<PAGE>
1993
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
<TABLE>
<C> <S>
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [ FEE REQUIRED ]
</TABLE>
For the fiscal year ended December 31, 1993
OR
<TABLE>
<C> <S>
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [ NO FEE REQUIRED ]
</TABLE>
<TABLE>
<S> <C>
For the transition period from............................ to................................
</TABLE>
Commission file number 1-971
HONEYWELL INC.
(Exact name of registrant as specified in its charter)
DELAWARE 41-0415010
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
HONEYWELL PLAZA, MINNEAPOLIS, MINNESOTA 55408
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 612-951-1000
Securities registered pursuant to section 12(b) of the act:
Name of each exchange
Title of each class on which registered
Common Stock, par value $1.50 New York Stock Exchange
per share
Preferred Stock Purchase Rights New York Stock Exchange
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 (Section 229.405 of this chapter) 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 or any amendment to this Form 10-K. /X/
Based on the closing sales price of $33.125 on March 1, 1994, the aggregate
market value of the voting stock held by nonaffiliates of the registrant was
$4,303,663,699.
As of March 1, 1994, the number of shares outstanding of the registrant's
common stock, par value $1.50 per share, was 130,676,010 shares.
DOCUMENTS INCORPORATED IN PART BY REFERENCE
Incorporated Documents Location in Form 10-K
- -------------------------------------------------------- ---------------------
Honeywell Notice of 1994 Annual Meeting and Proxy Part III
Statement
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<PAGE>
PART I
ITEM 1. BUSINESS
Honeywell Inc., a Delaware corporation incorporated in 1927, is a
Minneapolis-based international controls corporation that supplies automation
and control systems, components, software, products and services for homes and
buildings, industry, and space and aviation. The purpose of the company is to
develop and apply advanced-technology products, systems and services to conserve
energy, improve productivity, protect the environment, enhance comfort and
increase safety. Development and modification occur continuously in Honeywell's
business as new or improved products and services are introduced, new markets
are created or entered, distribution methods are revised, and products and
services are discontinued.
INDUSTRY SEGMENT INFORMATION
Honeywell's products and services are classified by management into three
industry segments: (i) Home and Building Control, (ii) Industrial Control, and
(iii) Space and Aviation Control. Financial information relating to these
industry segments is set forth in Part II, Item 6 at pages 9 and 10.
HOME AND BUILDING CONTROL
Honeywell's Home and Building Control business provides controls and systems
for building automation, energy management, fire and security, as well as
thermostats, air cleaners and other environmental controls and services for
buildings and homes.
Honeywell manufactures, markets and installs mechanical, pneumatic,
electrical and electronic control products and systems for heating, ventilation
and air conditioning in homes and commercial, industrial and public buildings.
The systems, which may be generic or specifically designed for each application,
may include panels and computers to centralize control of mechanical and
electrical functions.
Honeywell also produces building management systems for commercial
buildings, burner and boiler controls, lighting controls, thermostatic radiator
valves, pressure regulators for water systems, thermostats, actuators,
humidistats, relays, contactors, transformers, air-quality products, and gas
valves and ignition controls for homes and commercial buildings. Sales of these
products are made directly to original equipment manufacturers, including
manufacturers of heating and air conditioning equipment, through wholesalers,
distributors, dealers, contractors, hardware stores and home-care centers, and
also through the company's nationwide sales and service organization.
Services provided include indoor air-quality services, central-station
burglary and fire protection services for homes and commercial buildings, video
surveillance, access control and entry management services for commercial
buildings, contract maintenance services for commercial building mechanical and
control systems, automated management of building operations for building
complexes, energy management services, energy retrofit services and training.
INDUSTRIAL CONTROL
The Industrial Control business serves the automation and control needs of
its worldwide industrial customers as a major supplier of products, systems and
services ranging from sensors to integrated systems designed for specific
applications.
Honeywell's Industrial Control segment supplies process control systems and
associated software and services to customers in the refining, petrochemical,
bulk and fine chemical, pulp-and-paper, electric utility, food and consumer
goods, pharmaceutical, metals and transportation markets, as well as other
industries. Honeywell also designs and manufactures process instruments, process
controllers, recorders, programmers, programmable controllers, transmitters and
other field instruments. These products are sold as stand-alone products or
integrated into systems. These products are generally used in indicating,
recording and automatically controlling process variables.
1
<PAGE>
Under the MICRO SWITCH trademark, Honeywell manufactures solid-state sensors
(position, pressure, airflow, temperature and current), sensor interface
devices, manual controls, explosion-proof switches and precision snap-acting
switches, as well as proximity, photoelectric and mercury switches and
lighted/unlighted push-buttons. These products are used in industrial,
commercial, business equipment, and in consumer, medical, automotive, aerospace
and computer applications.
Other products include solenoid valves, optoelectronic devices, fiber-optic
systems and components, as well as microcircuits, sensors, transducers and
high-accuracy, noncontact measurement and detection products for factory
automation, quality inspection and robotics applications.
Honeywell also furnishes services, including product and component testing,
instrument maintenance, repair and calibration, contract services for industrial
control equipment and third-party maintenance for CAD/CAM and other industrial
control equipment, training, applications service and a range of customer
support services.
Services are generally sold directly to users on a monthly or annual
contract basis. Products are customarily sold by Honeywell on a delivered,
supervised or installed basis directly to end users, to equipment manufacturers
and contractors, or through third-party channels such as distributors and
systems houses.
SPACE AND AVIATION CONTROL
Honeywell's Space and Aviation Control business supplies avionics for the
commercial, military and space markets. The company designs, manufactures,
services and markets a variety of sophisticated electronic control systems and
components that are used on commercial and business aircraft, military aircraft
and spacecraft.
Products manufactured for aircraft use include ring laser gyro-based
inertial reference systems, navigation and guidance systems, flight control
systems, flight management systems, inertial sensors, air data computers, radar
altimeters, automatic test equipment, cockpit display systems and other
communication and flight instrumentation.
Honeywell products and services have been involved in every major U.S. space
mission since the mid-1960s. Products include guidance systems for launch and
re-entry vehicles, flight and engine control systems for manned spacecraft,
precision components for strategic missiles and on-board data processing. Other
products include spacecraft attitude and positioning systems, and precision
pointing and isolation systems.
Space and Aviation Control products are sold through an integrated
international marketing organization, with customer service centers providing
international service for commercial and business aviation users.
OTHER PRODUCTS
Products and services not included in the foregoing segment information are
described below.
Honeywell provides systems analysis and applied research and development on
systems and products, including space systems technology, application software,
sensors and artificial intelligence. The company is involved in the design and
development of gallium arsenide integrated circuits and the development of very
high-speed integrated circuit (VHSIC) technology.
Solid State Electronics Center, a semiconductor facility in Minnesota,
designs and manufactures integrated circuits for Honeywell and its government
customers.
Honeywell, through its Aerospace and Defense Group in Germany, develops,
markets and sells to European countries, among other things, military avionics
and electro-optic devices for flight control and nautical systems, including
sonar transducers and echo sounders.
2
<PAGE>
GENERAL INFORMATION
RAW MATERIALS
Honeywell experienced no significant or unusual problems in the purchase of
raw materials and commodities in 1993. Although it is impossible to predict what
effects shortages or price increases may have in the future, at present
management has no reason to believe a shortage of raw materials will cause any
material adverse impact during 1994.
PATENTS, TRADEMARKS, LICENSES AND DISTRIBUTION RIGHTS
Honeywell owns, or is licensed under, a large number of patents, patent
applications and trademarks acquired over a period of many years, which relate
to many of its products or improvements thereon and are of importance to its
business. From time to time, new patents and trademarks are obtained and patent
and trademark licenses and rights are acquired from others. In addition,
Honeywell has distribution rights of varying terms in a number of products and
services produced by other companies. In the judgment of management, such rights
are adequate for the conduct of the business being done by Honeywell. See Item 3
at page 7 for information concerning litigation in which Honeywell is involved
relating to patents.
SEASONALITY
Although Honeywell's business is not seasonal in the traditional sense,
revenues and earnings have tended to concentrate to some degree in the fourth
quarter of each calendar year, reflecting the tendency of customers to increase
ordering and spending for capital goods late in the year.
MAJOR CUSTOMER
Approximately 4 percent of Honeywell's total sales for 1993 was attributable
to sales of products and services to the United States government as a prime
contractor or subcontractor, the majority of which are described under the
heading "Space and Aviation Control" on page 2. Such business is significant
because of its volume and its contribution to Honeywell's technical
capabilities, but Honeywell's dependence upon individual programs is minimized
by the large variety of products and services it provides. Contracts and
subcontracts for all of such sales are subject to the standard provisions
permitting the government to terminate for convenience or default.
BACKLOG
The total dollar amount of backlog of Honeywell's orders believed to be firm
was approximately $3,128 million at December 31, 1993, and $3,603 million at
December 31, 1992. All but approximately $481 million of the 1993 backlog is
expected to be delivered within the current fiscal year. Backlog is not a
reliable indicator of Honeywell's future revenues because a substantial portion
of backlog represents the value of orders that are cancelable at the customer's
option.
COMPETITION
Honeywell is subject to active competition in substantially all products and
services. Competitors generally are engaged in business on a nationwide or an
international scale. Honeywell is the largest producer of control systems and
products used to regulate and control heating and air conditioning in commercial
buildings, and of systems to control industrial processes worldwide. Honeywell
is also a leading supplier of commercial aviation, space and avionics systems.
Honeywell's automation and control businesses compete worldwide, supported by a
strong distribution network with manufacturing and/or marketing capabilities,
for at least a portion of these businesses, in 95 countries.
Competitive conditions vary widely among the thousands of products and
services provided by Honeywell, and vary as well from country to country.
Markets, customers and competitors are becoming more international in outlook.
In those areas of environmental and industrial components and controls where
sales are primarily to equipment manufacturers, price/performance is probably
the most significant competitive factor, but customer service and applied
technology are also important. Competition is increasingly being applied to
government procurements to improve price and product performance. In service
businesses, quality, reliability and promptness of service are the most
3
<PAGE>
important competitive factors. Service must be offered from many areas because
of the localized nature of such business. In engineering, construction,
consulting and research activities, technological capability and a record of
proven reliability are generally the principal competitive factors. Although in
a small number of highly specialized products and services Honeywell may have
relatively few significant competitors, in most markets there are many
competitors.
RESEARCH AND DEVELOPMENT
During 1993 Honeywell spent approximately $742.2 million on research and
development activities, including $404.8 million in customer-funded research,
relating to the development of new products or services, or the improvement of
existing products or services. Honeywell spent $703.1 million in 1992 and $674.2
million in 1991 on research and development activities, including $390.5 million
and $373.5 million, respectively, in customer-funded research. No single product
or service accounted for a material portion of Honeywell's research and
development expenditures.
ENVIRONMENTAL PROTECTION
Compliance with current federal, state and local provisions regulating the
discharge of materials into the environment, or otherwise relating to the
protection of the environment, has not had, and in the opinion of management
will not have, a material effect upon Honeywell's capital expenditures, earnings
or competitive position. See Item 7 at page 13 for further information
concerning environmental matters.
EMPLOYEES
Honeywell employed approximately 52,300 persons in total operations as of
December 31, 1993.
GEOGRAPHIC AREAS
Honeywell engages in material operations in foreign countries. A large
majority of Honeywell's foreign business is in Western Europe, Canada and the
Asian Pacific Rim.
Although there are risks attendant to foreign operations, such as potential
nationalization of facilities, currency fluctuation and restrictions on movement
of funds, Honeywell has taken action reasonably calculated to mitigate such
risks.
Financial information related to geographic areas is included in Note 18 to
the financial statements in Part II, Item 8 at page 36.
4
<PAGE>
EXECUTIVE OFFICERS OF THE REGISTRANT
<TABLE>
<CAPTION>
POSITION AGE AT
NAME OFFICE HELD SINCE 3/1/94
- ------------------------- ------------------------------------------------------------ ------------- -------------
<S> <C> <C> <C>
M. R. Bonsignore (1) Chairman of the Board and Chief Executive Officer 1993 52
D. L. Moore (2) President and Chief Operating Officer 1993 57
J. R. Dewane (3) President, Space & Aviation Control 1993 59
E. D. Grayson (4) Vice President and General Counsel 1992 55
J. J. Grierson (5) Vice President, Business Development 1992 51
W. M. Hjerpe (6) Vice President and Controller 1992 42
E. T. Hurd (7) President, Industrial Control 1993 55
M. L. Jackson (8) Senior Vice President, Marketing and Administration 1993 51
J. J. Renier (9) Chairman, Executive Committee 1993 64
J.-P. Rosso (10) President, Home and Building Control 1993 53
W. L. Trubeck (11) Senior Vice President and Chief Financial Officer 1993 47
C. L. Vignali (12) Senior Vice President, Operations 1993 59
Officers are elected by the Board of Directors to terms of one year and until their successors are elected and
qualified.
<FN>
- ------------------------
(1) Mr. Bonsignore was elected to this position on February 16, 1993,
effective April 20, 1993. For more than five years prior thereto he was an
executive officer of the company.
(2) Dr. Moore was elected to this position on February 16, 1993, effective
April 20, 1993. From November 1990 to April 1993, he was Executive Vice
President and Chief Operating Officer, Space and Aviation, and Industrial.
From May 1989 to November 1990, he was President, Space and Aviation.
Prior thereto, he was Group Vice President of Honeywell's Commercial
Flight Systems Group since joining Honeywell when it acquired the Sperry
Aerospace Group in December 1986.
(3) Mr. Dewane was elected to this position on April 20, 1993, effective March
15, 1993. From April 1989 to March 1993, he was Group Vice President of
Honeywell's Commercial Flight Systems Group. From December 1987 to March
1989 he was Vice President and Group Executive of Honeywell's Military
Aviation Controls Group.
(4) Mr. Grayson was elected to this position on April 21, 1992, effective
April 1, 1992, when he joined the company. For more than five years prior
thereto, he was Senior Vice President, General Counsel, Corporate
Secretary and Clerk of Wang Laboratories.
(5) Mr. Grierson was elected to this position on February 18, 1992, effective
March 1, 1992. For more than five years prior thereto he was an executive
officer of the company.
(6) Mr. Hjerpe was elected to this position on February 18, 1992, effective
March 1, 1992. From July 1990 to February 1992, he was Vice President and
Treasurer of the company. From March 1989 to June 1990, he was Vice
President of Finance and Administration for Home and Building and Defense
and Marine Business.
(7) Mr. Hurd was appointed to this position on December 20, 1991, effective
January 1, 1992, and elected an executive officer of the company on April
20, 1993, effective April 26, 1993. From January 1991 to December 1991, he
was Vice President and Group Executive of Honeywell's Industrial
Automation and Control Group. From October 1989 to December 1990, he was
Vice
</TABLE>
5
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<TABLE>
<S> <C>
President and General Manager of Honeywell's Industrial Automation and
Control Division. From November 1988 to September 1989, he was Vice
President and General Manager of Honeywell's Industrial Automation Systems
Division.
(8) Mr. Jackson was elected to this position on April 20, 1993, effective
April 26, 1993. From January 1992 to April 1993, he was Senior Vice
President, Development and Customer Alliances. From December 1987 to
December 1991, he was Vice President and General Manager of Sales and
National Accounts for Honeywell's Commercial Building Group.
(9) Dr. Renier was elected to this position on February 16, 1993, effective
April 20, 1993. For more than five years prior thereto, he was Chief
Executive Officer of the company, and from December 1988 to April 1993
served as Chairman of the Board of Directors.
(10) Mr. Rosso was appointed to this position on December 20, 1991, effective
January 1, 1992, and elected an executive officer of the company on April
20, 1993, effective April 26, 1993. From January 1987 to December 1991, he
was President of Honeywell Europe.
(11) Mr. Trubeck was elected to this position on June 15, 1993, effective June
1, 1993. From February 1991 to March 1993, he was Chief Financial and
Administrative Officer for White & Case, an international law firm in New
York. From November 1990 to January 1991 he was self-employed as a
consultant. From March 1989 to October 1990 he was Executive Vice President
of Finance and Chief Financial Officer for NWA Inc. and Northwest Airlines.
(12) Mr. Vignali was elected to this position on April 20, 1993, by the Board of
Directors, effective April 26, 1993. From June 1987 to April 1993, he was
Vice President and Group Executive of Honeywell's Space Systems Group.
</TABLE>
ITEM 2. PROPERTIES
Honeywell and its subsidiaries operate facilities worldwide comprising
approximately 20,340,000 square feet of space for use as manufacturing, office
and warehouse space, of which approximately 12,438,600 square feet is owned and
approximately 7,901,400 square feet is leased. The facilities used by Honeywell
are adequate and suitable for the purposes they serve.
Facilities allocated for corporate use in the United States, including sales
offices, comprise approximately 3,379,000 square feet of space, of which
approximately 1,512,200 square feet is owned and approximately 1,866,800 square
feet is leased. These figures include Honeywell's principal executive offices in
Minneapolis, Minnesota which comprise approximately 957,400 square feet, all of
which is owned.
A summary of properties held by each segment of Honeywell is set forth
below, showing major plants, their location, size and type of holding. The
descriptions include approximately 232,400 square feet of space owned or leased
by Honeywell's operations in the United States that has been leased or subleased
to third parties. In addition, approximately 4,628,100 square feet of previously
leased space in the United States is under assignment to third parties
(including 2,851,700 square feet, 451,400 square feet and 102,600 square feet
which is assigned to Alliant Techsystems Inc., Federal Systems Inc. and Bull HN
Information Systems, Inc., respectively, all of which were formerly affiliates
of the company).
HOME AND BUILDING CONTROL
Home and Building Control occupies approximately 2,402,000 square feet of
space for operations in the United States, of which approximately 1,887,900
square feet is owned and approximately 514,100 square feet is leased.
Outside the United States, Home and Building Control operations occupy
approximately 3,204,900 square feet, of which approximately 1,670,100 square
feet is owned and approximately 1,534,800 square feet is leased. Principal
facilities operated outside the United States are located in Canada, Germany,
The Netherlands, the United Kingdom and Australia.
6
<PAGE>
Facilities in the United States comprising 300,000 square feet or more are
listed below.
<TABLE>
<CAPTION>
MAJOR USE OF APPROXIMATE OWNED OR
LOCATION FACILITY SQUARE FEET LEASED
- -------------------------- ------------------- ------------ ---------
<S> <C> <C> <C>
Arlington Heights, Ill. Manufacturing 494,600 Owned
Golden Valley, Minn. Manufacturing 1,185,300 Owned
</TABLE>
INDUSTRIAL CONTROL
Industrial Control occupies approximately 3,320,300 square feet of space for
operations in the United States, of which approximately 2,233,200 square feet is
owned and approximately 1,087,100 square feet is leased.
Outside the United States, Industrial Control operations occupy
approximately 2,228,500 square feet, of which approximately 862,200 square feet
is owned and approximately 1,366,300 square feet is leased. Principal facilities
operated outside the United States are located in the United Kingdom, Australia,
Canada, Switzerland, France, Germany, Belgium and The Netherlands.
Facilities in the United States comprising 300,000 square feet or more are
listed below.
<TABLE>
<CAPTION>
MAJOR USE OF APPROXIMATE OWNED OR
LOCATION FACILITY SQUARE FEET LEASED
- -------------------------- ------------------- ------------ ---------
<S> <C> <C> <C>
Freeport, Ill. Manufacturing 316,000 Owned
Ft. Washington, Pa. Manufacturing 411,400 Leased
Phoenix, Az. Manufacturing 550,000 Owned
</TABLE>
SPACE AND AVIATION CONTROL
Space and Aviation Control occupies approximately 5,244,500 square feet of
space for operations in the United States, of which approximately 3,819,100
square feet is owned and approximately 1,425,400 square feet is leased.
Outside the United States, Space and Aviation Control operations occupy
approximately 540,300 square feet, of which approximately 433,400 square feet is
owned and approximately 106,900 square feet is leased. Principal facilities
operated outside the United States are located in Canada, the United Kingdom and
Singapore.
Facilities in the United States comprising 300,000 square feet or more are
listed below.
<TABLE>
<CAPTION>
MAJOR USE OF APPROXIMATE OWNED OR
LOCATION FACILITY SQUARE FEET LEASED
- -------------------------- ------------------- ------------ ---------
<S> <C> <C> <C>
Phoenix, Ariz. Manufacturing 939,000 Owned
St. Louis Park, Minn. Manufacturing 559,000 Owned
Albuquerque, N.M. Office 526,600 Owned
Minneapolis, Minn. Manufacturing 525,100 Owned
Clearwater, Fla. Manufacturing 914,800 Owned
St. Petersburg, Fla. Manufacturing 304,000 Leased
</TABLE>
OTHER
Honeywell operations not included in the foregoing segment information
occupy approximately 20,500 square feet of space in areas outside the United
States, all of which is owned.
ITEM 3. LEGAL PROCEEDINGS
On March 13, 1990, Litton Systems Inc. filed suit against Honeywell in U.S.
District Court, Central District of California, alleging Honeywell patent
infringement relating to the process used by Honeywell to coat mirrors
incorporated in its ring laser gyroscopes; attempted monopolization by Honeywell
of certain alleged markets for products containing ring laser gyroscopes; and
intentional interference by Honeywell with Litton's prospective advantage in
European markets and with its contractual relationships with Ojai Research,
Inc., a California corporation. Honeywell has filed
7
<PAGE>
counterclaims against Litton alleging, among other things, violations by Litton
of various antitrust laws including attempted monopolization of markets for
inertial systems and interference with Honeywell's relationships with suppliers.
The trial of the patent infringement and intentional interference claims
commenced June 4, 1993, and on August 31, 1993, a federal court jury in U.S.
District Court in Los Angeles returned a verdict against Honeywell on each of
these claims and awarded damages in the amount of $1.2 billion and concluded
that the patent infringement was willful. Honeywell believes the verdict is
unsupported by the facts; that the Litton patent is invalid; and that
Honeywell's process differs from Litton's. The judge in the case held a hearing
November 22, 1993, on various issues including, among others, Honeywell's claims
that the patent was improperly obtained due to alleged "inequitable conduct" on
the part of Litton and Honeywell's other legal and equitable defenses. The court
has not yet entered a judgment. The trial will conclude when the court has
resolved legal issues that could alter or eliminate the jury verdict. Honeywell
will evaluate the outcome of the trial, including appealing any significant
judgment against the company. No trial date has been set for the antitrust
claims of Litton and Honeywell.
The court has yet to rule on significant, complex and interrelated issues
that could alter or eliminate the jury verdict; therefore, Honeywell and its
counsel have determined that it is not possible to estimate the amount of
damages, if any, that may ultimately be incurred. As a result, no provision has
been made in the financial statements with respect to this contingent liability.
Honeywell is a party to other various claims, legal and governmental
proceedings, including claims relating to previously reported environmental
matters. It is the opinion of management that losses in connection with these
matters and the resolution of the environmental claims will not have a material
effect on income.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of 1993.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The principal U.S. market for Honeywell's common stock is The New York Stock
Exchange. The high and low sales prices for the stock as reported by the
consolidated transaction reporting system, of the two most recent fiscal years
is set forth in Part II, Item 8 at page 41.
In November 1990, as part of Honeywell's program to enhance shareholder
value, the company authorized the repurchase of up to 4 million shares of its
common stock in open market transactions. In 1991, Honeywell repurchased 4
million shares under this program. In November 1991, the Board of Directors
authorized the repurchase of additional shares during the next five years for an
amount not to exceed $600 million. In 1991, 1992 and 1993, $3 million, $189
million and $240 million, respectively, of share repurchases were made under
this program.
Stockholders of record on March 1, 1994 totaled 33,159, excluding individual
participants in security position listings.
8
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
HONEYWELL INC. AND SUBSIDIARIES
(DOLLARS AND SHARES IN MILLIONS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1993 1992 1991 1990 1989 1988
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Results of Operations
Sales................................................... $5,963.0 $6,222.6 $6,192.9 $6,309.1 $6,058.6 $5,857.0
-------- -------- -------- -------- -------- --------
Cost of sales........................................... 4,019.6 4,195.3 4,185.1 4,308.7 4,172.5 4,258.8
Research and development................................ 337.4 312.6 300.7 279.6 283.5 288.9
Selling, general and administrative..................... 1,075.7 1,196.8 1,150.9 1,170.0 1,127.9 1,151.9
Litigation settlements and special charges.............. 18.6 (159.5)
Discontinuance of product lines......................... 150.8
Provision for restructuring activities.................. 81.6 101.9
Interest -- net......................................... 51.0 58.5 61.4 67.6 90.3 217.1
Gain on sale of assets.................................. (21.7) (340.1) (33.7)
Equity income........................................... (17.8) (15.8) (14.6) (11.5) (33.0) (9.8)
-------- -------- -------- -------- -------- --------
5,484.5 5,587.9 5,683.5 5,792.7 5,382.7 6,125.9
-------- -------- -------- -------- -------- --------
Income (loss) from continuing operations before income
taxes.................................................. 478.5 634.7 509.4 516.4 675.9 (268.9)
Provision for income taxes.............................. 156.3 234.8 178.3 144.6 125.6 212.6
-------- -------- -------- -------- -------- --------
Income (loss) from continuing operations................ 322.2 399.9 331.1 371.8 550.3 (481.5)
Income from discontinued operations..................... 10.1 53.8 46.6
Extraordinary item...................................... (8.6)
Cumulative effect of accounting changes................. (144.5)
-------- -------- -------- -------- -------- --------
Net income (loss)....................................... $ 322.2 $ 246.8 $ 331.1 $ 381.9 $ 604.1 $ (434.9)
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
Earnings (Loss) Per Common Share
Continuing operations................................... $ 2.40 $ 2.88 $ 2.35 $ 2.45 $ 3.23 $ (2.83)
Discontinued operations................................. 0.07 0.32 0.27
Extraordinary item...................................... (0.06)
Cumulative effect of accounting changes................. (1.04)
-------- -------- -------- -------- -------- --------
Net income (loss)....................................... $ 2.40 $ 1.78 $ 2.35 $ 2.52 $ 3.55 $ (2.56)
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
Cash Dividends Per Common Share........................... $ 0.91 $ 0.84 $ 0.77 $ 0.70 $ 0.57 $ 0.53
Financial Position
Current assets.......................................... $2,550.2 $2,707.8 $2,698.9 $2,582.2 $2,800.7 $2,576.3
Current liabilities..................................... 1,856.1 1,969.2 2,095.0 2,175.1 2,415.8 2,286.9
-------- -------- -------- -------- -------- --------
Working capital......................................... $ 694.1 $ 738.6 $ 603.9 $ 407.1 $ 384.9 $ 289.4
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
Short-term debt......................................... $ 187.9 $ 188.4 $ 168.4 $ 109.0 $ 145.6 $ 314.8
Long-term debt.......................................... 504.0 512.1 639.8 616.3 692.5 800.7
-------- -------- -------- -------- -------- --------
Total debt.............................................. 691.9 700.5 808.2 725.3 838.1 1,115.5
Stockholders' equity.................................... 1,773.0 1,790.4 1,850.8 1,696.9 1,918.2 1,731.3
-------- -------- -------- -------- -------- --------
Capitalization.......................................... $2,464.9 $2,490.9 $2,659.0 $2,422.2 $2,756.3 $2,846.8
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
Sales
Home and Building Control............................... $2,424.3 $2,393.6 $2,249.1 $2,196.7 $2,076.8 $2,036.2
Industrial Control...................................... 1,691.5 1,743.9 1,626.8 1,653.5 1,491.4 1,400.2
Space and Aviation Control.............................. 1,674.9 1,933.1 2,132.3 2,071.3 2,004.1 1,839.6
Other................................................... 172.3 152.0 184.7 387.6 486.3 581.0
-------- -------- -------- -------- -------- --------
$5,963.0 $6,222.6 $6,192.9 $6,309.1 $6,058.6 $5,857.0
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
</TABLE>
9
<PAGE>
(DOLLARS AND SHARES IN MILLIONS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1993 1992 1991 1990 1989 1988
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Operating Profit (1)(2)(3)
Home and Building Control............................... $ 232.7 $ 193.4 $ 229.1 $ 237.0 $ 225.1 $ 216.1
Industrial Control...................................... 189.7 156.9 224.0 219.5 136.8 119.4
Space and Aviation Control.............................. 148.1 175.8 226.1 200.4 111.5 (141.9)
Other................................................... (1.8) (9.5) (3.1) 18.8 20.8 (51.6)
Discontinuance of product lines (4)..................... (150.8)
-------- -------- -------- -------- -------- --------
Total operating profit (loss)........................... 568.7 516.6 676.1 675.7 494.2 (8.8)
Interest expense........................................ (68.0) (89.9) (89.4) (106.0) (135.2) (254.1)
Litigation settlements.................................. 32.6 287.9
Gain on sale of assets.................................. 21.7 340.1 33.7
Equity income........................................... 17.8 15.8 14.6 11.5 33.0 9.8
General corporate expense............................... (72.6) (95.7) (91.9) (86.5) (56.2) (49.5)
-------- -------- -------- -------- -------- --------
Income (loss) before income taxes....................... $ 478.5 $ 634.7 $ 509.4 $ 516.4 $ 675.9 $ (268.9)
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
Assets
Home and Building Control............................... $1,327.3 $1,302.4 $1,282.8 $1,228.7 $1,202.1 $1,181.5
Industrial Control...................................... 1,059.8 1,057.5 1,001.7 955.3 937.5 896.6
Space and Aviation Control.............................. 1,219.6 1,403.6 1,594.5 1,684.7 1,701.8 1,812.5
Corporate and Other..................................... 991.4 1,106.6 927.7 877.5 1,158.7 868.7
Discontinued operations................................. 258.1 222.7
-------- -------- -------- -------- -------- --------
$4,598.1 $4,870.1 $4,806.7 $4,746.2 $5,258.2 $4,982.0
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
Additional information
Average number of common shares outstanding............. 134.2 138.5 140.9 151.8 170.4 170.3
Return on average stockholders' equity.................. 18.4% 13.8% 19.2% 20.6% 33.5% Loss
Stockholders' equity per common share................... $ 13.48 $ 13.10 $ 13.25 $ 11.99 $ 11.99 $ 10.04
Percent of debt to total capitalization................. 28% 28% 30% 30% 30% 39%
Research and development
Honeywell-funded...................................... $ 337.4 $ 312.6 $ 300.7 $ 279.6 $ 283.5 $ 288.9
Customer-funded....................................... 404.8 390.5 373.5 417.5 460.9 388.9
Capital expenditures.................................... 232.1 244.1 240.2 251.5 268.0 292.4
Depreciation............................................ 235.3 242.8 238.5 236.1 247.8 258.4
Employees at year end................................... 52,300 55,400 58,200 60,300 65,300 70,900
<FN>
- --------------------------
(1) Operating profit is net of special charges amounting to $51.2 and $128.4
in 1993 and 1992, respectively, (see Note 3 to Financial Statements) as
follows: Home and Building Control -- $9.9 and $42.7; Industrial Control
-- $9.0 and $38.6; Space and Aviation Control -- $7.4 and $34.9; Other --
$16.4 and $2.6; and General Corporate Expense -- $8.5 and $9.6.
(2) Operating profit is net of the additional operating expense impact of
adopting SFAS 106 (see Note 17 to Financial Statements) and SFAS 112 (see
Note 1 to Financial Statements) amounting to $16.4 and $3.8, respectively,
in 1992 as follows: Home and Building Control -- $4.3 and $1.0; Industrial
Control -- $4.0 and $0.9; Space and Aviation Control -- $7.0 and $1.6;
Other -- $0.5 and $0.1; and General Corporate Expense -- $0.6 and $0.2.
(3) Operating profit is net of provision for restructuring activities
amounting to $81.6 and $101.9 in 1989 and 1988, respectively, as follows:
Home and Building Control -- $28.4 and $22.5; Industrial Control -- $32.7
and $9.3; Space and Aviation Control -- $12.1 and $27.6; Other -- $3.1 and
$27.2; and General Corporate Expense -- $5.3 and $15.3.
(4) Operating profit includes provision for discontinuance of product lines
amounting to $150.8 in 1988 as follows: Home and Building Control --
$(31.1); Industrial Control -- $4.8; Space and Aviation Control -- $23.8;
and Other -- $153.3.
</TABLE>
10
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OPERATIONS
SALES
Honeywell's 1993 sales were $5.963 billion, compared with $6.223 billion in
1992 and $6.193 billion in 1991. Both U.S. and international sales declined from
1992. U.S. sales of $3.895 billion were down 3 percent primarily due to a
continuing cyclical downturn in the Space and Aviation Control commercial
aviation market. International sales, which represent 35 percent of total sales,
declined 6 percent from 1992 to $2.068 billion. The international sales decline
was the result of negative currency effects as the dollar strengthened an
average of 9 percent against local currencies in countries where Honeywell does
business. This decline was partially offset by positive sales growth of 4
percent measured in local currency. U.S. export sales, including exports to
foreign affiliates, were $769 million in 1993, compared with $830 million in
1992 and $808 million in 1991.
COST OF SALES
Cost of sales was $4.020 billion in 1993, or 67.4 percent of sales, compared
with $4.195 billion (67.4 percent) in 1992 and $4.185 billion (67.6 percent) in
1991. Cost as a percentage of sales remained flat for 1993 during a period of
tough competitive markets and stagnation for a majority of economic sectors.
Honeywell remains committed to efforts to reduce operating costs and improve
margins.
RESEARCH AND DEVELOPMENT
Honeywell spent $337 million, or 5.7 percent of sales, on research and
development in 1993, compared with $313 million (5.0 percent) in 1992 and $301
million (4.9 percent) in 1991. Honeywell also received $405 million in funds for
customer-funded research and development in 1993, compared with $390 million in
1992 and $373 million in 1991. The higher R&D percentage in 1993 reflects
significant investments in next-generation technologies. The company expects to
return to approximately the same rate of R&D spending in 1994 as in 1992.
OTHER EXPENSES AND INCOME
Selling, general and administrative expenses were $1.076 billion in 1993, or
18.0 percent of sales, compared with $1.197 billion (19.2 percent) in 1992 and
$1.151 billion (18.6 percent) in 1991. Excluding royalties from autofocus
licensing agreements (see Note 3 to Financial Statements on page 25), the
percent of sales would have been 18.6 percent and 19.5 percent in 1993 and 1992,
respectively. The higher percentage in 1992 was due to increased international
selling expenses.
On April 16, 1993, Honeywell announced the settlement of its lawsuits
against the Unisys Corporation and other parties in connection with Honeywell's
1986 purchase of the Sperry Aerospace Group. Honeywell received $70 million in
cash and notes, and recorded a gain of $22 million, or $14 million ($0.10 per
share) after income taxes, to offset previously incurred costs associated with
the matter (see Note 3 to Financial Statements on page 25).
In April 1987, Honeywell filed suit against Minolta Camera Co. alleging that
Minolta autofocus cameras infringe Honeywell patents. Subsequently, Honeywell
filed similar suits against other major camera manufacturers that employ
autofocus technology. In March 1992, following a jury award in Honeywell's
favor, Minolta agreed to pay Honeywell $127 million in settlement of the damages
and Honeywell's claims for interest and legal fees. In addition to the Minolta
settlement, agreements were reached with various camera manufacturers for their
use of Honeywell's patented automatic focus camera technology. The total of all
autofocus settlements recorded, after associated expenses, was $10 million, or
$6 million ($0.05 per share) after income taxes, in 1993 and $288 million, or
$171 million ($1.24 per share) after income taxes, in 1992. The pre-tax gains
from litigation settlements are included in litigation settlements and special
charges on the income statement.
11
<PAGE>
Also included in litigation settlements and special charges are provisions
for special charges of $51 million, or $29 million ($0.22 per share) after
income taxes, in 1993 and $128 million, or $85 million ($0.62 per share) after
income taxes, in 1992. The 1993 charges were the result of implementing programs
to improve productivity and reduce costs in each of Honeywell's business
segments. Charges in 1992 were made to appropriately size the Space and Aviation
Control business segment to current market conditions and to reposition the Home
and Building Control and Industrial Control business segments to capitalize on
emerging market opportunities. The special charges include provisions for
work-force reductions, worldwide facilities consolidation and organizational
changes in both 1993 and 1992.
Net interest expense was $51 million in 1993, $59 million in 1992 and $61
million in 1991. In 1992, Honeywell reduced total debt by $108 million,
including redemption of high-coupon, long-term debt.
Earnings of companies owned 20 percent to 50 percent (primarily
Yamatake-Honeywell), which are accounted for using the equity method, were $18
million in 1993, $16 million in 1992 and $15 million in 1991.
INCOME TAXES
The provision for income taxes was $156 million in 1993, compared with $235
million in 1992 and $178 million in 1991. The enactment by Congress of the
Omnibus Budget Reconciliation Act of 1993, which raised the U.S. federal
statutory income tax rate for corporations from 34 percent to 35 percent
retroactive to January 1, 1993, did not have a material impact on the 1993
provision but did result in the recognition of a one-time gain of $9 million
($0.07 per share) in 1993 from the revaluation of deferred tax assets. Further
information about income taxes is provided in Note 4 to Financial Statements on
page 25.
EXTRAORDINARY ITEM
In 1992, Honeywell recorded an extraordinary loss of $14 million, or $9
million ($0.06 per share) after income taxes, as a result of early debt
redemptions that required the payment of premiums and the recognition of
unamortized discounts and deferred costs. These redemptions were undertaken as
part of Honeywell's efforts to reduce its debt and manage its interest-rate
exposure.
ACCOUNTING CHANGES
In 1992, Honeywell adopted three new Statements of Financial Accounting
Standards. Statement of Financial Accounting Standards No. 106 (SFAS 106),
"Employers' Accounting for Postretirement Benefits Other Than Pensions,"
required recognition of the expected cost of providing postretirement benefits
over the time employees earn these benefits. Before adopting SFAS 106, Honeywell
recognized the costs of providing these benefits on a pay-as-you-go basis by
expensing the cost in the year the benefit was provided. The cumulative effect
of adopting SFAS 106 at January 1, 1992, was a charge to income of $244 million,
or $151 million ($1.09 per share) after income taxes. The operating impact of
adopting SFAS 106 for 1992 was additional expense of $16 million, or $11 million
($0.08 per share) after income taxes.
Statement of Financial Accounting Standards No. 109 (SFAS 109), "Accounting
for Income Taxes," allowed consideration of future events in assessing the
likelihood that tax benefits will be realized in future tax returns. The
cumulative effect of adopting SFAS 109 at January 1, 1992, was an increase in
income of $31 million ($0.23 per share) resulting from Honeywell's ability to
recognize additional deferred tax assets.
Statement of Financial Accounting Standards No. 112 (SFAS 112), "Employers'
Accounting for Postemployment Benefits," required that the estimated cost of
providing postemployment benefits be recognized on an accrual basis. The
cumulative effect of adopting SFAS 112 at January 1, 1992, was a charge to
income of $40 million, or $25 million ($0.18 per share) after income taxes. The
operating impact of adopting SFAS 112 for 1992 was additional expense of $4
million, or $2 million ($0.02 per share) after income taxes.
12
<PAGE>
NET INCOME
Honeywell's net income was $322 million ($2.40 per share) in 1993, compared
with $247 million ($1.78 per share) in 1992 and $331 million ($2.35 per share)
in 1991. Net income in 1993 includes an after-tax gain from litigation
settlements, after associated expenses, of $20 million ($0.15 per share); an
after-tax provision for special charges of $29 million ($0.22 per share); and a
gain of $9 million ($0.07 per share) from the revaluation of deferred tax
assets. Net income in 1992 includes an after-tax gain from litigation
settlements, after associated expenses, of $171 million ($1.24 per share); an
after-tax provision for special charges of $85 million ($0.62 per share); an
extraordinary loss after income taxes of $9 million ($0.06 per share) from the
early redemption of long-term debt; and an after-tax reduction of $145 million
($1.04 per share) for the cumulative effect of accounting changes. Net income in
1992 also included the operating impact of SFAS 106 and SFAS 112, or an
after-tax expense of $13 million ($0.10 per share).
RETURN ON EQUITY AND INVESTMENT
Return on equity was 18.4 percent in 1993, 13.8 percent in 1992 and 19.2
percent in 1991. Return on investment was 14.6 percent in 1993, 11.8 percent in
1992 and 15.4 percent in 1991. The adoption of SFAS 106 and SFAS 112
significantly reduced ROE and ROI in 1992.
CURRENCY
The U.S. dollar strengthened an average of 9 percent in 1993 compared with
1992 in relation to the principal foreign currencies in countries where
Honeywell products are sold. A stronger dollar has a negative effect on
international results because foreign-exchange-denominated profits translate
into fewer U.S. dollars of profit; a weaker dollar has a positive translation
effect.
INFLATION
Highly competitive market conditions and a relatively stagnant economy
minimized inflation's impact on the selling prices of Honeywell's products and
the cost of its purchased materials. Productivity improvements and
cost-reduction programs largely offset the effects of inflation on other costs
and expenses.
EMPLOYMENT
Honeywell employed 52,300 people worldwide at year-end 1993, compared with
55,400 people in 1992 and 58,200 people in 1991. Approximately 33,200 employees
work in the United States, with 19,100 employed outside the country, primarily
in Europe. Total compensation and benefits in 1993 were $2.7 billion, or 49
percent of total costs and expenses. Sales per employee were $110,900 in 1993,
compared with $109,600 in 1992 and $106,100 in 1991.
ENVIRONMENTAL MATTERS
Honeywell is committed to protecting the environment, a commitment evidenced
by both Honeywell's products and Honeywell's manufacturing operations.
Honeywell's manufacturing sites generate both hazardous and nonhazardous wastes,
the treatment, storage, transportation and disposal of which are subject to
various local, state and national laws relating to protection of the
environment. Honeywell is in varying stages of investigation or remediation of
potential, alleged or acknowledged contamination at current or previously owned
or operated sites and at off-site locations where its wastes were taken for
treatment or disposal. In connection with the cleanup of various off-site
locations, Honeywell, along with a large number of other entities, has been
designated a potentially responsible party (PRP) by the U.S. Environmental
Protection Agency under the Comprehensive Environmental Response, Compensation
and Liability Act or by state agencies under similar state laws (Superfund),
which potentially subjects PRPs to joint and several liability for the costs of
such cleanup. In addition, Honeywell is incurring costs relating to
environmental remediation pursuant to the federal Resource Conservation and
Recovery Act. Based on Honeywell's assessment of the costs associated with its
environmental responsibilities, compliance with federal, state and local laws
regulating the discharge of materials into the environment, or otherwise
relating to the protection of the environment, has not had, and in the opinion
of Honeywell management, will not have a material
13
<PAGE>
effect on Honeywell's financial position, results of operations, capital
expenditures or competitive position. Honeywell's opinion with regard to
Superfund matters is based on its assessment of the predicted investigation,
remediation and associated costs, its expected share of those costs and the
availability of legal defenses. Honeywell's policy is to record environmental
liabilities when loss amounts are probable and reasonably estimable.
DISCUSSION AND ANALYSIS BY SEGMENT
HOME AND BUILDING CONTROL
Sales in Home and Building Control were $2.424 billion in 1993, compared
with $2.394 billion in 1992 and $2.249 billion in 1991. Sales in 1993 were up
slightly as stronger U.S. sales were mostly offset by a stronger U.S. dollar and
economic weakness in international markets, driven in large part by the
continuing recession in Europe. Home Control gained market share in the United
States through new product introductions and greater penetration of the OEM
market. TotalHome-R- was introduced outside the United States in 1993. The
acquisition of Enviracaire in December 1992 also contributed to the improvement
in U.S. sales. Building Control experienced strong U.S. interest in its
comprehensive retrofit and service solutions for schools and other institutions.
The U.S. economy continues to show signs of improvement in these markets, while
international market conditions have continued to deteriorate. Economic
conditions may continue to impede new construction markets in 1994; however,
Home and Building Control's large worldwide installed product base and market
strategies should continue to support continued sales growth, given that
retrofit and service revenues account for the largest portion of business.
The sales increase in 1992 reflected worldwide improvement for both Home
Control and Building Control despite weak commercial construction markets and
erratic housing markets. Home Control experienced increased market penetration
with original equipment manufacturers and retailers, and achieved growth with
new product introductions. Building Control made market share gains in small-and
medium-sized commercial buildings, and there was solid growth in vertical
markets such as schools and health-care facilities in the United States.
Home and Building Control operating profit was $233 million in 1993,
compared with $193 million in 1992 and $229 million in 1991. Excluding the
impact of special charges, operating profit increased slightly in 1993 despite
the deepening European recession, a stronger U.S. dollar, unfavorable
intra-European currency fluctuations, additional costs associated with
streamlining the U.S. field organization, and costs associated with introducing
the new EXCEL 5000TM building automation platform in the United States.
Operating profit included special charges of $10 million for implementation of
programs to improve productivity and competitiveness.
Operating profit in 1992 included special charges of $43 million for costs
associated with worldwide facilities consolidation, organizational changes and
work-force reductions incurred to capitalize on emerging market opportunities.
Excluding these added costs, operating profit increased over 1991, paced by
strong performance in Home Control in the United States.
Orders improved modestly in 1993 as stronger orders in the United States for
both Home Control and Building Control offset international weakness and a
stronger U.S. dollar. The backlog of orders showed a slight increase for 1993.
INDUSTRIAL CONTROL
Industrial Control sales were $1.692 billion in 1993, compared with $1.744
billion in 1992 and $1.627 billion in 1991. Sales declined slightly in 1993 due
to negative currency translation trends and the divestiture of the Keyboard
Division, which was sold to Key Tronic Corporation in the third quarter of 1993.
Excluding these items, both Industrial Automation and Control and Control
Components grew at moderate rates despite weak market conditions in the United
States, Europe and Latin America. Industrial Automation and Control reported
solid penetration gains in targeted worldwide markets despite a weak capital
spending environment in the United States and Europe. Demand for
14
<PAGE>
industrial systems increased in the Middle East and Asia Pacific. Sales of field
instruments showed a strong increase due to broad acceptance of Industrial
Automation and Control's smart field products. Control Components experienced
significant growth in solid state sensors for on-board automotive and
information technology and appliance market segments as demand for durable goods
improved. The company expects a slight increase in 1994 Industrial Control sales
despite a slow economic environment worldwide.
Industrial Control sales for 1992 increased moderately, despite the deferral
of industrial automation systems purchases in the United States due to the
inherent uncertainty of the economy and worldwide weakness in durable goods
markets. There was modest growth in Industrial Automation and Control sales in
the United States as increased sales of services and measurement and control
products offset weakness in automation systems. Control Component sales
increased moderately in 1992, benefiting from the trend by equipment
manufacturers to increase sensor utilization for quality and productivity
improvements.
Industrial Control operating profit was $190 million in 1993, $157 million
in 1992 and $224 million in 1991. Excluding the impact of special charges,
operating profit showed a slight increase in 1993. Profits were affected by the
weak capital spending environment in the United States and Europe, strength of
the U.S. dollar and aggressive investments in new technologies, with R&D
spending up 26 percent over 1992. Operating profit included special charges of
$9 million for implementation of programs to improve productivity and
competitiveness.
Operating profit in 1992 included special charges of $39 million for costs
associated with worldwide facilities consolidation, organizational changes and
work-force reductions to capitalize on emerging market opportunities. Before
special charges, operating profit was down in 1992 as a result of lower profit
margins reflecting a changing product mix in Industrial Automation and Control.
In 1993, Industrial Control orders declined slightly, due to negative
currency translation trends. Excluding this effect, Industrial Automation and
Control orders increased modestly as a result of solid showings in Asia Pacific
and Latin America. Control Components orders declined slightly due to the
divestiture of the Keyboard Division. Micro Switch orders were strong in North
America and Asia Pacific. The backlog of orders was down modestly for the year.
SPACE AND AVIATION CONTROL
Sales in Space and Aviation Control were $1.675 billion in 1993, compared
with $1.933 billion in 1992 and $2.132 billion in 1991. Sales in 1993 continued
to decline as anticipated as a result of the continuing cyclical decline in
commercial aircraft production, weak demand in the business jet market and
decreased spending in the military market. We expect these trends to continue in
1994.
Anticipated growth in 1992 did not materialize, and 1992 sales for
commercial flight systems declined sharply as financial pressures caused
airlines to defer, and in some instances cancel, aircraft and spare parts
purchases. As expected, military markets were weak as a result of declining
defense spending and flat NASA funding.
Space and Aviation Control operating profit was $148 million in 1993,
compared with $176 million in 1992 and $226 million in 1991. Operating profit
declined in 1993 due to the sharp volume decline in sales of commercial flight
systems and significant investments in next-generation avionics. Operating
profit included special charges of $7 million for implementation of programs to
improve productivity and competitiveness. Because of continued weak market
conditions, revenue and operating profit are expected to decline again in 1994.
Operating profit in 1992 included special charges of $35 million for costs
associated with facilities consolidation, organizational changes and severance
pay incurred to appropriately size operations to current and anticipated market
conditions. Excluding these special charges, operating profit was down
moderately in 1992 as a sharp volume decline in the commercial aviation business
was partially offset by an improved cost structure and a favorable sales mix in
military avionics.
15
<PAGE>
Space and Aviation orders were down in 1993 as commercial flight systems and
military avionics showed sharp declines. Space systems orders increased
moderately. The backlog of orders declined sharply from 1992 levels.
OTHER
Sales from other operations were $172 million in 1993, $152 million in 1992
and $185 million in 1991. These sales included the activities of various
business units, such as the Solid State Electronics Center and the Systems and
Research Center, which do not correspond with Honeywell's primary business
segments. These operations incurred operating losses of $2 million in 1993, $9
million in 1992 and $3 million in 1991. The 1993 loss included special charges
of $16 million for organizational changes and work-force reductions. The 1992
loss included special charges of $3 million that were also associated with
organizational changes and work-force reductions.
FINANCIAL POSITION
FINANCIAL CONDITION
At year-end 1993, Honeywell's capital structure comprised $188 million of
short-term debt, $504 million of long-term debt and $1.773 billion of
stockholders' equity. The ratio of debt to total capital was 28 percent and
remained unchanged from year-end 1992. Honeywell's debt-to-total capital policy
range is 30 to 40 percent. Honeywell managed its capital structure during 1993
at or below the low end of this range.
Total debt decreased $9 million during 1993 to $692 million. Stockholders'
equity decreased $17 million in 1993. Contributing to the decrease was a $209
million increase in treasury stock. Other changes in stockholders' equity
included an increase in retained earnings of $322 million from net income,
offset by dividends of $122 million; a $3 million decrease in the accumulated
foreign currency translation; and a $13 million decrease from the recognition of
a pension liability adjustment under Statement of Financial Accounting Standards
No. 87, "Employers' Accounting for Pensions," (see Note 16 to Financial
Statements on page 33).
Several events and trends that affected Honeywell's financial position are
discussed below.
CASH GENERATION
In 1993, $475 million of cash was generated from operating activities,
compared with $532 million in 1992 and $489 million in 1991. Included in 1992
operating cash flow was $194 million, net of expenses and taxes, from autofocus
settlements. In 1993, cash generated from investing and financing activities
included $47 million of proceeds from the sale of assets, $20 million from a
reduction of investment in Sperry Aerospace Group and $18 million of proceeds
from employee stock plans. These funds were primarily used to support $232
million of capital expenditures, $14 million of acquisitions, $122 million of
dividend payments, $241 million of share repurchases and $7 million of long-term
debt repayments. Cash balances decreased $100 million in 1993.
WORKING CAPITAL
Cash used for increases in the portion of working capital consisting of
trade and long-term receivables and inventories, offset by accounts payable and
customer advances, was $2 million in 1993. This portion of working capital as a
percentage of sales was 28 percent, compared with 26 percent in 1992. Trade
receivables sold at year-end 1993 were $38 million, an increase of $22 million
in 1993.
CAPITAL EXPENDITURES AND ACQUISITIONS
Capital expenditures for property, plant and equipment in 1993 were $232
million, compared with $244 million in 1992 and $240 million in 1991. The 1993
depreciation charges were $235 million. Honeywell continues to invest at levels
believed to be adequate to maintain its technological position in areas
providing long-term returns. During 1993, Honeywell invested $14 million in
complementary business acquisitions.
16
<PAGE>
SHARE REPURCHASE PLANS
In November 1990, the board of directors authorized a 4 million share
repurchase program. This program was completed in 1991. In November 1991, the
board of directors authorized a five-year program to purchase up to $600 million
of Honeywell shares. Under terms of this authorization, which expires December
31, 1996, the program may be altered depending on economic conditions, share
prices and cash-flow availability. Honeywell repurchased $3 million of shares in
1991, $189 million of shares in 1992 and $240 million of shares in 1993, and has
$168 million remaining under this authorization.
At year-end 1993, Honeywell had 188 million shares issued, 132 million
shares outstanding and 33,382 stockholders of record. At year-end 1992,
Honeywell had 188 million shares issued, 137 million shares outstanding and
34,571 stockholders of record.
DIVIDENDS
In November 1992, the board of directors approved an 8 percent increase in
the regular annual dividend to $0.89 per share, from $0.825 per share, effective
in the fourth quarter 1992. In November 1993, the board of directors approved an
additional 8 percent increase in the regular annual dividend to $0.96 per share
effective in the fourth quarter 1993. Honeywell paid $0.9075 per share in
dividends in 1993, compared with $0.84125 in 1992 and $0.76875 in 1991.
Honeywell has paid a quarterly dividend since 1932 and has increased the annual
payout per share in each of the last 18 years.
EMPLOYEE STOCK PROGRAM
Honeywell contributed 643,913 shares of Honeywell common stock to employees
under its U.S. employee stock match savings plans in 1993. The number of shares
contributed under this program depends on employee savings levels and company
performance.
PENSION CONTRIBUTIONS
Cash contributions to Honeywell's Retirement Plan for U.S. non-union
employees were $105 million in 1993, $79 million in 1992 and $61 million in
1991. Cash contributions to the Pension Plan for U.S. union employees were $36
million in 1993, $27 million in 1992 and $27 million in 1991.
TAXES
In 1993, taxes paid were $92 million. Accrued income taxes and related
interest decreased $18 million during 1993.
FUNDING SPECIAL CHARGES
During 1993 and 1992, the company established reserves for productivity
initiatives to strengthen the company's competitiveness. Future cash flows from
operating activities are expected to be sufficient to fund these accrued costs.
LIQUIDITY
Short-term debt at year-end 1993 was $188 million, consisting of $181
million of commercial paper and $7 million of notes payable and current
maturities of long-term debt. Short-term debt at year-end 1992 totaled $188
million, consisting of $182 million of notes payable and commercial paper and $6
million of current maturities of long-term debt.
Through its banks, Honeywell has access to various credit facilities,
including committed credit lines for which Honeywell pays commitment fees and
uncommitted lines provided by banks on a non-committed, best-efforts basis.
Available lines of credit at year-end 1993 totaled $2.272 billion. This consists
of $1.875 billion of committed credit lines to meet Honeywell's financing
requirements, including support of commercial paper and bank note borrowings and
an appeal bond which could be required in the Litton litigation as described in
Litigation below, and $397 million of uncommitted credit lines available to
certain foreign subsidiaries. This compared with $1.002 billion of available
credit lines at year-end 1992, consisting of $645 million of committed credit
lines and $357 million of
17
<PAGE>
uncommitted credit lines available to certain foreign subsidiaries. Cash and
short-term investments totaled $256 million at year-end 1993 and $346 million at
year-end 1992. Honeywell believes its available cash and committed credit lines
provide adequate liquidity.
LITIGATION
On August 31, 1993, a federal court jury in U.S. District Court in Los
Angeles returned a verdict against Honeywell on patent infringement and
intentional interference claims in the amount of $1.2 billion. These claims were
part of a lawsuit brought by Litton Systems Inc. alleging, among other things,
Honeywell patent infringement relating to the process used by Honeywell to coat
mirrors incorporated in its ring laser gyroscopes. Honeywell believes the
verdict is unsupported by the facts; that the Litton patent is invalid; and that
Honeywell's process differs from Litton's. The judge in the case held a hearing
November 22, 1993, on various issues including, among others, Honeywell's claims
that the patent was improperly obtained due to alleged "inequitable conduct" on
the part of Litton and Honeywell's other legal and equitable defenses. The court
has yet to enter a judgment. The trial will conclude when the court has resolved
legal issues that could alter or eliminate the jury verdict. Honeywell will
evaluate the outcome of the trial, including appealing any significant judgment
against the company. No trial date has been set for the antitrust claims of
Litton and Honeywell.
The court has yet to rule on significant, complex and interrelated issues
that could alter or eliminate the jury verdict; therefore, Honeywell and its
counsel have determined that it is not possible to estimate the amount of
damages, if any, that may ultimately be incurred. As a result, no provision has
been made in the financial statements with respect to this contingent liability.
Honeywell continues to believe the lawsuit is without merit, and its financial
position, liquidity and business strategies have not been adversely affected by
the jury verdict.
CREDIT RATINGS
Honeywell's credit ratings remained unchanged during 1993. Ratings for
long-term and short-term debt are, respectively, A/A-1 by Standard and Poor's
Corporation, A/Duff1 by Duff and Phelps Corporation and A3/P-2 by Moody's
Investor Service, Inc. On August 31, 1993, Moody's Investor Service, Inc. placed
Honeywell on credit watch status as a result of the jury verdict in the Litton
litigation. Any lowering of Honeywell's present credit ratings could lead to
higher interest costs by potentially reducing Honeywell's ability to access the
commercial paper market and other unsecured borrowing sources on terms as
favorable as those currently available.
STOCK PERFORMANCE
The market price of Honeywell stock ranged from $39 3/8 to $31 in 1993, and
was $34 1/4 at year end. Book value at year end was $13.48 in 1993 and $13.10 in
1992.
18
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEPENDENT AUDITORS' REPORT
To the Stockholders of Honeywell Inc.:
We have audited the statement of financial position of Honeywell Inc. and
subsidiaries as of December 31, 1993 and 1992, and the related statements of
income and cash flows for each of the three years in the period ended December
31, 1993. Our audits also included the financial statement schedules listed at
Item 14(a)2. These financial statements and financial statement schedules are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We have conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of Honeywell Inc. and subsidiaries at December
31, 1993 and 1992, and the results of their operations and their cash flows for
each of the three years in the period ended December 31, 1993, in conformity
with generally accepted accounting principles. Also in our opinion, such
financial statement schedules, when considered in relation to the basic
financial statements taken as a whole, present fairly in all material respects
the information set forth therein.
As discussed in Note 19 to the financial statements, Honeywell is a
defendant in litigation alleging (1) patent infringement, (2) market
monopolization and (3) interference with the plaintiff's markets and contractual
relationships. A federal court jury has returned a verdict against Honeywell on
the patent infringement and intentional interference claims in the case in the
amount of $1.2 billion; however, the court has yet to rule on significant,
complex and interrelated issues that could alter or eliminate the jury verdict.
The ultimate outcome of the litigation cannot presently be determined.
Accordingly, no provision for any loss that may result from the resolution of
this matter has been made in the accompanying financial statements.
As discussed in Notes 1, 4 and 17 to the financial statements, in 1992 the
Company changed its method of accounting for postemployment benefits, income
taxes and postretirement benefits other than pensions.
Deloitte & Touche
Minneapolis, Minnesota
February 11, 1994
19
<PAGE>
INCOME STATEMENT
HONEYWELL INC. AND SUBSIDIARIES
(DOLLARS AND SHARES IN MILLIONS
EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
---------------------------------
1993 1992 1991
--------- ---------- ----------
<S> <C> <C> <C>
Sales......................................................................... $ 5,963.0 $ 6,222.6 $ 6,192.9
--------- ---------- ----------
Costs and Expenses
Cost of sales............................................................... 4,019.6 4,195.3 4,185.1
Research and development.................................................... 337.4 312.6 300.7
Selling, general and administrative......................................... 1,075.7 1,196.8 1,150.9
Litigation settlements and special charges.................................. 18.6 (159.5)
--------- ---------- ----------
5,451.3 5,545.2 5,636.7
--------- ---------- ----------
Interest
Interest expense............................................................ 68.0 89.9 89.4
Interest income............................................................. 17.0 31.4 28.0
--------- ---------- ----------
51.0 58.5 61.4
--------- ---------- ----------
Equity Income................................................................. 17.8 15.8 14.6
--------- ---------- ----------
Income before Income Taxes.................................................... 478.5 634.7 509.4
Provision for Income Taxes.................................................... 156.3 234.8 178.3
--------- ---------- ----------
Income before Extraordinary Item and Cumulative Effect of Accounting
Changes...................................................................... 322.2 399.9 331.1
Extraordinary Item -- Loss on Early Redemption of Debt........................ (8.6)
Cumulative Effect of Accounting Changes....................................... (144.5)
--------- ---------- ----------
Net Income.................................................................... $ 322.2 $ 246.8 $ 331.1
--------- ---------- ----------
--------- ---------- ----------
Earnings Per Common Share
Income before extraordinary item and cumulative effect of accounting
changes.................................................................... $ 2.40 $ 2.88 $ 2.35
Extraordinary item -- loss on early redemption of debt...................... (0.06)
Cumulative effect of accounting changes..................................... (1.04)
--------- ---------- ----------
Net income.................................................................. $ 2.40 $ 1.78 $ 2.35
--------- ---------- ----------
--------- ---------- ----------
Average Number of Common Shares Outstanding................................... 134.2 138.5 140.9
</TABLE>
See accompanying Notes to Financial Statements.
20
<PAGE>
STATEMENT OF FINANCIAL POSITION
HONEYWELL INC. AND SUBSIDIARIES
(DOLLARS IN MILLIONS)
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31
-----------------------
1993 1992
---------- -----------
<S> <C> <C>
Current Assets
Cash and cash equivalents............................................................. $ 242.3 $ 342.4
Short-term investments................................................................ 13.8 3.8
Receivables........................................................................... 1,275.9 1,214.5
Inventories........................................................................... 760.1 827.6
Deferred income taxes................................................................. 258.1 319.5
---------- -----------
2,550.2 2,707.8
Investments and Advances................................................................ 227.7 162.1
Property, Plant and Equipment
Property, plant and equipment......................................................... 2,549.4 2,497.9
Less accumulated depreciation......................................................... 1,487.4 1,384.4
---------- -----------
1,062.0 1,113.5
Other Assets
Long-term receivables................................................................. 51.3 42.0
Goodwill.............................................................................. 133.0 139.5
Patents, licenses and trademarks...................................................... 89.8 114.7
Software and other intangibles........................................................ 266.3 301.2
Deferred income taxes................................................................. 63.8 156.8
Other................................................................................. 154.0 132.5
---------- -----------
Total Assets........................................................................ $ 4,598.1 $ 4,870.1
---------- -----------
---------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Short-term debt....................................................................... $ 187.9 $ 188.4
Accounts payable...................................................................... 381.9 357.2
Customer advances..................................................................... 61.4 85.0
Accrued compensation and benefit costs................................................ 433.2 440.6
Accrued income taxes.................................................................. 320.8 338.9
Deferred income taxes................................................................. 10.2
Other accrued liabilities............................................................. 460.7 559.1
---------- -----------
1,856.1 1,969.2
Long-Term Debt.......................................................................... 504.0 512.1
Other Liabilities
Accrued benefit costs................................................................. 378.6 389.2
Deferred income taxes................................................................. 27.6 147.1
Other................................................................................. 58.8 62.1
Stockholders' Equity
Common stock -- $1.50 par value
Authorized -- 250,000,000 shares
Issued -- 1993 -- 188,328,570 shares.................................................. 282.5
1992 -- 188,439,504 shares................................................... 282.7
Additional paid-in capital............................................................ 431.5 423.8
Retained earnings..................................................................... 2,447.3 2,247.0
Treasury stock -- 1993 -- 56,769,007 shares........................................... (1,428.4)
1992 -- 51,759,304 shares............................................ (1,219.0)
Accumulated foreign currency translation.............................................. 52.9 55.9
Pension liability adjustment.......................................................... (12.8)
---------- -----------
1,773.0 1,790.4
---------- -----------
Total Liabilities and Stockholders' Equity.......................................... $ 4,598.1 $ 4,870.1
---------- -----------
---------- -----------
</TABLE>
See accompanying Notes to Financial Statements.
21
<PAGE>
STATEMENT OF CASH FLOWS
HONEYWELL INC. AND SUBSIDIARIES
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
-------------------------------
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Cash Flows from Operating Activities
Net income..................................................................... $ 322.2 $ 246.8 $ 331.1
Adjustments to reconcile net income to net cash flows from operating
activities:
Cumulative effect of accounting changes...................................... 144.5
Extraordinary item -- loss on early redemption of debt....................... 8.6
Depreciation................................................................. 235.3 242.8 238.5
Amortization of intangibles.................................................. 49.6 49.9 47.5
Deferred income taxes........................................................ 28.8 6.7 33.7
Equity income, net of dividends received..................................... (14.5) (13.8) (12.3)
Loss on sale of assets....................................................... 6.2 1.6 4.4
Contributions to employee stock plans........................................ 28.7 40.0 34.3
Increase in receivables...................................................... (62.7) (136.0) (48.2)
Decrease in inventories...................................................... 54.2 67.7 63.6
Increase (decrease) in accounts payable...................................... 28.8 (60.8) 21.5
Increase (decrease) in accrued income taxes and interest..................... 8.3 (25.7) (38.7)
Other changes in working capital, excluding short-term investments and
short-term debt............................................................. (146.6) (85.6) (150.9)
Other noncurrent items -- net................................................ (63.5) 44.9 (35.6)
--------- --------- ---------
Net cash flows from operating activities......................................... 474.8 531.6 488.9
--------- --------- ---------
Cash Flows from Investing Activities
Reduction of investment in Sperry Aerospace Group.............................. 20.0
Proceeds from sale of assets................................................... 46.8 54.7 27.1
Capital expenditures........................................................... (232.1) (244.1) (240.2)
Investment in acquisitions..................................................... (14.2) (83.5)
(Increase) decrease in short-term investments.................................. (10.2) 6.8 26.4
Other -- net................................................................... (23.3) (7.1) (10.6)
--------- --------- ---------
Net cash flows from investing activities......................................... (213.0) (273.2) (197.3)
--------- --------- ---------
Cash Flows from Financing Activities
Net increase in short-term debt................................................ 2.8 90.1 66.9
Proceeds from issuance of long-term debt....................................... 0.6 2.6 99.1
Repayment of long-term debt.................................................... (7.3) (199.7) (81.5)
Purchase of treasury stock..................................................... (241.2) (188.2) (123.6)
Proceeds from employee stock plans............................................. 17.6 27.4 16.7
Dividends paid................................................................. (122.0) (116.7) (108.3)
--------- --------- ---------
Net cash flows from financing activities......................................... (349.5) (384.5) (130.7)
--------- --------- ---------
Effect of exchange rate changes on cash.......................................... (12.4) (28.7) 6.0
--------- --------- ---------
Increase (decrease) in cash and cash equivalents................................. (100.1) (154.8) 166.9
Cash and cash equivalents at beginning of year................................... 342.4 497.2 330.3
--------- --------- ---------
Cash and cash equivalents at end of year......................................... $ 242.3 $ 342.4 $ 497.2
--------- --------- ---------
--------- --------- ---------
</TABLE>
See accompanying Notes to Financial Statements.
22
<PAGE>
NOTES TO FINANCIAL STATEMENTS
HONEYWELL INC. AND SUBSIDIARIES
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
NOTE 1 -- ACCOUNTING POLICIES
CONSOLIDATION
The consolidated financial statements and accompanying data include
Honeywell Inc. and subsidiaries. All material intercompany transactions are
eliminated.
SALES
Product sales are recorded when title is passed to the customer, which
usually occurs at the time of delivery or acceptance. Sales under long-term
contracts are recorded on the percentage-of-completion method measured on the
cost-to-cost basis for engineering-type contracts and the units-of-delivery
basis for production-type contracts. Provisions for anticipated losses on
long-term contracts are recorded in full when they become evident.
INCOME TAXES
Income taxes are accounted for in accordance with Statement of Financial
Accounting Standards No. 109 (see Note 4). Interest costs related to prior
years' tax issues are included in the provision for income taxes in 1993.
EARNINGS PER COMMON SHARE
Earnings per common share are based on the average number of common shares
outstanding during the year.
STATEMENT OF CASH FLOWS
Cash equivalents are all highly liquid, temporary cash investments purchased
with a maturity of three months or less.
Cash flows from contracts used to hedge cash dividend payments from
subsidiaries are classified as part of the effect of exchange rate changes on
cash.
INVENTORIES
Inventories are valued at the lower of cost or market. Cost is determined
using the weighted-average method. Market is based on net realizable value.
Payments received from customers relating to the uncompleted portion of
contracts are deducted from applicable inventories.
INVESTMENTS
Investments in companies owned 20 to 50 percent are accounted for using the
equity method.
PROPERTY
Property is carried at cost and depreciated primarily using the
straight-line method over estimated useful lives of 10 to 40 years for buildings
and improvements, and three to 15 years for machinery and equipment.
INTANGIBLES
Intangibles are carried at cost and amortized using the straight-line method
over their estimated useful lives of not more than 40 years for goodwill, three
to 17 years for patents, licenses and trademarks, and six to 24 years for
software and other intangibles. Intangibles also include the asset resulting
from recognition of the defined benefit pension plan minimum liability, which is
amortized as part of net periodic pension cost.
23
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
HONEYWELL INC. AND SUBSIDIARIES
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
NOTE 1 -- ACCOUNTING POLICIES (CONTINUED)
FOREIGN CURRENCY
Foreign currency assets and liabilities are generally translated into U.S.
dollars using the exchange rates in effect at the statement of financial
position date. Results of operations are generally translated using the average
exchange rates throughout the period. The effects of exchange rate fluctuations
on translation of assets, liabilities and hedges of cash dividend payments from
subsidiaries are reported as accumulated foreign currency translation and
reduced stockholders' equity $3.0 in 1993, $74.8 in 1992 and $0.1 in 1991.
The carrying amounts of foreign currency contracts purchased to hedge firm
foreign currency commitments are deferred and included in the measurement of the
related foreign currency transaction. Foreign currency contracts that are not
hedges of firm foreign currency commitments are marked to market on a current
basis.
Gains and losses from foreign currency transactions are included in selling,
general and administrative expenses on the income statement and were not
material in any year.
POSTEMPLOYMENT BENEFITS
In 1992, Honeywell adopted Statement of Financial Accounting Standards No.
112 (SFAS 112), "Employers' Accounting for Postemployment Benefits." The pre-tax
cumulative effect of this accounting change to January 1, 1992, was $39.7 and
resulted in a reduction in net income of $24.6 ($0.18 per share). The effect of
this accounting change for 1992 was a decrease in income before income taxes of
$3.8, or $2.5 ($0.02 per share) after income taxes.
The enactment by Congress of the Omnibus Budget Reconciliation Act of 1993,
which made Medicare the primary provider of medical benefits for disabled former
employees after 29 months of disability, reduced the accumulated benefit
obligation for postemployment benefits by $33.4 in the fourth quarter of 1993.
This change in estimate is included in cost of sales on the income statement.
RECLASSIFICATIONS
Certain amounts in the 1992 statement of financial position have been
reclassified to conform to the presentation of similar amounts in the 1993
statement of financial position.
NOTE 2 -- ACQUISITIONS AND SALE OF ASSETS
Honeywell acquired eight companies in 1993 and nine companies in 1992 for
$14.2 and $83.5 in cash, respectively. These acquisitions were accounted for as
purchases, and accordingly, the assets and liabilities of the acquired entities
have been recorded at their estimated fair values at the dates of acquisition.
The excess of purchase price over the estimated fair values of the net assets
acquired, in the amount of $11.8 in 1993 and $44.2 in 1992, has been recorded as
goodwill and is amortized over estimated useful lives. The pro forma results for
1993 and 1992, assuming these acquisitions had been made at the beginning of the
year, would not be significantly different from reported results.
In 1993, Honeywell sold its Keyboard Division to Key Tronic Corporation for
$29.7 in cash, notes and common stock. Proceeds from other asset sales,
including the collection of notes receivable and sale of stock received from
asset sales made in previous years, amounted to $22.9. Gains and losses from
asset sales were not material in any year and are included in selling, general
and administrative expenses on the income statement.
24
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
HONEYWELL INC. AND SUBSIDIARIES
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
NOTE 3 -- LITIGATION SETTLEMENTS AND SPECIAL CHARGES
LITIGATION SETTLEMENTS
On April 16, 1993, Honeywell announced the settlement of its lawsuits
against the Unisys Corporation and other parties in connection with Honeywell's
1986 purchase of the Sperry Aerospace Group. Honeywell received $70.0 in cash
and notes and recorded a gain of $22.4 in the second quarter of 1993 to offset
previously incurred costs associated with the matter. In addition, the portion
of the purchase price originally allocated to goodwill and other intangibles was
reduced by $47.6.
Honeywell has reached agreement with various camera manufacturers for their
use of Honeywell's patented automatic focus camera technology. The total of all
one-time settlements recorded in these matters, after associated expenses,
resulted in a gain of $10.2 in the third quarter of 1993 and $287.9 in 1992.
Several settlements also included licensing agreements that require the payment
of royalties to Honeywell based upon the amount of product manufactured or sold
by the licensee. Autofocus royalty income from the licensing agreements amounted
to $31.4 in 1993 and $14.9 in 1992, and is included in selling, general and
administrative expenses on the income statement.
SPECIAL CHARGES
Honeywell recorded special charges of $23.2 and $28.0 in the second and
third quarters of 1993, respectively, for productivity initiatives to strengthen
the company's competitiveness. In 1992, special charges of $128.4 were recorded
to appropriately size the Space and Aviation Control business segment and to
reposition the Home and Building Control and Industrial Control business
segments to capitalize on emerging market opportunities. Special charges include
costs for work-force reductions, worldwide facilities consolidation,
organizational changes and other cost accruals.
NOTE 4 -- INCOME TAXES
The components of income before income taxes consist of the following:
<TABLE>
<CAPTION>
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Domestic........................................................ $ 316.9 $ 467.7 $ 282.9
Foreign......................................................... 161.6 167.0 226.5
--------- --------- ---------
$ 478.5 $ 634.7 $ 509.4
</TABLE>
The provision for income taxes on that income is as follows:
<TABLE>
<CAPTION>
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Current tax expense
United States................................................. $ 81.7 $ 140.2 $ 79.2
Foreign....................................................... 36.0 52.5 60.7
State and local............................................... 11.3 35.7 5.5
--------- --------- ---------
Total current................................................. 129.0 228.4 145.4
--------- --------- ---------
Deferred tax expense
United States................................................. 17.9 3.1 12.2
Foreign....................................................... 5.8 2.5 15.6
State and local............................................... 3.6 0.8 5.1
--------- --------- ---------
Total deferred................................................ 27.3 6.4 32.9
--------- --------- ---------
Provision for income taxes...................................... $ 156.3 $ 234.8 $ 178.3
</TABLE>
The enactment by Congress of the Omnibus Budget Reconciliation Act of 1993,
which raised the U.S. federal statutory income tax rate for corporations from 34
percent to 35 percent retroactive to
25
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
HONEYWELL INC. AND SUBSIDIARIES
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
NOTE 4 -- INCOME TAXES (CONTINUED)
January 1, 1993, did not have a material impact on the 1993 provision for income
taxes; however, the enactment of this legislation did result in a one-time gain
of $9.2 million ($0.07 per share) in the third quarter of 1993 from the
revaluation of deferred tax assets.
In 1992, Honeywell adopted Statement of Financial Accounting Standards No.
109 (SFAS 109), "Accounting for Income Taxes," and elected not to restate prior
years. The cumulative effect of this accounting change to January 1, 1992, was
an increase in net income of $31.4 ($0.23 per share), resulting from the
recognition of unrecorded deferred tax assets. This accounting change had no
effect on the 1992 provision for income taxes.
A reconciliation of the provision for income taxes to the amount computed
using U.S. federal statutory rates is as follows:
<TABLE>
<CAPTION>
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Taxes on income at U.S. federal statutory rates........................... $ 167.5 $ 215.8 $ 173.2
Tax effects of foreign income............................................. (26.0) (1.8) 21.0
State taxes............................................................... 10.9 24.1 7.0
Adjustments to effective tax rates used in recording tax assets and
liabilities.............................................................. (1.5) (29.8)
Other..................................................................... 3.9 (1.8) 6.9
--------- --------- ---------
Provision for income taxes................................................ $ 156.3 $ 234.8 $ 178.3
</TABLE>
Taxes paid were $91.8 in 1993, $244.0 in 1992 and $190.4 in 1991.
Deferred income taxes are provided for the temporary differences between the
financial reporting basis and the tax basis of Honeywell's assets and
liabilities. Temporary differences comprising the net deferred taxes shown on
the statement of financial position are:
<TABLE>
<CAPTION>
1993 1992
--------- ---------
<S> <C> <C>
Employee benefits................................................................... $ 177.8 $ 180.4
Miscellaneous accruals.............................................................. 96.0 114.2
Excess of tax over book depreciation................................................ (79.2) (75.8)
Asset valuation reserves............................................................ 42.5 43.4
Interest............................................................................ 28.7
Long-term contracts, installment sales and sale/leasebacks deferred for tax
purposes........................................................................... 24.8 14.7
Losses on discontinuance of product lines........................................... 2.3 4.2
State taxes......................................................................... 29.8 36.1
Pension liability adjustment........................................................ 8.2
Other............................................................................... (18.1) (16.7)
--------- ---------
$ 284.1 $ 329.2
</TABLE>
The components of net deferred taxes shown on the statement of financial
position are:
<TABLE>
<CAPTION>
1993 1992
--------- ---------
<S> <C> <C>
Deferred tax assets................................................................. $ 445.7 $ 476.3
Deferred tax liabilities............................................................ 161.6 147.1
</TABLE>
26
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
HONEYWELL INC. AND SUBSIDIARIES
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
NOTE 4 -- INCOME TAXES (CONTINUED)
Provision has not been made for U.S. or additional foreign taxes on $654.7
of undistributed earnings of international subsidiaries as those earnings are
considered to be permanently reinvested in the operations of those subsidiaries.
It is not practicable to estimate the amount of tax that might be payable on the
eventual remittance of such earnings.
At December 31, 1993, foreign subsidiaries had tax operating loss
carryforwards of $5.4.
NOTE 5 -- RECEIVABLES
Receivables have been reduced by an allowance for doubtful accounts as
follows:
<TABLE>
<CAPTION>
1993 1992
--------- ---------
<S> <C> <C>
Receivables, current............................................... $ 24.3 $ 26.7
Long-term receivables.............................................. 0.5 0.8
</TABLE>
Receivables include approximately $21.1 in 1993 and $26.3 in 1992 billed to
customers but not paid pursuant to contract retainage provisions. These balances
are due upon completion of the contracts, generally within one year.
Unbilled receivables related to long-term contracts amount to $275.6 in 1993
and $241.1 in 1992 and are generally billable and collectible within one year.
Long-term, interest-bearing notes receivable from the sale of assets have
been reduced by valuation reserves of $3.6 in 1993 and $2.9 in 1992 to an amount
that approximates realizable value.
In 1992, Honeywell entered into a three-year agreement, whereby it can sell
an undivided interest in a designated pool of trade accounts receivable up to a
maximum of $50.0 on an ongoing basis. As collections reduce accounts receivable
sold, Honeywell may sell an additional undivided interest in new receivables to
bring the amount sold up to the $50.0 maximum. The uncollected balance of
receivables sold amounted to $37.9 and $16.0 at December 31, 1993 and 1992,
respectively, and averaged $21.7 and $11.6 during those respective years. The
discount recorded on sale of receivables is included in selling, general and
administrative expenses on the income statement and amounted to $0.7, $0.6 and
$5.3 in 1993, 1992 and 1991, respectively. Honeywell, as agent for the
purchaser, retains collection and administrative responsibilities for the
participating interests sold.
