HONEYWELL INC, 10-K, 1995-03-29

HONEYWELL INC
10-K, 1995-03-29
AUTO CONTROLS FOR REGULATING RESIDENTIAL & COMML ENVIRONMENTS

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1994
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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [ FEE REQUIRED ]

For the fiscal year ended December 31, 1994

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [ NO FEE REQUIRED ]

For the transition period from.......... to....................................

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. / /

Based on the closing sales price of $36.00 on March 1, 1995, the aggregate
market value of the voting stock held by nonaffiliates of the registrant was
$4,562,938,836.

As of March 1, 1995, the number of shares outstanding of the registrant's
common stock, par value $1.50 per share, was 127,327,034 shares.

DOCUMENTS INCORPORATED IN PART BY REFERENCE

Incorporated Documents Location in Form 10-K
-------------------------------------------------------- ---------------------
Honeywell Notice of 1995 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 page 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 control systems to centralize 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.

Under the MICRO SWITCH trademark, Honeywell manufactures solid-state sensors
(position, pressure, airflow, temperature and current), sensor interface
devices, manual controls, explosion-

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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, application software, sensors, artificial
intelligence and advanced electronics.

Solid State Electronics Center, a semiconductor facility in Minnesota,
designs and manufactures integrated circuits and sensors for Honeywell,
government customers and selected external 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.

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GENERAL INFORMATION

RAW MATERIALS

Honeywell experienced no significant or unusual problems in the purchase of
raw materials and commodities in 1994. 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 1995.

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

Honeywell provides 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 $3,340 million at December 31, 1994, and $3,128 million at
December 31, 1993. All but approximately $813 million of the 1994 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 their
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
important competitive factors. Service must be offered from many areas because
of the localized

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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 1994 Honeywell spent approximately $659.5 million on research and
development activities, including $340.5 million in customer-funded research,
relating to the development of new products or services, or the improvement of
existing products or services. Honeywell spent $742.2 million in 1993 and $703.1
million in 1992 on research and development activities, including $404.8 million
and $390.5 million, respectively, in customer-funded research.

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 on Honeywell's financial position, net income,
capital expenditures or competitive position. See Item 7 at page 14 for further
information concerning environmental matters.

EMPLOYEES

Honeywell employed approximately 50,800 persons in total operations as of
December 31, 1994.

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 to mitigate such risks.

Financial information related to geographic areas is included in Note 19 to
the financial statements in Part II, Item 8 at page 36.

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EXECUTIVE OFFICERS OF THE REGISTRANT

<TABLE>
<CAPTION>
POSITION AGE AT
NAME OFFICE HELD SINCE 3/1/95
-------------------------- ------------------------------------------------------------ ------------- -------------
<S> <C> <C> <C>
M. R. Bonsignore (1) Chairman of the Board and Chief Executive Officer 1993 53
D. L. Moore (2) President and Chief Operating Officer 1993 58
J. R. Dewane (3) President, Space & Aviation Control 1993 60
E. D. Grayson (4) Vice President and General Counsel 1992 56
J. J. Grierson (5) Vice President, Business Development 1992 52
W. M. Hjerpe (6) Vice President and Chief Financial Officer 1994 43
E. T. Hurd (7) Senior Vice President 1995 56
B. M. McGourty (8) President, Home and Building Control 1994 57
P. M. Palazzari (9) Vice President and Controller 1994 47
M. I. Tambakeras (10) President, Industrial Automation and Control 1995 44
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.
(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.
(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 October 16, 1994. From February
1992 to October 1994, he was Vice President and Controller of the company.
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 elected to this position on February 21, 1995, effective
February 1, 1995. From January 1992 to January 1995, he was President,
Industrial Control. 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 President
and General Manager of Honeywell's Industrial Automation and Control
Division.
(8) Mr. McGourty was elected to this position on April 19, 1994, effective
April 1, 1994. From December 1991 to April 1994, he was Vice President,
Field Operations for Home and Building Control. From January 1990 to
December 1991, he was Chairman, President and Chief Executive Officer of
Honeywell Limited, Canada.
</TABLE>

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<TABLE>
<S> <C>
(9) Mr. Palazzari was elected to this position on October 16, 1994. From May
1993 to October 1994, he was Vice President, Finance for Home and Building
Control. From March 1992 to April 1993, he was Vice President and
Assistant Controller of Operations for the company. From January 1990 to
February 1992, he was Vice President for Financial Planning and Reporting
for the company.
(10) Mr. Tambakeras was elected to this position on February 21, 1995, effective
March 1, 1995. From January 1992 to February 1995, he was President of
Honeywell Asia Pacific. From February 1988 to December 1991, he was Vice
President of Business Operations for Industrial Automation Control.
</TABLE>

ITEM 2. PROPERTIES

Honeywell and its subsidiaries operate facilities worldwide comprising
approximately 21,331,600 square feet of space for use as manufacturing, office
and warehouse space, of which approximately 12,409,100 square feet is owned and
approximately 8,922,500 square feet is leased. In the judgment of management,
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 3,405,800 square feet of space, of which
approximately 1,683,300 square feet is owned and approximately 1,722,500 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 184,600 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 4,138,100 square feet of previously
leased space in the United States is under assignment to third parties
(including 2,417,000 square feet, 441,100 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 2,472,100 square feet of
space for operations in the United States, of which approximately 1,887,900
square feet is owned and approximately 584,200 square feet is leased.

Outside the United States, Home and Building Control operations occupy
approximately 4,101,100 square feet, of which approximately 1,487,000 square
feet is owned and approximately 2,614,100 square feet is leased. Principal
facilities operated outside the United States are located in Canada, Germany,
The Netherlands, the United Kingdom and Australia.

Facilities in the United States comprising 300,000 square feet or more are
listed below.

INDUSTRIAL CONTROL

Industrial Control occupies approximately 3,191,300 square feet of space for
operations in the United States, of which approximately 2,233,200 square feet is
owned and approximately 958,100 square feet is leased.

Outside the United States, Industrial Control operations occupy
approximately 2,441,100 square feet, of which approximately 968,800 square feet
is owned and approximately 1,472,300 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.

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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 5,166,300 square feet of
space for operations in the United States, of which approximately 3,819,100
square feet is owned and approximately 1,347,200 square feet is leased.

Outside the United States, Space and Aviation Control operations occupy
approximately 553,900 square feet, of which approximately 329,800 square feet is
owned and approximately 224,100 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. Manufacturing 526,600 Owned
Minneapolis, Minn. Manufacturing 525,100 Owned
Clearwater, Fla. Manufacturing 914,800 Owned
St. Petersburg, Fla. Manufacturing 304,000 Leased
</TABLE>

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 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 contended that the verdict
was unsupported by the facts; that the Litton patent was invalid; and that
Honeywell's process differed 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; Honeywell's other legal and equitable defenses; and Litton's
motion to enhance the damage award. On January 9, 1995, the court issued a
decision in favor of Honeywell, ruling that the Litton patent was unenforceable
because it was obtained by inequitable conduct and invalid because it was an
invention that would have been obvious from combining existing processes. The
court further ruled that if the judgment is subsequently vacated or reversed as
a result of an appeal of the court's ruling, a new trial on the issue of damages
would be held on the ground that the jury's award was inconsistent with the
clear weight of the evidence and to permit it to

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stand would constitute a miscarriage of justice. Litton has filed a motion to
appeal the court's ruling. The trial for the antitrust claims of Litton and
Honeywell is presently scheduled to commence in November 1995.

Honeywell believes that the court's ruling was correct and continues to
believe that Litton's claims are without merit. 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 any losses in connection with
these matters and the resolution of the environmental claims will not have a
material effect on net income, financial position or liquidity.

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 1994.

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 43.

Information regarding the frequency and amount of dividends paid by
Honeywell on its common stock during the two most recent years is set forth in
Note 23 to the financial statements in Part II, Item 8 at page 43. Further
information regarding the company's payment of dividends is set forth in Part
II, Item 7 at pages 17 and 18.

In November 1991, as part of Honeywell's program to enhance shareholder
value, the company authorized the repurchase of shares of its common stock in
open market transactions during the next five years for an amount not to exceed
$600 million. In 1992, 1993 and 1994, $189 million, $240 million and $168
million respectively, of share repurchases were made under this program.

Stockholders of record on March 1, 1995 totaled 31,829, excluding individual
participants in security position listings.

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ITEM 6. SELECTED FINANCIAL DATA

HONEYWELL INC. AND SUBSIDIARIES
(DOLLARS AND SHARES IN MILLIONS EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
1994 1993 1992 1991 1990 1989
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Results of Operations
Sales................................................... $6,057.0 $5,963.0 $6,222.6 $6,192.9 $6,309.1 $6,058.6
-------- -------- -------- -------- -------- --------
Cost of sales........................................... 4,082.1 4,019.6 4,195.3 4,185.1 4,308.7 4,172.5
Research and development................................ 319.0 337.4 312.6 300.7 279.6 283.5
Selling, general and administrative..................... 1,173.8 1,075.7 1,196.8 1,150.9 1,170.0 1,127.9
Litigation settlements.................................. (32.6) (287.9)
Special charges......................................... 62.7 51.2 128.4 81.6
Interest -- net......................................... 60.2 51.0 58.5 61.4 67.6 90.3
Gain on sale of assets.................................. (21.7) (340.1)
Equity income........................................... (10.5) (17.8) (15.8) (14.6) (11.5) (33.0)
-------- -------- -------- -------- -------- --------
5,687.3 5,484.5 5,587.9 5,683.5 5,792.7 5,382.7
-------- -------- -------- -------- -------- --------
Income from continuing operations before income taxes... 369.7 478.5 634.7 509.4 516.4 675.9
Provision for income taxes.............................. 90.8 156.3 234.8 178.3 144.6 125.6
-------- -------- -------- -------- -------- --------
Income from continuing operations....................... 278.9 322.2 399.9 331.1 371.8 550.3
Income from discontinued operations..................... 10.1 53.8
Extraordinary item...................................... (8.6)
Cumulative effect of accounting changes................. (144.5)
-------- -------- -------- -------- -------- --------
Net income.............................................. $ 278.9 $ 322.2 $ 246.8 $ 331.1 $ 381.9 $ 604.1
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
Earnings Per Common Share
Continuing operations................................... $ 2.15 $ 2.40 $ 2.88 $ 2.35 $ 2.45 $ 3.23
Discontinued operations................................. 0.07 0.32
Extraordinary item...................................... (0.06)
Cumulative effect of accounting changes................. (1.04)
-------- -------- -------- -------- -------- --------
Net income.............................................. $ 2.15 $ 2.40 $ 1.78 $ 2.35 $ 2.52 $ 3.55
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
Cash Dividends Per Common Share........................... $ 0.97 $ 0.91 $ 0.84 $ 0.77 $ 0.70 $ 0.57

Financial Position
Current assets.......................................... $2,649.4 $2,550.2 $2,707.8 $2,698.9 $2,582.2 $2,800.7
Current liabilities..................................... 2,071.8 1,856.1 1,969.2 2,095.0 2,175.1 2,415.8
-------- -------- -------- -------- -------- --------
Working capital......................................... $ 577.6 $ 694.1 $ 738.6 $ 603.9 $ 407.1 $ 384.9
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
Short-term debt......................................... $ 360.6 $ 187.9 $ 188.4 $ 168.4 $ 109.0 $ 145.6
Long-term debt.......................................... 501.5 504.0 512.1 639.8 616.3 692.5
-------- -------- -------- -------- -------- --------
Total debt.............................................. 862.1 691.9 700.5 808.2 725.3 838.1
Stockholders' equity.................................... 1,854.7 1,773.0 1,790.4 1,850.8 1,696.9 1,918.2
-------- -------- -------- -------- -------- --------
Capitalization.......................................... $2,716.8 $2,464.9 $2,490.9 $2,659.0 $2,422.2 $2,756.3
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
</TABLE>

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<PAGE>
(DOLLARS AND SHARES IN MILLIONS EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
1994 1993 1992 1991 1990 1989
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Sales
Home and Building Control............................... $2,664.5 $2,424.3 $2,393.6 $2,249.1 $2,196.7 $2,076.8
Industrial Control...................................... 1,835.3 1,691.5 1,743.9 1,626.8 1,653.5 1,491.4
Space and Aviation Control.............................. 1,432.0 1,674.9 1,933.1 2,132.3 2,071.3 2,004.1
Other................................................... 125.2 172.3 152.0 184.7 387.6 486.3
-------- -------- -------- -------- -------- --------
$6,057.0 $5,963.0 $6,222.6 $6,192.9 $6,309.1 $6,058.6
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
Operating Profit (1)(2)
Home and Building Control............................... $ 236.5 $ 232.7 $ 193.4 $ 229.1 $ 237.0 $ 225.1
Industrial Control...................................... 206.6 189.7 156.9 224.0 219.5 136.8
Space and Aviation Control.............................. 80.9 148.1 175.8 226.1 200.4 111.5
Other................................................... (1.8) (9.5) (3.1) 18.8 20.8
-------- -------- -------- -------- -------- --------
Total operating profit.................................. 524.0 568.7 516.6 676.1 675.7 494.2
Interest expense........................................ (75.5) (68.0) (89.9) (89.4) (106.0) (135.2)
Litigation settlements.................................. 32.6 287.9
Gain on sale of assets.................................. 21.7 340.1
Equity income........................................... 10.5 17.8 15.8 14.6 11.5 33.0
General corporate expense............................... (89.3) (72.6) (95.7) (91.9) (86.5) (56.2)
-------- -------- -------- -------- -------- --------
Income before income taxes.............................. $ 369.7 $ 478.5 $ 634.7 $ 509.4 $ 516.4 $ 675.9
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
Assets
Home and Building Control............................... $1,529.8 $1,327.3 $1,302.4 $1,282.8 $1,228.7 $1,202.1
Industrial Control...................................... 1,273.3 1,059.8 1,057.5 1,001.7 955.3 937.5
Space and Aviation Control.............................. 1,174.9 1,219.6 1,403.6 1,594.5 1,684.7 1,701.8
Corporate and Other..................................... 907.9 991.4 1,106.6 927.7 877.5 1,158.7
Discontinued operations................................. 258.1
-------- -------- -------- -------- -------- --------
$4,885.9 $4,598.1 $4,870.1 $4,806.7 $4,746.2 $5,258.2
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
Additional Information
Average number of common shares outstanding............. 129.4 134.2 138.5 140.9 151.8 170.4
Return on average stockholders' equity.................. 15.6% 18.4% 13.8% 19.2% 20.6% 33.5%
Stockholders' equity per common share................... $ 14.57 $ 13.48 $ 13.10 $ 13.25 $ 11.99 $ 11.99
Percent of debt to total capitalization................. 32% 28% 28% 30% 30% 30%
Research and development
Honeywell-funded...................................... $ 319.0 $ 337.4 $ 312.6 $ 300.7 $ 279.6 $ 283.5
Customer-funded....................................... 340.5 404.8 390.5 373.5 417.5 460.9
Capital expenditures.................................... 262.4 232.1 244.1 240.2 251.5 268.0
Depreciation............................................ 235.3 235.3 242.8 238.5 236.1 247.8
Employees at year end................................... 50,800 52,300 55,400 58,200 60,300 65,300
<FN>
--------------------------
(1) Operating profit is net of special charges amounting to $62.7, $51.2,
$128.4 and $81.6 in 1994, 1993, 1992 and 1989, respectively, (see Note 4
to Financial Statements) as follows: Home and Building Control, $28.7,
$9.9, $42.7 and $28.4; Industrial Control, $14.4, $9.0, $38.6 and $32.7;
Space and Aviation Control, $19.6, $7.4, $34.9 and $12.1; Other, $--,
$16.4, $2.6 and $3.1; and General Corporate Expense, $--, $8.5, $9.6 and
$5.3.

(2) Operating profit is net of the additional operating expense impact of
adopting SFAS 106 (see Note 21 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.
</TABLE>

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<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

OPERATIONS

SALES

Honeywell's 1994 sales were $6.057 billion, compared with $5.963 billion in
1993 and $6.223 billion in 1992. Sales in the United States of $3.825 billion
were down two percent primarily due to a continuing cyclical downturn in the
Space and Aviation Control commercial aviation market and reduced government
spending. International sales, which represent 37 percent of total sales,
increased eight percent from 1993 to $2.232 billion. The international sales
increase was the result of positive sales growth of seven percent measured in
local currency, along with positive currency effects as the U.S. dollar weakened
an average of one percent against local currencies in countries where Honeywell
does business. U.S. export sales, including exports to foreign affiliates, were
$780 million in 1994, compared with $769 million in 1993 and $830 million in
1992.

COST OF SALES

Cost of sales was $4.082 billion in 1994, or 67.4 percent of sales, compared
with $4.020 billion (67.4 percent) in 1993 and $4.195 billion (67.4 percent) in
1992. Cost as a percentage of sales remained flat for 1994 despite highly
competitive conditions in all sectors of operation. Honeywell continues to
closely monitor all phases of its program to reduce operating costs and improve
margins, and margin expansion is anticipated in 1995.

RESEARCH AND DEVELOPMENT

Honeywell spent $319 million, or 5.3 percent of sales, on research and
development in 1994, compared with $337 million (5.7 percent) in 1993 and $313
million (5.0 percent) in 1992. The higher 1993 percentage reflects significant
investments in next-generation technologies. Honeywell expects to return to
approximately the same rate of R&D spending in 1995 as in 1992. Honeywell also
received $340 million in funds for customer-funded research and development in
1994, compared with $405 million in 1993 and $390 million in 1992.

OTHER EXPENSES AND INCOME

Selling, general and administrative expenses were $1.174 billion, or 19.4
percent of sales in 1994, compared with $1.076 billion (18.0 percent) in 1993
and $1.197 billion (19.2 percent) in 1992. Excluding royalties from autofocus
licensees (see Note 3 to Financial Statements on page 26), the percent of sales
would have been 19.5 percent, 18.6 percent and 19.5 percent in 1994, 1993 and
1992, respectively. The higher percentage in 1994 was primarily due to increased
legal costs. The higher percentage in 1992 was due to increased international
selling expenses. Royalty income from autofocus licensing agreements is expected
to decline to less than $1 million in 1995 as a result of the expiration of the
related patents.

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 26).

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 (see Note 3 to
Financial Statements on page 26).

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<PAGE>
Honeywell remains committed to efforts to reduce operating costs and improve
margins. As a result of the identification of additional opportunities to
restructure and streamline operations, Honeywell announced on October 19, 1994,
its intention to record additional special charges in 1994. In December 1994,
Honeywell's management, with the approval of the Board of Directors, committed
itself to a plan of action and recorded special charges of $63 million, or $38
million ($0.29 per share) after income taxes. The actions to be undertaken
include a continuation of right-sizing the Space and Aviation Control business
segment, a worldwide consolidation of manufacturing capacity, a streamlining and
realignment of the overhead structure and corporate expense reductions. Special
charges of $51 million, or $29 million ($0.22 per share) after income taxes,
were recorded in 1993 for productivity initiatives to strengthen the company's
competitiveness. In 1992, special charges of $128 million, or $85 million ($0.62
per share) after income taxes, were recorded to right-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 and other cost accruals. Work force reduction
costs primarily include severance costs related to involuntary termination
programs instituted to improve efficiency and reduce costs. These costs amounted
to $53 million in 1994, $44 million in 1993 and $65 million in 1992. As a result
of the 1994 plan, approximately 1,500 employees will be terminated. Facilities
consolidation costs are primarily associated with consolidations of branch
office space and product lines to restructure and streamline Honeywell's
operations. These costs amounted to $10 million in 1994, $2 million in 1993 and
$43 million in 1992. Other cost accruals include costs of exiting several
product lines which were no longer considered complementary to Honeywell's
businesses and amounted to $5 million in 1993 and $20 million in 1992.

The estimated cost savings of the restructuring actions in 1994 will exceed
$30 million annually, when fully realized. Special charge accruals remaining to
be paid were $74 million, $79 million and $121 million at December 31, 1994,
1993 and 1992, respectively. Total expenditures amounted to $50 million in 1994,
$93 million in 1993 and $8 million in 1992. Cash flows from operating activities
have funded and are expected to fund all special charges. Further information
about special charges is provided in Note 4 to Financial Statements on page 26.

Net interest expense was $60 million in 1994, $51 million in 1993 and $59
million in 1992. Net interest expense increased in 1994 as a result of higher
market interest rates and higher debt compared with 1993. In 1992, Honeywell
reduced total debt by $108 million, including redemption of high-coupon,
long-term debt. Information concerning Honeywell's exposure to and management of
interest rate risk through the use of derivative financial instruments is
provided on page 19 and in Notes 14 and 15 to Financial Statements on pages 31
and 33, respectively.

Earnings of companies owned 20 percent to 50 percent (primarily
Yamatake-Honeywell Co., Ltd.), which are accounted for using the equity method,
were $11 million in 1994, $18 million in 1993 and $16 million in 1992. The
decline in 1994 primarily resulted from a decline in earnings, the writedown of
assets and a bad debt reserve increase.

INCOME TAXES

The provision for income taxes was $91 million in 1994, compared with $156
million in 1993 and $235 million in 1992. The 1994 income tax provision has been
reduced by $38 million ($0.29 per share) as a result of a favorable tax
settlement. 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 5 to Financial Statements on page 27.

12
<PAGE>
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.

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.

NET INCOME

Honeywell's net income was $279 million ($2.15 per share) in 1994, compared
with net income of $322 million ($2.40 per share) in 1993 and $247 million
($1.78 per share) in 1992. Net income in 1994 includes an after-tax provision
for special charges of $38 million ($0.29 per share) and a reduction of the
provision for income taxes of $38 million ($0.29 per share) from a favorable tax
settlement. 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.

RETURN ON EQUITY AND INVESTMENT

Return on equity (ROE) was 15.6 percent in 1994, 18.4 percent in 1993 and
13.8 percent in 1992. Return on investment (ROI) was 12.3 percent in 1994, 14.6
percent in 1993 and 11.8 percent in 1992. The adoption of SFAS 106 and SFAS 112
significantly reduced ROE and ROI in 1992.

CURRENCY

The U.S. dollar weakened an average of one percent in 1994 compared with
1993 in relation to the principal foreign currencies in countries where
Honeywell products are sold. A weaker dollar has a positive effect on
international results because foreign-exchange denominated profits translate
into more U.S. dollars of profit; a stronger dollar has a negative translation
effect. Information about Honeywell's exposure to and management of currency
risk through the use of derivative financial instruments is provided on page 19
and in Notes 6, 14 and 15 to Financial Statements on pages 28, 31 and 33,
respectively.

13
<PAGE>
INFLATION

Highly competitive market conditions have 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 have largely
offset the effects of inflation on other costs and expenses.

EMPLOYMENT

Honeywell employed 50,800 people worldwide at year-end 1994, compared with
52,300 people in 1993 and 55,400 people in 1992. Approximately 31,400 employees
work in the United States, with 19,400 employed outside the country, primarily
in Europe. Total compensation and benefits in 1994 were $2.7 billion, or 47
percent of total costs and expenses. Sales per employee were $118,600 in 1994,
compared with $110,900 in 1993 and $109,600 in 1992.

ENVIRONMENTAL MATTERS

Honeywell is committed to protecting the environment, a commitment evidenced
by both Honeywell's products and 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 federal 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 effect on Honeywell's financial position,
net income, 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 $2.665 billion in 1994, compared
with $2.424 billion in 1993 and $2.394 billion in 1992. Sales in 1994 were up
moderately as U.S. sales continued to benefit from an improving economy and
growing consumer confidence. International sales were aided by the beginnings of
economic recovery internationally. Home Control continued to achieve greater
market penetration with original equipment manufacturers worldwide and to
broaden its product offerings in key markets such as burner boiler control.
Honeywell acquired Metallwerke Neheim Goeke & Co. GmbH, a leading German
manufacturer of water heating control products, to complement its current
offerings in Europe. In addition, there were a number of new product
introductions which included a new line of smart gas valves and integrated
boiler and furnace controls. Building Control experienced continued success with
its comprehensive energy retrofit and service solutions, particularly in the
schools and industrial markets in the United States. Home and Building Control's
large worldwide installed product and service base and market strategies will
continue to support future sales growth.

Sales in 1993 were up slightly from 1992 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

14
<PAGE>
introductions and greater penetration of the OEM market.
TotalHome-Registered Trademark- 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 energy retrofit and service solutions for schools and other
institutions.

Home and Building Control operating profit was $236 million in 1994,
compared with $233 million in 1993 and $193 million in 1992. Operating profit
included special charges of $29 million in 1994, $10 million in 1993 and $43
million in 1992. Excluding the impact of special charges, operating profit
increased moderately in 1994 benefiting from increasing volume in an improving
U.S. economy and growing consumer confidence. Special charges were incurred in
1994 to consolidate facilities, streamline operations and improve productivity.

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 5000-Registered Trademark- building automation
platform in the United States. Special charges were incurred in 1993 and 1992
for implementation of programs to consolidate facilities and improve
productivity.

Orders improved moderately in 1994 for both Home Control and Building
Control, primarily in the United States. Order activity in the targeted segments
of schools and industrial facilities experienced double-digit growth. The
backlog of orders also showed a moderate increase for 1994.

INDUSTRIAL CONTROL

Industrial Control sales were $1.835 billion in 1994, compared with $1.692
billion in 1993 and $1.744 billion in 1992. Excluding year-earlier results of
the Keyboard Division, which was sold in the third quarter of 1993, sales
increased moderately in 1994. Industrial Automation and Control experienced
improving sales for TotalPlant-Registered Trademark- Open Solutions as industry
continues to focus on improving productivity and meeting stringent environmental
and safety regulations worldwide. Sales to the hydrocarbon processing market
were strong as companies invested to comply with the U.S. Environmental
Protection Agency regulations for reformulated fuels. Honeywell acquired Allied
Data Communications, Pepperl & Fuchs Systems, and Profimatics during the year
and forged alliances with other companies to expand its TotalPlant Open
Solutions portfolio and provide more one-stop shopping and a broader range of
services to its industrial customers. Sensing and Control (formerly Control
Components) benefited from continued improvements in the U.S. durable goods
market, particularly in the automotive, appliance and information technology
industries. The business introduced SDS Smart Distributed System, a
revolutionary sensor network for distributed machine control. The company
expects continued growth for both Industrial Automation and Control's and
Sensing and Control's systems and products in 1995.

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 Sensing and Control grew at moderate rates despite
weak 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 Industrial's 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. Sensing
and Control experienced significant growth in solid state sensors for on-board
automotive and information technology and appliance market segments as demand
for durable goods improved.

Industrial Control operating profit was $207 million in 1994, $190 million
in 1993 and $157 million in 1992. Operating profit included special charges of
$14 million in 1994, $9 million in 1993 and $39 million in 1992. Excluding the
impact of special charges, operating profit showed a moderate increase as a
result of volume increases in Industrial Automation and Control where
environmental

15
<PAGE>
and safety regulations remain key drivers of spending around the world,
particularly in the hydrocarbon processing and chemicals markets; and volume
increases in Sensing and Control where durable goods markets continued to
improve, particularly in the automotive and appliance industries. Special
charges were incurred in 1994 to consolidate facilities, streamline operations
and improve productivity.

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.
Special charges were incurred in 1993 and 1992 for implementation of programs to
consolidate facilities and improve productivity.

In 1994, on a comparable basis, Industrial Automation and Control
experienced strong order activity in both the United States and internationally
in such key markets as hydrocarbon and chemical processing. The backlog of
orders was up modestly for the year.

SPACE AND AVIATION CONTROL

Sales in Space and Aviation Control were $1.432 billion in 1994, compared
with $1.675 billion in 1993 and $1.933 billion in 1992. Sales continued to
decline in 1994 as anticipated, reflecting lower commercial aircraft production
rates and reduced government spending. A cyclical recovery of the commercial
aircraft industry is expected in 1996. We believe we have seen the worst of the
decline, and we anticipate flat sales in 1995.

Sales in 1993 declined 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.

Space and Aviation Control operating profit was $81 million in 1994,
compared with $148 million in 1993 and $176 million in 1992. Operating profit
included special charges of $20 million in 1994, $7 million in 1993 and $35
million in 1992. Excluding the impact of special charges, there was a sharp
decline in operating profit resulting from lower sales volume and continued
investment in next-generation technology. This was partially offset by favorable
warranty performance and termination settlements in the Military and Space
businesses. Special charges were incurred in 1994 to consolidate facilities,
streamline operations and improve productivity.

Excluding the impact of special charges, operating profit declined in 1993
due to the sharp volume decline in sales of commercial flight systems and
significant investments in next-generation avionics. Special charges were
incurred in 1993 and 1992 for implementation of programs to consolidate
facilities and improve productivity.

Space and Aviation Control orders increased sharply in 1994 as result of
contract awards in Space Systems to provide cockpit displays for the space
shuttle and supply command and data-handling systems for the International Space
Station Alpha, and improved orders in Business and Commuter Aviation driven by a
rebound in the business jet market. The backlog of orders increased moderately
from 1993 levels.

OTHER

Sales from other operations were $125 million in 1994, $172 million in 1993
and $152 million in 1992. These sales included the activities of various units,
such as the Solid State Electronics and the Honeywell Technology research and
development centers, which do not correspond with Honeywell's primary business
segments. Other operations broke even in 1994 and incurred operating losses of
$2 million in 1993 and $9 million in 1992. The 1993 and 1992 losses included
special charges of $16 million and $3 million, respectively, for work force
reductions.

16
<PAGE>
FINANCIAL POSITION

FINANCIAL CONDITION

At year-end 1994, Honeywell's capital structure comprised $361 million of
short-term debt, $501 million of long-term debt and $1.855 billion of
stockholders' equity. The ratio of debt to total capital was 32 percent,
compared with 28 percent at year-end 1993. Honeywell's debt-to-total capital
policy range is 30 to 40 percent. Honeywell managed its capital structure at the
low end of this range during 1994.

Total debt increased $170 million during 1994 to $862 million. The increase
was used to finance general corporate requirements, including capital
expenditures and working capital, and $105 million of acquisitions.

Stockholders' equity increased $82 million in 1994 to $1.855 billion. The
increase was primarily due to an increase in retained earnings of $279 million
from net income, offset by dividends of $126 million, a $55 million increase in
the accumulated foreign currency translation, and a $7 million reduction in the
pension liability adjustment. These increases in stockholders' equity were
partially offset by a $148 million increase in treasury stock.

CASH GENERATION AND DEPLOYMENT

In 1994, $470 million of cash was generated from operating activities,
compared with $475 million in 1993 and $532 million in 1992. The decrease in
1994 was largely due to lower earnings compared with 1993. In 1994, cash
generated from investing and financing activities included $23 million of
proceeds from the sale of assets and $6 million of proceeds from employee stock
plans. These funds were used to support $262 million of capital expenditures,
$126 million of dividend payments and $163 million of share repurchases. Cash
balances increased $25 million in 1994.

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 $9 million in 1994. This portion of working capital as a
percentage of sales was 28 percent, which was consistent with 1993. Trade
receivables sold at year-end 1994 were $2 million, a reduction of $36 million in
1994. The increases in receivable and payable balances in 1994 were consistent
with the increase in fourth quarter sales.

CAPITAL EXPENDITURES AND ACQUISITIONS

Capital expenditures for property, plant and equipment in 1994 were $262
million, compared with $232 million in 1993 and $244 million in 1992. The 1994
depreciation charges were $235 million. Honeywell continues to invest at levels
believed to be adequate to maintain its technological position in areas
providing value-added long-term returns. During 1994, Honeywell invested $105
million in complementary business acquisitions.

SHARE REPURCHASE PLANS

In November 1991, the Board of Directors authorized a five-year program to
purchase up to $600 million of Honeywell shares. This program was completed in
1994, two years ahead of schedule. Honeywell repurchased $3 million of shares in
1991, $189 million of shares in 1992, $240 million of shares in 1993, and $168
million of shares in 1994.

At year-end 1994, Honeywell had 188 million shares issued, 127 million
shares outstanding and 32,025 stockholders of record. At year-end 1993,
Honeywell had 188 million shares issued, 132 million shares outstanding and
33,382 stockholders of record.

DIVIDENDS

In November 1993, the Board of Directors approved an 8 percent increase in
the regular annual dividend to $0.96 per share, from $0.89 per share, effective
in the fourth quarter 1993. In November 1994, the Board of Directors approved an
additional 4 percent increase in the regular annual

17
<PAGE>
dividend to $1.00 per share effective in the fourth quarter 1994. Honeywell paid
$0.97 per share in dividends in 1994, compared with $0.9075 in 1993, and
$0.84125 in 1992. Honeywell has paid a quarterly dividend since 1932 and has
increased the annual payout per share in each of the last 19 years.

EMPLOYEE STOCK PROGRAM

Honeywell contributed 634,561 shares of Honeywell common stock to employees
under its U.S. employee stock match savings plan in 1994. 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 $86 million in 1994, $105 million in 1993 and $79 million in
1992. Cash contributions to the Pension Plan for U.S. union employees were $40
million in 1994, $36 million in 1993 and $27 million in 1992.

TAXES

In 1994, taxes paid were $79 million. Accrued income taxes and related
interest decreased $11 million during 1994.

FUNDING SPECIAL CHARGES

During 1994, 1993 and 1992, the company established reserves for
productivity initiatives to strengthen the company's competitiveness (see page
12 and Note 4 to Financial Statements on page 26). Future cash flows from
operating activities are expected to be sufficient to fund these accrued costs.

LIQUIDITY

Short-term debt at year-end 1994 was $361 million, consisting of $125
million of commercial paper, $102 million of notes payable and $134 million of
current maturities of long-term debt. Short-term debt at year-end 1993 totaled
$188 million, consisting of $181 million of commercial paper and $7 million of
notes payable and 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 general purpose lines of credit at year-end 1994 totaled $1.076
billion. This consisted of $737 million of committed credit lines to meet
Honeywell's financing requirements, including support of commercial paper and
bank note borrowings, and $339 million of uncommitted credit lines available to
certain foreign subsidiaries. In addition, Honeywell had a $1.2 billion special
purpose credit facility available for an appeal bond that might have been
required in the Litton litigation described in Litigation below. The $1.2
billion facility was canceled in February, 1995.

This compared with $2.272 billion of available credit lines at year-end
1993, consisting of $675 million of committed credit lines for general financing
requirements, $397 million of uncommitted credit lines available to certain
foreign subsidiaries and the $1.2 billion special purpose facility.

In addition to its committed credit lines, Honeywell has access to the
public debt markets as evidenced by its $500 million medium-term note program
which was initiated in August 1994. The medium-term note program allows note
issuances with maturities ranging from nine months to 30 years. At December 31,
1994, $101 million of notes was outstanding under this program. Long-term debt
maturities consist of $133 million in 1995, $185 million in 1996 and $115
million in 1997.

Cash and short-term investments totaled $275 million at year-end 1994 and
$256 million at year-end 1993. Management believes its available cash, committed
credit lines and access to the public debt markets through its medium-term note
program, provide adequate short-term and long-term liquidity.

18
<PAGE>
DERIVATIVE FINANCIAL INSTRUMENTS

Honeywell utilizes various foreign currency exchange contracts and interest
rate swaps to manage its exposure to exchange rate (see Notes 6, 14 and 15 to
Financial Statements on pages 28, 31 and 33, respectively) and interest rate
fluctuations and its mix of fixed and floating interest rates (see Notes 14 and
15 to Financial Statements on pages 31 and 33, respectively). At year-end 1994,
the notional amount of outstanding foreign exchange contracts was $1.089
billion. The notional amount of outstanding interest rate swaps was $232
million.

LITIGATION

On August 31, 1993, a federal court jury in the 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 contended the
verdict was unsupported by the facts; that the Litton patent was 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; Honeywell's other legal and
equitable defenses; and Litton's motion to enhance the damage award. On January
9, 1995, the court issued a decision in favor of Honeywell, ruling that the
Litton patent was unenforceable because it was obtained by inequitable conduct
and invalid because it was an invention that would have been obvious from
combining existing processes. The court further ruled that if the judgment is
subsequently vacated or reversed as a result of an appeal of the court's ruling,
a new trial on the issue of damages would be held on the ground that the jury's
award was inconsistent with the clear weight of the evidence and to permit it to
stand would constitute a miscarriage of justice. Litton has filed a motion to
appeal the court's ruling. The trial for the antitrust claims of Litton and
Honeywell is currently scheduled to commence in November 1995.

CREDIT RATINGS

Honeywell's credit ratings remained unchanged during 1994. 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
Investors Service, Inc. On January 10, 1995, Moody's Investors Service, Inc.
removed Honeywell from credit watch and affirmed the A3/P-2 debt ratings.
Moody's had placed Honeywell on credit watch status on August 31, 1993, as a
result of the jury verdict in the Litton litigation.

STOCK PERFORMANCE

The market price of Honeywell stock ranged from $36 7/8 to $28 1/4 in 1994,
and was $31 1/2 at year
end. Book value per common share at year end was $14.57 in 1994 and $13.48 in
1993.

19
<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, 1994 and 1993, and the related statements of
income and cash flows for each of the three years in the period ended December
31, 1994. Our audits also included the financial statement schedule listed at
Part IV, Item 14(a)2. These financial statements and the financial statement
schedule 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, 1994 and 1993, and the results of their operations and their cash flows for
each of the three years in the period ended December 31, 1994, in conformity
with generally accepted accounting principles. Also, in our opinion, such
financial statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.

As discussed in Notes 1, 5 and 21 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 LLP
Minneapolis, Minnesota
February 13, 1995

20
<PAGE>
INCOME STATEMENT
HONEYWELL INC. AND SUBSIDIARIES
(DOLLARS AND SHARES IN MILLIONS
EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
---------------------------------
1994 1993 1992
--------- ---------- ----------
<S> <C> <C> <C>
Sales......................................................................... $ 6,057.0 $ 5,963.0 $ 6,222.6
--------- ---------- ----------
Costs and Expenses
Cost of sales............................................................... 4,082.1 4,019.6 4,195.3
Research and development.................................................... 319.0 337.4 312.6
Selling, general and administrative......................................... 1,173.8 1,075.7 1,196.8
Litigation settlements...................................................... (32.6) (287.9)
Special charges............................................................. 62.7 51.2 128.4
--------- ---------- ----------
5,637.6 5,451.3 5,545.2
--------- ---------- ----------
Interest
Interest expense............................................................ 75.5 68.0 89.9
Interest income............................................................. 15.3 17.0 31.4
--------- ---------- ----------
60.2 51.0 58.5
--------- ---------- ----------
Equity Income................................................................. 10.5 17.8 15.8
--------- ---------- ----------
Income before Income Taxes.................................................... 369.7 478.5 634.7
Provision for Income Taxes.................................................... 90.8 156.3 234.8
--------- ---------- ----------
Income before Extraordinary Item and Cumulative Effect of Accounting
Changes...................................................................... 278.9 322.2 399.9
Extraordinary Item -- Loss on Early Redemption of Debt........................ (8.6)
Cumulative Effect of Accounting Changes....................................... (144.5)
--------- ---------- ----------
Net Income.................................................................... $ 278.9 $ 322.2 $ 246.8
--------- ---------- ----------
--------- ---------- ----------
Earnings Per Common Share
Income before extraordinary item and cumulative effect of accounting
changes.................................................................... $ 2.15 $ 2.40 $ 2.88
Extraordinary item -- loss on early redemption of debt...................... (0.06)
Cumulative effect of accounting changes..................................... (1.04)
--------- ---------- ----------
Net income.................................................................. $ 2.15 $ 2.40 $ 1.78
--------- ---------- ----------
--------- ---------- ----------
Average Number of Common Shares Outstanding................................... 129.4 134.2 138.5
</TABLE>

See accompanying Notes to Financial Statements.

21
<PAGE>
STATEMENT OF FINANCIAL POSITION
HONEYWELL INC. AND SUBSIDIARIES
(DOLLARS IN MILLIONS)

ASSETS

<TABLE>
<CAPTION>
DECEMBER 31
-----------------------
1994 1993
---------- -----------
<S> <C> <C>
Current Assets
Cash and cash equivalents............................................................. $ 267.4 $ 242.3
Short-term investments................................................................ 7.4 13.8
Receivables........................................................................... 1,406.9 1,275.9
Inventories........................................................................... 760.2 760.1
Deferred income taxes................................................................. 207.5 258.1
---------- -----------
2,649.4 2,550.2
Investments and Advances................................................................ 242.8 227.7
Property, Plant and Equipment
Property, plant and equipment......................................................... 2,716.8 2,549.4
Less accumulated depreciation......................................................... 1,617.3 1,487.4
---------- -----------
1,099.5 1,062.0
Other Assets
Long-term receivables................................................................. 40.1 51.3
Goodwill.............................................................................. 209.8 133.0
Patents, licenses and trademarks...................................................... 66.1 89.8
Software and other intangibles........................................................ 290.3 266.3
Deferred income taxes................................................................. 98.5 63.8
Other................................................................................. 189.4 154.0
---------- -----------
Total Assets........................................................................ $ 4,885.9 $ 4,598.1
---------- -----------
---------- -----------

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Short-term debt....................................................................... $ 360.6 $ 187.9
Accounts payable...................................................................... 429.6 381.9
Customer advances..................................................................... 72.6 61.4
Accrued compensation and benefit costs................................................ 434.6 433.2
Accrued income taxes.................................................................. 309.6 320.8
Deferred income taxes................................................................. 10.2
Other accrued liabilities............................................................. 464.8 460.7
---------- -----------
2,071.8 1,856.1
Long-Term Debt.......................................................................... 501.5 504.0
Other Liabilities
Accrued benefit costs................................................................. 359.0 378.6
Deferred income taxes................................................................. 39.8 27.6
Other................................................................................. 59.1 58.8
Stockholders' Equity
Common stock -- $1.50 par value
Authorized -- 250,000,000 shares
Issued -- 1994 -- 188,286,000 shares.................................................. 282.4
1993 -- 188,328,570 shares.................................................... 282.5
Additional paid-in capital............................................................ 446.9 431.5
Retained earnings..................................................................... 2,600.4 2,447.3
Treasury stock -- 1994 -- 61,030,565 shares........................................... (1,576.5)
1993 -- 56,769,007 shares............................................. (1,428.4)
Accumulated foreign currency translation.............................................. 107.4 52.9
Pension liability adjustment.......................................................... (5.9) (12.8)
---------- -----------
1,854.7 1,773.0
---------- -----------
Total Liabilities and Stockholders' Equity.......................................... $ 4,885.9 $ 4,598.1
---------- -----------
---------- -----------
</TABLE>

See accompanying Notes to Financial Statements.

22
<PAGE>
STATEMENT OF CASH FLOWS
HONEYWELL INC. AND SUBSIDIARIES
(DOLLARS IN MILLIONS)

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
-------------------------------
1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
Cash Flows from Operating Activities
Net income..................................................................... $ 278.9 $ 322.2 $ 246.8
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................................................................. 235.3 235.3 242.8
Amortization of intangibles.................................................. 52.1 49.6 49.9
Deferred income taxes........................................................ 14.0 28.8 6.7
Equity income, net of dividends received..................................... (7.6) (14.5) (13.8)
Loss on sale of assets....................................................... 1.0 6.2 1.6
Contributions to employee stock plans........................................ 26.5 28.7 40.0
Increase in receivables...................................................... (83.8) (62.7) (136.0)
Decrease in inventories...................................................... 20.9 54.2 67.7
Increase (decrease) in accounts payable...................................... 27.7 28.8 (60.8)
Increase (decrease) in accrued income taxes and interest..................... (4.6) 8.3 (25.7)
Other changes in working capital, excluding short-term investments and
short-term debt............................................................. (93.9) (146.6) (85.6)
Other noncurrent items -- net................................................ 3.0 (63.5) 44.9
--------- --------- ---------
Net cash flows from operating activities......................................... 469.5 474.8 531.6
--------- --------- ---------
Cash Flows from Investing Activities
Reduction of investment in Sperry Aerospace Group.............................. 20.0
Proceeds from sale of assets................................................... 22.6 46.8 54.7
Capital expenditures........................................................... (262.4) (232.1) (244.1)
Investment in acquisitions..................................................... (104.6) (14.2) (83.5)
(Increase) decrease in short-term investments.................................. 6.7 (10.2) 6.8
Other -- net................................................................... 10.5 (23.3) (7.1)
--------- --------- ---------
Net cash flows from investing activities......................................... (327.2) (213.0) (273.2)
--------- --------- ---------
Cash Flows from Financing Activities
Net increase in short-term debt................................................ 35.7 2.8 90.1
Proceeds from issuance of long-term debt....................................... 126.5 0.6 2.6
Repayment of long-term debt.................................................... (1.8) (7.3) (199.7)
Purchase of treasury stock..................................................... (162.5) (241.2) (188.2)
Proceeds from employee stock plans............................................. 5.9 17.6 27.4
Dividends paid................................................................. (125.6) (122.0) (116.7)
--------- --------- ---------
Net cash flows from financing activities......................................... (121.8) (349.5) (384.5)
--------- --------- ---------
Effect of exchange rate changes on cash.......................................... 4.6 (12.4) (28.7)
--------- --------- ---------
Increase (decrease) in cash and cash equivalents................................. 25.1 (100.1) (154.8)
Cash and cash equivalents at beginning of year................................... 242.3 342.4 497.2
--------- --------- ---------
Cash and cash equivalents at end of year......................................... $ 267.4 $ 242.3 $ 342.4
--------- --------- ---------
--------- --------- ---------
</TABLE>

See accompanying Notes to Financial Statements.