NOTE 6 -- INVENTORIES
<TABLE>
<CAPTION>
1993 1992
--------- ---------
<S> <C> <C>
Finished goods.................................................. $ 265.3 $ 246.4
Inventories related to long-term contracts...................... 97.7 139.1
Work in process................................................. 168.1 196.1
Raw materials and supplies...................................... 229.0 246.0
--------- ---------
$ 760.1 $ 827.6
</TABLE>
Inventories related to long-term contracts are net of payments received from
customers relating to the uncompleted portions of such contracts in the amounts
of $36.8 and $65.0 at December 31, 1993 and 1992, respectively.
27
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
HONEYWELL INC. AND SUBSIDIARIES
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
NOTE 7 -- PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
1993 1992
--------- ----------
<S> <C> <C>
Land.................................................................. $ 77.1 $ 78.5
Buildings and improvements............................................ 589.9 621.7
Machinery and equipment............................................... 1,814.2 1,734.4
Construction in progress.............................................. 68.2 63.3
--------- ----------
$ 2,549.4 $ 2,497.9
</TABLE>
NOTE 8 -- FOREIGN SUBSIDIARIES
The following is a summary of financial data pertaining to foreign
subsidiaries:
<TABLE>
<CAPTION>
1993 1992 1991
--------- ---------- ----------
<S> <C> <C> <C>
Income before extraordinary item and cumulative effect of
accounting changes....................................... $ 119.8 $ 112.0 $ 150.7
Assets.................................................... $ 1,546.5 $ 1,554.7 $ 1,720.1
Liabilities............................................... 620.5 655.7 714.8
--------- ---------- ----------
Net assets................................................ $ 926.0 $ 899.0 $ 1,005.3
</TABLE>
Insofar as can be reasonably determined, there are no foreign-exchange
restrictions that materially affect the financial position or the operating
results of Honeywell and its subsidiaries.
NOTE 9 -- INVESTMENTS IN OTHER COMPANIES
Following is a summary of financial data pertaining to companies 20 to 50
percent owned. The principal company included is Yamatake-Honeywell Co., Ltd.,
of which Honeywell owns 24.2 percent of the outstanding common stock.
<TABLE>
<CAPTION>
1993 1992 1991
--------- ---------- ----------
<S> <C> <C> <C>
Sales..................................................... $ 1,866.7 $ 1,656.3 $ 1,503.4
Gross profit.............................................. 682.4 607.4 556.3
Net income................................................ 69.8 62.8 61.3
Equity in net income...................................... 17.8 15.8 14.6
Current assets............................................ $ 1,297.0 $ 1,035.4 $ 1,020.9
Noncurrent assets......................................... 588.2 502.8 401.9
--------- ---------- ----------
1,885.2 1,538.2 1,422.8
--------- ---------- ----------
Current liabilities....................................... 704.5 687.0 678.1
Noncurrent liabilities.................................... 359.3 200.1 221.6
--------- ---------- ----------
1,063.8 887.1 899.7
--------- ---------- ----------
Net assets................................................ $ 821.4 $ 651.1 $ 523.1
Equity in net assets...................................... $ 200.3 $ 158.3 $ 126.4
</TABLE>
28
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
HONEYWELL INC. AND SUBSIDIARIES
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
NOTE 10 -- INTANGIBLE ASSETS
Intangible assets have been reduced by accumulated amortization as follows:
<TABLE>
<CAPTION>
1993 1992
--------- ---------
<S> <C> <C>
Goodwill.................................................................. $ 34.3 $ 30.4
Patents, licenses and trademarks.......................................... 170.0 144.2
Software and other intangibles............................................ 135.4 117.8
</TABLE>
NOTE 11 -- DEBT
SHORT-TERM DEBT
Honeywell has lines of credit available totaling $2,271.9 at December 31,
1993. Domestic revolving credit lines with 14 banks total $1,875.0, which
management believes is adequate to meet its financing requirements, including
support of commercial paper and bank note borrowings and an appeal bond that
could be required in the Litton litigation (see Note 19). These domestic lines
have commitment fee requirements. There were no borrowings on these lines at
December 31, 1993. The remaining credit facilities of $396.9 have been arranged
by non-U.S. subsidiaries in accordance with customary lending practices in their
respective countries of operation. Borrowings against these lines amounted to
$6.6 at December 31, 1993.
Short-term debt consists of the following:
<TABLE>
<CAPTION>
1993 1992
--------- ---------
<S> <C> <C>
Commercial paper.......................................................... $ 181.0 $ 161.0
Notes payable............................................................. 6.6 21.1
Current maturities of long-term debt...................................... 0.3 6.3
--------- ---------
$ 187.9 $ 188.4
</TABLE>
LONG-TERM DEBT
<TABLE>
<CAPTION>
1993 1992
--------- ---------
<S> <C> <C>
Honeywell Inc.
8% Dual-currency yen/U.S. dollar notes due 1995......................... $ 116.7 $ 114.9
7 7/8% due 1996......................................................... 100.0 100.0
6 1/4% Deutsche mark bonds due 1997..................................... 88.0 92.7
8 5/8% due 2006......................................................... 100.0 100.0
7.7% to 10 1/2% due 1995 to 2010........................................ 12.0 12.1
Subsidiaries
9.6% Canadian dollar notes due 1996..................................... 86.4 90.9
9.0% to 12.75% due 1994 to 2020, various currencies..................... 1.2 7.8
--------- ---------
504.3 518.4
Less amount included in short-term debt................................. 0.3 6.3
--------- ---------
$ 504.0 $ 512.1
</TABLE>
The 8 percent dual-currency yen/U.S. dollar notes due 1995 are repayable at
a fixed exchange rate and are linked to a currency exchange agreement that
results in a fixed U.S. dollar interest cost of 10.5 percent.
The 6 1/4 percent Deutsche mark bonds due 1997 are linked to a currency
exchange agreement that converts principal and interest payments into fixed U.S.
dollar obligations with an interest cost of 8.17 percent.
29
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
HONEYWELL INC. AND SUBSIDIARIES
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
NOTE 11 -- DEBT (CONTINUED)
In 1992, Honeywell entered into interest rate swap agreements effectively
converting $100.0 of its 8 5/8 percent debentures due 2006 from fixed-rate debt
to floating-rate debt based on six-month LIBOR rates. During 1993, $50.0 of the
$100.0 swap was terminated resulting in a gain of $0.9, which is being amortized
over the remaining life of the swap agreement. In 1993, Honeywell entered into
interest rate swap agreements effectively converting the 9.6 percent Canadian
dollar notes due 1996 to floating-rate debt based on three-month Canadian
bankers acceptance rates. The differential to be paid or received is accrued as
interest rates change and is charged to interest expense over the lives of the
agreements, which expire in September 1995 for the 8 5/8 percent debentures and
December 1996 for the 9.6 percent Canadian dollar notes.
Honeywell is exposed to credit risk to the extent of nonperformance by the
counterparties to the currency exchange agreements and the interest rate swaps
discussed above. However, the credit ratings of the counterparties, which
consist of a diversified group of financial institutions, are regularly
monitored and risk of default is considered remote.
In 1992, Honeywell redeemed its 9 3/8 percent debentures due 2005 to 2009,
its 8.2 percent debentures due 1996 to 1998, its 9 7/8 percent debentures due
1998 to 2017, and certain notes due 1993 to 2004, amounting to $9.6 with
interest rates ranging from 7.5 percent to 11.75 percent. These early
redemptions required the payment of premiums and the recognition of unamortized
discounts and deferred cost resulting in the recording of an extraordinary loss
of $13.8, or $8.6 ($0.06 per share) after income taxes. Honeywell redeemed an
additional $5.9 of notes due 1993 to 2000 with interest rates ranging from 10
percent to 12.1 percent in the first quarter of 1993 with no additional income
statement impact.
Annual sinking-fund and maturity requirements for the next five years on
long-term debt outstanding at December 31, 1993, are as follows:
<TABLE>
<S> <C>
1994............................................... $ 0.3
1995............................................... 126.8
1996............................................... 186.5
1997............................................... 88.1
1998............................................... 0.1
</TABLE>
Interest paid amounted to $63.9, $98.5 and $96.9 in 1993, 1992 and 1991,
respectively.
NOTE 12 -- FAIR VALUE OF FINANCIAL INSTRUMENTS
The estimated fair value of Honeywell's financial instruments at December
31, 1993 and 1992, is as follows:
<TABLE>
<CAPTION>
1993 1992
-------------------- --------------------
CARRYING FAIR Carrying Fair
AMOUNT VALUE Amount Value
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Long-term debt........................................... $ (504.3) $ (569.0) $ (518.4) $ (551.6)
Interest-rate and currency contracts..................... 10.7 22.3 15.8 10.0
</TABLE>
The estimated fair value of long-term debt is based on quoted market prices
for the same or similar issues or on current rates available to Honeywell for
debt of the same remaining maturities. The estimated fair value of interest-rate
and currency contracts is based on quotes obtained from various financial
institutions that deal in these types of instruments. The estimated fair values
of all other financial instruments approximate their carrying amounts in the
statement of financial position.
30
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
HONEYWELL INC. AND SUBSIDIARIES
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
NOTE 13 -- LEASING ARRANGEMENTS
As lessee, Honeywell has minimum annual lease commitments outstanding at
December 31, 1993, with the majority of the leases having initial periods
ranging from one to 10 years. Following is a summary of operating lease
information.
<TABLE>
<CAPTION>
OPERATING
LEASES
-----------
<S> <C>
1994........................................................... $ 101.7
1995........................................................... 81.8
1996........................................................... 57.7
1997........................................................... 41.2
1998........................................................... 28.1
1999 and beyond................................................ 125.8
-----------
$ 436.3
</TABLE>
Rent expense for operating leases was $134.2 in 1993, $128.0 in 1992 and
$119.6 in 1991.
Substantially all leases are for plant, warehouse, office space and
automobiles. A number of the leases contain renewal options ranging from one to
10 years.
NOTE 14 -- CAPITAL STOCK
<TABLE>
<CAPTION>
ADDITIONAL
COMMON PAID-IN TREASURY
STOCK CAPITAL STOCK
----------- ----------- -----------
<S> <C> <C> <C>
Balance January 1, 1991............................................. $ 141.8 $ 522.4 $ (992.2)
Purchase of treasury stock --
2,108,327 shares.................................................. (123.6)
Issued for employee stock plans --
1,313,025 treasury shares......................................... 8.0 47.0
157,696 shares canceled........................................... (0.2)
----------- ----------- -----------
Balance December 31, 1991........................................... 141.6 530.4 (1,068.8)
Purchase of treasury stock --
5,586,254 shares.................................................. (192.0)
Issued for employee stock plans --
2,965,328 treasury shares......................................... 35.0 41.8
355,342 shares canceled........................................... (0.5)
Adjustment for two-for-one stock split --
94,397,423 shares................................................. 141.6 (141.6)
----------- ----------- -----------
Balance December 31, 1992........................................... 282.7 423.8 (1,219.0)
Purchase of treasury stock --
6,916,868 shares.................................................. (240.0)
Issued for employee stock plans --
1,907,165 treasury shares......................................... 7.7 30.6
110,934 shares canceled........................................... (0.2)
----------- ----------- -----------
Balance December 31, 1993........................................... $ 282.5 $ 431.5 $ (1,428.4)
</TABLE>
31
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
HONEYWELL INC. AND SUBSIDIARIES
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
NOTE 14 -- CAPITAL STOCK (CONTINUED)
STOCK SPLIT
On November 9, 1992, the board of directors authorized a two-for-one stock
split in the form of a stock dividend payable to stockholders of record November
27, 1992. All references in the financial statements to average number of shares
outstanding and related prices, per share amounts, stock plan data and the 1992
share amounts in the table above have been restated to reflect this split.
KEY EMPLOYEE PLANS
In 1993, the board of directors adopted, and the stockholders approved, the
1993 Honeywell Stock and Incentive Plan. The plan, which terminates December 31,
1998, provides for the award of up to 7,500,000 shares of common stock. The
purpose of the plan is to further the growth, development and financial success
of Honeywell and its subsidiaries by aligning the personal interests of key
employees, through the ownership of shares of common stock and through other
incentives, to those of Honeywell stockholders. The plan is further intended to
provide flexibility to Honeywell in its ability to compensate key employees and
to motivate, attract and retain the services of such key employees who have the
ability to enhance the value of Honeywell and its subsidiaries. Awards made
under the plan may be in the form of stock options, stock appreciation rights or
other stock based awards. The plan replaced existing similar plans. Awards
currently outstanding under those plans are not affected, but no new awards will
be made. There were 15,118,538 shares reserved for all key employee plans at
December 31, 1993.
Stock options to purchase common stock have been granted to key employees at
100 percent of the market price at time of granting, pursuant to plans approved
by the stockholders. The following is a summary of stock options:
<TABLE>
<CAPTION>
1993 1992 1991
---------- ----------- -----------
<S> <C> <C> <C>
Granted --
Number of shares.................................... 969,173 1,353,224 1,014,184
Price per share..................................... $31-$38 $31-$37 $21-$32
Exercised --
Number of shares.................................... 1,020,769 1,926,649 1,508,424
Price per share..................................... $12-$33 $8-$30 $8-$26
Outstanding December 31 --
Number of shares.................................... 4,739,683 4,800,613 5,382,932
Price per share..................................... $12-$38 $12-$37 $8-$32
</TABLE>
Options totaling 3,779,200 shares at prices ranging from $12 to $37 per
share were exercisable at December 31, 1993.
Restricted common stock is issued to certain key employees as compensation.
Restricted shares are awarded with a fixed restriction period, usually five
years, or a restriction period dependent on the achievement of performance goals
within a specified measurement period. Participants have the rights of
stockholders, including the right to receive cash dividends and the right to
vote. Restricted shares forfeited revert to Honeywell at no cost. Restricted
shares issued totaled 533,995 in 1993, 47,812 in 1992 and 174,518 in 1991. The
cost of restricted stock is charged to income over the restriction period and
amounted to $6.3 in 1993, $6.5 in 1992 and $6.4 in 1991. At December 31,
restricted shares outstanding for key employee plans totaled 775,861 in 1993,
412,872 in 1992 and 968,750 in 1991.
32
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
HONEYWELL INC. AND SUBSIDIARIES
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
NOTE 14 -- CAPITAL STOCK (CONTINUED)
EMPLOYEE STOCK MATCH AND STOCK PURCHASE PLANS
In 1990, Honeywell adopted Stock Match and Performance Stock Match plans
under which Honeywell matches, in the form of Honeywell common stock, certain
eligible U.S. employee savings plan contributions. Shares issued under the stock
match plans totaled 643,913 shares in 1993, 977,716 shares in 1992 and 933,344
shares in 1991 at a cost of $22.3, $33.3 and $27.9, respectively. There were
2,348,295 shares reserved for employee stock match plans at December 31, 1993.
Honeywell has granted to eligible foreign subsidiary employees the right to
purchase common stock, principally at the lower of 85 percent of the market
price at the time of grant or at the time of purchase. At December 31, 1993,
there were 335,537 shares reserved for foreign subsidiary employee stock
purchase plans. Total shares issued under the foreign stock purchase plans
amounted to 49,250 in 1992 and 66,096 in 1991 at an average price per share of
$33 and $27, respectively. There were no shares issued in 1993.
STOCK PLEDGE
In 1993, Honeywell pledged to the Honeywell Foundation a 5-year option to
purchase 2,000,000 shares of common stock at $33 per share. This option is
exercisable in whole or in part, subject to certain conditions, from time to
time during its term. No shares were purchased under this option in 1993 and at
December 31, 1993, there were 2,000,000 shares reserved for this pledge.
PREFERENCE STOCK
Twenty-five million preference shares with a par value of $1 have been
authorized. None has been issued at December 31, 1993.
NOTE 15 -- RETAINED EARNINGS
<TABLE>
<CAPTION>
1993 1992 1991
--------- ---------- ----------
<S> <C> <C> <C>
Balance January 1......................................... $ 2,247.0 $ 2,116.9 $ 1,894.1
Net income................................................ 322.2 246.8 331.1
Dividends
1993-$0.9075 PER SHARE.................................. (121.9)
1992-$0.84125 per share................................. (116.7)
1991-$0.76875 per share................................. (108.3)
--------- ---------- ----------
Balance December 31....................................... $ 2,447.3 $ 2,247.0 $ 2,116.9
</TABLE>
Included in retained earnings are undistributed earnings of companies 20 to
50 percent owned, amounting to $121.3 at December 31, 1993.
NOTE 16 -- PENSION PLANS
Honeywell and its subsidiaries have noncontributory defined benefit pension
plans that cover substantially all of their U.S. employees. The plan covering
non-union employees provides pension benefits based on employee average earnings
during the highest paid 60 consecutive calendar months of employment during the
10 years prior to retirement. The plan covering union employees provides pension
benefits of stated amounts for each year of credited service. Funding for these
plans is provided solely through contributions from Honeywell determined by the
board of directors after consideration of recommendations from the plans'
independent actuary. Such recommendations are based on actuarial valuations of
benefits payable under the plans.
33
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
HONEYWELL INC. AND SUBSIDIARIES
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
NOTE 16 -- PENSION PLANS (CONTINUED)
The components of net periodic pension cost for U.S. defined benefit pension
plans are as follows:
<TABLE>
<CAPTION>
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Service cost of benefits earned during the period...................... $ 48.3 $ 48.1 $ 45.4
Interest cost of projected benefit obligation.......................... 198.9 192.2 175.6
Actual return on assets................................................ (225.7) (147.7) (360.7)
Net amortization and deferral.......................................... 69.3 (5.1) 212.2
--------- --------- ---------
$ 90.8 $ 87.5 $ 72.5
</TABLE>
Assumptions used in the accounting for the U.S. defined benefit plans were:
<TABLE>
<CAPTION>
1993 1992 1991
---------- ----------- -----------
<S> <C> <C> <C>
Discount rate used in determining present values............................. 7.5% 8.75% 8.75%
Annual increase in future compensation levels................................ 4.0% 5.0% 5.5%
Expected long-term rate of return on assets.................................. 8.5% 8.75% 8.75%
</TABLE>
Employees in foreign countries who are not U.S. citizens are covered by
various retirement benefit arrangements, some of which are considered to be
defined benefit pension plans for accounting purposes. The cost of all foreign
pension plans charged to income was $14.2 in 1993, $9.0 in 1992 and $9.8 in
1991.
The components of net periodic pension cost for foreign defined benefit
pension plans are as follows:
<TABLE>
<CAPTION>
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Service cost of benefits earned during the period......................... $ 25.8 $ 29.8 $ 24.1
Interest cost of projected benefit obligation............................. 46.3 47.0 40.5
Actual return on assets................................................... (111.7) (38.4) (76.5)
Net amortization and deferral............................................. 50.7 (32.8) 16.0
--------- --------- ---------
$ 11.1 $ 5.6 $ 4.1
</TABLE>
Assumptions used in the accounting for foreign defined benefit plans were:
<TABLE>
<CAPTION>
1993 1992 1991
---------- ------------ ------------
<S> <C> <C> <C>
Discount rate used in determining present values................ 5.0-9.0% 5.0-9.5% 6.0-11.0%
Annual increase in future compensation levels................... 2.0-8.0% 2.0-8.0% 2.0-9.0%
Expected long-term rate of return on assets..................... 6.0-9.5% 6.0-10.3% 7.0-10.3%
</TABLE>
34
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
HONEYWELL INC. AND SUBSIDIARIES
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
NOTE 16 -- PENSION PLANS (CONTINUED)
The plans' funded status as of September 30 and amounts recognized in
Honeywell's statement of financial position for its pension plans are summarized
below.
<TABLE>
<CAPTION>
Plans Whose Plans Whose
Assets Exceed Accumulated
Accumulated Benefits
1993 (U.S. AND FOREIGN) Benefits Exceed Assets
- ----------------------------------------------------------------------------------- ------------- -------------
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligation........................................................ $ (309.7) $ (2,472.0)
Accumulated benefit obligation................................................... $ (389.5) $ (2,626.5)
Projected benefit obligation..................................................... $ (480.6) $ (2,909.0)
Plan assets at fair value.......................................................... 637.7 2,381.7
------------- -------------
Projected benefit obligation (in excess of) less than plan assets.................. 157.1 (527.3)
Remaining unrecognized net transition asset........................................ (71.4) (9.2)
Unrecognized prior service cost.................................................... 1.8 228.6
Unrecognized net (gain) loss....................................................... (23.1) 170.3
Fourth-quarter 1993 contributions to plans......................................... 38.0
Adjustment to recognize minimum liability.......................................... (113.0)
------------- -------------
Overfunded (unfunded) pension asset (liability) recognized in the statement of
financial position................................................................ $ 64.4 $ (212.6)
</TABLE>
<TABLE>
<CAPTION>
Plans Whose Plans Whose
Assets Exceed Accumulated
Accumulated Benefits
1992 (U.S. and Foreign) Benefits Exceed Assets
- ----------------------------------------------------------------------------------- ------------- -------------
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligation........................................................ $ (1,876.8) $ (508.1)
Accumulated benefit obligation................................................... $ (2,050.0) $ (538.1)
Projected benefit obligation..................................................... $ (2,426.4) $ (584.0)
Plan assets at fair value.......................................................... 2,307.6 425.9
------------- -------------
Projected benefit obligation in excess of plan assets.............................. (118.8) (158.1)
Remaining unrecognized net transition obligation (asset)........................... (164.2) 62.5
Unrecognized prior service cost.................................................... 210.3 41.3
Unrecognized net (gain) loss....................................................... (5.0) 5.1
Fourth-quarter 1992 contributions to plans......................................... 28.7 7.9
Adjustment to recognize minimum liability.......................................... (74.7)
------------- -------------
Unfunded pension liability recognized in the statement of financial position....... $ (49.0) $ (116.0)
</TABLE>
Adjustments recorded to recognize the minimum liability required for defined
benefit pension plans whose accumulated benefits exceed assets amounted to
$113.0 in 1993 and $74.7 in 1992. A corresponding amount was recognized as an
intangible asset to the extent of unrecognized prior service cost and
unrecognized transition obligation. In 1993, $21.0 of excess minimum liability
resulted in a reduction in stockholders' equity, net of income taxes, of $12.8.
Plan assets are held by trust funds devoted to servicing pension benefits
and are not available to Honeywell until all covered benefits are satisfied
after a plan is terminated. The assets held by the trust funds consist of a
diversified portfolio of fixed-income investments and equity securities.
35
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
HONEYWELL INC. AND SUBSIDIARIES
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
NOTE 17 -- POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
In 1992, Honeywell adopted Statement of Financial Accounting Standards No.
106 (SFAS 106), "Employers' Accounting for Postretirement Benefits Other Than
Pensions," which requires recognition of the expected cost of providing
postretirement benefits over the time employees earn the benefits. Before
adopting SFAS 106, Honeywell recognized the cost of providing these benefits on
a pay-as-you-go basis by expensing the cost in the year the benefit was
provided.
Substantially all of Honeywell's domestic and Canadian employees who retire
from Honeywell between the ages of 55 and 65 with 10 or more years of service
are eligible to receive health-care benefits until age 65 identical to those
available to active employees. Honeywell continues to fund postretirement
benefits on a pay-as-you-go basis.
Honeywell elected to immediately recognize the cumulative effect of this
change in accounting for postretirement benefits for both U.S. and Canadian
plans, reducing net income by $151.3 ($1.09 per share). The pre-tax cumulative
effect of $244.1 represents the accumulated postretirement benefit obligation
(APBO) existing at January 1, 1992, less $11.3 related to discontinued product
lines recorded in prior years. The effect of this accounting change for 1992 was
a decrease in income before income taxes of $16.4, or $10.9 ($0.08 per share)
after income taxes. The pro forma effect of this change on years prior to 1992
would have been a decrease in net income in amounts approximately equal to the
1992 effect.
The components of net periodic postretirement benefit cost are as follows:
<TABLE>
<CAPTION>
1993 1992
----- -----
<S> <C> <C>
Service cost of benefits earned during the period........... $11.5 $10.5
Interest cost on accumulated postretirement benefit
obligation................................................. 22.2 20.9
----- -----
$33.7 $31.4
</TABLE>
The amounts recognized in Honeywell's statement of financial position are as
follows:
<TABLE>
<CAPTION>
1993 1992
------ ------
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees.................................................. $ 86.6 $ 84.7
Fully eligible active plan participants................... 41.5 44.6
Other active plan participants............................ 129.9 139.9
Unrecognized net gain..................................... 25.7
------ ------
Accrued postretirement benefit cost......................... $283.7 $269.2
</TABLE>
The discount rate used in determining the APBO was 7.0 percent in 1993 and
8.5 percent in 1992. The assumed health-care cost trend rate used in measuring
the APBO was 10.0 percent in 1993 and 1994, then declining by 0.6 percent per
year to an ultimate rate of 5.5 percent. The health-care cost trend rate
assumption has a significant effect on the amounts reported. For example, a 1
percent increase in the health-care trend rate would increase the APBO by 11
percent at December 31, 1993, and the net periodic postretirement benefit cost
by 14 percent for 1993.
NOTE 18 -- SEGMENT INFORMATION
Honeywell's operations are engaged in the design, development, manufacture,
marketing and service of control solutions in three industry segments -- Home
and Building Control, Industrial Control and Space and Aviation Control.
36
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
HONEYWELL INC. AND SUBSIDIARIES
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
NOTE 18 -- SEGMENT INFORMATION (CONTINUED)
Home and Building Control provides products and services to create
efficient, safe, comfortable environments by offering controls for heating,
ventilation, humidification and air-conditioning equipment; security and fire
alarm systems; home automation systems; energy-efficient lighting controls; and
building management systems and services.
Industrial Control produces systems for the automation and control of
process operations in industries such as oil refining, oil and gas drilling,
pulp and paper manufacturing, food processing, chemical manufacturing and power
generation; solid-state sensors for position, pressure, air flow, temperature
and current; precision electromechanical switches; manual controls; advanced
vision-based sensors; fiber-optic components; and solenoid valves used in fluid
control and processing industries.
Space and Aviation Control is a full-line avionics supplier and systems
integrator for commercial, military and space applications, providing automatic
flight control systems, electronic cockpit displays, flight management systems,
navigation, surveillance and warning systems, severe weather avoidance systems
and flight reference sensors.
The "other" category comprises various operations, such as Solid State
Electronics Center and Systems and Research Center, that are not a significant
part of Honeywell's operations either individually or in the aggregate.
Information concerning Honeywell's sales, operating profit and identifiable
assets by industry segment can be found in Item 6. Selected Financial Data at
page 9. This information for 1993, 1992 and 1991 is an integral part of these
financial statements. Sales include external sales only. Intersegment sales are
not significant. Corporate and other assets include the assets of the entities
in the "other" category, and cash, short term investments, investments, property
and deferred taxes held by corporate.
Following is additional financial information relating to industry segments:
<TABLE>
<CAPTION>
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Capital expenditures
Home and Building Control..................................... $ 73.6 $ 63.5 $ 58.1
Industrial Control............................................ 72.8 81.9 55.4
Space and Aviation Control.................................... 58.4 67.2 88.9
Corporate and other........................................... 27.3 31.5 37.8
--------- --------- ---------
$ 232.1 $ 244.1 $ 240.2
Depreciation and amortization
Home and Building Control..................................... $ 67.9 $ 69.0 $ 68.9
Industrial Control............................................ 59.9 54.6 48.6
Space and Aviation Control.................................... 127.0 137.4 137.9
Corporate and other........................................... 30.1 31.7 30.6
--------- --------- ---------
$ 284.9 $ 292.7 $ 286.0
</TABLE>
Honeywell engages in material operations in foreign countries, the majority
of which are located in Europe. Other geographic areas of operation include
Canada, Mexico, Australia, South America and the Far East.
37
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
HONEYWELL INC. AND SUBSIDIARIES
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
NOTE 18 -- SEGMENT INFORMATION (CONTINUED)
Following is financial information relating to geographic areas:
<TABLE>
<CAPTION>
1993 1992 1991
--------- ---------- ----------
<S> <C> <C> <C>
External sales
United States........................................... $ 3,895.1 $ 4,014.9 $ 4,100.2
Europe.................................................. 1,441.2 1,556.3 1,428.4
Other areas............................................. 626.7 651.4 664.3
--------- ---------- ----------
$ 5,963.0 $ 6,222.6 $ 6,192.9
Transfers between geographic areas
United States........................................... $ 246.7 $ 242.2 $ 233.1
Europe.................................................. 36.9 33.0 26.8
Other areas............................................. 47.6 47.0 48.0
--------- ---------- ----------
$ 331.2 $ 322.2 $ 307.9
Total sales
United States........................................... $ 4,141.8 $ 4,257.1 $ 4,333.3
Europe.................................................. 1,478.1 1,589.3 1,455.2
Other areas............................................. 674.3 698.4 712.3
Eliminations............................................ (331.2) (322.2) (307.9)
--------- ---------- ----------
$ 5,963.0 $ 6,222.6 $ 6,192.9
Operating profit
United States........................................... $ 384.1 $ 338.1 $ 428.3
Europe.................................................. 140.2 150.4 205.6
Other areas............................................. 44.4 28.1 42.2
--------- ---------- ----------
Operating profit........................................ 568.7 516.6 676.1
Interest expense........................................ (68.0) (89.9) (89.4)
Litigation settlements.................................. 32.6 287.9
Equity income........................................... 17.8 15.8 14.6
General corporate expense............................... (72.6) (95.7) (91.9)
--------- ---------- ----------
Income before income taxes.............................. $ 478.5 $ 634.7 $ 509.4
Identifiable Assets
United States........................................... $ 2,337.5 $ 2,502.7 $ 2,566.3
Europe.................................................. 1,111.4 1,134.4 1,183.3
Other areas............................................. 357.1 372.5 362.0
Corporate............................................... 792.1 860.5 695.1
--------- ---------- ----------
$ 4,598.1 $ 4,870.1 $ 4,806.7
</TABLE>
Honeywell transfers products from one geographic region for resale in
another. These transfers are priced to provide both areas with an equitable
share of the overall profit.
Operating profit is net of provision for special charges amounting to $51.2
and $128.4 in 1993 and 1992, respectively, (see Note 3) as follows: United
States -- $22.4 and $79.8, Europe -- $20.3 and $29.7, other areas -- $9.3 in
1992. General corporate expense includes special charges of $8.5 in 1993 and
$9.6 in 1992.
General corporate expense has been reduced by royalty income of $31.4 in
1993 and $14.9 in 1992 (see Note 3).
38
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
HONEYWELL INC. AND SUBSIDIARIES
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
NOTE 18 -- SEGMENT INFORMATION (CONTINUED)
The operating profit impact of implementing SFAS 106 was additional expense
of $16.4 in 1992 (see Note 17) as follows: United States -- $15.3, other areas
- -- $0.5, general corporate expense -- $0.6.
The operating profit impact of implementing SFAS 112 was additional expense
of $3.8 in 1992 (see Note 1) as follows: United States -- $3.6, general
corporate expense -- $0.2.
NOTE 19 -- CONTINGENCIES
LITTON LITIGATION
On March 13, 1990, Litton Systems Inc. filed suit against Honeywell in U.S.
District Court, Central District of California, alleging Honeywell patent
infringement relating to the process used by Honeywell to coat mirrors
incorporated in its ring laser gyroscopes; attempted monopolization by Honeywell
of certain alleged markets for products containing ring laser gyroscopes; and
intentional interference by Honeywell with Litton's prospective advantage in
European markets and with its contractual relationships with Ojai Research,
Inc., a California corporation. Honeywell has filed counterclaims against Litton
alleging, among other things, violations by Litton of various antitrust laws
including attempted monopolization of markets for inertial systems and
interference with Honeywell's relationships with suppliers.
The trial of the patent infringement and intentional interference claims
commenced June 4, 1993, and on August 31, 1993, a federal court jury in U.S.
District Court in Los Angeles returned a verdict against Honeywell on each of
these claims and awarded damages in the amount of $1,200.0 and concluded that
the patent infringement was willful. Honeywell believes the verdict is
unsupported by the facts; that the Litton patent is invalid; and that
Honeywell's process differs from Litton's. The judge in the case held a hearing
November 22, 1993, on various issues including, among others, Honeywell's claims
that the patent was improperly obtained due to alleged "inequitable conduct" on
the part of Litton and Honeywell's other legal and equitable defenses. The court
has not yet entered a judgment. The trial will conclude when the court has
resolved legal issues that could alter or eliminate the jury verdict. Honeywell
will evaluate the outcome of the trial, including appealing any significant
judgment against the company. No trial date has been set for the antitrust
claims of Litton and Honeywell.
The court has yet to rule on significant, complex and interrelated issues
that could alter or eliminate the jury verdict; therefore, Honeywell and its
counsel have determined that it is not possible to estimate the amount of
damages, if any, that may ultimately be incurred. As a result, no provision has
been made in the financial statements with respect to this contingent liability.
ENVIRONMENTAL MATTERS
Honeywell's manufacturing sites generate both hazardous and nonhazardous
wastes, the treatment, storage, transportation and disposal of which are subject
to various local, state and national laws relating to protection of the
environment. Honeywell is in varying stages of investigation or remediation of
potential, alleged or acknowledged contamination at current or previously owned
or operated sites and at off-site locations where its wastes were taken for
treatment or disposal. In connection with the cleanup of various off-site
locations, Honeywell, along with a large number of other entities, has been
designated a potentially responsible party (PRP) by the U.S. Environmental
Protection Agency under the Comprehensive Environmental Response, Compensation
and Liability Act or by state agencies under similar state laws (Superfund),
which potentially subjects PRPs to joint and several liability for the costs of
such cleanup. In addition, Honeywell is incurring costs relating to
environmental remediation pursuant to the federal Resource Conservation and
Recovery Act. Based on Honeywell's assessment of the costs associated with its
environmental responsibilities, compliance
39
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
HONEYWELL INC. AND SUBSIDIARIES
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
NOTE 19 -- CONTINGENCIES (CONTINUED)
with federal, state and local laws regulating the discharge of materials into
the environment, or otherwise relating to the protection of the environment, has
not had, and in the opinion of Honeywell management, will not have a material
effect on Honeywell's financial position, results of operations, capital
expenditures or competitive position. Honeywell's opinion with regard to
Superfund matters is based on its assessment of the predicted investigation,
remediation and associated costs, its expected share of those costs and the
availability of legal defenses. Honeywell's policy is to record environmental
liabilities when loss amounts are probable and reasonably estimable.
OTHER MATTERS
Honeywell is a party to a large number of other legal proceedings, some of
which are for substantial amounts. It is the opinion of management that losses
in connection with these matters will not have a material effect on net income.
The transfer of assets by Honeywell in the 1990 spinoff of the Defense and
Marine Systems Business to Alliant Techsystems Inc. (Alliant) included the
assignment of various contracts between Honeywell and the U.S. government. As
required by federal procurement regulations applicable to government contracts,
Honeywell has entered into novation agreements with Alliant and the U.S.
government that will provide, among other things, for Honeywell to directly or
indirectly guarantee or otherwise become liable for the performance of Alliant's
obligations under such contracts.
NOTE 20 -- QUARTERLY DATA (UNAUDITED)
<TABLE>
<CAPTION>
1993 1ST QTR. 2ND QTR. 3RD QTR. 4TH QTR.
- ------------------------------------------------------------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
Sales.............................................................. $1,438.6 $1,452.0 $1,452.3 $1,620.1
Cost of sales...................................................... 989.8 982.2 985.4 1,062.2
Net income......................................................... 57.3 71.4 80.9 112.6
Per share........................................................ 0.42 0.53 0.60 0.85
</TABLE>
The third quarter of 1993 includes a gain of $9.2 from the revaluation of
deferred tax assets (see Note 4). The fourth quarter of 1993 benefited from a
change in estimate of $33.4 for postemployment benefits (see Note 1) that was
partially offset by accruals for facilities closures and other expenses in the
amount of $26.9. Following is a summary of other significant items affecting
1993 results.
<TABLE>
<CAPTION>
1993 1ST QTR 2ND QTR. 3RD QTR. 4TH QTR.
- ------------------------------------------------------------------------ --------- --------- --------- ---------
<S> <C> <C> <C> <C>
Gain from litigation settlements (see Note 3)........................... $ 22.4 $ 10.2
After tax............................................................. 13.9 6.3
Per share............................................................. 0.10 0.05
Special charges (see Note 3)............................................ (23.2) (28.0)
After tax............................................................. (13.3) (15.5)
Per share............................................................. (0.10) (0.12)
</TABLE>
40
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
HONEYWELL INC. AND SUBSIDIARIES
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
NOTE 20 -- QUARTERLY DATA (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
1992 1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr.
- ---------------------------------------------------------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Sales........................................................... $ 1,481.6 $ 1,485.8 $ 1,550.0 $ 1,705.2
Cost of sales................................................... 1,023.0 1,005.1 1,039.1 1,128.1
Income before extrarordinary item and cumulative effect of
accounting changes 113.4 81.8 172.6 32.1
Per share..................................................... 0.82 0.58 1.25 0.23
Extroardinary item.............................................. (5.5) (3.1)
Per share..................................................... (0.04) (0.02)
Cumulative effect of accounting changes......................... (144.5)
Per share..................................................... (1.04)
Net income...................................................... (31.1) 81.8 167.1 29.0
Per share..................................................... (0.22) 0.58 1.21 0.21
</TABLE>
The first quarter of 1992 includes the cumulative effects of adopting SFAS
106 (see Note 17), SFAS 109 (see Note 4) and SFAS 112 (see Note 1) at January 1,
1992. The 1992 impact of adopting these accounting changes was a decrease in
income before income taxes of approximately $5.1 on a combined basis, or $3.4
($0.03 per share) after income taxes, for each quarter. Other significant items
affecting 1992 results include the following:
<TABLE>
<CAPTION>
1992 1st Qtr 2nd Qtr. 3rd Qtr. 4th Qtr.
- ------------------------------------------------------------------------ --------- ----------- --------- ---------
<S> <C> <C> <C> <C>
Gain from litigation settlements (see Note 3)........................... $ 108.3 $ 12.3 $ 152.8 $ 14.5
After tax............................................................. 65.0 7.4 91.6 7.4
Per share............................................................. 0.46 0.06 0.66 0.06
Special charges (see Note 3)............................................ (128.4)
After tax............................................................. (85.1)
Per share............................................................. (0.62)
</TABLE>
<TABLE>
<CAPTION>
Common Stock Price
(New York Stock
Exchange Composite)
Dividends
1993 Per Share High Low
- -------------------------------------------------------------------------------- ----------- --------- ---------
<S> <C> <C> <C>
FIRST QUARTER................................................................... $ .2225 $35 1/2 $31 1/2
SECOND QUARTER.................................................................. .2225 38 1/4 32 1/4
THIRD QUARTER................................................................... .2225 39 3/8 34 5/8
FOURTH QUARTER.................................................................. .24 37 31
<CAPTION>
1992
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
First Quarter................................................................... $ .20625 $37 7/8 $31 1/2
Second Quarter.................................................................. .20625 37 1/4 33 1/4
Third Quarter................................................................... .20625 34 7/8 30 7/8
Fourth Quarter.................................................................. .2225 34 7/8 30 1/8
</TABLE>
Stockholders of record on February 2, 1994, totaled 33,166.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
No report on Form 8-K reporting a change in Honeywell's certifying
independent accountants has been filed within the 24 months prior to the date of
the most recent financial statements.
41
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Pages 3 through 9 and page 14 of the Honeywell Notice of 1994 Annual Meeting
and Proxy Statement are incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
Pages 14 through 20 of the Honeywell Notice of 1994 Annual Meeting and Proxy
Statement are incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Pages 10 through 11 of the Honeywell Notice of 1994 Annual Meeting and Proxy
Statement are incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(A) DOCUMENTS FILED AS A PART OF THIS REPORT
1. FINANCIAL STATEMENTS
The financial statements required to be filed as part of this Annual Report
on Form 10-K are listed below with their location in this report.
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Honeywell Inc. and Subsidiaries:
Independent Auditors' Report....................................................... 19
Income Statement................................................................... 20
Statement of Financial Position.................................................... 21
Statement of Cash Flows............................................................ 22
Notes to Financial Statements...................................................... 23-41
</TABLE>
2. FINANCIAL STATEMENT SCHEDULES
The schedules required to be filed as part of this Annual Report on Form
10-K are listed below with their location in this report.
<TABLE>
<CAPTION>
PAGE
-----
<C> <S> <C> <C>
Honeywell Inc. and Subsidiaries:
Independent Auditors' Report.................................................................. 19
Schedules for the Years Ended December 31, 1993, 1992 and 1991:
V -- Property, Plant and Equipment......................................... 46
VI -- Accumulated Depreciation.............................................. 47
VIII -- Valuation Reserves.................................................... 48
IX -- Short-Term Borrowings................................................. 49
X -- Supplementary Income Statement Information............................ 49
</TABLE>
All schedules, other than indicated above, are omitted because of the
absence of the conditions under which they are required or because the
information required is shown in the financial statements or notes thereto.
42
<PAGE>
3. EXHIBITS
Documents Incorporated by Reference:
<TABLE>
<S> <C>
(3)(a) Restated Certificate of Incorporation of Honeywell Inc. dated June 18,
1991.
(4) Rights Agreement between Honeywell Inc. and Manufacturers Hanover Trust
Company, as Rights Agent, dated as of February 24, 1986, Amended and
Restated as of June 17, 1986, Amended and Restated as of December 12, 1988,
Amended as of April 2, 1990.
(10)(iii)(a) Honeywell Key Employee Severance Plan, as amended, is incorporated by
reference to Exhibit (10)(iii)(e) to Honeywell's Annual Report on Form 10-K
for 1989.
(10)(iii)(b) 1984 Honeywell Key Employee Stock Option Plan, as amended, is incorporated
by reference to Exhibit (10)(iii)(l) to Honeywell's Annual Report on Form
10-K for 1992.
(10)(iii)(c) Honeywell Supplementary Executive Retirement Plan for Mid-Career Hires, is
incorporated by reference to Exhibit (10)(iii)(m) to Honeywell's Annual
Report on Form 10-K for 1992.
(10)(iii)(d) Honeywell-Norwest Rabbi Trust Agreement, is incorporated by reference to
Exhibit (10)(iii)(n) to Honeywell's Annual Report on Form 10-K for 1992.
(28)(a) Honeywell Notice of 1994 Annual Meeting and Proxy Statement.*
Exhibits submitted herewith:
No instrument defining the rights of holders of long-term debt of Honeywell
and its consolidated subsidiaries or of any unconsolidated subsidiary for
which financial statements are required to be filed, is filed as an exhibit
hereto because there is no such instrument authorizing long-term debt in a
total amount exceeding 10% of the total assets of Honeywell and its
subsidiaries on a consolidated basis. Honeywell hereby agrees to furnish a
copy of any such instrument to the Securities and Exchange Commission upon
request.
(3)(b) By-laws of Honeywell Inc., as amended through December 21, 1993.
(10)(i) Credit and Reimbursement Agreement dated as of December 9, 1993 among
Honeywell Inc., Morgan Guaranty Trust Company of New York, The Chase
Manhattan Bank, Bank of America National Trust and Savings Association, The
Fuji Bank Limited and Citicorp USA, Inc.
(10)(iii)(e) 1993 Honeywell Stock and Incentive Plan.
(10)(iii)(f) 1988 Honeywell Stock and Incentive Plan, as amended.
(10)(iii)(g) Restricted-Stock Retirement Plan for Non-Employee Directors.
(10)(iii)(h) Honeywell Corporate Executive Compensation Plan, as amended.
(10)(iii)(i) Honeywell Supplementary Executive Retirement Plan for Compensation in
Excess of $200,000, as amended.
(10)(iii)(j) Honeywell Supplementary Executive Retirement Plan for CECP Participants.
(10)(iii)(k) Honeywell Supplementary Retirement Plan, as amended.
(10)(iii)(l) Honeywell Supplementary Executive Retirement Plan for Benefits in Excess of
Limits Under Tax Reform Act of 1986.
(10)(iii)(m) Honeywell Executive Life Insurance Agreement.
(10)(iii)(n) Form of Executive Termination Contract.
(10)(iii)(o) Honeywell Inc. Compensation Plan for Outside Directors.
(11) Computation of Earnings Per Share.
(22) Subsidiaries of Honeywell.
(24) Consent of Independent Auditors.
</TABLE>
43
<PAGE>
3. EXHIBITS (CONTINUED)
<TABLE>
<S> <C>
(25) Powers of Attorney.
(B) REPORTS ON FORM 8-K
None
<FN>
- ------------------------
*Only the portions of Exhibit (28)(a) specifically incorporated by reference are
deemed filed with the Commission.
</TABLE>
44
<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 report to be signed on
its behalf by the undersigned, thereunto duly authorized.
HONEYWELL INC.
By: /s/ SIGURD UELAND, JR.
--------------------------------------
Sigurd Ueland, Jr., Vice President
Dated: March 4, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- --------------------------- ---------------------------------------------------------------------------
<S> <C>
M. R. BONSIGNORE Chairman of the Board and Chief Executive Officer and Director
W. L. TRUBECK Senior Vice President and Chief Financial Officer
W. M. HJERPE Vice President and Controller
A. J. BACIOCCO, JR. Director
E. E. BAILEY Director
E. H. CLARK, JR. Director
W. H. DONALDSON Director
R. D. FULLERTON Director
G. GREENWALD Director
J. J. HOWARD Director
G. M. JOSEPH Director
B. E. KARATZ Director
D. L. MOORE Director
A. B. RAND Director
J. J. RENIER Director
S. G. ROTHMEIER Director
M. W. WRIGHT Director
</TABLE>
By: /s/ SIGURD UELAND, JR.
--------------------------------------
Sigurd Ueland, Jr., ATTORNEY-IN-FACT
March 4, 1994
45
<PAGE>
SCHEDULE V
HONEYWELL INC. AND SUBSIDIARIES
PROPERTY, PLANT AND EQUIPMENT
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
BALANCE AT TRANSERS BALANCE AT
BEGINNING OF ADDITIONS AT RECLASSIFICATIONS, ETC. CLOSE OF
CLASSIFICATION YEAR COST RETIREMENTS (NOTES 2 & 3) YEAR
- --------------------------------------- ------------- ------------ --------------- ----------------------- -----------
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1993:
Land................................. $ 78.5 $ 0.1 $ 1.8 $ 0.3 $ 77.1
Buildings and improvements........... 621.7 24.4 50.6 (5.6) 589.9
Machinery and equipment.............. 1,734.4 200.5 108.4 (12.3) 1,814.2
Construction in progress............. 63.3 7.1 (2.2) 68.2
------------- ------------ ------- ------ -----------
Total.............................. $ 2,497.9 $ 232.1 $ 160.8 $ (19.8) $ 2,549.4
------------- ------------ ------- ------ -----------
------------- ------------ ------- ------ -----------
Year ended December 31, 1992:
Land................................. $ 76.6 $ 3.9 $ 1.3 $ (0.7) $ 78.5
Buildings and improvements........... 616.5 29.9 17.2 (7.5) 621.7
Machinery and equipment.............. 1,673.8 218.5 120.4 (37.5) 1,734.4
Construction in progress............. 79.7 (8.2) (8.2) 63.3
------------- ------------ ------- ------ -----------
Total.............................. $ 2,446.6 $ 244.1 $ 138.9 $ (53.9) $ 2,497.9
------------- ------------ ------- ------ -----------
------------- ------------ ------- ------ -----------
Year ended December 31, 1991:
Land................................. $ 78.2 $ 1.4 $ (0.2) $ 76.6
Buildings and improvements........... 602.2 $ 26.1 10.4 (1.4) 616.5
Machinery and equipment.............. 1,542.2 227.8 101.5 5.3 1,673.8
Construction in progress............. 93.2 (13.7) 0.2 79.7
------------- ------------ ------- ------ -----------
Total.............................. $ 2,315.8 $ 240.2 $ 113.3 $ 3.9 $ 2,446.6
------------- ------------ ------- ------ -----------
------------- ------------ ------- ------ -----------
<FN>
- ------------------------
Notes: (1) Property is carried at cost and depreciated primarily using the
straight-line method over estimated useful lives of 10 to 40 years
for buildings and improvements and three to 15 years for machinery
and equipment.
(2) Foreign currency translation adjustments amounted to $(26.1) in 1993,
$(62.6) in 1992 and $0.1 in 1991.
(3) Includes $7.2 in 1993 and $17.4 in 1992 resulting from acquisitions.
</TABLE>
46
<PAGE>
SCHEDULE VI
HONEYWELL INC. AND SUBSIDIARIES
ACCUMULATED DEPRECIATION
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
BALANCE AT ADDITIONS TRANSERS BALANCE
BEGINNING OF CHARGED TO RECLASSIFICATIONS, AT CLOSE OF
CLASSIFICATION YEAR INCOME RETIREMENTS ETC. (NOTE) YEAR
- -------------------------------------------------- ------------ ---------- ----------- ------------------ -----------
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1993:
Buildings and improvements...................... $ 274.4 $ 32.7 $ 24.7 $ (2.7) $ 279.7
Machinery and equipment......................... 1,110.0 202.6 91.3 (13.6) 1,207.7
------------ ---------- ----------- ------ -----------
Total......................................... $ 1,384.4 $ 235.3 $ 116.0 $ (16.3) $ 1,487.4
------------ ---------- ----------- ------ -----------
------------ ---------- ----------- ------ -----------
Year ended December 31, 1992:
Buildings and improvements...................... $ 259.4 $ 33.1 $ 11.9 $ (6.2) $ 274.4
Machinery and equipment......................... 1,041.0 209.7 104.6 (36.1) 1,110.0
------------ ---------- ----------- ------ -----------
Total......................................... $ 1,300.4 $ 242.8 $ 116.5 $ (42.3) $ 1,384.4
------------ ---------- ----------- ------ -----------
------------ ---------- ----------- ------ -----------
Year ended December 31, 1991:
Buildings and improvements...................... $ 237.3 $ 32.0 $ 9.3 $ (0.6) $ 259.4
Machinery and equipment......................... 928.2 206.5 95.9 2.2 1,041.0
------------ ---------- ----------- ------ -----------
Total......................................... $ 1,165.5 $ 238.5 $ 105.2 $ 1.6 $ 1,300.4
------------ ---------- ----------- ------ -----------
------------ ---------- ----------- ------ -----------
<FN>
- --------------------------
Note: Foreign currency translation adjustments amounted to $(17.2) in 1993,
$(38.6) in 1992 and $0.7 in 1991.
</TABLE>
47
<PAGE>
SCHEDULE VIII
HONEYWELL INC. AND SUBSIDIARIES
VALUATION RESERVES
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
BALANCE AT ADDITIONS DEDUCTIONS BALANCE
BEGINNING CHARGED TO FROM AT CLOSE
OF YEAR INCOME RESERVES OF YEAR
------------- ---------------- ----------------- -----------
<S> <C> <C> <C> <C>
Reserves deducted from assets to which they apply --
allowance for doubtful accounts:
RECEIVABLES -- CURRENT
- --------------------------------------------------------
Year ended December 31, 1993............................ $ 26.7 $ 9.1(1) $ 11.5(2) $ 24.3
------------- ------ ------ -----------
------------- ------ ------ -----------
Year ended December 31, 1992............................ $ 26.3 $ 13.1(1) $ 12.7(2) $ 26.7
------------- ------ ------ -----------
------------- ------ ------ -----------
Year ended December 31, 1991............................ $ 24.9 $ 17.7(1) $ 16.3(2) $ 26.3
------------- ------ ------ -----------
------------- ------ ------ -----------
LONG-TERM RECEIVABLES
- --------------------------------------------------------
Year ended December 31, 1993............................ $ 0.8 $ -- $ 0.3(2) $ 0.5
------------- ------ ------ -----------
------------- ------ ------ -----------
Year ended December 31, 1992............................ $ 1.7 $ -- $ 0.9(2) $ 0.8
------------- ------ ------ -----------
------------- ------ ------ -----------
Year ended December 31, 1991............................ $ 1.4 $ 0.3(1) $ -- $ 1.7
------------- ------ ------ -----------
------------- ------ ------ -----------
Reserves deducted from assets to which they apply --
valuation reserve:
LONG-TERM RECEIVABLES
- --------------------------------------------------------
Year ended December 31, 1993............................ $ 2.9 $ 0.7(1) $ -- $ 3.6
------------- ------ ------ -----------
------------- ------ ------ -----------
Year ended December 31, 1992............................ $ 7.9 $ -- $ 5.0(4) $ 2.9
------------- ------ ------ -----------
------------- ------ ------ -----------
Year ended December 31, 1991............................ $ 5.5 $ 2.4(3) $ -- $ 7.9
------------- ------ ------ -----------
------------- ------ ------ -----------
Reserves deducted from assets to which they apply --
allowance for amortization of intangibles:
GOODWILL
- --------------------------------------------------------
Year ended December 31, 1993............................ $ 30.4 $ 6.7(5) $ 2.8(6) $ 34.3
------------- ------ ------ -----------
------------- ------ ------ -----------
Year ended December 31, 1992............................ $ 24.8 $ 5.3(5) $ (0.3)(6) $ 30.4
------------- ------ ------ -----------
------------- ------ ------ -----------
Year ended December 31, 1991............................ $ 21.5 $ 3.7(5) $ 0.4(6) $ 24.8
------------- ------ ------ -----------
------------- ------ ------ -----------
PATENTS, LICENSES AND TRADEMARKS
- --------------------------------------------------------
Year ended December 31, 1993............................ $ 144.2 $ 25.8(5) $ -- $ 170.0
------------- ------ ------ -----------
------------- ------ ------ -----------
Year ended December 31, 1992............................ $ 119.8 $ 24.4(5) $ -- $ 144.2
------------- ------ ------ -----------
------------- ------ ------ -----------
Year ended December 31, 1991............................ $ 96.0 $ 23.9(5) $ 0.1(6) $ 119.8
------------- ------ ------ -----------
------------- ------ ------ -----------
SOFTWARE AND OTHER INTANGIBLES
- --------------------------------------------------------
Year ended December 31, 1993............................ $ 117.8 $ 17.1(5) $ (0.5)(6) $ 135.4
------------- ------ ------ -----------
------------- ------ ------ -----------
Year ended December 31, 1992............................ $ 96.1 $ 20.2(5) $ (1.5)(6) $ 117.8
------------- ------ ------ -----------
------------- ------ ------ -----------
Year ended December 31, 1991............................ $ 77.0 $ 19.9(5) $ 0.8(6) $ 96.1
------------- ------ ------ -----------
------------- ------ ------ -----------
<FN>
- --------------------------
Notes: (1) Represents amounts included in selling, general and administrative
expenses.
(2) Represents uncollectible accounts written off, less recoveries and
translation adjustments.
(3) Represents amounts charged against interest income to reduce
long-term interest bearing notes receivable from sale of assets to an
amount which approximates realizable value.
(4) Represents reclassification of amount to other liabilities.
(5) Represents amounts included in cost of sales.
(6) Represents removal of fully amortized amounts and translation
adjustments.
</TABLE>
48
<PAGE>
SCHEDULE IX
HONEYWELL INC. AND SUBSIDIARIES
SHORT-TERM BORROWINGS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
AVERAGE WEIGHTED
BALANCE AVERAGE
WEIGHTED OUTSTANDING INTEREST RATE
BALANCE AT AVERAGE MAXIMUM DURING FOR THE
CLOSE INTEREST MONTH-END THE YEAR YEAR
OF YEAR RATE BALANCE (NOTE 2) (NOTE 3)
------------- --------------- ------------- --------------- -------------------
<S> <C> <C> <C> <C> <C>
1993 --
Banks (Note 1)................... $ 6.6 10.1% $ 6.6 $ 3.5 7.1%
Bank notes....................... -- -- 81.0 36.9 3.2
Commercial paper................. 181.0 3.3 241.0 198.8 3.2
Total.......................... $ 187.6 3.5% $ 311.5 $ 239.2 3.2%
------------- --- ------------- ------- ---
------------- --- ------------- ------- ---
1992 --
Banks (Note 1)................... $ 1.1 5.9% $ 7.9 $ 2.9 10.3%
Bank notes....................... 20.0 3.6 54.0 23.6 3.6
Commercial paper................. 161.0 3.6 236.0 121.3 3.7
Total.......................... $ 182.1 3.6% $ 239.3 $ 147.8 3.8%
------------- --- ------------- ------- ---
------------- --- ------------- ------- ---
1991 --
Banks (Note 1)................... $ 2.0 9.0% $ 45.5 $ 24.8 11.4%
Bank notes....................... -- -- 57.0 11.0 5.4
Commercial paper................. 90.0 4.8 201.9 109.8 5.8
Total.......................... $ 92.0 4.9% $ 245.9 $ 145.6 6.7%
------------- --- ------------- ------- ---
------------- --- ------------- ------- ---
<FN>
- ------------------------
Notes: (1) Borrowings are made against established credit facilities, primarily
foreign currencies.
(2) The average monthly borrowing is calculated using month-end balances
outstanding during the year.
(3) The approximate weighted average is calculated by dividing the related
interest expense by average monthly borrowings.
</TABLE>
------------------------
SCHEDULE X
HONEYWELL INC. AND SUBSIDIARIES
SUPPLEMENTARY INCOME STATEMENT INFORMATION
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Maintenance and repairs................................................................ $ 77.6 $ 81.3 $ 76.7
--------- --------- ---------
--------- --------- ---------
Taxes, other than payroll and income taxes............................................. $ 62.3 $ 57.2 $ 55.1
--------- --------- ---------
--------- --------- ---------
<FN>
- ------------------------
Note: Depreciation and amortization of intangible assets, royalties and
advertising are excluded because none exceeded 1% of total revenue.
</TABLE>
49
<PAGE>
EXHIBIT (11)
HONEYWELL INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
FOR THE FIVE YEARS ENDED DECEMBER 31, 1993
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1993 1992 1991 1990 1989
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Primary:
Income:
Income from continuing operations........................... $ 322.2 $ 399.9 $ 331.1 $ 371.8 $ 550.3
Income from discontinued operations......................... 10.1 53.8
----------- ----------- ----------- ----------- -----------
Income before extraordinary item and cumulative effect of
accounting changes......................................... 322.2 399.9 331.1 381.9 604.1
Extraordinary item -- loss on early redemption of debt...... (8.6)
Cumulative effect of accounting changes (Note).............. (144.5)
----------- ----------- ----------- ----------- -----------
Net income................................................ $ 322.2 $ 246.8 $ 331.1 $ 381.9 $ 604.1
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Shares:
Weighted average of shares outstanding during the year...... 134,242,394 138,525,414 140,868,222 151,759,942 170,404,548
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Earnings per share:
Continuing operations....................................... $ 2.40 $ 2.88 $ 2.35 $ 2.45 $ 3.23
Discontinued operations..................................... 0.07 0.32
----------- ----------- ----------- ----------- -----------
Income before extraordinary item and cumulative effect of
accounting changes........................................ 2.40 2.88 2.35 2.52 3.55
Extraordinary item -- loss on early redemption of debt...... (0.06)
Cumulative effect of accounting changes (Note).............. (1.04)
----------- ----------- ----------- ----------- -----------
Net income................................................ $ 2.40 $ 1.78 $ 2.35 $ 2.52 $ 3.55
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Assuming full dilution:
Income:
Income from continuing operations........................... $ 322.2 $ 399.9 $ 331.1 $ 371.8 $ 550.3
Income from discontinued operations......................... 10.1 53.8
----------- ----------- ----------- ----------- -----------
Income before extraordinary item and cumulative effect of
accounting changes........................................ 322.2 399.9 331.1 381.9 604.1
Extraordinary item -- loss on early redemption of debt...... (8.6)
Cumulative effect of accounting changes (Note).............. (144.5)
----------- ----------- ----------- ----------- -----------
Net income................................................ $ 322.2 $ 246.8 $ 331.1 $ 381.9 $ 604.1
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Shares:
Weighted average of shares outstanding during the year...... 134,242,394 138,525,414 140,868,222 151,759,942 170,404,548
Shares issuable in connection with stock plans less shares
purchaseable from proceeds................................ 1,069,901 1,599,395 2,120,234 1,410,826 2,426,676
----------- ----------- ----------- ----------- -----------
Total shares.............................................. 135,312,295 140,124,809 142,988,456 153,170,768 172,831,224
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Earnings per share:
Continuing operations....................................... $ 2.38 $ 2.85 $ 2.32 $ 2.43 $ 3.19
Discontinued operations..................................... 0.06 0.31
----------- ----------- ----------- ----------- -----------
Income before extraordinary item and cumulative effect of
accounting changes........................................ 2.38 2.85 2.32 2.49 3.50
Extraordinary item -- loss on early redemption of debt...... (0.06)
Cumulative effect of accounting changes (Note).............. (1.03)
----------- ----------- ----------- ----------- -----------
Net income................................................ $ 2.38 $ 1.76 $ 2.32 $ 2.49 $ 3.50
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
<FN>
- ------------------------------
Note: The cumulative effect of accounting changes in 1992 are the result of
adopting Statement of Financial Accounting Standards (SFAS) No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions,"
which reduced net income by $151.3 ($1.09 per share); SFAS No. 109,
"Accounting for Income Taxes," which increased net income by $31.4 ($0.23
per share); and SFAS No. 112, "Employers' Accounting for Postemployment
Benefits," which reduced net income by $24.6 ($0.18 per share).
</TABLE>
50
<PAGE>
EXHIBIT (24)
CONSENT OF INDEPENDENT AUDITORS
Honeywell Inc.:
We consent to the incorporation by reference in Registration Statements Nos.
2-64351, 2-98660, 33-29442, 33-44282, 33-44283, 33-44284 and 33-49819 on Form
S-8, and No. 33-62300 on Form S-3, of our reports dated February 11, 1994,
appearing in and incorporated by reference in the Annual Report on Form 10-K of
Honeywell Inc. for the year ended December 31, 1993.
Deloitte & Touche
Minneapolis, Minnesota
March 3, 1994
51
<PAGE>
Exhibit (3)(b)
---------------------------------------------------------
---------------------------------------------------------
HONEYWELL INC.
------------------
Incorporated under the Laws of the State of Delaware
October 27, 1927
------------------------
BY-LAWS
As Adopted October 27, 1927, and Amended
through December 21, 1993
- ----------------------------------------------------
- ----------------------------------------------------
<PAGE>
INDEX OF BY-LAWS
<TABLE>
<CAPTION>
Page
<C> <S> <C>
ARTICLE I. MEETINGS OF
STOCKHOLDERS................................ 1
Section 1. Annual Meetings.............................. 1
Section 2. Advance Notice of Stockholder-
Proposed Business at Annual Meetings........ 1
Section 3. Special Meetings............................. 2
Section 4. Place of Meeting............................. 3
Section 5. Notices of Meetings.......................... 3
Section 6. Quorum....................................... 4
Section 7. Organization................................. 5
Section 8. Order of Business............................ 5
Section 9. Voting....................................... 5
Section 10. List of Stockholders......................... 7
Section 11. Inspectors of Election....................... 8
ARTICLE II. CONSENTS TO CORPORATE ACTION................. 8
Section 1. Consent of Stockholders in Lieu of Meeting... 8
Section 2. Record Date.................................. 9
Section 3. Procedures................................... 10
</TABLE>
<PAGE>
ii
<TABLE>
<C> <S> <C>
ARTICLE III. BOARD OF DIRECTORS.................. 11
Section 1. General Powers...................... 11
Section 2. Number, Qualifications and
Term of Office..................... 11
Section 3. Nominations of Directors............ 11
Section 4. Election of Directors............... 12
Section 5. Organization........................ 13
Section 6. Resignations........................ 13
Section 7. Qualifications and Retirement....... 13
Section 8. Vacancies........................... 15
Section 9. Place of Meeting, etc............... 15
Section 10. First Meeting....................... 15
Section 11. Regular Meetings.................... 16
Section 12. Special Meetings; Notice............ 16
Section 13. Quorum and Manner of Acting......... 17
Section 14. Removal of Directors................ 17
Section 15. Compensation........................ 17
Section 16. Committees.......................... 18
Section 17. Indemnification of Employees,
Officers and Directors............. 19
Section 18. Action Without Meeting.............. 21
Section 19. Presence at Meetings................ 21
</TABLE>
<PAGE>
iii
<TABLE>
<C> <S> <C>
ARTICLE IV. OFFICERS............................ 22
Section 1. Number.............................. 22
Section 2. Election, Term of Office and
Qualifications..................... 23
Section 3. Removal............................. 23
Section 4. Resignations........................ 23
Section 5. Vacancies........................... 23
Section 6. The Chairman of the
Board of Directors................. 24
Section 7. The Vice Chairman of the
Board of Directors................. 24
Section 8. The President of the Corporation.... 25
Section 9. Authority and Duties of the Business
Presidents, Executive Vice
Presidents, Senior Vice Presidents,
and Vice Presidents................ 25
Section 10. The Treasurer....................... 26
Section 11. The Secretary....................... 27
Section 12. Assistant Treasurers, Assistant
Secretaries and Attesting
Secretaries........................ 28
Section 13. Salaries............................ 29
Section 14. Subordinate Positions, etc.......... 29
ARTICLE V. CONTRACTS, LOANS, CHECKS, DEPOSITS,
ETC................................ 29
Section 1. Contracts, etc. How Executed........ 29
Section 2. Loans............................... 30
Section 3. Checks, Drafts, etc................. 30
Section 4. Deposits............................ 30
Section 5. General and Special Bank Accounts... 31
ARTICLE VI. SHARES AND THEIR TRANSFER........... 31
Section 1. Certificates for Stock.............. 31
Section 2. Transfer of Stock................... 32
Section 3. Transfer and Registry Agents........ 33
Section 4. Lost, Stolen, Destroyed,
and Mutilated Certificates......... 33
Section 5. Fixing Date for Determination
of Stockholders of Record.......... 33
</TABLE>
<PAGE>
iv
<TABLE>
<C> <S> <C>
ARTICLE VII. OFFICES............................. 35
Section 1. Registered Office................... 35
Section 2. Other Offices....................... 35
ARTICLE VIII. DIVIDENDS, SURPLUS, ETC............. 35
ARTICLE IX. SEAL................................ 36
ARTICLE X. FISCAL YEAR AND AUDIT............... 36
Section 1. Fiscal Year......................... 36
Section 2. Audit of Books and Accounts......... 36
ARTICLE XI. WAIVER OF NOTICES................... 37
ARTICLE XII. INCENTIVE COMPENSATION PAYMENTS..... 37
ARTICLE XIII. NATIONAL EMERGENCY.................. 39
Section 1. Definition and Application.......... 39
Section 2. Meetings, etc....................... 39
Section 3. Amendment........................... 40
Section 4. Chief Executive Officer............. 41
Section 5. Substitute Directors................ 41
ARTICLE XIV. AMENDMENTS.......................... 41
CERTIFICATION......................................... 42
</TABLE>
<PAGE>
BY-LAWS
OF
HONEYWELL INC.
---------
ARTICLE I.
MEETINGS OF STOCKHOLDERS
SECTION 1. ANNUAL MEETINGS. The annual meeting of the stockholders of
Honeywell Inc. (hereinafter called the Corporation) for the election of
directors and for the transaction of any other proper business, notice of which
is given in the notice of the meeting, shall be held on such date and at such
hour as may be determined from time to time by the Board of Directors, which
date and hour shall be designated in the notice thereof. If any annual meeting
for the election of directors shall not be held on the date designated therefor,
the Board of Directors shall cause the meeting to be held as soon thereafter as
convenient.
SECTION 2. ADVANCE NOTICE OF STOCKHOLDER-PROPOSED BUSINESS AT ANNUAL
MEETINGS. At an annual meeting of the stockholders, only such business shall be
conducted as shall have been properly brought before the meeting. To be properly
brought before an annual meeting, business must be specified in the notice of
meeting (or any supplement thereto) given by or at the direction of the Board,
otherwise properly brought before the meeting by or at the direction of the
Board, or otherwise properly brought before the meeting by a stockholder. In
addition to any other applicable requirements, for business to be properly
brought before an annual meeting by a stockholder, the stockholder must have
given timely notice thereof in writing to the Secretary, Honeywell Inc. To be
timely, a stockholder's notice must be delivered to or mailed and received at
the principal executive offices of the
<PAGE>
2
Corporation, not less than 50 days nor more than 75 days prior to the meeting;
provided, however, that in the event that less than 65 days' notice or prior
public disclosure of the date of the meeting is given or made to stockholders,
notice by the stockholder to be timely must be so received not later than the
close of business on the 15th day following the day on which such notice of the
date of the annual meeting was mailed or such public disclosure was made. A
stockholder's notice to the Secretary shall set forth as to each matter the
stockholder proposes to bring before the annual meeting (i) a brief description
of the business desired to be brought before the annual meeting and the reasons
for conducting such business at the annual meeting, (ii) the name and record
address of the stockholder proposing such business, (iii) the class and number
of shares of the Corporation which are beneficially owned by the stockholder,
and (iv) any material interest of the stockholder in such business.
Notwithstanding anything in the By-Laws to the contrary, no business shall be
conducted at the annual meeting except in accordance with the procedures set
forth in this Section 2, PROVIDED, HOWEVER, that nothing in this Section 2 shall
be deemed to preclude discussion by any stockholder of any business properly
brought before the annual meeting in accordance with said procedure.
The Chairman of an annual meeting shall, if the facts warrant, determine and
declare to the meeting that business was not properly brought before the meeting
in accordance with the provisions of this Section 2, and if he should so
determine, he shall so declare to the meeting and any such business not properly
brought before the meeting shall not be transacted.
SECTION 3. SPECIAL MEETINGS. A special meeting of the stockholders for any
purpose or purposes may be called at any time by the Board of Directors, or by
the Chairman of the
<PAGE>
3
Board of Directors, or by the President of the Corporation, or as otherwise
prescribed by statute or by the Certificate of Incorporation of the Corporation.
SECTION 4. PLACE OF MEETING. Meetings of the stockholders (including annual
meetings, special meetings, meetings for the election of directors, and any and
all other meetings of stockholders) may be held at such places, within or
without the State of Delaware, as may be designated from time to time by the
Board of Directors or in the notices thereof. The Board of Directors is
authorized to and shall fix the place of meeting. Such action by the Board of
Directors may be taken from time to time and may fix different places from time
to time.
SECTION 5. NOTICES OF MEETINGS. Every stockholder shall furnish the
Secretary of the Corporation with an address at which notices of meetings and
all other corporate communications may be served on or mailed to him. Except in
special cases with respect to which other provision is made by statute or by the
Certificate of Incorporation of the Corporation, and except in those situations
in which action is to be taken pursuant to Section 1 of Article II, written or
printed notice of each meeting of the stockholders, whether annual or special,
shall be given, not less than ten (10) nor more than fifty (50) days before the
date on which the meeting is to be held, to each stockholder of record of the
Corporation entitled to vote at such meeting by delivering such notice thereof
to him personally or by depositing such notice in the United States mail, in a
postage-prepaid envelope directed to him at the post office address furnished by
him to the Secretary of the Corporation for such purpose, or, if he shall not
have furnished to the Secretary of the Corporation his address for such purpose,
then at his address as it shall otherwise appear on the records of the
Corporation. Except in special cases where other provision is made by statute,
no publication of any notice of a meeting of stockholders shall be required.
Every notice of a
<PAGE>
4
meeting of stockholders shall state the place, date and hour of the meeting and
the purpose or purposes for which the meeting is called. Nevertheless, notice of
any meeting of stockholders shall not be required to be given to any stockholder
who shall attend such meeting in person or by proxy except a stockholder who
shall attend such meeting for the express purpose of objecting, at the beginning
of the meeting, to the transaction of any business because the meeting was not
lawfully called or convened. Except where otherwise required by statute, notice
of any adjourned meeting of the stockholders of the Corporation shall not be
required to be given if the time and place thereof are announced at the meeting
which is adjourned.
SECTION 6. QUORUM. At all meetings of the stockholders of the Corporation,
except where other provision is made by statute, stockholders of the Corporation
holding of record a majority of the shares of stock of the Corporation entitled
to vote thereat shall be present in person or by proxy to constitute a quorum
for the transaction of business. In the absence of a quorum at any meeting or
any adjournment thereof, a majority in voting interest of those present in
person or by proxy and entitled to vote may adjourn such meeting from time to
time. At any such adjourned meeting at which a quorum may be present any
business may be transacted which might have been transacted at the meeting as
originally called. The absence from any meeting of stockholders holding the
number of shares of stock of the Corporation required by statute or by the
Certificate of Incorporation of the Corporation or by these by-laws for action
upon any given matter shall not prevent action at such meeting upon any other
matter or matters which may properly come before the meeting, if there shall be
present thereat in person or by proxy stockholders holding the number of shares
of stock of the Corporation required in respect of such other matter or matters.
<PAGE>
5
SECTION 7. ORGANIZATION. At each meeting of the stockholders the Chairman of
the Board of Directors, or in his absence the Vice Chairman of the Board of
Directors, or in their absence the President of the Corporation, or in the
absence of the Chairman of the Board, the Vice Chairman of the Board and the
President of the Corporation, a chairman (who shall be one of the other
Executive Vice Presidents or Vice Presidents, if any of them be present) chosen
by a majority in voting interest of the stockholders present in person or by
proxy and entitled to vote, shall act as chairman; and the Secretary of the
Corporation or, in his absence, an Assistant Secretary or, in the absence of the
Secretary and Assistant Secretaries of the Corporation, any person whom the
chairman of the meeting shall appoint, shall act as secretary of the meeting.
SECTION 8. ORDER OF BUSINESS. The order of business at all meetings of the
stockholders shall be determined by the chairman of the meeting, but such order
of business may be changed by the vote of a majority in voting interest of those
present or represented at said meeting and entitled to vote thereat.
SECTION 9. VOTING. Each stockholder of the Corporation entitled to vote at a
meeting of stockholders or entitled to give consent in writing to corporate
action without a meeting shall have one vote in person or by proxy for each
share of stock having voting rights held by him and registered in his name on
the books of the Corporation:
(a) on the date fixed pursuant to the provisions of Subsection (a) of
Section 5 of Article VI of these by-laws as the record date for the
determination of stockholders who shall be entitled to notice of and to vote
at such meeting or to give consent in writing to corporate action without a
meeting, or
<PAGE>
6
(b) if no such record date shall have been so fixed, then as provided by
the provisions of Subsection (b) of Section 5 of Article VI of these by-laws.
Shares of its own capital stock belonging to the Corporation or to another
corporation, if a majority of the shares entitled to vote in the election of
directors of such other corporation is held by the Corporation, shall not be
entitled to vote. Persons holding stock in a fiduciary capacity shall be
entitled to vote the shares so held, and persons whose stock is pledged shall be
entitled to vote, unless in the transfer by the pledgor on the books of the
Corporation he shall have expressly empowered the pledgee to vote thereon, in
which case only the pledgee or his proxy may represent said stock and vote
thereon. If shares shall stand of record in the names of two or more persons,
whether fiduciaries, members of a partnership, joint tenants, tenants in common,
tenants by the entirety or otherwise, or if two or more persons shall have the
same fiduciary relationship respecting the same shares, unless the Secretary of
the Corporation shall have been given written notice to the contrary and have
been furnished with a copy of the instrument of order appointing them or
creating the relationship wherein it is so provided, their acts with respect to
voting shall have the following effect:
(i) if only one shall vote, his act shall bind all,
(ii) if more than one shall vote, the act of the majority so voting shall
bind all, or
(iii) if more than one shall vote, but the vote shall be evenly split on
any particular matter, then, except as otherwise required by statute, each
faction may vote the shares in question proportionally.
If the instrument so filed shall show that any such tenancy is held in unequal
interests, a majority or even-split for the purpose of the next preceding
sentence shall be a majority or
<PAGE>
7
even-split in interest. Any vote on stock of the Corporation may be given by the
stockholder entitled thereto in person or by his proxy appointed by an
instrument in writing, subscribed by such stockholder or by his attorney
thereunto authorized and delivered to the secretary of the meeting; provided,
however, that no proxy shall be voted or acted upon after three years from its
date unless said proxy provides for a longer period. Except as provided in
Section 1 of Article II and Section 13 of Article III of these by-laws, and
except also in special cases where otherwise made mandatory by statute or by the
Certificate of Incorporation of the Corporation, all matters coming before the
stockholders shall be decided by the vote of a majority in voting interest of
the stockholders of the Corporation present in person or by proxy at a meeting
and entitled to vote thereat, a quorum being present.
SECTION 10. LIST OF STOCKHOLDERS. It shall be the duty of the Secretary, or
other officer of the Corporation who shall have charge of the stock ledger,
either directly or through a transfer agent appointed by the Board of Directors,
to prepare and make, at least ten days before every meeting of stockholders, a
complete list of stockholders entitled to vote thereat, arranged in alphabetical
order, and showing the address of each stockholder and the number of shares
registered in the name of each stockholder. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten (10) days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present. Upon the wilful
neglect or refusal of the directors to produce such a list at any meeting for
the election of directors, they shall be ineligible for election to any office
at
<PAGE>
8
such meeting. The stock ledger shall be the only evidence as to who are
stockholders entitled to examine the stock ledger, such list or the books of the
Corporation, or to vote in person or by proxy, at any meeting of stockholders.
SECTION 11. INSPECTORS OF ELECTION. At each meeting of the stockholders, the
chairman of such meeting may appoint two Inspectors of Election to act thereat.
Each Inspector of Election so appointed shall first subscribe an oath or
affirmation faithfully to execute the duties of an Inspector of Election at such
meeting with strict impartiality and according to the best of his ability. Such
Inspectors of Election, if any, shall take charge of the ballots at such meeting
and after the balloting thereat on any question shall count the ballots cast
thereon and shall make a report in writing to the secretary of such meeting of
the results thereof. An Inspector of Election need not be a stockholder of the
Corporation, and any officer or employee of the Corporation may be an Inspector
of Election on any question other than a vote for or against his election to any
position with the Corporation or on any other question in which he may be
directly interested.
ARTICLE II.
CONSENTS TO CORPORATE ACTION
SECTION 1. CONSENT OF STOCKHOLDERS IN LIEU OF MEETING. The election of
directors and any other action required by the General Corporation Law of the
State of Delaware or these by-laws to be taken at any annual or special meeting
of stockholders, or any action which may be taken at any annual or special
meeting of such stockholders, may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having not less than
the
<PAGE>
9
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and
voted. Separate written consents may be signed by stockholders severally. Prompt
notice of the taking of the corporate action without a meeting by less than
unanimous written consent shall be given to those stockholders who have not
consented in writing.
SECTION 2. RECORD DATE. The record date for determining stockholders
entitled to express consent to corporate action in writing without a meeting
shall be as fixed by the Board or as otherwise established under this Section.
Any person seeking to have the stockholders authorize or take corporate action
by written consent without a meeting may, by written notice addressed to the
Secretary and delivered to the Company as set forth below, request that a record
date be fixed for such purpose. The record date for determining stockholders
entitled to consent in writing without a meeting to corporate action for which
no prior action by the Board is required under the General Corporation Law of
the State of Delaware shall be (i) the date fixed by the Board or (ii) if no
record date has been so fixed prior to the first date on which a signed written
consent setting forth the action taken or proposed to be taken is delivered to
the Company by delivery to its registered office in Delaware, its principal
place of business or an officer or agent of the corporation having custody of
the book in which proceedings of meetings of stockholders are recorded, then
such first date. The record date for determining stockholders entitled to
consent in writing without a meeting to corporate action for which prior action
by the Board is required under the General Corporation Law of the State of
Delaware shall be (i) the date fixed by the Board or (ii) if the Board has not
taken action to fix the record date then such record date shall be the close of
business on the date upon which the Board adopts the resolution taking such
prior action. In connection with a record date fixed by the Board, in
<PAGE>
10
no case shall such record date (i) precede or (ii) be fixed more than 10 days
after the date upon which the resolution fixing the record date is adopted by
Board.
SECTION 3. PROCEDURES. In the event of the delivery to the Corporation of a
written consent or consents purporting to authorize or take corporate action
and/or related revocations (each such written consent and related revocation is
referred to in this Article II as a "Consent"), the Secretary of the Corporation
shall provide for the safe-keeping of such Consent and shall promptly conduct
such ministerial review of the sufficiency of the consents and of the validity
of the action to be taken by stockholder consent as he deems necessary or
appropriate including, determining whether the holders of shares having the
requisite voting power to authorize or take the action specified in the Consent
have given consent; PROVIDED, HOWEVER, that if the corporate action to which the
Consent relates is the removal or replacement of one or more members of the
Board, the Secretary of the Corporation shall designate two persons, who may not
be members of the Board, to serve as Inspectors with respect to such Consent and
such Inspectors shall discharge the functions of the Secretary of the
Corporation under this Section 3. If after such investigation the Secretary or
the Inspectors (as the case may be) shall determine that the Consent is valid
and that the action purported to be authorized or taken has been validly
authorized, that fact shall be noted on the records of the Corporation kept for
the purpose of recording the proceedings of meetings of stockholders, and the
Consent shall be filed in such records, at which time the Consent shall become
effective as stockholder action. In conducting the investigation required by
this Section 3, the Secretary or the Inspectors (as the case may be) may, at the
expense of the Corporation, retain special legal counsel and other necessary or
appropriate professional advisors, and such other personnel as they may deem
necessary or appropriate, to assist them.
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11
ARTICLE III.
BOARD OF DIRECTORS
SECTION 1. GENERAL POWERS. The property, affairs and business of the
Corporation shall be managed by the Board of Directors.
SECTION 2. NUMBER, QUALIFICATIONS AND TERM OF OFFICE. The number of
directors shall be fifteen, but the number may be increased, or diminished to
not less than three, by amendment of these by-laws. Directors need not be
stockholders. Each of the directors of the Corporation shall hold office until
the annual meeting held next after his election and shall qualify, or until his
earlier death or his earlier resignation or removal in the manner hereinafter
provided.
SECTION 3. NOMINATIONS OF DIRECTORS. Only persons who are nominated in
accordance with the following procedures shall be eligible for election as
directors. Nominations of persons for election to the Board of Directors of the
Corporation may be made at a meeting of stockholders by or at the direction of
the Board of Directors by any nominating committee or person appointed by the
Board or by any stockholder of the Corporation entitled to vote for the election
of directors at the meeting who complies with the notice procedures set forth in
this Section 3. Such nominations, other than those made by or at the direction
of the Board, shall be made pursuant to timely notice in writing to the
Secretary, Honeywell Inc. To be timely, a stockholder's notice shall be
delivered to or mailed and received at the principal executive offices of the
Corporation not less than 50 days nor more than 75 days prior to the meeting;
PROVIDED, HOWEVER, that in the event that less than 65 days' notice or prior
public disclosure of the date of the meeting is given or made to stockholders,
notice by the
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12
stockholder to be timely must be so received not later than the close of
business on the 15th day following the day on which such notice of the date of
the meeting was mailed or such public disclosure was made. Such stockholder's
notice to the Secretary shall set forth (a) as to each person whom the
stockholder proposes to nominate for election or re-election as a director, (i)
the name, age, business address and residence address of the person, (ii) the
principal occupation or employment of the person, (iii) the class and number of
shares of capital stock of the Corporation which are beneficially owned by the
person and (iv) any other information relating to the person that is required to
be disclosed in solicitations for proxies for election of directors pursuant to
Rule 14a under the Securities Exchange Act of 1934, as amended; and (b) as to
the stockholder giving the notice (i) the name and record address of stockholder
and (ii) the class and number of shares of capital stock of the Corporation
which are beneficially owned by the stockholder. The Corporation may require any
proposed nominee to furnish such other information as may reasonably be required
by the Corporation to determine the eligibility of such proposed nominee to
serve as director of the Corporation. No person shall be eligible for election
as a director of the Corporation unless nominated in accordance with the
procedures set forth herein.
The Chairman of the meeting shall, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with the
foregoing procedure, and if he should so determine, he shall so declare to the
meeting and the defective nomination shall be disregarded.
SECTION 4. ELECTION OF DIRECTORS. At each meeting of stockholders for the
election of directors at which a quorum is present, the persons receiving the
largest number of votes (up to and including the number of directors to be
elected) shall be directors. If directors are to be elected by consent in
writing of the stockholders without a meeting pursuant to Section 1 of
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13
Article II of these by-laws, those persons receiving the consent in writing of
the largest number of shares in the aggregate and constituting not less than a
majority of the total outstanding shares entitled to give consent in writing
thereon (up to and including the number of directors to be elected) shall be
directors.
SECTION 5. ORGANIZATION. At each meeting of the Board of Directors, the
Chairman of the Board of Directors, or in his absence, the President of the
Corporation, or in his absence an Executive Vice President, if a member of the
Board of Directors, or in the absence of all of said officers, a Vice President,
if a member of the Board of Directors, or in the absence of all of said
officers, a chairman chosen by the majority of the directors present, shall
preside. The Secretary of the Corporation, or in his absence, an Assistant
Secretary, if any, or, in the absence of both the Secretary and Assistant
Secretaries, any person whom the chairman shall appoint, shall act as secretary
of the meeting. Any person so appointed as secretary of the meeting shall, if so
required by the Board of Directors, be sworn to the faithful discharge of his
duties before entering thereupon.
SECTION 6. RESIGNATIONS. Any director of the Corporation may resign at any
time by giving written notice to the Chairman of the Board of Directors or to
the President of the Corporation or to the Secretary of the Corporation. Such
resignation shall take effect at the time specified therein, or, if the time be
not specified, upon receipt thereof by the Chairman of the Board of Directors,
the President of the Corporation or the Secretary, as the case may be; and,
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective.
SECTION 7. QUALIFICATIONS AND RETIREMENT.
(a) CHIEF EXECUTIVE OFFICERS OF HONEYWELL. A director who is also the Chief
Executive Officer of the Company shall
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14
no longer be qualified to act as a director and his or her term of office shall
expire at the time he or she ceases to hold that position; PROVIDED, HOWEVER,
that in the event the Nominating Committee determines that it will be in the
best interests of the Company for the former Chief Executive Officer to continue
as a director, the Committee may ask him or her to continue as a director
through the completion of any remaining part of his or her current, regular term
of office as a director and, in addition to any such partial year, may nominate
the former Chief Executive Officer to be a director for a single term of one
year.
(b) OTHER INSIDE DIRECTORS. Any director who is an officer of the Company,
other than the Chief Executive Officer, shall no longer be qualified to act as a
director and his or her term of office shall expire on the earliest to occur of:
(i) the time of a diminution in his or her duties or responsibilities as an
officer unless the Nominating Committee at its sole discretion determines such
officer continues to be qualified to act as a director, (ii) the time he or she
ceases to be an employee of the Corporation for any reason, or (iii) on his or
her sixty-fifth birthday.
(c) OUTSIDE DIRECTORS. Any director who is not and has not been an officer
of the Company (an Outside Director) shall not be nominated for re-election as a
director at the next annual meeting following either (i) fifteen years service
as a director or (ii) the director's seventieth birthday. At the time an Outside
Director retires from or changes the principal occupation engaged in when
initially elected as a director, he or she shall notify the Nominating Committee
of his or her change of position together with an indication of whether or not
he or she is willing to stand for election as a director at the next annual
meeting; thereafter the Nominating Committee at
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15
its discretion will determine whether or not to ask that director to stand for
re-election to the Board, provided the director shall not be permitted to stand
for re-election beyond the age and years-of-service limits set forth above.
(d) INTERPRETATION. The Nominating Committee in its sole discretion shall
have the responsibility for interpretation of qualifications for directors
identified in this Section 7.
SECTION 8. VACANCIES. Except as otherwise provided
by law, any vacancy in the Board of Directors (whether
because of death, resignation, removal, an increase in the
number of directors or any other cause) may be filled by a
majority of the directors then in office, though less than a
quorum; and each director so chosen shall hold office until the
next annual election and until his successor shall be duly
elected and qualified, unless sooner displaced.
SECTION 9. PLACE OF MEETING, ETC. The Board of Directors may hold its
meetings at such place or places within or without the State of Delaware as the
Board may from time to time determine, or as shall be specified or fixed in the
respective notices or waivers of notice thereof. The Corporation may have one or
more offices, and may keep its books and records at such place or places within
or without the State of Delaware as the Board shall from time to time determine.
SECTION 10. FIRST MEETING. As soon as practicable after each annual election
of directors and on the same day, the Board of Directors may meet for the
purposes of organization and of choosing the officers of the Corporation and for
the transaction of other business at the place where regular meetings of the
Board of Directors are held. Notice of such meeting need not be given. Such
first meeting may be held at any other time or place which shall be specified in
a notice given as hereinafter provided for special meetings of the Board, or in
a consent and waiver of notice thereof signed by all the directors.
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16
SECTION 11. REGULAR MEETINGS. Regular meetings of the Board of Directors
shall be held at such times as the Board of Directors shall by resolution from
time to time determine. If any day fixed for a regular meeting shall be a legal
holiday at the place where the meeting is to be held, then the meeting shall be
held at the same hour and place on the next succeeding secular day not a legal
holiday. Notice of regular meetings need not be given, except of the regular
meetings at which it is proposed to alter or repeal these by-laws or to adopt
one or more new by-laws, of each of which meetings a notice, which shall state
at least the substance of the proposed change, shall be given in the same manner
as is required for a special meeting.
SECTION 12. SPECIAL MEETINGS; NOTICE. Special meetings of the Board of
Directors shall be held whenever called by the Chairman of the Board of
Directors or by the President of the Corporation or by any two of the directors.
A notice shall be given as hereinafter in this section provided of each such
special meeting, in which shall be stated the time and place of such meeting,
but, except as otherwise expressly provided by law or by these by-laws, the
purposes thereof need not be stated in such notice. Except in special cases
where other provision is made by statute, notice of each such meeting shall be
mailed to each director, addressed to him at his residence or usual place of
business, at least two days before the day on which the meeting is to be held,
or shall be sent to him at such place by telegraph or cable or be delivered
personally or by telephone not later than the day before the day on which the
meeting is to be held. Any meeting of the Board of Directors shall be a legal
meeting without any notice thereof having been given if all the directors shall
be present thereat or if notice thereof shall be waived either before or after
such meeting in writing or by telegraph or cable by all absentees therefrom
provided a quorum be present thereat. Notice of any adjourned meeting need not
be given.
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17
SECTION 13. QUORUM AND MANNER OF ACTING. One third of the directors in
office at the time of any regular or special meeting of the Board of Directors
shall be present in person at such meeting in order to constitute a quorum for
the transaction of business and, except as specified in Sections 8, 16 and 17 of
this Article III and Section 4 of Article IV of these by-laws, and except also
in special cases where other provision is made by statute, the vote of a
majority of the directors present at any such meeting, at which a quorum is
present, shall be the act of the Board of Directors. In the absence of a quorum,
a majority of directors present at any meeting may adjourn the same from time to
time until a quorum be had. The directors shall act only as a board and the
individual directors shall have no power as such.
SECTION 14. REMOVAL OF DIRECTORS. Any director may be removed for cause at
any time by the affirmative vote of the holders of a majority of all the shares
of stock outstanding and entitled to vote for the election of directors, given
at a special meeting of such stockholders called for the purpose; and the
vacancy in the Board of Directors caused by such removal shall be filled by such
stockholders at such meeting, or, if the stockholders shall fail to fill such
vacancy, by the Board of Directors.
SECTION 15. COMPENSATION. Directors and members of any committee of the
Corporation contemplated by these by-laws or otherwise provided for by
resolution of the Board of Directors, who are not salaried officers of the
Corporation, shall receive such fixed sum per meeting attended, or such annual
sum or sums, as shall be determined from time to time by resolution of the Board
of Directors. All directors and members of any such committee shall receive
their expenses, if any, of attendance at meetings of the Board of Directors or
of such committee. Nothing herein contained shall be construed to preclude any
director from serving the Corporation in any other capacity, and receiving
proper compensation therefor.
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18
SECTION 16. COMMITTEES.
(a) There shall be an Executive Committee which shall have such powers and
authority provided by resolution passed by a majority of the Board of
Directors.
(b) The Board of Directors may, by resolution passed by a majority of the
whole Board, designate one or more committees, in addition to the Executive
Committee, which, to the extent provided in said resolution, shall have and
may exercise the powers and authority of the Board in the management of the
business and affairs of the Corporation and may authorize the seal of the
Corporation to be affixed to all papers which may require it.
(c) Each committee, for which provision is made by paragraph (a) or (b) of
this Section 16, shall consist of one or more directors of the Corporation
who shall be appointed by the Chairman of the Board of Directors provided,
however, that each such appointment shall be reported promptly to the Board
of Directors and no member of a committee shall participate in any action by
a committee which shall constitute an exercise of a power of the Board until
the appointment of such member has been ratified by a majority of the full
Board. Any vacancy on a committee shall be filled by appointment by the
Chairman of the Board of Directors in the same manner in which original
appointments to such committee were made. The chairman of each committee
shall be designated by the Chairman of the Board of Directors. A majority of
those entitled to vote at any meeting of any committee shall constitute a
quorum for the transaction of business at that meeting. In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the Board
to act at the meeting in the place of any such absent or disqualified member.
<PAGE>
19
SECTION 17. INDEMNIFICATION OF EMPLOYEES, OFFICERS AND DIRECTORS.
(a) Any person who is or was an employee, officer or director of the
Corporation, or of any other corporation, partnership, joint venture, trust
or other enterprise, including service with respect to employee benefit
plans, which he served as such at the request of the Corporation, shall,
unless prohibited by law, be indemnified by the Corporation in accordance
with paragraph (b) below, against reasonable expenses, paid or incurred by
him in connection with or resulting from any claim, action, suit or
proceeding (whether brought by or in the right of the Corporation or
otherwise), civil, criminal, administrative or investigative, including any
appeal therein in which he may be involved, or threatened to be involved, as
a party or otherwise, by reason of the fact he is or was an employee, officer
or director, provided such person acted, in good faith, in what he reasonably
believed to be in or not opposed to the best interest of the Corporation or
such other corporation or organization and, in addition, with respect to any
criminal actions or proceedings, had no reasonable cause to believe his
conduct was unlawful, provided further the Corporation shall indemnify any
such person in connection with a claim, action, suit or proceeding initiated
by such person only if such matter was authorized by the Board of Directors,
and provided further no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Court of
Chancery or such other court
<PAGE>
20
shall deem proper. The termination of any claim, action, suit or proceeding,
by judgment, settlement (whether with or without court approval), adverse
decision or conviction after trial or upon a plea of guilty or of NOLO
CONTENDERE, or its equivalent, shall not create a presumption that such
person did not meet the standards of conduct set forth in this paragraph (a).
As used in this Section 17 the term "expenses" shall include, but not be
limited to, counsel fees and disbursements, amounts of judgments, fines or
penalties against, and amounts paid in settlement by, such person.
(b) To the extent that any person claiming indemnification under paragraph
(a) of this Section 17 has been successful, on the merits or otherwise, in
defense of any claim, action, suit or proceeding of the character described
in paragraph (a), he shall be reimbursed by the Corporation for the amounts
of all reasonable expenses paid or incurred by him in connection with such
successful defense. Any person claiming indemnification under said paragraph
(a) shall be reimbursed by the Corporation for his reasonable expenses if (i)
the Board of Directors by a majority vote of a quorum consisting of directors
who are not parties to such claim, action, suit or proceeding shall deliver
to the Corporation its written findings that such person is entitled to
reimbursement under the provisions of said paragraph or (ii) if such a quorum
is not attainable, or even if obtainable a quorum of disinterested directors
so directs, independent legal counsel (who may be regular counsel for the
Corporation) selected by the Board of Directors shall deliver to the
Corporation written advice that, in their judgment, such person is so
entitled.
(c) Any expenses incurred by an officer or director with respect to any
claim, action, suit or proceeding of the character described in paragraph (a)
of this Section 17 may be advanced by the Corporation prior to the final
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21
disposition thereof upon receipt of an undertaking by or on behalf of the
person to repay such amount if it is ultimately determined that he is not to
be indemnified under this Section 17. Such expenses incurred by other
employees may be so paid upon such terms and conditions, if any, as the Board
of Directors shall determine to be appropriate.
(d) The rights of indemnification provided in this Section 17 shall be in
addition to any other rights to which any such person may otherwise be
entitled by contract or as a matter of law; and such rights shall continue as
to a person who has ceased to be an employee, officer or director and, in the
event of such person's death, shall extend to his heirs and legal
representatives.
SECTION 18. ACTION WITHOUT MEETING. Any action required or permitted to be
taken at any meeting of the Board of Directors or of any committee thereof may
be taken without a meeting if all members of the Board or of such committee, as
the case may be, consent thereto in writing, and the writing or writings are
filed with the minutes of proceedings of the Board or of such committee.
SECTION 19. PRESENCE AT MEETINGS. Members of the Board of Directors or of
any committee designated by it may participate in a meeting of such Board or
committee by means of conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other,
and participation in a meeting pursuant to this Section 19 shall constitute
presence in person at such meeting.
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22
ARTICLE IV.
OFFICERS
SECTION 1. NUMBER. The officers of the Corporation shall be a Chairman of
the Board of Directors who shall be chosen by the directors from their own
number, one or more Vice Chairmen of the Board of Directors if the Board of
Directors shall so determine, a President of the Corporation if the Board of
Directors shall so determine, one or more Presidents of the businesses of the
Corporation if the Board of Directors shall so determine, one or more Vice
Presidents, a Treasurer, a Secretary and such other officers as may be appointed
in accordance with the provisions of this Article. The Board of Directors may
designate one or more Vice Presidents to be an Executive Vice President or
Senior Vice President. The Board of Directors, by resolution, the Chairman of
the Board of Directors, the President of the Corporation, or the Treasurer may
create the offices of and appoint one or more Assistant Treasurers. The Board of
Directors, by resolution, the Chairman of the Board of Directors, the President
of the Corporation, or the Secretary may create the offices of and appoint one
or more Assistant Secretaries and one or more Attesting Secretaries. The term of
office for each Assistant Treasurer, each Assistant Secretary and Attesting
Secretary appointed by any of the foregoing officers shall be determined by the
officer making such appointment but shall not in any event exceed twelve months.
No more than three Assistant Treasurers and three Assistant Secretaries may be
appointed by those officers at any one time. The officer making the appointment
shall give to the Secretary written notification of each such appointment. The
notification shall be placed in the book containing the proceedings of the Board
of Directors.
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23
Any two or more of the above-mentioned offices may be held by the same
person.
SECTION 2. ELECTION, TERM OF OFFICE AND QUALIFICATIONS. Except for Assistant
Treasurers, Assistant Secretaries and Attesting Secretaries appointed by the
Chairman of the Board of Directors, the President of the Corporation, the
Treasurer, or the Secretary, the officers of the Corporation shall be chosen
annually by the Board of Directors at the first meeting thereof held after each
annual meeting of stockholders for the election of directors and shall hold
office until his successor shall have been duly chosen and shall qualify, or
until his earlier death or his earlier resignation or removal in the manner
hereinafter provided.
ARTICLE IV.
SECTION 3. REMOVAL. Any officer may be removed, either with or without
cause, at any time, by resolution adopted by a majority of the whole Board of
Directors at a special meeting of the Board called for that purpose, or, except
in the case of any officer elected or appointed by the stockholders or by the
Board of Directors, by any committee or superior officer upon whom such power of
removal may be conferred by the Board of Directors.
SECTION 4. RESIGNATIONS. Any officer may resign at any time by giving
written notice of his resignation to the Board of Directors, or to the Chairman
of the Board of Directors, or to the President of the Corporation, or to the
Secretary of the Corporation. Any such resignation shall take effect at any time
specified therein; and, unless otherwise specified therein, the acceptance of
such resignation shall not be necessary to make it effective.
SECTION 5. VACANCIES. A vacancy in any office because of death, resignation,
removal, disqualification or otherwise,
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24
shall be filled for the unexpired portion of the term in the manner prescribed
in these by-laws for regular appointments or elections to such office.
SECTION 6. THE CHAIRMAN OF THE BOARD OF DIRECTORS. The Chairman of the Board
of Directors shall, be the chief executive officer of the corporation and shall
have general supervision over the business and affairs of the Corporation and
over its several officers and employees, subject, however, to the control of the
Board of Directors. He shall, if present, preside at all meetings of the Board
of Directors and of the stockholders. The Chairman of the Board of Directors
shall see that all orders and resolutions of the Board of Directors are carried
into effect and shall from time to time report to the Board of Directors all
matters within his knowledge which the interests of the Corporation may require
to be brought to their notice. The Chairman of the Board of Directors may sign,
execute and deliver in the name of the Corporation, certificates for shares of
the capital stock of the Corporation, any deeds, mortgages, bonds, contracts or
other instruments which the Board of Directors shall have authorized to be
executed, except in cases where the signing and execution thereof shall be
expressly delegated by the Board or by these by-laws to some other officer or
agent of the Corporation or shall be required by law otherwise to be signed or
executed. In general, the Chairman of the Board of Directors shall perform all
duties incident to the office of the Chairman of the Board of Directors, and
such other duties as from time to time may be assigned by the Board of
Directors.
SECTION 7. THE VICE CHAIRMAN OF THE BOARD OF DIRECTORS. In the absence of
the Chairman of the Board of Directors, the Vice Chairman of the Board of
Directors shall, if present, preside at meetings of the Board of Directors, and
shall perform such other duties that may be assigned to him by the Board of
Directors.
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25
SECTION 8. THE PRESIDENT OF THE CORPORATION. The President of the
Corporation shall be the chief operating officer of the Corporation and shall
perform the duties assigned to him from time to time by the Chairman of the
Board of Directors or by the Board of Directors. In the absence of the Chairman
of the Board of Directors or a Vice Chairman of the Board of Directors (if that
position has been filled by the Board of Directors) the President of the
Corporation shall, if present, preside at meetings of the Board of Directors.
The President of the Corporation may sign, with the Secretary or Treasurer or
any other proper officer of the Corporation thereunto authorized by the Board of
Directors, certificates for shares of the capital stock of the Corporation, any
deeds, mortgages, bonds, contracts or other instruments which the Board of
Directors shall have authorized to be executed, except in cases where the
signing and execution thereof shall be expressly delegated by the Board or by
these by-laws to some other officer or agent of the Corporation or shall be
required by law otherwise to be signed or executed; and, in general, shall
perform all duties incident to the office of the President of the Corporation.
SECTION 9. AUTHORITY AND DUTIES OF THE BUSINESS PRESIDENTS, EXECUTIVE VICE
PRESIDENTS, SENIOR VICE PRESIDENTS, AND VICE PRESIDENTS. Any Business
President, Executive Vice President, Senior Vice President, or Vice President
authorized so to do by the Board of Directors may sign, with the Secretary or
the Treasurer or any other proper officer of the Corporation thereunto
authorized by the Board of Directors, certificates for shares of the capital
stock of the Corporation; and shall perform such other duties as from time to
time may be assigned to them by the Chairman of the Board of Directors or by the
President of the Corporation or by the Board of Directors.
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26
SECTION 10. THE TREASURER. The Treasurer shall:
(a) Have charge and custody of, and be responsible for, all funds and
securities of the Corporation, receive and give receipts for moneys due and
payable to the Corporation from any sources whatsoever, and deposit all such
moneys in the name of the Corporation in such banks, trust companies or other
depositaries as shall be selected in accordance with the provisions of
Article V of these by-laws;
(b) Have the right to require, from time to time, reports or statements
giving such information as he may desire with respect to any and all
financial transactions of the Corporation from the officers or agents
transacting the same;
(c) Render to the Board of Directors, whenever the Board of Directors
shall require him so to do, an account of the financial condition of the
Corporation and of all of his transactions as Treasurer;
(d) Exhibit at all reasonable times his books of account and other records
to any of the directors of the Corporation upon application during business
hours at the office of the Corporation where such books and records are kept;
(e) Sign (unless the Secretary or other proper officer thereunto duly
authorized by the Board of Directors shall sign), with the Chairman of the
Board of Directors or the President of the Corporation or an Executive Vice
President or a Vice President, certificates for shares of the capital stock
of the Corporation the issue of which shall have been authorized by
resolution of the Board of Directors, provided that the signatures of the
officers of the Corporation thereon may be facsimile as provided in Section 1
of Article VI of these by-laws; and
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27
(f) In general, perform all the duties incidental to the office of
Treasurer and such other duties as from time to time may be assigned to him
by the Chairman of the Board of Directors or by the President of the
Corporation or by the Board of Directors.
SECTION 11. THE SECRETARY. The Secretary shall:
(a) Record all the proceedings of the stockholders, the Board of Directors
and the Executive Committee in one or more books kept for that purpose;
(b) See that all notices are duly given in accordance with the provisions
of these by-laws or as required by law;
(c) Be custodian of the corporate records and of the seal of the
Corporation and see that the seal or a facsimile thereof is affixed to or
impressed or reproduced on all stock certificates prior to the issue thereof
and to all documents the execution of which on behalf of the Corporation
under its seal is duly authorized in accordance with the provisions of these
by-laws. Unless the Board of Directors shall otherwise direct in specific
instances, the seal of the Corporation when so affixed, impressed or
reproduced shall always be attested by the signature of the Secretary, or, if
any, of an Assistant Secretary or an Attesting Secretary, provided that
signatures on certificates for shares of the capital stock of the Corporation
may be facsimile as provided in Section 1 of Article VI of these by-laws;
(d) Keep a register of the post office address of each stockholder which
shall be furnished to the Secretary by such stockholder in accordance with
the provisions of Section 1 of Article II of these by-laws;
(e) See that the duties prescribed by Section 9 of Article I of these
by-laws are performed;
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(f) Sign (unless the Treasurer or other proper officer thereunto duly
authorized by the Board of Directors shall sign), with the Chairman of the
Board of Directors or the President of the Corporation or an Executive Vice
President or a Vice President, certificates for shares of the capital stock
of the Corporation the issue of which shall have been authorized by
resolution of the Board of Directors, provided that the signatures of the
officers of the Corporation thereon may be facsimile as provided in Section 1
of Article VI of these by-laws;
(g) Have general charge of the stock certificate books of the Corporation
and also of the other books and papers of the Corporation and see that the
books, reports, statements, certificates and all other documents and records
required by law are properly kept and filed; and
(h) In general, perform all duties incident to the office of Secretary,
and such other duties as from time to time may be assigned to him by the
Chairman of the Board of Directors or by the President of the Corporation or
by the Board of Directors.
SECTION 12. ASSISTANT TREASURERS, ASSISTANT SECRETARIES AND ATTESTING
SECRETARIES. The Assistant Treasurers and Assistant Secretaries, if thereunto
authorized by the Board of Directors, may sign, with the Chairman of the Board
of Directors, or the President of the Corporation, or an Executive Vice
President, or a Vice President, certificates for shares of the capital stock of
the Corporation the issue of which shall have been authorized by resolution of
the Board of Directors and, in general, shall perform such duties as shall be
assigned to them by the Treasurer or the Secretary, respectively, or by the
Board of Directors. The Assistant Secretaries and Attesting
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29
Secretaries shall have the power to affix and attest the corporate seal of the
Corporation and to attest the execution of documents on behalf of the
Corporation.
SECTION 13. SALARIES. The salaries of the officers shall be fixed from time
to time by the Board of Directors, or by one or more committees or officers to
the extent so authorized from time to time by the Board of Directors, and no
officer shall be prevented from receiving such salary by reason of the fact that
he is also a director of the Corporation.
SECTION 14. SUBORDINATE POSITIONS, ETC. The Corporation may provide titles,
including the title of Vice President, for other individuals who serve in
management positions with the corporate staff, or with group, division or other
operational units of the Corporation but who do not perform the function of
officer for the Corporation. Individuals in such positions shall hold such
titles at the discretion of the appointing officer and shall have such authority
and perform such duties as the Chairman of the Board of Directors, or the Vice
Chairman of the Board of Directors, or any officer to whom they delegate their
authority in this regard, may from time to time determine.
ARTICLE V.
CONTRACTS, LOANS, CHECKS, DEPOSITS, ETC.
SECTION 1. CONTRACTS, ETC. HOW EXECUTED. The Board of Directors, except as
in these by-laws otherwise provided, may authorize any officer or officers,
agent or agents, to enter into any contract or execute and deliver any
instrument in the name of and on behalf of the Corporation, and such authority
may be general or confined to specific instances; and, unless so authorized by
the Board of Directors or by the provisions of these by-laws, no officer, agent
or employee other than the Chairman of the Board of Directors and the President
shall
<PAGE>
30
have any power or authority to bind the Corporation by any contract or
engagement or to pledge its credit or to render it liable pecuniarily for any
purpose or to any amount.
SECTION 2. LOANS. No loans shall be contracted on behalf of the Corporation
and no negotiable paper shall be issued in its name, unless authorized by vote
of the Board of Directors. When so authorized by the Board of Directors any
officer or agent of the Corporation designated by the Board of Directors may
effect loans and advances at any time for the Corporation from any bank, trust
company or other institution, or from any firm, corporation or individual, and
for such loans and advances may make, execute and deliver bonds, notes and other
obligations or evidences of indebtedness of the Corporation, and when authorized
as aforesaid, as security for the payment of any and all loans, advances,
indebtedness and liabilities of the Corporation and of the interest thereon, may
pledge, hypothecate or transfer any and all stocks, securities and other
personal property held or owned by the Corporation and to that end endorse,
assign and deliver the same. Such authority may be general or confined to
specific instances.
SECTION 3. CHECKS, DRAFTS, ETC. All checks, drafts or other orders for the
payment of money, notes, or other evidences of indebtedness issued in the name
of the Corporation, shall be signed by such officer or officers, agent or agents
of the Corporation and in such manner as shall from time to time be determined
by resolution of the Board of Directors.
SECTION 4. DEPOSITS. All funds of the Corporation not otherwise employed
shall be deposited from time to time to the credit of the Corporation in such
banks, trust companies or other depositaries as the Board of Directors may
select or as may be selected by any officer or officers, agent or agents of the
Corporation to whom such power may from time to time be delegated by the Board
of Directors. For the purpose of
<PAGE>
31
such deposit, checks, drafts and other orders for the payment of money which are
payable to the order of the Corporation may be endorsed, assigned and delivered
by the Chairman of the Board of Directors, the President of the Corporation, any
Business President, any Executive Vice President, any Vice President, the
Treasurer or the Secretary, or by any officer, agent or employee of the
Corporation to whom any of said officers, in writing, or the Board of Directors,
by resolution, shall have delegated such power.
SECTION 5. GENERAL AND SPECIAL BANK ACCOUNTS. The Board of Directors may
from time to time authorize the opening and keeping of general and special bank
accounts with such banks, trust companies or other depositaries as the Board of
Directors may select, and may make such special rules and regulations with
respect thereto, not inconsistent with the provisions of these by-laws, as they
may deem expedient.
ARTICLE VI.
SHARES AND THEIR TRANSFER
SECTION 1. CERTIFICATES FOR STOCK. Every owner of stock of the Corporation
shall be entitled to a certificate to be in such form as the Board of Directors
shall prescribe, certifying the number and class of shares of stock of the
Corporation owned by him. The certificates for the respective classes of such
stock shall be numbered in the order in which they shall be issued and shall be
signed in the name of the Corporation by the Chairman of the Board of Directors,
or the President of the Corporation, or Executive Vice President, or a Vice
President and by the Secretary or the Treasurer, or by any other proper officer
of the Corporation thereunto authorized by the Board of Directors and the seal
of the Corporation shall be affixed thereto, provided that the signatures of the
officers of
<PAGE>
32
the Corporation and the seal thereon may be facsimile if such certificates are
signed by a transfer agent other than the Corporation or an employee of the
Corporation or by a registrar other than the Corporation or an employee of the
Corporation. The signature by or on behalf of the transfer agent on any such
certificate may also be facsimile if such certificate is signed by a registrar
other than the Corporation or an employee of the Corporation. A record shall be
kept of the name of the person, firm or corporation owning the stock represented
by such certificates, the number and class of shares represented by such
certificates, respectively, and the respective dates thereof, and in case of
cancellation, the respective dates of cancellation. Every certificate
surrendered to the Corporation for exchange or transfer shall be cancelled and
no new certificate or certificates shall be issued in exchange for any existing
certificate until such existing certificate shall have been so cancelled, except
in cases provided for in Section 4 of this Article VI.
SECTION 2. TRANSFER OF STOCK. Transfers of shares of the capital stock of
the Corporation shall be made only on the books of the Corporation by the
registered holder thereof, or by his attorney thereunto authorized by power of
attorney duly executed and filed with the Secretary of the Corporation, or with
its transfer agent, and on surrender for cancellation of the certificate or
certificates for such shares. The person in whose name shares of stock stand on
the books of the Corporation shall be deemed the owner thereof for all purposes
as regards the Corporation; provided that whenever any transfers of shares shall
be made as collateral security, and not absolutely, such fact shall be so
expressed in the entry of transfer if, when the certificate or certificates
shall be presented to the Corporation or to said transfer agent for transfer,
both the transferor and the transferee request the Corporation to do so.
<PAGE>
33
SECTION 3. TRANSFER AND REGISTRY AGENTS. The Corporation may maintain a
transfer office or agency where its stock shall be directly transferable and a
registry office, which may be identical with the transfer office or agency,
where its stock shall be registered; and the Corporation may, from time to time,
maintain one or more other transfer offices or agencies, and registry offices;
and the Board of Directors may from time to time, define the duties of such
transfer agents and registrars and make such rules and regulations as it may
deem expedient, not inconsistent with these By-laws, concerning the issue,
transfer and registration of certificates for shares of the capital stock of the
Corporation.
SECTION 4. LOST, STOLEN, DESTROYED AND MUTILATED CERTIFICATES. The owner of
any stock of the Corporation shall immediately notify the Corporation of any
loss, theft, destruction or mutilation of the certificate therefor, and the
Corporation may issue a new certificate of stock in the place of any certificate
theretofore issued by it, alleged to have been lost, stolen or destroyed, and
the Board of Directors may, in its discretion, require the owner of the lost,
stolen or destroyed certificate or his legal representatives to give the
Corporation a bond in such sum as it may direct, not exceeding double the value
of the stock, to indemnify the Corporation against any claim that may be made
against it on account of the alleged loss, theft or destruction of any such
certificate. A new certificate may be issued without requiring any bond when, in
the judgment of the Board of Directors, it is proper so to do.
SECTION 5. FIXING DATE FOR DETERMINATION OF STOCKHOLDERS OF RECORD.
(a) In order that the Corporation may determine the stockholders entitled
to notice of or to vote at any meeting of stockholders or any adjournment
thereof, or to express consent to corporate action in writing without a
meeting, or entitled to receive payment of any dividend or other
<PAGE>
34
distribution or allotment of any rights, or entitled to exercise any rights
in respect of any change, conversion or exchange of stock or for the purpose
of any other lawful action, the Board of Directors may fix, in advance, a
record date, which shall not be more than sixty (60) nor less than ten (10)
days before the date of such meeting, nor more than sixty (60) days prior to
any other action.
(b) If no record date is fixed:
(1) The record date for determining stockholders entitled to notice
of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or,
if notice is waived, at the close of business on the day next preceding
the day on which the meeting is held.
(2) The record date for determining stockholders entitled to express
consent to corporate action in writing without a meeting, when no prior
action by the Board of Directors is necessary, shall be the day on which
the first written consent is expressed.
(3) The record date for determining stockholders for any other
purpose shall be at the close of business on the day on which the Board
of Directors adopts the resolution relating thereto.
(c) A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
<PAGE>
35
ARTICLE VII.
OFFICES
SECTION 1. REGISTERED OFFICE. The registered office of the Corporation in
the State of Delaware shall be in the City of Wilmington, County of New Castle,
and the registered agent of the Corporation in said State is Corporation Trust
Company of America. The Corporation's "principal office or place of business" in
said State and its "resident agent" in said State shall be deemed to mean said
registered office and registered agent, respectively.
SECTION 2. OTHER OFFICES. The Corporation shall also have an office in the
City of Minneapolis, State of Minnesota, and at such other places as the Board
of Directors may from time to time appoint or the business of the Corporation
require.
ARTICLE VIII.
DIVIDENDS, SURPLUS, ETC.
Subject to the provisions of law, of the Certificate of Incorporation of the
Corporation and of these by-laws, the Board of Directors may declare and pay
dividends upon the shares of stock of the Corporation either (a) out of its
surplus as defined in and computed in accordance with the provisions of the laws
of the State of Delaware or (b) in case there shall be no such surplus, out of
its net profits for the fiscal year in which the dividend is declared and/or the
preceding fiscal year, whenever, and in such amounts as, in its opinion, the
condition of the affairs of the Corporation shall render it advisable. Subject
as aforesaid, the Board of Directors in its discretion may use and apply any of
the surplus or net profits of the Corporation applicable for such purpose in
purchasing or acquiring any of
<PAGE>
36
the shares of the capital stock of the Corporation in accordance with law, or
any of its bonds, debentures, notes, scrip or other securities or evidences of
indebtedness, or from time to time may set aside from such surplus or net
profits such sum or sums as it, in its absolute discretion, may think proper, as
a reserve fund to meet contingencies, or for the purpose of maintaining or
increasing the property or business of the Corporation, or for any other purpose
it may think conducive to the best interests of the Corporation.
ARTICLE IX.
SEAL
The Board of Directors shall provide a corporate seal, which shall be in the
form of a circle and shall bear the name of the Corporation and words and
figures showing that it was incorporated in the State of Delaware in the year
1927.
ARTICLE X.
FISCAL YEAR AND AUDIT
SECTION 1. FISCAL YEAR. The fiscal year of the Corporation shall end on the
thirty-first day of December in each year.
SECTION 2. AUDIT OF BOOKS AND ACCOUNTS. The books and accounts of the
Corporation shall be audited at least once in each fiscal year, by certified
public accountants of good standing selected by the Board of Directors.
<PAGE>
37
ARTICLE XI.
WAIVER OF NOTICES
Whenever any notice whatever is required to be given by these by-laws or the
Certificate of Incorporation of the Corporation or any of the corporate laws of
the State of Delaware, a waiver thereof in writing, signed by the person or
persons entitled to said notice, whether before or after the time stated
therein, shall be deemed equivalent to notice.
ARTICLE XII.
INCENTIVE COMPENSATION PAYMENTS
As an incentive to efficient and profitable management, there is hereby
authorized to be set aside for payment, for any fiscal year, beginning with the
year 1954, as additional compensation to officers, heads of departments and
other executives and key employees of the Corporation and its subsidiaries whose
work most affects the Corporation's earnings, amounts which, in the aggregate,
shall not exceed 3% of the consolidated net income during such year of the
Corporation and its subsidiaries, before deducting Federal or state taxes based
on income and before any provision for such additional compensation, provided
that no such additional compensation shall be paid for any year unless cash
dividends shall be paid in that year on the Common Stock of the Corporation at
the rate of at least $2 per share as constituted at January 1, 1954. Such
consolidated net income shall exclude, to the extent that the Committee
hereinafter mentioned shall in its discretion deem proper, the whole or any part
of any item of unusual or non-recurring income or loss not arising in the
ordinary course of business. Such aggregate amounts of
<PAGE>
38
additional compensation for any fiscal year shall be in addition to deferred
portions of additional compensation authorized for a prior year or years.
Subject to the foregoing limitations (which shall not be changed without the
approval of the holders of a majority of the outstanding stock of the
Corporation having general voting power), the total amount of additional
compensation, if any, that may be authorized for any year, the participants in
such additional compensation, the apportionment thereof among such participants
and the time or times of payment thereof shall be determined by a Committee of
the Board of Directors consisting of not less than three nor more than five of
those Directors who are not entitled to share in the payments or who shall have
advised the Board of Directors in writing that they irrevocably have elected not
to participate in the payments, as the Chairman of the Board of Directors shall
appoint to such Committee from time to time. Said Committee, which shall act by
a majority of its members, shall be authorized to determine that any award to
any participant for any year shall be paid at one time or to direct the payment
of all or any part thereof in such deferred installments over a period of not
exceeding ten consecutive years commencing not later than the tenth year
following the year for which the award was made, the payment of any such
deferred installments to be subject to such conditions, if any, with respect to
the continued employment of the participant, his refraining from competing with
the Corporation or otherwise, as the Committee shall determine. Said Committee
shall also be authorized to determine that any payment to be made to any
participant in any year shall be made in cash or partly in cash and partly in
Common Stock of the Corporation purchased in the open market for that purpose,
in such proportions as the Committee shall determine, such stock being valued
for such purpose at the mean price thereof on the New York Stock Exchange on
such date as the Committee shall determine. The total amount authorized under
this Article for
<PAGE>
39
any year shall be reported to the stockholders at or before the annual meeting
of stockholders following such year. The provisions of this Article shall not be
deemed to preclude such forms of incentive compensation for other employees of
the Corporation as shall be authorized from time to time by the Board of
Directors.
ARTICLE XIII.
NATIONAL EMERGENCY
SECTION 1. DEFINITION AND APPLICATION. For the purposes of this Article XIII
the term "national emergency" is defined as an emergency situation resulting
from an attack upon the United States, a nuclear disaster within the United
States, a catastrophe, or other emergency condition, as a result of which
attack, disaster, catastrophe or emergency condition a quorum of the Board of
Directors cannot readily be convened for action. Persons not directors of the
Corporation may conclusively rely upon a determination by the Board of Directors
of the Corporation, at a meeting held or purporting to be held pursuant to this
Article XIII that a national emergency as hereinabove defined exists regardless
of the correctness of such determination made or purporting to be made as
hereinafter provided. During the existence of a national emergency the
provisions of this Article XIII shall become operative, but, to the extent not
inconsistent with such provisions, the other provisions of these by-laws shall
remain in effect during any national emergency and upon its termination the
provisions of this Article XIII shall cease to be operative.
SECTION 2. MEETINGS, ETC. When it is determined in good faith by any
director that a national emergency exists, special meetings of the Board of
Directors may be called by such director. The director calling any such special
meeting shall make a reasonable effort to notify all other directors of
<PAGE>
40
the time and place of such special meeting, and such effort shall be deemed to
constitute the giving of notice of such special meeting, and every director
shall be deemed to have waived any requirement, of law or otherwise, that any
other notice of such special meeting be given. At any such special meeting two
directors shall constitute a quorum for the transaction of business including,
without limiting the generality hereof, the filling of vacancies among directors
and officers of the Corporation and the election of additional Vice Presidents,
Assistant Secretaries and Assistant Treasurers. The act of a majority of the
directors present thereat shall be the act of the Board of Directors. If at any
such special meeting of the Board of Directors there shall be only one director
present, such director present may adjourn the meeting from time to time until a
quorum is obtained, and no further notice thereof need be given of any such
adjournment.
The directors present at any such special meeting shall make reasonable
effort to report any action taken thereat to all absent directors, but failure
to give such report shall not affect the validity of the action taken at any
such meeting. All directors, officers, employees and agents of, and all persons
dealing with, the Corporation, if acting in good faith, may conclusively rely
upon any action taken at any such special meeting.
SECTION 3. AMENDMENT. The Board of Directors shall have the power to alter,
amend, or repeal any of these by-laws by the affirmative vote of at least
two-thirds (2/3) of the directors present at any special meeting attended by two
(2) or more directors and held in the manner prescribed in Section 2 of this
Article, if it is determined in good faith by said two-thirds (2/3) that such
alteration, amendment or repeal would be conducive to the proper direction of
the Corporation's affairs.
<PAGE>
41
SECTION 4. CHIEF EXECUTIVE OFFICER. If, during the existence of a national
emergency, the Chairman of the Board of Directors of the Corporation becomes
incapacitated, cannot by reasonable effort be located or otherwise is unable or
unavailable to perform the duties of his office, the Vice Chairman of the Board
of Directors of the Corporation is hereby designated as Chairman of the Board of
Directors. If the Vice Chairman of the Board of Directors is unable or
unavailable to perform the duties of the Chairman of the Board, unless otherwise
determined by the Board of Directors in accordance with the provisions of this
Article XIII, the senior available officer of the Corporation is hereby
designated as Chairman of the Board of Directors of the Corporation, the
seniority of such officer to be determined in order of rank of office and within
the same rank by the date on which he was first elected or appointed to such
office.
SECTION 5. SUBSTITUTE DIRECTORS. To the extent required to constitute a
quorum at any meeting of the Board of Directors during a national emergency, the
officers of the Corporation who are present shall be deemed, in order of rank of
office and within the same rank in order of election or appointment to such
offices, directors for such meeting.
ARTICLE XIV.
AMENDMENTS
The Board of Directors of the Corporation is expressly authorized (except as
otherwise provided in these by-laws) to make by-laws for the Corporation and
from time to time to alter or repeal by-laws so made but the by-laws made or
altered by the Board of Directors may be altered or repealed by the stockholders
at any annual or special meeting thereof, provided that notice of the proposal
so to alter or repeal such by-laws be included in the notice of such meeting.
<PAGE>
42
CERTIFICATION
I, the undersigned,
Secretary of HONEYWELL INC., a Delaware corporation, DO HEREBY CERTIFY
that the foregoing is a full, true and correct copy of the by-laws of said
Corporation as now in effect.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of said
Corporation, this day of , 19 .
_____________________________________________________________
Secretary
<PAGE>
CREDIT AND REIMBURSEMENT AGREEMENT
AGREEMENT dated as of December 9, 1993 among HONEYWELL INC., the BANKS
listed on the signature pages hereof, the CO-AGENTS listed on the signature
pages hereof and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Administrative
Agent.
WHEREAS, (Confidential treatment requested)
WHEREAS, (Confidential treatment requested)
WHEREAS, the Banks are willing to make such loans to the Borrower and
issue such letters of credit for the account of the Borrower pursuant to the
terms of this Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITIONS. The following terms, as used herein, have
the following meanings:
1
<PAGE>
"Abandoned Subsidiary" means any Subsidiary of the Borrower (i) as to
which a determination shall have been made in accordance with Section 5.04 to
terminate such Subsidiary's corporate existence and (ii) the fair market value
of the assets of which, immediately prior to such termination, shall not exceed
$5,000,000.
"Absolute Rate Auction" means a solicitation of Money Market Quotes
setting forth Money Market Absolute Rates pursuant to Section 2.03.
"Action" means the civil action (No. CV-90-0093 MRP (Ex)) in the Court
for patent infringement claims relating to ring laser gyroscopes used in
commercial aircraft brought by the Claimant against the Borrower but excluding
any claims arising out of antitrust or other allegations.
"Adjusted CD Rate" has the meaning set forth in Section 2.07(b).
"Adjusted London Interbank Offered Rate" has the meaning set forth in
Section 2.07(c).
"Administrative Questionnaire" means, with respect to each Bank, an
administrative questionnaire in the form prepared by the Agent and submitted to
the Agent (with a copy to the Borrower) duly completed by such Bank.
"Affiliate" means, with respect to any Person, (i) any Person that
directly, or indirectly through one or more intermediaries, controls such former
Person (a "Controlling Person") and (ii) any Person (other than a Subsidiary of
such former Person) which is controlled by or is under common control with a
Controlling Person. As used herein, the term "control" means possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
"Agent" means Morgan Guaranty Trust Company of New York in its
capacity as administrative agent for the Banks hereunder, and its successors in
such capacity.
"Aggregate LC Amount" has the meaning set forth in Section 6.02.
"Applicable Lending Office" means, with respect to any Bank, (i) in
the case of its Domestic Loans, its Domestic Lending Office, (ii) in the case of
its Euro-Dollar
2
<PAGE>
Loans, its Euro-Dollar Lending Office and (iii) in the case of its Money Market
Loans, its Money Market Lending Office.
"Assessment Rate" has the meaning set forth in Section 2.07(b).
"Assignee" has the meaning set forth in Section 9.06(c).
"Available LC Amount" means at any time an amount equal to the excess,
if any, of the aggregate amount of the Commitments over the aggregate
outstanding amount of Loans (if any) at such time.
"Bank" means each bank listed on the signature pages hereof, each
Assignee which becomes a Bank pursuant to Section 9.06(c), and their respective
successors.
"Base Rate" means, for any day, a rate per annum equal to
(Confidential treatment requested)
"Base Rate Loan" means (i) a Committed Loan which bears interest at
the Base Rate pursuant to the applicable Notice of Committed Borrowing or Notice
of Interest Rate Election or the provisions of Article VIII or (ii) an overdue
amount which was a Base Rate Loan immediately before it became overdue.
"Benefit Arrangement" means at any time an employee benefit plan
within the meaning of Section 3(3) of ERISA which is not a Plan or a
Multiemployer Plan and which is maintained or otherwise contributed to by any
member of the ERISA Group.
"Borrower" means Honeywell Inc., a Delaware corporation, and its
successors.
"Borrower's 1992 Form 10-K" means the Borrower's annual report on Form
10-K for the year ended December 31, 1992, as amended by Form 8 Amendment dated
May 3, 1993, as filed with the Securities and Exchange Commission pursuant to
the Securities Exchange Act of 1934.
"Borrowing" has the meaning set forth in Section 1.03.
"CD Base Rate" has the meaning set forth in Section 2.07(b).
3
<PAGE>
"CD Loan" means (i) a Committed Loan which bears interest at a CD Rate
pursuant to the applicable Notice of Committed Borrowing or Notice of Interest
Rate Election or (ii) an overdue amount which was a CD Loan immediately before
it became overdue.
"CD Margin" has the meaning set forth in Section 2.07(b).
"CD Rate" means a rate of interest determined pursuant to Section
2.07(b) on the basis of an Adjusted CD Rate.
"CD Reference Banks" means The Chase Manhattan Bank (National
Association), Citibank, N.A., Bank of America National Trust and Savings
Association, The Fuji Bank, Limited and Morgan Guaranty Trust Company of New
York.
"Claimant" has the meaning set forth in the first Whereas Clause.
"Closing Date" means the date on or after which the Agent shall have
received the documents specified in or pursuant to Section 3.01.
"Co-Agents" means the Banks listed as Co-Agents on the signature pages
hereof, each in its capacity as Co-Agent.
"Co-Arrangers" means J.P. Morgan Securities Inc. and Chase Securities,
Inc., each in its capacity as co-arranger.
"Commitment" means, with respect to each Bank, the amount set forth
opposite the name of such Bank on the signature pages hereof, as such amount may
be reduced from time to time pursuant to Section 2.09.
"Committed Loan" means a loan made by a Bank pursuant to Section 2.01;
PROVIDED that, if any such loan or loans (or portions thereof) are combined or
subdivided pursuant to a Notice of Interest Rate Election, the term "Committed
Loan" shall refer to the combined principal amount resulting from such
combination or to each of the separate principal amounts resulting from such
subdivision, as the case may be.
(Confidential treatment requested)
4
<PAGE>
(Confidential treatment requested)
"Consolidated Domestic Subsidiary" means any Consolidated Subsidiary
organized under the laws of any jurisdiction in the United States.
(Confidential treatment requested)
"Consolidated Subsidiary" means at any date any Subsidiary or other
entity the accounts of which would be consolidated with those of the Borrower in
its consolidated financial statements if such statements were prepared as of
such date.
(Confidential treatment requested)
"Court" means the United States District Court for the Central
District of California.
"Credit Availability Period" means the period from the Effective Date
to but excluding the Termination Date.
"Credit Event" means the making of a Loan or the issuance of a Letter
of Credit.
5
<PAGE>
"Debt" of any Person means at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable arising in the ordinary course of
business, (iv) all obligations of such Person as lessee which are capitalized in
accordance with generally accepted accounting principles, (v) all Debt secured
by a Lien on any asset of such Person, whether or not such Debt is otherwise an
obligation of such Person (to the extent of the lesser of the amount of such
Debt and the book value of any assets subject to such Lien),(vi) all non-
contingent obligations of such Person to reimburse or prepay any bank or other
Person in respect of amounts paid under a letter of credit, banker's acceptance
or similar instrument and (vii) all Debt of others Guaranteed by such Person (to
the extent of the lesser of the amount of such Debt Guaranteed or the amount of
such Guarantee).
"Default" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"Domestic Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in New York City are authorized by law to
close.
"Domestic Lending Office" means, as to each Bank, its office located
at its address set forth in its Administrative Questionnaire (or identified in
its Administrative Questionnaire as its Domestic Lending Office) or such other
office as such Bank may hereafter designate as its Domestic Lending Office by
notice to the Borrower and the Agent; PROVIDED that any Bank may so designate
separate Domestic Lending Offices for its Base Rate Loans, on the one hand, and
its CD Loans, on the other hand, in which case all references herein to the
Domestic Lending Office of such Bank shall be deemed to refer to either or both
of such offices, as the context may require.
"Domestic Loans" means CD Loans or Base Rate Loans or both.
"Domestic Reserve Percentage" has the meaning set forth in Section
2.07(b).
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"Effective Date" means the date this Agreement becomes effective in
accordance with Section 9.09.
(Confidential treatment requested)
"Environmental Laws" means any and all federal, state, local and
foreign statutes, laws, judicial decisions, regulations, ordinances, rules,
judgments, orders, decrees, injunctions, permits, licenses, agreements and other
governmental restrictions relating to the environment, the effect of the
environment on human health or to emissions, discharges or releases of
pollutants, contaminants, Hazardous Substances or wastes into the environment
including, without limitation, ambient air, surface water, ground water, or
land, or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of pollutants, contaminants,
Hazardous Substances or wastes or the clean-up or other remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute.
"ERISA Group" means the Borrower, any Subsidiary and all members of a
controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control which, together with the Borrower or any
Subsidiary, are treated as a single employer under Section 414 of the Internal
Revenue Code.
"Euro-Dollar Business Day" means any Domestic Business Day on which
commercial banks are open for international business (including dealings in
dollar deposits) in London.
"Euro-Dollar Lending Office" means, as to each Bank, its office,
branch or affiliate located at its address set forth in its Administrative
Questionnaire (or identified in its Administrative Questionnaire as its
Euro-Dollar Lending Office) or such other office, branch or affiliate of such
Bank as it may hereafter designate as its Euro-Dollar Lending Office by notice
to the Borrower and the Agent.
"Euro-Dollar Loan" means (i) a Committed Loan which bears interest at
a Euro-Dollar Rate pursuant to the applicable Notice of Committed Borrowing or
Notice of Interest Rate Election or (ii) an overdue amount which was a
Euro-Dollar Loan immediately before it became overdue.
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<PAGE>
"Euro-Dollar Margin" has the meaning set forth in Section 2.07(c).
"Euro-Dollar Rate" means a rate of interest determined pursuant to
Section 2.07(c) on the basis of an Adjusted London Interbank Offered Rate.
"Euro-Dollar Reference Banks" means the principal London offices of
The Chase Manhattan Bank (National Association), Citibank, N.A., Bank of America
National Trust and Savings Association, The Fuji Bank, Limited and Morgan
Guaranty Trust Company of New York.
"Euro-Dollar Reserve Percentage" has the meaning set forth in Section
2.07(c).
"Event of Default" has the meaning set forth in Section 6.01.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upward, if necessary, to the nearest 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Domestic Business Day
next succeeding such day, PROVIDED that (i) if such day is not a Domestic
Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Domestic Business Day as so published on the
next succeeding Domestic Business Day, and (ii) if no such rate is so published
on such next succeeding Domestic Business Day, the Federal Funds Rate for such
day shall be the average rate quoted to Morgan Guaranty Trust Company of New
York on such day on such transactions as determined by the Agent.
"Final Fee Payment Date" has the meaning set forth in Section 2.08(a).
"Fixed Rate Loans" means CD Loans or Euro-Dollar Loans or Money Market
Loans (excluding Money Market LIBOR Loans bearing interest at the Base Rate
pursuant to Section 8.01(a)) or any combination of the foregoing.
"Foreign Person" means (i) any government (a "Foreign Government")
other than the United States government or the government of any political
subdivision thereof, (ii) any agency or representative of a Foreign Government,
(iii) any form of business enterprise organized
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<PAGE>
under the laws of any country other than the United States or its possessions or
any political subdivision thereof or (iv) any form of business enterprise owned
or controlled by any of the persons described in clauses (i), (ii) or (iii)
above.
"Group of Loans" means at any time a group of Loans consisting of (i)
all Committed Loans which are Base Rate Loans at such time or (ii) all Committed
Loans which are Fixed Rate Loans of the same type having the same Interest
Period at such time; PROVIDED that, if a Committed Loan of any particular Bank
is converted to or made as a Base Rate Loan pursuant to Section 8.02 or 8.05,
such Loan shall be included in the same Group or Groups of Loans from time to
time as it would have been in if it had not been so converted or made.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt of any
other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Debt (whether arising by virtue of partnership arrangements, by agreement to
keep-well, to purchase assets, goods, securities or services, to take-or-pay, or
to maintain financial statement conditions or otherwise) or (ii) entered into
for the purpose of assuring in any other manner the obligee of such Debt of the
payment thereof or to protect such obligee against loss in respect thereof (in
whole or in part), PROVIDED that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course of business. The
term "Guarantee" used as a verb has a corresponding meaning.
"Hazardous Substances" means any toxic, radioactive, caustic or
otherwise hazardous substance, including petroleum, its derivatives, by-products
and other hydrocarbons, or any substance having any constituent elements
displaying any of the foregoing characteristics.
"Indemnitee" has the meaning set forth in Section 9.03(b).
"Initial Termination Date" means January 31, 1994 or such later date
as shall have been agreed to in writing by the Borrower and each of the Banks
from time to time.
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"Interest and Costs" means pre- and post-judgment interest on the
Judgment and court costs and attorneys' and experts' fees, if any, required by
the Court to be paid by the Borrower in the Action.
"Interest Period" means: (1) with respect to each Euro-Dollar Loan, a
period commencing on the date of Borrowing specified in the applicable Notice of
Borrowing or on the date specified in the applicable Notice of Interest Rate
Election and ending one, two, three or six months thereafter, as the Borrower
may elect in the applicable Notice; PROVIDED that:
(a) any Interest Period which would otherwise end on a day which is
not a Euro-Dollar Business Day shall be extended to the next succeeding
Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in
another calendar month, in which case such Interest Period shall end on the
next preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall, subject to clause (c) below, end on the last Euro-Dollar Business
Day of a calendar month; and
(c) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date.
(2) with respect to each CD Loan, a period commencing on the date of Borrowing
specified in the applicable Notice of Borrowing or on the date specified in the
applicable Notice of Interest Rate Election and ending 30, 60, 90 or 180 days
thereafter, as the Borrower may elect in the applicable Notice; PROVIDED that:
(a) any Interest Period (other than an Interest Period determined
pursuant to clause (b) below) which would otherwise end on a day which is
not a Euro-Dollar Business Day shall be extended to the next succeeding
Euro-Dollar Business Day; and
(b) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date.
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(3) with respect to each Money Market LIBOR Borrowing, the period commencing on
the date of borrowing specified in the applicable Notice of Borrowing and ending
such whole number of months thereafter as the Borrower may elect in accordance
with Section 2.03; PROVIDED that:
(a) any Interest Period which would otherwise end on a day which is
not a Euro-Dollar Business Day shall be extended to the next succeeding
Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in
another calendar month, in which case such Interest Period shall end on the
next preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall, subject to clause (c) below, end on the last Euro-Dollar Business
Day of a calendar month; and
(c) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date.
(4) with respect to each Money Market Absolute Rate Borrowing, the period
commencing on the date of borrowing specified in the applicable Notice of
Borrowing and ending such number of days thereafter (but not less than seven
days) as the Borrower may elect in accordance with Section 2.03; PROVIDED that:
(a) any Interest Period (other than an Interest Period determined
pursuant to clause (b) below) which would otherwise end on a day which is
not a Euro-Dollar Business Day shall be extended to the next succeeding
Euro-Dollar Business Day; and
(b) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended, or any successor statute.
(Confidential treatment requested)
11
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"LC Exposure" means, at any time and for any Bank, an amount equal to
such Bank's share of the amount of Letter of Credit Liabilities in respect of
each Letter of Credit outstanding at such time.
"Letter of Credit" has the meaning set forth in Section 2.15(a).
"Letter of Credit Liabilities" means, at any time and in respect of
any Letter of Credit, the sum, without duplication, of (i) the amount available
for drawing under such Letter of Credit plus (ii) the aggregate unpaid amount of
all Reimbursement Obligations in respect of previous drawings made under such
Letter of Credit.
"Level I Status" exists at any date if, at such date, the Borrower's
outstanding senior unsecured long-term debt securities are rated either A+ or
higher by S&P OR A1 or higher by Moody's.
"Level II Status" exists at any date if, at such date, (i) the
Borrower's outstanding senior unsecured long-term debt securities are rated
either A or higher by S&P OR A2 or higher by Moody's AND (ii) Level I Status
does not exist at such date.
"Level III Status" exists at any date if, at such date, (i) the
Borrower's outstanding senior unsecured long-term debt securities are rated
either A- or higher by S&P OR A3 or higher by Moody's AND (ii) neither Level I
Status nor Level II Status exists at such date.
"Level IV Status" exists at any date if, at such date, (i) the
Borrower's outstanding senior unsecured long-term debt securities are rated
either BBB+ or higher by S&P OR Baa1 or higher by Moody's AND (ii) none of Level
I Status, Level II Status or Level III Status exists at such date.
"Level V Status" exists at any date if, at such date, (i) the
Borrower's outstanding senior unsecured long-term debt securities are rated BBB
or higher by S&P AND Baa2 or higher by Moody's AND (ii) none of Level I Status,
Level II Status, Level III Status or Level IV Status exists at such date.
"Level VI Status" exists at any date if none of Level I Status, Level
II Status, Level III Status, Level IV Status or Level V Status exists at such
date.
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"LIBOR Auction" means a solicitation of Money Market Quotes setting
forth Money Market Margins based on the London Interbank Offered Rate pursuant
to Section 2.03.
"Lien" means, with respect to any asset, any mortgage, pledge or
security interest, or any other type of preferential arrangement that has the
practical effect of creating a security interest, in respect of such asset.
"Loan" means a Domestic Loan or a Euro-Dollar Loan or a Money Market
Loan and "Loans" means Domestic Loans or Euro-Dollar Loans or Money Market Loans
or any combination of the foregoing.
"London Interbank Offered Rate" has the meaning set forth in Section
2.07(c).
"Material Adverse Effect" means a material adverse effect on the
business, consolidated financial position or consolidated results of operations
(such results of operations to be considered on a four fiscal quarter basis) of
the Borrower and its Consolidated Subsidiaries, considered as a whole.
"Material Debt" means Debt (other than the Notes) of the Borrower
and/or one or more of its Subsidiaries, arising in one or more related or
unrelated transactions, in an aggregate principal amount exceeding $10,000,000.
"Material Plan" means at any time a Plan or Plans having aggregate
Unfunded Liabilities in excess of $50,000,000.
"Money Market Absolute Rate" has the meaning set forth in Section
2.03(d).
"Money Market Absolute Rate Loan" means a loan to be made by a Bank
pursuant to an Absolute Rate Auction.
"Money Market Lending Office" means, as to each Bank, its Domestic
Lending Office or such other office, branch or affiliate of such Bank as it may
hereafter designate as its Money Market Lending Office by notice to the Borrower
and the Agent; PROVIDED that any Bank may from time to time by notice to the
Borrower and the Agent designate separate Money Market Lending Offices for its
Money Market LIBOR Loans, on the one hand, and its Money Market Absolute Rate
Loans, on the other hand, in which case all references herein to the Money
Market Lending Office of
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such Bank shall be deemed to refer to either or both of such offices, as the
context may require.
"Money Market LIBOR Loan" means a loan to be made by a Bank pursuant
to a LIBOR Auction (including such a loan bearing interest at the Base Rate
pursuant to Section 8.01(a)).
"Money Market Loan" means a Money Market LIBOR Loan or a Money Market
Absolute Rate Loan.
"Money Market Margin" has the meaning set forth in Section 2.03(d).
"Money Market Quote" means an offer by a Bank to make a Money Market
Loan in accordance with Section 2.03.
"Moody's" means Moody's Investors Service, Inc., and its successors.
"Multiemployer Plan" means at any time an employee pension benefit
plan within the meaning of Section 4001(a)(3) of ERISA to which any member of
the ERISA Group is then making or accruing an obligation to make contributions
or has within the preceding five plan years made contributions, including for
these purposes any Person which ceased to be a member of the ERISA Group during
such five year period.
"Notes" means promissory notes of the Borrower, substantially in the
form of Exhibit A hereto, evidencing the obligation of the Borrower to repay the
Loans, and "Note" means any one of such promissory notes issued hereunder.
"Notice of Borrowing" means a Notice of Committed Borrowing (as
defined in Section 2.02) or a Notice of Money Market Borrowing (as defined in
Section 2.03(f)).
"Notice of Interest Rate Election" has the meaning set forth in
Section 2.11.
"Notice of Issuance" has the meaning set forth in Section 2.15(b).
"Parent" means, at any time with respect to any Bank, any Person which
at such time directly or indirectly owns securities or other ownership interests
of such Bank having ordinary voting power to elect a majority of the
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<PAGE>
board of directors of, or other Persons performing similar functions for, such
Bank.
"Participant" has the meaning set forth in Section 9.06(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a government
or political subdivision or an agency or instrumentality thereof.
"Plan" means at any time an employee pension benefit plan (other than
a Multiemployer Plan) which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Internal Revenue Code and
either (i) is maintained, or contributed to, by any member of the ERISA Group
for employees of any member of the ERISA Group or (ii) has at any time within
the preceding five years been maintained, or contributed to, by any Person which
was at such time a member of the ERISA Group for employees of any Person which
was at such time a member of the ERISA Group.
"Prime Rate" means the rate of interest publicly announced by Morgan
Guaranty Trust Company of New York in New York City from time to time as its
Prime Rate.
"Quarterly Date" means the last Euro-Dollar Business Day of each
March, June, September and December.
"Reference Banks" means the CD Reference Banks or the Euro-Dollar
Reference Banks, as the context may require, and "Reference Bank" means any one
of such Reference Banks.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"Reimbursement Due Date" has the meaning set forth in Section 2.15(e).
"Reimbursement Obligations" means at any date the obligations of the
Borrower then outstanding under Section 2.15 to reimburse any Bank for the
amount paid by such Bank in respect of a drawing under a Letter of Credit.
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<PAGE>
"Required Banks" means at any time Banks having at least 66-2/3% of
the aggregate amount of the Commitments or, if the Commitments shall have been
terminated, having at least 66 2/3% of the aggregate Total Exposures of all of
the Banks.
"Restricted Asset" means any real property (excluding equipment and
fixtures installed thereon or affixed thereto) owned or leased by the Borrower
or any of its Consolidated Domestic Subsidiaries, and any capital stock or
indebtedness of any Consolidated Domestic Subsidiary having assets with a book
value in excess of $10,000,000.
"Sell-Down Date" means the earlier of (i) the date on which the
Borrower has agreed, by notice to the Agent and the Banks, to permit each Bank
to assign or sell participating interests in its Commitment, Loans and Letter of
Credit Liabilities to one or more banks or other institutions pursuant to
Section 9.06 and (ii)
(Confidential treatment requested)
"S&P" means Standard & Poor's Ratings Group and its successors.
"Status" means each of Level I Status, Level II Status, Level III
Status, Level IV Status, Level V Status and Level VI Status.
"Subsidiary" means any corporation or other entity of which securities
or other ownership interests having ordinary voting power to elect a majority of
the board of directors or other persons performing similar functions are at the
time directly or indirectly owned by the Borrower.
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<PAGE>
"Term Sheet" means the summary of Terms and Conditions, including the
fee grids attached thereto, outlining the principal terms and conditions of this
Agreement, delivered by the Agent to each of the Banks.
"Termination Date" means the later of (i) the Initial Termination Date
and (ii) if on or prior to the Initial Termination Date the Sell-Down Date has
occurred, June 30, 1999; PROVIDED that if any such day is not a Euro-Dollar
Business Day, the Termination Date shall be the next succeeding Euro-Dollar
Business Day unless such Euro-Dollar Business Day falls in another calendar
month, in which the Termination Date shall be the next preceding Euro-Dollar
Business Day.
"Total Exposure" means, with respect to any Bank at any time, the sum
of (i) the aggregate principal amount of its Loans then outstanding and (ii) the
aggregate amount of its Letter of Credit Liabilities at such time.
"Unfunded Liabilities" means, with respect to any Plan at any time,
the amount (if any) by which (i) the value of all benefit liabilities under such
Plan, determined on a plan termination basis using the assumptions prescribed by
the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the fair market
value of all Plan assets allocable to such liabilities under Title IV of ERISA
(excluding any accrued but unpaid contributions), all determined as of the then
most recent valuation date for such Plan, but only to the extent that such
excess represents a potential liability of a member of the ERISA Group to the
PBGC or any other Person under Title IV of ERISA.
"United States" means the United States of America, including the
States and the District of Columbia, but excluding its territories and
possessions.
"Wholly-Owned Consolidated Subsidiary" means any Consolidated
Subsidiary all of the shares of capital stock or other ownership interests of
which (except directors' qualifying shares) are at the time directly or
indirectly owned by the Borrower.
SECTION 1.02. ACCOUNTING TERMS AND DETERMINATIONS. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared in accordance with
generally accepted accounting principles as in effect from time to time,
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applied on a basis consistent (except for changes concurred in by the Borrower's
independent public accountants) with the most recent audited consolidated
financial statements of the Borrower and its Consolidated Subsidiaries delivered
to the Banks; PROVIDED that, if the Borrower notifies the Agent that the
Borrower wishes to amend any covenant in Article V to eliminate the effect of
any change in generally accepted accounting principles on the operation of such
covenant (or if the Agent notifies the Borrower that the Required Banks wish to
amend Article V for such purpose), then the Borrower's compliance with such
covenant shall be determined on the basis of generally accepted accounting
principles in effect immediately before the relevant change in generally
accepted accounting principles became effective, until either such notice is
withdrawn or such covenant is amended in a manner satisfactory to the Borrower
and the Required Banks.
SECTION 1.03. TYPES OF BORROWINGS. The term "Borrowing" denotes the
aggregation of Loans of one or more Banks to be made to the Borrower pursuant to
Article II on the same date, all of which Loans are of the same type (subject to
Article VIII) and, except in the case of Base Rate Loans, have the same Interest
Period or initial Interest Period. Borrowings are classified for purposes of
this Agreement either by reference to the pricing of Loans comprising such
Borrowing (E.G., a "Euro-Dollar Borrowing" is a Borrowing comprised of
Euro-Dollar Loans) or by reference to the provisions of Article II under which
participation therein is determined (I.E., a "Committed Borrowing" is a
Borrowing under Section 2.01 in which all Banks participate in proportion to
their Commitments, while a "Money Market Borrowing" is a Borrowing under Section
2.03 in which the Bank participants are determined on the basis of their bids in
accordance therewith).
SECTION 1.04. BASIS FOR RATINGS; DEEMED RATINGS. (a) The credit
ratings to be utilized in the determination of a Status are the ratings assigned
to unsecured obligations of the Borrower without third party credit support.
Ratings assigned to any obligation which is secured or which has the benefit of
third party credit support shall be disregarded.
(b) If at any time (i) either S&P or Moody's has not publicly rated
the Borrower's outstanding senior unsecured long-term debt securities (the
"Ratable Securities") or no Ratable Securities of the Borrower are outstanding
at such time and (ii) at such time S&P or Moody's has provided written evidence
of a rating of Ratable
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Securities that is implied from the rating that S&P or Moody's, as the case
may be, has assigned to the Borrower's outstanding subordinated unsecured
long-term debt securities or the Borrower's outstanding senior secured
long-term debt securities, if any, such implied rating by S&P or
Moody's, as the case may be (together with the public rating or the implied
rating referred to in this subsection (b) of the other rating agency, if
available), shall be used for purposes
of determining any Status.
(c) If at any time (i) either S&P or Moody's has not publicly rated
the Ratable Securities or no Ratable Securities of the Borrower are outstanding
at such time, (ii) no implied rating by S&P or Moody's, as the case may be, is
available in accordance with subsection (b) above at such time and (iii) at such
time the Borrower has obtained a private letter rating from S&P or Moody's, as
the case may be, of the Ratable Securities, such private letter rating of S&P or
Moody's, as the case may be (together with the public rating or the implied
rating referred to in subsection (b) above of the other rating agency, if
available), shall be used for purposes of determining any Status.
(d) For purposes of determining Level I Status, Level II Status,
Level III Status and Level IV Status, if at any date the rating of the
Borrower's Ratable Securities by Moody's shall be higher or lower than the
comparable rating by S&P by two or more rating levels (it being understood that
for these purposes an S&P rating of A+ is comparable to a Moody's rating of A1,
an S&P rating of A is comparable to a Moody's rating of A2, and so forth), then
the rating of the Ratable Securities by each of Moody's and S&P shall be deemed
to be the comparable S&P and Moody's ratings at the midpoint between the two
actual ratings, or, if there shall be no rating at the midpoint, the next higher
rating from the midpoint between the two actual ratings. For example, if the
Ratable Securities are rated A+ by S&P and A3 by Moody's, the Ratable Securities
shall be deemed to be rated A by S&P and A2 by Moody's; and if the Ratable
Securities are rated BBB by S&P and A2 by Moody's, the Ratable Securities shall
be deemed to be rated A- by S&P and A3 by Moody's.
ARTICLE II
THE CREDITS
SECTION 2.01. COMMITMENTS TO LEND. During the Credit Availability
Period, each Bank severally agrees, on
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the terms and conditions set forth in this Agreement, to make loans to the
Borrower pursuant to this Section from time to time in amounts such that the sum
of (x) the aggregate principal amount of Committed Loans by such Bank plus (y)
such Bank's LC Exposure at any one time outstanding shall not exceed the amount
of its Commitment. Each Borrowing under this Section 2.01 shall be in an
aggregate principal amount of $25,000,000 or any larger multiple of $1,000,000
(except that any such Borrowing may be in the aggregate amount available in
accordance with Section 3.02(c)) and shall be made from the several Banks
ratably in proportion to their respective Commitments. Within the foregoing
limits, the Borrower may borrow under this Section 2.01, repay or, to the extent
permitted by Section 2.10, prepay Loans and reborrow at any time during the
Credit Availability Period pursuant to this Section 2.01.
SECTION 2.02. NOTICE OF COMMITTED BORROWING. (a) The Borrower shall
give the Agent notice (a "Notice of Committed Borrowing") not later than 11:00
A.M. (New York City time) on (x) the date of each Base Rate Borrowing, (y) the
second Domestic Business Day before each CD Borrowing and (z) the third
Euro-Dollar Business Day before each Euro-Dollar Borrowing, specifying:
(a) the date of such Borrowing, which shall be a Domestic Business
Day in the case of a Domestic Borrowing or a Euro-Dollar Business Day in
the case of a Euro-Dollar Borrowing,
(b) the aggregate amount of such Borrowing,
(c) whether the Loans comprising such Borrowing are to bear interest
initially at the Base Rate or at a CD Rate or a Euro-Dollar Rate, and
(d) in the case of a Fixed Rate Borrowing, the duration of the
initial Interest Period applicable thereto, subject to the provisions of
the definition of Interest Period.
(b) The provisions of subsection (a) above notwithstanding, if the
Borrower shall not have given a Notice of Borrowing not later than 11:00 A.M.
(New York City time) on any Reimbursement Due Date, then, unless the Borrower
notifies the Agent before such time that it elects not to borrow on such date,
the Agent shall be deemed to have received a Notice of Committed Borrowing
specifying that (i) the date of the proposed Borrowing shall be such
Reimbursement Due Date, (ii) the aggregate amount of the
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<PAGE>
proposed Borrowing shall be the aggregate amount of the Reimbursement
Obligations due and payable on such Reimbursement Due Date, and (iii) the Loans
comprising the proposed Borrowing are to be Base Rate Loans.
SECTION 2.03. MONEY MARKET BORROWINGS.
(a) THE MONEY MARKET OPTION. In addition to Committed Borrowings
pursuant to Section 2.01, the Borrower may, as set forth in this Section,
request the Banks during the Credit Availability Period to make offers to make
Money Market Loans to the Borrower. The Banks may, but shall have no obligation
to, make such offers and the Borrower may, but shall have no obligation to,
accept any such offers in the manner set forth in this Section.
(b) MONEY MARKET QUOTE REQUEST. When the Borrower wishes to request
offers to make Money Market Loans under this Section, it shall transmit to the
Agent by telex or facsimile transmission a Money Market Quote Request
substantially in the form of Exhibit B hereto so as to be received no later than
10:00 A.M. (New York City time) on (x) the fifth Euro-Dollar Business Day prior
to the date of Borrowing proposed therein, in the case of a LIBOR Auction or (y)
the Domestic Business Day next preceding the date of Borrowing proposed therein,
in the case of an Absolute Rate Auction (or, in either case, such other time or
date as the Borrower and the Agent shall have mutually agreed and shall have
notified to the Banks not later than the date of the Money Market Quote Request
for the first LIBOR Auction or Absolute Rate Auction for which such change is to
be effective) specifying:
(i) the proposed date of Borrowing, which shall be a Euro-Dollar
Business Day in the case of a LIBOR Auction or a Domestic Business Day in
the case of an Absolute Rate Auction,
(ii) the aggregate amount of such Borrowing, which shall be
$25,000,000 or a larger multiple of $1,000,000,
(iii) the duration of the Interest Period applicable thereto, subject
to the provisions of the definition of Interest Period, and
(iv) whether the Money Market Quotes requested are to set forth a
Money Market Margin or a Money Market Absolute Rate.
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The Borrower may request offers to make Money Market Loans for more than one
Interest Period in a single Money Market Quote Request. No Money Market Quote
Request shall be given within five Euro-Dollar Business Days (or such other
number of days as the Borrower and the Agent may agree) of any other Money
Market Quote Request.
(c) INVITATION FOR MONEY MARKET QUOTES. Promptly upon receipt of a
Money Market Quote Request, the Agent shall send to the Banks by telex or
facsimile transmission an Invitation for Money Market Quotes substantially in
the form of Exhibit C hereto, which shall constitute an invitation by the
Borrower to each Bank to submit Money Market Quotes offering to make the Money
Market Loans to which such Money Market Quote Request relates in accordance with
this Section.
(d) SUBMISSION AND CONTENTS OF MONEY MARKET QUOTES. (i) Each Bank
may submit a Money Market Quote containing an offer or offers to make Money
Market Loans in response to any Invitation for Money Market Quotes. Each Money
Market Quote must comply with the requirements of this subsection (d) and must
be submitted to the Agent by telex or facsimile transmission at its offices
specified in or pursuant to Section 9.01 not later than (x) 2:00 P.M. (New York
City time) on the fourth Euro-Dollar Business Day prior to the proposed date of
Borrowing, in the case of a LIBOR Auction or (y) 9:15 A.M. (New York City time)
on the proposed date of Borrowing, in the case of an Absolute Rate Auction (or,
in either case, such other time or date as the Borrower and the Agent shall have
mutually agreed and shall have notified to the Banks not later than the date of
the Money Market Quote Request for the first LIBOR Auction or Absolute Rate
Auction for which such change is to be effective); PROVIDED that Money Market
Quotes submitted by the Agent (or any affiliate of the Agent) in the capacity of
a Bank may be submitted, and may only be submitted, if the Agent or such
affiliate notifies the Borrower of the terms of the offer or offers contained
therein not later than (x) one hour prior to the deadline for the other Banks,
in the case of a LIBOR Auction or (y) 15 minutes prior to the deadline for the
other Banks, in the case of an Absolute Rate Auction. Subject to Articles III
and VI, any Money Market Quote so made shall be irrevocable except with the
written consent of the Agent given on the instructions of the Borrower.
(ii) Each Money Market Quote shall be in substantially the form of
Exhibit D hereto and shall in any case specify:
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(A) the proposed date of Borrowing,
(B) the principal amount of the Money Market Loan for which each such
offer is being made, which principal amount (w) may be greater than or less
than the Commitment of the quoting Bank, (x) must be $5,000,000 or a larger
multiple of $1,000,000, (y) may not exceed the principal amount of Money
Market Loans for which offers were requested and (z) may be subject to an
aggregate limitation as to the principal amount of Money Market Loans for
which offers being made by such quoting Bank may be accepted,
(C) in the case of a LIBOR Auction, the margin above or below the
applicable London Interbank Offered Rate (the "Money Market Margin")
offered for each such Money Market Loan, expressed as a percentage
(specified to the nearest 1/10,000th of 1%) to be added to or subtracted
from such base rate,
(D) in the case of an Absolute Rate Auction, the rate of interest per
annum (specified to the nearest 1/10,000th of 1%) (the "Money Market
Absolute Rate") offered for each such Money Market Loan, and
(E) the identity of the quoting Bank.