23
<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 comprise
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 5). Interest costs related to prior
years' tax issues are included in the provision for income taxes in 1994 and
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 purchases and maturities of held-to-maturity securities are
classified as cash flows from investing activities. 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, four
to 17 years for patents, licenses and trademarks, and three 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.

24
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
HONEYWELL INC. AND SUBSIDIARIES
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)

NOTE 1 -- ACCOUNTING POLICIES (CONTINUED)
DERIVATIVES

In 1994, Honeywell adopted Statement of Financial Accounting Standards No.
119, "Disclosure about Derivative Financial Instruments and Fair Value of
Financial Instruments." Honeywell uses derivative financial instruments such as
foreign currency contracts (forwards, swaps and options) to manage its foreign
currency exposure (see Notes 6, 14 and 15) and interest rate swaps to manage its
exposure to interest rate fluctuations and its mix of fixed and floating
interest rates (see Notes 14 and 15).

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. Gains and losses from other foreign
currency transactions are included in selling, general and administrative
expenses on the income statement and were not material in any year.

The amount to be paid or received from interest rate swaps is charged or
credited to interest expense over the lives of the interest rate swap
agreements.

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
increased/(reduced) stockholders' equity $54.5 in 1994, $(3.0) in 1993 and
$(74.8) in 1992.

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 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 1993. This change in estimate
is included in cost of sales on the income statement.

RECLASSIFICATIONS

Certain amounts in prior years' income statements have been reclassified to
conform to the current year presentation.

NOTE 2 -- ACQUISITIONS AND SALE OF ASSETS
Honeywell acquired 15 companies in 1994, eight companies in 1993 and nine
companies in 1992 for $104.6, $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 $82.4 in
1994, $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 1994, 1993 and
1992, assuming these acquisitions had been made at the beginning of the year,
would not be significantly different from reported results.

25
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
HONEYWELL INC. AND SUBSIDIARIES
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)

NOTE 2 -- ACQUISITIONS AND SALE OF ASSETS (CONTINUED)
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 $8.6 in 1994, $22.9 in 1993 and
$41.1 in 1992. 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.

NOTE 3 -- 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 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 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 $8.2 in 1994, $31.4 in
1993 and $14.9 in 1992, and is included in selling, general and administrative
expenses on the income statement.

NOTE 4 -- SPECIAL CHARGES
In December 1994, Honeywell's management, with the approval of the board of
directors, committed itself to a plan of action and recorded special charges of
$62.7. Honeywell remains committed to efforts to reduce operating costs and
improve margins. The actions to be undertaken include a continuation of
right-sizing the Space and Aviation Control business segment, a worldwide
consolidation of manufacturing capacity, a streamlining and realignment of the
overhead structure and corporate expense reductions. Special charges of $51.2
were recorded in 1993 for productivity initiatives to strengthen the company's
competitiveness. In 1992, special charges of $128.4 were recorded to right-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 and other cost accruals.

Work force reduction costs primarily include severance costs related to
involuntary termination programs instituted to improve efficiency and reduce
costs. These costs amounted to $52.4 in 1994, $43.7 in 1993 and $65.1 in 1992.
As a result of the 1994 plan, approximately 1,500 employees will be terminated.
Total expenditures of $36.0 in 1994 included $2.9, $26.4 and $6.7 related to
costs incurred in 1994, 1993 and 1992, respectively. Total expenditures of $49.8
in 1993 included $7.8 and $42.0 related to costs incurred in 1993 and 1992,
respectively. Total expenditures amounted to $2.3 in 1992. Special charges of
$5.9 from 1993 and $3.0 from 1992 remain to be paid out as a result of
longer-term agreements.

Facilities consolidation costs are primarily associated with consolidations
of branch office space and product lines to restructure and streamline
Honeywell's operations. These costs amounted to $10.3 in 1994, $2.0 in 1993 and
$42.7 in 1992. Total expenditures of $8.5 in 1994 included $1.6 and $6.9 related
to costs incurred in 1993 and 1992, respectively. Total expenditures of $26.2 in
1993

26
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
HONEYWELL INC. AND SUBSIDIARIES
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)

NOTE 4 -- SPECIAL CHARGES (CONTINUED)
related to costs incurred in 1992. Total expenditures amounted to $2.0 in 1992.
No expenditures have been made under the 1994 plan. Special charges of $0.4 from
1993 and $4.4 from 1992 remain to be paid out as a result of lease costs
associated with vacated facilities.

Other cost accruals include costs of exiting several product lines which
were no longer considered complementary to Honeywell's businesses and amounted
to $5.5 in 1993 and $20.6 in 1992. Total expenditures of $5.5 in 1994 related to
costs incurred in 1993. Total expenditures of $17.0 in 1993 related to costs
incurred in 1992. Total expenditures amounted to $3.6 in 1992.

Cash flows from operating activities have funded and are expected to fund
all special charges.

NOTE 5 -- INCOME TAXES

The components of income before income taxes consist of the following:

<TABLE>
<CAPTION>
1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
Domestic..................................... $208.4 $316.9 $467.7
Foreign...................................... 161.3 161.6 167.0
------ ------ ------
$369.7 $478.5 $634.7
</TABLE>

The provision for income taxes on that income is as follows:

<TABLE>
<CAPTION>
1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
Current tax expense
United States.............................. $ 33.8 $ 81.7 $140.2
Foreign.................................... 40.6 36.0 52.5
State and local............................ 2.9 11.3 35.7
------ ------ ------
Total current.............................. 77.3 129.0 228.4
------ ------ ------
Deferred tax expense
United States.............................. 13.0 17.9 3.1
Foreign.................................... (0.8) 5.8 2.5
State and local............................ 1.3 3.6 0.8
------ ------ ------
Total deferred............................. 13.5 27.3 6.4
------ ------ ------
Provision for income taxes................... $ 90.8 $156.3 $234.8
</TABLE>

A favorable tax settlement reduced the provision for income taxes by $37.6
($0.29 per share) in the fourth quarter of 1994.

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 for income taxes; however, the enactment of this
legislation did result in a one-time gain of $9.2 ($0.07 per share) in 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.

27
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
HONEYWELL INC. AND SUBSIDIARIES
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)

NOTE 5 -- INCOME TAXES (CONTINUED)
A reconciliation of the provision for income taxes to the amount computed
using U.S. federal statutory rates is as follows:

<TABLE>
<CAPTION>
1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
Taxes on income at U.S. federal statutory
rates....................................... $129.4 $167.5 $215.8
Tax effects of foreign income................ (15.5) (26.0) (1.8)
State taxes.................................. 4.2 10.9 24.1
Tax effect of settlement..................... (37.6)
Adjustments to effective tax rates used in
recording tax assets and liabilities........ 2.7 (1.5)
Other........................................ 7.6 3.9 (1.8)
------ ------ ------
Provision for income taxes................... $ 90.8 $156.3 $234.8
</TABLE>

Taxes paid were $79.4 in 1994, $111.2 in 1993 and $244.0 in 1992.

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>
1994 1993
------ ------
<S> <C> <C>
Employee benefits............................ $142.2 $177.8
Miscellaneous accruals....................... 95.2 96.0
Excess of tax over book
depreciation/amortization................... (24.0) (79.2)
Asset valuation reserves..................... 43.0 42.5
Long-term contracts and installment sales.... 4.2 24.8
Losses on discontinuance of product lines.... 0.7 2.3
State taxes.................................. 28.5 29.8
Pension liability adjustment................. 3.7 8.2
Other........................................ (27.3) (18.1)
------ ------
$266.2 $284.1
</TABLE>

The components of net deferred taxes shown on the statement of financial
position are:

<TABLE>
<CAPTION>
1994 1993
------ ------
<S> <C> <C>
Deferred tax assets.......................... $463.8 $445.7
Deferred tax liabilities..................... 197.6 161.6
</TABLE>

Provision has not been made for U.S. or additional foreign taxes on $711.0
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, 1994, foreign subsidiaries had tax operating loss
carryforwards of $14.7.

NOTE 6 -- FOREIGN CURRENCY
Honeywell has entered into various foreign currency exchange contracts
(primarily Belgian francs, Deutsche marks and Canadian dollars) designed to
minimize its exposure to exchange rate fluctuations on foreign currency
transactions. Honeywell only uses foreign currency exchange contracts to hedge
underlying exposures such as non-functional currency receivables and payables
and foreign currency imports and exports. Company policy prohibits speculation
in foreign currency contracts.

28
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
HONEYWELL INC. AND SUBSIDIARIES
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)

NOTE 6 -- FOREIGN CURRENCY (CONTINUED)
Foreign exchange contracts reduce Honeywell's overall exposure to exchange
rate movements, since the gains and losses on these contracts offset losses and
gains on the assets, liabilities and transactions being hedged. Honeywell hedges
a significant portion of all known foreign exchange exposures. The notional
amount of Honeywell's outstanding foreign currency contracts, consisting of
forwards, purchased options and swaps, at December 31, 1994, was approximately
$1,088.6. The remaining term of the contracts is generally less than one year.
The amount of hedging gains and losses deferred was not material at December 31,
1994.

NOTE 7 -- INVESTMENTS IN DEBT AND EQUITY SECURITIES
In 1994, Honeywell adopted Statement of Financial Accounting Standards No.
115, "Accounting for Certain Investments in Debt and Equity Securities," which
specifies certain accounting and reporting for investments in equity securities
that have readily determinable fair values and for all investments in debt
securities.

Honeywell's investments in held-to-maturity securities totaled $144.4 at
December 31, 1994, and are reported at amortized cost in the statement of
financial position as follows: cash equivalents, $124.9; short-term investments,
$6.6; and investments and advances, $12.9. Held-to-maturity securities generally
mature within one year and include the following: time deposits with financial
institutions, $116.2; commercial paper, $12.0; and other, $16.2. During 1994,
Honeywell purchased $233.9 of held-to-maturity securities. Proceeds from
maturities of held-to-maturity securities amounted to $233.0. Honeywell has no
investments in trading securities, and available-for-sale securities are not
material. The estimated aggregate fair value of these securities approximates
their carrying amounts in the statement of financial position. Gross unrealized
holding gains and losses are not material.

NOTE 8 -- RECEIVABLES
Receivables have been reduced by an allowance for doubtful accounts as
follows:

<TABLE>
<CAPTION>
1994 1993
--------- ---------
<S> <C> <C>
Receivables, current............................................... $ 31.1 $ 24.3
Long-term receivables.............................................. 0.7 0.5
</TABLE>

Receivables include approximately $21.9 in 1994 and $21.1 in 1993 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 $295.9 in 1994
and $275.6 in 1993 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 $1.9 in 1994 and $3.6 in 1993 to an amount
that approximates realizable value.

In 1992, Honeywell entered into a three-year agreement with a large
international banking institution, 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 and without recourse. 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. Proceeds received from the sale
of receivables are included in cash flows from operating activities in the
statement of cash flows and amounted to $34.4 in 1994, $193.7 in 1993 and $30.9
in 1992. The uncollected balance of receivables sold amounted to $2.4 and $37.9
at December 31, 1994, and 1993, respectively, and averaged $4.2 and $21.7 during
those respective years. The discount recorded on sale of receivables is included
in selling, general and

29
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
HONEYWELL INC. AND SUBSIDIARIES
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)

NOTE 8 -- RECEIVABLES (CONTINUED)
administrative expenses on the income statement and amounted to $0.4, $0.7 and
$0.6 in 1994, 1993 and 1992, respectively. Honeywell, as agent for the
purchaser, retains collection and administrative responsibilities for the
participating interests sold.

NOTE 9 -- INVENTORIES

<TABLE>
<CAPTION>
1994 1993
--------- ---------
<S> <C> <C>
Finished goods........................................................ $ 297.4 $ 265.3
Inventories related to long-term contracts............................ 89.1 97.7
Work in process....................................................... 156.9 168.1
Raw materials and supplies............................................ 216.8 229.0
--------- ---------
$ 760.2 $ 760.1
</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 $32.5 and $36.8 at December 31, 1994, and 1993, respectively.

NOTE 10 -- PROPERTY, PLANT AND EQUIPMENT

<TABLE>
<CAPTION>
1994 1993
--------- ----------
<S> <C> <C>
Land.................................................................. $ 78.2 $ 77.1
Buildings and improvements............................................ 623.4 589.9
Machinery and equipment............................................... 1,937.3 1,814.2
Construction in progress.............................................. 77.9 68.2
--------- ----------
$ 2,716.8 $ 2,549.4
</TABLE>

NOTE 11 -- FOREIGN SUBSIDIARIES
The following is a summary of financial data pertaining to foreign
subsidiaries:

<TABLE>
<CAPTION>
1994 1993 1992
--------- ---------- ----------
<S> <C> <C> <C>
Income before extraordinary item and cumulative effect of
accounting changes....................................... $ 121.5 $ 119.8 $ 112.0
Assets.................................................... $ 1,742.3 $ 1,546.5 $ 1,554.7
Liabilities............................................... 726.4 620.5 655.7
--------- ---------- ----------
Net assets................................................ $ 1,015.9 $ 926.0 $ 899.0
</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.

30
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
HONEYWELL INC. AND SUBSIDIARIES
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)

NOTE 12 -- 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>
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Sales........................................ $1,877.0 $1,866.7 $1,656.3
Gross profit................................. 680.7 682.4 607.4
Net income................................... 48.4 69.8 62.8
Equity in net income......................... 10.5 17.8 15.8

Current assets............................... $1,371.4 $1,297.0 $1,035.4
Noncurrent assets............................ 616.8 588.2 502.8
-------- -------- --------
1,988.2 1,885.2 1,538.2
-------- -------- --------
Current liabilities.......................... 841.6 704.5 687.0
Noncurrent liabilities....................... 225.8 359.3 200.1
-------- -------- --------
1,067.4 1,063.8 887.1
-------- -------- --------
Net assets................................... $ 920.8 $ 821.4 $ 651.1
Equity in net assets......................... $ 225.5 $ 200.3 $ 158.3
</TABLE>

NOTE 13 -- INTANGIBLE ASSETS
Intangible assets have been reduced by accumulated amortization as follows:

<TABLE>
<CAPTION>
1994 1993
-------- --------
<S> <C> <C>
Goodwill..................................... $ 42.3 $ 34.3
Patents, licenses and trademarks............. 175.4 170.0
Software and other intangibles............... 152.4 135.4
</TABLE>

NOTE 14 -- DEBT

SHORT-TERM DEBT

Honeywell had general purpose lines of credit available totaling $1,075.8 at
December 31, 1994. Domestic revolving credit lines with 21 banks total $737.0,
which management believes is adequate to meet its financing requirements,
including support of commercial paper and bank note borrowings. These domestic
lines have commitment fee requirements. There were no borrowings on these lines
at December 31, 1994. The remaining credit facilities of $338.8 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 $3.1 at December 31, 1994. The weighted-average interest rate on
short-term borrowings outstanding at December 31, 1994, and 1993, respectively,
was as follows: commercial paper, 5.7 percent and 3.3 percent; and notes
payable, 5.8 percent and 10.1 percent.

Short-term debt consists of the following:

<TABLE>
<CAPTION>
1994 1993
-------- --------
<S> <C> <C>
Commercial paper............................. $ 125.0 $ 181.0
Notes payable................................ 102.2 6.6
Current maturities of long-term debt......... 133.4 0.3
-------- --------
$ 360.6 $ 187.9
</TABLE>

31
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
HONEYWELL INC. AND SUBSIDIARIES
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)

NOTE 14 -- DEBT (CONTINUED)
LONG-TERM DEBT

<TABLE>
<CAPTION>
1994 1993
--------- ---------
<S> <C> <C>
Honeywell Inc.
8% Dual-currency yen/U.S. dollar notes due 1995......................... $ 120.2 $ 116.7
7 7/8% due 1996......................................................... 100.0 100.0
6 1/4% Deutsche mark bonds due 1997..................................... 95.2 88.0
7.25% to 7.71% medium-term notes due 1998............................... 30.0
7.36% to 7.46% medium-term notes due 1999............................... 70.5
8 5/8% due 2006......................................................... 100.0 100.0
7.7% to 10 1/2% due 1995 to 2010........................................ 10.2 12.0
Subsidiaries
9.6% Canadian dollar notes due 1996..................................... 82.0 86.4
7.0% to 10.06% due 1995 to 2001, various currencies..................... 26.8 1.2
--------- ---------
634.9 504.3
Less amount included in short-term debt................................. 133.4 0.3
--------- ---------
$ 501.5 $ 504.0
</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.

In August 1994, Honeywell initiated a $500.0 medium-term note program
whereby it may issue notes with maturities of nine months to 30 years
denominated in U.S. dollars or foreign currencies with fixed or variable
interest rates. Honeywell issued $100.5 of U.S. dollar fixed-rate medium-term
notes in 1994.

Honeywell utilizes interest rate swaps to manage its interest rate exposures
and its mix of fixed and floating interest rates. 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. In
1994, Honeywell entered into interest rate swap agreements effectively
converting $30.0 of medium-term notes due 1998 and $70.5 of medium-term notes
due 1999 to floating rate debt based on three-month LIBOR rates. These swap
agreements expire in September 1995 for the 8 5/8 percent debentures, December
1996 for the 9.6 percent Canadian dollar notes, and for the medium-term notes:
$10.0 in March 1998, $20.0 in May 1998, $50.0 in August 1999 and $20.5 in
September 1999.

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

32
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
HONEYWELL INC. AND SUBSIDIARIES
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)

NOTE 14 -- DEBT (CONTINUED)
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 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, 1994, are as follows:

Interest paid amounted to $69.1, $63.9 and $98.5 in 1994, 1993 and 1992,
respectively.

NOTE 15 -- FAIR VALUE OF FINANCIAL INSTRUMENTS
All financial instruments are held for purposes other than trading. The
estimated fair values of all nonderivative financial instruments approximate
their carrying amounts in the statement of financial position with the exception
of long-term debt. 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 carrying amount of long
term debt was $634.9 and $504.3 at December 31, 1994, and 1993, respectively;
and the fair value was $630.3 and $569.0 at December 31, 1994, and 1993,
respectively.

The carrying amount of interest rate swaps was zero and $0.3 at December 31,
1994, and 1993, respectively. The gross unrealized market (loss)/gain on
interest rate swaps was $(7.5) and $2.8 at December 31, 1994, and 1993,
respectively. The carrying amount of foreign currency contracts was $18.3 and
$10.4 at December 31, 1994, and 1993, respectively. The gross unrealized market
gain on foreign currency contracts was $26.6 and $19.9 and the gross unrealized
market loss was $28.3 and zero at December 31, 1994, and 1993, respectively. The
estimated fair value of interest rate swaps and foreign currency contracts,
which is the gross unrealized market gain or loss, is based primarily on quotes
obtained from various financial institutions that deal in these types of
instruments.

Honeywell is exposed to credit risk to the extent of nonperformance by the
counterparties to the foreign currency contracts 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.

33
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
HONEYWELL INC. AND SUBSIDIARIES
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)

NOTE 16 -- LEASING ARRANGEMENTS
As lessee, Honeywell has minimum annual lease commitments outstanding at
December 31, 1994, 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>
1995................................................................. $ 101.3
1996................................................................. 79.7
1997................................................................. 58.0
1998................................................................. 39.9
1999................................................................. 29.1
2000 and beyond...................................................... 130.1
-----------
$ 438.1
</TABLE>

Rent expense for operating leases was $136.9 in 1994, $134.2 in 1993 and
$128.0 in 1992.

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 17 -- CAPITAL STOCK

<TABLE>
<CAPTION>
ADDITIONAL
COMMON PAID-IN TREASURY
STOCK CAPITAL STOCK
----------- ----------- -----------
<S> <C> <C> <C>
Balance January 1, 1992............................................. $ 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)
Purchase of treasury stock --
5,223,800 shares.................................................. (168.0)
Issued for employee stock plans --
962,242 treasury shares........................................... 15.4 19.9
42,570 shares canceled............................................ (0.1)
----------- ----------- -----------
Balance December 31, 1994........................................... $ 282.4 $ 446.9 $ (1,576.5)
</TABLE>

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

34
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
HONEYWELL INC. AND SUBSIDIARIES
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)

NOTE 17 -- CAPITAL STOCK (CONTINUED)
statements relating to 1992 for 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, restricted stock or other
stock-based awards. The plan replaced existing similar plans, and awards
currently outstanding under those plans were not affected. There were 10,539,718
shares reserved for all key employee plans at December 31, 1994.

Options to purchase common stock have been granted to key employees at 100
percent of the market price on the date of grant, pursuant to
stockholder-approved plans. The following is a summary of existing stock options
under all plans:

<TABLE>
<CAPTION>
1994 1993 1992
---------- ----------- -----------
<S> <C> <C> <C>
Granted --
Number of shares.................................... 1,001,250 969,173 1,353,224
Price per share..................................... $33-$36 $31-$38 $31-$37
Exercised --
Number of shares.................................... 320,337 1,020,769 1,926,649
Price per share..................................... $12-$33 $12-$33 $8-$30
Outstanding December 31 --
Number of shares.................................... 5,346,237 4,739,683 4,800,613
Price per share..................................... $15-$38 $12-$38 $12-$37
</TABLE>

Options totaling 4,390,382 shares at prices ranging from $15 to $38 were
exercisable at December 31, 1994.