A Money Market Quote may set forth up to five separate offers by the quoting
Bank with respect to each Interest Period specified in the related Invitation
for Money Market Quotes.
(iii) Any Money Market Quote shall be disregarded if it:
(A) is not substantially in conformity with Exhibit D hereto or does
not specify all of the information required by subsection (d)(ii);
(B) contains qualifying, conditional or similar language;
(C) proposes terms other than or in addition to those set forth in
the applicable Invitation for Money Market Quotes; or
(D) arrives after the time set forth in subsection (d)(i).
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(e) NOTICE TO BORROWER. The Agent shall promptly notify the Borrower
of the terms (x) of any Money Market Quote submitted by a Bank that is in
accordance with subsection (d) and (y) of any Money Market Quote that amends,
modifies or is otherwise inconsistent with a previous Money Market Quote
submitted by such Bank with respect to the same Money Market Quote Request. Any
such subsequent Money Market Quote shall be disregarded by the Agent unless such
subsequent Money Market Quote is submitted solely to correct a manifest error in
such former Money Market Quote. The Agent's notice to the Borrower shall
specify (A) the aggregate principal amount of Money Market Loans for which
offers have been received for each Interest Period specified in the related
Money Market Quote Request, (B) the respective principal amounts and Money
Market Margins or Money Market Absolute Rates, as the case may be, so offered
and (C) if applicable, limitations on the aggregate principal amount of Money
Market Loans for which offers in any single Money Market Quote may be accepted.
(f) ACCEPTANCE AND NOTICE BY BORROWER. Not later than 10:30 A.M.
(New York City time) on (x) the third Euro-Dollar Business Day prior to the
proposed date of Borrowing, in the case of a LIBOR Auction or (y) the proposed
date of Borrowing, in the case of an Absolute Rate Auction (or, in either case,
such other time or date as the Borrower and the Agent shall have mutually agreed
and shall have notified to the Banks not later than the date of the Money Market
Quote Request for the first LIBOR Auction or Absolute Rate Auction for which
such change is to be effective), the Borrower shall notify the Agent of its
acceptance or non-acceptance of the offers so notified to it pursuant to
subsection (e). In the case of acceptance, such notice (a "Notice of Money
Market Borrowing") shall specify the aggregate principal amount of offers for
each Interest Period that are accepted. The Borrower may accept any Money
Market Quote in whole or in part; PROVIDED that:
(i) the aggregate principal amount of each Money Market Borrowing may
not exceed the applicable amount set forth in the related Money Market
Quote Request,
(ii) the aggregate principal amount of each Money Market Borrowing
must be $25,000,000 or a larger multiple of $1,000,000,
(iii) acceptance of offers may only be made on the basis of ascending
Money Market Margins or Money Market Absolute Rates, as the case may be,
and
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(iv) the Borrower may not accept any offer that is described in
subsection (d)(iii) or that otherwise fails to comply with the requirements
of this Agreement.
(g) ALLOCATION BY AGENT. If offers are made by two or more Banks
with the same Money Market Margins or Money Market Absolute Rates, as the case
may be, for a greater aggregate principal amount than the amount in respect of
which such offers are accepted for the related Interest Period, the principal
amount of Money Market Loans in respect of which such offers are accepted shall
be allocated by the Agent among such Banks as nearly as possible (in multiples
of $1,000,000, as the Agent may deem appropriate) in proportion to the aggregate
principal amounts of such offers. Determinations by the Agent of the amounts of
Money Market Loans shall be conclusive in the absence of manifest error.
SECTION 2.04. NOTICE TO BANKS; FUNDING OF LOANS.
(a) Upon receipt of a Notice of Borrowing, the Agent shall promptly
notify each Bank of the contents thereof and of such Bank's share (if any) of
such Borrowing and such Notice of Borrowing shall not thereafter be revocable by
the Borrower.
(b) Not later than 1:00 P.M. (New York City time) on the date of each
Borrowing, each Bank participating therein shall make available its share of
such Borrowing, in Federal or other funds immediately available in New York
City, to the Agent at its address referred to in Section 9.01. Unless the Agent
determines that any applicable condition specified in Article III has not been
satisfied, the Agent will make the funds so received from the Banks available to
the Borrower promptly after being made available to the Agent at the Agent's
aforesaid address in the same type of funds as those received by the Agent.
(c) Unless the Agent shall have received notice from a Bank prior to
the date of any Borrowing that such Bank will not make available to the Agent
such Bank's share of such Borrowing, the Agent may assume that such Bank has
made such share available to the Agent on the date of such Borrowing in
accordance with subsection (b) of this Section 2.04 and the Agent may, in
reliance upon such assumption, make available to the Borrower on such date a
corresponding amount. If and to the extent that such Bank shall not have so
made such share available to the Agent, such Bank and the Borrower severally
agree to repay to the Agent forthwith on
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demand such corresponding amount together with interest thereon, for each day
from the date such amount is made available to the Borrower until the date such
amount is repaid to the Agent, at (i) in the case of the Borrower, a rate per
annum equal to the higher of the Federal Funds Rate and the interest rate
applicable thereto pursuant to Section 2.07 and (ii) in the case of such Bank,
the Federal Funds Rate. If such Bank shall repay to the Agent such
corresponding amount, such amount so repaid shall constitute such Bank's Loan
included in such Borrowing for purposes of this Agreement.
SECTION 2.05. NOTES. (a) The Loans of each Bank shall be evidenced
by a single Note payable to the order of such Bank for the account of its
Applicable Lending Office in an amount equal to the aggregate unpaid principal
amount of such Bank's Loans.
(b) Each Bank may, by notice to the Borrower and the Agent, request
that its Loans of a particular type be evidenced by a separate Note in an amount
equal to the aggregate unpaid principal amount of such Loans. Each such Note
shall be in substantially the form of Exhibit A hereto with appropriate
modifications to reflect the fact that it evidences solely Loans of the relevant
type. Each reference in this Agreement to the "Note" of such Bank shall be
deemed to refer to and include any or all of such Notes, as the context may
require.
(c) Upon receipt of each Bank's Note pursuant to Section 3.01(a), the
Agent shall forward such Note to such Bank. Each Bank shall record the date,
amount and type of each Loan made by it and the date and amount of each payment
of principal made by the Borrower with respect thereto, and may, if such Bank so
elects in connection with any transfer or enforcement of its Note, endorse on
the schedule forming a part thereof appropriate notations to evidence the
foregoing information with respect to each such Loan then outstanding; PROVIDED
that the failure of any Bank to make any such recordation or endorsement shall
not affect the obligations of the Borrower hereunder or under the Notes. Each
Bank is hereby irrevocably authorized by the Borrower so to endorse its Note and
to attach to and make a part of its Note a continuation of any such schedule as
and when required.
SECTION 2.06. SCHEDULED TERMINATION OF COMMITMENTS AND MATURITY OF
LOANS. (a) The Commitments shall terminate on the Termination Date and any
Committed Loans then outstanding (together with accrued interest
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thereon) and all accrued fees hereunder shall be due and payable in full on such
date.
(b) Each Money Market Loan included in any Money Market Borrowing
shall mature, and the principal amount thereof shall be due and payable, on the
last day of the Interest Period applicable to such Borrowing.
SECTION 2.07. INTEREST RATES. (a) Each Base Rate Loan shall bear
interest on the outstanding principal amount thereof, for each day from the date
such Loan is made until it becomes due, at a rate per annum equal to the Base
Rate for such day. Such interest shall be payable quarterly in arrears on each
Quarterly Date and, with respect to the principal amount of any Base Rate Loan
converted to a CD Loan or a Euro-Dollar Loan, on the date such Base Rate Loan is
so converted. Any overdue principal of or interest on any Base Rate Loan shall
bear interest, payable on demand, for each day from and including the date
payment thereof was due to but excluding the actual date of payment at a rate
per annum equal to the sum of 2% plus the Base Rate for such day.
(b) Each CD Loan shall bear interest on the outstanding principal
amount thereof, for each day during each Interest Period applicable thereto, at
a rate per annum equal to the sum of the CD Margin for such day plus the
Adjusted CD Rate applicable to such Interest Period; PROVIDED that if any CD
Loan or any portion thereof shall, as a result of clause (2)(b) of the
definition of Interest Period, have an Interest Period of less than 30 days,
such portion shall bear interest during such Interest Period at the rate
applicable to Base Rate Loans during such period. Such interest shall be
payable for each Interest Period on the last day thereof and, if such Interest
Period is longer than 90 days, 90 days after the first day thereof. Any overdue
principal of or interest on any CD Loan shall bear interest, payable on demand,
for each day from and including the date payment thereof was due to but
excluding the actual date of payment at a rate per annum equal to the sum of 2%
plus (i) if principal of or interest on such CD Loan shall have become overdue
during an Interest Period applicable to such CD Loan, for each such day before
the last day of such Interest Period, the sum of the CD Margin plus the Adjusted
CD Rate applicable to such Loan for such Interest Period, and (ii) for the last
day of such Interest Period and each day thereafter, the Base Rate for such day.
"CD Margin" means (Confidential treatment requested)
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(Confidential treatment requested)
The "Adjusted CD Rate" applicable to any Interest Period means a rate
per annum determined pursuant to the following formula:
[ CDBR ]*
ACDR = [ ---------- ] + AR
[ 1.00 - DRP ]
ACDR = Adjusted CD Rate
CDBR = CD Base Rate
DRP = Domestic Reserve Percentage
AR = Assessment Rate
__________
* The amount in brackets being rounded upward, if
necessary, to the next higher 1/100 of 1%
The "CD Base Rate" applicable to any Interest Period is the rate of
interest determined by the Agent to be the average (rounded upward, if
necessary, to the next higher 1/100 of 1%) of the prevailing rates per annum bid
at 10:00 A.M. (New York City time) (or as soon thereafter as practicable) on the
first day of such Interest Period by two or more New York certificate of deposit
dealers of recognized standing for the purchase at face value from each CD
Reference Bank of its certificates of deposit in an amount comparable to the
principal amount of the CD Loan of such CD Reference Bank to which such Interest
Period applies and having a maturity comparable to such Interest Period,
excluding from the calculation of such average the rates bid by such deposit
dealers for such purchase of certificates of deposit of (i) the CD Reference
Bank receiving the lowest average bid rates from such deposit dealers and (ii)
the CD Reference Bank receiving the highest average bid rates from such deposit
dealers.
"Domestic Reserve Percentage" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement (including without limitation any
basic, supplemental or emergency reserves)
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for a member bank of the Federal Reserve System in New York City with deposits
exceeding five billion dollars in respect of new non-personal time deposits in
dollars in New York City having a maturity comparable to the related Interest
Period and in an amount of $100,000 or more. The Adjusted CD Rate shall be
adjusted automatically on and as of the effective date of any change in the
Domestic Reserve Percentage.
"Assessment Rate" means for any day the annual assessment rate in
effect on such day which is payable by a member of the Bank Insurance Fund
classified as adequately capitalized and within supervisory subgroup "A" (or a
comparable successor assessment risk classification) within the meaning of 12
C.F.R. SECTION 327.3(d) (or any successor provision) to the Federal Deposit
Insurance Corporation (or any successor) for such Corporation's (or such
successor's) insuring time deposits at offices of such institution in the United
States. The Adjusted CD Rate shall be adjusted automatically on and as of the
effective date of any change in the Assessment Rate.
(c) Each Euro-Dollar Loan shall bear interest on the outstanding
principal amount thereof, for each day during each Interest Period applicable
thereto, at a rate per annum equal to the sum of the Euro-Dollar Margin for such
day plus the Adjusted London Interbank Offered Rate applicable to such Interest
Period. Such interest shall be payable for each Interest Period on the last day
thereof and, if such Interest Period is longer than three months, three months
after the first day thereof.
"Euro-Dollar Margin" means (Confidential treatment requested)
The "Adjusted London Interbank Offered Rate" applicable to any
Interest Period means a rate per annum equal to the quotient obtained (rounded
upward, if necessary, to the next higher 1/100 of 1%) by dividing (i) the
applicable London Interbank Offered Rate by (ii) 1.00 minus the Euro-Dollar
Reserve Percentage.
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The "London Interbank Offered Rate" applicable to any Interest Period
means the average (rounded upward, if necessary, to the next higher 1/100 of 1%)
of the respective rates per annum at which deposits in dollars are offered to
each of the Euro-Dollar Reference Banks in the London interbank market at
approximately 11:00 A.M. (London time) two Euro-Dollar Business Days before the
first day of such Interest Period in an amount approximately equal to the
principal amount of the Euro-Dollar Loan of such Euro-Dollar Reference Bank to
which such Interest Period is to apply and for a period of time comparable to
such Interest Period, excluding from the calculation of such average the rate at
which such deposits are offered to (i) the Euro-Dollar Reference Bank offered
the lowest such rate and (ii) the Euro-Dollar Reference Bank offered the highest
such rate.
"Euro-Dollar Reserve Percentage" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement for a member bank of the Federal
Reserve System in New York City with deposits exceeding five billion dollars in
respect of "Eurocurrency liabilities" (or in respect of any other category of
liabilities which includes deposits by reference to which the interest rate on
Euro-Dollar Loans is determined or any category of extensions of credit or other
assets which includes loans by a non-United States office of any Bank to United
States residents). The Adjusted London Interbank Offered Rate shall be adjusted
automatically on and as of the effective date of any change in the Euro-Dollar
Reserve Percentage.
(d) Any overdue principal of or interest on any Euro-Dollar Loan
shall bear interest, payable on demand, for each day from and including the date
payment thereof was due to but excluding the date of actual payment, at a rate
per annum equal to the sum of 2% plus (i) if principal of or interest on such
Euro-Dollar Loan shall have become overdue during an Interest Period applicable
to such Euro-dollar Loan, for each such day before the last day of such Interest
Period, the sum of the Euro-Dollar Margin plus the Adjusted London Interbank
Offered Rate applicable to such Loan for such Interest Period, and (ii) for the
last day of such Interest Period and each day thereafter, the Euro-Dollar Margin
plus the quotient obtained (rounded upward, if necessary, to the next higher
1/100 of 1%) by dividing (x) the average (rounded upward, if necessary, to the
next higher 1/100 of 1%) of the respective rates per annum at which one day (or,
if such amount due remains unpaid more
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than three Euro-Dollar Business Days, then for such other period of time not
longer than six months as the Agent may select) deposits in dollars in an amount
approximately equal to such overdue payment due to each of the Euro-Dollar
Reference Banks are offered to such Euro-Dollar Reference Bank in the London
interbank market for the applicable period determined as provided above by (y)
1.00 minus the Euro-Dollar Reserve Percentage (or, if the circumstances
described in clause (a) or (b) of Section 8.01 shall exist, at a rate per annum
equal to the sum of 2% plus the Base Rate for such day).
(e) Subject to Section 8.01(a), each Money Market LIBOR Loan shall
bear interest on the outstanding principal amount thereof, for the Interest
Period applicable thereto, at a rate per annum equal to the sum of the London
Interbank Offered Rate for such Interest Period (determined in accordance with
Section 2.07(c) as if the related Money Market LIBOR Borrowing were a Committed
Euro-Dollar Borrowing) plus (or minus) the Money Market Margin quoted by the
Bank making such Loan in accordance with Section 2.03. Each Money Market
Absolute Rate Loan shall bear interest on the outstanding principal amount
thereof, for the Interest Period applicable thereto, at a rate per annum equal
to the Money Market Absolute Rate quoted by the Bank making such Loan in
accordance with Section 2.03. Such interest shall be payable for each Interest
Period on the last day thereof and, if such Interest Period is longer than three
months, at intervals of three months after the first day thereof. Any overdue
principal of or interest on any Money Market Loan shall bear interest, payable
on demand, for each day from and including the date payment thereof was due to
but excluding the date of actual payment, at a rate per annum equal to the sum
of 2% plus the Base Rate for such day.
(f) The Agent shall determine each interest rate applicable to the
Loans hereunder. The Agent shall give prompt notice to the Borrower and the
participating Banks of each rate of interest so determined, and its
determination thereof shall be conclusive in the absence of manifest error.
(g) Each Reference Bank agrees to use its best efforts to furnish
quotations to the Agent as contemplated by this Section. If any Reference Bank
does not furnish a timely quotation, the Agent shall determine the relevant
interest rate on the basis of the quotation or quotations furnished by the
remaining Reference Bank or Banks or, if none of such quotations is available on
a timely basis, the provisions of Section 8.01 shall apply.
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SECTION 2.08. FEES. (a) FACILITY FEE. The Borrower shall pay to
the Agent for the account of the Banks ratably a facility fee at the Facility
Fee Rate. Such facility fee shall accrue each day (i) from and including
December 9, 1993 to but excluding the Termination Date (or earlier date of
termination of the Commitments in their entirety), on the aggregate amount of
the Commitments (whether used or unused) on such date, and (ii) from and
including the Termination Date (or such earlier date) to but excluding the Final
Fee Payment Date, on the sum of (i) the aggregate outstanding principal amount
of the Loans plus (ii) the aggregate amount of the Letter of Credit Liabilities,
in each case on such date. Accrued fees under this subsection shall be payable
on each Quarterly Date, on the Termination Date and on the Final Fee Payment
Date.
"Facility Fee Rate" means (Confidential treatment requested)
"Final Fee Payment Date" means the latest of (i) the date on which the
Loans shall be repaid in their entirety, (ii) the date on which all Letters of
Credit shall have terminated, (iii) the date on which no drawings shall be
available under any Letter of Credit and (iv) the date on which all
Reimbursement Obligations shall be paid in full.
(b) ADVISORY FEES. The Borrower shall pay to each Co-Arranger
advisory fees (i) on the Effective Date, in the amount previously agreed upon
between such Co-Arranger and the Borrower and (ii) on the Sell-Down Date, in the
amount previously agreed upon between such Co-Arranger and the Borrower.
(c) SYNDICATION FEES. The Borrower shall pay to each Co-Agent and
Co-Arranger syndication fees (i) prior to the Effective Date, on the date and in
the amount previously agreed upon between the Borrower and such Co-Agent or Co-
Arranger, as the case may be, and (ii) on the Sell-Down Date, in the amount
specified in the Term Sheet to be paid to such Co-Agent or Co-Arranger, as the
case may be, upon commencement of Phase II (as defined in the Term Sheet).
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SECTION 2.09. OPTIONAL TERMINATION OR REDUCTION OF COMMITMENTS. The
Borrower may, upon at least three Domestic Business Days' notice to the Agent,
(i) terminate the Commitments at any time, if no Loans are outstanding and no
Letter of Credit Liabilities exist at such time or (ii) ratably reduce from time
to time by an aggregate amount of $25,000,000 or any larger multiple of
$1,000,000, the aggregate amount of the Commitments in excess of the sum of (x)
the aggregate outstanding principal amount of the Loans and (y) the aggregate
amount of Letter of Credit Liabilities at such time in respect of all Letters of
Credit.
SECTION 2.10. OPTIONAL PREPAYMENTS. (a) The Borrower may, upon at
least one Domestic Business Day's notice to the Agent, prepay a Group of Base
Rate Loans (or any Money Market Borrowing bearing interest at the Base Rate
pursuant to Section 8.01(a)) in whole at any time, or from time to time in part
in amounts aggregating $25,000,000 or any larger multiple of $1,000,000, by
paying the principal amount to be prepaid together with accrued interest thereon
to the date of prepayment. Each such optional prepayment shall be applied to
prepay ratably the Loans of the several Banks included in such Group or
Borrowing.
(b) The Borrower may, upon at least three Domestic Business Days'
notice to the Agent, in the case of a Group of CD Loans, or upon at least three
Euro-Dollar Business Days' notice to the Agent, in the case of a Group of
Euro-Dollar Loans, prepay the Loans comprising such Group in whole at any time,
or from time to time in part in amounts aggregating $25,000,000 or any larger
multiple of $1,000,000, by paying the principal amount to be prepaid together
with accrued interest thereon to the date of prepayment; PROVIDED that the
Borrower shall reimburse each Bank for any loss or expense incurred by it as a
result of any such prepayment in accordance with Section 2.13. Each such
optional prepayment shall be applied to prepay ratably the Loans of the several
Banks included in such Group.
(c) Except as provided in subsection (a) above, the Borrower may not
prepay all or any portion of the principal amount of any Money Market Loan prior
to the maturity thereof.
(d) Upon receipt of a notice of prepayment pursuant to this Section,
the Agent shall promptly notify each Bank of the contents thereof and of such
Bank's ratable share of such prepayment (if any) and such notice shall not
thereafter be revocable by the Borrower.
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SECTION 2.11. METHOD OF ELECTING INTEREST RATES. (a) The Loans
included in each Committed Borrowing shall bear interest initially at the type
of rate specified by the Borrower in the applicable Notice of Borrowing.
Thereafter, the Borrower may from time to time elect to change or continue the
type of interest rate borne by each Group of Loans (subject in each case to the
provisions of Article VIII), as follows:
(i) if such Loans are Base Rate Loans, the Borrower may elect to
convert such Loans to CD Loans as of any Domestic Business Day or to
Euro-Dollar Loans as of any Euro-Dollar Business Day;
(ii) if such Loans are CD Loans, the Borrower may elect to convert
such Loans to Base Rate Loans or Euro-Dollar Loans or elect to continue
such Loans as CD Loans for an additional Interest Period, in each case
effective on the last day of the then current Interest Period applicable to
such Loans;
(iii) if such Loans are Euro-Dollar Loans, the Borrower may elect to
convert such Loans to Base Rate Loans or CD Loans or elect to continue such
Loans as Euro-Dollar Loans for an additional Interest Period, in each case
effective on the last day of the then current Interest Period applicable to
such Loans.
Each such election shall be made by delivering a notice (a "Notice of Interest
Rate Election") to the Agent not later than 11:00 A.M. (New York City time) (x)
if the relevant Loans are to be converted to Domestic Loans or continued as
Domestic Loans for an additional Interest Period, the second Domestic Business
Day before such conversion or continuation is to be effective and (y) if the
relevant Loans are to be converted to Euro-Dollar Loans or continued as
Euro-Dollar Loans for an additional Interest Period, the third Euro-Dollar
Business Day before such conversion or continuation is to be effective. A
Notice of Interest Rate Election may, if it so specifies, apply to only a
portion of the aggregate principal amount of the relevant Group of Loans;
PROVIDED that (i) such portion is allocated ratably among the Loans comprising
such Group and (ii) the portion to which such Notice applies, and the remaining
portion to which it does not apply, are each $25,000,000 or any larger multiple
of $1,000,000.
(b) Each Notice of Interest Rate Election shall specify:
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(i) the Group of Loans (or portion thereof) to which such notice
applies,
(ii) the date on which the conversion or continuation selected in such
notice is to be effective, which shall comply with the applicable clause of
subsection (a) above,
(iii) if the Loans comprising such Group are to be converted, the new
type of Loans and, if such new Loans are Fixed Rate Loans, the duration of
the initial Interest Period applicable thereto, and
(iv) if such Loans are to be continued as CD Loans or Euro-Dollar
Loans for an additional Interest Period, the duration of such additional
Interest Period.
Each Interest Period specified in a Notice of Interest Rate Election shall
comply with the provisions of the definition of Interest Period. The number of
Groups of Loans outstanding at any one time shall not exceed the lesser of (i)
thirty and (ii) the number obtained by dividing the aggregate amount of the
Commitments at such time by $25,000,000 (rounded upward, if necessary, to the
next higher integer).
(c) Upon receipt of a Notice of Interest Rate Election from the
Borrower pursuant to subsection (a) above, the Agent shall promptly notify each
Bank of the contents thereof and such notice shall not thereafter be revocable
by the Borrower. If the Borrower fails to deliver a timely Notice of Interest
Rate Election to the Agent for any Group of Fixed Rate Loans, such Loans shall
be converted into Base Rate Loans on the last day of the then current Interest
Period applicable thereto.
SECTION 2.12. GENERAL PROVISIONS AS TO PAYMENTS. (a) The Borrower
shall make each payment of principal of, and interest on, the Loans and of fees
hereunder, not later than 12:00 Noon (New York City time) on the date when due,
in Federal or other funds immediately available in New York City, to the Agent
at its address referred to in Section 9.01. The Agent will promptly distribute
to each Bank its ratable share of each such payment received by the Agent for
the account of the Banks. Whenever any payment of principal of, or interest on,
the Domestic Loans or of fees shall be due on a day which is not a Domestic
Business Day, the date for payment thereof shall be extended to the next
succeeding Domestic Business Day. Whenever any payment of principal of, or
interest on, the Euro-Dollar Loans shall be due on a
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day which is not a Euro-Dollar Business Day, the date for payment thereof shall
be extended to the next succeeding Euro-Dollar Business Day unless such
Euro-Dollar Business Day falls in another calendar month, in which case the
date for payment thereof shall be the next preceding Euro-Dollar Business Day.
Whenever any payment of principal of, or interest on, the Money Market Loans
shall be due on a day which is not a Euro-Dollar Business Day, the date for
payment thereof shall be extended to the next succeeding Euro-Dollar Business
Day. If the date for any payment of principal is extended by operation of law
or otherwise, interest thereon shall be payable for such extended time.
(b) Unless the Agent shall have received notice from the Borrower
prior to the date on which any payment is due to the Banks hereunder that the
Borrower will not make such payment in full, the Agent may assume that the
Borrower has made such payment in full to the Agent on such date and the Agent
may, in reliance upon such assumption, cause to be distributed to each Bank on
such due date an amount equal to the amount then due such Bank. If and to the
extent that the Borrower shall not have so made such payment, each Bank shall
repay to the Agent forthwith on demand such amount distributed to such Bank
together with interest thereon, for each day from the date such amount is
distributed to such Bank until the date such Bank repays such amount to the
Agent, at the Federal Funds Rate.
SECTION 2.13. FUNDING LOSSES. If the Borrower makes any payment of
principal with respect to any Fixed Rate Loan or any Fixed Rate Loan is
converted to a Base Rate Loan (pursuant to Article II, VI or VIII or otherwise)
on any day other than the last day of an Interest Period applicable thereto, or
the end of an applicable period fixed pursuant to Section 2.07(d), or if the
Borrower fails to borrow or prepay any Fixed Rate Loans after notice has been
given to any Bank in accordance with Section 2.04(a) or 2.10(d), the Borrower
shall reimburse each Bank within 15 days after demand for any resulting loss or
expense incurred by it (or, subject to Section 9.06(e), by an existing or
prospective Participant in the related Loan), including (without limitation) any
loss incurred in obtaining, liquidating or employing deposits from third
parties, but excluding loss of margin for the period after any such payment or
conversion or failure to borrow or prepay, PROVIDED that such Bank shall have
delivered to the Borrower a certificate setting forth in reasonable detail its
calculation of the amount of such loss or expense, which certificate shall be
conclusive in the absence of manifest error.
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SECTION 2.14. COMPUTATION OF INTEREST AND FEES. Interest based on
the Prime Rate hereunder shall be computed on the basis of a year of 365 days
(or 366 days in a leap year) and paid for the actual number of days elapsed
(including the first day but excluding the last day). All other interest and
fees shall be computed on the basis of a year of 360 days and paid for the
actual number of days elapsed (including the first day but excluding the last
day).
SECTION 2.15. LETTERS OF CREDIT. (a) COMMITMENT TO ISSUE LETTERS OF
CREDIT. During the Credit Availability Period, the Banks severally agree, upon
the terms and conditions hereinafter set forth, to issue letters of credit
hereunder, ratably in proportion to their respective Commitments, from time to
time upon the request of the Borrower (letters of credit so issued, the "Letters
of Credit", and each a "Letter of Credit"); PROVIDED that, immediately after
each Letter of Credit is issued, (i) the sum of each Bank's outstanding LC
Exposure plus the aggregate principal amount of Committed Loans by such Bank
shall not exceed the amount of its Commitment and (ii) the aggregate amount of
the Letter of Credit Liabilities shall not exceed the Available LC Amount.
(b) NOTICE OF ISSUANCE. The Borrower shall give the Agent
irrevocable notice (i) at least five Domestic Business Days prior to the
requested issuance of a Letter of Credit, if the form of such Letter of Credit
has not been previously agreed upon by the Borrower and the Banks, and (ii) at
least three Domestic Business Days prior to the requested issuance of a Letter
of Credit, if the form of such Letter of Credit has been previously agreed upon
by the Borrower and the Banks, in each case specifying the date such
Letter of Credit is to be issued, and describing the proposed terms of such
Letter of Credit, including the face amount thereof (if not specified in the
form of such Letter of Credit, if any), and the nature of the transactions
proposed to be supported thereby (such notice, a "Notice of Issuance"). Upon
receipt of any Notice of Issuance, the Agent (i) shall promptly notify each Bank
of the contents thereof and of the amount of such Bank's ratable share of such
proposed Letter of Credit and (ii) shall prepare and send to the Borrower and
the Lenders a proposed form or the form, as the case may be, of such Letter of
Credit. The terms of each such Letter of Credit shall provide that each Bank is
obligated, severally and not jointly, to pay any drawings under such Letter of
Credit ratably in proportion to such Bank's Commitment as in effect on the date
such
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Letter of Credit is issued. The issuance by the Banks of each Letter of
Credit shall, in addition to the conditions precedent set forth in Article III,
be subject to the conditions precedent that (i) such Letter of Credit shall (x)
have a minimum aggregate face amount of $25,000,000 and (y) be in such form and
contain such terms as shall be reasonably satisfactory to the Banks, (ii) the
Borrower shall have, or shall have caused such other Persons to have, executed
and delivered such other instruments and agreements relating to such Letter of
Credit as any of the Banks shall have reasonably requested, (iii) such Letter of
Credit shall be used only for the purpose of staying directly or indirectly the
execution of any judgment entered by the Court in the Action and (iv) such
Letter of Credit shall be issued only to a beneficiary designated by the Court
or to one or more bonding companies accepted by the Court that issue surety
bonds in favor of such beneficiary. No Letter of Credit shall have a term
extending beyond the Termination Date.
(c) FEES. The Borrower agrees to pay to the Agent for the account of
each Bank in respect of each Letter of Credit, ratably in proportion to its
respective share of such Letter of Credit, a letter of credit fee with respect
to such Letter of Credit, computed for each day from and including the date of
issuance of such Letter of Credit until the date no drawings are available on
such Letter of Credit, at the LC Commission Rate on the undrawn amount of such
Letter of Credit on such day. Such fee shall be payable in arrears on each
Quarterly Date for so long as such Letter of Credit is outstanding and on the
date no drawings are available on such Letter of Credit.
"LC Commission Rate" means (Confidential treatment requested)
(d) DRAWINGS UNDER THE LETTER OF CREDIT. Upon receipt from the
beneficiary of any Letter of Credit of a demand for payment under such Letter of
Credit, the Agent shall determine in accordance with the terms and conditions of
such Letter of Credit whether such demand for payment should be honored. If the
Agent determines that a demand for payment by such beneficiary should be honored
in
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accordance with the terms and conditions set forth in such Letter of Credit, the
Agent shall promptly notify the Borrower and each Bank of the aggregate amount
to be paid as a result of such demand and shall promptly notify each Bank of its
share of such amount. Upon receipt of such notice, each Bank shall make
available to such beneficiary its share of the amount so demanded in accordance
with the terms of such Letter of Credit.
(e) REIMBURSEMENT OBLIGATION. If any Bank pays any portion of any
draft presented under any Letter of Credit, the Borrower agrees to pay to such
Bank (x) on the date the Agent notifies the Borrower of such payment, if such
notice is given at or before 10 A.M. (New York City time), or (y) if such notice
is given after 10 A.M. (New York City time) then not later than 1:00 P.M. (New
York City time) on the Domestic Business Day next succeeding the date such
notice is given (the "Reimbursement Due Date") an amount equal to the amount
paid by such Bank under such Letter of Credit (a "Reimbursable Amount"),
together with interest thereon from and including the date of such payment by
such Bank to but excluding the Reimbursement Due Date at a rate per annum equal
to the Base Rate for such day. If any Reimbursable Amount is not paid on the
relevant Reimbursement Due Date, the overdue amount shall bear interest for each
day from and including the Reimbursement Due Date to but excluding the date of
actual payment at a rate per annum equal to the sum of 2% plus the Base Rate for
such day. The Borrower shall be irrevocably and unconditionally obligated
forthwith to reimburse each Bank for any Reimbursable Amount paid by such Bank
upon any drawing under any Letter of Credit, without presentment, demand,
protest or other formalities of any kind.
(f) OBLIGATIONS. The obligations of the Borrower under this Section
2.15 shall be absolute, unconditional and irrevocable, and shall be performed
strictly in accordance with the terms of this Agreement, under all circumstances
whatsoever, including without limitation the following circumstances:
(i) any lack of validity or enforceability of any Letter of
Credit or any document related thereto;
(ii) any amendment or waiver of or any consent to departure from
all or any of the provisions of any Letter of Credit or any document
related thereto;
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(iii) the use which may be made of any Letter of Credit by, or any
acts or omission of, the beneficiary of such Letter of Credit (or any
Person for whom such the beneficiary may be acting);
(iv) the existence of any claim, set-off, defense or other rights
that the Borrower may have at any time against the beneficiary of a
Letter of Credit (or any Person for whom such beneficiary may be
acting), the Banks or any other Person, whether in connection with
this Agreement or any Letter of Credit or any document related hereto
or thereto or any unrelated transaction;
(v) any statement or any other document presented under a Letter
of Credit proving to be forged, fraudulent or invalid in any respect
or any statement therein being untrue or inaccurate in any respect
whatsoever;
(vi) payment under any Letter of Credit against presentation to
the Agent of a draft or certificate that does not comply with the
terms of such Letter of Credit, PROVIDED that the Agent's
determination that documents presented under such Letter of Credit
comply with the terms thereof shall not have constituted gross
negligence or willful misconduct of the Agent; or
(vii) any other act or omission to act or delay of any kind by any
Bank, the Agent or any other Person or any other event or circumstance
whatsoever that might, but for the provisions of this subsection (f),
constitute a legal or equitable discharge of the Borrower's
obligations hereunder.
(g) INDEMNIFICATION. The Borrower hereby indemnifies and holds
harmless each Bank and the Agent from and against any and all claims, damages,
losses, liabilities, costs or expenses which such Bank or the Agent may incur
(or which may be claimed against such Bank or the Agent by any Person
whatsoever), by reason of or in connection with the execution and delivery or
transfer of or payment or failure to pay under any Letter of Credit; PROVIDED
that the Borrower shall not be required to indemnify any Bank or the Agent for
any claims, damages, losses, liabilities, costs or expenses, to the extent
caused by (x) the willful misconduct or gross negligence of the
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Agent in determining whether a request presented under any Letter of Credit
complied with the terms of such Letter of Credit or (y) such Bank's failure to
pay under any Letter of Credit after receipt of notice from the Agent pursuant
to Section 2.15(b) after the presentation to the Agent by the beneficiary of
such Letter of Credit of documents strictly complying with the terms and
conditions of such Letter of Credit. Nothing in this subsection (g) is intended
to limit the obligations of the Borrower under any other provision of this
Agreement, including the Borrower's reimbursement obligation contained in
Section 2.15(e).
(h) LIMITED LIABILITY OF THE AGENT AND THE BANKS. The Agent, the
Banks and their respective officers, directors, employees and agents shall not
be liable or responsible for, and the obligations of the Borrower to reimburse
the Banks for payments under this Agreement shall not be excused by, any action
or inaction of the Agent or any Bank related to: (w) the use which may be made
of any Letter of Credit or any acts or omissions of the beneficiary of such
Letter of Credit in connection therewith; (x) the validity or genuineness of
documents presented under any Letter of Credit, even if such documents should in
fact prove to be in any or all respects invalid, fraudulent or forged; (y)
payment by any Bank against presentation of documents to the Agent which do not
comply with the terms of any Letter of Credit, including failure of any document
to bear any reference or adequate reference to such Letter of Credit; or (z) any
other circumstances whatsoever in making or failing to make payment under any
Letter of Credit, or notifying or failing to notify any Bank that is required to
make any payment under any Letter of Credit. Notwithstanding the foregoing, the
Borrower shall, in the case of clause (i) of this sentence, have a claim against
the Agent and, in the case of clause (ii) of this sentence, against any Bank,
and the Agent or such Bank, as the case may be, shall be liable to the Borrower,
to the extent, but only to the extent, of any direct, as opposed to
consequential, damages suffered by the Borrower which were caused by (i) the
Agent's willful misconduct or gross negligence in determining whether documents
presented under any Letter of Credit comply with the terms thereof or in failing
to notify any Bank in accordance with Section 2.15(d) or in accordance with the
terms of any Letter of Credit or (ii) such Bank's failure to pay, after receipt
of notice from the Agent pursuant to Section 2.15(b), under any Letter of Credit
after the presentation to the Agent by the beneficiary of such Letter of Credit
of documents strictly complying with the terms and conditions of such Letter of
Credit. In furtherance and not in limitation of the
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foregoing, the Agent may accept documents that appear on their face to be in
order, without responsibility for further investigation, regardless of any
notice or information to the contrary.
(i) OBLIGATIONS SEVERAL. The obligations of each Bank hereunder and
under any Letter of Credit are several but not joint. Failure of any Bank to
carry out its obligations hereunder and under any Letter of Credit shall not
relieve any other Bank, the Agent or the Borrower of any of their respective
obligations hereunder or under such Letter of Credit. Neither the Agent nor any
Bank shall be responsible for the obligations of any other party hereunder.
ARTICLE III
CONDITIONS
SECTION 3.01. CLOSING. The Closing hereunder shall occur upon
receipt by the Agent of the following documents, each dated the Closing Date
unless otherwise indicated:
(a) a duly executed Note for the account of each Bank dated on or
before the Closing Date, complying with the provisions of Section 2.05;
(b) a certificate signed on behalf of the Borrower by a vice
president and the secretary of the Borrower stating that (i) on the Closing
Date, no Default has occurred and is continuing and (ii) the
representations and warranties of the Borrower contained in this Agreement
are true on and as of the Closing Date;
(c) opinions of Skadden, Arps, Slate, Meagher & Flom, special counsel
for the Borrower, substantially in the form of Exhibit E hereto, and of the
General Counsel of the Borrower, substantially in the form of Exhibit F
hereto, and each covering such additional matters relating to the
transactions contemplated hereby as the Required Banks may reasonably
request;
(d) an opinion of Davis Polk & Wardwell, special counsel for the
Agent, substantially in the form of Exhibit G hereto and covering such
additional matters relating to the transactions contemplated hereby as the
Required Banks may reasonably request; and
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(e) all documents the Agent may reasonably request relating to the
existence of the Borrower, the corporate authority for and the validity of
this Agreement, the Notes or any related document, and any other matters
relevant hereto, all in form and substance reasonably satisfactory to the
Agent.
The Agent shall promptly notify the Borrower and the Banks of the Closing Date,
and such notice shall be conclusive and binding on all parties hereto.
SECTION 3.02. EACH CREDIT EVENT. The obligations of any Bank to make
a Loan on the occasion of any Borrowing and to issue a Letter of Credit on the
occasion of any request therefor by the Borrower are subject to the satisfaction
of the following conditions:
(a) the fact that the Closing Date shall have occurred;
(b) receipt (or deemed receipt) by the Agent of a Notice of Borrowing
as required by Section 2.02 or 2.03, or a Notice of Issuance as required by
Section 2.15, as the case may be;
(c) the fact that, immediately after such Credit Event, the sum of
(i) the aggregate outstanding principal amount of the Loans plus (ii) the
aggregate outstanding amount of Letter of Credit Liabilities will not
exceed the aggregate amount of the Commitments;
(d) the fact that, immediately before and after such Credit Event, no
Default shall have occurred and be continuing;
(e) the fact that the representations and warranties of the Borrower
contained in this Agreement (except (i) the representations set forth in
Sections 4.04(c) and 4.11(b) and (ii) the representations and warranties
set forth in Sections 4.05 and 4.07 as to any matter which has theretofore
been disclosed in writing by the Borrower to the Banks) shall be true on
and as of the date of such Credit Event;
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(f) (Confidential treatment requested)
(g) (Confidential treatment requested)
(h) (Confidential treatment requested)
(i) (Confidential treatment requested)
(j) (Confidential treatment requested)
(k) in the case of the initial Credit Event, (i) the fact that the
Sell-Down Date shall have occurred at least five Domestic Business Days
prior to the date of the initial Credit Event and (ii) receipt by the
Agent, for the account of each of the Co-Arrangers and the Co-Agents, of
the fees payable to the Co-Arrangers and the Co-Agents on or before the
date of the initial Credit Event.
Each Credit Event hereunder shall be deemed to be a representation and warranty
by the Borrower on the date of such Credit Event as to the facts specified in
clauses (c) through (i), inclusive, of this Section.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
SECTION 4.01. CORPORATE EXISTENCE AND POWER. The Borrower is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware, and has all corporate powers and all material
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governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted.
SECTION 4.02. CORPORATE AND GOVERNMENTAL AUTHORIZATION; NO
CONTRAVENTION. The execution, delivery and performance by the Borrower of this
Agreement and the Notes are within the Borrower's corporate power, have been
duly authorized by all necessary corporate action, require no action by or in
respect of, or filing with, any governmental body, agency or official and do not
contravene, or constitute a default under, any provision of applicable law or
regulation or of the restated certificate of incorporation or bylaws of the
Borrower or of any material agreement, judgment, injunction, order, decree or
other instrument binding upon the Borrower or any of its Subsidiaries or result
in the creation or imposition of any Lien on any asset of the Borrower or any of
its Subsidiaries.
SECTION 4.03. BINDING EFFECT. This Agreement constitutes a valid and
binding agreement of the Borrower, and the Notes, when executed and delivered in
accordance with by this Agreement, will constitute valid and binding obligations
of the Borrower.
SECTION 4.04. FINANCIAL INFORMATION.
(a) The consolidated statement of financial position of the Borrower
and its Consolidated Subsidiaries as of December 31, 1992 and the related
consolidated statements of income and of cash flows for the fiscal year then
ended, reported on by Deloitte & Touche and set forth in the Borrower's 1992
Form 10-K, a copy of which has been delivered to each of the Banks, fairly
present, in all material respects, in conformity with generally accepted
accounting principles, the consolidated financial position of the Borrower and
its Consolidated Subsidiaries as of such date and their consolidated results of
operations and cash flows for such fiscal year.
(b) The unaudited consolidated statement of financial position of the
Borrower and its Consolidated Subsidiaries as of October 3, 1993 and the related
unaudited consolidated statements of income and of cash flows for the three
quarters then ended, set forth in the Borrower's quarterly report for the fiscal
quarter ended October 3, 1993 as filed with the Securities and Exchange
Commission on Form 10-Q, a copy of which has been delivered to each of the
Banks, fairly present, in conformity with generally accepted
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accounting principles applied on a basis consistent with the financial
statements referred to in subsection (a) of this Section, the consolidated
financial position of the Borrower and its Consolidated Subsidiaries as of
such date and their consolidated results of operations and cash flows for such
period of three quarters (subject to normal year-end adjustments).
(c) Since December 31, 1992 there has been no material adverse change
in the business, financial position, results of operations or prospects of the
Borrower and its Consolidated Subsidiaries, considered as a whole; PROVIDED that
the verdict rendered by the jury in the Action and the entry by the Court, and
the payment by the Borrower, of the Judgment or any Settlement shall not, in and
of themselves, constitute such a material adverse change.
SECTION 4.05. LITIGATION. There is no action, suit or proceeding
pending against, or to the knowledge of the Borrower threatened against or
affecting, the Borrower or any of its Subsidiaries before any court or
arbitrator or any governmental body, agency or official (i) in which there is a
reasonable possibility of an adverse decision which could reasonably be expected
to have a Material Adverse Effect, except for the Action or (ii) which in any
manner draws into question the validity of this Agreement or the Notes.
SECTION 4.06. COMPLIANCE WITH ERISA; MINIMUM FUNDING. (a) Each
member of the ERISA Group has fulfilled its obligations under the minimum
funding standards of ERISA and the Internal Revenue Code with respect to each
Plan and is in compliance in all material respects with the presently applicable
provisions of ERISA and the Internal Revenue Code with respect to each Plan,
except where the failure to comply therewith could not reasonably be expected to
have a Material Adverse Effect. No member of the ERISA Group has (i) sought a
waiver of the minimum funding standard under Section 412 of the Internal Revenue
Code in respect of any Plan, (ii) failed to make any contribution or payment to
any Plan or Multiemployer Plan or in respect of any Benefit Arrangement, or made
any amendment to any Plan or Benefit Arrangement, which failure or amendment has
resulted or could result in the imposition of a Lien or the posting of a bond or
other security under ERISA or the Internal Revenue Code or (iii) incurred any
liability under Title IV of ERISA other than a liability to the PBGC for
premiums or similar items under Section 4007 of ERISA.
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(b) As of September 30 of each fiscal year of the Borrower, the fair
market value of all assets, in the aggregate, of all Plans maintained or
contributed to by any member of the ERISA Group (excluding any accrued but
unpaid contributions) shall not be less than 80% of the accumulated benefit
obligation for such Plans, calculated on the basis of the actuarial assumptions
used by the Borrower for financial reporting purposes for such fiscal year.
SECTION 4.07. ENVIRONMENTAL MATTERS. In the ordinary course of its
business, the Borrower conducts an ongoing review of the aggregate effect of
Environmental Laws on the business, operations and properties of the Borrower
and its Subsidiaries, in the course of which it identifies and evaluates
associated liabilities and costs (including, without limitation, capital or
operating expenditures required for clean-up or closure of properties presently
or previously owned, capital or operating expenditures required to achieve or
maintain compliance with environmental protection standards imposed by law or as
a condition of licenses, permits or contracts, related constraints on operating
activities, including periodic or permanent shutdowns of facilities or
reductions in the level of or changes in the nature of operations conducted
thereat, costs or liabilities in connection with off-site disposal of wastes or
Hazardous Substances, and any actual or potential liabilities to third parties,
including employees, and any related costs and expenses). On the basis of this
review, the Borrower has reasonably concluded that such associated liabilities
and costs, including the costs of compliance with Environmental Laws, are
unlikely to have a Material Adverse Effect.
SECTION 4.08. TAXES. United States Federal income tax returns of the
Borrower and its Subsidiaries have been examined and closed through the fiscal
year ended December 31, 1979. The Borrower and each of its Subsidiaries have
filed all United States Federal income tax returns and all other material tax
returns which are required to be filed by any of them and have paid all taxes
due pursuant to such returns or pursuant to any assessment received by any of
them, except for any such taxes which are being contested in good faith and for
which adequate reserves have been made on the books of the Borrower and its
Subsidiaries in accordance with generally accepted accounting principles. The
charges, accruals and reserves on the books of the Borrower and its Subsidiaries
in respect of income taxes are, in the opinion of the Borrower, adequate in
accordance with generally accepted accounting principles.
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SECTION 4.09. SUBSIDIARIES. Each corporate Subsidiary of the
Borrower is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation, and has all
corporate powers and all material governmental licenses, authorizations,
consents and approvals required to carry on its business as now conducted.
SECTION 4.10. NOT AN INVESTMENT COMPANY. The Borrower is not an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
SECTION 4.11. FULL DISCLOSURE. (a) All oral information relating to
the Action and all written information (taken as a whole) heretofore furnished
by or on behalf of the Borrower to the Agent, either Co-Arranger or any Bank for
purposes of or in connection with this Agreement or any transaction contemplated
hereby is, and all such information (taken as a whole) hereafter furnished by
the Borrower to the Agent, either Co-Arranger or any Bank will be, true and
accurate in all material respects on the date as of which such information is
stated or certified.
(b) The Borrower has disclosed to the Banks in writing any and all
facts which materially and adversely affect or could reasonably be expected to
materially and adversely affect (to the extent the Borrower can now reasonably
foresee), the business, operations or financial condition of the Borrower and
its Consolidated Subsidiaries, taken as a whole (to the extent the Borrower is
required to publicly disclose such information under the federal securities
laws), or the ability of the Borrower to perform its obligations under this
Agreement.
ARTICLE V
COVENANTS
The Borrower agrees that, so long as any Bank has any Commitment
hereunder or any amount payable under any Note remains unpaid or any Letter of
Credit Liability remains outstanding:
SECTION 5.01. INFORMATION. The Borrower will deliver to each of the
Banks:
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(a) as soon as available and in any event within 100 days after the
end of each fiscal year of the Borrower, a consolidated statement of
financial position of the Borrower and its Consolidated Subsidiaries as of
the end of such fiscal year and the related consolidated statements of
income and cash flows for such fiscal year, setting forth in each case in
comparative form the figures for the previous fiscal year, all reported on
in a manner acceptable to the Securities and Exchange Commission by
Deloitte & Touche or other independent public accountants of nationally
recognized standing;
(b) as soon as available and in any event within 50 days after the
end of each of the first three fiscal quarters of each fiscal year of the
Borrower, a consolidated statement of financial position of the Borrower
and its Consolidated Subsidiaries as of the end of such quarter and the
related consolidated statements of income and cash flows for such quarter
and for the portion of the Borrower's fiscal year ended at the end of such
fiscal quarter, setting forth in the case of such in comparative form the
figures for the corresponding quarter and the corresponding portion of the
Borrower's previous fiscal year, all certified (subject to normal year-end
adjustments) as to fairness of presentation, generally accepted accounting
principles and consistency by the chief financial officer or the chief
accounting officer of the Borrower;
(c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, a certificate of the
chief financial officer, the treasurer or the chief accounting officer of
the Borrower (i) setting forth in reasonable detail the calculations
required to establish whether the Borrower was in compliance with the
requirements of Sections 5.07 to 5.09, inclusive, on the date of such
financial statements and (ii) stating whether, to the best of such person's
knowledge after due inquiry, any Default exists on the date of such
certificate and, if any Default then exists, setting forth the details
thereof and the action which the Borrower is taking or proposes to take
with respect thereto;
(d) simultaneously with the delivery of each set of financial
statements referred to in clause (a) above, a statement of the firm of
independent public accountants which reported on such statements (i)
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whether anything has come to their attention to cause them to believe that any
Default existed on the date of such statements and (ii) confirming the
calculations set forth in the officer's certificate delivered simultaneously
therewith pursuant to clause (c) above;
(e) within five Domestic Business Days after any executive officer of
the Borrower obtains knowledge of any Default, if such Default is then
continuing, a certificate of the chief financial officer, the treasurer or
the chief accounting officer of the Borrower setting forth the details
thereof and the action which the Borrower is taking or proposes to take
with respect thereto;
(f) promptly upon the mailing thereof to the stockholders of the
Borrower generally, copies of all financial statements, reports and proxy
statements so mailed;
(g) promptly upon the filing thereof, copies of all registration
statements (other than the exhibits thereto and any registration statements
on Form S-8 or its equivalent) and reports on Forms 10-K, 10-Q and 8-K (or
their equivalents) which the Borrower shall have filed with the Securities
and Exchange Commission;
(h) within ten Domestic Business Days after any member of the ERISA
Group (i) gives or is required to give notice to the PBGC of any
"reportable event" (as defined in Section 4043 of ERISA) with respect to
any Plan which could reasonably be expected to constitute grounds for a
termination of such Plan under Title IV of ERISA, or knows that the plan
administrator of any Plan has given or is required to give notice of any
such reportable event, a copy of the notice of such reportable event given
or a description of the reportable event for which notice was required to
be given to the PBGC; (ii) receives notice of complete or partial
withdrawal liability under Title IV of ERISA or notice that any
Multiemployer Plan is in reorganization, is insolvent or has been
terminated, a copy of such notice; (iii) receives notice from the PBGC
under Title IV of ERISA of an intent to terminate, impose liability (other
than for premiums under Section 4007 of ERISA) in respect of, or appoint a
trustee to administer any Plan, a copy of such notice; (iv) applies for a
waiver of the minimum funding standard under Section 412 of the Internal
Revenue Code, a copy of such application; (v) gives notice of intent to
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terminate any Plan under Section 4041(c) of ERISA, a copy of such notice
and other information filed with the PBGC; (vi) gives notice of withdrawal
from any Plan pursuant to Section 4063 of ERISA, a copy of such notice; or
(vii) fails to make any payment or contribution to any Plan or
Multiemployer Plan or in respect of any Benefit Arrangement (or makes any
amendment to any Plan or Benefit Arrangement) which failure to contribute
or amendment has resulted or could reasonably be expected to result in the
imposition of a Lien or the posting of a bond or other security, a
certificate of the chief financial officer or the chief accounting officer
of the Borrower setting forth details as to such occurrence and action, if
any, which the Borrower or applicable member of the ERISA Group is
required or proposes to take;
(i) promptly after any executive officer of the Borrower obtains
knowledge of any actual or proposed change by Moody's or S&P of the rating
of the Borrower's outstanding senior unsecured long-term debt securities,
notice of such actual or proposed change;
(j) (Confidential treatment requested)
(k) from time to time such additional information regarding the
Action or the financial position or business of the Borrower and its
Subsidiaries as the Agent, at the request of any Bank, may reasonably
request.
SECTION 5.02. PAYMENT OF OBLIGATIONS. The Borrower will pay and
discharge, and will cause each Subsidiary to pay and discharge, at or before
maturity, all their respective material obligations and liabilities, including,
without limitation, tax liabilities, except where (i) the same may be contested
in good faith by appropriate proceedings or (ii) the failure to pay or discharge
such obligations and liabilities could not reasonably be expected to have a
Material Adverse Effect, and will maintain, and will cause each Subsidiary to
maintain, in accordance with generally accepted accounting principles (or, with
respect to any Subsidiary organized under the laws of any jurisdiction other
than the United States, in accordance with (x) accounting principles applicable
in such
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jurisdiction and (y) and, in the case of any Consolidated Subsidiary, accounting
principles adequate for the inclusion of the results of operations of such
Subsidiary in the consolidated financial statements of the Borrower and its
Subsidiaries), appropriate reserves for the accrual of any of the same.
SECTION 5.03. MAINTENANCE OF PROPERTY; INSURANCE. (a) The Borrower
will keep, and will cause each Subsidiary to keep, all property useful and
necessary in its business in good working order and condition, ordinary wear and
tear excepted, except where the failure to keep such property in good working
order and condition could not reasonably be expected to have a Material Adverse
Effect.
(b) The Borrower will, and will cause each of its Subsidiaries to,
provide as self-insurer to the extent provided below, or maintain (either in the
name of the Borrower or in such Subsidiary's own name) with financially sound
and responsible insurance companies, insurance on all their respective
properties in at least such amounts and against at least such risks (and with
such risk retention and such amounts of self-insurance) as are usually insured
against in the same general area by companies of established repute engaged in
the same or a similar business; and will furnish to the Banks, upon request from
the Agent, information presented in reasonable detail as to the insurance so
carried.
SECTION 5.04. CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE. The
Borrower will continue, and will cause each Subsidiary to continue, to engage in
business of the same general type as now conducted by the Borrower and its
Subsidiaries, and will preserve, renew and keep in full force and effect, and
will cause each Subsidiary to preserve, renew and keep in full force and effect
their respective corporate existence and their respective rights, privileges and
franchises necessary or desirable in the normal conduct of business, except for
any such rights, privileges and franchises the failure of which to be preserved
could not reasonably be expected to have a Material Adverse Effect; PROVIDED
that nothing in this Section 5.04 shall prohibit (i) the merger of a Subsidiary
into the Borrower or the merger or consolidation of a Subsidiary with or into
another Person if the corporation surviving such consolidation or merger is a
Subsidiary and if, in each case, after giving effect thereto, no Default shall
have occurred and be continuing, (ii) the termination of the corporate existence
of any Subsidiary or the discontinuation of any line of business of the Borrower
or
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any Subsidiary if the Borrower in good faith determines that such termination or
discontinuation, as the case may be, is in the best interest of the Borrower and
is not materially disadvantageous to the Banks, (iii) the acquisition of new
Subsidiaries by Borrower or any Subsidiary or the addition of any new line of
business of the Borrower or any Subsidiary or (iv) the sale of any assets of the
Borrower or any Subsidiary.
SECTION 5.05. COMPLIANCE WITH LAWS. The Borrower will comply, and
cause each Subsidiary to comply, in all material respects with all applicable
laws, ordinances, rules, regulations, and requirements of governmental
authorities (including, without limitation, Environmental Laws and ERISA and the
rules and regulations thereunder) except (i) where the necessity of compliance
therewith is contested in good faith by appropriate proceedings and (ii) in the
case of Environmental Laws and ERISA and the rules and regulations thereunder,
where the failure to be in compliance therewith could not reasonably be expected
to have a Material Adverse Effect.
SECTION 5.06. INSPECTION OF PROPERTY, BOOKS AND RECORDS. The
Borrower will keep, and will cause each Subsidiary to keep, proper books of
record and account in which full, true and correct entries shall be made of all
dealings and transactions in relation to its business and activities; and,
except to the extent prohibited by applicable law, rule, regulations or orders,
will permit, and will cause each Subsidiary to permit, representatives of any
Bank at such Bank's expense to visit and inspect any of their respective
properties, to examine and make abstracts from any of their respective books and
records and to discuss their respective affairs, finances and accounts with
their respective officers, employees and independent public accountants, all at
such reasonable times and as often as may reasonably be desired.
SECTION 5.07. (Confidential treatment requested)
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SECTION 5.08. (Confidential treatment requested)
SECTION 5.09. (Confidential treatment requested)
SECTION 5.10. NEGATIVE PLEDGE. Neither the Borrower nor any
Consolidated Domestic Subsidiary will create or assume any Lien on any
Restricted Asset now or hereafter owned by the Borrower or any Consolidated
Domestic Subsidiary securing any Debt, unless provision is made to secure
equally and ratably all Loans and Reimbursement Obligations then outstanding or
thereafter made to or owed by the Borrower, together with any other amounts then
or thereafter owed by the Borrower hereunder, with such secured Debt or
obligations, so long as such secured Debt shall be so secured, except:
(a) any Lien on any Restricted Asset securing Debt owed to a
governmental entity;
(b) any Lien on any Restricted Asset created for the sole purpose of
extending, renewing or replacing, in whole or in part, the Debt secured by
any existing
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Lien which was not created in violation of this Section, if the principal amount
of Debt secured thereby shall not exceed the principal amount of Debt so secured
at the time of such extension, renewal or replacement and such Lien shall be
limited to all or a part of the Restricted Assets which secured the Debt so
extended, renewed or replaced (plus improvements on or to any such Restricted
Assets and, if the Borrower shall so determine, any additional assets, Liens on
which are not restricted by this Section);
(c) any Lien existing on any Restricted Asset in connection with the
acquisition thereof; and
(d) any Lien on any Restricted Asset acquired, constructed or
improved after the date hereof, including any improvements thereon;
PROVIDED that (i) such Lien is created contemporaneously with such
acquisition, construction or improvement or within one hundred twenty
(120) days before the commencement thereof or after the completion
thereof, to secure or provide for the payment of an amount not
exceeding the cost of such acquisition, construction or improvement
(including related expenditures capitalized for federal income tax
purposes in connection therewith) incurred after the date hereof, but
only if, in the case of such construction or improvement, the Lien
shall not extend to any property other than that on or connected to
property on which the construction or improvement is located.
SECTION 5.11. CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE.
(a) The Borrower shall not consolidate with or merge into any other Person or
convey, transfer or lease its properties and assets substantially as an entirety
to any Person unless:
(1) the Person formed by such consolidation or into which the
Borrower is merged (if the Borrower is not the surviving corporation) or
the Person which acquires by conveyance or transfer, or which leases, the
properties and assets of the Borrower substantially as an entirety shall be
a corporation, partnership or trust, shall be organized and validly
existing under the laws of the United States, any State thereof or the
District of Columbia and shall expressly assume, by an instrument of
assumption, executed and delivered to the Agent, in form satisfactory to
the Agent, the due and
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punctual payment of the principal of and interest on the Notes and Reimbursement
Obligations and the performance or observance of every covenant of this
Agreement on the part of the Borrower to be performed or observed;
(2) immediately after giving effect to such transaction, no Default
shall have occurred and be continuing; and
(3) the Borrower shall have delivered to the Agent a certificate
executed by the Chairman of the Board, the President or a Vice President of
the Borrower and by the Treasurer or the Secretary of the Borrower and a
written opinion of counsel (who may be counsel for the Borrower), each
stating that such consolidation, merger, conveyance, transfer or lease and,
if an instrument of assumption is required in connection with such
transaction, such an instrument of assumption, comply with this Section and
that all conditions precedent herein provided for relating to such
transaction have been complied with.
(b) Upon any consolidation of the Borrower with, or merger by the
Borrower into, any other Person or any conveyance, transfer or lease of the
properties and assets of the Borrower substantially as an entirety in accordance
with this Section, the successor Person formed by such consolidation or into
which the Borrower is merged or to which such conveyance, transfer or lease is
made shall succeed to, and be substituted for, and may exercise every right and
power of, the Borrower under this Agreement with the same effect as if such
successor Person had been named as the Borrower herein, and thereafter, except
in the case of a lease, the predecessor Person shall be relieved of all
obligations and covenants under this Agreement and the Notes.
SECTION 5.12. (Confidential treatment requested)
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ARTICLE VI
DEFAULTS
SECTION 6.01. EVENTS OF DEFAULT. If one or more of the following
events ("Events of Default") shall have occurred and be continuing:
(a) the Borrower shall fail to pay any principal of any Loan or any
Reimbursement Obligation when due, or shall fail to pay within three
Domestic Business Days after the due date thereof any interest on any Note
or Reimbursement Obligation or any fees or any other amount payable
hereunder;
(b) the Borrower shall fail to observe or perform any covenant
contained in Sections 5.07 to 5.12, inclusive;
(c) the Borrower shall fail to observe or perform any covenant or
agreement contained in this Agreement (other than those covered by clause
(a) or (b) above) for 30 days after written notice thereof has been given
to the Borrower by the Agent at the request of any Bank;
(d) any representation, warranty, certification or statement made by
the Borrower in this Agreement or in any certificate, financial statement
or other document delivered pursuant to this Agreement shall prove to have
been incorrect in any material respect when made (or deemed made);
(e) the Borrower or any Subsidiary shall fail to make any payment in
respect of any Material Debt when due or within any applicable grace
period;
(f) any event or condition shall occur which results in the
acceleration of the maturity of any Material Debt or enables the holder of
such Debt or any Person acting on such holder's behalf to accelerate the
maturity thereof;
(g) the Borrower or any Subsidiary (other than any Abandoned
Subsidiary) shall commence a voluntary case or other proceeding seeking
liquidation, reorganization or other relief with respect to itself or its
debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator,
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custodian or other similar official of it or any substantial part of its
property, or shall consent to any such relief or to the appointment of or taking
possession by any such official in an involuntary case or other proceeding
commenced against it, or shall make a general assignment for the benefit of
creditors, or shall fail generally to pay its debts as they become due, or shall
take any corporate action to authorize any of the foregoing;
(h) an involuntary case or other proceeding shall be commenced
against the Borrower or any Subsidiary (other than any Abandoned
Subsidiary) seeking liquidation, reorganization or other relief with
respect to it or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or
any substantial part of its property, and such involuntary case or other
proceeding shall remain undismissed and unstayed for a period of 60 days;
or an order for relief shall be entered against the Borrower or any
Subsidiary (other than any Abandoned Subsidiary) under the federal
bankruptcy laws as now or hereafter in effect;
(i) any member of the ERISA Group shall fail to pay when due an
amount or amounts aggregating in excess of $50,000,000 which it shall have
become liable to pay under Title IV of ERISA in connection with a Plan or a
Multiemployer Plan; or notice of intent to terminate a Material Plan under
a distress termination within the meaning of Section 4041(c) of ERISA shall
be filed under Title IV of ERISA by any member of the ERISA Group, any plan
administrator or any combination of the foregoing; or the PBGC shall
institute proceedings under Title IV of ERISA to terminate, to impose
liability (other than for premiums under Section 4007 of ERISA) in respect
of, or to cause a trustee to be appointed to administer any Material Plan;
or a condition specified in Section 4042(a) of ERISA shall exist by reason
of which the PBGC would be entitled to obtain a decree adjudicating that
any Material Plan must be terminated; or there shall occur a complete or
partial withdrawal from, or a default, within the meaning of Section
4219(c)(5) of ERISA, with respect to, one or more Multiemployer Plans which
could cause one or more members of the ERISA Group to incur a current
payment obligation in excess of $50,000,000;
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(j) a judgment or order for the payment of money in an amount in
excess of the greater of (x) $100,000,000 and (y) 10% of Consolidated
Adjusted Net Worth determined as of the end of the then most recently ended
fiscal quarter of the Borrower and such judgment or order shall continue
unsatisfied and unstayed for a period of 30 days; or
(k) any person or group of persons (within the meaning of Section 13
or 14 of the Securities Exchange Act of 1934, as amended) shall have
acquired beneficial ownership (within the meaning of Rule 13d-3 promulgated
by the Securities and Exchange Commission under said Act) of 20% or more of
the outstanding shares of common stock of the Borrower; or, during any
period of twelve consecutive calendar months, individuals (i) who were
directors of the Borrower on the first day of such period or (ii) whose
nomination for election to the board of directors of the Borrower was
recommended or approved by a vote of at least a majority of the directors
then still in office who were directors of the Borrower on the first day of
such period, shall cease to constitute a majority of the board of directors
of the Borrower;
then, and in every such event, the Agent shall (i) if requested by Banks having
more than 50% in aggregate amount of the Commitments, by notice to the Borrower
terminate the Commitments and they shall thereupon terminate, and (ii) if
requested by Banks holding Notes evidencing more than 50% in aggregate
principal amount of the Loans, by notice to the Borrower declare the Notes
(together with accrued interest thereon) to be, and the Notes shall thereupon
become, immediately due and payable without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the Borrower;
PROVIDED that in the case of any of the Events of Default specified in clause
(g) or (h) above with respect to the Borrower, without any notice to the
Borrower or any other act by the Agent or the Banks, the Commitments shall
thereupon terminate and the Notes (together with accrued interest thereon)
shall become immediately due and payable without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by the Borrower.
SECTION 6.02. CASH COVER. The Borrower hereby agrees, in addition to
the provisions of Section 6.01 hereof, that upon the occurrence and during the
continuance of any Event of Default, it shall, if requested by the Agent upon
instruction of Banks having more than 50% in aggregate
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amount of the Letter of Credit Liabilities, pay to the Agent an amount in
immediately available funds equal to the then aggregate amount available for
drawings under all Letters of Credit at the time outstanding (the "Aggregate LC
Amount"); PROVIDED that, upon the occurrence of any Event of Default specified
in clauses (g) and (h) of Section 6.01 with respect to the Borrower, the
Borrower shall be obligated forthwith to pay such amount without any notice or
demand or any other act by the Agent or the Banks.
The Aggregate LC Amount, when received by the Agent, shall be held by
the Agent in a collateral account maintained with the Agent (the "Collateral
Account"), which account (and all investments held therein) shall be held in
name of and subject to the dominion and control of the Agent on behalf of the
Banks, as cash collateral for the Reimbursement Obligations of the Borrower in
the event of any drawing under any Letter of Credit. Upon any drawing under any
Letter of Credit, the Agent shall apply such amounts held in the Collateral
Account to the Reimbursement Obligations in respect of such Letter of Credit.
The Borrower hereby grants to the Agent, for the benefit of the Banks,
a security interest in and right of set-off against any and all of the funds and
investments held in the Collateral Account from time to time and any instrument
evidencing the foregoing, and the proceeds thereof and the right to receive
interest, dividends and other income therefrom, to secure equally and ratably
the obligations of the Borrower hereunder in respect of the Letters of Credit
and the Reimbursement Obligations. The Agent, on behalf of the Banks, shall
have the rights, powers and remedies of a secured party under the New York
Uniform Commercial Code with respect to the funds and investments held in the
Collateral Account from time to time. The Agent shall exercise such rights,
powers and remedies as and when requested by Banks having more than 50% in
aggregate amount of the aggregate Letter of Credit Liabilities from time to
time; PROVIDED that the Agent shall not be obligated to take any action which it
believes to be contrary to law or inconsistent with the equal and ratable nature
of the security interest provided in this paragraph. The Agent's duties under
this paragraph (as well as under all other provisions of this Agreement) are
subject to the provisions of Article VII. The Borrower shall take such actions
from time to time as the Agent (at the request of any Bank) may reasonably
request to perfect and preserve the security interests provided for in this
paragraph.
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The Agent shall invest funds held in the Collateral Account from time
to time only in direct obligations of the United States or any agency thereof,
or obligations guaranteed by the United States or any agency thereof (in each
case maturing within 90 days from the date of acquisition thereof by the Agent)
designated by the Borrower; PROVIDED that the Agent is authorized to sell
investments held in the Collateral Account when and as required to make payments
out of the Collateral Account as herein provided.
Upon the date on which all Letters of Credit have terminated and
drawings are no longer available thereunder, and the payment in full of all
secured obligations, the Agent shall release all funds and investments held in
the Collateral Account to or upon the order of the Borrower (or as a court of
competent jurisdiction may otherwise direct).
SECTION 6.03. NOTICE OF DEFAULT. The Agent shall give notice to the
Borrower under Section 6.01(c) promptly upon being requested to do so by any
Bank and shall thereupon notify all the Banks thereof.
ARTICLE VII
THE AGENT
SECTION 7.01. APPOINTMENT AND AUTHORIZATION. Each Bank irrevocably
appoints and authorizes the Agent to take such action as agent on its behalf
and to exercise such powers under this Agreement, the Notes and the Letters of
Credit as are delegated to the Agent by the terms hereof or thereof, together
with all such powers as are reasonably incidental thereto.
SECTION 7.02. THE AGENT AND AFFILIATES. Morgan Guaranty Trust
Company of New York shall have the same rights and powers under this Agreement
as any other Bank and may exercise or refrain from exercising the same as though
it were not the Agent, and Morgan Guaranty Trust Company of New York and its
affiliates may accept deposits from, lend money to, and generally engage in any
kind of business with the Borrower or any of its Subsidiaries or affiliates of
the Borrower as if it were not the Agent hereunder.
SECTION 7.03. ACTION BY THE AGENT. The obligations of the Agent
hereunder are only those expressly set forth herein. Without limiting the
generality of the foregoing, the Agent shall not be required to take any
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action with respect to any Default, except as expressly provided in Article VI.
SECTION 7.04. CONSULTATION WITH EXPERTS. The Agent may consult with
legal counsel (who may be counsel for the Borrower), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken by it in good faith in accordance with the
advice of such counsel, accountants or experts.
SECTION 7.05. LIABILITY OF THE AGENT. Neither the Agent nor any of
its affiliates nor any of their respective directors, officers, agents or
employees shall be liable for any action taken or not taken by it in connection
herewith (i) with the consent or at the request of the Required Banks or (ii) in
the absence of its own gross negligence or willful misconduct. Neither the
Agent nor any of its affiliates nor any of their respective directors, officers,
agents or employees shall be responsible for or have any duty to ascertain,
inquire into or verify (i) any statement, warranty or representation made in
connection with this Agreement or any Credit Event hereunder; (ii) the
performance or observance of any of the covenants or agreements of the Borrower;
(iii) the satisfaction of any condition specified in Article III, except receipt
of items required to be delivered to the Agent; or (iv) the validity,
effectiveness or genuineness of this Agreement, the Notes or any other
instrument or writing furnished in connection herewith. The Agent shall not
incur any liability by acting in reliance upon any notice, consent, certificate,
statement, or other writing (which may be a bank wire, telex or similar writing)
believed by it to be genuine or to be signed by the proper party or parties.
SECTION 7.06. INDEMNIFICATION. Each Bank shall, ratably in
accordance with its Commitment, indemnify the Agent, its affiliates and their
respective directors, officers, agents and employees (to the extent not
reimbursed by the Borrower) against any cost, expense (including reasonable
counsel fees and disbursements), claim, demand, action, loss or liability
(except such as result from such indemnitees' gross negligence or willful
misconduct) that such indemnitees may suffer or incur in connection with this
Agreement or any action taken or omitted by such indemnitees hereunder.
SECTION 7.07. CREDIT DECISION. Each Bank acknowledges that it has,
independently and without reliance upon the Agent or any other Bank, and based
on such
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documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Bank also acknowledges
that it will, independently and without reliance upon the Agent or any other
Bank, and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
any action under this Agreement.
SECTION 7.08. SUCCESSOR AGENT. The Agent may resign at any time by
giving written notice thereof to the Banks and the Borrower. Upon any such
resignation, the Required Banks shall have the right, with the consent of the
Borrower, to appoint a successor Agent; PROVIDED that the Borrower's consent to
any such appointment shall not unreasonably be withheld, but may in any event be
withheld if both (i) such proposed successor Agent fails to deliver evidence
reasonably satisfactory to the Borrower that such proposed successor Agent is
not a Foreign Person and (ii) the Borrower in good faith concludes that the
appointment of such proposed successor Agent could result in a violation of any
law, rule, guideline or regulation, or a violation of, revocation of, failure to
renew or modification of any, order, facility security clearance or permit. If
no successor Agent shall have been so appointed by the Required Banks, and shall
have accepted such appointment, within 30 days after the retiring Agent gives
notice of resignation, then the retiring Agent may, on behalf of the Banks,
appoint a successor Agent, which shall (i) be a commercial bank organized or
licensed under the laws of the United States of America or of any State thereof,
(ii) not be a Foreign Person and (iii) have a combined capital and surplus of at
least $50,000,000. Upon the acceptance of its appointment as Agent hereunder by
a successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations hereunder. After any
retiring Agent's resignation hereunder as Agent, the provisions of this Article
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Agent.
SECTION 7.09. AGENT'S FEE. The Borrower shall pay to the Agent for
its own account fees in the amounts and at the times previously agreed upon
between the Borrower and the Agent.
SECTION 7.10 CO-AGENTS NOT LIABLE. Nothing in this Agreement
shall impose upon any Co-Agent, in such capacity, any duties or responsibilities
whatsoever.
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ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.01. BASIS FOR DETERMINING INTEREST RATE INADEQUATE OR
UNFAIR. If on or prior to the first day of any Interest Period for any CD Loan,
Euro-Dollar Loan or Money Market LIBOR Loan:
(a) the Agent is advised by the Reference Banks that deposits in
dollars (in the applicable amounts) are not being offered to the Reference
Banks in the relevant market for such Interest Period, or
(b) in the case of CD Loans or Euro-Dollar Loans, Banks having 50% or
more of the aggregate principal amount of the affected Loans advise the
Agent that the Adjusted CD Rate or the Adjusted London Interbank Offered
Rate, as the case may be, as determined by the Agent will not adequately
and fairly reflect the cost to such Banks of funding their CD Loans or
Euro-Dollar Loans, as the case may be, for such Interest Period,
the Agent shall forthwith give notice thereof to the Borrower and the Banks,
whereupon until the Agent notifies the Borrower that the circumstances giving
rise to such suspension no longer exist, (i) the obligations of the Banks to
make CD Loans or Euro-Dollar Loans, as the case may be, or to convert
outstanding Loans into CD Loans or Euro-Dollar Loans, as the case may be, shall
be suspended and (ii) each outstanding CD Loan or Euro-Dollar Loan, as the case
may be, shall be converted into a Base Rate Loan on the last day of the then
current Interest Period applicable thereto. Unless the Borrower notifies the
Agent at least two Domestic Business Days before the date of any Fixed Rate
Borrowing for which a Notice of Borrowing has previously been given that it
elects not to borrow on such date, (i) if such Fixed Rate Borrowing is a
Committed Borrowing, such Borrowing shall instead be made as a Base Rate
Borrowing and (ii) if such Fixed Rate Borrowing is a Money Market LIBOR
Borrowing, the Money Market LIBOR Loans comprising such Borrowing shall bear
interest for each day from and including the first day to but excluding the last
day of the Interest Period applicable thereto at the Base Rate for such day.
SECTION 8.02. ILLEGALITY. If, on or after the date of this
Agreement, the adoption of any applicable law, rule or regulation, or any change
therein, or any change in
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the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Bank (or its Euro-Dollar Lending
Office) with any request or directive (whether or not having the force of law)
of any such authority, central bank or comparable agency shall make it unlawful
or impossible for any Bank (or its Euro-Dollar Lending Office) to make, maintain
or fund its Euro-Dollar Loans and such Bank shall so notify the Agent, the Agent
shall forthwith give notice thereof to the other Banks and the Borrower,
whereupon until such Bank notifies the Borrower and the Agent that the
circumstances giving rise to such suspension no longer exist, the obligation of
such Bank to make Euro-Dollar Loans, or to convert outstanding Loans into
Euro-Dollar Loans, shall be suspended. Before giving any notice to the Agent
pursuant to this Section, such Bank shall designate a different Euro-Dollar
Lending Office if such designation will avoid the need for giving such notice
and will not, in the judgment of such Bank, be otherwise disadvantageous to such
Bank. If such notice is given, each Euro-Dollar Loan of such Bank then
outstanding shall be converted to a Base Rate Loan either (a) on the last day of
the then current Interest Period applicable to such Euro-Dollar Loan if such
Bank may lawfully continue to maintain and fund such Loan to such day or (b)
immediately if such Bank shall determine that it may not lawfully continue to
maintain and fund such Loan to such day.
SECTION 8.03. INCREASED COST AND REDUCED RETURN. (a) If on or after
(x) the date hereof, in the case of any Committed Loan or any obligation to make
a Committed Loan or issue Letters of Credit or (y) the date of the related Money
Market Quote, in the case of any Money Market Loan, the adoption of any
applicable law, rule or regulation, or any change therein, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Bank (or its Applicable Lending Office) with any
request or directive (whether or not having the force of law) of any such
authority, central bank or comparable agency shall impose, modify or deem
applicable any reserve (including, without limitation, any such requirement
imposed by the Board of Governors of the Federal Reserve System, but excluding
(i) with respect to any CD Loan any such requirement included in an applicable
Domestic Reserve Percentage and (ii) with respect to any Euro-Dollar Loan any
such requirement included in an applicable Euro-Dollar Reserve Percentage),
special deposit, insurance assessment
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(excluding, with respect to any CD Loan, any such requirement reflected in an
applicable Assessment Rate) or similar requirement against assets of, deposits
with or for the account of, or credit extended by, any Bank (or its Applicable
Lending Office) or shall impose on any Bank (or its Applicable Lending Office)
or on the United States market for certificates of deposit or the London
interbank market any other condition affecting its Fixed Rate Loans, its Note or
its obligation to make Fixed Rate Loans, the Letters of Credit issued by it or
its obligation to issue Letters of Credit (collectively, its "Covered Credits")
and the result of any of the foregoing is to increase the cost to such Bank (or
its Applicable Lending Office) (excluding any Taxes, Other Taxes and Excluded
Taxes (as each such term is defined in Section 8.04)) of making or maintaining
any Covered Credit, or to reduce the amount of any sum received or receivable by
such Bank (or its Applicable Lending Office) under this Agreement or under its
Note with respect thereto, by an amount deemed by such Bank to be material,
then, within 15 days after demand by such Bank (with a copy to the Agent)
accompanied by a certificate setting forth in reasonable detail its calculation
of such increased cost or reduction, the Borrower shall pay to such Bank such
additional amount or amounts as will compensate such Bank for such increased
cost or reduction.
(b) If any Bank shall have determined that, after the date hereof,
the adoption of any applicable law, rule, guideline or regulation regarding
capital adequacy, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or any request
or directive regarding capital adequacy (whether or not having the force of law)
of any such authority, central bank or comparable agency (collectively, a
"Change in Law"), has or would have the effect of reducing the rate of return on
capital of such Bank (or its Parent) as a consequence of such Bank's obligations
hereunder to a level below that which such Bank (or its Parent) could have
achieved but for such adoption, change, request or directive (taking into
consideration its policies with respect to capital adequacy) by an amount deemed
by such Bank to be material, then from time to time, within 15 days after demand
by such Bank (with a copy to the Agent) accompanied by a certificate setting
forth in reasonable detail its calculation of such reduction, the Borrower shall
pay to such Bank such additional amount or amounts as will compensate such Bank
(or its Parent) for such reduction; PROVIDED that to the extent that (i) a Bank
shall increase its level of capital
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above the level maintained by such Bank on the date of this Agreement and there
has not been a Change in Law or (ii) there has been a Change in Law and a Bank
shall increase its level of capital by an amount greater than the increase
attributable (taking into consideration the same variables taken into
consideration in determining the level of capital maintained by such Bank on the
date of this Agreement) to such Change in Law, the Borrower shall not be
required to pay any amount or amounts under this Agreement with respect to any
such increase in capital. Thus, for example, a Bank which is "adequately
capitalized" (as such term or any similar term is used by any applicable bank
regulatory agency having authority with respect to such Bank) may not require
the Borrower to make payments in respect of increases in such Bank's level of
capital made under the circumstances described in clause (i) or (ii) above which
improve its capital position from "adequately capitalized" to "well capitalized"
(as such term or any similar term is used by any applicable bank regulatory
agency having authority with respect to such Bank).