Restricted shares of common stock are issued to certain key employees as
compensation. Restricted shares are awarded with a fixed restriction period,
usually five years, or with a restriction period that may be shortened 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 141,376 in 1994, 533,995
in 1993 and 47,812 in 1992. The cost of restricted stock is charged to income
over the restriction period and amounted to $5.6 in 1994, $6.3 in 1993 and $6.5
in 1992. At December 31, restricted shares outstanding pursuant to key employee
plans totaled 767,209 in 1994, 775,861 in 1993 and 412,872 in 1992.

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

35
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
HONEYWELL INC. AND SUBSIDIARIES
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)

NOTE 17 -- CAPITAL STOCK (CONTINUED)
plan contributions. Shares issued under the stock match plans totaled 634,561
shares in 1994, 643,913 shares in 1993 and 977,716 shares in 1992 at a cost of
$20.7, $22.3 and $33.3, respectively. There were 1,713,734 shares reserved for
employee stock match plans at December 31, 1994.

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. Total shares issued under
the foreign stock purchase plans amounted to 49,250 in 1992 at an average price
per share of $33. There were no shares issued in 1994 or 1993 under these plans.

STOCK PLEDGE

In 1993, Honeywell pledged to the Honeywell Foundation a five-year option to
purchase 2,000,000 shares of common stock at $33 per share. This option is
transferable to charitable organizations and 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 1994 or 1993 and at December 31, 1994, there were
2,000,000 shares reserved for this pledge.

PREFERENCE STOCK

Twenty-five million preference shares with a par value of $1 per share have
been authorized. None has been issued at December 31, 1994.

NOTE 18 -- RETAINED EARNINGS

<TABLE>
<CAPTION>
1994 1993 1991
--------- ---------- ----------
<S> <C> <C> <C>
Balance January 1......................................... $ 2,447.3 $ 2,247.0 $ 2,116.9
Net income................................................ 278.9 322.2 246.8
Dividends
1994-$0.97 PER SHARE.................................... (125.8)
1993-$0.9075 per share.................................. (121.9)
1992-$0.84125 per share................................. (116.7)
--------- ---------- ----------
Balance December 31....................................... $ 2,600.4 $ 2,447.3 $ 2,247.0
</TABLE>

Included in retained earnings are undistributed earnings of companies 20 to
50 percent owned, amounting to $131.8 at December 31, 1994.

NOTE 19 -- 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.

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.

36
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
HONEYWELL INC. AND SUBSIDIARIES
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)

NOTE 19 -- SEGMENT INFORMATION (CONTINUED)
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 Honeywell Technology 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 on page 10. This information for 1994,
1993 and 1992 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>
1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
Capital expenditures
Home and Building Control..................................... $ 95.6 $ 73.6 $ 63.5
Industrial Control............................................ 73.6 72.8 81.9
Space and Aviation Control.................................... 54.9 58.4 67.2
Corporate and other........................................... 38.3 27.3 31.5
--------- --------- ---------
$ 262.4 $ 232.1 $ 244.1
Depreciation and amortization
Home and Building Control..................................... $ 71.8 $ 67.9 $ 69.0
Industrial Control............................................ 67.1 59.9 54.6
Space and Aviation Control.................................... 120.0 127.0 137.4
Corporate and other........................................... 28.5 30.1 31.7
--------- --------- ---------
$ 287.4 $ 284.9 $ 292.7
</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 19 -- SEGMENT INFORMATION (CONTINUED)
Following is financial information relating to geographic areas:

<TABLE>
<CAPTION>
1994 1993 1992
--------- ---------- ----------
<S> <C> <C> <C>
External sales
United States........................................... $ 3,824.7 $ 3,895.1 $ 4,014.9
Europe.................................................. 1,528.5 1,441.2 1,556.3
Other areas............................................. 703.8 626.7 651.4
--------- ---------- ----------
$ 6,057.0 $ 5,963.0 $ 6,222.6
Transfers between geographic areas
United States........................................... $ 293.3 $ 246.7 $ 242.2
Europe.................................................. 46.3 36.9 33.0
Other areas............................................. 54.3 47.6 47.0
--------- ---------- ----------
$ 393.9 $ 331.2 $ 322.2
Total sales
United States........................................... $ 4,118.0 $ 4,141.8 $ 4,257.1
Europe.................................................. 1,574.8 1,478.1 1,589.3
Other areas............................................. 758.1 674.3 698.4
Eliminations............................................ (393.9) (331.2) (322.2)
--------- ---------- ----------
$ 6,057.0 $ 5,963.0 $ 6,222.6
Operating profit
United States........................................... $ 343.7 $ 384.1 $ 338.1
Europe.................................................. 139.1 140.2 150.4
Other areas............................................. 41.2 44.4 28.1
--------- ---------- ----------
Operating profit........................................ 524.0 568.7 516.6
Interest expense........................................ (75.5) (68.0) (89.9)
Litigation settlements.................................. 32.6 287.9
Equity income........................................... 10.5 17.8 15.8
General corporate expense............................... (89.3) (72.6) (95.7)
--------- ---------- ----------
Income before income taxes.............................. $ 369.7 $ 478.5 $ 634.7
Identifiable Assets
United States........................................... $ 2,356.2 $ 2,337.5 $ 2,502.7
Europe.................................................. 1,303.1 1,111.4 1,134.4
Other areas............................................. 434.9 357.1 372.5
Corporate............................................... 791.7 792.1 860.5
--------- ---------- ----------
$ 4,885.9 $ 4,598.1 $ 4,870.1
</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 provisions for special charges amounting to
$62.7, $51.2 and $128.4 in 1994, 1993 and 1992, respectively, (see Note 4) as
follows: United States, $23.2, $22.4 and $79.8; Europe, $29.6, $20.3 and $29.7;
other areas, $9.9 in 1994 and $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 $8.2 in
1994, $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 20 -- 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.

The components of net periodic pension cost for U.S. defined benefit pension
plans are as follows:

<TABLE>
<CAPTION>
1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
Service cost of benefits earned during the period.................. $ 53.8 $ 48.3 $ 48.1
Interest cost of projected benefit obligation...................... 201.5 198.9 192.2
Actual return on assets............................................ (73.3) (225.7) (147.7)
Net amortization and deferral...................................... (92.6) 69.3 (5.1)
--------- --------- ---------
$ 89.4 $ 90.8 $ 87.5
</TABLE>

Following is a summary of assumptions used in the accounting for the U.S.
defined benefit plans.

<TABLE>
<CAPTION>
1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
Discount rate used in determining present values.................. 8.5% 7.5% 8.75%
Annual increase in future compensation levels..................... 4.5% 4.0% 5.0%
Expected long-term rate of return on assets....................... 8.5% 8.5% 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 $1.2 in 1994, $14.2 in 1993 and $9.0 in
1992.

The components of net periodic pension cost for foreign defined benefit
pension plans are as follows:

<TABLE>
<CAPTION>
1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
Service cost of benefits earned during the period................. $ 30.3 $ 25.8 $ 29.8
Interest cost of projected benefit obligation..................... 47.6 46.3 47.0
Actual return on assets........................................... (43.2) (111.7) (38.4)
Net amortization and deferral..................................... (37.1) 50.7 (32.8)
--------- --------- ---------
$ (2.4) $ 11.1 $ 5.6
</TABLE>

Assumptions used in the accounting for foreign defined benefit plans were:

<TABLE>
<CAPTION>
1994 1993 1992
---------- ----------- ------------
<S> <C> <C> <C>
Discount rate used in determining present values.................. 4.5-9.0% 5.0-9.0% 5.0-9.5%
Annual increase in future compensation levels..................... 2.0-8.0% 2.0-8.0% 2.0-8.0%
Expected long-term rate of return on assets....................... 5.5-9.5% 6.0-9.5% 6.0-10.3%
</TABLE>

39
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
HONEYWELL INC. AND SUBSIDIARIES
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)

NOTE 20 -- 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
1994 (U.S. AND FOREIGN) Benefits Exceed Assets
----------------------------------------------------------------------------------- ------------- -------------
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligation........................................................ $ (409.2) $ (2,412.7)
Accumulated benefit obligation................................................... $ (414.7) $ (2,581.3)
Projected benefit obligation..................................................... $ (587.6) $ (2,847.8)
Plan assets at fair value.......................................................... 723.8 2,386.9
------------- -------------
Projected benefit obligation (in excess of) less than plan assets.................. 136.2 (460.9)
Remaining unrecognized net transition obligation (asset)........................... (76.3) 5.2
Unrecognized prior service cost.................................................... 1.7 233.4
Unrecognized net loss.............................................................. 10.6 160.4
Fourth-quarter 1994 contributions to plans......................................... 24.8
Adjustment to recognize minimum liability.......................................... (129.4)
------------- -------------
Overfunded (unfunded) pension asset (liability) recognized in the statement of
financial position................................................................ $ 72.2 $ (166.5)
</TABLE>

<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>

Adjustments recorded to recognize the minimum liability required for defined
benefit pension plans whose accumulated benefits exceed assets amounted to
$129.4 in 1994 and $113.0 in 1993. A corresponding amount was recognized as an
intangible asset to the extent of unrecognized prior service cost and
unrecognized transition obligation. At December 31, 1994, $9.6 of excess minimum
liability resulted in a reduction in stockholders equity, net of income taxes,
of $5.9. At December 31, 1993, $21.0 of excess minimum liability resulted in a
reduction in stockholders equity, net of income taxes, of $12.8.

40
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
HONEYWELL INC. AND SUBSIDIARIES
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)

NOTE 20 -- PENSION PLANS (CONTINUED)
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.

NOTE 21 -- 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.

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 funds 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 components of net periodic postretirement benefit cost are as follows:

<TABLE>
<CAPTION>
1994 1993 1992
----- ----- -----
<S> <C> <C> <C>
Service cost of benefits earned during the period........... $10.4 $11.5 $10.5
Interest cost on accumulated post-retirement benefit
obligation................................................. 18.0 22.2 20.9
Net amortization............................................ 0.5
----- ----- -----
$28.9 $33.7 $31.4
</TABLE>

The amounts recognized in Honeywell's statement of financial position are as
follows:

<TABLE>
<CAPTION>
1994 1993
------ ------
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees.................................................. $ 87.7 $ 86.6
Fully eligible active plan participants................... 58.7 41.5
Other active plan participants............................ 151.8 129.9
Unrecognized prior service cost........................... (7.7)
Unrecognized net gain..................................... 2.3 25.7
------ ------
Accrued postretirement benefit cost......................... $292.8 $283.7
</TABLE>

The discount rate used in determining the APBO was 8.0 percent in 1994 and
7.0 percent in 1993. The assumed health-care cost trend rate used in measuring
the APBO was 10.1 percent in 1995, 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,
1994, and the net periodic postretirement benefit cost by 14 percent for 1994.

NOTE 22 -- CONTINGENCIES

LITTON LITIGATION

41
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
HONEYWELL INC. AND SUBSIDIARIES
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)

NOTE 22 -- CONTINGENCIES (CONTINUED)
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 contended that the verdict was
unsupported by the facts; that the Litton patent was invalid; and that
Honeywell's process differed 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; Honeywell's other legal and equitable defenses; and Litton's
motion to enhance the damage award. On January 9, 1995, the court issued a
decision in favor of Honeywell, ruling that the Litton patent was unenforceable
because it was obtained by inequitable conduct and invalid because it was an
invention that would have been obvious from combining existing processes. The
court further ruled that if the judgment is subsequently vacated or reversed as
a result of an appeal of the court's ruling, a new trial on the issue of damages
would be held on the ground that the jury's award was inconsistent with the
clear weight of the evidence and to permit it to stand would constitute a
miscarriage of justice. Litton has filed a motion to appeal the court's ruling.
The trial for the antitrust claims of Litton and Honeywell is currently
scheduled to commence in November 1995.

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 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, net income, 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.

42
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
HONEYWELL INC. AND SUBSIDIARIES
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)

NOTE 22 -- CONTINGENCIES (CONTINUED)
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 any
losses in connection with these matters will not have a material effect on
Honeywell's net income, financial position or liquidity.

NOTE 23 -- QUARTERLY DATA (UNAUDITED)

<TABLE>
<CAPTION>
1994 1ST QTR. 2ND QTR. 3RD QTR. 4TH QTR.
------------------------------------------------------------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
Sales.............................................................. $1,347.9 $1,463.8 $1,507.6 $1,737.7
Cost of sales...................................................... 917.3 1,001.8 1,011.9 1,151.1
Net income......................................................... 47.7 56.9 69.4 104.9
Per share........................................................ 0.36 0.44 0.54 0.81
</TABLE>

The fourth quarter of 1994 includes special charges of $62.7, or $37.6
($0.29 per share) after income taxes (see Note 4). The fourth quarter of 1994
also includes a reduction of the provision for income taxes of $37.6 ($0.29 per
share) related to a favorable tax settlement (see Note 5).

<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 5). 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 4)..................................... (23.2) (28.0)
After tax...................................................... (13.3) (15.5)
Per share...................................................... (0.10) (0.12)
</TABLE>

<TABLE>
<CAPTION>
Common Stock Price
(New York Stock
Exchange Composite)
Dividends
Per Share High Low
---------- ---------- ----------
<S> <C> <C> <C> <C>
1994 FIRST QUARTER................................ $.24 $35 1/2 $31 3/4
SECOND QUARTER............................... .24 34 1/2 30 1/2
THIRD QUARTER................................ .24 36 7/8 31
FOURTH QUARTER............................... .25 35 5/8 28 1/4
1993 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
</TABLE>

Stockholders of record on February 1, 1995, totaled 31,940.

43
<PAGE>
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.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Pages 3 through 8 and page 22 of the Honeywell Notice of 1995 Annual Meeting
and Proxy Statement are incorporated herein by reference.

ITEM 11. EXECUTIVE COMPENSATION

Pages 12 through 20 of the Honeywell Notice of 1995 Annual Meeting and Proxy
Statement are incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Page 11 of the Honeywell Notice of 1995 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....................................................... 20
Income Statement................................................................... 21
Statement of Financial Position.................................................... 22
Statement of Cash Flows............................................................ 23
Notes to Financial Statements...................................................... 24-43
</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.................................................................. 20
Schedules for the Years Ended December 31, 1994, 1993 and 1992:
II -- Valuation Reserves.................................................... 47
</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.

44
<PAGE>
3. EXHIBITS
Documents Incorporated by Reference:

<TABLE>
<S> <C>
(3)(a) Restated Certificate of Incorporation of Honeywell Inc. dated June 18,
1991.
(4)(a) 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)(f) Restricted-Stock Retirement Plan for Non-Employee Directors, is
incorporated by reference to Exhibit 10(iii)(g) to Honeywell's Annual
Report on Form 10-K for 1993.*
(10)(iii)(l) Honeywell Executive Life Insurance Agreement, is incorporated by reference
to Exhibit 10(iii)(m) to Honeywell's Annual Report on Form 10-K for 1993.*
(99)(ii) Honeywell Notice of 1995 Annual Meeting and Proxy Statement.**

Exhibits submitted herewith:
(3)(b) By-laws of Honeywell Inc., as amended through February 21, 1995.
(4)(b) Indenture, dated as of August 1, 1994, between Honeywell Inc. and The Chase
Manhattan Bank (National Association), as Trustee for Honeywell Inc.
Medium-Term Notes, Series A.
(10)(iii)(a) Honeywell Key Employee Severance Plan, as amended.*
(10)(iii)(b) Honeywell Supplementary Executive Retirement Plan for Mid-Career Hires, as
amended.*
(10)(iii)(c) Honeywell-Norwest Rabbi Trust Agreement, as amended.*
(10)(iii)(d) 1993 Honeywell Stock and Incentive Plan, as amended.*
(10)(iii)(e) 1988 Honeywell Stock and Incentive Plan, as amended.*
(10)(iii)(g) Honeywell Corporate Executive Compensation Plan, as amended.*
(10)(iii)(h) Honeywell Supplementary Executive Retirement Plan for Compensation in
Excess of $200,000, as amended.*
(10)(iii)(i) Honeywell Supplementary Executive Retirement Plan for CECP Participants, as
amended.*
(10)(iii)(j) Honeywell Supplementary Retirement Plan, as amended.*
(10)(iii)(k) Honeywell Supplementary Executive Retirement Plan for Benefits in Excess of
Limits Under Tax Reform Act of 1986, as amended.*
(10)(iii)(m) Form of Executive Termination Contract.*
(10)(iii)(n) Honeywell Inc. Compensation Plan for Outside Directors.*
(11) Computation of Earnings Per Share.
(12) Computation of Ratios of Earnings to Fixed Charges.
(21) Subsidiaries of Honeywell.
(23) Consent of Independent Auditors.
(24) Powers of Attorney.
(27) Financial Data Schedule.
(B) REPORTS ON FORM 8-K
None
<FN>
------------------------
*Management contract or compensatory plan or arrangement.
**Only the portions of Exhibit (99)(ii) specifically incorporated by reference
are deemed filed with the Commission.
</TABLE>

45
<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 29, 1995

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.

SIGNATURE TITLE
-------------------- --------------------------------------------------------

M. R. BONSIGNORE Chairman of the Board and Chief Executive Officer and
Director

W. M. HJERPE Vice President and Chief Financial Officer

P. M. PALAZZARI 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

J. J. HOWARD Director

B. E. KARATZ Director

D. L. MOORE Director

A. B. RAND Director

S. G. ROTHMEIER Director

M. W. WRIGHT Director

By: /s/ SIGURD UELAND, JR.

-----------------------------------
Sigurd Ueland, Jr.,
ATTORNEY-IN-FACT
March 29, 1995

46
<PAGE>
SCHEDULE II

HONEYWELL INC. AND SUBSIDIARIES
VALUATION RESERVES
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(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, 1994............................ $ 24.3 $ 12.5(1) $ 5.7(2) $ 31.1
------------- ------ ------ -----------
------------- ------ ------ -----------
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
------------- ------ ------ -----------
------------- ------ ------ -----------
LONG-TERM RECEIVABLES
--------------------------------------------------------
Year ended December 31, 1994............................ $ 0.5 $ -- $ (0.2)(2) $ 0.7
------------- ------ ------ -----------
------------- ------ ------ -----------
Year ended December 31, 1993............................ $ 0.8 $ -- $ 0.3(2) $ 0.5
------------- ------ ------ -----------
------------- ------ ------ -----------
Year ended December 31, 1992............................ $ 1.7 -- $ 0.9(2) $ 0.8
------------- ------ ------ -----------
------------- ------ ------ -----------
Reserves deducted from assets to which they apply --
valuation reserve:

LONG-TERM RECEIVABLES
--------------------------------------------------------
Year ended December 31, 1994............................ $ 3.6 $ (1.7)(1) $ -- $ 1.9
------------- ------ ------ -----------
------------- ------ ------ -----------
Year ended December 31, 1993............................ $ 2.9 $ 0.7(1) $ -- $ 3.6
------------- ------ ------ -----------
------------- ------ ------ -----------
Year ended December 31, 1992............................ $ 7.9 $ -- $ 5.0(3) $ 2.9
------------- ------ ------ -----------
------------- ------ ------ -----------
Reserves deducted from assets to which they apply --
allowance for amortization of intangibles:

GOODWILL
--------------------------------------------------------
Year ended December 31, 1994............................ $ 34.3 $ 8.6(4) $ 0.6(5) $ 42.3
------------- ------ ------ -----------
------------- ------ ------ -----------
Year ended December 31, 1993............................ $ 30.4 $ 6.7(4) $ 2.8(5) $ 34.3
------------- ------ ------ -----------
------------- ------ ------ -----------
Year ended December 31, 1992............................ $ 24.8 $ 5.3(4) $ (0.3)(5) $ 30.4
------------- ------ ------ -----------
------------- ------ ------ -----------
PATENTS, LICENSES AND TRADEMARKS
--------------------------------------------------------
Year ended December 31, 1994............................ $ 170.0 $ 24.2(4) $ 18.8(5) $ 175.4
------------- ------ ------ -----------
------------- ------ ------ -----------
Year ended December 31, 1993............................ $ 144.2 $ 25.8(4) $ -- $ 170.0
------------- ------ ------ -----------
------------- ------ ------ -----------
Year ended December 31, 1992............................ $ 119.8 $ 24.4(4) $ -- $ 144.2
------------- ------ ------ -----------
------------- ------ ------ -----------
SOFTWARE AND OTHER INTANGIBLES
--------------------------------------------------------
Year ended December 31, 1994............................ $ 135.4 $ 19.3(4) $ 2.3(5) $ 152.4
------------- ------ ------ -----------
------------- ------ ------ -----------
Year ended December 31, 1993............................ $ 117.8 $ 17.1(4) $ (0.5)(5) $ 135.4
------------- ------ ------ -----------
------------- ------ ------ -----------
Year ended December 31, 1992............................ $ 96.1 $ 20.2(4) $ (1.5)(5) $ 117.8
------------- ------ ------ -----------
------------- ------ ------ -----------
<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 reclassification of amount to other liabilities.
(4) Represents amounts included in cost of sales.
(5) Represents removal of fully amortized amounts and translation
adjustments.
</TABLE>

<PAGE>

----------------------------------------
----------------------------------------

HONEYWELL INC.

___________

Incorporated under the Laws of the State of Delaware

October 27, 1927

___________

BY-LAWS

As Adopted October 27, 1927, and Amended

through February 21, 1995

----------------------------------------
----------------------------------------

<PAGE>

INDEX OF BY-LAWS

PAGE
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

<PAGE>

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

<PAGE>

iii

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

<PAGE>

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

<PAGE>

BY-LAWS

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>

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>

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>

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>

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>

(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>

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>

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>

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>

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.

<PAGE>

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 twelve, 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

<PAGE>

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

<PAGE>

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

<PAGE>

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

<PAGE>

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.

<PAGE>

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.

<PAGE>
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.

<PAGE>

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>

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>

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

<PAGE>

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.

<PAGE>

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.

<PAGE>

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.

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,

<PAGE>

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.

<PAGE>

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.

<PAGE>

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

<PAGE>

(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;

<PAGE>

(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

<PAGE>

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>

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>

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>

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>

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>

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>

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>

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>

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>

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>

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>

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>

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>

-------------------------------------------------------------------------------

HONEYWELL INC.

THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
TRUSTEE

---------------------

INDENTURE

DATED AS OF AUGUST 1, 1994

---------------------

-------------------------------------------------------------------------------

<PAGE>

HONEYWELL INC.

Reconciliation and tie between Trust Indenture Act of 1939 and
Indenture, dated as of August 1, 1994

Trust Indenture
Act Section Indenture Section
--------------- -----------------

Section 310(a)(1) . . . . . . . . . . . . . . . . . . 609
(a)(2) . . . . . . . . . . . . . . . . . . 609
(a)(3) . . . . . . . . . . . . . . . . . . Not Applicable
(a)(4) . . . . . . . . . . . . . . . . . . Not Applicable
(a)(5) . . . . . . . . . . . . . . . . . . 609
(b) . . . . . . . . . . . . . . . . . . 608, 610
Section 311 . . . . . . . . . . . . . . . . . . 613
Section 312(a) . . . . . . . . . . . . . . . . . . 701, 702(a)
(b) . . . . . . . . . . . . . . . . . . 702(b)
(c) . . . . . . . . . . . . . . . . . . 702(c)
Section 313 . . . . . . . . . . . . . . . . . 703
Section 314(a) . . . . . . . . . . . . . . . . . . 704
(b) . . . . . . . . . . . . . . . . . . Not Applicable
(c)(1) . . . . . . . . . . . . . . . . . . 102
(c)(2) . . . . . . . . . . . . . . . . . . 102
(c)(3) . . . . . . . . . . . . . . . . . . Not Applicable
(d) . . . . . . . . . . . . . . . . . . Not Applicable
(e) . . . . . . . . . . . . . . . . . . 102
Section 315(a) . . . . . . . . . . . . . . . . . . 601
(b) . . . . . . . . . . . . . . . . . . 602
(c) . . . . . . . . . . . . . . . . . . 601
(d) . . . . . . . . . . . . . . . . . . 601
(e) . . . . . . . . . . . . . . . . . . 514
Section 316(a) . . . . . . . . . . . . . . . . . . 101
(a)(1)(A) . . . . . . . . . . . . . . . . . . 502, 512
(a)(1)(B) . . . . . . . . . . . . . . . . . . 513
(a)(2) . . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . . 508
Section 317(a)(1) . . . . . . . . . . . . . . . . . . 503
(a)(2) . . . . . . . . . . . . . . . . . . 504
(b) . . . . . . . . . . . . . . . . . . 1003
Section 318(a) . . . . . . . . . . . . . . . . . . 107

-------------------
Note: This reconciliation and tie shall not, for any purpose, be deemed to be
part of the Indenture.

<PAGE>
TABLE OF CONTENTS

PAGE

PARTIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

RECITALS OF THE COMPANY. . . . . . . . . . . . . . . . . . . . . . . . . . 1

ARTICLE ONE

DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

SECTION 101. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . 1
Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Attributable Debt . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Authenticating Agent. . . . . . . . . . . . . . . . . . . . . . . . . 2
Board of Directors. . . . . . . . . . . . . . . . . . . . . . . . . . 2
Board Resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Business Day. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Commission. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Company Request . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Consolidated Net Tangible Assets. . . . . . . . . . . . . . . . . . . 3
Corporate Trust Office. . . . . . . . . . . . . . . . . . . . . . . . 3
Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Defaulted Interest. . . . . . . . . . . . . . . . . . . . . . . . . . 4
Depositary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Event of Default. . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Exchange Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Funded Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Global Security . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Holder. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Interest Payment Date . . . . . . . . . . . . . . . . . . . . . . . . 5
Lien or Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Maturity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Officers' Certificate . . . . . . . . . . . . . . . . . . . . . . . . 5
Opinion of Counsel. . . . . . . . . . . . . . . . . . . . . . . . . . 5
Original Issue Discount Security. . . . . . . . . . . . . . . . . . . 5
Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Paying Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Periodic Offering . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Person. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

i
<PAGE>

Place of Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Predecessor Security. . . . . . . . . . . . . . . . . . . . . . . . . 7
Principal Property. . . . . . . . . . . . . . . . . . . . . . . . . . 7
Redemption Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Redemption Price. . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Regular Record Date . . . . . . . . . . . . . . . . . . . . . . . . . 8
Required Currency . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Responsible Officer . . . . . . . . . . . . . . . . . . . . . . . . . 8
Restricted Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . 8
Sale and Leaseback Transaction. . . . . . . . . . . . . . . . . . . . 8
Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Security Register and Security Registrar. . . . . . . . . . . . . . . 8
Special Record Date . . . . . . . . . . . . . . . . . . . . . . . . . 8
Stated Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Subsidiary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Trust Indenture Act or TIA. . . . . . . . . . . . . . . . . . . . . . 9
U.S. Government Obligations . . . . . . . . . . . . . . . . . . . . . 9
Vice President. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Voting Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 102. Compliance Certificates and Opinions . . . . . . . . . . . . 9
SECTION 103. Form of Documents Delivered to Trustee . . . . . . . . . . . 10
SECTION 104. Acts of Holders. . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 105. Notices, Etc., to Trustee and Company. . . . . . . . . . . . 12
SECTION 106. Notice to Holders; Waiver. . . . . . . . . . . . . . . . . . 12
SECTION 107. Compliance with Trust Indenture Act. . . . . . . . . . . . . 13
SECTION 108. Effect of Headings and Table of Contents . . . . . . . . . . 13
SECTION 109. Successors and Assigns . . . . . . . . . . . . . . . . . . . 13
SECTION 110. Separability Clause. . . . . . . . . . . . . . . . . . . . . 13
SECTION 111. Benefits of Indenture. . . . . . . . . . . . . . . . . . . . 13
SECTION 112. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 113. Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . 14

ARTICLE TWO

SECURITY FORMS

SECTION 201. Forms Generally. . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 202. Form of Face of Security . . . . . . . . . . . . . . . . . . 15
SECTION 203. Form of Reverse of Security. . . . . . . . . . . . . . . . . 18
SECTION 204. Form of Trustee's Certificate of Authentication. . . . . . . 22
SECTION 205. Form of Legend for Global Securities . . . . . . . . . . . . 22

<PAGE>

ARTICLE THREE

THE SECURITIES

SECTION 301. Amount Unlimited; Issuable in Series . . . . . . . . . . . . 23
SECTION 302. Denominations. . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 303. Execution, Authentication, Delivery and Dating . . . . . . . 26
SECTION 304. Temporary Securities . . . . . . . . . . . . . . . . . . . . 29
SECTION 305. Registration, Registration of Transfer and Exchange. . . . . 29
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities . . . . . . 31
SECTION 307. Payment of Interest; Interest Rights Preserved . . . . . . . 32
SECTION 308. Persons Deemed Owners. . . . . . . . . . . . . . . . . . . . 33
SECTION 309. Cancellation . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 310. Computation of Interest. . . . . . . . . . . . . . . . . . . 34
SECTION 311. Payment to be in Proper Currency . . . . . . . . . . . . . . 34

ARTICLE FOUR

SATISFACTION AND DISCHARGE

SECTION 401. Satisfaction and Discharge of Indenture. . . . . . . . . . . 35
SECTION 402. Application of Trust Money . . . . . . . . . . . . . . . . . 36
SECTION 403. Defeasance and Discharge of Indenture. . . . . . . . . . . . 36

ARTICLE FIVE

REMEDIES

SECTION 501. Events of Default. . . . . . . . . . . . . . . . . . . . . . 38
SECTION 502. Acceleration of Maturity; Rescission and Annulment . . . . . 40
SECTION 503. Collection of Indebtedness and Suits for
Enforcement by Trustee . . . . . . . . . . . . . . . . . . 41
SECTION 504. Trustee May File Proofs of Claim . . . . . . . . . . . . . . 42
SECTION 505. Trustee May Enforce Claims Without
Possession of Securities . . . . . . . . . . . . . . . . . 43
SECTION 506. Application of Money Collected . . . . . . . . . . . . . . . 44
SECTION 507. Limitation on Suits. . . . . . . . . . . . . . . . . . . . . 44
SECTION 508. Unconditional Right of Holders to
Receive Principal, Premium and Interest. . . . . . . . . . 45
SECTION 509. Restoration of Rights and Remedies . . . . . . . . . . . . . 45
SECTION 510. Rights and Remedies Cumulative . . . . . . . . . . . . . . . 45
SECTION 511. Delay or Omission Not Waiver . . . . . . . . . . . . . . . . 46
SECTION 512. Control by Holders . . . . . . . . . . . . . . . . . . . . . 46
SECTION 513. Waiver of Past Defaults. . . . . . . . . . . . . . . . . . . 46
SECTION 514. Undertaking for Costs. . . . . . . . . . . . . . . . . . . . 47
SECTION 515. Waiver of Stay or Extension Laws . . . . . . . . . . . . . . 47

iii

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ARTICLE SIX

THE TRUSTEE

SECTION 601. Certain Duties and Responsibilities. . . . . . . . . . . . . 48
SECTION 602. Notice of Defaults . . . . . . . . . . . . . . . . . . . . . 48
SECTION 603. Certain Rights of Trustee. . . . . . . . . . . . . . . . . . 49
SECTION 604. Not Responsible for Recitals or Issuance of Securities . . . 50
SECTION 605. May Hold Securities. . . . . . . . . . . . . . . . . . . . . 50
SECTION 606. Money Held in Trust. . . . . . . . . . . . . . . . . . . . . 51
SECTION 607. Compensation and Reimbursement . . . . . . . . . . . . . . . 51
SECTION 608. Disqualification; Conflicting Interests. . . . . . . . . . . 52
SECTION 609. Corporate Trustee Required; Eligibility. . . . . . . . . . . 52
SECTION 610. Resignation and Removal; Appointment of Successor. . . . . . 52
SECTION 611. Acceptance of Appointment by Successor . . . . . . . . . . . 54
SECTION 612. Merger, Conversion, Consolidation or Succession to Business. 55
SECTION 613. Preferential Collection of Claims Against Company. . . . . . 56
SECTION 614. Appointment of Authenticating Agent. . . . . . . . . . . . . 56

ARTICLE SEVEN

HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY

SECTION 701. Company to Furnish Trustee Names
and Addresses of Holders . . . . . . . . . . . . . . . . . 58
SECTION 702. Preservation of Information; Communications to Holders . . . 58
SECTION 703. Reports by Trustee . . . . . . . . . . . . . . . . . . . . . 59
SECTION 704. Reports by Company . . . . . . . . . . . . . . . . . . . . . 59

ARTICLE EIGHT

CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE

SECTION 801. Company May Consolidate, Etc., Only on Certain Terms . . . . 60
SECTION 802. Successor Substituted. . . . . . . . . . . . . . . . . . . . 61

<PAGE>

ARTICLE NINE

SUPPLEMENTAL INDENTURES

SECTION 901. Supplemental Indentures Without Consent of Holders . . . . . 61
SECTION 902. Supplemental Indentures with Consent of Holders. . . . . . . 63
SECTION 903. Execution of Supplemental Indentures . . . . . . . . . . . . 64
SECTION 904. Effect of Supplemental Indentures. . . . . . . . . . . . . . 64
SECTION 905. Conformity with Trust Indenture Act. . . . . . . . . . . . . 65
SECTION 906. Reference in Securities to Supplemental Indentures . . . . . 65
SECTION 907. Notice of Supplemental Indentures. . . . . . . . . . . . . . 65

ARTICLE TEN

COVENANTS

SECTION 1001. Payment of Principal, Premium and Interest. . . . . . . . . 65
SECTION 1002. Maintenance of Office or Agency . . . . . . . . . . . . . . 66
SECTION 1003. Money for Securities Payments to Be Held in Trust . . . . . 66
SECTION 1004. Existence . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 1005. Maintenance of Properties . . . . . . . . . . . . . . . . . 68
SECTION 1006. Payment of Taxes and Other Claims . . . . . . . . . . . . . 68
SECTION 1007. Restriction on Secured Debt . . . . . . . . . . . . . . . . 68
SECTION 1008. Restriction on Sale and Leaseback Transactions. . . . . . . 71
SECTION 1009. Defeasance of Certain Obligations . . . . . . . . . . . . . 72
SECTION 1010. Waiver of Certain Covenants . . . . . . . . . . . . . . . . 73

ARTICLE ELEVEN

REDEMPTION OF SECURITIES

SECTION 1101. Applicability of Article. . . . . . . . . . . . . . . . . . 74
SECTION 1102. Election to Redeem; Notice to Trustee . . . . . . . . . . . 74
SECTION 1103. Selection by Trustee of Securities to Be Redeemed . . . . . 75
SECTION 1104. Notice of Redemption. . . . . . . . . . . . . . . . . . . . 75
SECTION 1105. Deposit of Redemption Price . . . . . . . . . . . . . . . . 76
SECTION 1106. Securities Payable on Redemption Date . . . . . . . . . . . 76
SECTION 1107. Securities Redeemed in Part . . . . . . . . . . . . . . . . 77

ARTICLE TWELVE

SINKING FUNDS

SECTION 1201. Applicability of Article. . . . . . . . . . . . . . . . . . 77
SECTION 1202. Satisfaction of Sinking Fund Payments with Securities . . . 78
SECTION 1203. Redemption of Securities for Sinking Fund . . . . . . . . . 78

<PAGE>

INDENTURE, dated as of August 1, 1994 between Honeywell Inc., a corporation
duly organized and existing under the laws of the State of Delaware (herein
called the "Company"), having its principal office at Honeywell Plaza,
Minneapolis, Minnesota 55408, and The Chase Manhattan Bank (National
Association), as Trustee (herein called the "Trustee").

RECITALS OF THE COMPANY

The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured
debentures, notes or other evidences of indebtedness (herein called the
"Securities"), to be issued in one or more series as in this Indenture provided.

All things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done.

NOW, THEREFORE, THIS INDENTURE WITNESSETH:

For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed, for
the equal and proportionate benefit of all Holders of the Securities or of
series thereof, as follows:

ARTICLE ONE

DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

SECTION 101. Definitions.

For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:

(1) the terms defined in this Article have the meanings assigned
to them in this Article and include the plural as well as the singular;

(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;

(3) any gender used in this Indenture shall be deemed and
construed to include correlative words of the masculine, feminine or neuter
gender;

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(4) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles, and, except as otherwise herein expressly provided, the term
"generally accepted accounting principles" with respect to any computation
required or permitted hereunder shall mean such accounting principles as are
generally accepted at the date of such computation; and

(5) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.

Certain terms, used principally in Article Six, are defined in that
Article.

"Act", when used with respect to any Holder, has the meaning
specified in Section 104.

"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control", when used with respect to any specified Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.

"Attributable Debt" in respect of any Sale and Leaseback Transaction means,
at the date of determination, the present value (discounted at the rate of
interest implicit in the terms of the lease) of the obligation of the lessee for
net rental payments during the remaining term of the lease (including any period
for which such lease has been extended or may, at the option of the lessor, be
extended). "Net rental payments" under any lease for any period means the sum of
the rental and other payments required to be paid in such period by the lessee
thereunder, excluding any amounts required to be paid by such lessee (whether or
not designated as rental or additional rental) on account of maintenance and
repairs, insurance, taxes, assessments, water rates or similar charges required
to be paid by such lessee thereunder or any amounts required to be paid by such
lessee thereunder contingent upon the amount of sales, main tenance and repairs,
insurance, taxes, assessments, water rates or similar charges.

"Authenticating Agent" means any Person authorized by the Trustee pursuant
to Section 614 to act on behalf of the Trustee to authenticate Securities of one
or more series.

"Board of Directors" means either the board of directors of the Company or
any duly authorized committee appointed by that board.

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"Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Company to have been duly adopted by the Board
of Directors and to be in full force and effect on the date of such
certification. Where any provision of this Indenture refers to action to be
taken pursuant to a Board Resolution (including establishment of any series of
the Securities and the forms and terms thereof), such action may be taken by any
committee, officer or employee of the Company authorized to take such action by
a Board Resolution.

"Business Day", when used with respect to any Place of Payment, means each
Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions generally in that Place of Payment are authorized or
obligated by law or executive order to close, unless otherwise specified in a
form of Security.

"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Securities Exchange Act of 1934, as amended,
or, if at any time after the execution of this instrument such Commission is not
existing and performing the duties now assigned to it under the Trust Indenture
Act, then the body performing such duties at such time.

"Company" means the Person named as the "Company" in the first paragraph of
this instrument until a successor corporation shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor corporation.

"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chairman of the Board, its President or
a Vice President, and by its Treasurer, an Assistant Treasurer, its Secretary or
an Assistant Secretary and delivered to the Trustee.

"Consolidated Net Tangible Assets" means the aggregate amount of assets
(less applicable reserves and other properly deductible items) after deducting
therefrom (a) all current liabilities (excluding any indebtedness for money
borrowed having a maturity of less than 12 months from the date of the most
recent consolidated balance sheet of the Company but which by its terms is
renewable or extendable beyond 12 months from such date at the option of the
borrower) and (b) all goodwill, trade names, patents, unamortized debt discount
and expense and any other like intangibles, all as set forth on the most recent
consolidated balance sheet of the Company and computed in accordance with
generally accepted accounting principles.

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"Corporate Trust Office" means the office of the Trustee in The City of New
York, New York at which at any particular time its corporate trust business
shall be principally administered.

"Corporation" includes corporations, associations, companies, joint stock
companies and business trusts.

"Debt" has the meaning specified in Section 1007.

"Defaulted Interest" has the meaning specified in Section 307.

"Depositary" means, with respect to the Securities of any series issuable
or issued in whole or in part in the form of one or more Global Securities, the
clearing agency registered under the Exchange Act, specified for that purpose as
contemplated by Section 301 or any successor clearing agency registered under
the Exchange Act as contemplated by Section 305, and if at any time there is
more than one such Person, "Depositary" as used with respect to the Securities
of any series shall mean the Depositary with respect to the Securities of such
series.

"Event of Default" has the meaning specified in Section 501.

"Exchange Act" means the Securities Exchange Act of 1934, as amended.

"Funded Debt" means Debt which by its terms matures at or is extendible or
renewable at the option of the obligor to a date more than 12 months after the
date of the creation of such Debt.

"Global Security" means a Security bearing the legend specified in Section
205 evidencing all or part of a series of Securities, issued to the Depositary
for such series or its nominee, and registered in the name of such Depositary or
nominee.

"Holder" means a Person in whose name a Security is registered in the
Security Register.

"Indenture" means this instrument as originally executed or as it may from
time to time be supplemented or amended by one or more indentures supplemental
hereto entered into pursuant to the applicable provisions hereof and shall
include the terms of particular series of Securities established as contemplated
by Section 301; provided, however, that, if at any time more than one Person is
acting as Trustee under this instrument due to the appointment of one or more
separate Trustees for any one or more separate series of Securities pursuant to
Section 610(e), "Indenture" shall mean, with respect to such series of
Securities for which any such Person is Trustee, this instrument as originally
executed or as it may from time to time be supplemented or amended by one or
more indentures supplemental hereto

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entered into pursuant to the applicable provisions hereof and shall include the
terms of particular series of Securities for which such Person is Trustee
established as contemplated by Section 301, exclusive, however, of any
provisions or terms which relate solely to other series of Securities for which
such Person is not Trustee, regardless of when such terms or provisions were
adopted, and exclusive of any provisions or terms adopted by means of one or
more indentures supplemental hereto executed and delivered after such Person had
become such Trustee but to which such Person, as such Trustee, was not a party.

"interest", when used with respect to an Original Issue Discount Security
which by its terms bears interest only after Maturity, means interest payable
after Maturity.

"Interest Payment Date", when used with respect to any Security, means the
Stated Maturity of an installment of interest on such Security.

"Lien" or "Liens" has the meaning specified in Section 1007.

"Maturity", when used with respect to any Security, means the date on which
the principal of such Security or an installment of principal becomes due and
payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption or otherwise.

"Officers' Certificate" means a certificate signed by the Chairman of the
Board, the President, a Vice President or an Assistant Vice President of the
Company, and by the Treasurer, an Assistant Treasurer, the Secretary or an
Assistant Secretary of the Company, and delivered to the Trustee.

"Opinion of Counsel" means a written opinion of counsel, who may be counsel
for the Company.

"Original Issue Discount Security" means any Security which provides for an
amount less than the principal amount thereof to be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section 502.

"Outstanding", when used with respect to Securities, means, as of the date
of determination, all Securities theretofore authenticated and delivered under
this Indenture, except:

(i) Securities theretofore canceled by the Trustee or delivered to
the Trustee for cancellation;

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<PAGE>

(ii) Securities for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Trustee or any
Paying Agent (other than the Company) in trust or set aside and segregated
in trust by the Company (if the Company shall act as its own Paying Agent)
for the Holders of such Securities; provided that, if such Securities are
to be redeemed, notice of such redemption has been duly given pursuant to
this Indenture or provision therefor satisfactory to the Trustee has been
made; and

(iii) Securities which have been paid pursuant to Section 306 or in
exchange for or in lieu of which other Securities have been authenticated
and delivered pursuant to this Indenture, other than any such Securities
in respect of which there shall have been presented to the Trustee proof
satisfactory to it that such Securities are held by a bona fide purchaser
in whose hands such Securities are valid obligations of the Company;

provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder or whether a
quorum is present at a meeting of Holders of Securities, (i) the principal
amount of an Original Issue Discount Security that shall be deemed to be
Outstanding shall be the amount of the principal thereof that would be due and
payable as of the date of such determination upon acceleration of the Maturity
thereof pursuant to Section 502, (ii) the principal amount of a Security
denominated in one or more foreign currencies or currency units that shall be
deemed to be Outstanding shall be the U.S. dollar equivalent, determined in the
manner provided as contemplated by Section 301 as of the date of original
issuance of such Security, of the principal amount (or, in the case of an
Original Issue Discount Security, the U.S. dollar equivalent, determined as of
the date of original issuance of such Security, of the amount determined as
provided in (i) above) of such Security as determined by the Company pursuant to
Section 301, and (iii) Securities owned by the Company or any other obligor upon
the Securities or any Affiliate of the Company or of such other obligor shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether the Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Securities which the
Trustee knows to be so owned shall be so disregarded. Securities so owned which
have been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Securities and that the pledgee is not the Company or any
other obligor upon the Securities or any Affiliate of the Company or of such
other obligor.

"Paying Agent" means any Person authorized by the Company to pay the
principal of (and premium, if any) and/or interest on any Securities on behalf
of the Company.