(c) Each Bank will promptly notify the Borrower and the Agent of any
event of which it has knowledge, occurring after the date hereof, which will
entitle such Bank to compensation pursuant to this Section and will designate a
different Applicable Lending Office if such designation will avoid the need for,
or reduce the amount of, such compensation and will not, in the judgment of such
Bank, be otherwise disadvantageous to such Bank. A certificate of any Bank
claiming compensation under this Section and setting forth in reasonable detail
its calculation of the additional amount or amounts to be paid to it hereunder
shall be conclusive in the absence of manifest error. In determining such
amount, such Bank may use any reasonable averaging and attribution methods.
Notwithstanding the foregoing subsections (a) and (b) of this Section 8.03, the
Borrower shall only be obligated to compensate any Bank for any amount arising
or accruing during (i) any time or period commencing not more than (x) in the
case of subsection (a), six months and (y) in the case of subsection (b), three
months, prior to the date on which such Bank notifies the Agent and the Borrower
that it proposes to demand such compensation and identifies to the Agent and the
Borrower the statute, regulation or other basis upon which the claimed
compensation is or will be based and (ii) any time or period during which,
because of the retroactive application of such statute, regulation or other
basis, such Bank did not know that such amount would arise or accrue.
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SECTION 8.04. TAXES. (a) Any and all payments by the Borrower to or
for the account of any Bank or the Agent hereunder or under any Note shall be
made free and clear of and without deduction for any and all present or future
taxes, duties, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, EXCLUDING, in the case of each Bank and the
Agent, taxes imposed on its income, branch profits taxes and franchise or
similar taxes imposed on it, by the jurisdiction (or any political subdivision
thereof) under the laws of which such Bank or the Agent (as the case may be) is
organized or has its principal office and, in the case of each Bank, taxes
imposed on its income, branch profit taxes and franchise or similar taxes
imposed on it, by the jurisdiction of such Bank's Applicable Lending Office or
any political subdivision thereof (all such non-excluded taxes, duties, levies,
imposts, deductions, charges, withholdings and liabilities being herein referred
to as "Taxes" and all such excluded taxes being herein referred to as "Excluded
Taxes"). If the Borrower shall be required by law to deduct any Taxes from or
in respect of any sum payable hereunder or under any Note to any Bank or the
Agent, (i) the sum payable shall be increased as necessary so that after making
all required deductions (including deductions applicable to additional sums
payable under this Section 8.04) such Bank or the Agent (as the case may be)
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions, (iii) the
Borrower shall pay the full amount deducted to the relevant taxation authority
or other authority in accordance with applicable law and (iv) the Borrower shall
furnish to the Agent, at its address referred to in Section 9.01, the original
or a certified copy of a receipt evidencing payment thereof. Upon the
reasonable request of the Borrower, each Bank agrees to promptly and diligently
pursue at the expense of the Borrower any available refund of any such Taxes and
Other Taxes (as defined in subsection (b) below) and to promptly remit
immediately available funds to the Borrower in an amount equal to any such
refund (including any interest thereon received by such Bank from the applicable
taxing authority).
(b) In addition, the Borrower agrees to pay any present or future
stamp or documentary taxes and any other excise or property taxes, charges or
similar levies which arise from any payment made hereunder or under any Note or
from the execution or delivery of, or otherwise with respect to, this Agreement,
any Note or any Letter of Credit (hereinafter referred to as "Other Taxes").
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(c) The Borrower agrees to indemnify each Bank and the Agent for the
full amount of Taxes or Other Taxes (including, without limitation, any Taxes or
Other Taxes imposed or asserted by any jurisdiction on amounts payable under
this Section 8.04) paid by such Bank or the Agent (as the case may be) and any
liability (including penalties, interest and expenses) arising therefrom or with
respect thereto. This indemnification shall be made within 30 days from the
date such Bank or the Agent (as the case may be) makes demand therefor.
(d) Each Bank organized under the laws of a jurisdiction outside the
United States, on or prior to the date of its execution and delivery of this
Agreement in the case of each Bank listed on the signature pages hereof and on
or prior to the date on which it becomes a Bank in the case of each other Bank,
and from time to time thereafter if requested in writing by the Borrower (but
only so long as such Bank remains lawfully able to do so), shall provide the
Borrower with two duly completed copies of Internal Revenue Service form 1001 or
4224, as appropriate, or any successor form prescribed by the Internal Revenue
Service, certifying that such Bank is entitled to benefits under an income tax
treaty to which the United States is a party which reduces the rate of
withholding tax on payments of interest or certifying that the income receivable
pursuant to this Agreement is effectively connected with the conduct of a trade
or business in the United States. If the form provided by a Bank at the time
such Bank first becomes a party to this Agreement indicates a United States
interest withholding tax rate in excess of zero, withholding tax at such rate
shall be considered excluded from "Taxes" as defined in Section 8.04(a). Each
such Bank that so delivers a form 1001 or 4224 (or applicable successor forms)
agrees to deliver to the Borrower updated or modified forms, or other manner of
certification acceptable to the Borrower, at any time that any such form is
required to be resubmitted or modified, as a result of any action taken by such
Bank, as a condition to obtaining an exemption from withholding tax.
(e) For any period with respect to which a Bank has failed to provide
the Borrower with the appropriate form pursuant to Section 8.04(d) (unless such
failure is due to a change in treaty, law or regulation occurring subsequent to
the date on which a form originally was required to be provided), such Bank
shall not be entitled to indemnification under Section 8.04(a) with respect to
Taxes. Should a Bank, which is otherwise exempt from or subject to a reduced
rate of withholding tax, become subject to Taxes because of its failure to
deliver a form required hereunder,
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the Borrower shall take such steps as such Bank shall reasonably request to
assist such Bank to recover such Taxes.
(f) If the Borrower is required to pay additional amounts to or for
the account of any Bank pursuant to this Section 8.04, then such Bank will
change the jurisdiction of its Applicable Lending Office so as to eliminate or
reduce any such additional payment which may thereafter accrue if such change,
in the judgment of such Bank, is not otherwise disadvantageous to such Bank.
SECTION 8.05. BASE RATE LOANS SUBSTITUTED FOR AFFECTED FIXED RATE
LOANS. If (i) the obligation of any Bank to make or maintain Euro-Dollar Loans
has been suspended pursuant to Section 8.02 or (ii) any Bank has demanded
compensation under Section 8.03 or 8.04 with respect to its CD Loans or
Euro-Dollar Loans and the Borrower shall, by at least five Euro-Dollar Business
Days' prior notice to such Bank through the Agent, have elected that the
provisions of this Section shall apply to such Bank, then, unless and until such
Bank notifies the Borrower that the circumstances giving rise to such suspension
or demand for compensation no longer exist:
(a) all Loans which would otherwise be made by such Bank as (or
continued as or converted into) CD Loans or Euro-Dollar Loans, as the case
may be, shall instead be Base Rate Loans (on which interest and principal
shall be payable contemporaneously with the related Fixed Rate Loans of the
other Banks), and
(b) after each of its CD Loans or Euro-Dollar Loans, as the case may
be, has been repaid (or converted to a Base Rate Loan), all payments of
principal which would otherwise be applied to repay such Fixed Rate Loans
shall be applied to repay its Base Rate Loans instead.
If such Bank notifies the Borrower that the circumstances giving rise to such
notice no longer apply, the principal amount of each such Base Rate Loan shall
be converted into a CD Loan or Euro-Dollar Loan, as the case may be, on the
first day of the next succeeding Interest Period applicable to the related CD
Loans or Euro-Dollar Loans of the other Banks.
SECTION 8.06. SUBSTITUTION OF BANK. If (i) the obligation of any
Bank to make Euro-Dollar Loans has been suspended pursuant to Section 8.02 or
(ii) any Bank has
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demanded compensation under Section 8.03 or 8.04, the Borrower shall have the
right, with the assistance of the Agent, to seek a substitute bank or banks
reasonably satisfactory to the Agent and the Borrower (which may be one or
more of the Banks) to purchase the Note and Letter of Credit Liabilities in
respect of unpaid Reimbursement Obligations and assume the Commitment and
contingent obligations with respect to undrawn amounts under outstanding
Letters of Credit of such Bank, if such substitution is not prohibited by the
terms of any outstanding Letter of Credit, and the Borrower, the Agent, such
Bank and substitute bank or banks shall execute and deliver an appropriately
completed Assignment and Assumption Agreement pursuant to Section 9.06(c)
hereof to effect the assignment of rights to and assumption of obligations by
such substitute bank or banks.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. NOTICES. All notices, requests and other
communications to any party hereunder shall be in writing (including bank wire,
telex, facsimile transmission or similar writing) and shall be given to such
party: (x) in the case of the Borrower or the Agent, at its address, facsimile
number or telex number set forth on the signature pages hereof, (y) in the case
of any Bank, at its address, facsimile number or telex number set forth in its
Administrative Questionnaire or (z) in the case of any party, such other
address, facsimile number or telex number as such party may hereafter specify
for the purpose by notice to the Agent and the Borrower. Each such notice,
request or other communication shall be effective (i) if given by telex, when
such telex is transmitted to the telex number specified in this Section and the
appropriate answerback is received, (ii) if given by mail, 72 hours after such
communication is deposited in the mails with first class postage prepaid,
addressed as aforesaid, (iii) if given by facsimile transmission, when such
transmission is confirmed by telephone or (iv) if given by any other means, when
delivered at the address specified in this Section; PROVIDED that notices to the
Agent under Article II or Article VIII shall not be effective until received.
SECTION 9.02. NO WAIVERS. No failure or delay by the Agent or any
Bank in exercising any right, power or privilege hereunder or under any Note
shall operate as a waiver thereof nor shall any single or partial exercise
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thereof preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. The rights and remedies herein provided shall
be cumulative and not exclusive of any rights or remedies provided by law.
SECTION 9.03. EXPENSES; INDEMNIFICATION. (a) The Borrower shall pay
(i) all reasonable out-of-pocket expenses of the Agent, including reasonable
fees and disbursements of special counsel for the Agent, in connection with the
preparation of this Agreement, any Letter of Credit, any waiver or consent
hereunder or thereunder or any amendment hereof or thereof or any Default or
alleged Default hereunder and (ii) if an Event of Default occurs, all
out-of-pocket expenses incurred by the Agent and each Bank, including fees and
disbursements of counsel (including allocated costs of staff counsel), in
connection with such Event of Default and collection, bankruptcy, insolvency and
other enforcement proceedings resulting therefrom; PROVIDED that the foregoing
clauses (i) and (ii) shall exclude Taxes, Other Taxes and Excluded Taxes (as
each such term is defined in Section 8.04).
(b) The Borrower agrees to indemnify the Agent and each Bank, their
respective affiliates and the respective directors, officers, agents and
employees of the foregoing (each an "Indemnitee") and hold each Indemnitee
harmless from and against any and all liabilities, losses, damages, costs and
expenses of any kind, including, without limitation, the reasonable fees and
disbursements of counsel, but excluding Taxes, Other Taxes and Excluded Taxes,
which may be incurred by such Indemnitee in connection with any investigative,
administrative or judicial proceeding (whether or not such Indemnitee shall be
designated a party thereto) brought or threatened relating to or arising out of
this Agreement, any Letter of Credit, or any actual or proposed use of proceeds
of Loans hereunder or any actual or proposed use of any Letter of Credit;
PROVIDED that (i) no Indemnitee shall have the right to be indemnified hereunder
for any liabilities, losses, damages, costs or expenses arising out of or
resulting from such Indemnitee's own gross negligence or willful misconduct and
(ii) the Borrower shall not be liable for the cost of any settlement effected
without its consent, which consent shall not be unreasonably withheld. Each of
the Banks agrees to use reasonable efforts to notify the Borrower prior to
retaining any counsel or consultants, and to review with the Borrower the need
for, the circumstances of and compensation arrangements relating to any such
retention, with a view to controlling the cost to the Borrower thereof; PROVIDED
that
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the failure of any Bank to do so shall not affect the obligations of the
Borrower under this Section 9.03.
SECTION 9.04. SHARING OF SET-OFFS. Each Bank agrees that if it
shall, by exercising any right of set-off or counterclaim or otherwise, receive
payment of a proportion of the aggregate amount of principal and interest due
with respect to any Note held by it and any Reimbursement Obligation owed to it
and interest (if any) thereon (collectively, the "Relevant Debt") which is
greater than the proportion received by any other Bank in respect of the
aggregate amount of the Relevant Debt of such other Bank, the Bank receiving
such proportionately greater payment shall purchase such participations in the
Relevant Debt of the other Banks, and such other adjustments shall be made, as
may be required so that all such payments of principal and interest with respect
to the Relevant Debt of the Banks shall be shared by the Banks pro rata;
PROVIDED that nothing in this Section shall impair the right of any Bank to
exercise any right of set-off or counterclaim it may have and to apply the
amount subject to such exercise to the payment of indebtedness of the Borrower
other than its indebtedness under its Relevant Debt. The Borrower agrees, to
the fullest extent it may effectively do so under applicable law, that any
holder of a participation in a Note or a Letter of Credit, whether or not
acquired pursuant to the foregoing arrangements, may exercise rights of set-off
or counterclaim and other rights with respect to such participation as fully as
if such holder of a participation were a direct creditor of the Borrower in the
amount of such participation.
SECTION 9.05. AMENDMENTS AND WAIVERS. Any provision of this
Agreement or the Notes may be amended or waived if, but only if, such amendment
or waiver is in writing and is signed by the Borrower and the Required Banks
(and, if the rights or duties of the Agent are affected thereby, by the Agent);
PROVIDED that no such amendment or waiver shall, unless signed by all the Banks,
(i) increase or decrease the Commitment of any Bank (except for a ratable
decrease in the Commitments of all Banks) or subject any Bank to any additional
obligation, (ii) reduce the principal of or rate of interest on any Loan or any
Reimbursement Obligation or any fees hereunder, (iii) postpone the date fixed
for any scheduled payment of principal of or interest on any Loan or any
Reimbursement Obligation or any fees hereunder or for any termination of any
Commitment, (iv) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Notes or the aggregate amount of the Letter of
Credit Liabilities, or the number of Banks,
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which shall be required for the Banks or any of them to take any action under
this Section or any other provision of this Agreement or (v) amend any provision
of Sections 2.15(b)(iii) or 5.12.
SECTION 9.06. SUCCESSORS AND ASSIGNS. (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, except that the Borrower may not
assign or otherwise transfer any of its rights or obligations under this
Agreement without the prior written consent of all Banks, except pursuant to and
in accordance with the terms of Section 5.11(b), and no Bank may assign or
otherwise transfer any of its rights or obligations under this Agreement except
in compliance with this Section 9.06.
(b) Any Bank may, at any time on or after the Sell-Down Date, grant
to one or more banks or other institutions (each a "Participant") participating
interests in its Commitment or any or all of its Loans or Letter of Credit
Liabilities. In the event of any such grant by a Bank of a participating
interest to a Participant, whether or not upon notice to the Borrower and the
Agent, such Bank shall remain responsible for the performance of its obligations
hereunder, and the Borrower and the Agent shall continue to deal solely and
directly with such Bank in connection with such Bank's rights and obligations
under this Agreement. Any agreement pursuant to which any Bank may grant such a
participating interest shall provide that such Bank shall retain the sole right
and responsibility to enforce the obligations of the Borrower hereunder
including, without limitation, the right to approve any amendment, modification
or waiver of any provision of this Agreement; PROVIDED that such participation
agreement may provide that such Bank will not agree to any modification,
amendment or waiver of this Agreement described in clause (i), (ii), (iii) or
(iv) of Section 9.05, without the consent of the Participant. Subject to
Section 9.06(e), the Borrower agrees that each Participant shall, to the extent
provided in its participation agreement, be entitled to the benefits of Article
VIII with respect to its participating interest; PROVIDED that the Bank granting
such participating interest and such Participant comply with all duties and
obligations under Article VIII (as if, in the case of a Participant, it were a
Bank). An assignment or other transfer which is not permitted by subsection (c)
or (d) below shall be given effect for purposes of this Agreement only to the
extent of a participating interest granted in accordance with this subsection
(b).
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(c) Any Bank may, at any time on or after the Sell-Down Date, assign
to one or more banks or other institutions (each an "Assignee") all, or a
proportionate part (such portion to be in an amount equal to or greater than
$10,000,000) of all, of its rights and obligations under this Agreement, the
Notes and the Letters of Credit (provided that after giving effect to each such
assignment, such assigning Bank shall have retained a portion in an amount equal
to or greater than (i) in the case of any Bank that is not a Co-Agent or the
Agent on the Effective Date, $10,000,000, and (ii) in the case of any Bank that
is a Co-Agent or the Agent on the Effective Date, the lesser of (x) $30,000,000
and (y) 25% of such Bank's Commitment outstanding on the Effective Date (each
such amount, a "Minimum Hold Amount"); PROVIDED that if at any time the
aggregate amount of the Commitments shall be reduced, each Minimum Hold Amount
shall be reduced by the same percentage that the aggregate amount by which the
Commitments were reduced bears to the aggregate amount of the Commitments
immediately before such reduction), and such Assignee shall assume such rights
and obligations, pursuant to an Assignment and Assumption Agreement in
substantially the form of Exhibit H hereto executed by such Assignee and such
transferor Bank, with (and subject to) the subscribed consent of the Borrower
(which consent shall not unreasonably be withheld, but which may in any event be
withheld if both (i) such proposed Assignee fails to deliver evidence reasonably
satisfactory to the Borrower that such Assignee is not a Foreign Person and (ii)
the Borrower in good faith concludes that such assignment could result in a
violation of any law, rule or regulation, or a violation of, revocation of,
failure to renew or modification of any order, facility security clearance or
permit) and the consent of the Agent (which consent shall not be unreasonably
withheld); PROVIDED that if an Assignee is an Affiliate of such transferor Bank
and is not a Foreign Person and such assignment would not render any Letter of
Credit unacceptable to the Court or any beneficiary of such Letter of Credit, no
such consent shall be required; and PROVIDED FURTHER that such assignment may,
but need not, include rights of the transferor Bank in respect of outstanding
Money Market Loans; and PROVIDED FURTHER that (A) if a Bank has any contingent
obligations with respect to undrawn amounts under any Letters of Credit, such
Bank may assign its rights and obligations under this Agreement, the Notes and
the Letters of Credit pursuant to this subsection (c) only if the assignment of
such contingent obligations is permitted by the terms of such Letters of Credit
and (B) a Bank may assign its Commitment only to a Qualifying Bank (it being
understood that compliance with this clause (B) shall
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not eliminate the requirement of the Borrower's consent in accordance with this
subsection (c)).
"Qualifying Bank" means:
(i) a bank having (x) senior unsecured long-term debt securities,
long-term certificates of deposit or long-term letters of credit which are
rated A- or higher by S&P AND (y) senior unsecured long-term debt
securities, long-term bank deposits or long-term letters of credit which
are rated A3 or higher by Moody's, or
(ii) a bank (x) having (a) senior unsecured long-term debt securities
or long-term certificates of deposit rated A- or higher by S&P OR (b)
having senior unsecured long-term debt securities, long-term bank deposits
or long-term letters of credit rated A3 or higher by Moody's, (y) having no
long-term securities rated by the other rating agency and (z) having (A)
short-term certificates of deposit or short-term letters of credit which
are rated A1 or higher by S&P AND (B) short-term bank deposits or short-
term letters of credit which are rated P1 or higher by Moody's.
Upon execution and delivery of such instrument and payment by such Assignee to
such transferor Bank of an amount equal to the purchase price agreed between
such transferor Bank and such Assignee, such Assignee shall be a Bank party to
this Agreement and, subject to Section 9.06(e), shall have all the rights and
obligations of a Bank with a Commitment as set forth in such instrument of
assumption, and the transferor Bank shall be released from its obligations
hereunder to a corresponding extent, and no further consent or action by any
party shall be required. Upon the consummation of any assignment pursuant to
this subsection (c), the transferor Bank, the Agent and the Borrower shall make
appropriate arrangements so that, if required, a new Note is issued to the
Assignee. In connection with any such assignment occurring after the earlier of
(i) the 90th date after the Sell-Down Date and (ii) the date as of which the
Agent has notified the Banks that general syndication has been completed, the
transferor Bank shall pay to the Agent an administrative fee for processing such
assignment in the amount of $2,500. If the Assignee is not incorporated under
the laws of the United States of America or a state thereof, it shall deliver to
the Borrower and the Agent certification as to exemption from deduction or
withholding of any United States federal income taxes in accordance with Section
8.04.
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(d) Any Bank may at any time assign all or any portion of its rights
under this Agreement and its Note to a Federal Reserve Bank. No such assignment
shall release the transferor Bank from its obligations hereunder.
(e) No Assignee, Participant or other transferee of any Bank's rights
(and no Bank on behalf of any Assignee, Participant or other transferee) shall
be entitled to receive any greater payment under Article VIII or Section 2.13
(whether individually or in aggregate with any such payments received by such
Bank) than such Bank would have been entitled to receive with respect to the
rights transferred, unless such transfer is made with the Borrower's prior
written consent or by reason of the provisions of Section 8.02, 8.03 or 8.04
requiring such Bank to designate a different Applicable Lending Office under
certain circumstances.
SECTION 9.07. COLLATERAL. Each of the Banks represents to the Agent
and each of the other Banks that it in good faith is not relying upon any
"margin stock" (as defined in Regulation U) as collateral in the extension or
maintenance of the credit provided for in this Agreement.
SECTION 9.08. GOVERNING LAW; SUBMISSION TO JURISDICTION. This
Agreement and each Note shall be governed by and construed in accordance with
the laws of the State of New York. The Borrower hereby submits to the
nonexclusive jurisdiction of the United States District Court for the Southern
District of New York and of any New York State court sitting in New York City
for purposes of all legal proceedings arising out of or relating to this
Agreement or the transactions contemplated hereby. The Borrower 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 proceeding brought in
such a court and any claim that any such proceeding brought in such a court has
been brought in an inconvenient forum.
SECTION 9.09. COUNTERPARTS; INTEGRATION; EFFECTIVENESS. This Agreement
may be signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement constitutes the entire agreement and understanding
among the parties hereto and supersedes any and all prior agreements and
understandings, oral or written, relating to the subject matter hereof. This
Agreement shall become effective upon receipt, on or prior to December 16,
1993, by the Agent of counterparts hereof signed by each of the parties hereto
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(or, in the case of any party as to which an executed counterpart shall not
have been received, receipt by the Agent in form satisfactory to it of
telegraphic, telex or other written confirmation from such party of execution
of a counterpart hereof by such party).
SECTION 9.10. WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE AGENT
AND THE BANKS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN
ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
HONEYWELL INC.
By /s/ Michael A. Rocca
-----------------------------------
Title: Vice President and Treasurer
Honeywell Plaza
Minneapolis, MN 55408
Telex number:
Facsimile number:
Commitments
- -----------
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By /s/ Charles C. O'Brien
-----------------------------------
Title: Managing Director
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
By /s/ Alexander H. Danzberger, Jr.
-----------------------------------
Title: Vice President
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By /s/ Patricia DelGrande
-----------------------------------
Title: Vice President
THE FUJI BANK, LIMITED
By /s/ Peter L. Chinnici
-----------------------------------
Title: Joint General Manager
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CITICORP USA, INC.
By /s/ Robert M. Spence
-----------------------------------
Title: Vice President
Total
Commitments
- -------------
- --------------
- --------------
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Administrative Agent
By /s/ Charles C. O'Brien
-----------------------------------
Title: Managing Director
60 Wall Street
New York, New York 10260
Attention: John O'Hara
Telex number: 177615
Facsimile number: (212) 648-5336
THE CHASE MANHATTAN BANK (NATIONAL
ASSOCIATION), as Co-Agent
By /s/ Alexander H. Danzberger, Jr.
-----------------------------------
Title: Vice President
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Co-Agent
By /s/ Patricia DelGrande
-----------------------------------
Title: Vice President
THE FUJI BANK, LIMITED, as Co-Agent
By /s/ Peter L. Chinnici
-----------------------------------
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Title: Joint General Manager
CITICORP USA, INC., as Co-Agent
By /s/ Robert M. Spence
-----------------------------------
Title: Vice President
81
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1993 HONEYWELL STOCK AND INCENTIVE PLAN
ARTICLE 1. PURPOSE AND DURATION
1.1 PURPOSE. The purpose of the 1993 Honeywell Stock and Incentive Plan
(the "Plan") is to further the growth, development and financial success of
Honeywell Inc. (the "Company") and its Subsidiaries by aligning the personal
interests of key employees, through the ownership of shares of the Company's
Common Stock and through other incentives, to those of the Company's
shareholders. The Plan is further intended to provide flexibility to the
Company in its ability to compensate key employees and to motivate, attract
and retain the services of such key employees who have the ability to
enhance the value of the Company and its Subsidiaries. In addition, the Plan
provides for incentive awards to key employees of Affiliates in those cases
where the success of the Company or its Subsidiaries may be enhanced by the
award of incentives to such persons.
The Plan permits the granting of Stock Options, Stock Appreciation Rights
and Other Stock Based Awards.
1.2 DURATION. Upon approval by the Board of Directors of the Company,
subject to ratification by an affirmative vote of a majority of the Shares
present and entitled to vote at the annual meeting of shareholders of the
Company to be held on April 20, 1993, or at any adjournment thereof, the
Plan, if so approved, shall become effective April 21, 1993 (the "Effective
Date"), and shall remain in effect, subject to the right of the Board of
Directors to terminate the Plan at any time pursuant to Article 10 herein,
until December 31, 1998 (the "Termination Date"). No Award may be granted
under the Plan on or after the Termination Date, but Awards made prior to
the Termination Date may be exercised, vested or otherwise effectuated
beyond that date unless otherwise limited.
ARTICLE 2. DEFINITIONS
2.1 DEFINITIONS. Whenever used in the Plan, the following terms shall have
the meanings set forth below and, when the meaning is intended, the initial
letter of the word is capitalized:
(a) "AFFILIATE" means any corporation (other than a Subsidiary),
partnership, association, joint venture or other entity in which the Company
or any Subsidiary participates directly or indirectly in the decisions
regarding the management thereof or the production or marketing of products
or services.
(b) "AWARD" means, individually or collectively, a grant under this Plan
of Stock Options, Stock Appreciation Rights or Other Stock Based Awards.
(c) "AWARD AGREEMENT" means the document which evidences an Award and
which sets forth the terms, conditions and limitations relating to such
Award.
(d) "BOARD" or "BOARD OF DIRECTORS" means the Board of Directors of the
Company.
(e) "CHANGE IN CONTROL" shall have the meaning set forth in Article 9
herein.
(f) "CHANGE IN CONTROL VALUE" means the highest price paid for a Share
by a third party in connection with a Change in Control.
(g) "CODE" means the Internal Revenue Code of 1986, as amended from time
to time or any successor Code thereto.
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(h) "COMMITTEE" means the group of individuals administering the Plan,
which shall be the Personnel Committee of the Board or any other committee
of the Board performing similar functions as appointed from time to time by
the Board and constituted so as to permit the Plan to comply with Rule 16b-3
under the Exchange Act, or any successor rule thereto.
(i) "COMPANY" means Honeywell Inc., a Delaware corporation.
(j) "EFFECTIVE DATE" means April 21, 1993.
(k) "ELIGIBLE EMPLOYEE" means any executive, managerial, professional,
technical or administrative employee of the Company, any Subsidiary or any
Affiliate who is expected to contribute to its success.
(l) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor Act thereto.
(m) "FAIR MARKET VALUE" means, with respect to any particular date, the
average of the highest and lowest price of a Share as reported on the
consolidated tape for New York Stock Exchange listed securities (or other
principal reporting system, as determined by the Committee).
(n) "INCENTIVE STOCK OPTION" or "ISO" means an option to purchase
Shares, granted pursuant to Article 6 herein, which is designated as an
Incentive Stock Option and is intended to meet the requirements of Section
422 of the Code.
(o) "INSIDER" means an officer of the Company or any Subsidiary as
defined under Rule 16a-1(f) under the Exchange Act.
(p) "NONQUALIFIED STOCK OPTION" or "NQSO" means an option to purchase
Shares, granted pursuant to Article 6 herein, which is not intended to be an
Incentive Stock Option.
(q) "OTHER STOCK BASED AWARD" means an Award, granted pursuant to
Article 6 herein, other than a Stock Option or SAR, that is paid with,
valued in whole or in part by reference to, or is otherwise based on Shares.
(r) "PARTICIPANT" means an Eligible Employee selected by the Committee
to receive an Award under the Plan.
(s) "PLAN" means the 1993 Honeywell Stock and Incentive Plan.
(t) "SHARES" means the issued or unissued shares of the common stock,
par value $1.50 per share, of Honeywell Inc.
(u) "STOCK APPRECIATION RIGHT" or "SAR" means the grant, pursuant to
Article 6 herein, of a right to receive a payment from the Company, in the
form of stock, cash or a combination of both, equal to the difference
between the Fair Market Value of one or more Shares and the exercise price
of such Shares under the terms of such Stock Appreciation Right.
(v) "STOCK OPTION" means the grant, pursuant to Article 6 herein, of a
right to purchase a specified number of Shares during a specified period at
a designated price, which may be an Incentive Stock Option or a Nonqualified
Stock Option.
(w) "SUBSIDIARY" means a corporation as defined in Section 425(f) of the
Code with the Company being treated as the employer corporation for purposes
of this definition.
(x) "TERMINATION DATE" means the earlier of: the date on which all
Shares subject to the Plan have been purchased or acquired according to the
Plan's provisions, the date the Plan is terminated pursuant to Article 10,
or December 31, 1998.
(y) "WITHHOLDING EVENT" means an event related to an Award which results
in the Participant being subject to taxation at the federal, state, local or
foreign level.
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ARTICLE 3. ADMINISTRATION
3.1 AUTHORITY. The Plan shall be administered by the Committee which shall
have full and exclusive power, except as limited by law or by the Restated
Certificate of Incorporation or By-laws of the Company, and subject to the
provisions herein, to:
(a) select Eligible Employees to whom Awards are granted;
(b) determine the size and types of Awards;
(c) determine the terms and conditions of such Awards in a manner
consistent with the Plan;
(d) determine whether, to what extent and under what circumstances,
Awards may be: settled, paid or exercised in cash, shares, or other Awards,
or other property or canceled, forfeited or suspended.
(e) construe and interpret the Plan and any agreement or instrument
entered into under the Plan;
(f) establish, amend or waive rules and regulations for the Plan's
administration;
(g) amend (subject to the provisions of Section 4.4 and Article 10
herein) the terms and conditions, other than price, of any outstanding Award
to the extent such terms and conditions are within its discretion; and
(h) make all other determinations which may be necessary or advisable
for the administration of the Plan.
All Awards hereunder shall be made by the Committee, except that Awards made
other than during the normal period for granting Awards may, subject to
ratification by the Committee, be made by the Chief Executive Officer of the
Company, or a designee approved by the Committee, provided, however, that
notwithstanding the foregoing, all Awards to Insiders, must be approved by
the Committee prior to the grant of the Award.
3.2 DECISIONS BINDING. All determinations and decisions made by the
Committee pursuant to the provisions of the Plan and all related orders or
resolutions of the Board of Directors shall be final, conclusive and binding
on all persons, including the Company, its Subsidiaries and Affiliates, its
shareholders, Participants, and their estates and beneficiaries.
ARTICLE 4. SHARES SUBJECT TO THE PLAN
4.1 NUMBER OF SHARES. Subject to adjustment as provided in Section 4.4
herein, no more than 7,500,000 Shares may be issued under the Plan, of which
a maximum of fifty percent (50%) of such Shares may be issued pursuant to
Other Stock Based Awards. These Shares may consist in whole or in part, of
authorized and unissued Shares, or of treasury Shares. No fractional Shares
shall be issued under the Plan; however, cash may be paid in lieu of any
fractional Shares in settlements of Awards under the Plan.
For purposes of determining the number of Shares available for issuance
under the Plan:
(a) The grant of an Award shall reduce the authorized pool of Shares by
the number of Shares subject to such Award while such Award is outstanding,
except to the extent that such an Award is in tandem with another Award
covering the same or fewer Shares.
(b) Any Shares tendered by a Participant in payment of the price of a
Stock Option or stock option exercised under any other Company plan shall be
credited to the authorized pool of Shares.
(c) To the extent that any Shares covered by SARs are not issued upon
the exercise of such SAR, the authorized pool of Shares shall be credited
for such number of Shares.
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(d) To the extent that an Award is settled in cash or any form other
than in Shares, the authorized pool of Shares shall be credited with the
appropriate number of Shares represented by such settlement of the Award, as
determined at the sole discretion of the Committee (subject to the
limitation set forth in Section 4.2 herein).
(e) If Shares are used to pay dividends and dividend equivalents in
conjunction with outstanding Awards, an equivalent number of Shares shall be
deducted from the Shares available for issuance.
4.2 LAPSED AWARDS. If any Award granted under the Plan is cancelled,
terminates, expires or lapses for any reason, any Shares subject to such
Award shall again be available for the grant of an Award under the Plan;
except, however, to the extent that such Award was granted in tandem with
another Award, any Shares issued pursuant to the exercise or settlement of
such other Award shall not be credited back.
4.3 EFFECT OF ACQUISITION. Any Awards granted by the Company in
substitution for awards or rights issued by a company whose shares or assets
are acquired by the Company or a Subsidiary shall not reduce the number of
Shares available for grant under the Plan.
4.4 ADJUSTMENTS IN AUTHORIZED SHARES. Subject to Article 9 herein, in the
event of any merger, reorganization, consolidation, recapitalization,
separation, spin-off, liquidation, stock dividend, split-up, Share
combination or other change in the corporate or capital structure of the
Company affecting the Shares, such adjustment shall be made in the number
and class of Shares which may be delivered under the Plan, and in the number
and class of and/or price of Shares subject to outstanding Awards granted
under the Plan, as may be determined to be appropriate and equitable by the
Committee, in its sole discretion, to prevent dilution or enlargement of
rights; provided that the number of Shares subject to any Award shall always
be a whole number.
4.5 COMMITTEE DETERMINATION. In determining the number of Shares available
for issuance under the Plan as contemplated by this Article 4, the Committee
shall interpret and apply the provisions of this Article so as to permit the
Plan to comply with Rule 16b-3 under the Exchange Act, or any successor rule
thereto.
ARTICLE 5. PARTICIPATION
5.1 SELECTION OF PARTICIPANTS. Subject to the provisions of the Plan, the
Committee may, from time to time, select from all Eligible Employees, those
to whom Awards shall be granted and shall determine the nature and amount of
each Award. No Eligible Employee shall have the right to receive an Award
under the Plan, or, if selected to receive an Award, the right to continue
to receive same. Further, no Participant shall have any rights, by reason of
the grant of any award under the Plan to continued employment by the Company
or any Subsidiary or Affiliate. There is no obligation for uniformity of
treatment of Participants under the Plan.
5.2 AWARD AGREEMENT. All Awards granted under the Plan shall be evidenced
by an Award Agreement that shall specify the terms, conditions, limitations
and such other provisions applicable to the Award as the Committee shall
determine.
ARTICLE 6. AWARDS
Except as otherwise provided for in Section 3.1 herein, Awards may be
granted by the Committee to Eligible Employees at any time, and from time to
time as the Committee shall determine. The Committee shall have complete
discretion in determining the number of Awards to grant (subject to the
Share limitations set forth in Section 4.1 herein) and, consistent with the
provisions of the Plan, the terms, conditions and limitations pertaining to
such Awards.
The Committee may provide that the Participant shall have the right to
utilize Shares to pay all or any part of the purchase price of the exercise
of any Stock Option or option to acquire Shares
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under any another Honeywell incentive compensation plan, if permitted under
such plan; provided that the number of Shares, bearing restrictive legends,
if any, which are used for such exercise, shall be subject to the same
restrictions following such exercise.
6.1 STOCK OPTIONS. Stock Options may be granted at a price which shall not
be less than one hundred percent (100%) of the Fair Market Value of a Share
on the date the Stock Option is granted.
A Stock Option may be exercised at such times as may be specified in an
Award Agreement, in whole or in installments, which may be cumulative and
shall expire at such time as the Committee shall determine at the time of
grant; provided that no Stock Option shall be exercisable later than ten
(10) years after the date granted. Prior to the exercise of a Stock Option,
the holder thereof shall not have any rights of a shareholder with respect
to any of the Shares covered by the Stock Option.
Stock Options shall be exercised by the delivery of a written notice of
exercise to the Director of Executive Compensation of the Company or such
other person specified by the Committee, setting forth the number of Shares
with respect to which the Stock Option is to be exercised, accompanied by
full payment of the total Stock Option price and any required withholding
taxes. Payment shall be made either (a) in cash or its equivalent, (b) by
tendering previously acquired Shares having a Fair Market Value at the time
of exercise equal to the total price of the Stock Option, or (c) by a
combination of (a) and (b). The Committee also may allow exercises to be
made with the delivery of payment as permitted under Federal Reserve Board
Regulation T, subject to applicable securities law restrictions, or by any
other means which the Committee determines to be consistent with the Plan's
purpose and applicable law. The Committee may provide that the exercise of a
Stock Option, by tendering previously acquired shares, will entitle the
exercising Participant to receive another Stock Option covering the same
number of shares tendered and with a price of no less than the Fair Market
Value on the date of grant of such other option.
6.2 STOCK APPRECIATION RIGHTS. SARs may be granted at a price which shall
not be less than one hundred percent (100%) of the Fair Market Value of a
Share on the date the SAR is granted, in tandem with a Stock Option, such
that the exercise of the SAR or related Stock Option will result in a
forfeiture of the right to exercise the related Stock Option for an
equivalent number of shares, or independently of any Stock Option.
An SAR may be exercised at such times as may be specified in an Award
Agreement, in whole or in installments, which may be cumulative and shall
expire at such time as the Committee shall determine at the time of grant;
provided that no SAR shall be exercisable later than ten (10) years after
the date granted.
SARs shall be exercised by the delivery of a written notice of exercise to
the Director of Executive Compensation of the Company or such other person
specified by the Committee, setting forth the number of Shares with respect
to which the SAR is to be exercised.
6.3 OTHER STOCK BASED AWARDS. Other Stock Based Awards may be granted to
such Eligible Employees as the Committee may select, at any time and from
time to time as the Committee shall determine. The Committee shall have
complete discretion in determining the number of Shares subject to such
Awards, the consideration for such Awards and the terms, conditions and
limitations pertaining to same including, without limitation, restrictions
based upon the achievement of specific business objectives, tenure, and
other measurements of individual or business performance, and/or
restrictions under applicable federal or state securities laws, and
conditions under which same will lapse. Such Awards may include the issuance
of Shares in payment of amounts earned under other incentive compensation
plans of the Company. The terms, restrictions and conditions of the Award
need not be the same with respect to each Participant.
The Committee may, at its sole discretion, direct the Company to issue
Shares subject to such restrictive legends and/or stop transfer instructions
as the Committee deems appropriate.
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ARTICLE 7. DIVIDENDS AND DIVIDEND EQUIVALENTS
The Committee may provide that Awards earn dividends or dividend
equivalents. Such dividend equivalents may be paid currently or may be
credited to an account established by the Committee under the Plan in the
name of the Participant. In addition, dividends or dividend equivalents paid
on outstanding Awards or issued Shares may be credited to such account
rather than paid currently. Any crediting of dividends or dividend
equivalents may be subject to such restrictions and conditions as the
Committee may establish, including reinvestment in additional Shares or
Share equivalents.
ARTICLE 8. DEFERRALS AND SETTLEMENTS
Payment of Awards may be in the form of cash, shares, other Awards, or in
such combinations thereof as the Committee shall determine at the time of
grant, and with such restrictions as it may impose. Payment may be made in a
lump sum or in installments as prescribed by the Committee. The Committee
may also require or permit participants to elect to defer the issuance of
Shares or the settlement of Awards in cash under such rules and procedures
as it may establish under the Plan. It may also provide that deferred
settlements include the payment or crediting of interest on the deferral
amounts or the payment or crediting of dividend equivalents on deferred
settlements denominated in Shares.
ARTICLE 9. CHANGE IN CONTROL
9.1 CHANGE IN CONTROL. In the event of a Change in Control of the Company,
all Awards granted under the Plan that are still outstanding and not yet
exercisable or are subject to restrictions, shall, unless otherwise provided
for in the Award Agreement, become immediately exercisable, and all
restrictions shall be removed, as of the first date that the Change in
Control has been deemed to have occurred, and shall remain as such for the
remaining life of the Award, as such life is provided herein and within the
provisions of the related Award Agreements.
For purposes of this Section 9.1, a Change in Control of the Company shall
be deemed to have occurred if the conditions set forth in any one or more of
the following paragraphs shall have been satisfied:
(a) Any "person", as such term is used in Sections 13(d) and 14(d) of
the Exchange Act (other than the Company, any trustee or other fiduciary
holding securities under an employee benefit plan of the Company or any
corporation owned, directly or indirectly, by the shareholders of the
Company in substantially the same proportions as their ownership of stock of
the Company), is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the
Company representing thirty percent (30%) or more of the combined voting
power of the Company's then outstanding securities; or
(b) During any period of two consecutive years (not including any period
prior to the Effective Date of the Plan), individuals who at the beginning
of such period constitute the Board, and any new director (other than a
director designated by a person who has entered into an agreement with the
Company to effect a transaction described in paragraphs (a), (b) or (c) of
this Section 9.1) whose election by the Board or nomination for election by
the Company's shareholders was approved by a vote of at least two-thirds
(2/3) of the directors then still in office who either were directors at the
beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute at least a
majority thereof;
(c) The shareholders of the Company approve a merger or consolidation of
the Company with any other person, other than (i) a merger or consolidation
which would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity) more than fifty percent (50%) of the combined voting power of the
voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation, or (ii) a merger
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or consolidation effected to implement a recapitalization of the Company (or
similar transaction) in which no "person" (as hereinabove defined) acquires
more than thirty percent (30%) of the combined voting power of the Company's
then outstanding securities; or
(d) The shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by
the Company of all or substantially all of the Company's assets (or any
transaction having a similar effect).
ARTICLE 10. AMENDMENT, MODIFICATION AND TERMINATION
10.1 AMENDMENT, MODIFICATION AND TERMINATION. The Committee may terminate,
amend or modify the Plan at any time and from time to time, with the
approval of the Board. The termination, amendment or modification of the
Plan may be in response to changes in the Code, the Exchange Act, national
securities exchange regulations or for other reasons deemed appropriate by
the Committee. However, without the approval of the shareholders of the
Company, no amendment or modification may:
(a) Materially increase the total amount of Shares which may be issued
under the Plan, except as provided in Sections 4.3 and 4.4 herein; or
(b) Cause the Plan not to comply with Rule 16b-3 under the Exchange Act,
or any successor rule thereto.
10.2 AWARDS PREVIOUSLY GRANTED. No termination, amendment or modification
of the Plan shall in any manner adversely affect any Award previously
granted under the Plan, without the written consent of the Participant.
ARTICLE 11. WITHHOLDING
11.1 TAX WITHHOLDING. The Company shall have the power and the right to
deduct or withhold, or require a Participant to remit to the Company, an
amount in cash or Shares having a Fair Market Value sufficient to satisfy
federal, state and local taxes (including the Participant's FICA obligation)
required by law to be withheld with respect to any Withholding Event which
occurs because of a grant, exercise or payment made under or as a result of
the Plan.
11.2 SHARE WITHHOLDING. Upon a Withholding Event, the Committee may
require one or more classes of Participants to satisfy the withholding
requirement, in whole or in part, by having the Company withhold Shares
having a Fair Market Value, on the date the tax is to be determined, equal
to the amount of withholding (federal, FICA, state or local) which is
required by law. Absent such a mandate, the Committee may allow a
Participant to elect Share withholding for tax purposes subject to such
terms and conditions as the Committee shall establish.
ARTICLE 12. TRANSFERABILITY
No Award granted under the Plan may be sold, transferred, pledged, assigned
or otherwise alienated or hypothecated, other than by will or by the laws of
descent and distribution or pursuant to a qualified domestic relations order
as defined by the Code, or Title I of the Employee Retirement Income
Security Act, or the rules thereunder. Further, all Awards granted to a
Participant under the Plan shall be exercisable during the Participant's
lifetime only by the Participant. Notwithstanding the foregoing, the
designation of a beneficiary by a Participant does not constitute a
transfer.
ARTICLE 13. INDEMNIFICATION
13.1 INDEMNIFICATION. Each person who is or shall have been a member of
the Committee, or of the Board, shall be indemnified and held harmless by
the Company against and from any loss, cost, liability or expense that may
be imposed upon or reasonably incurred by such person in connection with or
resulting from any claim, action, suit or proceeding to which such person
may be a party or in which such person may be involved by reason of any
action taken or failure to act under the
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Plan and against and from any and all amounts paid by such person in
settlement thereof, with the Company's approval, or paid by such person in
satisfaction of any judgment in any such action, suit or proceeding against
such person, provided such person shall give the Company an opportunity, at
its own expense, to handle and defend the same before such person undertakes
to handle and defend it on such person's own behalf. The foregoing right of
indemnification shall not be exclusive of any other rights of
indemnification to which such persons may be entitled under the Company's
Restated Certificate of Incorporation or By-laws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold
them harmless.
ARTICLE 14. UNFUNDED PLAN
14.1 UNFUNDED PLAN. The Plan shall be unfunded and the Company shall not
be required to segregate any assets that may at any time be represented by
Awards under the Plan. Any liability of the Company to any person with
respect to any Award under the Plan shall be based solely upon any
contractual obligations that may be effected pursuant to the Plan. No such
obligation of the Company shall be deemed to be secured by any pledge of, or
other encumbrance on, any property or assets of the Company.
ARTICLE 15. SUCCESSORS
15.1 SUCCESSORS. All obligations of the Company under the Plan, with
respect to Awards granted hereunder, shall be binding on any successor to
the Company, whether the existence of such successor is the result of a
direct or indirect purchase, merger, consolidation or otherwise, of all or
substantially all of the business and/or assets of the Company.
ARTICLE 16. SECURITIES LAW COMPLIANCE
16.1 SECURITIES LAW COMPLIANCE. The Plan is intended to comply with all
applicable conditions of Rule 16b-3 or any successor rule thereto under the
Exchange Act. To the extent any provision of the Plan or action by the
Committee fails to so comply, it shall be deemed null and void, to the
extent permitted by law and deemed advisable by the Committee. Further, each
Award shall be subject to the requirement that, if at any time the Committee
shall determine, in its sole discretion, that the listing, registration or
qualification of any Award under the Plan upon any securities exchange or
under any state or federal law, or the consent or approval of any government
regulatory body, is necessary or desirable as a condition of, or in
connection with, the granting of such Award or the grant or settlement
thereof, such Award may not be exercised or settled in whole or in part
unless such listing, registration, qualification, consent or approval shall
have been effected or obtained free of any conditions not acceptable to the
Committee.
ARTICLE 17. REQUIREMENTS OF LAW
17.1 REQUIREMENTS OF LAW. The granting of Awards and the issuance of
Shares under the Plan shall be subject to all applicable laws, rules and
regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required.
17.2 SEVERABILITY. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining parts of the Plan, and the Plan shall be construed and
enforced as if the illegal or invalid provision had not been included.
17.3 GOVERNING LAW. To the extent not preempted by federal law, the Plan
and all Award Agreements, shall be construed in accordance with and governed
by the laws of the State of Minnesota.
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Amended Effective: 01/17/89
Printed: 03/21/89
1988 HONEYWELL STOCK AND INCENTIVE PLAN
1. DEFINITIONS
The following words and phrases, as used in the Plan, shall have these
meanings:
1.01 "Affiliate" means any corporation (other than a Subsidiary),
partnership, association, joint venture or other entity in which the Company or
any Subsidiary participates directly or indirectly in the decisions regarding
the management thereof or the production or marketing of products or services.
1.02 "Award" means, individually or collectively, any Option, Earned
Performance Share Award, Restricted Stock Award or other award, whether
contingent or absolute, made pursuant to this Plan.
1.03 "Board" means the Board of Directors of the Company.
1.04 "Change in Control" means a change of control of the Company as
defined in Section 13 of the Plan.
1.05 "Code" means the Internal Revenue Code of 1986, as amended.
1.06 "Commission" means the United States Securities and Exchange
Commission.
1.07 "Committee" shall mean the Personnel Committee of the Board, composed
of not less than three directors, each of whom is a Disinterested Person.
1.08 "Company" means Honeywell Inc.
1.09 "Disability" means disability as defined from time to time pursuant
to the Company's policies then in effect.
1.10 "Disinterested Person" shall have the meaning set forth in Rule
16b-3(d)(3) promulgated by the Securities and Exchange commission under the
Exchange Act, or any successor definition adopted by the Commission.
1.11 "Earned Performance Share" means a Share earned under the Earned
Performance Share Program.
1.12 "Effective Date" means the date on which the Plan is approved by the
stockholders of the Company, as provided in Section 3.
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1.13 "Eligible Company" means Company, any Subsidiary, and any Affiliate.
1.14 "Eligible Employee" means any executive, professional, or
administrative employee of an Eligible Company who is expected to contribute to
the success of an Eligible Company.
1.15 "Exchange Act" means the Securities Exchange Act of 1934, as amended.
1.16 "Fair Market Value" means, with respect to any particular date, the
average of the highest and lowest price of the Stock as reported on the
consolidated tape for New York Stock Exchange listed securities (or other
principal reporting system, as determined by the Committee).
1.17 "Fiscal Year" means the fiscal year of the company, which is
presently the calendar year.
1.18 "Incentive Stock option" means an Option within the meaning of
Section 422A of the Code.
1.19 "Nonqualified Stock Option" means an Option granted under the Plan
other than an Incentive Stock Option.
1.20 "Option" means a Nonqualified Stock Option or an Incentive Stock
option to purchase Stock.
1.21 "Option Agreements" means option agreements entered into as provided
in Section 7 of the Plan.
1.22 "Option Price" means the price at which Stock may be purchased
under an option as provided in Section 7.
1.23 "Participant" means an individual selected by the Committee from
among the Eligible Employees to receive an Award under the Plan.
1.24 "Performance Goal" means target performance levels of an individual,
an Eligible company or business unit.
1.25 "Performance Incentive Award" means an award in addition to those
described elsewhere in the Plan, that is paid with, valued in whole or in part
by reference to, or is otherwise based on Shares as further described in Section
10.
1.26 "Performance Period" means the period of time, as determined by the
Committee at the time any Award is granted or at any time thereafter, over which
a Participants performance is measured.
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1.27 "Personal Representative" means the person or persons who, upon the
death, Disability, or incompetency of a Participant, shall have acquired, by
will or by the laws of descent and distribution or by other legal proceedings,
the right to the benefits of an Award.
1.28 "Plan" means the 1988 Honeywell Stock and Incentive Plan.
1.29 "Programs" means the Stock option Plan described in Section 7, the
Earned Performance Share Program described in Section 8, the Restricted Stock
Plan described in Section 9, and the Other Performance Incentive Awards
described in Section 10.
1.30 "Restricted Stock" means Stock subject to the terms, restrictions and
conditions provided in Section 9.
1.31 "Restriction Period" means a period of time determined under Section
9 during which Restricted Stock is subject to the terms and conditions provided
in Section 9.
1.32 "Shares" means either authorized and previously unissued or treasury
shares of Stock.
1.33 "Stock" means the common stock, par value $1.50 of the Company.
1.34 "Subsidiary" means a corporation as defined in section 425(f) of the
Code with the Company being treated as the employer corporation for purposes of
this definition.
2. PURPOSES
2.01 The purpose of the Plan is to provide a means through which Honeywell
and its subsidiaries may attract and employ key employees and provide such key
employees with additional incentive and reward opportunities designed to enhance
the profitable growth of the Company and its Subsidiaries. A further purpose of
the Plan is to provide a means whereby those key employees upon whom the
successful administration and management of the Company and its Subsidiaries
rests, and whose present and potential contributions to the success of the
Company and its Subsidiaries are of importance, can acquire and maintain stock
ownership, thereby strengthening their commitment to the success of the Company
and its Subsidiaries and their desire to remain in its employ.
In addition, the Plan provides for Awards to employees of Affiliates in
those cases where the success of the Company or its Subsidiaries may be enhanced
by the award of incentives to employees of Affiliates. So that the appropriate
incentives can be provided, the Plan provides for the award of Stock options,
Restricted Stock Awards, Earned Performance Shares, other Performance Incentive
Awards or any combination of the foregoing.
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3. EFFECTIVE DATE AND EXPIRATION OF PLAN
3.01 The Plan is subject to approval by holders of a majority of the
outstanding shares of capital stock of the Company present in person or
represented by proxy and entitled to vote at the annual meeting of stockholders
of the Company to be held on April 21, 1988, or at any adjournment thereof, and,
if so approved, shall be effective as of such date. Unless earlier terminated
pursuant to Section 14, the Plan shall terminate on the fifth anniversary of its
Effective Date. No Award shall be made pursuant to the Plan after its
termination date, but Awards made prior to the termination date may be
exercised, vested or otherwise effectuated beyond that date unless otherwise
limited.
4. ADMINISTRATION
4.01 The Plan shall be administered by the Committee, which shall take
action upon approval of a majority of its members. The Committee shall have
authority to establish rules for the administration and interpretation of the
Plan, subject to such orders or resolutions of the Board not inconsistent with
the express terms hereof, as it deems appropriate or necessary. Any decision of
the Committee with respect to the interpretation, construction, administration
and application of the Plan shall be conclusive and binding. No employee or
Participant shall have any claim to be granted any Award under the Plan and
there is no obligation for uniformity of treatment of Participants under the
Plan. All Awards hereunder shall be made by the Committee, except that Awards
made other than during the normal period for granting Awards may, subject to
ratification by the Committee, be made by the Chairman of the Board or Chief
Executive officer, provided, however, that notwithstanding the foregoing, all
Awards to Participants in Grade F (or the equivalent, it no grades are
designated) and above, regardless of the date of award, must receive Committee
approval prior to making the Award.
5. ELIGIBLE EMPLOYEES
5.01 Awards hereunder may be granted only to Eligible Employees.
6. MAXIMUM SHARES UNDER PLAN
6.01 MAXIMUM - subject to adjustment under Subsection 6.03, the maximum
number of Shares available for distribution under the Plan shall be 3,000,000.
In the event of a lapse, expiration, termination or cancellation, in whole or in
part, of any Award granted under the Plan without the issuance of Shares, or if
Shares are issued under an Option hereunder and are reacquired by the Company
pursuant to rights reserved upon issuance thereof, the Shares subject to or
reserved for such Award may be again used for new Awards hereunder, provided
that in no event may the number of Shares issued hereunder exceed 3,000,000, the
total number of Shares reserved for issuance hereunder.
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6.02 EFFECT OF ACQUISITION - Any Awards made by the Company in
substitution for awards or rights issued by a company whose shares or assets are
acquired by the Company or a Subsidiary shall not reduce the number of Shares
available for Awards under the Plan pursuant to Section 6.01.
6.03 ADJUSTMENT UPON CHANGES IN CAPITALIZATION - in the event of any
merger, reorganization, consolidation, recapitalization, stock dividend, or
other change in corporate structure, affecting the Awards, such adjustment shall
be made in the aggregate number and class of Shares which may be delivered under
the Plan, in the number, class and option price of Shares subject to outstanding
options granted under the Plan, and in the value of, or number or class of
Shares subject to, Awards granted under the Plan as may be deemed appropriate by
the Committee in its sole discretion, provided, that the number of Shares
subject to any Award shall always be a whole number.
7. STOCK OPTIONS
7.01 LIMITATION ON VALUE OF INCENTIVE STOCK OPTION GRANTS - The aggregate
Fair Market Value (determined at the time the Option is granted) of Shares with
respect to which options designated and qualifying as Incentive Stock Options,
as amended, are exercisable for the first time by any one Eligible Employee in
any calendar year under all plans of the Company and its Subsidiaries shall not
exceed $100,000.
7.02 POWERS OF THE COMMITTEE - In addition to and not in limitation of any
powers which the Committee shall have under other Sections of the Plan, the
Committee shall have plenary authority in its discretion, but subject to the
express provisions of the Plan, to designate each Option as an Incentive Stock
Option or as a Nonqualified Stock Option; to determine the purchase price of the
Shares covered by each Option, the Eligible Employees to whom, and the time or
times at which options shall be granted and exercisable and the number of Shares
to be covered by each Option.
7.03 ELIGIBILITY - In addition to the eligibility requirements set forth
in Section 5.01 hereof, the Committee shall take into account in determining the
Eligible Employees to whom Options shall be granted and the number of Shares to
be covered by each option, the nature of the services rendered by the respective
Eligible Employee, their present and potential contributions to the success of
the Company, its Subsidiaries or Affiliates and such other factors as the
Committee in its discretion shall deem relevant. A Participant who has been
granted an Option may be granted additional Options. Incentive Stock Options may
be granted to any Eligible Employee of the Company or its Subsidiaries.
Notwithstanding the foregoing, no Incentive Stock Option may be issued to any
person who, at the time of grant, owns more than 10% percent of the total
combined
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voting power of all classes of stock of the Company or any Subsidiary.
7.04 OPTION PRICES - The purchase price of the Shares covered by each
option shall be determined by the Committee, but shall not be less than 100% of
the Fair Market Value of the Shares at the time the Option is granted PROVIDED,
HOWEVER, that to the extent permitted by law, the Committee in its discretion
may reprice existing options if the exercise price of the option exceeds the
Fair Market Value of the Stock on the date of Committee action. The Option
Agreements may contain such provisions regarding the form (which may include,
without limitation, securities of the Company) and time of payment of the
purchase price and withholding taxes in connection with an exercise of an Option
as the Committee shall approve.
7.05 EXERCISE OF OPTIONS
(a) The Committee shall have authority in its discretion to prescribe in
any Option Agreement that the Option will be exercisable in full at any time or
in part from time to time during the term of the Option. The Committee shall
have similar authority to prescribe in any Option Agreement a minimum number of
Shares as to which the Option may be exercised at any time, but otherwise, an
option may be exercised at any time or from time to time during the term of the
Option as to any or all full Shares which have become purchasable under the
provisions of the Option. Any exercise of an Option shall be accomplished by the
giving of a notice, together with a payment or commitment to pay the purchase
price and any required withholding taxes. Payment of the option price and
withholding taxes may be made by the delivery of cash, Shares or other
consideration as permitted by law and provided by the Committee in the Option
Agreement. The term of each Option shall be fixed by the Committee at the time
of grant but shall not be more than ten years from the date of granting thereof.
An Option granted by the Company prior to January 1, 1987 as an Incentive Stock
Option shall not be exercisable at a time when there remains outstanding (within
the meaning of Section 422A(c)(7) of the Code, the whole or part of any Stock
Option which then is (or has been) an Incentive Stock Option which was granted
before the granting of such Option to the same Participant to purchase Stock in
the Company or in a corporation which (at the time of the granting of such
option) is the parent corporation or Subsidiary of the Company or is a
predecessor corporation of any such corporations.
(b) Except as provided in Sections 12 and 13, no Option may be exercised at
any time unless the holder thereof is then an employee of the Company, a
subsidiary or Affiliate. The holder of an Option shall not have any rights of a
shareholder with respect to any of the Shares covered by the Option prior to the
date the option is properly exercised. The Committee shall have authority in its
discretion to prescribe in any Option Agreement the action which shall
constitute proper exercise of an Option.
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Upon proper exercise of an Option, the person so exercising it shall be treated
for all purposes as having become the registered owner of the Shares as to which
the Option has been exercised as of the close of business on the date of
exercise, provided that the Company shall not be obligated to deliver a
certificate for such Shares prior to its receipt of payment in full of the
purchase price thereof and any required withholding taxes.
7.06 PARTICIPANT'S AGREEMENT TO SERVE - Each Participant receiving an
Option shall, as one of the terms of the Option Agreement, agree to remain in
the service of the Company, its Subsidiaries or Affiliates for a period
determined by the Committee (or until such earlier date on which the Participant
may take disability, early or normal retirement in accordance with the Company's
policies then in effect), and to devote his or her entire time, energy and skill
during such employment to the service of the Company, such Subsidiary or
Affiliate and the promotion of its interests, subject to vacations, sick leave
and other absences and employments in accordance with the regular policies of
the Eligible Company. Such employment shall (subject to the terms of any
contract between the Company and such employee) be at the pleasure of the
management of the Company and at such compensation as management shall
reasonably determine from time to time.
7.07 ACCEPTANCE OF OPTIONS - No Option granted under the Plan shall be
exercisable unless the Participant to whom the Option is granted shall have
executed and delivered to the Company an Option Agreement within 45 days after
the Option Agreement shall have been sent to the employee by or on behalf of the
Company; provided that such period may, for good cause, be extended by the
Company to no more than 90 days.
8. EARNED PERFORMANCE SHARES
8.01 EARNED PERFORMANCE SHARE AWARDS - The Committee may grant Awards
under which payment may be in Shares, cash or a combination of Shares and cash
if the performance of the Participant, the Company, a Subsidiary or Affiliate
during the Performance Period meets Performance Goals established by the
Committee. Such Earned Performance Share Awards shall be subject to the
following terms and conditions and such other terms and conditions an the
Committee may prescribe.
8.02 POWERS OF THE COMMITTEE
The Committee shall select the Participants, determine the Performance
Periods and the Performance Goals separately for each Performance Period.
Participants for an Award Period may be identified after the beginning of the
Performance Period. Performance Goals applicable to a Participant may also be
modified by the Committee if during the Performance Period the Participant
transfers to a business unit to which different Performance Goals apply.
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8.03 PAYMENT
(a) As soon as practicable after the Performance Period, Earned
Performance Shares shall be paid to Participants. In the discretion of the
Committee, Earned Performance Shares shall be paid in Stock or in cash or a
combination of Stock and cash.
b) No Participant shall have any rights as a stockholder with respect to
Shares represented by Earned Performance Shares until such Shares are issued.
9. RESTRICTED STOCK
9.01 ISSUANCE - Restricted Stock Awards may be issued hereunder to
Participants, for no cash consideration or for such consideration as may be
determined by the Committee.
9.02 RESTRICTION PERIOD - At the time a Restricted Stock Award is made,
the Committee shall establish the Restriction Period applicable to such Award
and the terms and conditions under which the restrictions shall lapse. The
terms, restrictions and conditions of the Restricted Stock Awards need
not be the same with respect to each Participant.
9.03 OTHER TERMS AND CONDITIONS - Shares awarded pursuant to a Restricted
Stock Award shall be represented by a stock certificate registered in the name
of the Participant. The Participant shall have the right to enjoy all
shareholder rights during the Restriction Period, including the right to vote
and to receive cash dividends, with the exception that:
(a) The Participant shall not be entitled to delivery of a stock
certificate until the Restriction Period shall have expired; provided that
the Committee,. in its sole discretion, may direct the Company to issue
Shares subject to such restrictive legends and/or stop-transfer
instructions as the Committee deems appropriate.
(b) Except as provided in section 9.06, the Participant may not sell,
transfer, pledge, exchange, hypothecate, encumber or otherwise dispose of
the Shares during the Restriction Period.
(c) A breach of the terms and conditions set forth in the Restricted
Stock Award shall cause a forfeiture of the Restricted Stock Award, and any
stock dividends withheld thereon.
(d) Stock dividends may be either currently paid to the Participant
or withheld by the Company for the Participant's account.
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9.04 FORFEITURE PROVISIONS - Subject to Section 9.05, in the event a
Participant ceases to be an employee of the Company, a subsidiary or Affiliate
during the Restriction Period, the Award (including for purposes of this
Section 9.04, any restricted shares issued in respect thereof) will be
forfeited, depending an the cause of such cessation, as follows:
(a) For cause or voluntary on the part of the Participant:
- The Award will be completely forfeited.
(b) Disability or Early or Normal Retirement pursuant to the Company
retirement plan provisions then in effect:
- The Award will be prorated for service during the Restriction
Period.
(c) Death:
- The Award will be prorated for service during the Restriction
Period.
(d) Leave of Absence or Termination for convenience:
- The Committee shall determine the forfeiture provisions to be
applied in the event of leave of absence or termination for
convenience.
9.05 WAIVER OF RESTRICTIONS - In the event of cessation of employment
pursuant to Section 9.04, the Committee may, in its sole discretion, accelerate
or waive all or any portion of the restrictions remaining in respect of a
Restricted Stock Award. This right may be exercised for any or all Participants.
9.06 SWAP IN CONNECTION WITH OPTIONS - The Committee may provide that the
Participant shall have the right to utilize restricted shares awarded pursuant
to Section 9 to pay all or any part of the purchase price of the exercise of any
option to acquire Stock under any Honeywell stock option plan, if permitted
under such option plan; provided that the number of shares, bearing the same
restrictive legends, which are used to exercise the option, shall be retained as
Restricted Stock following exercise of any such option.
10. OTHER PERFORMANCE INCENTIVE AWARDS
10.01 ADMINISTRATION - Performance Incentive Awards may be granted
hereunder to Participants, either alone or in addition to other Awards granted
under the Plan. Such Performance Incentive Awards may be paid in Shares, other
securities of the company, cash or other form of property as the Committee shall
determine. Subject to the provisions of the Plan, the Committee
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shall have sole and complete authority to determine the Eligible Employees to
whom and the time or times at which such Awards shall be made, the number of
Shares to be granted pursuant to such Awards or the amount of such Awards, and
all other conditions of the Awards.
10.02 TERMS AND CONDITIONS - Subject to the provisions of this Plan and
any applicable agreement, Shares subject to Awards made under this.Section 10,
may not be sold, assigned, transferred, pledged or otherwise encumbered prior to
the date on which the Shares are issued, or, if later, the date on which any
applicable restriction or performance period lapses. Shares granted under this
Section 10 may be issued for no cash consideration or for such consideration as
may be determined by the Committee.
11. TRANSFERABILITY
11.01 OPTIONS - No option granted to a Participant under the Plan shall be
transferable otherwise than to a beneficiary (as provided in Section 11.02), or
by will or the laws of descent and distribution, and only the Participant, or
the guardian or legal representative of the Participant, may exercise the Option
during the Participant's lifetime.
11.02 If any Participant to whom an Option has been granted under the Plan
shall die while employed by the Company, a subsidiary or Affiliate or within the
period after termination of employment during which the Participant could have
exercised the Option pursuant to the provisions of Section 7.05, the Option may
(subject to any conditions or limitations provided in the Option Agreement) be
exercised by a surviving beneficiary designated (pursuant to rules outlined by
the Committee) by the Participant during his lifetime or, in the absence of such
a designation, by the person designated by will or, in the absence of either
such designation, by the Participant's legal representative at any time within a
period of two years (or such shorter period as may be prescribed in the Option
Agreement) after the date of death, but in no event after the normal termination
date of such option, to the extent provided by the Option Agreement.
12. TERMINATION OF EMPLOYMENT
12.01 STOCK OPTIONS
(a) Termination of a Participant's services during the period when any
Option Agreement is outstanding, where the termination is either (i) for cause
or (ii) voluntary on the par,, of the Participant and without the written
consent of the Chairman of the Board or Chief Executive officer of the Company,
shall be deemed a violation by the Participant of such Option Agreement. In the
event of such violation, any option or Options granted to the Participant under
the Plan, to the extent not theretofore exercised, shall forthwith terminate and
the Company
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shall have the right and options, exercisable within 190 days after the date of
any exercise of any such Option, to purchase from the Participant or from the
estate, legal representative or surviving joint tenant of the Participant, that
number of Shares which is equal to the number of Shares which had been purchased
pursuant to exercise of any such Option within six months prior to the
employment termination date, together with any Shares received from adjustments
which pertained to the purchased Shares and which were made as a result of any
of the types of transactions referred to in Section 6.03, for a purchase price
equal to the total amount paid by the Participant for the Shares so purchased;
provided, however, that any such purchase option shall not apply to United
Kingdom employees of the Company, its Subsidiaries or Affiliates who receive
approved share option schemes pursuant to the United Kingdom Finance Act 1984.
(b) (i) In the event of the termination, by reason of any retirement
which, under the Company's policy then in effect, is a disability, early or
normal retirement, of the employment of a Participant to whom an option has been
granted, the Participant may exercise the option at any time within sixty (60)
months (or such shorter period as may be provided in the Option Agreement but in
no event after the end of the original term of the option) after such
termination of employment to the extent of the number of Shares covered by
Option which were purchasable at the date of such termination of employment. The
option Agreements may contain such provisions as the Committee shall approve as
to when termination of employment shall be deemed to have occurred in the event
of a termination for convenience or leave of absence.
(ii) In the event of the termination, with express approval of the
Chairman of the Board or Chief Executive Officer of the Company, of the
employment of a Participant to whom an Option has been granted, the Committee
may, in its sole discretion, extend the period during which an Option granted
under this Plan may be exercised after such termination of employment, but in no
event shall the Option be exercisable after the end of the original term as
stated in the Option Agreement.
(iii) In the event of the termination of the employment of a Participant
to whom an option has been granted for any reason except as provided in Sections
11.02, 12.01(a), 12.01(b)(i) and (ii) hereof, the Participant may, subject to
Section 12-01(a), exercise the Option at any time within three (3) months (or
such shorter period as may be provided in the option Agreement), but in no case
after the normal termination of such Option, such exercise being limited to the
extent of the number of Shares covered by the option which were purchasable at
the date of such termination of employment.
(iv) Options granted under the Plan shall not be affected by any change of
duties or position so long as the Participant continues to be an employee of the
Company, a Subsidiary or Affiliate.
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12.02 EARNED PERFORMANCE SHARES
(a) Subject to Section 12.02(b), in the event a Participant ceases to be
an employee of the Company, a subsidiary or Affiliate during the Performance
Period, the Earned Performance Shares will be awarded, depending upon the cause
of such cessation, as follows:
(i) For cause or voluntary on the part of the Participant:
- The Earned Performance Shares will be completely forfeited.
(ii) Disability or Early or Normal Retirement pursuant to the Company
retirement plan provisions then in effect:
- The Earned performance Shares will be prorated for service during the
Performance Period.
(iii) Death:
- The Earned Performance Shares will be prorated for service during the
Performance Period.
(iv) Leave of Absence or Termination for Convenience:
- The Committee shall determine the forfeiture provisions to be applied
in the event of leave of absence or termination for convenience.
(b) In the event of cessation of employment pursuant to Section 12.02(a),
the Committee may, in its sole discretion, modify the forfeiture provisions with
respect to an Earned Performance Share Award. This right may be exercised for
any or all Participants.
12.03 EFFECT OF CHANGE OF CONTROL - In the event of a termination of
employment as a result of events described in Section 13 hereof, Section 13
shall govern in lieu of section 12.
12.04 EMPLOYMENT RELATIONSHIPS - Nothing in the Plan or in any Award
granted pursuant thereto shall confer on any Participant any right to continue
in the employ of the Company, a Subsidiary or Affiliate or affect in any way the
right of the Company, any Subsidiary or Affiliate to terminate such employment
at any time.
13. CHANGE IN CONTROL
13.01 DEFINITION - For purposes of the Plan, a "Change in Control" of the
Company shall have occurred if:
(a) any "person", an such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as
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amended (the "Exchange Act") (other than the Company, any trustee or other
fiduciary holding securities under an employee benefit plan of the Company or
any corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of stock of the
Company), is or becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the Company
representing 30% or more of the combined voting power of the Company's then
outstanding securities;
(b) during any period of two consecutive years (not including any
period prior to the execution of this amendment to the Plan), individuals who at
the beginning of such period constitute the Board, and any new director (other
than a director designated by a person who has entered into an agreement with
the Company to effect a transaction described in clause (a), (b) or (d) of this
Section) whose election by the Board or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so approved,
cease for any reason to constitute at least a majority thereof;
(c) the stockholders of the Company approve a merger or consolidation
of the Company with any other corporation, other than (i) a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 50% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation, or (ii) a merger or consolidation effected to
implement a recapitalization of the company (or similar transaction) in which no
"Person" (as hereinabove defined) acquires more than 30% of the combined voting
power of the Company's then outstanding securities; or
(d) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets (or any transaction
having a similar effect).
13.02 PAYMENTS UPON A CHANGE IN CONTROL.
(a) In the event of a Change in Control, (i) any options granted
under the Plan not previously exercisable and vested shall become fully
exercisable and vested, (ii) the Restrictions applicable to Restricted stock or
Performance Incentive Awards, if any, awarded under the Plan shall lapse and
such shares shall become fully vested and (iii) Earned Performance Share Awards
and Performance Incentive Awards shall be paid an described in paragraph (b) of
this Section 13.02.
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(b) Notwithstanding any other provision of the Plan, a Participant
shall receive with respect to each Performance Period in progress at the time of
the change in Control a lump sum cash amount, within five days after the change
in control, equal to the "Change in Control Value" of the Earned Performance
Share Awards and Performance Incentive Awards the Participant would have earned
if 100% of the relevant Performance Goals were met, multiplied by a fraction,
the numerator of which is the number of months (rounded to the nearest whole
month) of actual service in the relevant Performance Period and the denominator
being the number of months in the relevant Performance Period. For purposes of
this Section 13.02, Change in Control Value means the highest price paid for a
share of Stock by a third party in connection with the Change in Control.
14. TERMINATION AND AMENDMENT
14.01 POWERS OF BOARD - The Board, or the Committee, acting on the Board's
behalf, may terminate the Plan or make such amendments to the Plan as it shall
deem advisable except that the approval by a majority of those stockholders of
the Company present or represented by proxy at a meeting duly held shall be
required for any amendment which would:
(a) materially modify the requirements as to eligibility for Awards
under the Plan;
(b) materially increase the maximum number of Shares available under
the Plan;
(c) extend the period during which Awards can be granted beyond April
21, 1993; or
(d) materially increase the benefits accruing to Participants under
the Plan.
The approval of the Company's stockholders for such amendment shall be
solicited in a manner which substantially conforms to the rules and regulations
in effect under Section 14(a) of the Exchange Act.
14.02 EFFECT OF TERMINATION OR AMENDMENT ON EXISTING AWARDS - No
termination, modification or amendment of the Plan may, without the consent of
the Participant, adversely affect the rights of such Participant under an Award
previously made, and no such modification or termination shall affect the right
of any Participant to receive payment for a Performance Period which has
previously ended.
15. SECURITIES REGULATION
15.01 Anything in the Plan to the contrary notwithstanding: (a) the
Company may, if it shall determine it necessary or desirable for any reason, at
the time of Award or issuance of
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<PAGE>
Shares pursuant to an Award, require the Participants, as a condition to the
receipt of the Award or Shares, to deliver to the Company a written
representation of present intention to acquire the Shares for his or her own
account for investment and not for distribution; and (b) if at any time the
Company further determines, in its sole discretion, that the listing,
registration or qualification (or any updating of any such document) of any
Shares is necessary on any securities exchange or under any federal or state
securities or blue sky law, or that the consent or approval of any governmental
regulatory body is necessary or desirable as a condition of, or in connection
with the Award or the issuance of Shares, or the removal of any restrictions
imposed on such Shares, such Award or such Shares shall not be issued or such
restrictions shall not be removed, as the case may be, in whole or in part,
unless such listing, registration, qualification, consent or approval shall have
been effected or obtained free of any conditions not acceptable to the Company.
16. GENERAL PROVISIONS
16.01 ADJUSTMENTS IN AWARD CRITERIA - The Committee shall be authorized to
make adjustments in performance award criteria or in the terms and conditions of
other Awards in recognition of unusual or nonrecurring events affecting the
Company, a Subsidiary or Affiliate or their respective financial statements or
changes in applicable laws, regulations or accounting principles. In the event
of the promotion or demotion of a Participant during a Performance Period, the
Committee may adjust or eliminate the performance award as it deems appropriate.
The Committee may correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Award in the manner and to the extent it shall
deem desirable to carry it into effect. In the event the Company shall assume
outstanding employee benefit awards or the right or obligation to make future
such awards in connection with the acquisition of another corporation or
business entity, the Committee may, in its discretion, make such adjustments in
the terms of Awards under the Plan as it shall deem appropriate.
16.02 FOREIGN EMPLOYEES - The Committee, in its discretion, may make such
adjustments or modifications to Awards to Eligible Employees working outside
the United States as are necessary an advisable to cause the Awards to fulfill
the fundamental purposes of this Plan.
16.03 EXPENSES - All expenses of administering the Plan shall be borne by
the Company.
16.04 GOVERNING LAW - The place of administration of the Plan shall
conclusively be deemed to be within the State of Minnesota and the validity,
construction, interpretation, administration and effect of the Plan and of its
rules and regulations and the rights of any and all personnel having or claiming
to have an interest therein or thereunder shall be governed by and determined
exclusively and solely in accordance with the laws of the State Minnesota.
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Amended Effective: 01/17/89
Printed: 03/21/89
RESTRICTED-STOCK RETIREMENT PLAN FOR
NON-EMPLOYEE DIRECTORS
----------------------------------------
1. PURPOSE OF THE PLAN. The purpose of the Honeywell Restricted-Stock
Retirement Plan for Non-Employee Directors ("Plan") is to grant to non-employee
directors of Honeywell Inc. ("Company") awards ("Awards") of shares of Common
Stock, par value $1.50 per share, of the Company ("Stock") that will be
available without restriction on retirement from the Board and will increase
their proprietary interest in the Company and their identification with the
interests of the Company's stockholders ("Stockholders"). The Plan shall become
effective on the date ("Effective Date") the Plan is approved by the
Stockholders or such later date as may be established by the Board of Directors
of the Company ("Board").
2. GRANT OF AWARDS. Each non-employee director ("Director") of the
Company elected at or after the 1988 Annual Meeting of Stockholders shall be
granted Awards under the Plan as follows:
(a) ANNUAL AWARDS. On the date of each Annual Meeting of
Stockholders ("Annual Meeting"), each person who has served as a Director
since the prior Annual Meeting shall receive an Award of Stock having the
Fair Market Value (as defined in Section 3) equal to one-half the fees
earned by the Director since the date of the prior Annual Meeting.
(b) INITIAL AWARD. Each Director who, at the time of the 1988 Annual
Meeting, has served at least two full years as Director shall receive an
additional initial award of Stock having the Fair Market Value equal to the
number of full years of service as a Director ending with the 1987 Annual
Meeting times the Fair Market Value of the Award that Director receives
under Section 2(a).
3. FAIR MARKET VALUE. For purposes of determining the number of shares of
Stock granted under any Award, the "Fair Market Value" of the Stock shall equal
the average of the reported closing prices for the Stock on the New York Stock
Exchange for the twenty (20) consecutive trading business days immediately
preceding the Annual Meeting; and all fractional shares shall be rounded to the
nearest whole number.
4. ISSUANCE OF STOCK. As promptly as practical following the Annual
Meeting for each Award, the Company shall issue certificates ("Certificates"),
registered in the name of each Director receiving an Award, representing the
number of shares of Stock covered by the Award. The Stock shall have the rights
and be subject to the restrictions and other terms and conditions of the Plan.
<PAGE>
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5. RIGHTS. Upon issuance of the Certificates, the Directors in whose
names they are registered shall, subject to the restrictions of the Plan, have
all of the rights of a Stockholder with respect to the Stock, including the
right to vote the Stock and receive cash dividends and other cash distributions
thereon.