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"Periodic Offering" means an offering of Securities of a series from time
to time the specific terms of which Securities, including without limitation the
rate or rates of interest (or formula for determining the rate or rates of
interest), if any, thereon, the Stated Maturity or Maturities thereof and the
redemption provisions, if any, with respect thereto, are to be determined by the
Company or its agents upon the issuance of such Securities.

"Person" means any individual, Corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.

"Place of Payment", when used with respect to the Securities of any series,
means the place or places where the principal of (and premium, if any) and/or
interest on the Securities of that series are payable, where Securities of that
series may be surrendered for registration of transfer or exchange and where
notices and demands to or upon the Company in respect of the Securities of that
series and this Indenture may be served.

"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security, and, for the purposes of this definition, any Security
authenticated and delivered under Section 306 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.

"Principal Property" means any manufacturing plant located within the
United States of America (other than its territories or possessions) and owned
by the Company or any Subsidiary, the gross book value (without deduction of any
depreciation reserves) of which on the date as of which the determination is
being made exceeds 1% of Consolidated Net Tangible Assets of the Company, except
any such plant (i) which is financed by obligations issued by a State or local
governmental unit pursuant to Section 142(a)(5), 142(a)(6), 142(a)(8) or 144(a)
of the Internal Revenue Code of 1986, or any successor provision thereof, or
(ii) which is not of material importance to the business conducted by the
Company and its Subsidiaries, taken as a whole (as determined by any two of the
following: the Chairman or a Vice Chairman of the Board of the Company, its
President, its Chief Financial Officer, its Vice President of Finance, its
Treasurer or its Controller).

"Redemption Date", when used with respect to any Security to be redeemed,
means the date fixed for such redemption pursuant to this Indenture.

"Redemption Price", when used with respect to any Security to be redeemed,
means the price at which it is to be redeemed pursuant to this Indenture.

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"Regular Record Date" for the interest payable on any Interest Payment Date
on the Securities of any series means the date specified for that purpose as
contemplated by Section 301.

"Required Currency" has the meaning specified in Section 311.

"Responsible Officer", when used with respect to the Trustee, means any
officer of the Trustee assigned by it to administer its corporate trust matters.

"Restricted Subsidiary" means any Subsidiary which owns or leases a
Principal Property.

"Sale and Leaseback Transaction" has the meaning specified in Section 1008.

"Securities" has the meaning stated in the first recital of this Indenture
and more particularly means any Securities authenticated and delivered under
this Indenture; provided, however, that if at any time there is more than one
Person acting as Trustee under this Indenture, "Securities" with respect to the
Indenture as to which such Person is Trustee shall have the meaning stated in
the first recital of this Indenture and shall more particularly mean Securities
authenticated and delivered under this Indenture, exclusive, however, of
Securities of any series as to which such Person is not Trustee.

"Security Register" and "Security Registrar" have the respective meanings
specified in Section 305.

"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 307.

"Stated Maturity", when used with respect to any Security or any
installment of principal thereof or interest thereon, means the date specified
in such Security as the fixed date on which the principal of such Security or
such installment of principal or interest is due and payable.

"Subsidiary" means any Corporation of which securities (excluding
securities entitled to vote for directors only by reason of the happening of a
contingency) entitled to elect at least a majority of the corporation's
directors shall at the time be owned, directly or indirectly, by the Company, or
one or more Subsidiaries, or by the Company and one or more Subsidiaries.

"Trustee" means the Person named as the "Trustee" in the first paragraph of
this instrument until a successor Trustee shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Trustee" shall mean or

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include each Person who is then a Trustee hereunder, and if at any time there is
more than one such Person, "Trustee" as used with respect to the Securities of
any series shall mean the Trustee with respect to Securities of that series.

"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939 as in
force at the date as of which this instrument was executed, except as provided
in Section 905.

"U.S. Government Obligations" means direct obligations of the United States
of America, backed by its full faith and credit.

"Vice President", when used with respect to the Company, means any vice
president, whether or not designated by a number or a word or words added before
or after the title "vice president".

"Voting Stock", when used with respect to a Corporation, means stock of the
class or classes having general voting power under ordinary circumstances to
elect at least a majority of the board of directors, managers or trustees of
such Corporation (irrespective of whether at the time stock or securities of any
other class or classes shall have or might have voting power by reason of the
happening of any contingency).

SECTION 102. Compliance Certificates and Opinions.

Upon any application or request by the Company to the Trustee to take any
action under any provision of this Indenture, the Company shall furnish to the
Trustee an Officers' Certificate stating that all conditions precedent, if any,
provided for in this Indenture relating to the proposed action have been
complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with, except
that in the case of any such application or request as to which the furnishing
of such documents is specifically required by any provision of this Indenture
relating to such particular application or request, no additional certificate or
opinion need be furnished.

Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include:

(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;

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(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;

(3) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion whether such covenant or condition has been
complied with; and

(4) a statement whether, in the opinion of each such individual, such
condition or covenant has been complied with.

SECTION 103. Form of Documents Delivered to Trustee.

In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.

Any certificate or opinion of any officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which such officer's certificate or opinion is
based are erroneous. Any such certificate or Opinion of Counsel may be based,
insofar as it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.

Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.

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SECTION 104. Acts of Holders.

(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture to be given or taken by Holders may
be embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Holders in person or by an agent duly appointed in writing,
and, except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the Trustee and,
where it is hereby expressly required, to the Company. Such instrument or
instruments (and the action embodied therein and evidenced thereby) are herein
sometimes referred to as the "Act" of the Holders signing such instrument or
instruments. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this Indenture
and (subject to Section 601) conclusive in favor of the Trustee and the Company,
if made in the manner provided in this Section.

(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than such signer's
individual capacity, such certificate or affidavit shall also constitute
sufficient proof of such signer's authority. The fact and date of the execution
of any such instrument or writing, or the authority of the Person executing the
same, may also be proved in any other manner which the Trustee deems sufficient.

(c) The ownership of Securities shall be proved by the Security Register.
The Company may fix any day as the record date for the purpose of determining
the Holders of Securities of any series entitled to give or take any request,
demand, authorization, direction, notice, consent, waiver or other action, or
to vote on any action, authorized or permitted to be given or taken by Holders
of Securities of such series. If not set by the Company prior to the first
solicitation of a Holder of Securities of such series made by any Person in
respect of any such action, or, in the case of any such vote, prior to such
vote, the record date for any such action or vote shall be the 30th day (or, if
later, the date of the most recent list of Holders required to be provided
pursuant to Section 701) prior to such first solicitation or vote, as the case
may be. With regard to any record date for action to be taken by the Holders of
one or more series of Securities, only the Holders of Securities of such series
on such date (or their duly designated proxies) shall be entitled to give or
take, or vote on, the relevant action.

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<PAGE>

(d) Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Holder of any Security shall bind every future Holder of the
same Security and the Holder of every Security issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done, omitted or suffered to be done by the Trustee or the Company in
reliance thereon, whether or not notation of such action is made upon such
Security.

SECTION 105. Notices, Etc., to Trustee and Company.

Any request, demand, authorization, direction, notice, consent, waiver or
Act of Holders or other document provided or permitted by this Indenture to be
made upon, given or furnished to, or filed with,

(1) the Trustee by any Holder or by the Company shall be sufficient
for every purpose hereunder if made, given, furnished or filed in writing
to or with a Responsible Officer of the Trustee at its Corporate Trust
Office, Attention: Corporate Trust Department, or

(2) the Company by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided) if
in writing and mailed, first-class postage prepaid, to the Company
addressed to it at the address of its principal office specified in the
first paragraph of this instrument (Attention: Treasurer) or at any other
address previously furnished in writing to the Trustee by the Company.

SECTION 106. Notice to Holders; Waiver.

Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at such Holder's address as it appears in the Security Register,
not later than the latest date, and not earlier than the earliest date,
prescribed for the giving of such notice. In any case where notice to Holders is
given by mail, neither the failure to mail such notice, nor any defect in any
notice so mailed, to any particular Holder shall affect the sufficiency of such
notice with respect to other Holders. Where this Indenture provides for notice
in any manner, such notice may be waived in writing by the Person entitled to
receive such notice, either before or after the event, and such waiver shall be
the equivalent of such notice. Waivers of notice by Holders shall be filed with
the Trustee, but such filing shall not be a condition precedent to the validity
of any action taken in reliance upon such waiver.

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<PAGE>

In case by reason of the suspension of regular mail service or by reason of
any other cause it shall be impracticable to give such notice by mail, then such
notification as shall be made by or with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.

SECTION 107. Compliance with Trust Indenture Act.

This Indenture is subject to, and shall be governed by, the provisions of
the Trust Indenture Act that are required to be part of this Indenture. If any
provision hereof limits, qualifies or conflicts with a provision of the Trust
Indenture Act that is required under such Act to be a part of and govern this
Indenture, the latter provision shall control. If any provision of this
Indenture modifies or excludes any provision of the Trust Indenture Act that may
be so modified or excluded, the latter provision shall be deemed to apply to
this Indenture as so modified or to be excluded, as the case may be.

SECTION 108. Effect of Headings and Table of Contents.

The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.

SECTION 109. Successors and Assigns.

All covenants and agreements in this Indenture by the Company or the
Trustee shall bind its successors and assigns, whether so expressed or not.

SECTION 110. Separability Clause.

In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.

SECTION 111. Benefits of Indenture.

Nothing in this Indenture or in the Securities, express or implied, shall
give to any Person, other than the parties hereto, any Authenticating Agent, any
Paying Agent, any Securities Registrar, and their successors hereunder and the
Holders, any benefit or any legal or equitable right, remedy or claim under this
Indenture.

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<PAGE>

SECTION 112. Governing Law.

This Indenture and the Securities shall be governed by and construed in
accordance with the laws of the State of New York.

SECTION 113. Legal Holidays.

Except as may be otherwise specified with respect to any particular
Securities, in any case where any Interest Payment Date, Redemption Date or
Stated Maturity of any Security shall not be a Business Day at any Place of
Payment, then (notwithstanding any other provision of this Indenture or of the
Securities) payment of interest or principal (and premium, if any) need not be
made at such Place of Payment on such date, but may be made on the next
succeeding Business Day at such Place of Payment with the same force and effect
as if made on the Interest Payment Date or Redemption Date, or at the Stated
Maturity, provided that no interest shall accrue for the period from and after
such Interest Payment Date, Redemption Date or Stated Maturity, as the case may
be.

ARTICLE TWO

SECURITY FORMS

SECTION 201. Forms Generally.

The Securities of each series shall be in substantially the form set forth
in this Article, or in such other form as shall be established by or pursuant to
a Board Resolution and set forth in an Officers' Certificate or established by
one or more indentures supplemental hereto, in each case with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture, and may have such letters, numbers or other marks
of identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange or as may,
consistently herewith, be determined by the officers executing such Securities,
as evidenced by their execution of the Securities. If the form of Securities of
any series is established by action taken pursuant to a Board Resolution, a copy
of an appropriate record of such action shall be certified by the Secretary or
an Assistant Secretary of the Company and delivered to the Trustee at or prior
to the delivery of the Company Order contemplated by Section 303 for the
authentication and delivery of such Securities.

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<PAGE>

The Trustee's certificates of authentication shall be in substantially the
form set forth in this Article with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture.

The definitive Securities may be printed, lithographed or engraved on steel
engraved borders or may be produced in any other manner, all as determined by
the officers executing such Securities, as evidenced by their execution of such
Securities.

SECTION 202. Form of Face of Security.

[INSERT ANY LEGEND REQUIRED BY THE INTERNAL REVENUE CODE AND THE REGULATIONS
THEREUNDER.]

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<PAGE>

HONEYWELL INC.
--------------------------

No._________ [$]_________________

Honeywell Inc., a corporation duly organized and existing under the
laws of Delaware (herein called the "Company", which term includes any successor
Person under the Indenture hereinafter referred to), for value received, hereby
promises to pay to___________________, or registered assigns, the principal sum
of _________________ [Dollars] on _______________[IF THE SECURITY IS TO BEAR
INTEREST PRIOR TO MATURITY, INSERT ---, and to pay interest thereon from
___________or from the most recent Interest Payment Date to which interest has
been paid or duly provided for, [semi-annually in arrears on________________ and
________________in each year] [annually in arrears on ______________],
commencing __________________, at the rate of_____ % per annum, until the
principal hereof is paid or made available for payment [IF APPLICABLE INSERT --,
and (to the extent that the payment of such interest shall be legally
enforceable) at the rate of ____% per annum on any overdue principal and premium
and on any overdue installment of interest]. The interest so payable, and
punctually paid or duly provided for, on any Interest Payment Date will, as
provided in such Indenture, be paid to the Person in whose name this Security
(or one or more Predecessor Securities) is registered at the close of business
on the Regular Record Date for such interest, which shall be the _______________
or __________________ (whether or not a Business Day), as the case may be, next
preceding such Interest Payment Date. Any such interest not so punctually paid
or duly provided for will forthwith cease to be payable to the Holder on such
Regular Record Date and may either be paid to the Person in whose name this
Security (or one or more Predecessor Securities) is registered at the close of
business on a Special Record Date for the payment of such Defaulted Interest to
be fixed by the Trustee, notice whereof shall be given to holders of Securities
of this series not less than 10 days prior to such Special Record Date, or be
paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Securities of this series
may be listed, and upon such notice as may be required by such exchange, all as
more fully provided in said Indenture]. [IF THE SECURITY IS NOT TO BEAR INTEREST
PRIOR TO MATURITY, INSERT --. The principal of this Security shall not bear
interest except in the case of a default in payment of principal upon
acceleration, upon redemption or at Stated Maturity and in such case the overdue
principal of this Security shall bear interest at the rate of____% per annum (to
the extent that the payment of such interest shall be legally enforceable),
which shall accrue from the date of such default in payment to the date payment
of such principal has been made or duly provided for. Interest on any overdue
principal shall be payable on demand. Any such interest on any overdue principal
that is not so paid on demand shall bear interest at the rate of _____% per
annum (to the extent that the payment of such interest shall be legally
enforceable), which shall accrue

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<PAGE>

from the date of such demand for payment to the date payment of such interest
has been made or duly provided for, and such interest shall also be payable on
demand.]

Payment of the principal of (and premium, if any) and [If applicable,
insert -- any such] interest on this Security will be made at the office or
agency of the Company maintained for that purpose in ________, in such coin
or currency [of the United States of America] as at the time of payment is legal
tender for payment of public and private debts [IF APPLICABLE, INSERT --;
provided, however, that at the option of the Company payment of interest may be
made by check mailed to the address of the Person entitled thereto as such
address shall appear in the Security Register].

[IF APPLICABLE, INSERT -- [The Securities of this series are/This Security
is] subject to redemption prior to the Stated Maturity as described on the
reverse hereof.]

Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.

Unless the certificate of authentication hereon has been executed by or on
behalf of the Trustee referred to on the reverse hereof by manual signature,
this Security shall not be entitled to any benefit under the Indenture or be
valid or obligatory for any purpose.

IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.

Dated:

HONEYWELL INC.

By
-------------------------------

Attest:

-----------------------------

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<PAGE>

SECTION 203. Form of Reverse of Security.

This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued in one or more
series under an Indenture, dated as of [DATE], 1993 (herein called the
"Indenture"), between the Company and The Chase Manhattan Bank (National
Association), as Trustee (herein called the "Trustee", which term includes any
successor trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights, limitations of rights, duties and immunities thereunder of the Company,
the Trustee and the Holders of the Securities and of the terms upon which the
Securities are, and are to be authenticated and delivered. This Security is one
of the series designated on the face hereof [, limited in aggregate principal
amount to [$]______________ ]. By the terms of the Indenture, additional
Securities [IF APPLICABLE, INSERT -- of this series and] of other separate
series, which may vary as to date, amount, Stated Maturity, interest rate or
method of calculating the interest rate and in other respects as therein
provided, may be issued in an unlimited principal amount.

[IF APPLICABLE, INSERT -- [The Securities of this series are/This Security
is] subject to redemption prior to the Stated Maturity hereof upon not less than
30 days' notice by mail to the Person[s] in whose name[s] [the Securities to be
redeemed are/this Security is] registered at the address specified in the
Security Register, [IF APPLICABLE, INSERT -- (1) on ______ in any year
commencing with the year ______ and ending with the year ______ through
operation of the sinking fund for this series at a Redemption Price equal to
100% of the principal amount, and (2)] at any time [on or after _________ ], as
a whole or in part, at the election of the Company, at the following Redemption
Prices (expressed as percentages of the principal amount): if redeemed [on or
before ________, ______%, and if redeemed] during the 12-month period beginning
_______ of the years indicated,

Redemption Redemption
Year Price Year Price
---- ---------- ---- ----------

and thereafter at a Redemption Price equal to _____% of the principal amount,
[If APPLICABLE, INSERT -- together in the case of any such redemption [IF
APPLICABLE, INSERT -- (whether through operation of the sinking fund or
otherwise)] with accrued interest to the Redemption Date, provided, however,
that installments of interest whose Stated Maturity is on or prior to such
Redemption Date will be payable to the [Holders of such Securities/Holder of
this Security] (or one or more Predecessor Securities) of record at the close of
business on the relevant Record

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<PAGE>

Dates referred to on the face hereof, all as provided in the Indenture]. [IF
THERE IS NO SINKING FUND, INSERT -- [The Securities of this series are/This
Security is] not subject to any sinking fund.]

[IF APPLICABLE, INSERT -- [The Securities of this series are/This Security
is] subject to redemption prior to the Stated Maturity hereof upon not less than
30 days' notice by mail to the Person[s] in whose name[s] [the Securities to be
redeemed are/this Security is] registered at the address specified in the
Security Register, (1) on ________ in any year commencing with the year ______
and ending with the year _____ through operation of the sinking fund for this
series at the Redemption Prices for redemption through operation of the sinking
fund (expressed as percentages of the principal amount) set forth in the table
below, and (2) at any time [on or after _____________ ], as a whole or in part,
at the election of the Company, at the Redemption Prices for redemption
otherwise than through operation of the sinking fund (expressed as percentages
of the principal amount) set forth in the table below: If redeemed during the
12-month period beginning ______________ of the years indicated,

Redemption Price
for Redemption Redemption Price for
Through Operation Redemption Otherwise
of the Than Through Operation
Year Sinking Fund of the Sinking Fund
---- ----------------- ----------------------

and thereafter at a Redemption Price equal to ____% of the principal amount [IF
APPLICABLE, INSERT ---, together in the case of any such redemption (whether
through operation of the sinking fund or otherwise) with accrued interest to the
Redemption Date, provided, however, that installments of interest whose Stated
Maturity is on or prior to such Redemption Date will be payable to the [Holders
of such Securities/Holder of this Security] (or one or more Predecessor
Securities) of record at the close of business on the relevant Record Dates
referred to on the face hereof, all as provided in the Indenture].]

[Notwithstanding the foregoing, the Company may not, prior to ____, redeem
any Securities of this series as contemplated by [Clause (2) of] the preceding
paragraph as a part of, or in anticipation of, any refunding operation by the
application, directly or indirectly, of moneys borrowed having an interest cost
to the Company (calculated in accordance with generally accepted financial
practice) of less than ___% per annum.]

[The sinking fund for this series provides for the redemption on __________
in each year beginning with the year _____ and ending with the year ____ of
[not less than]

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<PAGE>

[$]__________ [("mandatory sinking fund") and not more than [$]______ ]
aggregate principal amount of Securities of this series. [Securities of this
series acquired or redeemed by the Company otherwise than through [mandatory]
sinking fund payments may be credited against subsequent [mandatory] sinking
fund payments otherwise required to be made -- in the inverse order in which
they become due.]]

[In the event of redemption of this Security in part only, a new Security
or Securities of this series and of like tenor or an authorized denomination for
the unredeemed portion hereof will be issued in the name of the Holder hereof
upon the cancellation hereof, and, in the event of transfer or exchange, a new
Security or Securities of this series and of like tenor and for a like aggregate
principal amount will be issued to the Holder, in the case of exchange, or the
designated transferee or transferees, in the case of transfer.]

[If the Security is not an Original Issue Discount Security, -- If an Event
of Default with respect to Securities of this series shall occur and be
continuing, the principal of the Securities of this series may (subject to the
conditions set forth in the Indenture) be declared due and payable in the manner
and with the effect provided in the Indenture.]

[IF THE SECURITY IS AN ORIGINAL ISSUE DISCOUNT SECURITY, -- If an Event of
Default with respect to Securities of this series shall occur and be continuing,
a lesser amount than the principal amount due at the Stated Maturity of the
Securities of this series may (subject to the conditions set forth in the
Indenture) be declared due and payable in the manner and with the effect
provided in the Indenture. The amount due and payable on this Security in the
event that this Security is declared due and payable prior to the Stated
Maturity hereof shall be -- INSERT FORMULA FOR DETERMINING THE AMOUNT -- or in
the event that this Security is redeemed shall be the specified percentage --
INSERT FORMULA FOR DETERMINING THE AMOUNT. Upon payment (i) of the amount of
principal so declared due and payable and (ii) of interest on any overdue
principal and overdue interest (in each case to the extent that the payment of
such interest shall be legally enforceable), all of the Company's obligations in
respect of the payment of the principal of and interest, if any, on the
Securities of this series shall terminate.]

[IF APPLICABLE, INSERT -- The Indenture contains provisions for defeasance
at any time of the Company's obligations in respect of (i) the entire
indebtedness of this Note or (ii) certain restrictive covenants with respect to
this Note, in each case upon compliance with certain conditions set forth
therein.]

The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent

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<PAGE>

of the Holders of not less than a majority in aggregate principal amount of the
Securities at the time Outstanding of each series to be affected and, for
certain purposes, without the consent of the Holders of any Securities at the
time Outstanding. The Indenture also contains provisions permitting the Holders
of specified percentages in aggregate principal amount of the Securities of each
series at the time Outstanding, on behalf of the Holders of all Securities of
such series, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Security shall be conclusive
and binding upon such Holder and upon all future Holders of this Security and of
any Security issued upon the registration of transfer hereof or in exchange
hereof or in lieu hereof, whether or not notation of such consent or waiver is
made upon this Security.