6. RESTRICTED PERIOD. The Stock shall be subject to the restrictions of
the Plan for a period ("Restricted Period") running until the Director has
served five years as a Director (including time served prior to issuance of a
Certificate) and until the first to occur of the following events:
(a) the Director retires from the Board in compliance with the
Board's retirement policy as then in effect;
(b) the Director's service on the Board terminates as a result of not
being nominated for reelection by the Board, but not as a result of the
Director's declining to serve again;
(c) the Director's service on the Board terminates because the
Director, although nominated for reelection by the Board, is not reelected
by the Stockholders;
(d) the Director is unable to serve because of disabilities;
(e) the Director dies; or
(f) the occurrence of a Change in Control (as defined below).
For purposes of the Plan, a "Change in Control" of the Company shall
have occurred if:
(i) any "person", as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") (other than the Company any trustee or other fiduciary
holding securities under an employee benefit plan of the Company or
any corporation owned, directly or indirectly, by the stockholders of
the Company in substantially the same proportions as their ownership
of stock of the Company), is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of securities of the Company representing 30% or more of the combined
voting power of the Company's then outstanding securities;
<PAGE>
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(ii) during any period of two consecutive years (not including
any period prior to the execution of this amendment to the Plan),
individuals who at the beginning of such period constitute the Board
of Directors of the Company (the "Board"), and any new director (other
than a director designated by a person who has entered into an
agreement with the Company to effect a transaction described in clause
(i), (iii) or (iv) of this Section) whose election by the Board or
nomination for election by the Company's stockholders was approved by
a vote of at least two-thirds (2/3) of the directors then still in
office who either were directors at the beginning of the period or
whose election or nomination for election was previously so approved,
cease for any reason to constitute at least a majority thereof;
(iii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than
(A) a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) more than
50% of the combined voting power of the voting securities of the
Company or such surviving entity outstanding immediately after such
merger or consolidation or (B) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction)
in which no "person" (as hereinabove defined) acquires more than 30%
of the combined voting power of the Company's then outstanding
securities; or
(iv) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition
of the Company of all or substantially all of the Company's assets (or
any transaction having a similar effect).
7. FORFEITURE OF STOCK. If the date ("Termination Date") a Director's
service on the Board terminates is before the end of the Restricted Period, the
Director shall forfeit and return to the Company all Stock awarded to the
Director under the Plan.
8. RECEIPT OF STOCK. If a Director's Termination Date is at or after the
end of the Restricted Period, the Director shall receive, free and clear of the
restrictions of the Plan, all Stock previously awarded under the Plan.
9. RESTRICTIONS. The Stock shall be subject to the following restrictions
during the Restricted Period:
(a) The Stock shall be subject to forfeiture to the Company as
provided in the Plan.
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(b) The Stock may not be sold, assigned, transferred, pledged,
hypothecated or otherwise disposed of; and neither the right to receive
Stock nor any interest under the Plan may be assigned by a Director, and
any attempted assignment shall be void.
(c) The Certificates shall be held by the Company and shall, at the
option of the Company, bear an appropriate restrictive legend and be
subject to appropriate "stop transfer" orders. The Director shall deliver
to the Company a stock power endorsed in blank to the Company.
(d) Any additional Stock or other securities or property (other than
cash) that may be issued with respect to Stock awarded under the Plan as a
result of any stock dividend, stock split, business combination or other
event, shall be subject to the restrictions and other terms and conditions
of the Plan.
(e) A Director shall not be entitled to receive any Stock prior to the
completion of any registration or qualification of the Stock under any
federal or state law or governmental rule or regulation that the Company,
in its sole discretion, determines to be necessary or advisable.
10. WAIVER. In the event a Director's service on the Board terminates,
the Board, in its sole discretion, may waive the forfeiture provisions of
Section 7 as to some or all of the Stock subject to forfeiture thereunder.
11. ADMINISTRATION OF THE PLAN. The Plan shall be administered by a
committee ("Committee") that shall be the Nominating Committee of the Board or
such other committee of Directors as may be designated by the Board. The
Committee shall have full power, discretion and authority to interpret and
administer the Plan, except that the Committee shall have no power to (a)
determine the eligibility for Awards or the number of shares of Stock or timing
or value of Awards to be granted to any Director, or (b) take any action
specifically delegated to the Board under the Plan. The Committee's
interpretations and actions shall, except as otherwise determined by the Board,
be final, conclusive and binding on all persons for all purposes.
12. AMENDMENT OR TERMINATION OF THE PLAN. The Board may, at any time,
amend or terminate the Plan; but no amendment or termination shall, without the
written consent of a Director, reduce the Director's rights under previously
granted Awards. No amendment shall, without approval of the Stockholders,
increase the percentage of fees on which an Annual Award is based in Section
2(a), or modify the requirements of Sections 1 and 2 as to eligibility for
participation in the Plan.
<PAGE>
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13. NO RIGHT TO RENOMINATION. Nothing in the Plan or in any Award shall
confer upon any Director the right to be nominated for reelection to the Board.
14. STATEMENT OF ACCOUNT. Each Director shall receive an annual
statement, within thirty days following each Annual Meeting, showing the number
of shares of Stock that have been awarded to the Director under the Plan.
<PAGE>
CECP2-93.CLN
HONEYWELL CORPORATE EXECUTIVE COMPENSATION PLAN
(Amended and Restated Effective February 15, 1993)
SECTION 1 - PURPOSE OF THE PLAN
The purpose of the Honeywell Corporate Executive Compensation Plan is to provide
compensation to executives that (a) is compatible with the diverse sizes and
characteristics of the operating units within Honeywell, (b) is equitable
internally and competitive externally, and (c) meets Honeywell's "pay for
performance" philosophy by directly relating individual, unit, and company-wide
performance to compensation.
<PAGE>
SECTION 2 - DEFINITIONS
2.1 BASE PLAN. The Honeywell Retirement Benefit Plan, as from time to time
amended.
2.2 BASE SALARY. The regular, monthly, straight-time cash earnings, including
salary continuations because of illness, disability or other authorized leave of
absence. Excluded are any other salary continuations, stock incentives, special
payments or allowances because of work location, or any other benefits or
special payments.
2.3 BOARD OF DIRECTORS. The Board of Directors of Honeywell.
2.4 COMMITTEE. The Personnel Committee of the Board of Directors.
2.5 COMPANY. Honeywell and any domestic or foreign subsidiary of Honeywell in
which it owns a majority of the voting stock.
2.6 COMPOSITE INCENTIVE PERCENTAGE. That percentage obtained by weighing the
Leveraged Incentive Percentage of a Unit in accordance with approved Influence
Weightings.
2.7 COMPOSITE PERFORMANCE PERCENTAGE. The percent of actual performance of
On-Plan objectives by a Unit after applying any Unit Performance Adjustment and
weighting such Unit performance in accordance with predetermined financial
measures assigned by Corporate Management.
2.8 CORPORATE MANAGEMENT. The Chief Executive Officer and the Chief Operating
Officer of Honeywell, respectively, and any other officials to whom they
delegate responsibility hereunder.
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2.9 DEFERRED AWARD ACCOUNT OR ACCOUNT. The unfunded bookkeeping account
maintained by the Company for a Participant who elects to defer payment of his
or her Incentive Award(s) pursuant to Section 6.1.
2.10 EARLY RETIREMENT DATE. Retirement by a Participant under his or her Base
Plan, which is defined as the termination of employment on or after his or her
55th birthday and after he or she has been credited with 10 or more years of
"Credited Service for Benefit Accrual" under the Base Plan.
2.11 FINAL INCENTIVE FUND. The actual fund available for allocation of
incentive awards to a Unit's Participants after making any Incentive Fund
Adjustments.
2.12 HONEYWELL. Honeywell Inc., a Delaware corporation.
2.13 INCENTIVE AWARD OR AWARD. An award of incentive pay to a Participant under
Section 5 of the Plan.
2.14 INCENTIVE FUND ADJUSTMENT. An adjustment to a Unit's Incentive Fund by the
Unit's cognizant President of a dollar amount equal to a plus or minus
percentage no greater than 20 percent of the Unit's On-Plan Incentive Fund to
reflect his or her assessment of the Unit's total performance.
2.15 INCENTIVE UNIT OR UNIT. The Company or a part thereof (for example,
Strategic Business Unit, operation, division, group, business, or major
corporate staff department) for which Unit objectives are set.
2.16 INFLUENCE WEIGHTINGS. Multipliers resulting from an assessment of the
degree of interdependence between Incentive Units based on a percentage
relationship established by Corporate Management.
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2.17 LEVERAGED INCENTIVE PERCENTAGE. A percentage which equals 100 percent plus
or minus specified multiples, as determined by Corporate Management prior to the
beginning of the calendar year to which an award relates, times the Unit's
variance from On-Plan performance and which is not less than 0 percent nor
greater than 200 percent.
2.18 NORMAL RETIREMENT DATE. Retirement by a Participant on or after his or her
"Social Security Retirement Age" as defined under his or her Base Plan.
2.19 ON-PLAN. A financial performance of a Participant or Unit which equals 100
percent of his or her or its annual approved objectives.
2.20 ON-PLAN INCENTIVE FUND. The sum of On-Plan incentive amounts for each
Participant in a Unit.
2.21 ON-PLAN INCENTIVE PERCENTAGE. That percentage of a Participant's Base
Salary determined from time to time by Corporate Management for each Honeywell
salary grade level which determines the On-Plan incentive amount for such
Participant.
2.22 PARTICIPANT. An employee of the Company employed in a position which
satisfies the eligibility requirements of Section 3.4, whose participation is
recommended by the top management of his Unit and approved by a level of
management designated by the Company as appropriate on the job level involved,
during any portion of the Term of the Plan during which such employee is within
the grade levels "A" through "U" under the Plan.
2.23 PERMANENT AND TOTAL DISABILITY. The disability of a Participant whereby
such Participant is wholly disabled by bodily injury or disease and will be
permanently, continuously and wholly prevented thereby for life from engaging in
his or her customary occupation or employment for wage or profit, as determined
by the Committee.
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2.24 PLAN. This Honeywell Corporate Executive Compensation Plan, as amended and
restated effective February 15, 1993.
2.25 TERM. The term of the Plan shall be indefinite and continuing subject to
amendment, cancellation or termination at any time by the Board of Directors.
2.26 TOP MANAGEMENT OF UNIT. The manager with the highest level of authority,
as designated by Corporate Management, of an Incentive Award Unit.
2.27 UNIT INCENTIVE FUND. The dollar amount available to a Unit for Incentive
Awards, prior to the application of the Incentive Fund Adjustment, obtained by
multiplying the Unit's Composite Incentive Percentage by the Unit's On-Plan
Incentive Fund.
2.28 UNIT OBJECTIVES. The annual financial objectives set for the Company and
each Unit by Corporate Management (for example, operating profit, net income,
and return on investment). With approval by Corporate Management, Unit
Objectives may also include specified non-financial objectives.
2.29 UNIT PERFORMANCE ADJUSTMENT. A dollar or percentage adjustment applied by
Corporate Management to compensate for unforeseen circumstances which
significantly impact the Unit's attainment of its established financial
objectives (for example, unplanned acquisitions, divestitures, or foreign
exchange effects).
5
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SECTION 3 - ADMINISTRATION OF THE PLAN
3.1 AMENDMENT AND TERMINATION. The Board of Directors may amend, cancel, or
terminate the Plan at any time and any such amendment, cancellation or
termination may be retroactively effective except that no amendment,
cancellation or termination shall adversely affect Awards earned under the Plan
for calendar years completed before adoption of any such amendment, cancellation
or termination. The Plan shall not be deemed to be a contract for employment or
a guarantee of compensation.
3.2 COMMITTEE. The Plan shall be administered by the Committee, with the
assistance of the Honeywell Corporate Compensation Department. All payments of
Incentive Awards under the Plan are subject to the discretion of the Committee.
The Committee shall have authority to establish, administer, and interpret such
rules with respect to the Plan as it deems appropriate. Any decision of the
Committee with respect to such rules and the interpretation, construction,
administration and application of the Plan shall be conclusive and binding.
3.3 ESTABLISHMENT OF OBJECTIVES. Corporate Management shall recommend to the
Committee what objectives and performance measures shall be utilized for the
Company and each Unit and Participant for purposes of the Plan. The Committee
shall have the authority to make final decisions as to such annual objectives
and appropriate performance measures which shall be applied under the Plan.
Honeywell shall maintain an appropriate recordkeeping system for Incentive
Awards.
3.4 ELIGIBILITY OF EMPLOYEE'S POSITION. The employee's position must be
recommended for participation by the top management of his or her unit, and
satisfy the following criteria:
(A) ACCOUNTABILITY OF POSITION.
The employee's position must be sufficiently accountable to directly
impact the financial results of Honeywell or one or more of its
operating Units.
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(B) REPORTING LEVEL OF POSITION.
The employee's position must report at a sufficiently high level in
the organization to regularly impact management decisions of Honeywell
or one or more of its operating Units.
7
<PAGE>
SECTION 4 - SALARY STRUCTURE OF PARTICIPANTS
4.1 DETERMINATION OF BASE SALARY. The Base Salary of Participants is
determined from time to time as follows:
(A) JOB EVALUATION. The Honeywell executive job evaluation method is used
for preparing position descriptions, assessing position
responsibilities, and assigning positions to salary grades and ranges.
Each position is evaluated by the Honeywell Corporate Compensation
Department and approved by a level of management designated by the
Company as appropriate for the job level involved.
(B) SALARY GRADES AND RANGES. Each salary grade is assigned a salary
range. A salary grade encompasses positions whose market pay
typically falls within a plus or minus 20 percent of the salary grade
midpoint. Salary grade midpoints generally have a 13 to 15 percent
differential.
4.2 ADJUSTMENTS TO BASE SALARY. The Base Salary of Participants may be
adjusted from time to time as follows:
(A) REVIEW OF SALARY RANGES. Salary ranges are reviewed at least annually
and adjusted as necessary to assure that they are competitive with pay
opportunities provided by selected, large, high-technology companies.
Changes in salary ranges are approved by the Committee.
(B) CHANGES IN BASE SALARY. Changes in Base Salary are designed to
reflect performance of the Participant over time, as measured against
the performance requirements of the Participant's position. Such
adjustments to Base Salary must be approved by the next two higher
levels of Company management or, if no such levels exist, the
Committee.
8
<PAGE>
SECTION 5 - CALCULATION OF INCENTIVE AWARD
5.1 ESTABLISHING UNIT OBJECTIVES. At the beginning of each year, Unit
Objectives are approved by Corporate Management for the Company and each of the
Incentive Units for the year. Such objectives may vary by Unit to reflect the
characteristics and emphases of the Units.
5.2 ASSESSING UNIT PERFORMANCE. After the end of each year, actual performance
against unit objectives is measured for the Company and each of its Units.
Actual results for each objective are expressed as a percentage of the objective
or plan. Performance against any one objective is limited to 200 percent after
leveraging under Section 5.5.
5.3 ADJUSTING UNIT FINANCIAL RESULTS. A Unit Performance Adjustment to
compensate for unforeseen circumstances which significantly impact the Unit's
performance may be applied by Corporate Management to reflect a dollar impact
which was not taken into account in establishing Unit objectives for the
calendar year.
5.4 WEIGHTING UNIT PERFORMANCE. The percentage of the Unit's performance
determined under Section 5.2, after application of any Unit Performance
Adjustment, shall thereupon be weighted by the respective percentage assigned by
Corporate Management to each objective (for example, 50 percent ROI, 50 percent
Operating Profit), equal to a 100 percent total, to arrive at the Composite
Performance Percentage for the Unit.
5.5 CALCULATING LEVERAGED INCENTIVE PERCENTAGE. The Unit's Composite
Performance Percentage is then adjusted up or down by a Leveraged Incentive
Percentage for each one percent deviation from On-Plan performance between 70
and 130 percent, or such other range as determined by Corporate Management and
approved by the Committee prior to the beginning of the calendar year to which
an Award relates, to arrive at the Unit's Leveraged Incentive Percentage.
9
<PAGE>
5.6 DETERMINING ORGANIZATIONAL INFLUENCE WEIGHTINGS. Unless otherwise approved
by the Chief Executive Officer, the Unit's Leveraged Incentive Percentage shall
be weighted according to Influence Weightings to determine the Composite
Incentive Percentage of the Unit:
(A) COMPANY INFLUENCE. From 0 to 20 percent of a Unit's Composite
Incentive Percentage, as determined in the sole discretion of the
Chief Executive Officer, shall be based upon the performance of the
Company.
(B) UNIT INFLUENCE. At least 40 percent of a Unit's Composite Incentive
Performance shall be based on its own performance.
(C) OTHER UNIT INFLUENCE. Where a Unit has a significant interdependence
with another Unit, additional approved Influence Weightings may be
used in determining the Unit's Composite Incentive Percentage.
5.7 ESTABLISHING ON-PLAN INCENTIVE FUND. The On-Plan Incentive Percentage for
each Participant is multiplied by his or her annual Base Salary for the calendar
year or, (i) in the event that the Participant is promoted or demoted during the
calendar year by each Base Salary applicable to the Participant on a pro-rata
basis for that portion of the calendar year, (ii) in the event a Participant
retires, was laid off, or left work because of death or Permanent and Total
Disability, or who became a Participant in the Plan after January 1 of the
calendar year, by his or her Base Salary for the months he or she was a
Participant in the Plan. Such amounts shall then be added to an amount
calculated in that manner for all other Participants in the Unit in order to
arrive at the On-Plan Incentive Fund for the Unit.
5.8 COMPUTING UNIT INCENTIVE FUND. The Unit's Composite Incentive Percentage
is multiplied by the On-Plan Incentive Fund of the Unit and may then be
increased or decreased by Corporate Management provided that the sum of Unit
Incentive Funds so adjusted may not exceed the sum of such funds prior to such
adjustment.
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5.9 DETERMINING FINAL INCENTIVE FUND. At the end of each calendar year,
Corporate Management assesses a Unit's performance against both its financial
and non-financial objectives and may, in its discretion, adjust the Unit
Incentive Fund by an Incentive Fund Adjustment of a plus or minus percentage no
greater than 20 percent of the Unit's On Plan Incentive Fund to reflect his or
her assessment of the Unit's total performance, including its attainment of
non-financial objectives, to determine the Final Incentive Fund of the Unit.
Non-financial objectives may vary by Unit and may include, among other factors,
innovation, risk taking, human resource productivity improvement, equal
opportunity, Company image, customer service, product development, and progress
toward long-term objectives. In the case of individual Presidents and inside
directors of Honeywell, the Committee assesses the performance of these
Participants against such objectives which it may select and may adjust the
Incentive Fund applicable to those Participants in the same manner as provided
above for other Participants in this Section 5.9 to reflect its assessment of
such Participants' performance.
5.10 ALLOCATING THE UNIT'S FINAL INCENTIVE FUND TO PARTICIPANTS. The Unit's
Final Incentive Fund is allocated to individual Participants by the Top
Management of Unit, reviewed by appropriate higher level management, approved by
Corporate Management and, except as otherwise provided in Section 7, paid to the
Participant in the month of February of the calendar year following the
incentive year during which the Award was earned unless the Participant has
elected to defer payment of the Award in accordance with Section 8. Individual
Awards are based on the Unit's Final Incentive Fund adjusted to reflect the
Participant's actual performance against individual goals and objectives. The
sum of individual awards for a Unit cannot exceed such Unit's Final Incentive
Fund.
5.11 LIMITATIONS. The amount of total Incentive Awards distributed under the
Plan is limited as follows:
(A) PERCENTAGE OF ON-PLAN INCENTIVE. No Participant or Unit may receive
more than 200 percent of his or its On-Plan Incentive Fund.
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(B) AMOUNT OF INCENTIVE COMPENSATION. The amount which the Company may
distribute as Awards for any calendar year pursuant to the Plan to
those Participants that are determined by the Committee to be the
executives subject to the limit on incentive compensation under
Article XI of Honeywell's By-laws shall not exceed the amount which,
when added to the amount of incentive compensation accrued for such
year under the Honeywell Long-Range Stock Incentive Plan and any
performance-related award under the Honeywell Stock and Incentive Plan
with respect to such executives, would equal the limit on incentive
compensation for such year under that Article of the By-Laws, as in
effect at the end of such year. Individual payments under this Plan
to such Participants shall be reduced pro rata to the extent necessary
to comply with this limitation after any payments under the Honeywell
Long-Range Stock Incentive Plan to these Participants have first been
reduced.
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SECTION 6 - LOCATION EXECUTIVE COMPENSATION PLANS
6.1 GENERAL. An Incentive Unit may, with the approval of the Committee,
administer a "location executive compensation plan" under and pursuant to the
provisions of this Plan. Such plans shall be administered by the Unit's
president with all payments of Incentive awards subject to his or her discretion
as exercised in accordance with the rules established by the Committee as
permitted by Section 3.2.
6.2 HOME AND BUILDING CONTROL/INTERNATIONAL EXECUTIVE COMPENSATION PLAN. The
Home and Building Control/International Executive Compensation Plan constitutes
a location executive compensation plan which has been approved by the Committee.
It shall be administered by the President, Home and Building
Control/International, pursuant to the terms of this Plan except that Section
5.6(a) shall not be applicable.
6.3 INDUSTRIAL AUTOMATION CONTROL EXECUTIVE COMPENSATION PLAN. The Industrial
Automation Control Executive Compensation Plan constitutes a location executive
compensation plan which has been approved by the Committee. It shall be
administered by the President, Industrial Automation and Control, pursuant to
the terms of this Plan except that Section 5.6(a) shall not be applicable.
6.4 MICROSWITCH EXECUTIVE COMPENSATION PLAN. The Microswitch Executive
Compensation Plan constitutes a location executive compensation plan which has
been approved by the Committee. It shall be administered by the President,
Industrial Automation Control, pursuant to the terms of this Plan except that
Section 5.6(a) shall not be applicable.
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SECTION 7 - DEFERRED PAYMENT OF AWARDS
7.1 ELECTION TO DEFER. Not later than the last day of the first calendar
quarter during 1985 and not later than the last day of the year prior to the
year to which an Incentive Award relates during calendar years thereafter, each
Participant shall be provided the opportunity to make an irrevocable election to
defer the payment of the Award for that respective calendar year.
7.2 AMOUNT OF DEFERRAL. Each Participant may elect to defer the payment of a
specified dollar amount, any excess over a specified dollar amount, or a
designated percentage of the Award. The minimum amount of the Award which may
be deferred with respect to a calendar year is $1,000.
7.3 PERIOD OF DEFERRAL. Subject to earlier payment under Section 7.6, a
Participant may elect to defer commencement of payment of the Award until the
earlier of March 15 of the calendar year following the Participant's Early
Retirement Date or Normal Retirement following the Participant's Normal
Retirement Date.
7.4 DESIGNATION OF FORM OF PAYMENT. Each Participant who elects to receive
deferred payment of his Award may specify whether such deferred amount is to be
paid in a lump sum on or about March 15 of the year following the earlier of the
year in which the Participant's Early Retirement Date or Normal Retirement Date
occurs, or in approximately equal annual installments over a period of not more
than ten (10) years commencing on or about March 15 of the year following the
earlier of the year in which the Participant's Early Retirement Date or Normal
Retirement Date occurs.
7.5 CREDITS TO DEFERRED AWARD ACCOUNT. In the event that the Participant
elects to defer payment of his or her Award, a credit in the amount of such
deferred payment shall be made to the Participant's Deferred Award Account no
later than February 28 of the calendar year following the incentive year during
which the Award was earned. During the term of the Plan, interest shall be
credited to each Participant's Deferred Award
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<PAGE>
Account (a) annually as of February 15, (b) as of the last day of the month
preceding a Change in Control of the Company, and (c) at the time of
distribution of the entire balance of or annual installment from such Account
for the year or portion thereof then ended, based on the average daily balance
of the Account for such year or portion thereof, at the average effective
interest rate on the composite of long-term and short-term borrowings of
Honeywell Inc. and designated finance company subsidiaries for the five (5)
years ending with the calendar year in which interest is being credited, as such
rate may be determined for purposes of the financial reports prepared for the
Honeywell Corporate Treasurer.
7.6 EVENT TRIGGERING PAYMENT OF DEFERRED AWARD ACCOUNT. Participant's Deferred
Award Account shall be paid or commenced to be paid by Honeywell to such
Participant, or, in the event of his or her death or incapacity, to the person
or persons legally entitled thereto, after the earliest to occur of the
following events:
(a) the Participant's Early Retirement Date,
(b) the Participant's Normal Retirement Date,
(c) the Participant's death,
(d) termination of the Participant's employment with the Company for any
reason other than death, Early Retirement, or retirement on or after
his or her Normal Retirement Date, or
(e) a Change in Control as defined in Section 8, with the form and
commencement of such payment being determined by the provisions of
Section 7.7.
7.7 MANNER OF PAYMENT OF DEFERRED AWARD ACCOUNT. The manner of payment of the
Deferred Award Account to a Participant where clauses (a) and (b) of Section 7.6
are
15
<PAGE>
applicable shall be in a lump sum which shall be paid to him or her on or about
March 15 of the year following the year in which the earlier of such events set
forth in clauses (a) or (b) occur unless the Participant has elected installment
payments pursuant to Section 7.4 whereby approximately equal annual installments
over a period of not more than ten (10) years shall be made beginning with an
initial installment to be paid on or about March 15 of the year following the
year in which such event occurs. The form of payment of the Deferred Award
Account to a Participant where clauses (c) or (d) of Section 7.6 are applicable
shall be in a lump sum which shall be paid to the Participant within sixty (60)
days following the occurrence of any event set forth in such clauses. The form
of payment of the Deferred Award Account to a Participant upon a Change in
Control shall be in a manner set forth in Section 8.
7.8 EARLY PAYMENT OF DEFERRED AWARD ACCOUNT. Notwithstanding any contrary
provisions of Section 7, in the event that the Participant or beneficiary incurs
a financial hardship, he or she may apply to the Committee to receive an amount
from the Participant's Deferred Award Account sufficient to satisfy the
emergency need. If the application is approved by the Committee, it will direct
Honeywell to pay an amount necessary to meet the emergency need. The term
"financial hardship" shall mean an event resulting from an illness or accident
of the Participant or of a dependent of the Participant, loss of the
Participant's property due to casualty, the layoff of the Participant or other
circumstances arising as a result of events beyond the control of the
Participant. An event shall not constitute a "financial hardship" to the extent
that such hardship may be relieved through reimbursement or compensation by
insurance or otherwise or by liquidation of the Participant's assets, to the
extent that the liquidation of such assets would not itself cause a financial
hardship. Also, a "financial hardship" shall not include the need to send a
Participant's child to college or the desire to purchase a home.
7.9 ADMINISTRATIVE PROCEDURES. The Committee may adopt such rules and
regulations governing such deferrals and specifications as it deems appropriate.
All deferred payments hereunder shall be paid in cash from the general funds of
the
16
<PAGE>
Company and no special or separate fund shall be established and no other
segregation of assets shall be made to assure the payment of benefits hereunder.
17
<PAGE>
SECTION 8 - CHANGE IN CONTROL
8.1 PAYMENTS UPON CHANGE IN CONTROL. Notwithstanding any provision in the Plan
to the contrary, in the event of a "Change in Control", as defined in this
Section, each Participant shall receive payment of:
(a) the Participant's Incentive Award, based upon an assumption of On-Plan
performance for the incentive year during which such Change in Control
occurs, multiplied by a fraction, the numerator of which is the number
of months (calculated to the nearest whole month) of such
Participant's participation in the Plan during the incentive year in
which the Change in Control occurs and the denominator being twelve
and
(b) all amounts, if any, credited to the Participant's Deferred Award
Account, as of the effective date of such Change in Control, including
any interest accrued in accordance with Section 7.5 of the Plan,
which payments shall be distributed on the fifth business day after such Change
in Control as a lump sum cash payment.
8.2 DEFINITION OF CHANGE OF CONTROL. For all purposes of the Plan, a "Change
in Control" of the Company shall have occurred if:
(a) any "person", as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")
(other than the Company, any trustee or other fiduciary holding
securities under an employee benefit plan of the Company or any
corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of
stock of the Company), is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of securities of the Company
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<PAGE>
representing 30 percent or more of the combined voting power of the
Company's then outstanding securities;
(b) during any period of two consecutive years (not including any period
prior to the execution of this amendment to the Plan), individuals who
at the beginning of such period constitute the Board of Directors of
the Company (the "Board"), and any new director (other than a director
designated by a person who has entered into an agreement with the
Company to effect a transaction described in clause (a), (c) or (d) of
this Section) whose election by the Board or nomination for election
by the Company's stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any
reason to constitute at least a majority thereof;
(c) the stockholders of the Company approve a merger or consolidation of
the Company with any other corporation, other than (i) a merger or
consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than 50 percent of the
combined voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or
consolidation or (ii) a merger or consolidation effected to implement
a recapitalization of the Company (or similar transaction) in which no
"person" (as hereinabove defined) acquires more than 30 percent of the
combined voting power of the Company's then outstanding securities; or
(d) the stockholders of the Company approve a plan of complete liquidation
of the Company or an agreement for the sale or disposition by the
Company
19
<PAGE>
of all or substantially all of the Company's assets (or any
transaction having a similar effect).
20
<PAGE>
SECTION 9 - CHANGES IN EMPLOYEE STATUS
9.1 TRANSFERS BETWEEN UNITS. A Participant who transfers between Units before
the end of a calendar year shall be eligible to receive an Award based on the
performance of either the old or new Unit or a combination thereof. The
determination will be made by Corporate Management on a case-by-case basis.
Generally, a pro rata allocation will be made, but if an individual transfers
early in a calendar year, the Award may be calculated as if the Participant had
been in the new Unit all year. If the transfer is late in the year, it may be
calculated as if the Participant had been in the former Unit the entire year.
Transfers in the second or third quarter generally result in a prorated
calculation (for example, six months based on the old Unit and six months based
on the new Unit).
9.2 PARTICIPATION FOR A PARTIAL YEAR. A Participant who (i) ceases to be a
Participant in the Plan during a calendar year because of voluntary retirement,
layoff, position assignment, Permanent and Total Disability, or death, or (ii)
becomes a Participant in the Plan after January 1 of any year, shall be eligible
for an Incentive Award determined under Section 5, but pro-rated to reflect the
portion of the year in which he or she was a Participant.
A Participant whose employment terminates because of resignation or Company-
initiated employment termination shall not be eligible for an Incentive Award
for the calendar year in which such employment termination occurs.
9.3 DISCHARGE. If a Participant is discharged from the Company before an
Incentive Award has been made for a calendar year because of malfeasance (which
shall include, among other reasons, neglect of duties, divulgence of Company
secrets, or breach of Company policy), the Participant shall forfeit any and all
rights he or she would have had to an Incentive Award under the Plan for that
year, unless a specific contrary decision is made by Corporate Management.
21
<PAGE>
SECTION 10 - ASSIGNMENT AND BENEFICIARIES
10.1 DESIGNATION OF BENEFICIARY. Neither amounts awarded to a Participant or
credited to the Participant's Deferred Award Compensation Account nor any other
rights or benefits of a Participant under the Plan may be assigned, transferred,
pledged or alienated in any way; provided, however, that a Participant may
designate a beneficiary or beneficiaries to receive after the Participant's
death payments at the times and in the amounts to which the Participant would
have been entitled under the Plan if he or she were alive. The beneficiary or
beneficiaries last designated by the Participant to receive the proceeds under
the Company Basic Life Insurance Plan upon his or her death shall be the
designated beneficiary or beneficiaries for purposes of this Plan. Such
designation of a Participant's beneficiary or beneficiaries may be replaced by a
new designation or may be revoked by the Participant at any time. The
designation or revocation of a beneficiary shall not be effective unless it is
on a form provided for that purpose by the Company, signed by the Participant
and delivered to the Company prior to the Participant's death.
10.2 DISTRIBUTION TO DESIGNATED BENEFICIARY. In the case of death of a
Participant who has made a valid beneficiary designation which has not been
subsequently replaced or revoked, amounts to which the Participant would have
been entitled under the Plan shall be distributed in accordance with the Plan to
the designated beneficiary or beneficiaries to the extent the designation of
such beneficiary or beneficiaries is valid and enforceable under applicable law.
Any amount distributable to a Participant upon death and not subject to such a
designation shall be distributed to the Participant's legal representative or
estate. If there is any question as to the legal right of any beneficiary to
receive the distribution under the Plan, the amount in question may be paid to
the legal representative or estate of the Participant, at the option of the
Committee, in which event the Company shall have no further liability to anyone
with respect to such amount.
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<PAGE>
SECTION 11 - GENERAL CONDITIONS
11.1 LIMITATION OF RIGHTS. Nothing in this Plan and no action taken pursuant to
its provisions shall be construed to:
(a) give any employee of the Company any right to any compensation, except
as specifically provided herein;
(b) be evidence of any agreement, contract, or understanding, expressed or
implied, that the Company will employ a Participant in any particular
position or at any particular rate of remuneration;
(c) limit in any way the right of the Company to terminate a Participant's
employment at any time;
(d) give any Participant any right, title, or interest whatever in or to
any investments which the Company may make to aid it in meeting its
obligations hereunder;
(e) create a trust of any kind or a fiduciary relationship between the
Company and a Participant or any other person; and
no assets of the Company or any of its subsidiaries shall be segregated with
respect to any deferred amounts and all such amounts shall constitute unsecured
contractual obligations of the Company and its subsidiaries.
11.2 APPLICABLE LAW. All questions pertaining to the construction, validity and
effect of the Plan shall be determined in accordance with the laws of the United
States and the State of Minnesota, other than its laws respecting choice of law.
23
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2SRP 12/93
HONEYWELL SUPPLEMENTARY EXECUTIVE RETIREMENT PLAN
FOR COMPENSATION IN EXCESS OF $200,000
($200K SERP)
(Amended Through December 21, 1993)
TABLE OF CONTENTS
<TABLE>
<C> <S> <C>
ARTICLE I - DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.1 Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.2 Base Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.3 Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.4 Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.5 Early Retirement . . . . . . . . . . . . . . . . . . . . . . . . .1
1.6 Earnings Limitation. . . . . . . . . . . . . . . . . . . . . . . .1
1.7 Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . .2
1.8 Honeywell. . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
1.9 Mid-Career SERP. . . . . . . . . . . . . . . . . . . . . . . . . .2
1.10 Normal Retirement. . . . . . . . . . . . . . . . . . . . . . . . .2
1.11 Participant. . . . . . . . . . . . . . . . . . . . . . . . . . . .2
1.12 Permanent and Total Disability . . . . . . . . . . . . . . . . . .2
1.13 Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
1.14 Spouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
ARTICLE II - PLAN FORMULA. . . . . . . . . . . . . . . . . . . . . . . . . . .3
2.1 $200K SERP Formula . . . . . . . . . . . . . . . . . . . . . . . .3
</TABLE>
<PAGE>
<TABLE>
<C> <S> <C>
ARTICLE III - BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
3.1 Normal Retirement . . . . . . . . . . . . . . . . . . . . . . . .5
3.2 Early Retirement. . . . . . . . . . . . . . . . . . . . . . . . .5
3.3 Change In Control . . . . . . . . . . . . . . . . . . . . . . . .5
3.4 Permanent and Total Disability. . . . . . . . . . . . . . . . . .7
3.5 Immediate Pre-retirement Surviving Spouse Benefit . . . . . . . .7
3.6 Deferred Surviving Spouse Benefit . . . . . . . . . . . . . . . .7
3.7 Surviving Children's Benefit. . . . . . . . . . . . . . . . . . .7
ARTICLE IV - PAYMENT OF BENEFITS . . . . . . . . . . . . . . . . . . . . . . .9
4.1 Form of Payment to Participant. . . . . . . . . . . . . . . . . .9
4.2 Time of Payments. . . . . . . . . . . . . . . . . . . . . . . . 10
4.3 Payment Subsequent to a Change in Control . . . . . . . . . . . 10
4.4 Payments Subsequent to the Participant's Retirement . . . . . . 12
ARTICLE V - ADMINISTRATION OF THE PLAN . . . . . . . . . . . . . . . . . . . 13
5.1 Personnel Committee . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE VI - AMENDMENT AND TERMINATION . . . . . . . . . . . . . . . . . . . 14
6.1 Amendment and Termination . . . . . . . . . . . . . . . . . . . 14
ARTICLE VII - GENERAL CONDITIONS . . . . . . . . . . . . . . . . . . . . . . 15
7.1 Non-assignability of the Right to Receive Benefits. . . . . . . 15
7.2 Applicable Law. . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE VIII - FUNDING . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.1 Source of Payments. . . . . . . . . . . . . . . . . . . . . . . 16
8.2 Status of Participants. . . . . . . . . . . . . . . . . . . . . 16
8.3 FICA and FUTA Contributions on Plan Benefits. . . . . . . . . . 16
</TABLE>
<PAGE>
<TABLE>
<C> <S> <C>
ARTICLE IX - CLAIMS PROCEDURE. . . . . . . . . . . . . . . . . . . . . . . . 18
9.1 Filing of a Claim for Benefits. . . . . . . . . . . . . . . . . 18
9.2 Notification to Claimant of Decision. . . . . . . . . . . . . . 18
9.3 Content of Notice . . . . . . . . . . . . . . . . . . . . . . . 18
9.4 Review Procedure. . . . . . . . . . . . . . . . . . . . . . . . 19
9.5 Decision on Review. . . . . . . . . . . . . . . . . . . . . . . 19
Table I. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
</TABLE>
<PAGE>
2SRP 12/93
HONEYWELL SUPPLEMENTARY EXECUTIVE RETIREMENT PLAN
FOR COMPENSATION IN EXCESS OF $200,000
($200K SERP)
(Amended Through December 21, 1993)
ARTICLE I - DEFINITIONS
1.1 ACT. The Employee Retirement Income Security Act of 1974, as from time to
time amended.
1.2 BASE PLAN. The Honeywell Retirement Benefit Plan, as from time to time
amended.
1.3 CODE. The Internal Revenue Code of 1986, as from time to time amended.
1.4 COMPANY. Honeywell Inc. and any subsidiary which is designated for
inclusion in the Plan, as hereafter defined, by the Board of Directors of
Honeywell Inc.
1.5 EARLY RETIREMENT. "Early Retirement" by a Participant under his or her Base
Plan, which is defined as the termination of employment on or after his or her
55th birthday and after he or she has been credited with 10 or more years of
"Credited Service for Benefit Accrual", as determined under the Base Plan.
1.6 EARNINGS LIMITATION. The maximum amount of compensation of a Participant
and his or her family members permitted to be taken into account during the plan
year commencing on and after July 1, 1989 under the Base Plan pursuant to
Section
<PAGE>
401(a)(17) of the Code (as it may be adjusted from time to time pursuant to
Section 415(d) of the Code), which is $209,200 for 1990.
1.7 EFFECTIVE DATE. The original effective date of this Plan was July 1, 1989.
1.8 HONEYWELL. Honeywell Inc., a Delaware corporation.
1.9 MID-CAREER SERP. The Honeywell Supplementary Executive Retirement Plan for
Mid-Career Hires, as it may be amended from time to time, maintained for certain
executives or highly compensated employees of the Company to provide augmented
credited service for retirement benefit determination.
1.10 NORMAL RETIREMENT. "Normal Retirement" by a Participant on or after his or
her "Social Security Retirement Age" as defined under his or her Base Plan.
1.11 PARTICIPANT. An employee of the Company who is a participant in the Base
Plan on or after January 1, 1985, whose earnings are in excess of the Earnings
Limitation under the Base Plan. No controlling shareholder or independent
contractor shall be a Participant.
1.12 PERMANENT AND TOTAL DISABILITY. The disability of a Participant whereby
such Participant is wholly disabled by bodily injury or disease and will be
permanently, continuously and wholly prevented thereby for life from engaging in
any occupation or employment for wage or profit.
1.13 PLAN. The Honeywell Supplementary Executive Retirement Plan for
Compensation in Excess of $200,000 ("$200K SERP"), as amended through September
15, 1992.
1.14 SPOUSE. A person who is formally married to a Participant as determined by
the Honeywell Pension and Retirement Administrative Committee for purposes of
the Base Plan.
<PAGE>
ARTICLE II - PLAN FORMULA
2.1 $200K SERP FORMULA. That annual benefit equal to Paragraph (a) minus
Paragraph (b).
(a) The applicable benefit computed under the Base Plan:
(i) by including under the definition of "Earnings" for the
purposes of arriving at "Final Average Earnings" under the
Base Plan his or her "Earnings" under the Base Plan which
are in excess of the Earnings Limitation;
(ii) by excluding under the definition of "Earnings" for purposes
of arriving at "Final Average Earnings" under the Base Plan
the amount of any defined incentive award in the year in
which the award would otherwise have been paid by the
Corporate Executive Compensation Plan;
(iii) by disregarding the provisions of such Base Plan limiting
the maximum benefit payable thereunder to the maximum
benefit permitted by the provisions of Section 415 of the
Code in a pension plan qualifying under Section 401 of the
Code;
(iv) by not exceeding the Participant's frozen "Accrued Benefit"
determined under the Base Plan as of June 30, 1989 (or June
30, 1990, whichever may be applicable) as required by
Section 8.2 of that Plan; and
(v) by excluding "Augmented Credited Service for Benefit
Accrual" under the Mid-Career SERP, if such Plan is
applicable to the Participant.
3
<PAGE>
(b) the applicable benefit computed under the Base Plan:
(i) by excluding under the definition of "Earnings" for the
purpose of arriving at "Final Average Earnings" under the
Base Plan his or her "Earnings" under the Base Plan which
are in excess of the Earnings Limitation;
(ii) by excluding under the definition of "Earnings" for purposes
of arriving at "Final Average Earnings" under the Base Plan
the amount of any defined incentive award in the year in
which the award would otherwise have been paid by the
Corporate Executive Compensation Plan;
(iii) by disregarding the provisions of such Base Plan limiting
the maximum benefit payable thereunder to the maximum
benefit permitted by the provisions of Section 415 of the
Code in a pension plan qualifying under Section 401 of the
Code;
(iv) by not exceeding the Participant's frozen "Accrued Benefit"
determined under the Base Plan as of June 30, 1989 (or June
30, 1990, whichever may be applicable) as required by
Section 8.2 of that Plan; and
(v) by excluding "Augmented Credited Service for Benefit
Accrual" under the Mid-Career SERP, if such Plan is
applicable to the Participant.
4
<PAGE>
ARTICLE III - BENEFITS
3.1 NORMAL RETIREMENT. Upon Normal Retirement, a Participant shall be eligible
for life for an annual benefit determined by calculating the Participant's
annual "Normal Retirement Benefit" under the Base Plan in accordance with the
$200K SERP Formula as prescribed in Section 2.1.
3.2 EARLY RETIREMENT. Upon Early Retirement, a Participant shall be eligible
for life for an annual benefit determined by calculating the Participant's
annual "Early Retirement Benefit" under the Base Plan in accordance with the
$200K SERP Formula as prescribed in Section 2.1.
3.3 CHANGE IN CONTROL. In the event of a "Change in Control," as defined in
this Section for all purposes of the Plan, each Participant's accrued benefit
under the Plan shall become immediately and fully vested and shall be paid to
the Participant in accordance with Section 4.3(a) of the Plan.
For purposes of this Plan, a "Change in Control" of the Company shall have
occurred if:
(a) any "person," as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")
(other than the Company, any trustees or other fiduciary holding
securities under an employee benefit plan of the Company or any
corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of
stock of the Company), is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of securities of the Company representing 30% or more of the combined
voting power of the Company's then outstanding securities;
5
<PAGE>
(b) during any period of two consecutive years (not including any period
prior to the execution of this amendment to the Plan), individuals who
at the beginning of such period constitute the Board of Directors of
the Company (the "Board"), and any new director (other than a director
designated by a person who has entered into an agreement with the
Company to effect a transaction described in clause (a), (c) or (d) of
this Section) whose election by the Board of nomination for election
by the Company's stockholders was approved by a vote of at least two-
thirds of the directors then still in office who either were directors
at the beginning of the period or whose election or nomination for
election was previously so approved, cease for any reason to
constitute at least a majority thereof;
(c) the stockholders of the Company approve a merger or consolidation of
the Company with any other corporation, other than (i) a merger or
consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than 50 percent of the
combined voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or
consolidation or (ii) a merger or consolidation effected to implement
a recapitalization of the Company (or similar transaction) in which no
"person" (as hereinabove defined) acquires more than 30 percent of the
combined voting power of the Company's then outstanding securities; or
(d) the stockholders of the Company approve a plan of complete liquidation
of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets (or any
transaction having a similar effect).
6
<PAGE>
3.4 PERMANENT AND TOTAL DISABILITY. Upon the receipt of benefits by a
Participant under his or her Base Plan, based on a determination of Permanent
and Total Disability, he or she shall be eligible for life for an annual benefit
determined by calculating the Participant's annual "Disability Retirement
Benefit" under the Base Plan in accordance with the $200K SERP Formula as
prescribed in Section 2.1.
3.5 IMMEDIATE PRE-RETIREMENT SURVIVING SPOUSE BENEFIT. Upon the death of a
married Participant who is eligible for Early Retirement under his or her Base
Plan but who has not yet retired under such plan, his or her surviving Spouse on
the date of his or her death shall be eligible for life for an annual benefit
determined by calculating the surviving Spouse's annual "Pre-retirement
Surviving Spouse Benefit" under the Participant's Base Plan in accordance with
the $200K SERP Formula as prescribed in Section 2.1.
3.6 DEFERRED SURVIVING SPOUSE BENEFIT. Upon the death of a married Participant
who is vested but not eligible for Early Retirement under his or her Base Plan
and who is in the "Active Service" of the Company (as defined in the Base Plan)
on the date of his or her death, on the first day of the month following the
date such Participant would have attained his or her earliest retirement
eligibility under his or her Base Plan as a vested Participant, his or her
surviving Spouse the date of his or her death shall be eligible for life for an
annual benefit determined by calculating the surviving Spouse's annual "Deferred
Pre-retirement Surviving Spouse Benefit" under the Participant's Base Plan in
accordance with the $200K SERP Formula as prescribed in Section 2.1.
3.7 SURVIVING CHILDREN'S BENEFIT. Upon the death of a Participant who is
eligible for Early Retirement under his or her Base Plan and who is in the
"Active Service" of the Company (as defined in the Base Plan), the surviving
"Child" (as defined in the Base Plan) of a Participant (a) who has no surviving
Spouse on the date of his or her death, or (b) whose surviving Spouse dies while
receiving or while eligible to receive survivor benefits under the Base Plan
shall be eligible until such Child's attainment of age 23 for an annual benefit
determined by calculating the Child's annual "Surviving Children's Benefit"
under
7
<PAGE>
the Participant's Base Plan in accordance with the $200K SERP Formula as
prescribed in Section 2.1.
The benefit shall be divided equally among all such Children as defined in the
Base Plan and an equal share shall be paid to such Child while he qualifies as a
Child. The portion of the benefit payable to each such Child shall be
redetermined as of the last day of the month following the date a recipient
ceases to be a Child and the remaining such Children shall thereupon receive an
equal share of such benefit.
8
<PAGE>
ARTICLE IV - PAYMENT OF BENEFITS
4.1 FORM OF PAYMENT TO PARTICIPANT.
(a) NORMAL FORM OF PAYMENT.
Except as otherwise provided in Paragraph (b) of this Section 4.1, a
benefit under the Plan shall be paid in the form of the benefit paid
with respect to the Participant under his or her Base Plan. Any
election, designation of a beneficiary(ies) or contingent
annuitant(s), or revocation made prior to the Participant's "Benefit
Starting Date" and in effect under the Participant's Base Plan shall
be in effect under the Plan.
(b) LUMP SUM FORM OF PAYMENT. Notwithstanding the provisions of Paragraph
(a) of this Section 4.1, a Participant, who is eligible for Early
Retirement or who will become eligible for Early Retirement within 13
months, may elect to receive the present value of the benefits payable
to him or her under the Plan, as computed as of the last day of the
month in which the earlier of the dates of the Participant's Early
Retirement or Normal Retirement occurs by utilizing the interest rate
and mortality assumptions set forth in Table I, which may be modified
from time to time by the Board of Directors of Honeywell Inc. (or, in
the case of the Participant's earlier death, the present value of such
benefits so computed as of the later of the last day of the month in
which the Participant's death or the Participant's earliest retirement
eligibility under his or her Base Plan occurs) in a lump sum cash
payment. The Participant's written election to receive a lump sum cash
payment shall be submitted on a form provided for that purpose by the
Company, and consented to by the Participant's Spouse in writing if
the Participant is married, and delivered to the Vice President,
Corporate Compensation and Benefits, at least 13 months prior to the
Participant's Early Retirement or Normal Retirement. Such Spouse's
consent must acknowledge the effect
9
<PAGE>
of such election and be witnessed by a notary public. If a Participant
dies after making such election and prior to his or her Early
Retirement or Normal Retirement, the lump sum cash payment shall be
made to the Participant's surviving Spouse in accordance with Section
3.5 or Section 3.6, whichever may be applicable, or to the
Participant's surviving Children in accordance with Section 3.7.
4.2 TIME OF PAYMENTS. Benefit payments paid pursuant to Sections 3.1 or 3.2,
respectively, shall begin (or, in lieu thereof, in the event that the
Participant has complied with Section 4.1(b), be paid) 30 days after the
Participant's Normal Retirement or Early Retirement, as the case may be.
Payments pursuant to Section 3.4 of the Plan shall commence 30 days after the
later of (a) the last day of the calendar month in which the Participant is
determined to be Permanently and Totally disabled under his or her Base Plan or
(b) 6 months after his or her last full day of active employment if he or she
elects an immediate disability benefit under his or her Base Plan; but if he or
she elects a deferred disability benefit under his or her Base Plan, payments
shall commence (or, in the event that the Participant has complied with Section
4.1(b), the present value of such benefits shall be paid) 30 days after his or
her Early Retirement or Normal Retirement. Payments pursuant to Section 3.5 and
3.6 of the Plan, shall commence (or, in the event that the Participant has
complied with Section 4.1(b), the present value of such benefits shall be paid)
30 days after the Participant's death if he or she was eligible for Early
Retirement or 30 days after the date he or she would have attained his or her
earliest retirement eligibility under his or her Base Plan. Payments pursuant to
Section 3.7 of the Plan shall commence (or, in the event that the Participant
has complied with Section 4.1(b), the present value of such benefits shall be
paid) 30 days after the date of the Participant's death.
4.3 PAYMENT SUBSEQUENT TO A CHANGE IN CONTROL.
(a) Payments upon Termination of Employment. Notwithstanding any Plan
provision to the contrary, if subsequent to a Change in Control, a
10
<PAGE>
Participant's employment shall be terminated by the Participant for
"Good Reason" (as defined in the Honeywell Key Employee Severance
Plan) or by the Company other than for "Cause" (as defined in the
Honeywell Key Employee Severance Plan) or Permanent and Total
Disability, the present value of the benefits payable pursuant to
Section 3.3 (utilizing the interest rate and mortality assumptions set
forth in Table I, which may be modified from time to time by the Board
of Directors of Honeywell Inc.) shall be paid as a lump sum cash
payment to the Participant on the fifth day after such termination.
(b) PAYMENTS UPON IMPOSITION OF FEDERAL OR STATE TAXES. If subsequent to
a Change in Control, any Participant is determined to be subject to
Federal or state income tax on any amount accrued on his or her behalf
under this Plan prior to the time of payment hereunder, Federal or
state taxes attributable to the amount determined to be so taxable
shall be distributed by the Plan to such Participant. An amount
accrued on his or her behalf under this Plan shall be determined to be
subject to Federal income tax upon the earliest of:
(i) a final determination by the United States Internal Revenue
Service addressed to the Participant which is not appealed
to the courts;
(ii) a final determination by the United States Tax Court or any
other Federal Court affirming any such determination by the
Internal Revenue Service; or
(iii) an opinion by the Tax Counsel of the Company, addressed to
the Company and the Trustee, that, by reason of Treasury
Regulations, amendments to the Internal Revenue Code,
published Internal Revenue Service rulings, court decisions
or other substantial
11
<PAGE>
precedent, amounts accrued on a Participant's behalf
hereunder are subject to Federal or state income tax prior
to payment.
The Company shall undertake at its sole expense to defend any tax
claims described herein which are asserted by the Internal Revenue
Service or by any state revenue authority against any Participant
subsequent to a Change in Control, including attorney fees and costs
of appeal, and shall have the sole authority to determine whether or
not to appeal any determination made by the Service, by any state
revenue authority or by a lower court. The Company also agrees to
reimburse any Executive for any interest or penalties in respect of
Federal or state tax claims hereunder upon receipt of documentation of
same. Any distributions from the Plan to a Participant under this
Section 4.3(b) shall be applied in an equitable manner to reduce
Company liabilities to such Participant under the Plans.
4.4 PAYMENTS SUBSEQUENT TO THE PARTICIPANT'S RETIREMENT. At any time before or
after a Change in Control, a Participant, after he or she has retired under the
provisions of the Base Plan on or after December 17, 1991, or the surviving
Spouse or beneficiary of the Participant, after the Participant's death
subsequent to such retirement on or after December 17, 1991, may elect to
receive the present value of such benefits or remaining benefits to which he or
she is entitled under this Plan in one lump-sum cash payment at any time after
the Participant's date of retirement or death, respectively, as computed as of
the last day of the month in which the request is received by the Vice
President, Corporate Compensation and Benefits, by utilizing the interest rate
and mortality assumptions set forth in Table I, which may be modified from time
to time by the Board of Directors of Honeywell Inc., and then reduced by a
penalty, which shall be forfeited to the Company, (a) which is equal, before a
Change in Control occurs, to 10 percent of the present value of any unpaid
benefits, and (b) which is equal, after a Change in Control occurs, to 6 percent
of the present value of such unpaid benefits. Payment of such benefits shall be
effected on the last day of the next month following the month in which the
request is received.
12
<PAGE>
ARTICLE V - ADMINISTRATION OF THE PLAN
5.1 PERSONNEL COMMITTEE. The Plan shall be administered by the Personnel
Committee of Honeywell's Board of Directors which shall have the authority to
determine Plan eligibility and the amount of Plan benefits to which a
Participant or beneficiary is entitled to receive, interpret the Plan, maintain
records and issue such regulations as it shall from time to time deem
appropriate. The interpretations of such Committee shall be final. The Committee
shall have absolute discretion in carrying out its responsibilities. No
Participant or beneficiary of this Plan may be a member of this Committee.
13
<PAGE>
ARTICLE VI - AMENDMENT AND TERMINATION
6.1 AMENDMENT AND TERMINATION. The Board of Directors of Honeywell Inc. may
amend or terminate the Plan at any time, provided, however, that no such
amendment or termination shall adversely affect a benefit payable on the Normal
or Early Retirement, death or Total and Permanent Disability of a Participant
with respect to the Participant's employment by the Company prior to the date of
such amendment or termination unless such benefit is or becomes payable under
another plan or practice adopted by such Board of Directors. In the event of
termination of the Plan, any benefits which have accrued hereunder shall be paid
in the form and at the time determined under Section 4.1(a) of the Plan.
14
<PAGE>
ARTICLE VII - GENERAL CONDITIONS
7.1 NON-ASSIGNABILITY OF THE RIGHT TO RECEIVE BENEFITS. The right to receive
benefits under the Plan may not be anticipated, alienated, sold, transferred,
assigned, pledged, encumbered, or subjected to any charge or legal process.
7.2 APPLICABLE LAW. All questions pertaining to the construction, validity and
effect of the Plan shall be determined in accordance with the laws of the United
States and the State of Minnesota, other than its laws respecting choice of law.
15
<PAGE>
ARTICLE VIII - FUNDING
8.1 SOURCE OF PAYMENTS. All payments hereunder shall be paid in cash from the
general funds of the Company, and no special or separate fund shall be
established since it is the intent to pay benefits as they become payable from
operating revenue. The Company may, however, in its sole discretion, establish a
separate reserve which may be held by it from which such benefits may be paid.
The foregoing shall not preclude the establishment by the Company of a "rabbi
trust" or the use of assets contributed to a "rabbi trust" to pay benefits under
the Plan.
8.2 STATUS OF PARTICIPANTS. A Participant shall have no right, title, or
interest whatever in or to any investments which the Company may make to aid it
in meeting its obligations hereunder. Nothing contained in this Plan, and no
action taken pursuant to its provisions, shall create or be construed to create
a trust of any kind, or a fiduciary relationship, between the Company and a
Participant or any other person. To the extent that any person acquires a right
to receive payments from the Company, such right shall be no greater than the
right of an unsecured creditor.
8.3 FICA AND FUTA CONTRIBUTIONS ON PLAN BENEFITS. All amounts which have
accrued to a Participant under this Plan with respect to a Participant's service
with the Company after December 31, 1983, as provided in this Section 8.3 shall
be considered "wages" for purposes of the Federal Insurance Contribution Act
("FICA") and the Federal Unemployment Tax Act ("FUTA") as of the earliest of (i)
the date of the commencement of the Participant's Normal Retirement benefits,
Early Retirement benefits, Total and Permanent Disability benefits, or
commencement of Pre-retirement Surviving Spouse Benefits to the Participant's
Spouse or Surviving Children's Benefit to his or her Child or Children ("Benefit
Commencement Date"); (ii) the date in 1993 on which an active Participant
submitted an application for retirement benefits under the Base Plan or resigned
his or her employment with the Company, effective in 1994 but prior to July 1,
1994; or (iii) the date in 1993 on which a specified accrued benefit is
determined with
16
<PAGE>
respect to any other Participant in the Plan who is designated by the Vice
President Corporate Human Resources and approved by the Chief Executive Officer
of the Company prior to December 31, 1993.
Effective with the first payment made under the Plan after December 31, 1990,
any amount taken into account as wages with respect to a Participant's Benefit
Commencement Date occurring after the applicable effective date specified in the
Social Security Amendment of 1983 by reason of this Section 8.3 shall not again
be treated as wages for FICA or FUTA purposes. However, no Participant shall be
entitled to a refund from the Company of any previously paid FICA or FUTA
contributions as a result of the application of this Section 8.3.
In order to compute the present value of a Participant's benefit under this Plan
for purposes of determining the amount of any FICA or FUTA contribution payable
with respect to such benefit, such present value shall be determined in
accordance with Table I.
17
<PAGE>
ARTICLE IX - CLAIMS PROCEDURE
9.1 FILING OF A CLAIM FOR BENEFITS. Upon denial of benefits by the Company, the
Participant or the Participant's beneficiary shall make a claim to the Personnel
Committee or its delegatee(s) for the benefits provided under the Plan in the
manner provided in this Article.
9.2 NOTIFICATION TO CLAIMANT OF DECISION. If a claim is wholly or partially
denied, notice of the decision, meeting the requirements of Section 9.3 shall be
furnished to the claimant within 90 days after receipt of the claim by the
Personnel Committee, unless special circumstances, such as the need to hold a
hearing, require an extension of time for processing the claim. If an extension
of time is required, written notice of the extension shall be furnished to the
claimant prior to the end of the initial 90 day period, indicating the special
circumstances requiring the extension and the date by which a final decision is
expected. An extension of time shall in no event exceed a period of 90 days from
the end of the initial 90 day period. If notice of the denial of a claim is not
furnished in accordance with the provisions of this Section, the claim shall be
deemed denied and the claimant may proceed with the review procedure set forth
in Section 9.3.
9.3 CONTENT OF NOTICE. The Personnel Committee or its delegatee(s) shall
provide to any claimant who is denied a claim for benefits written notice
setting forth in a manner calculated to be understood by the claimant, the
following:
(a) The specific reason or reasons for the denial;
(b) Specific reference to pertinent provisions of the Plan on which the
denial is based;
(c) A description of any additional material or information necessary for
the claimant to perfect the claim and an explanation of why such
material or
18
<PAGE>
information necessary for the claimant to perfect the claim and an
explanation of why such material or information is necessary; and
(d) An explanation of the Plan's claim review procedure, as set forth in
this Section 9.4 and 9.5, together with any review procedures
specified by the Personnel Committee.
9.4 REVIEW PROCEDURE. The purpose of the review procedures set forth in this
Section 9.4 as follows is to provide a procedure by which a claimant under this
Plan may have a reasonable opportunity to appeal a denial of a claim to the
Personnel Committee for a full and fair review. To accomplish that purpose, the
claimant or his or her duly authorized representative:
(a) May request a review upon written application to the Personnel
Committee,
(b) May review pertinent documents; and
(c) May submit issues and comments in writing.
A claimant (or his or her duly authorized representative) shall request a review
by filing a written application for review with the Personnel Committee at any
time within 60 days after receipt by the claimant of written notice of the
denial of the claim.
9.5 DECISION ON REVIEW. A decision of a denied claim shall be made in the
following manner:
(a) The decision on review shall be made by the Personnel Committee or by
its delegatee(s), which may in its discretion hold a hearing on the
denied claim. The Personnel Committee shall make its decision
promptly, and not later than 60 days after receipt of the request for
review, unless special
19
<PAGE>
circumstances (such as the need to hold a hearing) require an
extension of time for processing, in which case a decision shall be
rendered as soon as possible, but not later than 120 days after
receipt of the request for review. If an extension of time for review
is required because of special circumstances, written notice of the
extension shall be furnished to the claimant prior to the commencement
of the extension. If the decision on review is not furnished within
the time specified, the claim shall be deemed denied on review.
(b) The decision on review shall be in writing and shall include specific
reasons for the decision, written in a manner calculated to be
understood by the claimant, and specific references to the pertinent
provisions of the Plan on which the decision is based.
20
<PAGE>
TABLE I
ACTUARIAL ASSUMPTIONS FOR LUMP SUM PAYMENT
(amended through December 21, 1993)
The present value of Plan benefits for purposes of Section 4.1(b), Section
4.3(a), Section 4.4, and Section 8.3 shall be calculated using the following
actuarial assumptions and factors:
Interest: 8-1/2 percent per annum discount rate
Mortality: 1983 Group Annuity Mortality Table for healthy males
<PAGE>
CSRP12/93
HONEYWELL SUPPLEMENTARY EXECUTIVE RETIREMENT PLAN
FOR CECP PARTICIPANTS
(CECP SERP)
(Amended Through December 21, 1993)
TABLE OF CONTENTS
<TABLE>
<C> <S> <C>
ARTICLE I - DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 ACT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 BASE PLAN. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 CODE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.4 COMPANY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.5 CORPORATE EXECUTIVE COMPENSATION PLAN (CECP) . . . . . . . . . . 1
1.6 EARLY RETIREMENT . . . . . . . . . . . . . . . . . . . . . . . . 1
1.7 EARNINGS LIMITATION. . . . . . . . . . . . . . . . . . . . . . . 2
1.8 EFFECTIVE DATE . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.9 HONEYWELL. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.10 MID-CAREER SERP. . . . . . . . . . . . . . . . . . . . . . . . . 2
1.11 NORMAL RETIREMENT. . . . . . . . . . . . . . . . . . . . . . . . 2
1.12 PARTICIPANT. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.13 PERMANENT AND TOTAL DISABILITY . . . . . . . . . . . . . . . . . 2
1.14 PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.15 SPOUSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
</TABLE>
<PAGE>
<TABLE>
<C> <S> <C>
ARTICLE II - PLAN FORMULA. . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.1 CECP SERP FORMULA. . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE III - BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.1 NORMAL RETIREMENT. . . . . . . . . . . . . . . . . . . . . . . . 6
3.2 EARLY RETIREMENT . . . . . . . . . . . . . . . . . . . . . . . . 6
3.3 CHANGE IN CONTROL. . . . . . . . . . . . . . . . . . . . . . . . 6
3.4 PERMANENT AND TOTAL DISABILITY . . . . . . . . . . . . . . . . . 8
3.5 IMMEDIATE PRE-RETIREMENT SURVIVING SPOUSE BENEFIT. . . . . . . . 8
3.6 DEFERRED PRE-RETIREMENT SURVIVING SPOUSE BENEFIT . . . . . . . . 8
3.7 SURVIVING CHILDREN'S BENEFIT . . . . . . . . . . . . . . . . . . 8
ARTICLE IV - PAYMENT OF BENEFITS . . . . . . . . . . . . . . . . . . . . . . 10
4.1 FORM OF PAYMENT. . . . . . . . . . . . . . . . . . . . . . . . . 10
4.2 TIME OF PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . 11
4.3 PAYMENT SUBSEQUENT TO CHANGE IN CONTROL. . . . . . . . . . . . . 11
4.4 PAYMENTS SUBSEQUENT TO THE PARTICIPANT'S RETIREMENT. . . . . . . 13
ARTICLE V - ADMINISTRATION OF THE PLAN . . . . . . . . . . . . . . . . . . . 14
5.1 PERSONNEL COMMITTEE. . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE VI - AMENDMENT AND TERMINATION . . . . . . . . . . . . . . . . . . . 15
6.1 AMENDMENT AND TERMINATION. . . . . . . . . . . . . . . . . . . . 15
ARTICLE VII - GENERAL CONDITIONS . . . . . . . . . . . . . . . . . . . . . . 16
7.1 NON-ASSIGNABILITY OF THE RIGHT TO RECEIVE BENEFITS . . . . . . . 16
7.2 APPLICABLE LAW . . . . . . . . . . . . . . . . . . . . . . . . . 16
</TABLE>
2
<PAGE>
<TABLE>
<C> <S> <C>
ARTICLE VIII - FUNDING . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
8.1 SOURCE OF PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . 17
8.2 STATUS OF PARTICIPANTS . . . . . . . . . . . . . . . . . . . . . 17
8.3 FICA AND FUTA CONTRIBUTIONS ON PLAN BENEFITS . . . . . . . . . . 17
ARTICLE IX - CLAIMS PROCEDURE. . . . . . . . . . . . . . . . . . . . . . . . 19
9.1 FILING OF A CLAIM FOR BENEFITS . . . . . . . . . . . . . . . . . 19
9.2 NOTIFICATION TO CLAIMANT OF DECISION . . . . . . . . . . . . . . 19
9.3 CONTENT OF NOTICE. . . . . . . . . . . . . . . . . . . . . . . . 19
9.4 REVIEW PROCEDURE . . . . . . . . . . . . . . . . . . . . . . . . 20
9.5 DECISION ON REVIEW . . . . . . . . . . . . . . . . . . . . . . . 20
TABLE I. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Actuarial Assumptions for Lump Sum Payments . . . . . . . . . . . . . . 22
</TABLE>
3
<PAGE>
CSRP12/93
HONEYWELL SUPPLEMENTARY EXECUTIVE RETIREMENT PLAN
FOR CECP PARTICIPANTS
(CECP SERP)
(Amended Through December 21, 1993)
ARTICLE I - DEFINITIONS
1.1 ACT. The Employee Retirement Income Security Act of 1974, as from time to
time amended.
1.2 BASE PLAN. The Honeywell Retirement Benefit Plan, as from time to time
amended.
1.3 CODE. The Internal Revenue Code of 1986, as from time to time amended.
1.4 COMPANY. Honeywell Inc. and any subsidiary which is designated for
inclusion in the Plan, as hereafter defined, by the Board of Directors of
Honeywell Inc.
1.5 CORPORATE EXECUTIVE COMPENSATION PLAN (CECP). An incentive compensation
plan maintained by the Company to provide incentive compensation for a select
group of management or highly compensated employees, as from time to time
amended.
1.6 EARLY RETIREMENT. Retirement by a Participant under his or her Base Plan,
which is defined as the termination of employment on or after his or her 55th
birthday and after he or she has been credited with 10 or more years of
"Credited Service for Benefit Accrual," under the Base Plan.
<PAGE>
1.7 EARNINGS LIMITATION. The maximum amount of compensation of a Participant
and his or her family members permitted to be taken into account under the Base
Plan pursuant to Section 401(a)(17) of the Code.
1.8 EFFECTIVE DATE. The original effective date of this Plan was January 1,
1985.
1.9 HONEYWELL. Honeywell Inc., a Delaware corporation.
1.10 MID-CAREER SERP. The Honeywell Supplementary Executive Retirement Plan for
Mid-Career Hires, as it may be amended from time to time, maintained for certain
executives or highly compensated employees of the Company to provide augmented
credited service for retirement benefit determination.
1.11 NORMAL RETIREMENT. Retirement by a Participant on or after his or her
"Social Security Retirement Age" as defined under his or her Base Plan.
1.12 PARTICIPANT. An employee of the Company who is both a participant in the
Base Plan on or after January 1, 1985 and a participant in the Corporate
Executive Compensation Plan on or after January 1, 1985, whose earnings
recognized under the Base Plan do not include deferred incentive payments under
the Corporate Executive Compensation Plan. No controlling shareholder or
independent contractor shall be a Participant
1.13 PERMANENT AND TOTAL DISABILITY. The disability of a Participant whereby
such Participant is wholly disabled by bodily injury or disease and will be
permanently, continuously and wholly prevented thereby for life from engaging in
any occupation or employment for wage or profit.
2
<PAGE>
1.14 PLAN. The Honeywell Supplementary Executive Retirement Plan for Corporate
Executive Compensation Plan ("CECP SERP") Participants, effective January 1,
1985 and amended through September 15, 1992.
1.15 SPOUSE. A person who is formally married to a Participant as determined by
the Honeywell Pension and Retirement Administrative Committee for purposes of
the Base Plan.
3
<PAGE>
ARTICLE II - PLAN FORMULA
2.1 CECP SERP FORMULA. That annual benefit equal to Paragraph (a) minus
Paragraph (b).
(a) The applicable benefit computed with respect to a Participant under
the Base Plan:
(i) by including under the definition of "Earnings" for the
purpose of arriving at "Final Average Earnings" under the
Base Plan his or her "Earnings" under the Base Plan which
are in excess of the Earnings Limitation;
(ii) by including under the definition of "Earnings" for purposes
of arriving at "Final Average Earnings" under the Base Plan
the amount of any deferred incentive award in the year in
which the award would otherwise have been paid by the
Corporate Executive Compensation Plan;
(iii) by disregarding the provisions of the Base Plan limiting the
maximum benefit payable thereunder to the maximum benefit
permitted by the provisions of Section 415 of the Code in a
pension plan qualifying under Section 401 of the Code;
(iv) by not exceeding the Participant's frozen "Accrued Benefit"
determined under the Base Plan as of June 30, 1989 (or June
30, 1990, whichever may be applicable) as required by
Section 8.2 of that Plan; and
4
<PAGE>
(v) by excluding "Augmented Credited Service for Benefit
Accrual" under the Mid-Career SERP, if such plan is
applicable to the Participant.
(b) the applicable benefit computed with respect to a Participant under
the Base Plan:
(i) by including under the definition of "Earnings" for the
purpose of arriving at "Final Average Earnings" under the
Base Plan his or her "Earnings" under the Base Plan which
are in excess of the Earnings Limitation;
(ii) by excluding under the definition of "Earnings" for purposes
of arriving at "Final Average Earnings" under the Base Plan
the amount of any defined incentive award in the year in
which the award would otherwise have been paid by the
Corporate Executive Compensation Plan;
(iii) by disregarding the provisions of the Base Plan limiting the
maximum benefit payable thereunder to the maximum benefit
permitted by the provisions of Section 415 of the Code in a
pension plan qualifying under Section 401 of the Coded;
(iv) by not exceeding the Participant's frozen "Accrued Benefit"
determined under the Base Plan as of June 30, 1989 (or June
30, 1990, whichever may be applicable) as required by
Section 8.2 of that Plan; and
(v) by excluding "Augmented Credited Service for Benefit
Accrual" under the Mid-Career SERP, if applicable.
5
<PAGE>
ARTICLE III - BENEFITS
3.1 NORMAL RETIREMENT. Upon Normal Retirement, a Participant shall be eligible
for life for an annual benefit determined by calculating the Participant's
annual "Normal Retirement Benefit" under the Base Plan in accordance with the
CECP SERP Formula as prescribed in Section 2.1.
3.2 EARLY RETIREMENT. Upon Early Retirement, a Participant shall be eligible
for life for an annual benefit determined by calculating the Participant's
annual "Early Retirement Benefit" under the Base Plan in accordance with the
CECP SERP Formula as prescribed in Section 2.1.
3.3 CHANGE IN CONTROL. In the event of a "Change in Control," as defined in
this Section for all purposes of the Plan, each Participant's accrued benefit
under the Plan shall become immediately and fully vested and shall be paid to
the Participant in accordance with Section 4.3(a) of the Plan. For purposes of
this Plan, a "Change in Control" of the Company shall have occurred if:
(a) any "person," as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")
(other than the Company, any trustees or other fiduciary holding
securities under an employee benefit plan of the Company or any
corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of
stock of the Company), is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of securities of the Company representing 30% or more of the combined
voting power of the Company's then outstanding securities;
6
<PAGE>
(b) during any period of two consecutive years (not including any period
prior to the execution of this amendment to the Plan), individuals who
at the beginning of such period constitute the Board of Directors of
the Company (the "Board"), and any new director (other than a director
designated by a person who has entered into an agreement with the
Company to effect a transaction described in clause (a), (c) or (d) of
this Section) whose election by the Board of nomination for election
by the Company's stockholders was approved by a vote of at least two-
thirds of the directors then still in office who either were directors
at the beginning of the period or whose election or nomination for
election was previously so approved, cease for any reason to
constitute at least a majority thereof;
(c) the stockholders of the Company approve a merger or consolidation of
the Company with any other corporation, other than (i) a merger or
consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than 50 percent of the
combined voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or
consolidation or (ii) a merger or consolidation effected to implement
a recapitalization of the Company (or similar transaction) in which no
"person" (as hereinabove defined) acquires more than 30 percent of the
combined voting power of the Company's then outstanding securities; or
(d) the stockholders of the Company approve a plan of complete liquidation
of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets (or any
transaction having a similar effect).
7
<PAGE>
3.4 PERMANENT AND TOTAL DISABILITY. Upon the receipt of benefits by a
Participant under his or her Base Plan based on a determination of Permanent and
Total Disability, he or she shall be eligible for life for an annual benefit
determined by calculating the Participant's annual "Disability Retirement
Benefit" under the Base Plan in accordance with the CECP SERP Formula as
prescribed in Section 2.1.
3.5 IMMEDIATE PRE-RETIREMENT SURVIVING SPOUSE BENEFIT. Upon the death of a
married Participant who is eligible for Early Retirement under his or her Base
Plan but who has not yet retired under such plan, his or her surviving Spouse on
the date of his or her death shall be eligible for life for an annual benefit
determined by calculating the surviving Spouse's annual "Pre-Retirement
Surviving Spouse Benefit" under the Participant's Base Plan in accordance with
the CECP SERP Formula as prescribed in Section 2.1.
3.6 DEFERRED PRE-RETIREMENT SURVIVING SPOUSE BENEFIT. Upon the death of a
married Participant who is vested but not eligible for Early Retirement under
his or her Base Plan and who is in the "Active Service" of the Company (as
defined in the Base Plan) on the date of his or her death, on the first day of
the month following the date such Participant would have attained his or her
earliest retirement eligibility under his or her Base Plan as a vested
Participant, his or her surviving Spouse on the date of his or her death shall
be eligible for life for an annual benefit determined by calculating the
surviving Spouse's annual "Deferred Pre-retirement Surviving Spouse Benefit"
under the Participant's Base Plan in accordance with the CECP SERP Formula as
prescribed in Section 2.1.
3.7 SURVIVING CHILDREN'S BENEFIT. Upon the death of a Participant who is
eligible for Early Retirement under his or her Base Plan and who is in the
"Active Service" of the Company (as defined in the Base Plan), the surviving
"Child" (as defined in the Base Plan) of a Participant (a) who has no surviving
Spouse on the date of his or her death, or (b) whose surviving Spouse dies while
receiving or while eligible to receive survivor benefits under the Base Plan
shall be eligible until such Child's attainment of age 23 for an annual benefit
determined by calculating the Child's annual "Surviving Children's Benefit"
under
8
<PAGE>
the Participant's Base Plan in accordance with the CECP SERP Formula as
prescribed in Section 2.1.
The benefit shall be divided equally among all such Children as defined in the
Base Plan and an equal share shall be paid to such Child while he qualifies as a
Child. The portion of the benefit payable to each such Child shall be
redetermined as of the last day of the month following the date a recipient
ceases to be a Child and the remaining such Children shall thereupon receive an
equal share of such benefit.
9
<PAGE>
ARTICLE IV - PAYMENT OF BENEFITS
4.1 FORM OF PAYMENT.
(A) NORMAL FORM OF PAYMENT.
Except as otherwise provided in Paragraph (b) of this Section 4.1, a
benefit under the Plan shall be paid in the form of the benefit paid
with respect to the Participant under his or her Base Plan. Any
election, designation of a beneficiary(ies) or contingent
annuitant(s), or revocation made prior to the Participant's "Benefit
Starting Date" and in effect under the Participant's Base Plan shall
be in effect under the Plan.
(B) LUMP SUM FORM OF PAYMENT.
Notwithstanding the provisions of Paragraph (a) of this Section 4.1, a
Participant, who is eligible for Early Retirement or who will become
eligible for Early Retirement within 13 months, may elect to receive
the present value of the benefits payable to him or her under the
Plan, as computed as of the last day of the month in which the earlier
of the date of the Participant's Early Retirement or Normal Retirement
occurs by utilizing the interest rate and mortality assumptions set
forth in Table I, which may be modified from time to time by the Board
of Directors of Honeywell Inc. (or, in the case of the Participant's
earlier death, the present value of such benefits so computed as of
the later of the last day of the month in which the Participant's
death or the Participant's earliest retirement eligibility under his
or her Base Plan occurs) in a lump sum cash payment. The Participant's
written election to receive a lump sum cash payment shall be submitted
on a form provided for that purpose by the Company, and consented to
by the Participant's Spouse in writing if the Participant is married,
and delivered to the Vice President, Corporate Compensation and
Benefits, at least 13 months prior to the Participant's Early
Retirement or Normal Retirement. Such Spouse's consent must
acknowledge the effect of such election and
10
<PAGE>
be witnessed by a notary public. If a Participant dies after making
such election and prior to his or her Early Retirement or Normal
Retirement, the lump sum cash payment shall be made to the
Participant's surviving Spouse in accordance with Section 3.5 or
Section 3.6, whichever may be applicable, or to the Participant's
surviving Children in accordance with Section 3.7.
4.2 TIME OF PAYMENTS. Benefit payments pursuant to Sections 3.1 or 3.2,
respectively, shall begin (or, in the event that the Participant has complied
with Section 4.1(b), be paid) 30 days after the Participant's Normal Retirement
or Early Retirement, as the case may be. Payments pursuant to Section 3.4 of
the Plan shall commence 30 days after the later of (a) the last day of the
calendar month in which the Participant is determined to be Permanently and
Totally Disabled , or (b) 6 months after his or her last full day of active
employment if he or she elects an immediate disability benefit under his or her
Base Plan; but if he or she elects a deferred disability benefit under his or
her Base Plan, payments shall commence (or, in the event that the Participant
has complied with Section 4.1(b), the present value of such benefits shall be
paid) 30 days after his or her Early Retirement or Normal Retirement. Payments
pursuant to Section 3.5 and 3.6 of the Plan, shall commence (or, in the event
that the Participant has complied with Section 4.1(b), the present value of such
benefits shall be paid) 30 days after the Participant's death if he or she was
eligible for Early Retirement of 30 days after the date he or she would have
attained his or her earliest retirement eligibility under his or her Base Plan.
Payments pursuant to Section 3.7 of the Plan shall commence (or, in the event
that the Participant has complied with Section 4.1(b), the present value of such
benefits shall be paid) 30 days after the date of the Participant's death.
4.3 PAYMENT SUBSEQUENT TO CHANGE IN CONTROL.
(A) PAYMENT UPON TERMINATION OF EMPLOYMENT. Notwithstanding any Plan
provision to the contrary, if subsequent to a Change in Control, a
Participant's employment shall be terminated by the Participant for
"Good Reason" (as defined in the Honeywell Key Employee Severance
Plan) or by
11
<PAGE>
the Company other than for "Cause" (as defined in the Honeywell Key
Employee Severance Plan) or Permanent and Total Disability, the
present value of the benefits payable pursuant to Section 3.3
(utilizing the interest rate and mortality assumptions set forth in
Table I, which may be modified from time to time by the Board of
Directors of Honeywell Inc.) and mortality assumptions shall be paid
as a lump sum cash payment to the Participant on the fifth day after
such termination.
(B) PAYMENTS UPON IMPOSITION OF FEDERAL OR STATE TAXES. If subsequent to
a Change in Control, any Participant is determined to be subject to
Federal or state income tax on any amount accrued on his or her behalf
under this Plan prior to the time of payment hereunder, Federal or
state taxes attributable to the amount determined to be so taxable
shall be distributed by the Plan to such Participant. An amount
accrued on his or her behalf under this Plan shall be determined to be
subject to Federal income tax upon the earliest of:
(i) a final determination by the United States Internal Revenue
Service addressed to the Participant which is not appealed
to the courts;
(ii) a final determination by the United States Tax Court or any
other Federal Court affirming any such determination by the
Internal Revenue Service; or
(iii) an opinion by the Tax Counsel of the Company, addressed to
the Company and the Trustee, that, by reason of Treasury
Regulations, amendments to the Internal Revenue Code,
published Internal Revenue Service rulings, court decisions
or other substantial precedent, amounts accrued on a
Participant's behalf hereunder are subject to Federal or
state income tax prior to payment.
12
<PAGE>
The Company shall undertake at its sole expense to defend any tax claims
described herein which are asserted by the Internal Revenue Service or by
any state revenue authority against any Participant subsequent to a Change
in Control, including attorney fees and costs of appeal, and shall have the
sole authority to determine whether or not to appeal any determination made
by the Service, by any state revenue authority or by a lower court. The
Company also agrees to reimburse any Executive for any interest or
penalties in respect of Federal or state tax claims hereunder upon receipt
of documentation of same. Any distributions from the Plan to a Participant
under this Section 4.3(b) shall be applied in an equitable manner to reduce
Company liabilities to such Participant under the Plans.
4.4 PAYMENTS SUBSEQUENT TO THE PARTICIPANT'S RETIREMENT. At any time before or
after a Change in Control, a Participant, after he or she has retired under the
provisions of the Base Plan on or after December 17, 1991, or the surviving
Spouse or beneficiary of the Participant, after the Participant's death
subsequent to such retirement on or after December 17, 1991, may elect to
receive the present value of such benefits or remaining benefits to which he or
she is entitled under this Plan in one lump sum cash payment at any time after
the Participant's date of retirement or death, respectively, as computed as of
the last day of the month in which the request is received by the Vice
President, Corporate Compensation and Benefits, by utilizing the interest rate
and mortality assumptions set forth in Table I, which may be modified from time
to time by the Board of Directors of Honeywell Inc, and then reduced by a
penalty, which shall be forfeited to the Company, (a) which is equal, before a
Change in Control occurs, to 10 percent of the present value of any unpaid
benefits, and (b) which is equal, after a Change in Control, to 6 percent of the
present value of such unpaid benefits. Payment of such benefits shall be
effected on the last day of the next month following the month in which the
request is received.
13
<PAGE>
ARTICLE V - ADMINISTRATION OF THE PLAN
5.1 PERSONNEL COMMITTEE. The Plan shall be administered by the Personnel
Committee of Honeywell's Board of Directors which shall have the authority to
determine Plan eligibility and the amount of Plan benefits to which a
Participant or beneficiary is entitled to receive, to interpret the Plan,
maintain records and issue such regulations as it shall from time to time deem
appropriate. The Committee shall have absolute discretion in carrying out its
responsibilities. No Participant or beneficiary of this Plan may be a member of
this Committee. The interpretations of such Committee shall be final.
14
<PAGE>
ARTICLE VI - AMENDMENT AND TERMINATION
6.1 AMENDMENT AND TERMINATION. The Board of Directors of Honeywell Inc. may
amend or terminate the Plan at any time, provided, however, that no such
amendment or termination shall adversely affect a benefit payable on the Normal
or Early Retirement, death or Permanent and Total Disability of a Participant
with respect to the Participant's employment by the Company prior to the date of
such amendment or termination unless such benefit is or becomes payable under
another plan or practice adopted by such Board of Directors. In the event of
termination of the Plan, any benefits which have accrued hereunder shall be paid
in the form and at the time determined under Section 4.1(a) of the Plan.
15
<PAGE>
ARTICLE VII - GENERAL CONDITIONS
7.1 NON-ASSIGNABILITY OF THE RIGHT TO RECEIVE BENEFITS. The right to receive
benefits under the Plan may not be anticipated, alienated, sold, transferred,
assigned, pledged, encumbered, or subjected to any charge or legal process.
7.2 APPLICABLE LAW. All questions pertaining to the construction, validity and
effect of the Plan shall be determined in accordance with the laws of the United
States and the State of Minnesota, other than its laws respecting choice of law.
16
<PAGE>
ARTICLE VIII - FUNDING
8.1 SOURCE OF PAYMENTS. All payments hereunder shall be paid in cash from the
general funds of the Company, and no special or separate fund shall be
established since it is the intent to pay benefits as they become payable from
operating revenue. The Company may, however, in its sole discretion, establish
a separate reserve which may be held by it from which such benefits may be paid.
The foregoing shall not preclude the establishment by the Company of a "rabbi
trust" or the use of assets contributed to a "rabbi trust" to pay benefits under
the Plan.
8.2 STATUS OF PARTICIPANTS. A Participant shall have no right, title, or
interest whatever in or to any investments which the Company may make to aid it
in meeting its obligations hereunder. Nothing contained in this Plan, and no
action taken pursuant to its provisions, shall create or be construed to create
a trust of any kind, or a fiduciary relationship, between the Company and a
Participant or any other person. To the extent that any person acquires a right
to receive payments from the Company, such right shall be no greater than the
right of an unsecured creditor.
8.3 FICA AND FUTA CONTRIBUTIONS ON PLAN BENEFITS. All amounts which have
accrued to a Participant under this Plan with respect to a Participant's service
with the Company after December 31, 1983, as provided in this Section 8.3 shall
be considered "wages" for purposes of the Federal Insurance Contribution Act
("FICA") and the Federal Unemployment Tax Act ("FUTA") as of the earliest of (i)
the date of the commencement of the Participant's Normal Retirement benefits,
Early Retirement benefits, Total and Permanent Disability benefits, or
commencement of Pre-retirement Surviving Spouse Benefits to the Participant's
spouse or Surviving Children's Benefit to his or her Child or Children ("Benefit
Commencement Date"); (ii) the date in 1993 on which an active Participant
submitted an application for retirement benefits under the Base Plan or resigned
his or her employment with the Company, effective in 1994 but prior to July 1,
1994; or (iii) the date in 1993 on which a specified accrued benefit is
determined with
17
<PAGE>
respect to any other Participant in the Plan who is designated by the Vice
President Corporate Human Resources and approved by the Chief Executive Officer
of the Company prior to December 31, 1993.
Effective with the first payment made under the Plan after December 31, 1990,
any amount taken into account as wages with respect to a Participant's Benefit
Commencement Date occurring after the applicable effective date specified in the
Social Security Amendment of 1983 by reason of this Section 8.3 shall not again
be treated as wages for FICA or FUTA purposes. However, no Participant shall be
entitled to a refund from the Company of any previously paid FICA or FUTA
contributions as a result of the application of this Section 8.3.
In order to compute the present value of a Participant's benefit under this Plan
for purposes of determining the amount of any FICA or FUTA contribution payable
with respect to such benefit, such present value shall be determined in
accordance with Table I.
18
<PAGE>
ARTICLE IX - CLAIMS PROCEDURE
9.1 FILING OF A CLAIM FOR BENEFITS. Upon denial of benefits by the Company,
the Participant or the Participant's beneficiary shall make a claim to the
Personnel Committee or its delegatee(s) for the benefits provided under the Plan
in the manner provided in this Article.
9.2 NOTIFICATION TO CLAIMANT OF DECISION. If a claim is wholly or partially
denied, notice of the decision, meeting the requirements of Section 9.3 shall be
furnished to the claimant within 90 days after receipt of the claim by the
Personnel Committee, unless special circumstances, such as the need to hold a
hearing, require an extension of time for processing the claim. If an extension
of time is required, written notice of the extension shall be furnished to the
claimant prior to the end of the initial 90 day period, indicating the special
circumstances requiring the extension and the date by which a final decision is
expected. An extension of time shall in no event exceed a period of 90 days
from the end of the initial 90 day period. If notice of the denial of a claim
is not furnished in accordance with the provisions of this Section, the claim
shall be deemed denied and the claimant may proceed with the review procedure
set forth in Section 9.4.
9.3 CONTENT OF NOTICE. The Personnel Committee or its delegatee(s) shall
provide to any claimant who is denied a claim for benefits written notice
setting forth in a manner calculated to be understood by the claimant, the
following:
(a) The specific reason or reasons for the denial;
(b) Specific reference to pertinent provisions of the Plan on which the
denial is based;
(c) A description of any additional material or information necessary for
the claimant to perfect the claim and an explanation of why such
material or
19
<PAGE>
information necessary for the claimant to perfect the claim and an explanation
of why such material or information is necessary; and
(d) An explanation of the Plan's claim review procedure, as set forth in
Sections 9.4 and 9.5, together with any review procedures specified by
the Personnel Committee.
9.4 REVIEW PROCEDURE. The purpose of the review procedures set forth in this
Section 9.4 as follows is to provide a procedure by which a claimant under this
Plan may have a reasonable opportunity to appeal a denial of a claim to the
Personnel Committee for a full and fair review. To accomplish that purpose, the
claimant or his or her duly authorized representative:
(a) May request a review upon written application to the Personnel
Committee,
(b) May review pertinent documents; and
(c) May submit issues and comments in writing.
A claimant (or his or her duly authorized representative) shall request a review
by filing a written application for review with the Personnel Committee at any
time within 60 days after receipt by the claimant of written notice of the
denial of the claim.
9.5 DECISION ON REVIEW. A decision of a denied claim shall be made in the
following manner:
(a) The decision on review shall be made by the Personnel Committee or by
its delegatee(s), which may in its discretion hold a hearing on the
denied claim. The Personnel Committee shall make its decision
promptly, and not later than 60 days after receipt of the request for
review, unless special
20
<PAGE>
circumstances (such as the need to hold a hearing) require an extension of time
for processing, in which case a decision shall be rendered as soon as possible,
but not later than 120 days after receipt of the request for review. If an
extension of time for review is required because of special circumstances,
written notice of the extension shall be furnished to the claimant prior to the
commencement of the extension. If the decision on review is not furnished
within the time specified, the claim shall be deemed denied on review.
(b) The decision on review shall be in writing and shall include specific
reasons for the decision, written in a manner calculated to be
understood by the claimant, and specific references to the pertinent
provisions of the Plan on which the decision is based.
21
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TABLE I
Actuarial Assumptions for Lump Sum Payments
(Amended through December 21, 1993)
The present value of Plan benefits for purposes of Section 4.1(b),
Section 4.3(a), Section 4.4, and Section 8.3 shall be calculated using
the following actuarial assumptions:
Interest: 8-1/2 percent per annum discount rate
Mortality: 1983 Group Annuity Mortality Table for healthy males
<PAGE>
SRP12/93
HONEYWELL
SUPPLEMENTARY RETIREMENT PLAN
(SRP SERP)
(Amended Through December 21, 1993)
TABLE OF CONTENTS
<TABLE>
<C> <S> <C>
ARTICLE I - DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 ACT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 BASE PLAN. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 CODE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.4 COMPANY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.5 EARLY RETIREMENT . . . . . . . . . . . . . . . . . . . . . . . . 1
1.6 HONEYWELL. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.7 NORMAL RETIREMENT. . . . . . . . . . . . . . . . . . . . . . . . 2
1.8 PARTICIPANT. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.9 PERMANENT AND TOTAL DISABILITY . . . . . . . . . . . . . . . . . 2
1.10 PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.11 SPOUSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II - SRP SERP FORMULA. . . . . . . . . . . . . . . . . . . . . . . . 3
2.1 PLAN FORMULA . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE III - BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.1 NORMAL RETIREMENT. . . . . . . . . . . . . . . . . . . . . . . . 5
</TABLE>
<PAGE>
<TABLE>
<C> <S> <C>
3.2 EARLY RETIREMENT . . . . . . . . . . . . . . . . . . . . . . . . 5
3.3 CHANGE IN CONTROL. . . . . . . . . . . . . . . . . . . . . . . . 5
3.4 PERMANENT AND TOTAL DISABILITY . . . . . . . . . . . . . . . . . 7
3.5 IMMEDIATE PRE-RETIREMENT SURVIVING SPOUSE BENEFIT. . . . . . . . 7
3.6 DEFERRED PRE-RETIREMENT SURVIVING SPOUSE BENEFIT . . . . . . . . 7
3.7 SURVIVING CHILDREN'S BENEFIT . . . . . . . . . . . . . . . . . . 7
ARTICLE IV - PAYMENT OF BENEFITS . . . . . . . . . . . . . . . . . . . . . . 9
4.1 FORM OF PAYMENT. . . . . . . . . . . . . . . . . . . . . . . . . 9
4.2 TIME OF PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . 10
4.3 PAYMENT SUBSEQUENT TO A CHANGE IN CONTROL. . . . . . . . . . . . 10
4.4 PAYMENTS SUBSEQUENT TO THE PARTICIPANT'S RETIREMENT. . . . . . . 12
ARTICLE V - ADMINISTRATION OF THE PLAN . . . . . . . . . . . . . . . . . . . 13
5.1 PERSONNEL COMMITTEE. . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE VI - AMENDMENT AND TERMINATION . . . . . . . . . . . . . . . . . . . 14
6.1 AMENDMENT AND TERMINATION. . . . . . . . . . . . . . . . . . . . 14
ARTICLE VII - GENERAL CONDITIONS . . . . . . . . . . . . . . . . . . . . . . 15
7.1 NON-ASSIGNABILITY OF THE RIGHT TO RECEIVE BENEFITS . . . . . . . 15
7.2 APPLICABLE LAW . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE VIII - FUNDING . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.1 SOURCE OF PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . 16
8.2 STATUS OF PARTICIPANTS . . . . . . . . . . . . . . . . . . . . . 16
8.3 FICA AND FUTA CONTRIBUTIONS ON PLAN BENEFITS . . . . . . . . . . 16
TABLE I. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
</TABLE>
<PAGE>
SRP12/93
HONEYWELL
SUPPLEMENTARY RETIREMENT PLAN
(SRP SERP)
(Amended Through December 21, 1993)
ARTICLE I - DEFINITIONS
1.1 ACT. The Employee Retirement Income Security Act of 1974, as from time to
time amended.
1.2 BASE PLAN. The Honeywell Retirement Benefit Plan, as from time to time
amended.
1.3 CODE. The Internal Revenue Code of 1986, as from time to time amended.
1.4 COMPANY. Honeywell Inc. and any subsidiary which is designated for
inclusion in the Plan as hereafter defined by the Board of Directors of
Honeywell Inc.
1.5 EARLY RETIREMENT. Retirement by a Participant under his or her Base Plan,
which is defined as the termination of employment on or after his or her 55th
birthday and after he or she has been credited with 10 or more years of
"Credited Service for Benefit Accrual" under his or her Base Plan.
1.6 HONEYWELL. Honeywell Inc., a Delaware corporation.
<PAGE>
1.7 NORMAL RETIREMENT. Retirement by a Participant on or after his or her
"Social Security Retirement age as defined under his or her Base Plan.
1.8 PARTICIPANT. An employee of the Company who is a participant in the Base
Plan on or after February 1, 1976, whose benefit under such plan on his or her
Normal Retirement Date, if he or she continued as a Participant with earnings as
defined in the Base Plan at or in excess of his or her current earnings, if
computed without regard to the provisions of the Base Plan limiting the maximum
benefit payable thereunder to the maximum benefit permitted by Section 415 of
the Code for a pension plan qualifying under Section 401 of the Code, would
exceed such maximum. No controlling shareholder or independent contractor shall
be a Participant.
1.9 PERMANENT AND TOTAL DISABILITY. The disability of a Participant whereby
such Participant is wholly disabled by bodily injury or disease and will be
permanently, continuously and wholly prevented thereby for life from engaging in
any occupation or employment for wage or profit.
1.10 PLAN. The Honeywell Supplementary Retirement Plan, as amended through
September 15, 1992.
1.11 SPOUSE. A person who is formally married to a Participant as determined by
the Honeywell Pension and Retirement Administrative Committee for purposes of
the Base Plan.
2
<PAGE>
ARTICLE II - SRP SERP FORMULA
2.1 PLAN FORMULA. That annual benefit equal to Paragraph (a) minus Paragraph
(b);
(a) The applicable benefit computed under the Base Plan:
(i) by excluding under the definition of "Earnings" for the purpose
of arriving at "Final Average Earnings" under the Base Plan his
or her "Earnings" under the Base Plan which are in excess of the
Earnings Limitation;
(ii) by excluding under the definition of "Earnings" for purposes of
arriving at "Final Average Earnings" under the Base Plan the
amount of any defined incentive award in the year in which the
award would otherwise have been paid by the Corporate Executive
Compensation Plan;
(iii) by disregarding the provisions of such Base Plan limiting the
maximum benefit payable thereunder to the maximum benefit
permitted by the provisions of Section 415 of the Code in a
pension plan qualifying under Section 401 of the Code;
(iv) by not exceeding the Participant's frozen "Accrued Benefit"
determined under the Base Plan as of June 30, 1989 (or June 30,
1990, whichever may be applicable) as required by Section 8.2 of
that Plan; and
(v) by excluding "Augmented Credited Service for Benefit Accrual"
under the Mid-Career SERP, if such Plan is applicable to the
Participant.
3
<PAGE>
(b) the applicable benefit computed under the Base Plan:
(i) by excluding under the definition of "Earnings" for the purpose
of arriving at "Final Average Earnings" under the Base Plan his
or her "Earnings" under the Base Plan which are in excess of the
Earnings Limitation;
(ii) by excluding under the definition of "Earnings" for purposes of
arriving at "Final Average Earnings" under the Base Plan the
amount of any defined incentive award in the year in which the
award would otherwise have been paid by the Corporate Executive
Compensation Plan;
(iii) by applying the provisions of such Base Plan limiting the maximum
benefit payable thereunder to the maximum benefit permitted by
the provisions of Section 415 of the Code in a pension plan
qualifying under Section 401 of the Code;
(iv) by not exceeding the Participant's frozen "Accrued Benefit"
determined under the Base Plan as of June 30, 1989 (or June 30,
1990, whichever may be applicable) as required by Section 8.2 of
that Plan; and
(v) by excluding "Augmented Credited Service for Benefit Accrual"
under the Mid-Career SERP, if such Plan is applicable to the
Participant.
4
<PAGE>
ARTICLE III - BENEFITS
3.1 NORMAL RETIREMENT. Upon Normal Retirement, a Participant shall be eligible
for life for an annual benefit determined by calculating the Participant's
annual "Normal Retirement Benefit" under the Base Plan in accordance with the
SRP SERP Formula as prescribed in Section 2.1.
3.2 EARLY RETIREMENT. Upon Early Retirement, a Participant shall be eligible
for life for an annual benefit determined by calculating the Participant's
annual "Early Retirement Benefit" under the Base Plan in accordance with the SRP
SERP Formula as prescribed in Section 2.1.
3.3 CHANGE IN CONTROL. In the event of a "Change in Control," as defined in
this Section for all purposes of the Plan, each Participant's accrued benefit
under the Plan shall become immediately and fully vested and shall be paid to
the Participant in accordance with Section 3.3 of the Plan. For purposes of
this Plan, a "Change in Control" of the Company shall have occurred if:
(a) any "person," as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")
(other than the Company, any trustees or other fiduciary holding
securities under an employee benefit plan of the Company or any
corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of
stock of the Company), is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of securities of the Company representing 30 percent or more of the
combined voting power of the Company's then outstanding securities;
5
<PAGE>
(b) during any period of two consecutive years (not including any period
prior to the execution of this amendment to the Plan), individuals who
at the beginning of such period constitute the Board of Directors of
the Company (the "Board"), and any new director (other than a director
designated by a person who has entered into an agreement with the
Company to effect a transaction described in clause (a), (c) or (d) of
this Section) whose election by the Board of nomination for election
by the Company's stockholders was approved by a vote of at least two-
thirds of the directors then still in office who either were directors
at the beginning of the period or whose election or nomination for
election was previously so approved, cease for any reason to
constitute at least a majority thereof;
(c) the stockholders of the Company approve a merger or consolidation of
the Company with any other corporation, other than (i) a merger or
consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than 50 percent of the
combined voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or
consolidation or (ii) a merger or consolidation effected to implement
a recapitalization of the Company (or similar transaction) in which no
"person" (as hereinabove defined) acquires more than 30 percent of the
combined voting power of the Company's then outstanding securities; or
(d) the stockholders of the Company approve a plan of complete liquidation
of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets (or any
transaction having a similar effect).
6
<PAGE>
3.4 PERMANENT AND TOTAL DISABILITY. Upon the receipt of benefits by a
Participant under his or her Base Plan, based on a determination of Permanent
and Total Disability, he or she shall be eligible for life for an annual benefit
determined by calculating the Participant's annual "Disability Retirement
Benefit" under the Base Plan in accordance with the SRP SERP Formula as
prescribed in Section 2.1.
3.5 IMMEDIATE PRE-RETIREMENT SURVIVING SPOUSE BENEFIT. Upon the death of a
married Participant who is eligible for Early Retirement under his or her Base
Plan but who has not yet retired under such Plan, his or her surviving Spouse on
the date of his or her death shall be eligible for life for an annual benefit
determined by calculating the surviving Spouse's annual "Pre-Retirement
Surviving Spouse Benefit" under the Participant's Base Plan in accordance with
the SRP SERP Formula as prescribed in Section 2.1.
3.6 DEFERRED PRE-RETIREMENT SURVIVING SPOUSE BENEFIT. Upon the death of a
married Participant who is vested but not eligible for Early Retirement under
his or her Base Plan and who is in the "Active Service" of the Company (as
defined in the Base Plan) on the date of his or her death, on the first day of
the month following the date such married Participant would have attained his or
her earliest retirement eligibility under his or her Base Plan as a vested
Participant, his or her surviving Spouse the date of his or her death shall be
eligible for life for an annual benefit determined by calculating the surviving
Spouse's annual "Deferred Pre-Retirement Surviving Spouse Benefit" under the
Participant's Base Plan in accordance with the SRP SERP Formula as prescribed in
Section 2.1.
3.7 SURVIVING CHILDREN'S BENEFIT. Upon the death of a Participant who is
eligible for Early Retirement under his or her Base Plan and who is in the
"Active Service" of the Company (as defined in the Base Plan), the surviving
"Child" (as defined in the Base Plan) of a Participant (a) who has no surviving
Spouse on the date of his or her death, or (b) whose surviving Spouse dies while
receiving or while eligible to receive survivor benefits under the Base Plan
shall be eligible until such Child's attainment of age 23 for an annual
7
<PAGE>
benefit determined by calculating the Child's annual "Surviving Children's
Benefit" under the Participant's Base Plan in accordance with the SRP SERP
Formula as prescribed in Section 2.1.
The benefit shall be divided equally among all such Children as defined in the
Base Plan and an equal share shall be paid to such Child while he qualifies as a
Child. The portion of the benefit payable to each such Child shall be
redetermined as of the last day of the month following the date a recipient
ceases to be a Child and the remaining such Children shall thereupon receive an
equal share of such benefit.
8
<PAGE>
ARTICLE IV - PAYMENT OF BENEFITS
4.1 FORM OF PAYMENT.
(A) NORMAL FORM OF PAYMENT.
Except as otherwise provided in Paragraph (b) of this Section 4.1, a
benefit under the Plan shall be paid in the form of the benefit paid
with respect to the Participant under his or her Base Plan. Any
election, designation of a beneficiary(ies) or contingent
annuitant(s), or revocation made prior to the Participant's "Benefit
Starting Date" and in effect under the Participant's Base Plan shall
be in effect under the Plan.
(B) LUMP SUM FORM OF PAYMENT.
Notwithstanding the provisions of Paragraph (a) of this Section 4.1, a
Participant, who is eligible for Early Retirement or who will be
eligible for Early Retirement within 13 months, may elect to receive
the present value of the benefits payable to him or her under the
Plan, as computed as of the last day of the month in which the earlier
of the date of the Participant's Early Retirement or Normal Retirement
occurs by utilizing the interest rate and mortality assumptions set
forth on Table I, which may be modified from time to time by the Board
of Directors of Honeywell Inc. (or, in the case of the Participant's
earlier death, the present value of such benefits so computed as of
the later of the last day of the month in which the Participant's
death or the Participant's earliest retirement eligibility under his
or her Base Plan occurs) in a lump sum cash payment. The
Participant's written election to receive a lump sum cash payment
shall be submitted on a form provided for that purpose by the Company,
and consented to by the Participant's Spouse in writing if the
Participant is married, and delivered to the Vice President, Corporate
Compensation and Benefits, at least 13 months prior to the
Participant's Early Retirement or Normal Retirement. Such Spouse's
consent must acknowledge the effect of such election and
9
<PAGE>
be witnessed by a notary public. If a Participant dies after making
such election and prior to his or her Early Retirement or Normal
Retirement, the lump sum cash payment shall be made to the
Participant's surviving Spouse in accordance with Section 3.5 or
Section 3.6, whichever may be applicable, or to the Participant's
surviving Children in accordance with Section 3.7.
4.2 TIME OF PAYMENTS. Benefit payments paid pursuant to Sections 3.1 or 3.2,
respectively, shall begin (or, in the event that the Participant has complied
with Section 4.1(b), be paid) 30 days after the Participant's Normal Retirement
or Early Retirement, as the case may be. Payments pursuant to Section 3.4 of
the Plan shall commence 30 days after the later of (a) the last day of the
calendar month in which the Participant is determined to have become Permanently
and Totally Disabled under his or her Base Plan or (b) 6 months after his or her
last full day of active employment if he or she elects an immediate disability
benefit under his or her Base Plan; but if he or she elects a deferred
disability benefit under his or her Base Plan, payments shall commence (or, in
the event that the Participant has complied with Section 4.1(b), the present
value of such benefits shall be paid) 30 days after his or her Early Retirement
or Normal Retirement. Payments pursuant to Sections 3.5 and 3.6 of the Plan
shall commence (or, in the event that the Participant has complied with Section
4.1(b), the present value of such benefits shall be paid) 30 days after the
Participant's death if he or she was eligible for Early Retirement or 30 days
after the date he or she would have attained his or her earliest retirement
eligibility under his or her Base Plan. Payments pursuant to Section 3.7 of the
Plan shall commence (or, in the event that the Participant has complied with
Section 4.1(b), the present value of such benefits shall be paid) 30 days after
the date of the Participant's death.
4.3 PAYMENT SUBSEQUENT TO A CHANGE IN CONTROL.
(A) PAYMENT UPON TERMINATION OF EMPLOYMENT.
Notwithstanding any Plan provision to the contrary, if subsequent to a
Change in Control, a Participant's employment shall be terminated by
the
10
<PAGE>
Participant for "Good Reason" (as defined in the Honeywell Key Employee
Severance Plan) or by the Company other than for "Cause" (as defined in the
Honeywell Key Employee Severance Plan) or Permanent and Total Disability, the
present value of the benefits payable pursuant to Section 3.3 (utilizing the
interest rate and mortality assumptions set forth in Table I, which may be
modified from time to time by the Board of Directors of Honeywell Inc.) shall be
paid as a lump sum cash payment to the Participant on the fifth business day
after such termination.
(B) PAYMENT UPON IMPOSITION OF FEDERAL OR STATE INCOME TAXES.
If subsequent to a Change in Control, any Participant is determined to
be subject to Federal or state income tax on any amount accrued on his
or her behalf under this Plan prior to the time of payment hereunder,
Federal or state taxes attributable to the amount determined to be so
taxable shall be distributed by the Plan to such Participant. An
amount accrued on his or her behalf under this Plan shall be
determined to be subject to Federal income tax upon the earliest of:
(i) a final determination by the United States Internal Revenue
Service addressed to the Participant which is not appealed to the
courts;
(ii) a final determination by the United States Tax Court or any other
federal Court affirming any such determination by the Internal
Revenue Services; or
(iii) an opinion by the Tax Counsel of the Company addressed to the
Company and the Trustee, that, by reason of Treasury Regulations,
amendments to the Internal Revenue Code, published Internal
Revenue Service rulings, court decisions or other substantial
11
<PAGE>
precedent, amounts accrued on a Participants behalf hereunder are
subject to Federal or state income tax prior to payment.
The Company shall undertake at its sole expense to defend any tax claims
described herein which are asserted by the Internal Revenue Service or by
any state revenue authority against any Participant subsequent to a Change
in Control, including attorney fees and costs of appeal, and shall have the
sole authority to determine whether or not to appeal any determination made
by the Service, by any state revenue authority or by a lower court. The
Company also agrees to reimburse any Participant for any interest or
penalties in respect of Federal or state tax claims hereunder upon receipt
of documentation of same. Any distribution from the Plan to the
Participant under this Section 4.3(b) shall be applied in an equitable
manner to reduce Company liabilities to such Participant under the Plan.
4.4 PAYMENTS SUBSEQUENT TO THE PARTICIPANT'S RETIREMENT. At any time before or
after a Change in Control, a Participant, after he or she has retired under the
provisions of the Base Plan on or after December 17, 1991, or the surviving
Spouse or beneficiary of the Participant, after the Participant's death
subsequent to such retirement on or after December 17, 1991, may elect to
receive the present value of his or her remaining benefits to which he or she is
entitled under this Plan in one lump sum cash payment at any time after the
Participant's date of retirement or death, respectively, as computed as of the
last day of the month in which the request is received by the Vice President,
Corporate Compensation and Benefits, by utilizing the interest rate and
mortality assumptions set forth on Table I, which may be modified from time to
time by the Board of Directors of Honeywell Inc., and then reduced by a penalty,
which shall be forfeited to the Company, (a) which is equal, before a Change in
Control, to 10 percent of the present value of any unpaid benefits, and (b)
which is equal, after a Change in Control, to 6 percent of the present value of
such unpaid benefits. Payment of such benefits shall be effected on the last
day of the next month following the month in which the request is received.
12
<PAGE>
ARTICLE V - ADMINISTRATION OF THE PLAN
5.1 PERSONNEL COMMITTEE. The Plan shall be administered by the Personnel
Committee of Honeywell's Board of Directors which shall have the authority to
determine Plan eligibility and the amount of Plan benefits to which a
Participant or beneficiary is entitled to receive, interpret the Plan, maintain
records and issue such regulations as it shall from time to time deem
appropriate. The interpretations of such Committee shall be final. The
Committee shall have absolute discretion in carrying out its responsibilities.
No Participant or beneficiary of this Plan may be a member of this Committee.
13
<PAGE>
ARTICLE VI - AMENDMENT AND TERMINATION
6.1 AMENDMENT AND TERMINATION. The Board of Directors of Honeywell Inc. may
amend or terminate the Plan at any time, provided, however, that no such
amendment or termination shall adversely affect a benefit payable on the Normal
or Early Retirement, death or Permanent and Total Disability of a Participant
with respect to the Participant's employment by the Company prior to the date of
such amendment or termination unless such benefit is or becomes payable under
another plan or practice adopted by such Board of Directors. In the event of
termination of the Plan, any benefits which have accrued hereunder shall be paid
in the form and at the time determined under Section 4.1(a) of the Plan.
14
<PAGE>
ARTICLE VII - GENERAL CONDITIONS
7.1 NON-ASSIGNABILITY OF THE RIGHT TO RECEIVE BENEFITS. The right to receive
benefits under the Plan may not be anticipated, alienated, sold, transferred,
assigned, pledged, encumbered, or subjected to any charge or legal process.
7.2 APPLICABLE LAW. All questions pertaining to the construction, validity and
effect of the Plan shall be determined in accordance with the laws of the United
States and the State of Minnesota, other than its laws respecting choice of law.
15
<PAGE>
ARTICLE VIII - FUNDING
8.1 SOURCE OF PAYMENTS. All payments hereunder shall be paid in cash from the
general funds of the Company, and no special or separate fund shall be
established since it is the intent to pay benefits as they become payable from
operating revenue. The Company may, however, in its sole discretion, establish
a separate reserve which may be held by it from which such benefits may be paid.
The foregoing shall not preclude the establishment by the Company of a "rabbi
trust" or the use of assets contributed to a "rabbi trust" to pay benefits under
the Plan.
8.2 STATUS OF PARTICIPANTS. A Participant shall have no right, title, or
interest whatever in or to any investments which the Company may make to aid it
in meeting its obligations hereunder. Nothing contained in this Plan, and no
action taken pursuant to its provisions, shall create or be construed to create
a trust of any kind, or a fiduciary relationship, between the Company and a
Participant or any other person. To the extent that any person acquires a right
to receive payments from the Company, such right shall be no greater than the
right of an unsecured creditor.
8.3 FICA AND FUTA CONTRIBUTIONS ON PLAN BENEFITS. All amounts which have
accrued to a Participant under this Plan with respect to a Participant's service
with the Company after December 31, 1983, as provided in this Section 8.3 shall
be considered "wages" for purposes of the Federal Insurance Contribution Act
("FICA") and the Federal Unemployment Tax Act ("FUTA") as of the earliest of (i)
the date of the commencement of the Participant's Normal Retirement benefits,
Early Retirement benefits, Total and Permanent Disability benefits, or
commencement of Pre-retirement Surviving Spouse Benefits to the Participant's
spouse or Surviving Children's Benefits to his or her Child or Children
("Benefit Commencement Date"); (ii) the date in 1993 on which an active
Participant submitted an application for retirement benefits under the Base Plan
or resigned his or her employment with the Company, effective in 1994 but prior
to July 1, 1994; or (iii) the date in 1993 on which a specified accrued benefit
is determined with
16
<PAGE>
respect to any other Participant in the Plan who is designated by the Vice
President Corporate Human Resources and approved by the Chief Executive Officer
of the Company prior to December 31, 1993.
Effective with the first payment made under the Plan after December 31, 1990,
any amount taken into account as wages with respect to a Participant's Benefit
Commencement Date occurring after the applicable effective date specified in the
Social Security Amendment of 1983 by reason of this Section 8.3 shall not again
be treated as wages for FICA or FUTA purposes. However, no Participant shall be
entitled to a refund from the Company of any previously paid FICA or FUTA
contributions as a result of the application of this Section 8.3.
In order to compute the present value of a Participant's benefit under this Plan
for purposes of determining the amount of any FICA or FUTA contribution payable
with respect to such benefit, such present value shall be determined in
accordance with Table I.
17
<PAGE>
TABLE I
ACTUARIAL ASSUMPTIONS FOR LUMP SUM PAYMENTS
(Amended through December 21, 1993)
The present value of Plan benefits for purposes of Section 4.1(b), Section
4.3(a), Section 4.4 and Section 8.3 shall be calculated using the following
actuarial assumptions:
Interest: 8-1/2 percent per annum discount rate
Mortality: 1983 Group Annuity Mortality Table for healthy males
<PAGE>
TSRP 12/93
HONEYWELL SUPPLEMENTARY EXECUTIVE RETIREMENT PLAN
FOR BENEFITS IN EXCESS OF LIMITS UNDER TAX REFORM ACT OF 1986
(TRA SERP)
(Amended Through December 21, 1993)
TABLE OF CONTENTS
<TABLE>
<C> <S> <C>
ARTICLE I - DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 ACT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 BASE PLAN. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 CODE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.4 COMPANY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.5 CORPORATE EXECUTIVE COMPENSATION PLAN (CECP) . . . . . . . . . . 1
1.6 CORPORATE EXECUTIVE COMPENSATION PLAN SERP . . . . . . . . . . . 1
1.7 EARLY RETIREMENT . . . . . . . . . . . . . . . . . . . . . . . . 2
1.8 EARNINGS LIMITATION. . . . . . . . . . . . . . . . . . . . . . . 2
1.9 EFFECTIVE DATE . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.10 EXCESS BENEFIT PLAN. . . . . . . . . . . . . . . . . . . . . . . 2
1.11 HONEYWELL. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.12 MID-CAREER SERP. . . . . . . . . . . . . . . . . . . . . . . . . 2
1.13 NORMAL RETIREMENT. . . . . . . . . . . . . . . . . . . . . . . . 2
1.14 PARTICIPANT. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.15 PERMANENT AND TOTAL DISABILITY . . . . . . . . . . . . . . . . . 3
1.16 PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.17 SPOUSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
</TABLE>
<PAGE>
<TABLE>
<C> <S> <C>
1.18 TRA '86 AMENDMENT DATE . . . . . . . . . . . . . . . . . . . . . 3
1.19 TWO HUNDRED THOUSAND ($200K) SERP. . . . . . . . . . . . . . . . 3
ARTICLE II - PLAN SERP FORMULA . . . . . . . . . . . . . . . . . . . . . . . 4
2.1 TRA SERP FORMULA . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE III - BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.1 NORMAL RETIREMENT. . . . . . . . . . . . . . . . . . . . . . . . 6
3.2 EARLY RETIREMENT . . . . . . . . . . . . . . . . . . . . . . . . 7
3.3 CHANGE IN CONTROL. . . . . . . . . . . . . . . . . . . . . . . . 8
3.4 PERMANENT AND TOTAL DISABILITY . . . . . . . . . . . . . . . . . 10
3.5 IMMEDIATE PRE-RETIREMENT SURVIVING SPOUSE BENEFIT. . . . . . . . 11
3.6 DEFERRED SURVIVING SPOUSE BENEFIT. . . . . . . . . . . . . . . . 13
3.7 SURVIVING CHILDREN'S BENEFIT . . . . . . . . . . . . . . . . . . 14
ARTICLE IV - PAYMENT OF BENEFITS . . . . . . . . . . . . . . . . . . . . . . 15
4.1 FORM OF PAYMENT. . . . . . . . . . . . . . . . . . . . . . . . . 15
4.2 TIME OF PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . 16
4.3 PAYMENT SUBSEQUENT TO A CHANGE IN CONTROL. . . . . . . . . . . . 16
4.4 PAYMENTS SUBSEQUENT TO THE PARTICIPANT'S RETIREMENT. . . . . . . 18
ARTICLE V - ADMINISTRATION OF THE PLAN . . . . . . . . . . . . . . . . . . . 19
5.1 PERSONNEL COMMITTEE. . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE VI - AMENDMENT AND TERMINATION . . . . . . . . . . . . . . . . . . . 20
6.1 AMENDMENT AND TERMINATION. . . . . . . . . . . . . . . . . . . . 20
ARTICLE VII - GENERAL CONDITIONS . . . . . . . . . . . . . . . . . . . . . . 21
7.1 NON-ASSIGNABILITY OF THE RIGHT TO RECEIVE BENEFITS . . . . . . . 21
7.2 APPLICABLE LAW . . . . . . . . . . . . . . . . . . . . . . . . . 21
</TABLE>
<PAGE>
<TABLE>
<C> <S> <C>
ARTICLE VIII - FUNDING . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
8.1 SOURCE OF PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . 22
8.2 STATUS OF PARTICIPANTS . . . . . . . . . . . . . . . . . . . . . 22
8.3 FICA AND FUTA CONTRIBUTIONS ON PLAN BENEFITS . . . . . . . . . . 22
ARTICLE IX - CLAIMS PROCEDURE. . . . . . . . . . . . . . . . . . . . . . . . 24
9.1 FILING OF A CLAIM FOR BENEFITS . . . . . . . . . . . . . . . . . 24
9.2 NOTIFICATION TO CLAIMANT OF DECISION . . . . . . . . . . . . . . 24
9.3 CONTENT OF NOTICE. . . . . . . . . . . . . . . . . . . . . . . . 24
9.4 REVIEW PROCEDURE . . . . . . . . . . . . . . . . . . . . . . . . 25
9.5 DECISION ON REVIEW . . . . . . . . . . . . . . . . . . . . . . . 25
Table I. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
</TABLE>
<PAGE>
TSRP 12/93
HONEYWELL SUPPLEMENTARY EXECUTIVE RETIREMENT PLAN
FOR BENEFITS IN EXCESS OF LIMITS UNDER TAX REFORM ACT OF 1986
(TRA SERP)
(Amended Through December 21, 1993)
ARTICLE I - DEFINITIONS
1.1 ACT. The Tax Reform Act of 1986.
1.2 BASE PLAN. The Honeywell Retirement Benefit Plan, as from time to time
amended.
1.3 CODE. The Internal Revenue Code of 1986, as from time to time amended.
1.4 COMPANY. Honeywell Inc. and any subsidiary which is designated for
inclusion in the Plan, as hereafter defined, by the Board of Directors of
Honeywell Inc.
1.5 CORPORATE EXECUTIVE COMPENSATION PLAN (CECP). An incentive compensation
plan maintained by the Company to provide incentive compensation for a select
group of management or highly compensated employees, as from time to time
amended.
1.6 CORPORATE EXECUTIVE COMPENSATION PLAN SERP. The Honeywell Supplementary
Executive Compensation Plan for CECP Participants, as it may be amended from
time to time, maintained to provide benefits for a select group of management or
highly compensated employees who have deferred their incentive awards under the
Honeywell Corporate Executive Compensation Plan.
<PAGE>
1.7 EARLY RETIREMENT. Retirement by a Participant under his or her Base Plan,
which is defined as the termination of employment on or after his or her 55th
birthday and after he or she has been credited with 10 or more years of
"Credited Service for Benefit Accrual" under the Base Plan.
1.8 EARNINGS LIMITATION. The maximum amount of compensation of a Participant
and his or her family members permitted to be taken into account under the Base
Plan pursuant to Section 401(a)(17) of the Code.
1.9 EFFECTIVE DATE. The original effective date of this Plan was July 1,
1989. The effective date of this amended and restated Plan is September 15,
1992.
1.10 EXCESS BENEFIT PLAN. The Honeywell Supplementary Retirement Plan, as it
may be amended from time to time, maintained to provide benefits for a select
group of management or highly compensated employees in excess of the limitations
on contributions and benefits imposed by Section 415 of the Code.
1.11 HONEYWELL. Honeywell Inc., a Delaware corporation.
1.12 MID-CAREER SERP. The Honeywell Supplementary Executive Retirement Plan
for Mid-Career Hires, as it may be amended from time to time, maintained for
certain executives or highly compensated employees of the Company to provide
augmented credited service for retirement benefit determination.
1.13 NORMAL RETIREMENT. Retirement by a Participant on or after his or her
"Social Security Retirement Age" as defined under his or her Base Plan.
1.14 PARTICIPANT. An employee of the Company who is a participant in the Base
Plan on or after July 1, 1989, and whose accrued benefit under the Base Plan, as
a highly
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compensated employee as defined under Section 414(q)(1)(A) or (B) of the Code,
was frozen as of June 30, 1989, or June 30, 1990, in compliance with IRS Notice
88-131, Alternative IID. No controlling shareholder or independent contractor
shall be a Participant.
1.15 PERMANENT AND TOTAL DISABILITY. The disability of a Participant whereby
such Participant is wholly disabled by bodily injury or disease and will be
permanently, continuously and wholly prevented thereby for life from engaging in
any occupation or employment for wage or profit.
1.16 PLAN. The Honeywell Supplementary Executive Retirement Plan for Benefits
in Excess of Limits under Tax Reform Act of 1986 ("TRA SERP"), maintained to
provide benefits for a select group of management or highly compensated
employees, effective July 1, 1989 and amended through September 15, 1992.
1.17 SPOUSE. A person who is formally married to a Participant as determined
by the Honeywell Pension and Retirement Administrative Committee for purposes of
the Base Plan.
1.18 TRA '86 AMENDMENT DATE. That date on which the Base Plan was amended to
comply with the Act, January 2, 1991.
1.19 TWO HUNDRED THOUSAND ($200K) SERP. The Honeywell Supplementary Executive
Retirement Plan for Compensation in Excess of $200,000.
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ARTICLE II - PLAN SERP FORMULA
2.1 TRA SERP FORMULA. That annual benefit equal to Paragraph (a) minus
Paragraph (b).
(a) The applicable benefit computed under the Base Plan:
(i) by including under the definition of "Earnings" for the purposes
of arriving at "Final Average Earnings" under the Base Plan his
or her "Earnings" under the Base Plan which are in excess of the
Earnings Limitation;
(ii) by including under the definition of "Earnings" for purposes of
arriving at "Final Average Earnings" under the Base Plan the
amount of any deferred incentive award in the year in which the
award would otherwise have been paid by the Corporate Executive
Compensation Plan;
(iii) by disregarding the provisions of such Base Plan limiting the
maximum benefit payable thereunder to the maximum benefit
permitted by the provisions of Section 415 of the Code in a
pension plan qualifying under Section 401 of the Code;
(iv) by disregarding the Base Plan's amendment in compliance with IRS
Notice 88-131, Alternative IID, which served to freeze the
"Accrued Benefit" which highly compensated Base Plan participants
were eligible to receive under the Base Plan pursuant to Section
5.8 of the Base Plan in effect on June 30, 1989, so as to apply
the Base Plan formula in effect through the TRA '86 Amendment
Date; and
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(v) by excluding "Augmented Credited Service for Benefits Accrual"
under the Mid-Career SERP, if such plan is applicable to the
Participant.
(b) the applicable benefit computed under the Base Plan:
(i) by including under the definition of "Earnings" for the purposes
of arriving at "Final Average Earnings" under the Base Plan his
or her "Earnings" under the Base Plan which are in excess of the
Earnings Limitation;
(ii) by including under the definition of "Earnings" for purposes of
arriving at "Final Average Earnings" under the Base Plan the
amount of any deferred incentive award in the year in which the
award would otherwise have been paid by the Corporate Executive
Compensation Plan;
(iii) by disregarding the provisions of such Base Plan limiting the
maximum benefit payable thereunder to the maximum benefit
permitted by the provisions of Section 415 of the Code in a
pension plan qualifying under Section 401 of the Code;
(iv) by not exceeding the Participant's frozen "Accrued Benefit"
determined under the Base Plan as of June 30, 1989 (or June 30,
1990, whichever may be applicable) as required by Section 8.2 of
that Plan; and
(v) by excluding "Augmented Credited Service for Benefit Accrual"
under the Mid-Career SERP, if applicable to the Participant.
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ARTICLE III - BENEFITS
3.1 NORMAL RETIREMENT.
(a) PRIOR TO TRA '86 AMENDMENT DATE
Upon retirement before the TRA '86 Amendment Date, the Participant's
annual "Normal Retirement Benefit" under his or her Base Plan computed
(i) without regard to the Base Plan's amendment in compliance with IRS
Notice 88-131, Alternative IID, which served to freeze the accrued
benefit which highly compensated Base Plan participants are eligible
to receive under the Base Plan pursuant to Section 5.8 of the Base
Plan, (ii) by including under the definition of "Earnings" for the
purpose of arriving at "Final Average Earnings" under the Base Plan
his or her "Earnings" under the Base Plan which are in excess of the
Earnings Limitation, (iii) by including under the definition of
"Earnings" for purposes of arriving at "Final Average Earnings" under
the Base Plan the amount of any deferred incentive award in the year
in which the award would otherwise have been paid by the Corporate
Executive Compensation Plan, and (iv) without regard to the provisions
of such Base Plan limiting the maximum benefit payable thereunder to
the maximum benefit permitted under the provisions of Section 415 of
the Code in a pension plan qualifying under Section 401 of the Code,
LESS (A) the amount of the greater of his or her annual "Normal
Retirement Benefit" or "Minimum Normal Retirement Benefit" determined
under his or her Base Plan, as limited pursuant to Section 5.8 of the
Base Plan as a result of its amendment in compliance with IRS Notice
88-131, Alternative IID, which served to freeze his or her accrued
benefit under the Base Plan, (B) the amount of his or her annual
"Normal Retirement Benefit" provided to him or her under the $200K
SERP, (C) the amount of his or her annual "Normal Retirement Benefit"
provided to him or her under the Corporate Executive Compensation Plan
SERP, and (D) the amount of the
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annual "Normal Retirement Benefit" provided to him or her under the
Excess Benefit Plan.
(b) ON AND AFTER TRA '86 AMENDMENT DATE
Upon retirement on or after the TRA '86 Amendment Date, a Participant
shall be eligible for life for an annual benefit determined by
calculating the Participant's annual "Normal Retirement Benefit" under
the Base Plan in accordance with the TRA SERP Formula prescribed in
Section 2.1.
3.2 EARLY RETIREMENT. Upon Early Retirement at or after his or her Early
Retirement Date, a Participant shall be eligible for life for an annual benefit
in an amount equal to the greater of his or her "Early Retirement Benefit" or
"Minimum Early Retirement Benefit" under his or her Base Plan determined as
follows:
(a) PRIOR TO TRA '86 AMENDMENT DATE
Upon Early Retirement before the TRA '86 Amendment Date, the
Participant's annual "Early Retirement Benefit" under his or her Base
Plan computed (i) without regard to the Base Plan's amendment in
compliance with IRS Notice 88-131, Alternative IID, which served to
freeze the accrued benefit which highly compensated Base Plan
participants are eligible to receive under the Base Plan pursuant to
Section 5.8 of the Base Plan, (ii) by including under the definition
of "Earnings" for the purpose of arriving at "Final Average Earnings"
under the Base Plan his or her "Earnings" under the Base Plan which
are in excess of the Earnings Limitation, (iii) by including under the
definition of "Earnings" for purposes of arriving at "Final Average
Earnings" under the Base Plan the amount of any deferred incentive
award in the year in which the award would otherwise have been paid by
the Corporate Executive Compensation Plan, and (iv) without regard to
the provisions of such Base Plan limiting the maximum benefit payable
thereunder to the maximum benefit permitted under the provisions of
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Section 415 of the Code in a pension plan qualifying under Section 401
of the Code, LESS (A) the greater of the amount of his or her annual
"Early Retirement Benefit" or "Minimum Early Retirement Benefit"
determined under his or her Base Plan, as limited pursuant to Section
5.8 of the Base Plan as a result of its amendment in compliance with
IRS Notice 88-131, Alternative IID, which served to freeze his or her
accrued benefit under the Base Plan, (B) the amount of his or her
annual "Early Retirement Benefit" provided to him or her under the
$200K SERP, (C) the amount of his or her annual "Early Retirement
Benefit" provided to him or her under the Corporate Executive
Compensation Plan SERP, and (D) the amount of the annual "Early
Retirement Benefit" provided to him or her under the Excess Benefit
Plan.
(b) ON OR AFTER TRA '86 AMENDMENT DATE
Upon Early Retirement on or after the TRA '86 Amendment Date, a
Participant shall be eligible for life for an annual benefit
determined by calculating the Participant's annual "Early Retirement
Benefit" under the Base Plan in accordance with the TRA SERP Formula
as prescribed in Section 2.1.
3.3 CHANGE IN CONTROL. In the event of a "Change in Control," as defined in
this Section for all purposes of the Plan, each Participant's accrued benefit
under the Plan shall become immediately and fully vested and shall be paid to
the Participant in accordance with Section 4.3 of the Plan. For purposes of
this Plan, a "Change in Control" of the Company shall have occurred if:
(a) any "person," as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")
(other than the Company, any trustees or other fiduciary holding
securities under an employee benefit plan of the Company or any
corporation owned,
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directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the
Company), is or becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of securities
of the Company representing 30% or more of the combined voting power
of the Company's then outstanding securities;
(b) during any period of two consecutive years (not including any period
prior to the execution of this amendment to the Plan), individuals who
at the beginning of such period constitute the Board of Directors of
the Company (the "Board"), and any new director (other than a director
designated by a person who has entered into an agreement with the
Company to effect a transaction described in clause (a), (c) or (d) of
this Section) whose election by the Board of nomination for election
by the Company's stockholders was approved by a vote of at least two-
thirds of the directors then still in office who either were directors
at the beginning of the period or whose election or nomination for
election was previously so approved, cease for any reason to
constitute at least a majority thereof;
(c) the stockholders of the Company approve a merger or consolidation of
the Company with any other corporation, other than (i) a merger or
consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than 50 percent of the
combined voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or
consolidation or (ii) a merger or consolidation effected to implement
a recapitalization of the Company (or similar transaction) in which no
"person" (as hereinabove defined) acquires
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more than 30 percent of the combined voting power of the Company's
then outstanding securities; or
(d) the stockholders of the Company approve a plan of complete liquidation
of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets (or any
transaction having a similar effect).
3.4 PERMANENT AND TOTAL DISABILITY. Upon the commencement of benefits by a
Participant under his or her Base Plan, based on a determination of Permanent
and Total Disability, he shall be eligible for life for an annual benefit in an
amount equal to the annual "Disability Retirement Benefit" being paid to him or
her under the Base Plan determined as follows:
(a) PRIOR TO TRA '86 AMENDMENT DATE
Upon the receipt of benefits before the TRA '86 Amendment Date, the
Participant's "Disability Benefit" being paid to him/her under the
Base Plan computed (i) without regard to the Base Plan's amendment in
compliance with IRS Notice 88-131, Alternative IID, which served to
freeze the accrued benefit which highly compensated Base Plan
participants are eligible to receive under the Base Plan pursuant to
Section 5.8 of the Base Plan, (ii) by including under the definition
of "Earnings" for the purpose of arriving at "Final Average Earnings"
under the Base Plan his or her "Earnings" under the Base Plan which
are in excess of the Earnings Limitation, (iii) by including under the
definition of "Earnings" for purposes of arriving at "Final Average
Earnings" under the Base Plan the amount of any deferred incentive
award in the year in which the award would otherwise have been paid by
the Corporate Executive Compensation Plan, and (iv) without regard to
the provisions of such Base Plan limiting the maximum benefit payable
thereunder to the maximum benefit permitted under the provisions of
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Section 415 of the Code in a pension plan qualifying under Section 401
of the Code, LESS (A) the amount of his or her annual "Disability
Benefit" determined under his or her Base Plan, as limited pursuant to
Section 5.8 of the Base Plan as a result of its amendment in
compliance with IRS Notice 88-131, Alternative IID, which served to
freeze his or her accrued benefit under the Base Plan, (B) the amount
of his or her annual Disability Benefit provided to him or her under
the $200K SERP, (C) the amount of his or her annual Disability Benefit
provided to him or her under the Corporate Executive Compensation Plan
SERP, and (D) the amount of the annual "Disability Benefit" provided
to him or her under the Excess Benefit Plan.
(b) ON OR AFTER TRA '86 AMENDMENT DATE
Upon receipt of benefits on and after the TRA '86 Amendment Date, an
annual benefit determined by calculating the Participant's annual
"Disability Retirement Benefit" under the Base Plan in accordance with
the TRA SERP Formula as prescribed in Section 2.1.
3.5 IMMEDIATE PRE-RETIREMENT SURVIVING SPOUSE BENEFIT. Upon the death of a
married Participant who is eligible for Early Retirement under his or her Base
Plan but who has not yet retired under such plan, his or her surviving Spouse on
the date of his or her death shall be eligible for life for an annual benefit in
an amount equal to such surviving Spouse's annual "Pre-retirement Surviving
Spouse Benefit" under the Participant's Base Plan determined as follows:
(a) PRIOR TO TRA '86 AMENDMENT DATE
Upon the Participant's death before the TRA '86 Amendment Date, an
annual surviving Spouse benefit computed (i) without regard to the
Base Plan's amendment in compliance with IRS Notice 88-131,
Alternative IID, which served to freeze the accrued benefit which
highly compensated Base Plan participants are eligible to receive
under the Base Plan pursuant to
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Section 5.8 of the Base Plan, (ii) by including under the definition
of "Earnings" for the purpose of arriving at "Final Average Earnings"
under the Base Plan the deceased Participant's "Earnings" under the
Base Plan which are in excess of the Earnings Limitation, (iii) by
including under the definition of "Earnings" for purposes of arriving
at "Final Average Earnings" under the Base Plan the amount of any
deferred incentive award in the year in which the award would
otherwise have been paid to the deceased Participant by the Corporate
Executive Compensation Plan, and (iv) without regard to the provisions
of such Base Plan limiting the maximum benefit payable thereunder to
the maximum benefit permitted under the provisions of Section 415 of
the Code in a pension plan qualifying under Section 401 of the Code,
LESS (A) the amount of the surviving Spouse's annual "Pre-retirement
Surviving Spouse Benefit" determined under the deceased Participant's
Base Plan, as limited pursuant to Section 5.8 of the Base Plan as a
result of its amendment in compliance with IRS Notice 88-131,
Alternative IID, which served to freeze the Participant's accrued
benefit under the Base Plan, (B) the amount of the surviving Spouse's
annual "Pre-retirement Surviving Spouse Benefit" provided to such
surviving Spouse under the $200K SERP, (C) the amount of the annual
"Pre-retirement Surviving Spouse Benefit" provided to the surviving
Spouse under the Corporate Executive Compensation Plan SERP, and (D)
the amount of the annual "Pre-retirement Surviving Spouse Benefit"
provided to such surviving Spouse under the Excess Benefit Plan.
(b) ON OR AFTER TRA '86 AMENDMENT DATE
Upon death of the Participant on or after the TRA '86 Amendment Date,
an annual benefit determined by calculating the surviving Spouse's
annual "Pre-Retirement Surviving Spouse Benefit" under the
Participant's Base Plan in accordance with the TRA SERP Formula as
prescribed in Section 2.1.
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3.6 DEFERRED SURVIVING SPOUSE BENEFIT. Upon the death of a married
Participant who is vested but not eligible for Early Retirement under his or her
Base Plan and who is in the "Active Service" of the Company (as defined in the
Base Plan) on the date of his or her death, on the first day of the month
following the date such Participant would have attained his or her earliest
retirement eligibility under his or her Base Plan as a vested Participant, his
or her surviving Spouse the date of his or her death shall be eligible for life
for an annual benefit in an amount equal to such surviving Spouse's annual
"Deferred Pre-retirement Surviving Spouse Benefit" under the Participant's Base
Plan, after any reductions have been applied, determined as follows:
(a) PRIOR TO TRA '86 AMENDMENT DATE
Upon the death of the Participant before the TRA '86 Amendment Date,
an annual benefit computed (i) without regard to the Base Plan's
amendment in compliance with IRS Notice 88-131, Alternative IID, which
served to freeze the accrued benefit which highly compensated Base
Plan participants are eligible to receive under the Base Plan pursuant
to Section 5.8 of the Base Plan, (ii) by including under the
definition of "Earnings" for the purpose of arriving at "Final Average
Earnings" under the Base Plan the deceased Participant's "Earnings"
under the Base Plan which are in excess of the Earnings Limitation,
(iii) by including under the definition of "Earnings" for purposes of
arriving at "Final Average Earnings" under the Base Plan the amount of
any deferred incentive award in the year in which the award would
otherwise have been paid to the deceased Participant by the Corporate
Executive Compensation Plan, and (iv) without regard to the provisions
of such Base Plan limiting the maximum benefit payable thereunder to
the maximum benefit permitted under the provisions of Section 415 of
the Code in a pension plan qualifying under Section 401 of the Code,
LESS (A) the amount of the Surviving spouse's annual "Deferred
Surviving Spouse Benefit" determined under the deceased Participant's
Base Plan, as limited pursuant to Section 5.8 of the Base Plan as a
result
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of its amendment in compliance with IRS Notice 88-131, Alternative
IID, which served to freeze his or her accrued benefit under the Base
Plan, (B) the amount of the annual "Deferred Surviving Spouse Benefit"
provided to such surviving Spouse under the $200K SERP, (C) the amount
of the annual "Deferred Surviving Spouse Benefit" provided to the
surviving Spouse under the Corporate Executive Compensation Plan SERP,
and (D) the amount of the annual "Deferred Surviving Spouse Benefit"
provided to the surviving Spouse under the Excess Benefit Plan.
(b) ON OR AFTER TRA '86 AMENDMENT DATE
Upon the death of a Participant on or after the TRA '86 Amendment
Date, an annual benefit determined by calculating the surviving
Spouse's annual "Deferred Pre-Retirement Surviving Spouse Benefit"
under the Participant's Base Plan in accordance with the TRA SERP
Formula as prescribed in Section 2.1.
3.7 SURVIVING CHILDREN'S BENEFIT. Upon the death of a Participant who is
eligible for Early Retirement under his or her Base Plan and who is in the
"Active Service" of the Company (as defined in the Base Plan), the surviving
"Child" (as defined in the Base Plan) of a Participant (a) who has no surviving
Spouse on the date of his or her death, or (b) whose surviving Spouse dies while
receiving or while eligible to receive survivor benefits under the Base Plan
shall be eligible until such Child's attainment of age 23 for an annual benefit
determined by calculating the Child's annual "Surviving Children's Benefit"
under the Participant's Base Plan in accordance with the TRA SERP Formula as
prescribed in Section 2.1.
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ARTICLE IV - PAYMENT OF BENEFITS
4.1 FORM OF PAYMENT.
(a) NORMAL FORM OF PAYMENT.
Except as otherwise provided in Paragraph (b) of this Section 4.1, a
benefit under the Plan shall be paid in the form of the benefit paid
with respect to the Participant under his or her Base Plan. Any
election, designation of a beneficiary(ies) or contingent
annuitant(s), or revocation made prior to the Participant's "Benefit
Starting Date" and in effect under the Participant's Base Plan shall
be in effect under the Plan.
(b) LUMP SUM FORM OF PAYMENT.
Notwithstanding the provisions of Paragraph (a) of this Section 4.1, a
Participant, who is eligible for Early Retirement or who will be
eligible for Early Retirement within 13 months, may elect to receive
the present value of the benefits payable to him or her under the
Plan, as computed as of the last day of the month in which the earlier
of the dates of the Participant's Early Retirement or Normal
Retirement occurs by utilizing the interest rate and mortality
assumptions set forth in Table I, which may be modified from time to
time by the Board of Directors of Honeywell Inc. (or, in the case of
the Participant's earlier death, the present value of such benefits so
computed as of the later of the last day of the month in which the
Participant's death or the Participant's earliest retirement
eligibility under his or her Base Plan occurs) in a lump sum cash
payment. The Participant's written election to receive a lump sum
cash payment shall be submitted on a form provided for that purpose by
the Company and consented to by the Participant's Spouse in writing if
the Participant is married and delivered to the Vice President,
Corporate Compensation and Benefits, at least 13 months prior to the
Participant's Early Retirement or Normal Retirement. Such Spouse's
consent must acknowledge the effect of such election and
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be witnessed by a notary public. If a Participant dies after making
such election and prior to his or her Early Retirement or Normal
Retirement, the lump sum cash payment shall be made to the
Participant's surviving Spouse in accordance with Section 3.5 or
Section 3.6, whichever may be applicable, or to the Participant's
surviving Children in accordance with Section 3.7.
4.2 TIME OF PAYMENTS. Benefit payments paid pursuant to Sections 3.1 or 3.2,
respectively, shall begin (or, in the event that the Participant has complied
with Section 43.1(b), be paid) 30 days after the Participant's Normal Retirement
or Early Retirement, as the case may be. Payments pursuant to Section 3.4 of
the Plan shall commence 30 days after the later of (a) the last day of the
calendar month in which the Participant is determined to be Permanently and
Totally Disabled under his or her Base Plan or (b) 6 months after his or her
last full day of active employment if he or she elects an immediate disability
benefit under his or her Base Plan; but if he or she elects a deferred
disability benefit under his or her Base Plan, payments shall commence (or, in
the event that the Participant has complied with Section 4.1(b), the present
value of such benefits shall be paid) 30 days after his or her Early Retirement
or Normal Retirement. Payments pursuant to Section 3.5 and 3.6 of the Plan,
shall commence (or, in the event that the Participant has complied with Section
4.1(b), the present value of such benefits shall be paid) 30 days after the
Participant's death if he or she was eligible for Early Retirement or 30 days
after the date he or she would have attained his or her earliest retirement
eligibility under his or her Base Plan. Payments pursuant to Section 3.7 of the
Plan shall commence (or, in the event that the Participant has complied with
Section 4.1(b), the present value of such benefits shall be paid) 30 days after
the date of the Participant's death.
4.3 PAYMENT SUBSEQUENT TO A CHANGE IN CONTROL.
(a) PAYMENT UPON TERMINATION OF EMPLOYMENT. Notwithstanding any Plan
provision to the contrary, if subsequent to a Change in Control, a
Participant's employment shall be terminated by the Participant for
"Good Reason" (as defined in the Honeywell Key Employee Severance
Plan) or by
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the Company other than for "Cause" (as defined in the Honeywell Key
Employee Severance Plan) or Permanent and Total Disability, the
present value of the benefits payable pursuant to Section 3.3,
(utilizing the interest rate and mortality assumptions set forth in
Table I, which may be modified from time to time by the Board of
Directors of Honeywell Inc.) shall be paid as a lump sum cash payment
to the Participant on the fifth day after such termination.
(b) PAYMENT UPON IMPOSITION OF FEDERAL OR STATE TAXES. If subsequent to a
Change in Control, any Participant is determined to be subject to
Federal or state income tax on any amount accrued on his or her behalf
under this Plan prior to the time of payment hereunder, Federal or
state taxes attributable to the amount determined to be so taxable
shall be distributed by the Plan to such Participant. An amount
accrued on his or her behalf under this Plan shall be determined to be
subject to Federal income tax upon the earliest of:
(i) a final determination by the United States Internal Revenue
Service addressed to the Participant which is not appealed to the
courts;
(ii) a final determination by the United States Tax Court or any other
Federal Court affirming any such determination by the Internal
Revenue Service; or
(iii) an opinion by the Tax Counsel of the Company, addressed to the
Company and the Trustee, that, by reason of Treasury Regulations,
amendments to the Internal Revenue Code, published Internal
Revenue Service rulings, court decisions or other substantial
precedent, amounts accrued on a Participant's behalf hereunder
are subject to Federal or state income tax prior to payment.
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The Company shall undertake at its sole expense to defend any tax claims
described herein which are asserted by the Internal Revenue Service or by
any state revenue authority against any Participant subsequent to a Change
in Control, including attorney fees and costs of appeal, and shall have
the sole authority to determine whether or not to appeal any determination
made by the Service, by any state revenue authority or by a lower court.
The Company also agrees to reimburse any Executive for any interest or
penalties in respect of Federal or state tax claims hereunder upon receipt
of documentation of same. Any distributions from the Plan to a Participant
under this Section 4.3(b) shall be applied in an equitable manner to
reduce Company liabilities to such Participant under the Plans.
4.4 PAYMENTS SUBSEQUENT TO THE PARTICIPANT'S RETIREMENT. At any time before
or after a Change in Control, a Participant, after he or she has retired under
the provisions of the Base Plan on or after December 17, 1991, or the surviving
Spouse or beneficiary of the Participant, after the Participant's death
subsequent to such retirement on or after December 17, 1991, may elect to
receive the present value of such benefits or remaining benefits to which he or
she is entitled to under this Plan in one lump sum cash payment at any time
after the Participant's date of retirement or death, respectively, as computed
as of the last day of the month in which the request is received by the Vice
President, Corporate Compensation and Benefits, by utilizing the interest rate
and mortality assumptions set forth in Table I, which may be modified from time
to time by the Board of Directors of Honeywell Inc., and then reduced by a
penalty, which shall be forfeited to the Company, (a) which is equal, before a
Change in Control occurs, to 10 percent of the present value of any unpaid
benefits, and (b) which is equal, after a Change in Control occurs, to 6 percent
of the present value of such unpaid benefits. Payment of such benefits shall be
effected on the last day of the next month following the month in which the
request is received.
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ARTICLE V - ADMINISTRATION OF THE PLAN
5.1 PERSONNEL COMMITTEE. The Plan shall be administered by the Personnel
Committee of Honeywell's Board of Directors which shall have the authority to
determine Plan eligibility and the amount of Plan benefits to which a
Participant or beneficiary is entitled to receive, interpret the Plan, maintain
records and issue such regulations as it shall from time to time deem
appropriate. The interpretations of such Committee shall be final. The
Committee shall have absolute discretion in carrying out its responsibilities.
No Participant or beneficiary of this Plan may be a member of this Committee.
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ARTICLE VI - AMENDMENT AND TERMINATION
6.1 AMENDMENT AND TERMINATION. The Board of Directors of Honeywell Inc. may
amend or terminate the Plan at any time, provided, however, that no such
amendment or termination shall adversely affect a benefit payable on the Normal
or Early Retirement, death or Permanent and Total Disability of a Participant
with respect to the Participant's employment by the Company prior to the date of
such amendment or termination unless such benefit is or becomes payable under
another plan or practice adopted by such Board of Directors. In the event of
termination of the Plan, any benefits which have accrued hereunder shall be paid
in the form and at the time determined under Section 3.1(a) of the Plan.
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ARTICLE VII - GENERAL CONDITIONS
7.1 NON-ASSIGNABILITY OF THE RIGHT TO RECEIVE BENEFITS. The right to receive
benefits under the Plan may not be anticipated, alienated, sold, transferred,
assigned, pledged, encumbered, or subjected to any charge or legal process.
7.2 APPLICABLE LAW. All questions pertaining to the construction, validity
and effect of the Plan shall be determined in accordance with the laws of the
United States and the State of Minnesota, other than its laws respecting choice
of law.
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ARTICLE VIII - FUNDING
8.1 SOURCE OF PAYMENTS. All payments hereunder shall be paid in cash from the
general funds of the Company, and no special or separate fund shall be
established since it is the intent to pay benefits as they become payable from
operating revenue. The Company may, however, in its sole discretion, establish
a separate reserve which may be held by it from which such benefits may be paid.
The foregoing shall not preclude the establishment by the Company of a "rabbi
trust" or the use of assets contributed to a "rabbi trust" to pay benefits under
the Plan.
8.2 STATUS OF PARTICIPANTS. A Participant shall have no right, title, or
interest whatever in or to any investments which the Company may make to aid it
in meeting its obligations hereunder. Nothing contained in this Plan, and no
action taken pursuant to its provisions, shall create or be construed to create
a trust of any kind, or a fiduciary relationship, between the Company and a
Participant or any other person. To the extent that any person acquires a right
to receive payments from the Company, such right shall be no greater than the
right of an unsecured creditor.
8.3 FICA AND FUTA CONTRIBUTIONS ON PLAN BENEFITS. All amounts which have
accrued to a Participant under this Plan with respect to a Participant's service
with the Company after December 31, 1983, as provided in this Section 7.3 shall
be considered "wages" for purposes of the Federal Insurance Contribution Act
("FICA") and the Federal Unemployment Tax Act ("FUTA") as of the earliest of (i)
the date of the commencement of the Participant's Normal Retirement benefits,
Early Retirement benefits, Total and Permanent Disability benefits, or
commencement of Pre-retirement Surviving Spouse Benefits to the Participant's
spouse or Surviving Children's Benefit to his or her Child or Children ("Benefit
Commencement Date"); (ii) the date in 1993 on which an active Participant
submitted an application for retirement benefits under the Base Plan or resigned
his or her employment with the Company, effective in 1994 but prior to July 1,
1994; or (iii) the date in 1993 on which a specified accrued benefit is
determined with
22
<PAGE>
respect to any other Participant in the Plan who is designated by the Vice
President Corporate Human Resources and approved by the Chief Executive Officer
of the Company prior to December 31, 1993.
Effective with the first payment made under the Plan after December 31, 1990,
any amount taken into account as wages with respect to a Participant's Benefit
Commencement Date occurring after the applicable effective date specified in the
Social Security Amendment of 1983 by reason of this Section 7.3 shall not again
be treated as wages for FICA or FUTA purposes. However, no Participant shall be
entitled to a refund from the Company of any previously paid FICA or FUTA
contributions as a result of the application of this Section 7.3.
In order to compute the present value of a Participant's benefit under this Plan
for purposes of determining the amount of any FICA or FUTA contribution payable
with respect to such benefit, such present value shall be determined in
accordance with Table I.
23
<PAGE>
ARTICLE IX - CLAIMS PROCEDURE
9.1 FILING OF A CLAIM FOR BENEFITS. Upon denial of benefits by the Company,
the Participant or the Participant's beneficiary shall make a claim to the
Personnel Committee or its delegatee(s) for the benefits provided under the Plan
in the manner provided in this Article.
9.2 NOTIFICATION TO CLAIMANT OF DECISION. If a claim is wholly or partially
denied, notice of the decision, meeting the requirements of Section 8.3 shall be
furnished to the claimant within 90 days after receipt of the claim by the
Personnel Committee, unless special circumstances, such as the need to hold a
hearing, require an extension of time for processing the claim. If an extension
of time is required, written notice of the extension shall be furnished to the
claimant prior to the end of the initial 90 day period, indicating the special
circumstances requiring the extension and the date by which a final decision is
expected. An extension of time shall in no event exceed a period of 90 days from
the end of the initial 90 day period. If notice of the denial of a claim is not
furnished in accordance with the provisions of this Section, the claim shall be
deemed denied and the claimant may proceed with the review procedure set forth
in Section 8.3.
9.3 CONTENT OF NOTICE. The Personnel Committee or its delegatee(s) shall
provide to any claimant who is denied a claim for benefits written notice
setting forth in a manner calculated to be understood by the claimant, the
following:
(a) The specific reason or reasons for the denial;
(b) Specific reference to pertinent provisions of the Plan on which the
denial is based;
(c) A description of any additional material or information necessary for
the claimant to perfect the claim and an explanation of why such
material or
24
<PAGE>
information necessary for the claimant to perfect the claim and an
explanation of why such material or information is necessary; and
(d) An explanation of the Plan's claim review procedure, as set forth in
Sections 8.4 and 8.5, together with any review procedures specified by
the Personnel Committee.
9.4 REVIEW PROCEDURE. The purpose of the review procedures set forth in this
Section 8.4 as follows is to provide a procedures by which a claimant under this
Plan may have a reasonable opportunity to appeal a denial of a claim to the
Personnel Committee for a full and fair review. To accomplish that purpose, the
claimant or his or her duly authorized representative:
(a) May request a review upon written application to the Personnel
Committee,
(b) May review pertinent documents; and
(c) May submit issues and comments in writing.
A claimant (or his or her duly authorized representative) shall request a
review by filing a written application for review with the Personnel
Committee at any time within 60 days after receipt by the claimant of
written notice of the denial of the claim.
9.5 DECISION ON REVIEW. A decision of a denied claim shall be made in the
following manner:
(a) The decision on review shall be made by the Personnel Committee (or
its delegatee(s), which may in its discretion hold a hearing on the
denied claim. The Personnel Committee shall make its decision
promptly, and not later
25
<PAGE>
than 60 days after receipt of the request for review, unless special
circumstances (such as the need to hold a hearing) require an
extension of time for processing, in which case a decision shall be
rendered as soon as possible, but not later than 120 days after
receipt of the request for review. If an extension of time for review
is required because of special circumstances, written notice of the
extension shall be furnished to the claimant prior to the commencement
of the extension. If the decision on review is not furnished within
the time specified, the claim shall be deemed denied on review.
(b) The decision on review shall be in writing and shall include specific
reasons for the decision, written in a manner calculated to be
understood by the claimant, and specific references to the pertinent
provisions of the Plan on which the decision is based.
26
<PAGE>
TABLE I
(amended through December 21, 1993)
The present value of Plan benefits for purposes of Section 4.1(b),
Section 4.3(a), and Section 4.4 shall be calculated using the
following actuarial assumptions and factors:
Interest: 8-1/2 percent per annum discount rate
Mortality: 1983 Group Annuity Mortality Table for
healthy males
<PAGE>
12/30/89
HONEYWELL EXECUTIVE LIFE
INSURANCE AGREEMENT
THIS AGREEMENT made and entered into effective the __________ day of
_________________, 199___, by and between HONEYWELL INC. ("Employer"), and
________________________________________________________________ ("Owner");
WHEREAS, _______________________________________________ ("Employee") is a
valued employee of Employer and Employer wishes to retain him in its employ;
and
WHEREAS, as an inducement to Employee's continued employment, Employer wishes to
assist Employee with his personal life insurance program by entering into the
Honeywell Executive Life Insurance Agreement with the Owner.
NOW, THEREFORE, the Employer and Owner agree as follows:
1. IDENTIFICATION OF POLICY. The policy number of the life insurance policy
to which this Agreement relates ("Policy"), the name of the Company issuing such
Policy ("Insurer"), and the Owner's death benefit payable in the event of the
Employee's death shall be set forth on Exhibit A to this Agreement as determined
by the Employer effective each January 1 during the term of this Agreement.
2. OWNERSHIP OF POLICY. Owner or his (or its) transferee shall be the owner
of the Policy, and may exercise all ownership rights granted to the Owner by the
terms of the Policy. Notwithstanding any other provisions of this Agreement or
any form of policy assignment executed by Owner or his (or its) transferee in
connection with this Agreement, it is the express intention of the parties to
reserve to the Owner all rights in and to the Policy granted to the Owner by its
terms, including, but not limited to, the right to assign the Owner's interest
in the Policy, the right to change the beneficiary of the Policy, the right to
exercise settlement options, the right to borrow against the cash value of the
Policy, and the right to surrender or cancel the Policy, in whole or in part.
Employer shall neither have nor exercise any right in or to the Policy which
could, in any way, endanger, defeat or impair any of the rights of the Owner in
the Policy, including the right to collect the proceeds of the Policy in excess
of the amount due the Employer, as provided in this Agreement. The only rights
in and to the Policy granted to the Employer shall be limited to its security
interest in the "surrender value" of the Policy, which for all purposes of this
Agreement shall be as defined in the Policy, and a portion of the death benefit
of the Policy, as hereinafter provided. The Employer shall not assign any of
its rights in the Policy to anyone other than the Owner (or the Owner's
transferee, if the Owner has transferred his or its rights in the Policy).
<PAGE>
3. PREMIUM. The Owner shall contribute to the Employer an amount equal to the
annual economic benefit derived by the Owner (as determined by the Employer in
accordance with Revenue Rulings 64-328 and 66-110 and set forth in item 7 of
Exhibit A), or, if less, the premium for that year as set forth in item 6 of
Exhibit A. If the Owner is also the Employee, such contribution shall be made
by periodic payroll deductions. If the Owner is other than the Employee, the
Owner shall pay the Owner's portion of the premium to the Employer in a lump sum
at the beginning of each Policy year. The Employer shall pay the remainder of
each total premium on the Policy. The total annual premium due on such Policy,
effective January 1 for each year during the term of this Agreement, shall be
set forth in item 6 on Exhibit A of this Agreement, as determined by the
Employer.
4. ASSIGNMENT. Contemporaneously with this Agreement, the Owner has assigned
the Policy to the Employer under the form of Assignment attached as Exhibit B,
as it may be amended from time to time to reflect any modifications to Exhibit A
with respect to the Insurer or policy number, which Assignment gives the
Employer the right to recover the premiums it has paid on the Policy less
amounts received under the Agreement from the Owner ("net premium outlay") from
the surrender value of the Policy and to recover a portion of the death benefit
of the Policy. The interest of the Employer in and to the Policy shall be
specifically limited to the following rights:
a. The right to recover the lesser of its net premium outlay or the
surrender value of the Policy in the event the Policy is totally
surrendered or cancelled by the Owner, or the right to receive the
surrender proceeds to the extent of its net premium outlay in the
event the Policy is partially surrendered by the Owner as provided in
paragraph 5;
b. The right to recover the death benefit proceeds remaining after the
Owner's death benefit set forth in item 5 of Exhibit A has been paid
to the Owner's designated beneficiary upon the death of Employee, as
provided in paragraph 7 below;
c. The right to recover the lesser of its net premium outlay or the
surrender value of the Policy, or to receive ownership of the Policy,
in the event of termination of this Agreement, as provided in
paragraphs 6(a) and 6(b) below; and
d. The right to recover its net premium outlay to the extent a Policy
loan made by the Owner in any year exceeds the lesser of the Owner's
portion of the premium for that year as specified in item 7 of Exhibit
A or the increase for that year in the surrender value of the Policy,
as provided in paragraph 8.
-2-
<PAGE>
5. SURRENDER OR CANCELLATION. The Owner shall have the sole right to
surrender or cancel the Policy, in whole or in part, and to receive its
surrender value. The parties agree that the Owner shall partially surrender the
Policy within thirty (30) days following the later of Employee's termination of
employment with the Employer and the tenth anniversary of the effective date of
this Agreement. In the event of any partial or complete surrender or
cancellation, the Employer shall be provided at least fifteen (15) days written
notice of the surrender or cancellation of the Policy, in whole or in part, by
the Owner prior to the Owner's receipt of the surrender value of the Policy from
the Insurer.