[IF THE SECURITY IS AN ORIGINAL ISSUE DISCOUNT SECURITY, -- In determining
whether the Holders of the requisite principal amount of the Outstanding
Securities have given any request, demand, authorization, direction, notice,
consent or waiver under the Indenture or whether a quorum is present at a
meeting of Holders of Securities, the principal amount of any Original Issue
Discount Security that shall be deemed to be Outstanding shall be the amount of
the principal thereof that would be due and payable as of the date of such
determination upon the acceleration of the Maturity thereof.]

No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of (and premium, if any) and
interest on this Security at the times, place and rate, and in the coin or
currency, herein prescribed.

As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Security is registrable in the Security Register,
upon surrender of this Security for registration of transfer at the office or
agency of the Company in any place where the principal of (and premium, if any)
and interest on this Security are payable, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the Holder hereof or such Holder's attorney
duly authorized in writing, and thereupon one or more new Securities of this
series and of like tenor of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees.

The Securities of this series are issuable only in registered form without
coupons in denominations of [$1,000] and any amount in excess thereof which is
an integral multiple of [$1,000]. As provided in the Indenture and subject to
certain limitations therein set forth, Securities of this series are
exchangeable for a like aggregate principal amount of Securities of this series
and of like tenor of a different authorized denomination, as requested by the
Holder surrendering the same.

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<PAGE>

No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.

Prior to due presentment of this Security for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Security is registered in the Security Register as the
owner hereof for all purposes, whether or not this Security be overdue, and
neither the Company, the Trustee nor any such agent shall be affected by notice
to the contrary.

The Securities shall be governed by and construed in accordance with the
laws of the State of New York.

All terms used in this Security which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.

SECTION 204. Form of Trustee's Certificate of Authentication.

This is one of the Securities of the series designated therein and issued
pursuant to the within-mentioned Indenture.

THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
as Trustee

By
--------------------------------
Authorized Officer

SECTION 205. Form of Legend for Global Securities.

Any Global Security authenticated and delivered hereunder shall, in
addition to the provisions contained in Sections 202 and 203, bear a legend in
substantially the following form or such similar form as may be required by the
Depositary:

"Unless this certificate is presented by an authorized
representative of The Depository Trust Company (55 Water
Street, New York, New York) to the issuer or to its agent
for registration of transfer, exchange or payment, and
any certificate issued is registered in the name of
Cede & Co. or such other name as requested by an

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<PAGE>

authorized representative of The Depository Trust Company
and any payment is made to Cede & Co., ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL since the registered owner
hereof, Cede & Co., has an interest herein.

ARTICLE THREE

THE SECURITIES

SECTION 301. Amount Unlimited; Issuable in Series.

The aggregate principal amount of Securities which may be authenticated and
delivered under this Indenture is unlimited.

The Securities may be issued in one or more series. There shall be
established by or pursuant to a Board Resolution and, subject to Section 303,
set forth or determined in the manner provided in an Officers' Certificate or
established in one or more indentures supplemental hereto, prior to the initial
issuance of Securities of any series,

(1) the title of the Securities of the series (which shall
distinguish the Securities of the series from Securities of any other
series);

(2) any limit upon the aggregate principal amount of the Securities
of the series which may be authenticated and delivered under this Indenture
(except for Securities authenticated and delivered upon registration of
transfer of, or in lieu of, other Securities of the series pursuant to
Section 304, 305, 306, 906, 1107 and except for any Securities which,
pursuant to Section 303, are deemed never to have been authenticated and
delivered hereunder);

(3) the Person to whom any interest on a Security of the series shall
be payable, if other than the Person in whose name that Security (or one or
more Predecessor Securities) is registered at the close of business on the
Regular Record Date for such interest;

(4) the date or dates on which the principal or installments of
principal of the Securities of the series is or are payable and any rights
to extend such date or dates;

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<PAGE>

(5) the rate or rates at which the Securities of the series shall
bear interest, if any, or the formula pursuant to which such rate or rates
shall be determined, the date or dates from which such interest shall
accrue, the Interest Payment Dates on which such interest shall be payable
and the Regular Record Date for the interest payable on any Interest
Payment Date;

(6) the place or places where the principal of (and premium, if any)
and interest on Securities of the series shall be payable, any Securities
of the series may be surrendered for registration of transfer or exchange
and notices and demands to or upon the Company with respect to the
Securities of the series and this Indenture may be served;

(7) the period or periods within which, the price or prices at which
and the terms and conditions upon which Securities of the series may be
redeemed, in whole or in part, at the option of the Company;

(8) the obligation, if any, of the Company to redeem or purchase
Securities of the series pursuant to any sinking fund or analogous
provisions or at the option of a Holder thereof and the period or periods
within which, the price or prices at which and the terms and conditions
upon which Securities of the series shall be redeemed or purchased, in
whole or in part, pursuant to such obligation;

(9) if other than denominations of $1,000 or any amount in excess
thereof which is an integral multiple of $1,000, the denominations in which
Securities of the series shall be issuable;

(10) the currency, currencies or currency units in which payment of
the principal of and any premium and interest on any Securities of the
series shall be payable if other than the currency of the United States of
America, the manner of determining the U.S. dollar equivalent of the
principal amount thereof for purposes of the definition of "Outstanding"
in Section 101, and, if the principal of or any premium or interest on any
Securities of the series is to be payable, at the election of the Company
or a Holder thereof, in one or more currencies or currency units other than
that or those in which the Securities are stated to be payable, the
currency, currencies or currency units in which payment of the principal
of and any premium and interest on Securities of such series as to which
such election is made shall be payable, and the periods within which and
the terms and conditions upon which such election is to be made;

(11) any other event or events of default applicable with respect to
Securities of the series in addition to or in lieu of those provided in
Section 501(1)-(7);

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<PAGE>

(12) if less than the principal amount thereof, the portion of the
principal amount of Securities of the series which shall be payable upon
declaration of acceleration of the Maturity thereof pursuant to
Section 502;

(13) whether the Securities of the series shall be issued in whole or
in part in the form of one or more Global Securities and, if so, (a) the
Depositary with respect to such Global Security or Securities and (b) the
circumstances under which any such Global Security may be exchanged for
Securities registered in the name of, and any transfer of such Global
Security may be registered to, a Person other than such Depositary or its
nominee, if other than as set forth in Section 305;

(14) if principal of or any premium or interest on the Securities of
a series is denominated or payable in a currency or currencies other than
the currency of the United States of America, whether and under what terms
and conditions the Company may be discharged from obligations pursuant to
Sections 403 and 1107 with respect to Securities of such series; and

(15) any other terms of the series (which terms shall not be
inconsistent with the provisions of this Indenture, except as permitted by
Section 901(5)).

All Securities of any one series (other than Securities offered in a
Periodic Offering) shall be substantially identical except as to denomination
and except as may otherwise be provided by or pursuant to the Board Resolution
referred to above and, subject to Section 303, set forth, or determined in the
manner provided, in the Officers' Certificate referred to above or in any such
indenture supplemental hereto.

If any of the terms of the series are established by action taken pursuant
to a Board Resolution, a copy of an appropriate record of such action shall be
certified by the Secretary or an Assistant Secretary of the Company and
delivered to the Trustee at or prior to the delivery of the Officers'
Certificate setting forth the terms of the series.

With respect to Securities of a series offered in a Periodic Offering,
such Board Resolution and Officers' Certificate or supplemental indenture may
provide general terms or parameters for Securities of such series and provide
either that the specific terms of particular Securities of such series shall be
specified in a Company Order or that such terms shall be determined by the
Company or its agents in accordance with other procedures specified in a Company
Order as contemplated by the third paragraph of Section 303.

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SECTION 302. Denominations.

Unless otherwise provided in the applicable Officers' Certificate or
supplemental indenture, the Securities of each series shall be issued in
registered form without coupons in such denominations as shall be specified as
contemplated by Section 301. In the absence of any such provisions with respect
to the Securities of any series, the Securities of such series shall be issuable
in denominations of $1,000 or any amount in excess thereof which is an integral
multiple of $1,000.

SECTION 303. Execution, Authentication, Delivery and Dating.

The Securities shall be executed on behalf of the Company by its Chairman
of the Board, its President or one of its Vice Presidents, under its corporate
seal affixed thereto or reproduced thereon attested by its Secretary or one of
its Assistant Secretaries. The signature of any of these officers on the
Securities may be manual or facsimile.

Securities bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.

At any time and from time to time after the execution and delivery of this
Indenture, the Company may deliver Securities of any series executed by the
Company to the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Securities, or, in the case of Securities
offered in a Periodic Offering, from time to time in accordance with such other
procedures (including, without limitation, the receipt by the Trustee of
electronic instructions from the Company or its duly authorized agents, promptly
confirmed in writing by the Company) acceptable to the Trustee as may be
specified from time to time by a Company Order for establishing the specific
terms of particular Securities being so offered, and the Trustee in accordance
with the Company Order shall authenticate and deliver such Securities. If the
form or forms or terms of the Securities of the series have been established by
or pursuant to one or more Board Resolutions as permitted by Sections 201 and
301, in authenticating such Securities and accepting the additional
responsibilities under this Indenture in relation to such Securities, the
Trustee shall be entitled to receive, and (subject to Section 601) shall be
fully protected in relying upon, an Opinion of Counsel stating,

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(a) that the form or forms of such Securities have been established
in conformity with the provisions of this Indenture;

(b) that the terms of such Securities have been established in
conformity with the provisions of this Indenture;

(c) that such Securities, when authenticated and delivered by the
Trustee and issued by the Company in the manner and subject to any
conditions specified in such Opinion of Counsel, will constitute valid and
legally binding obligations of the Company, enforceable in accordance with
their terms, subject to bankruptcy, insolvency, reorganization and other
laws of general applicability relating to or affecting the enforcement of
creditors' rights and to general equity principles;

(d) that authentication and delivery of such Securities and the
execution and delivery of the supplemental indenture, if any, by the
Trustee will not violate the terms of the Indenture;

(e) that the Company has the corporate power to issue such
Securities, and has duly taken all necessary corporate action with respect
to such issuance; and

(f) that the issuance of such Securities will not contravene the
certificate of incorporation or bylaws of the Company or result in any
violation of any of the terms or provisions of any law or regulation or of
any indenture, mortgage or other agreement known to such Counsel by which
the Company is bound;

provided, however, that, with respect to Securities of a series offered in a
Periodic Offering, the Trustee shall be entitled to receive such Opinion of
Counsel in connection only with the first authentication of each form of
Securities of such series and that the opinions described in Clauses (b) and (c)
above may state, respectively, that

(b) if the terms of such Securities are to be established pursuant
to a Company Order or pursuant to such procedures as may be specified from
time to time by a Company Order, all as contemplated by a Board Resolution
or action taken pursuant thereto, such terms will have been duly authorized
by the Company and established in conformity with the provisions of this
Indenture; and

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(c) that such Securities, when executed by the Company, completed,
authenticated and delivered by the Trustee in accordance with this
Indenture, and issued and delivered by the Company and paid for, all in
accordance with any agreement of the Company relating to the offering,
issuance and sale of such Securities, will be duly issued under this
Indenture and will constitute valid and legally binding obligations of the
Company, enforceable in accordance with their terms, subject to bankruptcy,
insolvency, reorganization, moratorium and other laws relating to or
affecting generally the enforcement of creditors' rights and to general
principles of equity.

With respect to Securities of a series offered in a Periodic Offering, the
Trustee may rely, as to the authorization by the Company of any of such
Securities, the form or forms and terms thereof and the legality, validity,
binding effect and enforceability thereof, upon the Opinion of Counsel, Company
Order and other documents delivered pursuant to Sections 201 and 301 and this
Section, as applicable, in connection with the first authentication of a form of
Securities of such series and it shall not be necessary for the Company to
deliver such Opinion of Counsel and other documents (except as may be required
by the specified other procedures, if any, referred to above) at or prior to the
time of authentication of each Security of such series unless and until the
Trustee receives notice that such Opinion of Counsel or other documents have
been superseded or revoked, and may assume compliance with any conditions
specified in such Opinion of Counsel (other than any conditions to be performed
by the Trustee). If such form or forms or terms have been so established, the
Trustee shall not be required to authenticate such Securities if the issue of
such Securities pursuant to this Indenture will affect the Trustee's own rights,
duties or immunities under the Securities and this Indenture or otherwise in a
manner which is not reasonably acceptable to the Trustee.

Each Security shall be dated the date of its authentication.

No Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any
Security shall be conclusive evidence, and the only evidence, that such Security
has been duly authenticated and delivered hereunder and is entitled to the
benefits of this Indenture. Notwithstanding the foregoing, if any Security shall
have been authenticated and delivered hereunder but never issued and sold by the
Company, and the Company shall deliver such Security to the Trustee for
cancellation as provided in Section 309 together with a written statement (which
need not comply with Section 102 and need not be accompanied by an Opinion of
Counsel) stating that such Security has never been issued and sold by the
Company, for all purposes of this Indenture such Security shall be deemed never
to have been authenticated and delivered hereunder and shall never be entitled
to the benefits of this Indenture.

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SECTION 304. Temporary Securities.

Pending the preparation of definitive Securities of any Series, the Company
may execute, and upon Company Order the Trustee shall authenticate and deliver,
temporary Securities which are printed, lithographed, typewritten or otherwise
produced, in any authorized denomination, substantially of the tenor of the
definitive Securities in lieu of which they are issued and with such appropriate
insertions, omissions, substitutions and other variations as the officers
executing such Securities may determine, as evidenced by their execution of such
Securities.

If temporary Securities of any series are issued, the Company will cause
definitive Securities of that series to be prepared without unreasonable delay.
After the preparation of definitive Securities of such series, the temporary
Securities of such series shall be exchangeable for definitive Securities of
like tenor of such series upon surrender of the temporary Securities of such
series at the office or agency of the Company in a Place of Payment for that
series, without charge to the Holder. Upon surrender for cancellation of any one
or more temporary Securities of any series the Company shall execute and the
Trustee shall authenticate and deliver in exchange therefor a like principal
amount of definitive Securities of the same series and of like tenor and of any
authorized denominations. Until so exchanged the temporary Securities of any
series shall in all respects be entitled to the same benefits under this
Indenture as definitive Securities of such series and tenor.

SECTION 305. Registration, Registration of Transfer and Exchange.

The Company shall cause to be kept at the Corporate Trust Office of the
Trustee a register (the "Security Register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Securities and of transfers of Securities. The Trustee is hereby
appointed "Security Registrar" for the purpose of registering Securities and
transfers of Securities as herein provided.

Upon surrender for registration of transfer of any Security of any series
at the office or agency of the Company in any Place of Payment for such series,
the Company shall execute and the Trustee shall authenticate and deliver (in the
name of the designated transferee or transferees) one or more new Securities of
the same series, of any authorized denominations and of a like aggregate
principal amount and tenor.

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At the option of the Holder, Securities of any series may be exchanged for
other Securities of the same series, of any authorized denominations and of a
like aggregate principal amount and tenor, upon surrender of the Securities to
be exchanged at the office or agency of the Company in any Place of Payment for
such series. Whenever any Securities are so surrendered for exchange, the
Company shall execute, and the Trustee shall authenticate and deliver, the
Securities which the Holder making the exchange is entitled to receive.

All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
debt and entitled to the same benefits under this Indenture as the Securities
surrendered upon such registration of transfer or exchange.

Every Security presented or surrendered for registration of transfer or for
exchange shall (if so required by the Company or the Trustee) be duly endorsed,
or be accompanied by a written instrument of transfer in form satisfactory to
the Company and the Security Registrar duly executed, by the Holder thereof or
such Holder's attorney duly authorized in writing.

No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 304, 906 or 1107 not involving any transfer.

The Company may but shall not be required (i) to issue, register the
transfer of or exchange Securities of any series during a period beginning at
the opening of business 15 days before the day of the mailing of a notice of
redemption of Securities of that series selected for redemption under Section
1103 and ending at the close of business on the day of such mailing, or (ii) to
register the transfer of or exchange any Security so selected for redemption in
whole or in part, except the unredeemed portion of any Security being redeemed
in part.

Notwithstanding the foregoing, except as otherwise specified a contemplated
by Section 301, any Global Security shall be exchangeable pursuant to this
Section 305 for Securities registered in the name of Persons other than the
Depositary for such Security or its nominee only if (i) such Depositary notifies
the Company that it is unwilling or unable to continue as Depositary for such
Global Security or if at any time such Depositary ceases to be a clearing agency
registered under the Exchange Act, (ii) the Company executes and delivers to the
Trustee a Company Order that such Global Security shall be so exchangeable or
(iii) there shall have occurred and be continuing an Event of Default with
respect to the Securities of such series. Upon the occurrence in respect of any
Global Security of any series of any one or more of the conditions specified in
Clauses (i), (ii) or (iii) of the preceding sentence or such

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other conditions as may be specified as contemplated by Section 301 for such
series, such Global Security may be exchanged for Securities not bearing the
legend specified in Section 205 and registered in the names of such Persons as
may be specified by the Depositary (including Persons other than the
Depositary).

Notwithstanding any other provision of this Indenture, a Global Security
may not be transferred except as a whole by the Depositary for such Global
Security to a nominee of the Depositary or by a nominee of the Depositary to the
Depositary or another nominee of the Depositary.

SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities.

If any mutilated Security is surrendered to the Trustee, the Company shall
execute and the Trustee shall authenticate and deliver in exchange therefor a
new Security of the same series and of like tenor and principal amount and
bearing a number not contemporaneously outstanding.

If there shall be delivered to the Company and the Trustee (i) evidence to
their satisfaction of the destruction, loss or theft of any Security and (ii)
such security or indemnity as may be required by them to save each of them and
any agent of either of them harmless, then, in the absence of notice to the
Company or the Trustee that such Security has been acquired by a bona fide
purchaser, the Company shall execute and upon its written request the Trustee
shall authenticate and deliver, in lieu of any such destroyed, lost or stolen
Security, a new Security of the same series and of like tenor and principal
amount and bearing a number not contemporaneously outstanding.

In case any such mutilated, destroyed, lost or stolen Security has become
or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.

Upon the issuance of any new Security under this Section, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee) connected therewith.

Every new Security of any series issued pursuant to this Section in lieu of
any destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities of that series duly issued hereunder.

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The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities.

SECTION 307. Payment of Interest; Interest Rights Preserved.

Unless otherwise provided as contemplated by Section 301 with respect to
any series of Securities, interest on any Security which is payable, and is
punctually paid or duly provided for, on any Interest Payment Date shall be paid
to the Person in whose name that Security (or one or more Predecessor
Securities) is registered in the Security Register at the close of business on
the Regular Record Date for such Interest Payment Date.

Any interest on any Security of any series which is payable but is not
punctually paid or duly provided for on any Interest Payment Date (herein called
"Defaulted Interest") shall forthwith cease to be payable to the Holder on the
relevant Regular Record Date by virtue of having been such Holder, and such
Defaulted Interest may be paid by the Company, at its election in each case, as
provided in Clause (1) or (2) below:

(1) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Securities of such series (or their
respective Predecessor Securities) are registered at the close of business
on a Special Record Date for the payment of such Defaulted Interest, which
shall be fixed in the following manner. The Company shall notify the
Trustee in writing of the amount of Defaulted Interest proposed to be paid
on each Security of such series and the date of the proposed payment, and
at the same time the Company shall deposit with the Trustee an amount of
money equal to the aggregate amount proposed to be paid in respect of such
Defaulted Interest or shall make arrangements satisfactory to the Trustee
for such deposit prior to the date of the proposed payment, such money when
deposited to be held in trust for the benefit of the Persons entitled to
such Defaulted Interest as in this Clause provided. Thereupon the Trustee
shall fix a Special Record Date for the payment of such Defaulted Interest
which shall be not more than 15 days and not less than 10 days prior to the
date of the proposed payment and not less than 10 days after the receipt by
the Trustee of the notice of the proposed payment. The Trustee shall
promptly notify the Company of such Special Record Date and, in the name
and at the expense of the Company, shall cause notice of the proposed
payment of such Defaulted Interest and the Special Record Date therefor to
be mailed, first-class postage prepaid, to each Holder of Securities of
such series at such Holder's address as it appears in the Security
Register, not less than 10 days prior to such Special Record Date. Notice
of the proposed payment of such Defaulted Interest and

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the Special Record Date therefor having been so mailed, such Defaulted
Interest shall be paid to the Persons in whose names the Securities of such
series (or their respective Predecessor Securities) are registered at the
close of business on such Special Record Date and shall no longer be
payable pursuant to the following Clause (2).

(2) The Company may make payment of any Defaulted Interest on the
Securities of any series in any other lawful manner not inconsistent with
the requirements of any securities exchange on which such Securities may be
listed, and upon such notice as may be required by such exchange, if, after
notice given by the Company to the Trustee of the proposed payment pursuant
to this Clause, such manner of payment shall be deemed practicable by the
Trustee.

Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of, or in exchange
for, or in lieu of, any other Security shall carry the rights to interest
accrued and unpaid, and to accrue, which were carried by such other Security.

SECTION 308. Persons Deemed Owners.

Prior to due presentment of a Security for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name such Security is registered in the Security Register as the
owner of such Security for the purpose of receiving payment of principal of (and
premium, if any) and (subject to Section 307) interest on such Security and for
all other purposes whatsoever, whether or not such Security be overdue, and
neither the Company, the Trustee nor any agent of the Company or the Trustee
shall be affected by notice to the contrary.

No holder of any beneficial interest in any Global Security held on its
behalf by a Depositary (or its nominee) shall have any rights under this
Indenture with respect to such Global Security or any Security represented
thereby, and such Depositary may be treated by the Company, the Trustee, and any
agent of the Company or the Trustee as the owner of such Global Security or any
Security represented thereby for all purposes whatsoever. Notwithstanding the
foregoing, with respect to any Global Security, nothing herein shall prevent the
Company, the Trustee, or any agent of the Company or the Trustee, from giving
effect to any written certification, proxy or other authorization furnished by a
Depositary or impair, as between a Depositary and such holders of beneficial
interest, the operation of customary practices governing the exercise of the
rights of the Depositary (or its nominees) as Holder of any Security.

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SECTION 309. Cancellation.