In the event of a complete surrender or cancellation of the Policy, the balance
of the surrender value remaining after the payment provided for in paragraph
4(a), if any, shall belong to the Owner. It is agreed that the entire amount of
the surrender value of the Policy shall be payable to the Owner who shall
immediately upon receipt remit to the Employer the amount to which it is
entitled pursuant to paragraph 4(a). It is the purpose of this provision
specifically to provide that the sole and exclusive right to surrender or cancel
the Policy, in whole or in part, is vested in the Owner, and that the Employer
shall have no right to cancel or surrender the Policy, in whole or in part,
subject to the Employer's right to terminate the Agreement pursuant to
paragraph 6.
6. TERMINATION OF AGREEMENT. This Agreement may be terminated, subject to the
provisions of subparagraphs (a) and (b) below, by either party's giving notice
in writing to the other party. In the event of the termination of Employee's
employment with the Employer after the tenth anniversary of the effective date
of this Agreement for any reason other than Employee's death, this Agreement
shall terminate automatically, subject to the provisions of the subparagraphs
(a) and (b) below:
a. In the event of termination of this Agreement as provided in this
paragraph 6, the Owner shall have the right to obtain the release of
the Assignment of the Policy to the Employer. To obtain a release of
the Assignment, the Owner shall, within thirty (30) days after the
date of termination of the Agreement, surrender, in whole or in part,
or cancel the Policy, and after providing at least fifteen (15) days
written notice to the Employer prior to the receipt of the surrender
value of the Policy, pay to the Employer immediately upon the Owner's
receipt thereof the lesser of the Employer's net premium outlay or the
surrender value of the Policy, computed as of the date of termination
of the Agreement. Upon receipt of such amount, the Employer shall
execute an appropriate instrument of release of the Assignment of the
Policy.
-3-
<PAGE>
b. If the Owner fails to surrender or cancel the Policy within
thirty (30) days of the date of termination of the Agreement, then,
after such 30-day period, the Owner shall execute any and all
instruments that may be required to vest ownership of the Policy in
the Employer. Thereafter, the Owner shall have no further interest
in the Policy or this Agreement.
7. DEATH. Upon the death of Employee, the Owner shall be entitled to
receive a death benefit in the amount specified in item 5 of Exhibit A. The
balance of the death benefit provided under the Policy, if any, shall be paid
directly to the Employer.
8. LOANS. The Owner shall have the sole right to borrow against the Policy,
and the Employer shall have no right to obtain loans against the Policy,
directly or indirectly, from the Insurer or from any other person, or to pledge
or assign the Policy as security for any loan. If the Owner in any Policy year
borrows from the Policy an amount in excess of the Owner's portion of the annual
premium specified in item 7 of Exhibit A for that year or the increase in the
surrender value of the Policy for the year, whichever is less, the Employer
shall be entitled to receive such excess amount, to the extent of its net
premium outlay under this Agreement. The Owner shall pay any interest due on
any Policy loan it obtains.
9. TRANSFEREE. In the event Owner shall transfer all of his (or its) interest
in the Policy, then all of Owner's interest in the Policy and in this Agreement
shall be vested in his (or its) transferee, who shall be substituted as a party
under this Agreement, and the transferring Owner shall have no further interest
in the Policy or in this Agreement.
10. SUCCESSORS AND ASSIGNS. This Agreement shall bind Employer, its successors
and assigns, and Employee and Owner and their heirs, executors, administrators
and transferees, and any Policy beneficiary. The Employer agrees that it will
not merge or consolidate with another employer, corporation, or organization, or
permit its business and activities to be taken over by any other organization
unless or until the succeeding or continuing employer, corporation or other
organization shall expressly assume the rights and obligations of the Employer
set forth in this Agreement.
11. EFFECT ON EMPLOYMENT. This Agreement shall not be deemed to constitute a
contract of employment between the parties, nor shall any provision restrict the
right of Employee to terminate his employment, at any time not in contravention
of any applicable employment agreement.
-4-
<PAGE>
12. INSURER. The Insurer shall be bound only by the provisions of and
endorsements on the Policy, and any payments made or action taken by it in
accordance with the Policy shall fully discharge it from all claims, suits and
demands of all persons whatsoever. Except as specifically provided by
endorsement on the Policy, the Insurer shall in no way be bound by the
provisions of this Agreement.
13. CLAIMS PROCEDURE. The following claims procedure shall apply to this
Agreement under the Honeywell Executive Life Insurance Agreement:
a. FILING OF A CLAIM FOR BENEFITS. The Owner or the Owner's beneficiary
shall make a claim to the Employer for the benefits provided under the
Agreement in the manner provided in this Agreement.
b. NOTIFICATION TO CLAIMANT OF DECISION. If a claim is wholly or
partially denied, notice of the decision, meeting the requirements of
paragraph 13(c) following, shall be furnished to the claimant within
ninety (90) days after receipt of the claim by the Employer, unless
special circumstances, such as the need to hold a hearing, require an
extension of time for processing the claim. If an extension of time
is required, written notice of the extension shall be furnished to the
claimant prior to the end of the initial ninety (90) day period,
indicating the special circumstances requiring the extension and the
date by which a final decision is expected. An extension of time
shall in no event exceed a period of ninety (90) days from the end of
the initial ninety (90) day period. If notice of the denial of a
claim is not furnished in accordance with the provisions of this
paragraph, the claim shall be deemed denied and the claimant may
proceed with the review procedure set forth in paragraph 13(d)
following.
c. CONTENT OF NOTICE. The Employer shall provide to any claimant who is
denied a claim for benefits written notice setting forth in a manner
calculated to be understood by the claimant, the following:
1. The specific reason or reasons for the denial;
2. Specific reference to pertinent provisions of the Agreement on
which the denial is based;
3. A description of any additional material or information necessary
for the claimant to perfect the claim and an explanation of why
such material or information necessary for the claimant to
perfect the claim and an explanation of why such material or
information is necessary; and
4. An explanation of the Agreement's claim review procedure, as set
forth in paragraphs 13(d) and (e) following, together with any
review procedures specified by the Employer.
-5-
<PAGE>
d. REVIEW PROCEDURE. The purpose of the review procedures set forth in
this paragraph 13(d) and in paragraph 13(e) following is to provide a
procedure by which a claimant under this Agreement may have a
reasonable opportunity to appeal a denial of a claim to the Employer
as named fiduciary for a full and fair review. To accomplish that
purpose, the claimant or his or her duly authorized representative:
1. May request a review upon written application to the Employer;
2. May review pertinent documents; and
3. May submit issues and comments in writing.
A claimant (or his or her duly authorized representative) shall
request a review by filing a written application for review with the
Employer at any time within sixty (60) days after receipt by the
claimant of written notice of the denial of the claim.
e. DECISION ON REVIEW. A decision of a denied claim shall be made in the
following manner:
1. The decision on review shall be made by the Employer, which may
in its discretion hold a hearing on the denied claim. The
Employer shall make its decision promptly, and not later than
sixty (60) days after receipt of the request for review, unless
special circumstances (such as the need to hold a hearing)
require an extension of time for processing, in which case a
decision shall be rendered as soon as possible, but not later
than one hundred and twenty (120) days after receipt of the
request for review. If an extension of time for review is
required because of special circumstances, written notice of the
extension shall be furnished to the claimant prior to the
commencement of the extension. If the decision on review is not
furnished within the time specified, the claim shall be deemed
denied on review.
2. The decision on review shall be in writing and shall include
specific reasons for the decision, written in a manner calculated
to be understood by the claimant, and specific references to the
pertinent provisions of the Agreement on which the decision is
based.
14. AMENDMENT. Except as provided in paragraph 6 and in paragraphs 1 and 3
pertaining to Exhibit A, this Agreement may not be cancelled, amended, altered
or modified, except by a written instrument signed by all of the parties.
-6-
<PAGE>
15. NOTICES. Any notice, consent or demand required or permitted to be given
under the provisions of this Agreement by one party to another shall be in
writing, shall be signed by the party giving or making the same, and may be
given either by delivering the same to such other party personally, or by
mailing the same, by United States certified mail, postage prepaid, to such
party, addressed to his, her or its last known address as shown on the records
of the Employer. The date of such mailing shall be deemed the date of such
mailed notice, consent or demand.
16. GENDER AND NUMBER. Whenever any words are used herein in the masculine
gender, they shall be construed as though they were also used in the feminine or
neuter gender in all cases where they would so apply, and whenever any words are
used herein in the singular or plural form, they shall be construed as though
they were also used in the other form in all cases where they would so apply.
17. CONTROLLING LAW. This Agreement, and the rights of the parties hereunder,
shall be governed by and construed pursuant to the laws of the State of
Minnesota.
IN WITNESS WHEREOF, the parties have executed this Agreement effective the day
and year first above written.
OWNER HONEYWELL INC.
___________________________________
By_________________________________ By______________________________________
Its Authorized Vice
President
___________________________________ ________________________________________
Witness Witness
-7-
<PAGE>
September 23, 1993
Name
Address
City
Dear _____________________:
Honeywell Inc. (the "Corporation") considers it essential to the best
interests of its stockholders to foster the continuous employment of key
management personnel. In this connection, the Board of Directors (the "Board")
recognizes that, as is the case with many publicly held corporations, the
possibility of a change in control of the Corporation may exist and that such
possibility, and the uncertainty and questions which it may raise among
management, may result in the departure or distraction of management personnel
to the detriment of the Corporation and its stockholders.
The Board has determined that appropriate steps should be taken to
reinforce and encourage the continued attention and dedication of members of the
Corporation's management, including you, to their assigned duties without
distraction in the face of potentially disturbing circumstances arising from the
possibility of a change in control of the Corporation. In that regard, the
Board has determined that this letter agreement (the "Agreement") will better
serve the above-stated objective than the letter agreement entered into between
you and the Corporation dated January 15, 1992 (the "Prior Agreement"), which is
hereby terminated.
In order to induce you to remain in the employ of the Corporation, the
Corporation agrees that you shall receive the severance benefits set forth in
this Agreement in the event your employment with the Corporation is terminated
under the circumstances described below subsequent to a "change in control of
the Corporation" (as defined in Section 2).
1. TERM OF AGREEMENT. This Agreement shall replace the Prior Agreement,
shall commence as of the date hereof, and shall continue in effect through
December 31, 1993; provided, however, that commencing on January 1, 1994 and
each January 1 thereafter, the
<PAGE>
September 23, 1993
Page 2
term of this Agreement shall automatically be extended for one additional year
unless, not later than October 1 of the preceding year, the Corporation shall
have given notice that it does not wish to extend this Agreement; and provided,
further, that if a change in control of the Corporation, as defined in Section
2, shall have occurred during the original or extended term of this Agreement,
this Agreement shall continue in effect for a period of not less than thirty-six
(36) months beyond the month in which such change in control occurred. In no
event, however, shall the term of this Agreement extend beyond the end of the
calendar month in which your 65th birthday occurs.
2. CHANGE IN CONTROL. No benefits shall be payable hereunder unless there
shall have been a change in control of the Corporation, as set forth below. For
purposes of this Agreement, a "change in control of the Corporation" shall be
deemed to have occurred if:
(i) any "person," as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") (other than the
Corporation, any trustee or other fiduciary holding securities under an employee
benefit plan of the Corporation, or any corporation owned, directly or
indirectly, by the stockholders of the Corporation in substantially the same
proportions as their ownership of stock of the Corporation), is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Corporation representing 30%, or more of the
combined voting power of the Corporation's then outstanding securities eligible
to vote; or
(ii) during any period of two consecutive years (not including any period
prior to the execution of this Agreement), individuals who at the beginning of
such period constitute the Board, and any new director (other than a director
designated by a person who has entered into an agreement with the Corporation to
effect a transaction described in clause (i), (iii) or (iv) of this Section)
whose election by the Board or nomination for election by the Corporation's
stockholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so approved
(hereinafter referred to as "Continuing Directors"), cease for any reason to
constitute at least a majority thereof;
(iii) the stockholders of the Corporation approve a merger or consolidation
of the Corporation with any other corporation, other than a merger or
consolidation which would result in the voting securities of the Corporation
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity)
<PAGE>
September 23, 1993
Page 3
more than 50% of the combined voting power of the voting securities of the
Corporation or such surviving entity outstanding immediately after such merger
or consolidation; provided, however, that a merger or consolidation effected to
implement a recapitalization of the Corporation (or similar transaction) in
which no "person" (as hereinabove defined) acquires more than 30% of the
combined voting power of the Corporation's then outstanding securities shall not
constitute a change in control of the Corporation; or
(iv) the stockholders of the Corporation approve a plan of complete
liquidation of the Corporation or an agreement for the sale or disposition by
the Corporation of all or substantially all of the Corporation's assets (or any
transaction having a similar effect).
3. TERMINATION FOLLOWING CHANGE IN CONTROL.
(i) GENERAL. If any of the events described in Section 2 constituting a
change in control of the Corporation shall have occurred, you shall be entitled
to such benefits provided in Section 4 which may be applicable, upon the
subsequent termination of your employment during the term of this Agreement,
unless such termination is (a) because of your death or Disability, (b) by the
Corporation for Cause, or (c) by you other than for Good Reason. In the event
your employment with the Corporation is terminated for any reason prior to the
occurrence of a change in control of the Corporation and subsequently a change
in control of the Corporation shall have occurred, you shall not be entitled to
any benefits hereunder.
(ii) DISABILITY. If, as a result of your incapacity due to physical or
mental illness, you shall have been absent from the full-time performance of
your duties with the Corporation for six (6) consecutive months, and within
thirty (30) days after written notice of termination is given, you shall not
have returned to the full-time performance of your duties, for purposes of this
Agreement your employment may be terminated for "Disability."
(iii) CAUSE. Termination by the Corporation of your employment for "Cause"
shall mean termination (a) upon the willful and continued failure by you to
substantially perform your duties with the Corporation (other than any such
failure resulting from your incapacity due to physical or mental illness or any
such actual or anticipated failure after the issuance of a Notice of Termination
(as defined in Subsection 3(v)) by you for Good Reason (as defined in Subsection
3(iv))), within ten (10) days after a written demand for substantial performance
is delivered to you by the Board, which demand specifically identifies the
manner in which the Board believes that you have not substantially performed
your duties, or (b) the willful engaging by you in conduct which is clearly and
materially injurious to the Corporation, monetarily or
<PAGE>
September 23, 1993
Page 4
otherwise. For purposes of this Subsection, no act, or failure to act, on your
part shall be deemed "willful" unless done, or omitted to be done, by you in bad
faith and without reasonable belief that your action or omission was in or not
opposed to the best interest of the Corporation. Notwithstanding the foregoing,
you shall not be deemed to have been terminated for Cause unless and until there
shall have been delivered to you a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters (3/4) of the entire membership
of the Board at a meeting of the Board (after reasonable notice to you and an
opportunity for you, together with your counsel, to be heard before the Board),
finding that in the good faith opinion of the Board you were guilty of conduct
set forth above in this Subsection and specifying the particulars thereof in
detail.
(iv) GOOD REASON. You shall be entitled to terminate your employment for
Good Reason. For purposes of this Agreement, "Good Reason" shall mean, without
your express written consent, the occurrence after a change in control of the
Corporation of any of the following circumstances unless, in the case of
paragraphs (a), (e), (f), (g) or (h), such circumstances are fully corrected
prior to the Date of Termination (as defined in Section 3(vi)) specified in the
Notice of Termination (as defined in Section 3(v)) given in respect thereof:
(a) the assignment to you of any duties inconsistent with the status
of the position in the Corporation that you held immediately prior to the
change in control of the Corporation or an adverse alteration in the nature
or status of your responsibilities or in the quality or amount of office
accommodations or assistance provided to you, from those in effect
immediately prior to such change in control;
(b) a reduction by the Corporation in your annual base salary as in
effect on the date immediately prior to the change in control of the
Corporation or as the same may be increased from time to time thereafter;
(c) the Corporation's moving you to be based more than 50 miles from
the Corporation's offices at which you are principally employed immediately
prior to the date of the change in control of the Corporation except for
required travel on the Corporation's business to an extent substantially
consistent with your present business travel obligations;
(d) the failure by the Corporation to pay to you any portion of your
current compensation or compensation under any deferred compensation
program of the Corporation within seven (7) days of the date such
compensation is due:
<PAGE>
September 23, 1993
Page 5
(e) the failure by the Corporation to continue in effect any
compensation or benefit plan or perquisites in which you participate
immediately prior to the change in control of the Corporation which is
material to your total compensation, including but not limited to the
Corporation's Corporate Executive Compensation Plan, Performance Stock
Program, 1988 Stock and Incentive Plan, Stock Recognition Plan,
Supplementary Retirement Plan, Financial Planning Program, Corporate Club
Membership Plan, Honeywell Executive Automobile Plan or Personal Automobile
Plan, any supplementary executive retirement plans of the Corporation you
may be covered under, or any successor plans (collectively, the
"Compensation Plans"), unless an equitable arrangement (embodied in an
ongoing substitute or alternative plan) has been made with respect to such
plan, or the failure by the Corporation to continue your participation
therein (or in such substitute or alternative plan) on a basis not
materially less favorable, both in terms of the amount of benefits provided
and the level of your participation relative to other participants, than
existed at the time of the change in control of the Corporation;
(f) the failure by the Corporation to continue to provide you with
benefits substantially similar to those enjoyed by you under any of the
Corporation's life insurance, medical, dental, accident or disability plans
in which you were participating at the time of the change in control of the
Corporation, the taking of any action by the Corporation which would
directly or indirectly materially reduce any of such benefits, or the
failure by the Corporation to provide you with the number of paid vacation
days to which you are entitled on the basis of your years of service with
the Corporation in accordance with the Corporation's normal vacation policy
in effect at the time of the change in control of the Corporation;
(g) the failure of the Corporation to obtain a satisfactory agreement
from any successor to assume and agree to perform this Agreement, as
contemplated in Section 5 hereof; or
(h) any purported termination of your employment that is not effected
pursuant to a Notice of Termination satisfying the requirements of
Subsection (v) hereof (and, if applicable, the requirements of Subsection
(iii) hereof), which purported termination shall not be effective for
purposes of this Agreement.
Your right to terminate your employment pursuant to this Subsection shall not be
affected by your incapacity due to physical or mental illness. Your continued
employment shall not constitute consent
<PAGE>
September 23, 1993
Page 6
to, or a waiver of rights with respect to, any circumstance constituting Good
Reason hereunder.
(v) NOTICE OF TERMINATION. Any purported termination of your
employment by the Corporation or by you shall be communicated by written Notice
of Termination to the other party hereto in accordance with Section 6. "Notice
of Termination" shall mean a notice that shall indicate the specific termination
provision in this Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of your
employment under the provision so indicated.
(vi) DATE OF TERMINATION. "Date of Termination" shall mean (a) if your
employment is terminated for Disability, thirty (30) days after Notice of
Termination is given (provided that you shall not have returned to the full-time
performance of your duties during such thirty (30)-day period), (b) if your
employment is terminated pursuant to Subsection (iii) or (iv) hereof, the date
specified in the Notice of Termination (which, in the case of a termination for
Good Reason shall not be less than fifteen (15) nor more than sixty (60) days
from the date such Notice of Termination is given, (c) in the case of a
termination by you for any other reason shall not be less than thirty (30) days
from the date such Notice of Termination is given); and (d) if your employment
is terminated by the Corporation for any other reason (other than for Cause or
for Disability), the date specified in the Notice of Termination, which shall be
the last day of a layoff period specified in paragraph (e) of Section 4 (iv);
provided, however, that if within fifteen (15) days after any Notice of
Termination is given, or, if later, prior to the Date of Termination (as
determined without regard to this proviso), the party receiving such Notice of
Termination notifies the other party that a dispute exists concerning the
termination, then the Date of Termination (other than the Date of Termination
where clause (d) of this Subsection (vi) is applicable) shall be the date on
which the dispute is finally determined, either by mutual written agreement of
the parties, by a binding arbitration award, or by a final judgment, order or
decree of a court of competent jurisdiction (which is not appealable or with
respect to which the time for appeal therefrom has expired and no appeal has
been perfected); and provided, further, that the Date of Termination shall be
extended by a notice of dispute only if such notice is given in good faith and
the party giving such notice pursues the resolution of such dispute with
reasonable diligence. Notwithstanding the pendency of any such dispute, the
Corporation will continue to pay you your full compensation in effect when the
notice giving rise to the dispute was given and continue you as a participant in
all Compensation Plans, life insurance, medical, dental, accident or disability
plans and any similar plans in which you were participating when the notice
giving rise to the dispute was given, until the dispute is finally resolved in
accordance with this
<PAGE>
September 23, 1993
Page 7
Subsection. Amounts paid under this Subsection are in addition to all other
amounts due under this Agreement, and shall not be offset against or reduce any
other amounts due under this Agreement and shall not be reduced by any
compensation earned by you as the result of employment by another employer.
4. COMPENSATION DURING DISABILITY OR UPON TERMINATION. Following a change
in control of the Corporation, you shall be entitled to the following during a
period of Disability, upon termination of your employment, or upon the cessation
of your active service during a layoff period, as the case may be, provided that
such period, termination, or cessation of your active service occurs during the
term of this Agreement:
(i) During any period that you fail to perform your full-time duties with
the Corporation as a result of incapacity due to physical or mental illness, you
shall continue to receive your base salary at the rate in effect at the
commencement of any such period, together with all compensation payable to you
under the Corporation's disability plan or program or other similar plan during
such period, until this Agreement is terminated pursuant to Section 3(ii)
hereof. Thereafter, or in the event your employment shall be terminated by
reason of your death, your benefits shall be determined under the Corporation's
retirement, insurance and other compensation programs then in effect in
accordance with the terms of such programs.
(ii) If your employment shall be terminated by the Corporation for Cause or
by you other than for Good Reason, the Corporation shall pay you your full base
salary through the Date of Termination at the rate in effect at the time Notice
of Termination is given, plus all other amounts or benefits to which you are
entitled under any Compensation Plan of the Corporation then in effect, and the
Corporation shall have no further obligations to you under this Agreement.
(iii) If your employment by the Corporation shall be terminated by you for
Good Reason, then you shall be entitled to the following:
(a) the Corporation shall pay to you your full base salary through the
Date of Termination at the rate in effect at the time Notice of Termination
is given, no later than the fifth day following the Date of Termination,
plus all other amounts to which you are entitled under any compensation
plan of the Corporation, at the time such payments are due;
(b) in lieu of any further salary payments to you for periods
subsequent to the Date of Termination, the Corporation shall pay as
severance pay to you, at the time specified in Subsection (vi), a lump sum
severance payment equal to three
<PAGE>
September 23, 1993
Page 8
times the sum of your (1) annual salary as in effect as of your Date of
Termination and (2) "on-plan" bonus under the Corporate Executive Compensation
Plan (without regard to any attempted or purported termination or reduction of
such salary or bonus;
(c) your rights under the Compensation Plans shall be governed by the
terms of those respective plans;
(d) the Corporation shall pay to you all legal fees and expenses
incurred by you as a result of such termination (including all such fees
and expenses, if any, reasonably incurred in contesting or disputing by
arbitration or otherwise, any such termination or in seeking to obtain or
enforce any right or benefit provided by this Agreement or in connection
with any tax audit or proceeding to the extent attributable to the
application of section 4999 of the Internal Revenue Code of 1986, as
amended, (the "Code"), to any payment or benefit provided hereunder; and
(e) for a three year period after such termination, the Corporation
shall arrange to provide you with benefits substantially similar to those
which you were receiving or entitled to receive under the Corporation's
life, disability, accident and group health insurance plans or any similar
plans in which you were participating immediately prior to the Date of
Termination ("Welfare Plan Benefits") at a cost to you which is no greater
than that cost to you in effect at the Date of Termination; provided,
however, that to the extent any such coverage is prohibited by any judicial
or legislative authority, the Corporation shall make alternative
arrangements to provide you with Welfare Plan Benefits, including, but not
limited to, providing you with a payment in an amount equal to your cost of
purchasing the Welfare Plan Benefits. Benefits otherwise receivable by you
pursuant to this paragraph (e) shall be reduced to the extent comparable
benefits are actually received on your behalf during the three year period
following your termination, and such benefits actually received by you
shall be reported to the Corporation.
(iv) If your employment by the Corporation shall be terminated by the
Corporation other than for Cause or Disability, then you shall be entitled to
the following:
(a) the Corporation shall pay to you your full base salary through the
date the Notice of Termination is given at the rate in effect at the time
Notice of Termination is given, no later than the fifth day following the
date of the Notice of Termination, plus all other amounts to which you are
entitled under any compensation plan of the Corporation, at the time such
payments are due;
<PAGE>
September 23, 1993
Page 9
(b) in lieu of any further salary payments to you for periods
subsequent to the date the Notice of Termination is given, the Corporation
shall pay as severance pay to you, at the time specified in Subsection
(vi), a lump sum severance payment equal to three times the sum of your (1)
annual salary as in effect at the time Notice of Termination is given and
(2) "on-plan" bonus under the Corporate Executive Compensation Plan
(without regard to any attempted or purported termination or reduction of
such salary or bonus;
(c) your rights under the Compensation Plans shall be governed by the
terms of those respective plans which are applicable to a laid off
employee;
(d) the Corporation shall pay to you all legal fees and expenses
incurred by you as a result of such cessation of active service and
placement on layoff or termination (including all such fees and expenses,
if any, incurred in contesting or disputing any such layoff or termination
or in seeking to obtain or enforce any right or benefit provided by this
Agreement or in connection with any tax audit or proceeding to the extent
attributable to the application of Section 4999 of the Internal Revenue
Code of 1986, as amended, (the "Code"), to any payment or benefit provided
hereunder);
(e) you shall be placed on layoff status without recall rights for all
purposes in accordance with the Corporation's policies in effect
immediately prior to the date of the change in control of the Corporation,
receive continued accrual of credited service for benefits under the
provisions of the Honeywell Retirement Benefit Plan in effect immediately
prior to the change in control during such layoff period, and retention of
your employment status for (1) two years from the date of the cessation of
your active service if your years of credited service for benefits under
such Plan are less than two years or (2) the number of your years of such
credited service for benefits under such Plan which are not in excess of
five years; and
(f) for a three year period after your cessation of active service,
the Corporation shall arrange to provide you with benefits substantially
similar to those which you were receiving or entitled to receive under the
Corporation's life, disability, accident and group health insurance plans
or any similar plans in which you were participating immediately prior to
the date the Notice of Termination was given ("Welfare Plan Benefits")
including but not limited to providing you with a payment in an amount
equal to your cost of purchasing the Welfare Plan Benefits at a cost to you
which is no greater than that cost to you in effect at the time the Notice
of Termination is given; provided, however, that to the
<PAGE>
September 23, 1993
Page 10
extent any such coverage is prohibited by any judicial or legislative
authority, the Corporation shall make alternative arrangements to provide
you with Welfare Plan Benefits, including but not limited to providing you
with a payment in an amount equal to your cost of purchasing the Welfare
Plan Benefits. Benefits otherwise receivable by you pursuant to this
paragraph (f) shall be reduced to the extent comparable benefits are
actually received by you during the three year period following your
cessation of active service, and such benefits actually received by you
shall be reported to the Corporation.
(v) If any payments under this Agreement or any other payments or benefits
received or to be received by you in connection with a change in control of the
Corporation, your termination of employment, or your cessation of active service
(whether pursuant to the terms of this agreement or any other plan, arrangement
or agreement with the Corporation, or any person affiliated with the
Corporation) (the "Severance Payments"), will be subject to the tax (the "Excise
Tax") imposed by section 4999 of the Code (or any similar tax that may hereafter
be imposed), the Corporation shall pay at the time specified below, an
additional amount (the "Gross-Up Payment") such that the net amount retained by
you, after deduction of any Excise Tax on the Severance Payments and any
federal, state and local income tax and Excise Tax upon the payment provided for
by this Subsection 4(v), shall be equal to the Severance Payments. For purposes
of determining whether any of the Severance Payments will be subject to the
Excise Tax and the amount of such Excise Tax, (a) all Severance Payments shall
be treated as "parachute payments" within the meaning of section 280G(b)(2) of
the Code, and all "excess parachute payments" within the meaning of section
280G(b)(1) shall be treated as subject to the Excise Tax, unless in the opinion
of tax counsel selected by the Corporation's independent auditors and acceptable
to you such Severance Payments (in whole or in part) do not constitute parachute
payments, or such excess parachute payments (in whole or in part) represent
reasonable compensation for services actually rendered within the meaning of
section 280G(b)(4) of the Code in excess of the base amount within the meaning
of section 280G(b)(3) of the Code, or are otherwise not subject to the Excise
Tax, (b) the amount of the Severance Payments which shall be treated as subject
to the Excise Tax shall be equal to the lesser of (1) the total amount of the
Severance Payments or (2) the amount of excess parachute payments within the
meaning of section 280G(b)(1) (after applying clause (a), above), and (c) the
value of any non-cash benefits or any deferred payment or benefit shall be
determined by the Corporation's independent auditors in accordance with the
principles of section 280G(d)(3) and (4) of the Code. For purposes of
determining the amount of the Gross-Up Payment, you shall be deemed to pay
federal income taxes at your highest marginal rate of federal income taxation in
the calendar year in which the Gross-Up
<PAGE>
September 23, 1993
Page 11
Payment is to be made and state and local income taxes at your highest marginal
rate of taxation in the state and locality of your residence on the Date of
Termination (or earlier cessation of your active service), net of the maximum
reduction in federal income taxes which could be obtained from deduction of such
state and local taxes. In the event that the Excise Tax is subsequently
determined to be less than the amount taken into account hereunder at the time
of termination of your employment (or earlier cessation of your active service),
you shall repay to the Corporation at the time that the amount of such reduction
in Excise Tax is finally determined the portion of the Gross-Up Payment
attributable to such reduction (plus the portion of the Gross-Up Payment
attributable to the Excise Tax and federal and state and local income tax
imposed on the Gross-Up Payment being repaid by you if such repayment results in
a reduction in Excise Tax and/or a federal and state and local income tax
deduction) plus interest on the amount of such repayment at the rate provided in
section 1274(b)(2)(B) of the Code (the "Applicable Rate"). In the event that
the Excise Tax is determined to exceed the amount taken into account hereunder
at the time of the termination of your employment or earlier cessation of your
active service (including by reason of any payment the existence or amount of
which cannot be determined at the time of the Gross-Up Payment), the Corporation
shall make an additional Gross-Up Payment in respect of such excess (plus any
interest payable with respect to such excess at the Applicable Rate) at the time
that the amount of such excess is finally determined. Any payment to be made to
you under this paragraph shall be payable within five (5) days of your Date of
Termination (or within five (5) days of your earlier cessation of active
service).
(vi) The payments provided for in Subsection (iii)(b) and Subsection
(iv)(b), shall be made not later than the fifth day following the Date of
Termination or the date of your cessation of active service, whichever is
earlier, provided, however, that if the amounts of such payments cannot be
finally determined on or before such day, the Corporation shall pay to you on
such day an estimate, as determined in good faith by the Corporation, of the
minimum amount of such payments and shall pay the remainder of such payments
(together with interest at the Applicable Rate) as soon as the amount thereof
can be determined but in no event later than the thirtieth day after the Date of
Termination or date of cessation of your active service, whichever may be
earlier. In the event that the amount of the estimated payments exceeds the
amount subsequently determined to have been due, such excess shall constitute a
loan by the Corporation to you, payable on the fifth day after demand by the
Corporation (together with interest at the Applicable Rate).
(vii) Except as required in Subsection (iii)(e) and Subsection (iv)(f)
hereof, you shall not be required to mitigate the amount of any payment provided
for in this Section 4 by seeking other
<PAGE>
September 23, 1993
Page 12
employment or otherwise, nor shall the amount of any payment or benefit provided
for in this Section 4 be reduced by any compensation earned by you as the result
of employment by another employer, by retirement benefits, by offset against any
amount claimed to be owed by you to the Corporation, or otherwise; provided,
however, that if during the three year period subsequent to your Date of
Termination or earlier cessation of your active service, you directly compete
with the Corporation by making use of trade secrets or other proprietary
knowledge you obtained while employed by the Corporation in violation of the
commitment to protect such proprietary or trade secret information set forth in
the "Honeywell Employment Agreement" attached to your "Application for
Employment" with the Corporation, all income earned as a result of such use of
information shall be remitted to the Corporation to the extent payments were
made to you under this Section 4.
5. SUCCESSORS; BINDING AGREEMENT. (i) The Corporation will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Corporation to (A) expressly assume and agree to perform this Agreement in the
same manner and to the same extent that the Corporation would be required to
perform it if no such succession had taken place and (B) agree to notify the
executive of the assumption of the Agreement within 10 days of such assumption.
Failure of the Corporation to obtain any such assumption and agreement prior to
the effectiveness of any such succession shall be a breach of this Agreement and
shall entitle you to compensation from the Corporation in the same amount and on
the same terms to which you would be entitled hereunder if you terminate your
employment for Good Reason following a change in control of the Corporation,
except that for purposes of implementing the foregoing, the date on which any
such succession becomes effective shall be deemed the Date of Termination. As
used in this Agreement, "Corporation" shall mean the Corporation and any
successor to its business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, or otherwise.
(ii) This Agreement shall inure to the benefit of and be enforceable by
you and your personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If you should die while
any amount would still be payable to you hereunder had you continued to live,
all such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to your devisee, legatee or other designee or,
if there is no such designee, to your estate.
6. NOTICE. For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered
<PAGE>
September 23, 1993
Page 13
or mailed by United States certified or registered mail, return receipt
requested, postage prepaid, addressed to the respective addresses set forth on
the first page of this Agreement, provided that all notice to the Corporation
shall be directed to the attention of the Board with a copy to the Secretary of
the Corporation, or to such other address as either party may have furnished to
the other in writing in accordance herewith, except that notice of change of
address shall be effective only upon receipt.
7. MISCELLANEOUS. No provision of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing and signed by you and such officer as may be authorized by the Board.
No waiver by either party hereto at any time of any breach by the other party
hereto of, or compliance with, any condition or provision of this Agreement to
be performed by such other party shall be deemed a waiver of similar of
dissimilar provisions or conditions at the same or at any prior or subsequent
time. No agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either party which
are not expressly set forth in this Agreement. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of Minnesota without regard to its conflicts of law principles. All
references to sections of the Code shall be deemed also to refer to any
successor provisions to such sections. Any payments provided for hereunder
shall be paid net of any applicable withholding required under federal, state or
local law, except for any withholding that may be required under Section 4999 of
the Code. The obligations of the Corporation under Section 4 shall survive the
expiration of the term of this Agreement.
8. VALIDITY. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
9. COUNTERPARTS. This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
10. ARBITRATION. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by binding
arbitration, conducted before a panel of three arbitrators in the city of
Minneapolis or, at your option, in the city where you are principally employed
immediately prior to the date of a change in control, in accordance with the
rules of the American Arbitration Association then in effect; provided, however,
that you shall be entitled to seek specific performance of your rights under
Section 3(vi) during the pendency of any dispute or controversy
<PAGE>
September 23, 1993
Page 14
arising under or in connection with this Agreement. Judgment may be entered on
the arbitrator's award in any court having jurisdiction.
11. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement of
the parties hereto in respect of the subject matter contained herein and
supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto; and any prior agreement
of the parties hereto in respect of the subject matter contained herein
including the Prior Agreement, is hereby terminated and canceled.
If this letter sets forth our agreement on the subject matter hereof,
kindly sign and return this original letter to the Corporation which will then
constitute our agreement on this subject. The enclosed copy is for your
personal records.
Sincerely,
Honeywell Inc.
_____________________________
By:__________________________
Michael R. Bonsignore
Chairman and
Chief Executive Officer
Agreed to as of this 23rd
day of September, 1993
- -----------------------------
<PAGE>
HONEYWELL INC.
COMPENSATION PLAN FOR OUTSIDE DIRECTORS
1. NAME OF PLAN. This plan shall be known as the Honeywell Inc.
Compensation Plan for Outside Directors and is hereinafter referred to as the
"Plan".
2. PURPOSE OF PLAN. The purpose of the Plan is to enable Honeywell Inc., a
Delaware corporation (the "Company"), to attract and retain persons of
exceptional ability to serve as non-employee directors of the Company
("Directors"). The Plan provides for compensation through the payment of a
Director's Annual Retainer and Meeting Fees in cash, or Common Stock, or for the
deferral of such fees.
3. ELIGIBLE PARTICIPANTS. Each member of the Board of Directors of the
Company ("Board") from time to time who is not a full-time employee of the
Company or any of its subsidiaries shall be a participant ("Participant") in the
Plan.
4. EFFECTIVE DATE. The Plan as herein amended shall be effective as of
April 20, 1993.
5. FEES
RETAINER. The term "Annual Retainer" shall mean the retainer fee
paid to a Participant for services on the Board for a Director Year.
MEETING FEES. The term "Meeting Fees" shall mean the fees paid to a
Participant for attending a meeting of the Board or a Committee of the Board.
This term shall include all fees paid to a Participant for extraordinary or
special Board and/or Committee meetings.
PER DIEM FEES. The Chief Executive Officer, in his or her sole
discretion, may authorize payment of a $1,000 per diem to a Participant who is
asked to work on board issues for a significant part of a day outside of normal
board or committee meetings.
6. DIRECTORS ELECTIONS. (a) Each Participant shall be given an opportunity
by the Company on an annual basis to elect ("Annual Election") to receive his or
her Annual Retainer and Meeting Fees: (i) in cash, (ii) in shares of Common
Stock, or (iii) in a combination of cash and Common Stock; and in addition a
Participant may elect to defer receipt of the Annual Retainer and Meeting Fees,
which the Participant has the opportunity to earn during the next succeeding
Director Year. The "Director Year" is the fiscal year commencing on the date of
the Company's Annual Meeting of Shareholders and ending on the date immediately
preceding the next Annual Meeting of Shareholders.
<PAGE>
(b) The Annual Election must be in writing and shall be delivered to
the Corporate Secretary of the Company no later than the day preceding the date
of the Annual Meeting of Shareholders. (The Annual Election shall be irrevocable
after the beginning of the Director Year.) The Annual Election shall specify the
applicable percentage of the Annual Retainer and Meeting Fees that such
Participant wishes to receive in cash, or shares of Common Stock, or to defer.
(c) Any person who becomes a non-employee director following the
Company's Annual Meeting of Shareholders, whether by appointment or election as
a director (or by change in status from a full-time employee), shall receive an
Annual Retainer prorated for the balance of that Director Year.
7. PAYMENTS
CASH. If selected, cash payment for the Annual Retainer shall be paid
as soon as practicable after the beginning of a Director Year, and cash payment
for Meeting Fees shall be paid as soon as practicable after a meeting.
SHARES. (a) If selected, the amount of shares payable in lieu the of
the Annual Retainer shall be determined at the Fair Market Value (as defined in
Section 9 hereunder) on the date of the Company's Annual Meeting of Shareholders
and a certificate shall be delivered to the Participant as soon as practicable
thereafter.
(b) If selected, payment in shares for Meeting Fees occurring within
a calendar quarter shall be paid as soon as practicable following the end of the
calendar quarter. The number of shares of Common Stock payable shall equal the
total cash amount in fees for the quarterly period divided by the Fair Market
Value determined as of the last trading day for such quarter.
DEFERRED FEES. (a) If selected by the Participant, deferred fees
shall be credited to a deferred compensation account for each Participant. The
amount of fees credited to a Participant's account shall equal the deferred cash
amount for the Annual Retainer and/or Meeting Fees. Interest shall be credited
to each account annually, as of December 31, and at the time of distribution of
the entire balance of such an account, on the daily average balance of such
account for such year or portion thereof. For account balances through December
31, 1990, the rate of interest for such year shall be the Company's return on
investment for such year (or, in the case of a deferral made other than as of
December 31, for the prior year), as calculated for management information
purposes pursuant to the Company's applicable policy or practice then in effect.
Commencing January 1, 1991, and, in any event, following retirement from the
Board, the applicable interest rate is to be calculated at the Company's average
five-year borrowing rate.
<PAGE>
(b) A Participant's deferred compensation account shall be paid to
him or her in annual installments over a period of ten years, beginning with an
initial installment to be paid on or about June 1 of the year following his or
her retirement from the Board; provided, however, that the Chief Executive
Officer shall have the discretion to direct the Company to make payments at
different dates (but not before retirement by the Participant), over a longer or
shorter period of time, or in a lump sum, all as the Chairman may direct from
time to time and subject to change from time to time. For this purpose,
retirement is defined as termination from service on the Board due to the first
to occur of the following events: (i) retirement in compliance with the Board's
retirement policy then in effect; (ii) retirement due to not being nominated for
re-election to the Board; (iii) retirement due to not being re-elected by
stockholders; (iv) disability or death; or (v) retirement due to the occurrence
of a Change in Control.
(c) In the event of a Participant's death, payments shall be made to
the beneficiary designated by the Participant, or in the absence of an executed
beneficiary form, to the person legally entitled thereto, as designated under
his or her will, or to such heirs as determined under the laws of intestacy for
the state of his or her domicile. Deferred amounts shall be nontransferable and
shall not be assignable, alienable, salable or otherwise transferable by the
Participant other than by will or the laws of descent and distribution, or
pursuant to a qualified domestic relations order.
VOLUNTARY MID-YEAR TERMINATION. In the event a Participant
voluntarily resigns from the Board during a Director Year, the Participant shall
return to the Company a cash payment covering the prorated portion of the Annual
Retainer for the balance of that Director Year. No return of any portion of the
Annual Retainer shall be required in the event a Participant leaves the Board as
the result of retirement, incapacity or death.
8. SHARE CERTIFICATES, VOTING AND OTHER RIGHTS. The certificates for Common
Stock issued under Section 7 may be registered in the name of the Participant,
or in the name of the Participant and one other individual as joint tenants, and
shall be held by such Participant. All Common Stock that shall be issued
hereunder shall be fully paid and non-assessable. The Company shall pay all
original issue taxes with respect to the issue of shares and all other fees and
expenses necessarily incurred by Company in connection therewith.
9. FAIR MARKET VALUE. "Fair Market Value" means, as of any valuation date,
the median of the high and low trading price of Honeywell Inc. Common Stock, par
value $1.50 per share, as quoted in the New York Stock Exchange Composite
Transactions, on such date as reported in the Wall Street Journal (or, if there
is no reported sale on such date, on the last preceding date on which any
reported sale occurred).
<PAGE>
10. FRACTIONS OF SHARES. The Company shall not issue fractions of shares.
Whenever under the terms of the Plan, a fractional share would otherwise be
required to be issued, the Participant shall be paid in cash for such fractional
share; or for Participants electing to receive Meeting Fees in stock, the unpaid
amount shall be added to the fees for the next quarterly period.
11. GENERAL RESTRICTIONS. The issuance of Common Stock or the delivery of
certificates for such shares to Participants under the Plan shall be subject to
the requirement that, if at any time the General Counsel or Corporate Secretary
of the Company shall reasonably determine, in his or her discretion, that the
listing, registration or qualification of such Common Stock upon any securities
exchange or under any state or federal law, or the consent or approval of any
governmental body, is necessary or desirable as a condition of, or in connection
with, the issuance or payment or delivery shall not take place unless such
listing, registration, qualification, consent or approval shall have been
effected or obtained free of any conditions not reasonably acceptable to the
General Counsel or Corporate Secretary.
12. SHARES AVAILABLE. Shares of Common Stock issuable under the Plan shall
be taken from authorized but unissued or treasury shares of the Company, as
shall from time to time be necessary for issuance pursuant to the Plan.
13. CHANGE IN CAPITAL STRUCTURE. In the event of any change in the Common
Stock by reason of any stock dividend, split, combination of shares, exchange of
shares, warrants or rights offering to purchase Common Stock at a price below
its fair market value, reclassification, recapitalization, merger, consolidation
or other change in capitalization, appropriate adjustment shall be made by the
Company in the number and kind of shares subject to the Plan and any other
relevant provisions of the Plan, whose determination shall be binding and
conclusive on all persons.
14. INCOME TAX PROVISIONS. No income will be recognized by a Participant at
the time of the deferral of Annual Retainer and/or Meeting Fees. Upon payment to
a Participant with respect to amounts previously deferred, the Participant will
recognize ordinary income in an amount equal to the sum of the cash received
from a Participant's deferred compensation account.
15. ADMINISTRATION. The Plan shall be administered by the Chief Executive
Officer, who shall have full authority to construe and interpret the Plan, to
establish, amend and rescind rules and regulations relating to the Plan, and to
take all such actions and make all such determinations in connection with the
Plan as he or she may deem necessary or desirable. The Chief Executive Officer
may from time to time make such amendments to the Plan as he or she may deem
proper, necessary, and in the best interests of the Company.
<PAGE>
16. RIGHTS OF DIRECTORS. Nothing in the plan shall confer upon any
Participant any right to serve on the Board for any period of time or to
continue his or her current or any other rate of compensation.
17. GOVERNING LAW. The Plan and all actions taken thereunder shall be
governed by and construed in accordance with the laws of the State of Minnesota.
<PAGE>
EXHIBIT (11)
HONEYWELL INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
FOR THE FIVE YEARS ENDED DECEMBER 31, 1993
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1993 1992 1991 1990 1989
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Primary:
Income:
Income from continuing operations........................... $ 322.2 $ 399.9 $ 331.1 $ 371.8 $ 550.3
Income from discontinued operations......................... 10.1 53.8
----------- ----------- ----------- ----------- -----------
Income before extraordinary item and cumulative effect of
accounting changes......................................... 322.2 399.9 331.1 381.9 604.1
Extraordinary item -- loss on early redemption of debt...... (8.6)
Cumulative effect of accounting changes (Note).............. (144.5)
----------- ----------- ----------- ----------- -----------
Net income................................................ $ 322.2 $ 246.8 $ 331.1 $ 381.9 $ 604.1
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Shares:
Weighted average of shares outstanding during the year...... 134,242,394 138,525,414 140,868,222 151,759,942 170,404,548
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Earnings per share:
Continuing operations....................................... $ 2.40 $ 2.88 $ 2.35 $ 2.45 $ 3.23
Discontinued operations..................................... 0.07 0.32
----------- ----------- ----------- ----------- -----------
Income before extraordinary item and cumulative effect of
accounting changes........................................ 2.40 2.88 2.35 2.52 3.55
Extraordinary item -- loss on early redemption of debt...... (0.06)
Cumulative effect of accounting changes (Note).............. (1.04)
----------- ----------- ----------- ----------- -----------
Net income................................................ $ 2.40 $ 1.78 $ 2.35 $ 2.52 $ 3.55
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Assuming full dilution:
Income:
Income from continuing operations........................... $ 322.2 $ 399.9 $ 331.1 $ 371.8 $ 550.3
Income from discontinued operations......................... 10.1 53.8
----------- ----------- ----------- ----------- -----------
Income before extraordinary item and cumulative effect of
accounting changes........................................ 322.2 399.9 331.1 381.9 604.1
Extraordinary item -- loss on early redemption of debt...... (8.6)
Cumulative effect of accounting changes (Note).............. (144.5)
----------- ----------- ----------- ----------- -----------
Net income................................................ $ 322.2 $ 246.8 $ 331.1 $ 381.9 $ 604.1
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Shares:
Weighted average of shares outstanding during the year...... 134,242,394 138,525,414 140,868,222 151,759,942 170,404,548
Shares issuable in connection with stock plans less shares
purchaseable from proceeds................................ 1,069,901 1,599,395 2,120,234 1,410,826 2,426,676
----------- ----------- ----------- ----------- -----------
Total shares.............................................. 135,312,295 140,124,809 142,988,456 153,170,768 172,831,224
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Earnings per share:
Continuing operations....................................... $ 2.38 $ 2.85 $ 2.32 $ 2.43 $ 3.19
Discontinued operations..................................... 0.06 0.31
----------- ----------- ----------- ----------- -----------
Income before extraordinary item and cumulative effect of
accounting changes........................................ 2.38 2.85 2.32 2.49 3.50
Extraordinary item -- loss on early redemption of debt...... (0.06)
Cumulative effect of accounting changes (Note).............. (1.03)
----------- ----------- ----------- ----------- -----------
Net income................................................ $ 2.38 $ 1.76 $ 2.32 $ 2.49 $ 3.50
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
<FN>
- ------------------------------
Note: The cumulative effect of accounting changes in 1992 are the result of
adopting Statement of Financial Accounting Standards (SFAS) No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions,"
which reduced net income by $151.3 ($1.09 per share); SFAS No. 109,
"Accounting for Income Taxes," which increased net income by $31.4 ($0.23
per share); and SFAS No. 112, "Employers' Accounting for Postemployment
Benefits," which reduced net income by $24.6 ($0.18 per share).
</TABLE>
50
<PAGE>
Exhibit 22
<TABLE>
<CAPTION>
HONEYWELL INC. AFFILIATES -- MARCH 1, 1994
A %
I COUNTRY OWNED COMPANY *
- - --------------------- ----- -----------------------------------------------------------------------------------
<C> <S> <C> <C>
A UNITED STATES:NY 100 AHLSTROM AUTOMATION INC.
A UNITED STATES:DEL. 50 GE/MICROSWITCH CONTROL INC.
I UNITED STATES:CALIF. 100 HONEYWELL ADVANCED SYSTEMS INC.
A UNITED STATES:DEL. 100 HONEYWELL ASIA PACIFIC INC.
A UNITED STATES:DEL. 100 HONEYWELL BUILDING MANAGEMENT SERVICES INC.
A UNITED STATES:DEL. 100 HONEYWELL CHINA INC.
I UNITED STATES:MINN. 100 HONEYWELL COMMUNICATIONS COMPANY
A UNITED STATES:DEL. 100 HONEYWELL DISC INC.
A UNITED STATES:DEL. 100 HONEYWELL ENVIRONMENTAL AIR CONTROL INC.
I UNITED STATES:DEL. 100 HONEYWELL EUROPE INC. (HEI)
A UNITED STATES:DEL. 100 HONEYWELL FINANCE INC.
A UNITED STATES:DEL. 100 HONEYWELL FINANCE INTERNATIONAL INC.
I UNITED STATES:DEL. 100 HONEYWELL HIGH-TECH TRADING INC.
A BRAZIL 50 HONEYWELL DO BRASIL & CIA. (Partnership)
(Other partner is HONEYWELL OVERSEAS FINANCE CO., owning 50%)
A UNITED STATES:COLO. 100 HONEYWELL LOVELAND CONTROLS COMPANY
A UNITED STATES:IL. 49 HONEYWELL INC./FOSTER ELECTRIC JOINT VENTURE
A UNITED STATES:MINN. 100 HONEYWELL NEIGHBORHOOD IMPROVEMENT PROGRAM, INC.
A UNITED STATES:DEL. 100 HONEYWELL OVERSEAS FINANCE COMPANY (HOFC)
A UNITED STATES:DEL. 100 HONEYWELL REALTY, INC.
I UNITED STATES:MICH. 100 ETKIN TOWERS, INC.
I UNITED STATES:DEL. 100 MINNEAPOLIS-HONEYWELL REGULATOR COMPANY INC.
A UNITED STATES:DEL. 100 HONEYWELL TCAS INC.
A UNITED STATES:CALIF. 100 TETRA TECH DATA SYSTEMS INC.
A UNITED STATES:CALIF. 100 TETRA TECH SYSTEMS, INC.
A UNITED STATES:CALIF. 100 TETRA TECH MANAGEMENT SERVICES, INC.
I SAUDI ARABIA 75 SAUDI ARABIAN TETRA TECH LIMITED
A UNITED STATES:DEL. 100 HONEYWELL ELECTRONICS CORPORATION
A UNITED STATES:DEL. 100 COEUR D'ALENE DEVELOPMENT INC.
A ENGLAND 100 HONEYWELL LIMITED
A ENGLAND 100 HONEYWELL CONTROL SYSTEMS LIMITED
A SOUTH AFRICA 100 HONEYWELL SOUTHERN AFRICA (PROPRIETARY) LIMITED
A ENGLAND 100 HONEYWELL AVIONICS SYSTEMS LIMITED
A ENGLAND 100 HONEYWELL AEROSPACE AND DEFENCE LIMITED
A ENGLAND 100 KODEN MAINTENANCE COMPANY LIMITED
I ENGLAND 100 KODEN GROUP SERVICES LIMITED
I ENGLAND 100 HONEYWELL INFORMATION SYSTEMS LIMITED
I ENGLAND 100 HONEYWELL LEASING LIMITED
A ENGLAND 100 HONEYWELL ICOTRON LTD.
A ENGLAND 100 HONEYWELL PENSION TRUSTEES LIMITED
I ENGLAND 100 HONEYWELL I.S. LIMITED
A ENGLAND 100 HONEYWELL PCS LIMITED
I ENGLAND 100 LIPPKE (UK) LIMITED
A ENGLAND 100 COMFORT COOLING LIMITED
I ENGLAND 100 SACDA (U.K.) LIMITED
A ARGENTINA 100 HONEYWELL S.A.I.C.
I ARGENTINA 100 CONTROLES HONEYWELL S.A.C.I.
A AUSTRALIA 100 HONEYWELL HOLDINGS PTY. LIMITED
A AUSTRALIA 100 BLENDAIR PTY. LIMITED
A AUSTRALIA 100 HONEYWELL LIMITED
A NEW ZEALAND 100 HONEYWELL HOLDINGS LIMITED
A NEW ZEALAND 100 HONEYWELL LIMITED
I NEW ZEALAND 100 HONEYWELL (WHOLESALE) LIMITED
A BELGIUM 100 HONEYWELL S.A.
A BELGIUM 100 HONEYWELL EUROPE S.A.
A BERMUDA 100 HONEYWELL ASSURANCE LIMITED
I BRAZIL 49 EMBRASID S.A.
A CANADA 100 HONEYWELL LIMITED - HONEYWELL LIMITEE
I CANADA 100 TORONTO CABLE & TOWER RENTALS LIMITED
A CANADA 100 SACDA, INC.
A NETHERLANDS ANTILLES 100 HONEYWELL LIMITED FINANCE N.V.
A CANADA 100 2526-9630 QUEBEC INC.
A CANADA 100 2526-9648 QUEBEC INC.
A CANADA 50 AERONOX (P.A.B.) LIMITEE
(other 50% is owned by 2526-9630 QUEBEC INC.)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
HONEYWELL INC. AFFILIATES -- MARCH 1, 1994
A %
I COUNTRY OWNED COMPANY *
- - --------------------- ----- -----------------------------------------------------------------------------------
<C> <S> <C> <C>
A CHILE 50 HONEYWELL CHILE S.A.
(Also, MINNEAPOLIS-HONEYWELL REGULATOR COMPANY INC. owns 50%)
A CHINA 55 SINOPEC HONEYWELL (TIANJIN) LIMITED
A DENMARK 100 HONEYWELL A/S
I DOMINICAN REPUBLIC 100 HONEYWELL DOMINICANA C. POR A.
A FINLAND 100 HONEYWELL OY
A FINLAND 100 KIINTEISTOHUOLTO MERATEK OY
A FINLAND 100 VM-KIINTEISTOHUOLTO OY
A FINLAND 80.1 HONEYWELL-AHLSTROM ADVANCED CONTROLS OY FINLAND
A FRANCE 99.9 HONEYWELL S.A.
A FRANCE 99.9 DAVILOR TECHNOLOGIE S.A.
A FRANCE 99.9 HONEYWELL AEROSPACE S.A.
A GERMANY 100 HONEYWELL HOLDING AG
A GERMANY 100 INGIENEURBURO FUR AUTOMATISIERUNGSTECHNIK G.m.b.H.
A GERMANY 100 HONEYWELL REGELSYSTEME G.m.b.H.
A GERMANY 70 HONEYWELL IAL VERTRIEBS G.m.b.H.
A GERMANY 100 HONEYWELL PAPER MACHINE AUTOMATION CENTER G.m.b.H.
A BULGARIA 100 HONEYWELL EOOD
A CZECH REPUBLIC 100 HONEYWELL SERVICE AND ENGINEERING CSFR spol.s.r.o.
A HUNGARY 100 HONEYWELL SZABALYOZASTECHNIKAI ES AUTOMATIZALASI KFT
A POLAND 100 HONEYWELL SP.Z.O.O.
A RUSSIA 100 HONEYWELL AVIATION CONTROL MOSCOW
A RUSSIA 100 HONEYWELL HOME AND BUILDING CONTROL
A GERMANY 100 HONEYWELL AG
A GERMANY 100 HONEYWELL UNTERSTUTZUNGSKASSE G.m.b.H.
A GERMANY 100 HONEYWELL BRAUKMANN UNTERSTUTZUNGSKASSE G.m.b.H.
A GERMANY 100 HONEYWELL-ELAC-NAUTIK G.m.b.H.
A GERMANY 100 HONEYWELL-ELAC-NAUTIK UNTERSTUTZUNGSKASSE
G.m.b.H.
A GERMANY 20 ARBEITSMEDIZINISCHE BETREUUNGSGESELLSCHAFT
KIELER BETRIEBE m.b.H.
A GERMANY 10.7 GEOMAR TECHNOLOGIE G.m.b.H.
A GERMANY 100 CENTRA-BUERKLE G.m.b.H.
A SWITZERLAND 100 HONEYWELL CENTRABUERKLE AG
A AUSTRIA 100 HONEYWELL AUSTRIA Ges.m.b.H.
I AUSTRIA 100 PAPIERMASCHINEN HANDELSGESELLSCHAFT m.b.H.
I AUSTRIA 90 PAPIERMASCHINEN HANDELSGESELLSCHAFT m.b.H. & CO., KG
(a Partnership: Other partner is PAPIERMASCHINEN
HANDELSGESELLSCHAFT m.b.H., owning 10% )
A RUSSIA 50 STERCH CONTROLS
A UKRAINE 100 HONEYWELL
A HONG KONG 100 HONEYWELL LIMITED
A INDIA 39.9 TATA HONEYWELL LIMITED
I INDIA 40 HONEYWELL INDIA LIMITED
A ITALY 100 HONEYWELL S.p.A.
A ITALY 100 UNIVERSAL GAS VALVES S.r.l.
A ITALY 100 STRUMENTECNICA S.r.l.
A ITALY 25 SINTED S.p.A.
A ITALY 40 SPACE CONTROLS ALENIA-HONEYWELL S.p.A.
A PORTUGAL 70 HONEYWELL PORTUGAL AUTOMACAO E CONTROLE LDA.
[Also, HONEYWELL S.A. (Spain) owns 30%]
I JAPAN 50 NEC HONEYWELL SPACE SYSTEMS LTD.
A JAPAN 24.2 YAMATAKE-HONEYWELL CO., LTD.
A JAPAN 71.9 YAMATAKE & CO., LTD
A JAPAN 50 TAISHIN CO., LTD.
A JAPAN 100 YAMATAKE KEISO CO., LTD.
A JAPAN 60 YAMATAKE ENGINEERING CO., LTD.
A JAPAN 100 YAMATAKE CONTROL PRODUCTS CO., LTD.
A JAPAN 100 YAMATAKE TECHNO-SYSTEMS CO., LTD.
A KOREA 40 GOLDSTAR-HONEYWELL COMPANY, LTD.
(Also, YAMATAKE-HONEYWELL CO., LTD. owns 10%)
A MALAYSIA 100 HONEYWELL AUTOMATION AND CONTROLS SDN. BHD.
A MALAYSIA 100 HONEYWELL ENGINEERING SDN. BHD.
A MALAYSIA 30 BERKAT HONEYWELL SDN. BHD.
A MEXICO 100 HONEYWELL S.A. DE C.V.
A MEXICO 100 HONEYWELL OPTOELECTRONICA, S.A. DE C.V.
A MEXICO 100 MEXHON S.A. DE C.V.
A MEXICO 100 HONEYWELL MANUFACTURAS DE CHIHUAHUA, S.A. DE C.V.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
HONEYWELL INC. AFFILIATES -- MARCH 1, 1994
A %
I COUNTRY OWNED COMPANY *
- - --------------------- ----- -----------------------------------------------------------------------------------
<C> <S> <C> <C>
A NETHERLANDS ANTILLES 100 HONEYWELL INTERNATIONAL FINANCE N.V.
A NETHERLANDS ANTILLES 100 HONEYWELL CAPITAL N.V.
A NETHERLANDS 100 HONEYWELL FAR EAST B.V.
A NETHERLANDS 100 HONEYWELL MIDDLE EAST B.V.
A BULGARIA 40 SYSTEMATICS
A KUWAIT 40 HONEYWELL KUWAIT K.S.C.
A EGYPT 90 HONEYWELL (EGYPT)
(Also, HONEYWELL S.p.A. owns 10%)
A OMAN 60 HONEYWELL & CO. OMAN L.L.C.
A TURKEY 80 HONEYWELL OTOMASYON VE KONTROL SISTEMLERI SAN.
VE TIC.A.S.
A SWITZERLAND 100 HONEYWELL-LUCIFER S.A.
A GERMANY 100 HONEYWELL EUROPE HOLDING G.m.b.H.
A NETHERLANDS 100 HONEYWELL EUROPEAN DISTRIBUTION CENTER B.V.
A NETHERLANDS 100 SKINNER EUROPA B.V.
A NETHERLANDS 92.6 HONEYWELL B.V.
(Other 7.4% owned by SKINNER EUROPA B.V.)
A NETHERLANDS 100 ELECTRONICS FOR MEDICINE EUROPE B.V.
A NETHERLANDS 100 GASMODUL B.V.
A NETHERLANDS 50 TURNKIEK PROCESS CONTROL B.V.
A NETHERLANDS 100 HONEYWELL FOREIGN SALES CORPORATION B.V.
A NETHERLANDS 100 HONEYWELL FINANCE B.V.
A NORWAY 100 HONEYWELL A/S
A SAUDI ARABIA 50 HONEYWELL TURKI-ARABIA LTD.
A SINGAPORE 100 HONEYWELL PRIVATE LIMITED
A SINGAPORE 100 HONEYWELL AEROSPACE PTE. LTD.
I SINGAPORE 100 HONEYWELL COMPUTERS PRIVATE LIMITED
I SINGAPORE 100 HONEYWELL-SYNERTEK PTE. LTD.
A SPAIN 100 HONEYWELL S.A.
A SWEDEN 100 HONEYWELL AB
A SWEDEN 100 HONEYWELL AUTOMATION AB
A SWITZERLAND 100 HONEYWELL AG
A TAIWAN 100 HONEYWELL TAIWAN LIMITED
I THAILAND 100 HONEYWELL SYSTEMS (THAILAND) LIMITED
A VENEZUELA 100 HONEYWELL C.A.
A VENEZUELA 100 SERVICIOS HONEYWELL C.A.
A PANAMA 100 HONEYWELL PANAMA, S.A.
NOTE: A = ACTIVE
I = INACTIVE
<FN>
* SUBSIDIARIES OF HONEYWELL INC.s AFFILIATES OR SUBSIDIARIES ARE INDICATED BY THE INDENTATION
OF THE NAME BELOW THE NAME OF THE OWNING COMPANY: e.g., HONEYWELL KUWAIT K.S.C. IS 40% OWNED
BY HONEYWELL MIDDLE EAST B.V., WHICH IS 100% OWNED BY HONEYWELL CAPITAL N.V., WHICH IS
100% OWNED BY HONEYWELL INC.
</TABLE>
<PAGE>
EXHIBIT (24)
CONSENT OF INDEPENDENT AUDITORS
Honeywell Inc.:
We consent to the incorporation by reference in Registration Statements Nos.
2-64351, 2-98660, 33-29442, 33-44282, 33-44283, 33-44284 and 33-49819 on Form
S-8, and No. 33-62300 on Form S-3, of our reports dated February 11, 1994,
appearing in and incorporated by reference in the Annual Report on Form 10-K of
Honeywell Inc. for the year ended December 31, 1993.
Deloitte & Touche
Minneapolis, Minnesota
March 3, 1994
51
<PAGE>
Exhibit 25
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that the undersigned director of HONEYWELL
INC., a Delaware corporation, constitutes and appoints SIGURD UELAND, JR. and
WILLIAM L. TRUBECK, each of them with full power to act without the other, as
true and lawful attorneys-in-fact, for him in his name, place and stead in any
and all capacities to sign the Form 10-K Annual Report to be filed pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 as amended for the
fiscal year ended December 31, 1993, with full power to file such report, with
all amendments and exhibits thereto and other documents in connection therewith.
I certify that I have read a draft of such Form 10-K Annual Report for
fiscal year ended December 31, 1993, and am aware of the contents thereof.
I hereby grant to said attorneys-in-fact, and each of them, full power
and authority to do and perform any and all acts necessary to be done, hereby
ratifying and confirming all that said attorneys-in-fact, or either of them, may
lawfully do or cause to be done pursuant hereto.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of
the 15th day of February, 1994.
/s/ J. J. Renier
---------------------------------------
J. J. Renier, Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that the undersigned director of HONEYWELL
INC., a Delaware corporation, constitutes and appoints SIGURD UELAND, JR. and
WILLIAM L. TRUBECK, each of them with full power to act without the other, as
true and lawful attorneys-in-fact, for him in his name, place and stead in any
and all capacities to sign the Form 10-K Annual Report to be filed pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 as amended for the
fiscal year ended December 31, 1993, with full power to file such report, with
all amendments and exhibits thereto and other documents in connection therewith.
I certify that I have read a draft of such Form 10-K Annual Report for
fiscal year ended December 31, 1993, and am aware of the contents thereof.
I hereby grant to said attorneys-in-fact, and each of them, full power
and authority to do and perform any and all acts necessary to be done, hereby
ratifying and confirming all that said attorneys-in-fact, or either of them, may
lawfully do or cause to be done pursuant hereto.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of
the 15th day of February, 1994.
/s/ M. R. Bonsignore
----------------------------------------
M. R. Bonsignore
Chairman of the Board and
Chief Executive Officer,
and Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that the undersigned director of HONEYWELL
INC., a Delaware corporation, constitutes and appoints SIGURD UELAND, JR. and
WILLIAM L. TRUBECK, each of them with full power to act without the other, as
true and lawful attorneys-in-fact, for him in his name, place and stead in any
and all capacities to sign the Form 10-K Annual Report to be filed pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 as amended for the
fiscal year ended December 31, 1993, with full power to file such report, with
all amendments and exhibits thereto and other documents in connection therewith.
I certify that I have read a draft of such Form 10-K Annual Report for
fiscal year ended December 31, 1993, and am aware of the contents thereof.
I hereby grant to said attorneys-in-fact, and each of them, full power
and authority to do and perform any and all acts necessary to be done, hereby
ratifying and confirming all that said attorneys-in-fact, or either of them, may
lawfully do or cause to be done pursuant hereto.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of
the 15th day of February, 1994.
/s/ D. L. Moore
----------------------------------------
D. L. Moore
President and
Chief Operating Officer,
and Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that the undersigned officer of HONEYWELL
INC., a Delaware corporation, constitutes and appoints SIGURD UELAND, JR. as
true and lawful attorney-in-fact, for him in his name, place and stead in any
and all capacities to sign the Form 10-K Annual Report to be filed pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 as amended for the
fiscal year ended December 31, 1993, with full power to file such report, with
all amendments and exhibits thereto and other documents in connection therewith.
I certify that I have read a draft of such Form 10-K Annual Report for
fiscal year ended December 31, 1993, and am aware of the contents thereof.
I hereby grant to said attorney-in-fact full power and authority to do
and perform any and all acts necessary to be done, hereby ratifying and
confirming all that said attorney-in-fact may lawfully do or cause to be done
pursuant hereto.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of
the 15th day of February, 1994.
/s/ W. L. Trubeck
----------------------------------------
W. L. Trubeck
Senior Vice President
and Chief Financial Officer
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that the undersigned officer of HONEYWELL
INC., a Delaware corporation, constitutes and appoints SIGURD UELAND, JR. as
true and lawful attorney-in-fact, for him in his name, place and stead in any
and all capacities to sign the Form 10-K Annual Report to be filed pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 as amended for the
fiscal year ended December 31, 1993, with full power to file such report, with
all amendments and exhibits thereto and other documents in connection therewith.
I certify that I have read a draft of such Form 10-K Annual Report for
fiscal year ended December 31, 1993, and am aware of the contents thereof.
I hereby grant to said attorney-in-fact full power and authority to do
and perform any and all acts necessary to be done, hereby ratifying and
confirming all that said attorney-in-fact may lawfully do or cause to be done
pursuant hereto.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of
the 15th day of February, 1994.
/s/ W. M. Hjerpe
----------------------------------------
W. M. Hjerpe
Vice President and Controller
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that the undersigned director of HONEYWELL
INC., a Delaware corporation, constitutes and appoints SIGURD UELAND, JR. and
WILLIAM L. TRUBECK, each of them with full power to act without the other, as
true and lawful attorneys-in-fact, for him in his name, place and stead in any
and all capacities to sign the Form 10-K Annual Report to be filed pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 as amended for the
fiscal year ended December 31, 1993, with full power to file such report, with
all amendments and exhibits thereto and other documents in connection therewith.
I certify that I have read a draft of such Form 10-K Annual Report for
fiscal year ended December 31, 1993, and am aware of the contents thereof.
I hereby grant to said attorneys-in-fact, and each of them, full power
and authority to do and perform any and all acts necessary to be done, hereby
ratifying and confirming all that said attorneys-in-fact, or either of them, may
lawfully do or cause to be done pursuant hereto.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of
the 15th day of February, 1994.
/s/ A. J. Baciocco, Jr.
----------------------------------------
A. J. Baciocco, Jr.
Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that the undersigned director of HONEYWELL
INC., a Delaware corporation, constitutes and appoints SIGURD UELAND, JR. and
WILLIAM L. TRUBECK, each of them with full power to act without the other, as
true and lawful attorneys-in-fact, for her in her name, place and stead in any
and all capacities to sign the Form 10-K Annual Report to be filed pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 as amended for the
fiscal year ended December 31, 1993, with full power to file such report, with
all amendments and exhibits thereto and other documents in connection therewith.
I certify that I have read a draft of such Form 10-K Annual Report for
fiscal year ended December 31, 1993, and am aware of the contents thereof.
I hereby grant to said attorneys-in-fact, and each of them, full power
and authority to do and perform any and all acts necessary to be done, hereby
ratifying and confirming all that said attorneys-in-fact, or either of them, may
lawfully do or cause to be done pursuant hereto.
IN WITNESS WHEREOF, the undersigned has hereunto set her hand as of
the 15th day of February, 1994.
/s/ E. E. Bailey
----------------------------------------
E. E. Bailey
Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that the undersigned director of HONEYWELL
INC., a Delaware corporation, constitutes and appoints SIGURD UELAND, JR. and
WILLIAM L. TRUBECK, each of them with full power to act without the other, as
true and lawful attorneys-in-fact, for him in his name, place and stead in any
and all capacities to sign the Form 10-K Annual Report to be filed pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 as amended for the
fiscal year ended December 31, 1993, with full power to file such report, with
all amendments and exhibits thereto and other documents in connection therewith.
I certify that I have read a draft of such Form 10-K Annual Report for
fiscal year ended December 31, 1993, and am aware of the contents thereof.
I hereby grant to said attorneys-in-fact, and each of them, full power
and authority to do and perform any and all acts necessary to be done, hereby
ratifying and confirming all that said attorneys-in-fact, or either of them, may
lawfully do or cause to be done pursuant hereto.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of
the 15th day of February, 1994.
/s/ E. H. Clark, Jr.
----------------------------------------
E. H. Clark, Jr.
Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that the undersigned director of HONEYWELL
INC., a Delaware corporation, constitutes and appoints SIGURD UELAND, JR. and
WILLIAM L. TRUBECK, each of them with full power to act without the other, as
true and lawful attorneys-in-fact, for him in his name, place and stead in any
and all capacities to sign the Form 10-K Annual Report to be filed pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 as amended for the
fiscal year ended December 31, 1993, with full power to file such report, with
all amendments and exhibits thereto and other documents in connection therewith.
I certify that I have read a draft of such Form 10-K Annual Report for
fiscal year ended December 31, 1993, and am aware of the contents thereof.
I hereby grant to said attorneys-in-fact, and each of them, full power
and authority to do and perform any and all acts necessary to be done, hereby
ratifying and confirming all that said attorneys-in-fact, or either of them, may
lawfully do or cause to be done pursuant hereto.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of
the 15th day of February, 1994.
/s/ W. H. Donaldson
----------------------------------------
W. H. Donaldson
Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that the undersigned director of HONEYWELL
INC., a Delaware corporation, constitutes and appoints SIGURD UELAND, JR. and
WILLIAM L. TRUBECK, each of them with full power to act without the other, as
true and lawful attorneys-in-fact, for him in his name, place and stead in any
and all capacities to sign the Form 10-K Annual Report to be filed pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 as amended for the
fiscal year ended December 31, 1993, with full power to file such report, with
all amendments and exhibits thereto and other documents in connection therewith.
I certify that I have read a draft of such Form 10-K Annual Report for
fiscal year ended December 31, 1993, and am aware of the contents thereof.
I hereby grant to said attorneys-in-fact, and each of them, full power
and authority to do and perform any and all acts necessary to be done, hereby
ratifying and confirming all that said attorneys-in-fact, or either of them, may
lawfully do or cause to be done pursuant hereto.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of
the 15th day of February, 1994.
/s/ R. D. Fullerton
----------------------------------------
R. D. Fullerton
Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that the undersigned director of HONEYWELL
INC., a Delaware corporation, constitutes and appoints SIGURD UELAND, JR. and
WILLIAM L. TRUBECK, each of them with full power to act without the other, as
true and lawful attorneys-in-fact, for him in his name, place and stead in any
and all capacities to sign the Form 10-K Annual Report to be filed pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 as amended for the
fiscal year ended December 31, 1993, with full power to file such report, with
all amendments and exhibits thereto and other documents in connection therewith.
I certify that I have read a draft of such Form 10-K Annual Report for
fiscal year ended December 31, 1993, and am aware of the contents thereof.
I hereby grant to said attorneys-in-fact, and each of them, full power
and authority to do and perform any and all acts necessary to be done, hereby
ratifying and confirming all that said attorneys-in-fact, or either of them, may
lawfully do or cause to be done pursuant hereto.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of
the 15th day of February, 1994.
/s/ G. Greenwald
----------------------------------------
G. Greenwald
Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that the undersigned director of HONEYWELL
INC., a Delaware corporation, constitutes and appoints SIGURD UELAND, JR. and
WILLIAM L. TRUBECK, each of them with full power to act without the other, as
true and lawful attorneys-in-fact, for him in his name, place and stead in any
and all capacities to sign the Form 10-K Annual Report to be filed pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 as amended for the
fiscal year ended December 31, 1993, with full power to file such report, with
all amendments and exhibits thereto and other documents in connection therewith.
I certify that I have read a draft of such Form 10-K Annual Report for
fiscal year ended December 31, 1993, and am aware of the contents thereof.
I hereby grant to said attorneys-in-fact, and each of them, full power
and authority to do and perform any and all acts necessary to be done, hereby
ratifying and confirming all that said attorneys-in-fact, or either of them, may
lawfully do or cause to be done pursuant hereto.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of
the 15th day of February, 1994.
/s/ J. J. Howard
----------------------------------------
J. J. Howard
Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that the undersigned director of HONEYWELL
INC., a Delaware corporation, constitutes and appoints SIGURD UELAND, JR. and
WILLIAM L. TRUBECK, each of them with full power to act without the other, as
true and lawful attorneys-in-fact, for her in her name, place and stead in any
and all capacities to sign the Form 10-K Annual Report to be filed pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 as amended for the
fiscal year ended December 31, 1993, with full power to file such report, with
all amendments and exhibits thereto and other documents in connection therewith.
I certify that I have read a draft of such Form 10-K Annual Report for
fiscal year ended December 31, 1993, and am aware of the contents thereof.
I hereby grant to said attorneys-in-fact, and each of them, full power
and authority to do and perform any and all acts necessary to be done, hereby
ratifying and confirming all that said attorneys-in-fact, or either of them, may
lawfully do or cause to be done pursuant hereto.
IN WITNESS WHEREOF, the undersigned has hereunto set her hand as of
the 15th day of February, 1994.
/s/ G. M. Joseph
----------------------------------------
G. M. Joseph
Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that the undersigned director of HONEYWELL
INC., a Delaware corporation, constitutes and appoints SIGURD UELAND, JR. and
WILLIAM L. TRUBECK, each of them with full power to act without the other, as
true and lawful attorneys-in-fact, for him in his name, place and stead in any
and all capacities to sign the Form 10-K Annual Report to be filed pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 as amended for the
fiscal year ended December 31, 1993, with full power to file such report, with
all amendments and exhibits thereto and other documents in connection therewith.
I certify that I have read a draft of such Form 10-K Annual Report for
fiscal year ended December 31, 1993, and am aware of the contents thereof.
I hereby grant to said attorneys-in-fact, and each of them, full power
and authority to do and perform any and all acts necessary to be done, hereby
ratifying and confirming all that said attorneys-in-fact, or either of them, may
lawfully do or cause to be done pursuant hereto.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of
the 15th day of February, 1994.
/s/ B. E. Karatz
----------------------------------------
B. E. Karatz
Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that the undersigned director of HONEYWELL
INC., a Delaware corporation, constitutes and appoints SIGURD UELAND, JR. and
WILLIAM L. TRUBECK, each of them with full power to act without the other, as
true and lawful attorneys-in-fact, for him in his name, place and stead in any
and all capacities to sign the Form 10-K Annual Report to be filed pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 as amended for the
fiscal year ended December 31, 1993, with full power to file such report, with
all amendments and exhibits thereto and other documents in connection therewith.
I certify that I have read a draft of such Form 10-K Annual Report for
fiscal year ended December 31, 1993, and am aware of the contents thereof.
I hereby grant to said attorneys-in-fact, and each of them, full power
and authority to do and perform any and all acts necessary to be done, hereby
ratifying and confirming all that said attorneys-in-fact, or either of them, may
lawfully do or cause to be done pursuant hereto.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of
the 15th day of February, 1994.
/s/ A. B. Rand
----------------------------------------
A. B. Rand
Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that the undersigned director of HONEYWELL
INC., a Delaware corporation, constitutes and appoints SIGURD UELAND, JR. and
WILLIAM L. TRUBECK, each of them with full power to act without the other, as
true and lawful attorneys-in-fact, for him in his name, place and stead in any
and all capacities to sign the Form 10-K Annual Report to be filed pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 as amended for the
fiscal year ended December 31, 1993, with full power to file such report, with
all amendments and exhibits thereto and other documents in connection therewith.
I certify that I have read a draft of such Form 10-K Annual Report for
fiscal year ended December 31, 1993, and am aware of the contents thereof.
I hereby grant to said attorneys-in-fact, and each of them, full power
and authority to do and perform any and all acts necessary to be done, hereby
ratifying and confirming all that said attorneys-in-fact, or either of them, may
lawfully do or cause to be done pursuant hereto.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of
the 15th day of February, 1994.
/s/ S. G. Rothmeier
----------------------------------------
S. G. Rothmeier
Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that the undersigned director of HONEYWELL
INC., a Delaware corporation, constitutes and appoints SIGURD UELAND, JR. and
WILLIAM L. TRUBECK, each of them with full power to act without the other, as
true and lawful attorneys-in-fact, for him in his name, place and stead in any
and all capacities to sign the Form 10-K Annual Report to be filed pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 as amended for the
fiscal year ended December 31, 1993, with full power to file such report, with
all amendments and exhibits thereto and other documents in connection therewith.
I certify that I have read a draft of such Form 10-K Annual Report for
fiscal year ended December 31, 1993, and am aware of the contents thereof.
I hereby grant to said attorneys-in-fact, and each of them, full power
and authority to do and perform any and all acts necessary to be done, hereby
ratifying and confirming all that said attorneys-in-fact, or either of them, may
lawfully do or cause to be done pursuant hereto.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of
the 15th day of February, 1994.
/s/ M. W. Wright
----------------------------------------
M. W. Wright
Director