All Securities surrendered for payment, redemption, registration of
transfer or exchange or for credit against any sinking fund payment shall, if
surrendered to any Person other than the Trustee, be delivered to the Trustee
and shall be promptly canceled by it. The Company may at any time deliver to the
Trustee for cancellation any Securities previously authenticated and delivered
hereunder which the Company may have acquired in any manner whatsoever, and may
deliver to the Trustee (or to any other Person for delivery to the Trustee) for
cancellation any Securities previously authenticated hereunder which the Company
has not issued and sold, and all Securities so delivered shall be promptly
canceled by the Trustee. No Securities shall be authenticated in lieu of or in
exchange for any Securities canceled as provided in this Section, except as
expressly permitted by this Indenture. All canceled Securities held by the
Trustee shall be destroyed unless otherwise directed by a Company Order.

SECTION 310. Computation of Interest.

Except as otherwise specified as contemplated by Section 301 for Securities
of any series, interest on the Securities of each series shall be computed on
the basis of a 360-day year of twelve 30-day months.

SECTION 311. Payment to be in Proper Currency.

In the case of any Securities denominated in any currency (the "Required
Currency") other than United States of America dollars, except as otherwise
provided therein, the obligation of the Company to make any payment of
principal, premium or interest thereon shall not be discharged or satisfied by
any tender by the Company, or recovery by the Trustee, in any currency other
than the Required Currency, except to the extent that such tender or recovery
shall result in the Trustee timely holding the full amount of the Required
Currency then due and payable. If any such tender or recovery is in a currency
other than the Required Currency, the Trustee may take such actions as it
considers appropriate to exchange such currency for the Required Currency. The
costs and risks of any such exchange, including without limitation the risks of
delay and exchange rate fluctuation, shall be borne by the Company, the Company
shall remain fully liable for any shortfall or delinquency in the full amount of
Required Currency then due and payable, and in no circumstances shall the
Trustee be liable therefor except in the case of its negligence or willful
misconduct.

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ARTICLE FOUR

SATISFACTION AND DISCHARGE

SECTION 401. Satisfaction and Discharge of Indenture.

This Indenture shall upon Company Request cease to be of further effect
(except as to any surviving rights of registration of transfer or exchange of
Securities herein expressly provided for), and the Trustee, at the expense of
the Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when

(1) either

(A) all Securities theretofore authenticated and delivered
(other than (i) Securities which have been destroyed, lost or stolen
and which have been replaced or paid as provided in Section 306 and
(ii) Securities for whose payment money has theretofore been deposited
in trust or segregated and held in trust by the Company and thereafter
repaid to the Company or discharged from such trust, as provided in
Section 1003) have been delivered to the Trustee for cancellation; or

(B) all such Securities not theretofore delivered to the Trustee
for cancellation

(i) have become due and payable, or

(ii) will become due and payable at their Stated Maturity
within one year, or

(iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice
of redemption by the Trustee in the name, and at the expense, of
the Company,

and the Company, in the case of (i), (ii) or (iii) above, has
deposited or caused to be deposited with the Trustee as trust funds
in trust for the purpose an amount, in the currency in which such
Securities are payable, sufficient to pay and discharge the entire
indebtedness on such Securities not theretofore delivered to the
Trustee for cancellation, for principal (and premium, if any) and
interest to the date of such deposit (in the case of Securities
which have become due and payable) or to the respective Stated
Maturity or Redemption Date, as the case may be;

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(2) the Company has paid or caused to be paid all other sums
payable hereunder by the Company, and

(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge
of this Indenture have been complied with.

Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 607, the obligations of
the Trustee to any Authenticating Agent under Section 614, and, if money shall
have been deposited with the Trustee pursuant to Subclause (B) of Clause (1) of
this Section, the obligations of the Trustee under Section 402 and the last
paragraph of Section 1003, shall survive.

SECTION 402. Application of Trust Money.

Subject to provisions of the last paragraph of Section 1003, all money
deposited with the Trustee pursuant to Section 401 shall be held in trust and
applied by it, in accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if
any) and interest for whose payment such money has been deposited with the
Trustee but such money need not be segregated from other funds except to the
extent required by law.

SECTION 403. Defeasance and Discharge of Indenture.

If principal of and any premium and interest on Securities of any series
are denominated and payable in United States of America dollars, the Company
shall be deemed to have paid and discharged the entire indebtedness on all the
Outstanding Securities of such series on the 91st day after the date of the
deposit referred to in subparagraph (d) hereof, and the provisions of this
Indenture, as it relates to such Outstanding Securities, shall no longer be in
effect (and the Trustee, at the expense of the Company, shall at Company
Request, execute proper instruments acknowledging the same), except as to:

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(a) the rights of Holders of Securities to receive, from the trust
funds described in subparagraph (d) hereof, (i) payment of the principal
of (and premium, if any) or interest on the Outstanding Securities on the
Stated Maturity of such principal or installment of principal or interest
and (ii) the benefit of any mandatory sinking fund payments applicable to
the Securities on the day on which such payments are due and payable in
accordance with the terms of this Indenture and the Securities;

(b) the Company's obligations with respect to such Securities under
Sections 305, 306, 1002 and 1003; and

provided that, the following conditions shall have been satisfied:

(d) The Company has deposited or caused to be irrevocably deposited
with the Trustee (or another trustee satisfying the requirements of
Section 609) as trust funds in the trust, specifically pledged as security
for, and dedicated solely to, the benefit of the Holders of the Securities,
(i) money in an amount, or (ii) U.S. Government Obligations which through
the payment of interest and principal in respect thereof in accordance
with their terms will provide not later than one day before the due date
of any payment referred to in clause (A) or (B) of this subparagraph (d)
money in an amount or (iii) a combination thereof, sufficient, in the
opinion of a nationally recognized firm of independent certified public
accountants expressed in a written certification thereof delivered to the
Trustee, to pay and discharge (A) the principal of (and premium, if any)
and each installment of principal of (and premium, if any) and interest on
the Outstanding Securities on the Stated Maturity of such principal or
installment of principal and interest and (B) any mandatory sinking fund
payments applicable to the Securities on the day on which such payments
are due and payable in accordance with the terms of this Indenture and of
the Securities;

(e) such deposit shall not cause the Trustee with respect to the
Securities to have a conflicting interest as defined in Section 608 and
for purposes of the Trust Indenture Act with respect to the Securities;

(f) such deposit will not result in a breach or violation of, or
constitute a default under, this Indenture or any other agreement or
instrument to which the Company is a party or by which it is bound;

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(g) such provision would not cause any Outstanding Securities then
listed on the New York Stock Exchange or other securities exchange to be
delisted as a result thereof;

(h) no Event of Default or event which with notice or lapse of time
would become an Event of Default with respect to the Securities shall have
occurred and be continuing on the date of such deposit or during the period
ending on the 91st day after such date;

(i) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel to the effect that there has been a change in
applicable Federal law such that, or the Company has received from, or
there has been published by, the Internal Revenue Service a ruling to the
effect that, Holders of the Securities will not recognize income, gain or
loss for Federal income tax purposes as a result of such deposits,
defeasance and discharge and will be subject to Federal income tax on the
same amount and in the same manner and at the same times, as would have
been the case if such deposit, defeasance and discharge had not occurred;
and

(j) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent
relating to the defeasance contemplated by this Section have been complied
with.

ARTICLE FIVE

REMEDIES

SECTION 501. Events of Default.

"Event of Default", wherever used herein with respect to Securities of any
series, and unless otherwise provided with respect to Securities of any series
pursuant to Section 301(12), means any one of the following events (whatever
the reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):

(1) default in the payment of any interest upon any Security of that
series when it becomes due and payable, and continuance of such default for
a period of 30 days; or

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(2) default in the payment of the principal of (or premium, if any,
on) any Security of that series at its Maturity; or

(3) default in the deposit of any sinking fund payment, when and as
due by the terms of a Security of that series; or

(4) default in the performance, or breach, of any covenant or
warranty of the Company in this Indenture (other than a covenant or
warranty a default in whose performance or whose breach is elsewhere in
this Section specifically dealt with or which has expressly been included
in this Indenture solely for the benefit of a series of one or more
Securities other than that series), and continuance of such default or
breach for a period of 60 days after there has been given, by registered
or certified mail, to the Company by the Trustee or to the Company and the
Trustee by the Holders of at least 25% in aggregate principal amount of the
Outstanding Securities of that series a written notice specifying such
default or breach and requiring it to be remedied and stating that such
notice is a "Notice of Default" hereunder; or

(5) an event of default, as defined in any indenture or instrument
under which the Company or any Restricted Subsidiary shall have outstanding
at least $10,000,000 aggregate principal amount of indebtedness for money
borrowed, shall happen and be continuing and such indebtedness shall, as a
result thereof, have been accelerated so that the same shall be or become
due and payable prior to the date on which the same would otherwise have
become due and payable, and such acceleration shall not be rescinded or
annulled within 10 days after notice thereof shall have been given, by
registered or certified mail, to the Company by the Trustee, or to the
Company and the Trustee by the Holders of at least 25% in aggregate
principal amount of the Securities at the time Outstanding; provided,
however, that if such event of default under such indenture or instrument
shall be remedied or cured by the Company or waived by the Holders of such
indebtedness, then, unless the Securities of any series shall have been
accelerated as provided herein, the Event of Default hereunder by reason
thereof shall be deemed likewise to have been thereupon remedied, cured or
waived without further action upon the part of either the Trustee
or any Holders of the Securities of any series; or

(6) the entry by a court having jurisdiction in the premises of (A)
a decree or order for relief in respect of the Company in an involuntary
case or proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or (B) a decree or order
adjudging the Company a bankrupt or insolvent, or approving as properly
filed a petition seeking reorganization, arrangement, adjustment or
composition of or in respect of the Company under any applicable Federal
or State law, or

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appointing a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company or of any
substantial part of its property, or ordering the winding up or
liquidation of its affairs, and the continuance of any such decree or
order for relief or any such other decree or order unstayed and in effect
for a period of 60 consecutive days; or

(7) the commencement by the Company of a voluntary case or proceeding
under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or of any other case or proceeding to
be adjudicated a bankrupt or insolvent, or the consent by it to the entry
of a decree or order for relief in respect of the Company in an involuntary
case or proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or to the commencement of
any bankruptcy or insolvency case or proceeding against it, or the filing
by it of a petition or answer or consent seeking reorganization or relief
under any applicable Federal or State law, or the consent by it to the
filing of such petition or to the appointment of or taking possession by
a custodian, receiver, liquidator, assignee, trustee, sequestrator or other
similar official of the Company or of any substantial part of its property,
or the making by it of an assignment for the benefit of creditors, or the
admission by it in writing of its inability to pay its debts generally as
they become due, or the taking of corporate action by the Company in
furtherance of any such action; or

(8) any other Event of Default provided with respect to Securities
of that series.

SECTION 502. Acceleration of Maturity; Rescission and Annulment.

If an Event of Default with respect to Outstanding Securities of any series
occurs and is continuing, then and in every such case the Trustee or the Holders
of not less than 25% in aggregate principal amount of the Outstanding Securities
of that series may declare the principal amount (or, if any of the Securities of
that series are Original Issue Discount Securities, such lesser portion of the
principal amount of such Securities as may be specified in the terms thereof) of
all of the Securities of that series to be due and payable immediately, by a
notice in writing to the Company (and to the Trustee if given by Holders), and
upon any such declaration such principal amount (or specified portion thereof)
shall become immediately due and payable.

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At any time after such a declaration of acceleration with respect to
Outstanding Securities of any series has been made and before a judgment or
decree for payment of the money due has been obtained by the Trustee as
hereinafter in this Article provided, the Holders of a majority in aggregate
principal amount of the Outstanding Securities of that series, by written notice
to the Company and the Trustee, may rescind and annul such declaration and its
consequences if

(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay

(A) all overdue interest on all Securities of that series,

(B) the principal of (and premium, if any, on) any Securities
of that series which have become due otherwise than by such
declaration of acceleration and interest thereon at the rate or rates
prescribed therefor in such Securities,

(C) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate or rates prescribed
therefor in such Securities, and

(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 607; and

(2) all Events of Default with respect to Securities of that series,
other than the non-payment of the principal of Securities of that series
which have become due solely by such declaration of acceleration, have been
cured or waived as provided in Section 513.

No such rescission shall affect any subsequent default or impair any right
consequent thereon.

SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee.

The Company covenants that if

(1) default is made in the payment of any interest on any Security
when such interest becomes due and payable and such default continues for
a period of 30 days, or

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(2) default is made in the payment of the principal of (or premium,
if any, on) any Security at the Maturity thereof,

the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Security, the whole amount then due and payable on such Security
for principal (and premium, if any) and interest and, to the extent that payment
of such interest shall be legally enforceable, interest on any overdue principal
(and premium, if any) and on any overdue interest at the rate or rates
prescribed therefor in such Security, and, in addition thereto, such further
amount as shall be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel.

If the Company fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the same
against the Company or any other obligor upon such Security and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon such Security, wherever
situated.

If an Event of Default with respect to Securities of any series occurs and
is continuing, the Trustee may in its discretion proceed to protect and enforce
its rights and the rights of the Holders of Securities of such series by such
appropriate judicial proceedings as the Trustee shall deem most effectual to
protect and enforce any such rights, whether for the specific enforcement of any
covenant or agreement in this Indenture or in aid of the exercise of any power
granted herein, or to enforce any other proper remedy.

SECTION 504. Trustee May File Proofs of Claim.

In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the Securities
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand on
the Company for the payment of overdue principal or interest) shall be entitled
and empowered, by intervention in such proceeding or otherwise,

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(i) to file and prove a claim for the whole amount of principal (and
premium, if any) or such portion of the principal amount of any series of
Original Issue Discount Securities as may be specified in the terms of such
series and interest owing and unpaid in respect of the Securities and to
file such other papers or documents as may be necessary or advisable in
order to have the claims of the Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee
under Section 607) and of the Holders allowed in such judicial proceeding,
and

(ii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders, to
pay to the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 607.

Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.

SECTION 505. Trustee May Enforce Claims Without Possession of Securities.

All rights of action and claims under this Indenture or the Securities may
be prosecuted and enforced by the Trustee without the possession of any of the
Securities or the production thereof in any proceeding relating thereto, and
any such proceeding instituted by the Trustee shall be brought in its own name
as trustee of an express trust, and any recovery of judgment shall, after
provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and for any
other amounts due the Trustee under Section 607, be for the ratable benefit of
the Holders of the Securities in respect of which such judgment has been
recovered.

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SECTION 506. Application of Money Collected.

Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal (or premium,
if any) or interest, upon presentation of the Securities and the notation
thereon of the payment if only partially paid and upon surrender thereof if
fully paid:

FIRST: To the payment of all amounts due the Trustee under
Section 607; and

SECOND: To the payment of the amounts then due and unpaid for
principal of (and premium, if any) and interest on the Securities in
respect of which or for the benefit of which such money has been collected,
ratably, without preference or priority of any kind, according to the
amounts due and payable on such Securities for principal (and premium, if
any) and interest, respectively; and

THIRD: The balance, if any, to the Person or Persons entitled
thereto.

SECTION 507. Limitation on Suits.

No Holder of any Security of any series shall have any right to institute
any proceeding, judicial or otherwise, with respect to this Indenture, or for
the appointment of a receiver or trustee, or for any other remedy hereunder,
unless

(1) such Holder has previously given written notice to the Trustee
of a continuing Event of Default with respect to the Securities of that
series;

(2) the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series shall have made written request to
the Trustee to institute proceedings in respect of such Event of Default
in its own name as Trustee hereunder;

(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;

(4) the Trustee, for 60 days after its receipt of such notice,
request and offer of indemnity, has failed to institute any such
proceeding; and

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(5) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a majority
in principal amount of the Outstanding Securities of that series;

it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other of
such Holders, or to obtain or to seek to obtain priority or preference over any
other of such Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all of such
Holders.

SECTION 508. Unconditional Right of Holders to Receive Principal, Premium and
Interest.

Notwithstanding any other provision in this Indenture, the Holder of any
Security shall have the right, which is absolute and unconditional, to receive
payment of the principal of (and premium, if any) and (subject to Section 307)
interest on such Security on the Stated Maturity or Maturities expressed in
such Security (or, in the case of redemption, on the Redemption Date) and to
institute suit for the enforcement of any such payment, and such rights shall
not be impaired without the consent of such Holder.

SECTION 509. Restoration of Rights and Remedies.

If the Trustee or any Holder has instituted any proceeding to enforce any
right or remedy under this Indenture and such proceeding has been discontinued
or abandoned for any reason, or has been determined adversely to the Trustee or
to such Holder, then and in every such case, subject to any determination in
such proceeding, the Company, the Trustee and the Holders shall be restored
severally and respectively to their former positions hereunder and thereafter
all rights and remedies of the Trustee and the Holders shall continue as though
no such proceeding had been instituted.

SECTION 510. Rights and Remedies Cumulative.

Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Securities in the last paragraph of
Section 306, no right or remedy herein conferred upon or reserved to the Trustee
or to the Holders is intended to be exclusive of any other right or remedy, and
every right and remedy shall, to the extent permitted by law, be cumulative and
in addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or

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otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.

SECTION 511. Delay or Omission Not Waiver.

No delay or omission of the Trustee or of any Holder of any Securities to
exercise any right or remedy accruing upon any Event of Default shall impair
any such right or remedy or constitute a waiver of any such Event of Default or
an acquiescence therein. Every right and remedy given by this Article or by law
to the Trustee or to the Holders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Holders, as the case
may be.

SECTION 512. Control by Holders.

The Holders of a majority in aggregate principal amount of the Outstanding
Securities of any series shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee, with respect to the
Securities of such series, provided that

(1) such direction shall not be in conflict with any rule of law or
with this Indenture, and

(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.

SECTION 513. Waiver of Past Defaults.

The Holders of not less than a majority in aggregate principal amount of
the Outstanding Securities of any series may, on behalf of the Holders of all
the Securities of such series, waive any past default hereunder with respect to
such series and its consequences, except a default

(1) in the payment of the principal of (or premium, if any) or
interest on any Security of such series, or

(2) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the Holder of
each Outstanding Security of such series affected.

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The Company may, but shall not be obligated to, fix a record date for the
purpose of determining the Persons entitled to waive any past default hereunder.
If a record date is fixed, the Holders on such record date, or their duly
designated proxies, and only such Persons, shall be entitled to waive any
default hereunder, whether or not such Holders remain Holders after such record
date; provided, that unless such majority in principal amount shall have waived
such default prior to the date which is 90 days after such record date, any such
waiver of such default previously given shall automatically and without further
action by any Holder be canceled and of no further effect.

Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.

SECTION 514. Undertaking for Costs.

All parties to this Indenture agree, and each Holder of any Security by
such Holder's acceptance thereof shall be deemed to have agreed, that any court
may in its discretion require, in any suit for the enforcement of any right or
remedy under this Indenture, or in any suit against the Trustee for any action
taken, suffered or omitted by it as Trustee, the filing by any party litigant
in such suit of an undertaking to pay the costs of such suit, and that such
court may in its discretion assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in such suit, having due regard to
the merits and good faith of the claims or defenses made by such party litigant;
provided, however, that the provisions of this Section shall not apply to any
suit instituted by the Company, to any suit instituted by the Trustee, to any
suit instituted by any Holder, or group of Holders, holding in the aggregate
more than 10% in principal amount of the Outstanding Securities of any series,
or to any suit instituted by any Holder for the enforcement of the payment of
the principal of (or premium, if any) or interest on any Security on or after
the Stated Maturity or Maturities expressed in such Security (or, in the case of
redemption, on or after the Redemption Date).

SECTION 515. Waiver of Stay or Extension Laws.

The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, which may affect the covenants or the
performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will

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not hinder, delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power as though
no such law had been enacted.

ARTICLE SIX

THE TRUSTEE

SECTION 601. Certain Duties and Responsibilities.

The provisions of TIA Section 315 shall apply to the Trustee.

SECTION 602. Notice of Defaults.

Within 90 days after the occurrence of any default hereunder with respect
to the Securities of any series, the Trustee shall transmit by mail to all
Holders of Securities of such series, as their names and addresses appear in
the Security Register, notice of such default hereunder known to the Trustee,
unless such default shall have been cured or waived; provided however, that,
except in the case of a default in the payment of the principal of (or premium,
if any) or interest on any Security of such series or in the payment of any
sinking fund installment with respect to Securities of such series, the Trustee
shall be protected in withholding such notice if and so long as the board of
directors, the executive committee or a trust committee of directors and/or
Responsible Officers of the Trustee in good faith determine that the withholding
of such notice is in the interest of the Holders of Securities of such series;
and provided, further, that in the case of any default of the character
specified in Section 501(4) with respect to Securities of such series, no such
notice to Holders shall be given until at least 30 days after the occurrence
thereof. For the purpose of this Section, the term "default" means any event
which is, or after notice or lapse of time or both would become, an Event of
Default with respect to Securities of such series.

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SECTION 603. Certain Rights of Trustee.

Subject to the provisions of TIA Section 315(a) through 315(d):

(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed or presented
by the proper party or parties;

(b) any request or direction of the Company mentioned herein shall
be sufficiently evidenced by a Company Request or Company Order or as
otherwise expressly provided herein and any resolution of the Board of
Directors may be sufficiently evidenced by a Board Resolution;

(c) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless
other evidence be herein specifically prescribed) may, in the absence of
bad faith on its part, rely upon an Officers' Certificate;

(d) the Trustee may consult with counsel and the written advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon;

(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction
of any of the Holders pursuant to this Indenture, unless such Holders shall
have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred by it in compliance
with such request or direction;

(f) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further
inquiry or investigation into such fact or matters as it may see fit, and,
if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and
premises of the Company, personally or by agent or attorney;

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(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder;

(h) the Trustee shall not be liable for any action taken, suffered
or omitted by it in good faith and believed by it to be authorized or
within the discretion, rights or powers conferred upon it by this
Indenture; and

(i) the Trustee shall not be required to expend or risk its own funds
or otherwise incur any financial liability in the performance of any of its
duties hereunder or in the exercise of any of its rights or powers if it
shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured
to it.

SECTION 604. Not Responsible for Recitals or Issuance of Securities.

The recitals contained herein and in the Securities, except the Trustee's
certificates of authentication, shall be taken as the statements of the Company,
and neither the Trustee nor any Authenticating Agent assumes any responsibility
for their correctness. The Trustee makes no representations as to the validity
or sufficiency of this Indenture or of the Securities. The Trustee or any
Authenticating Agent shall not be accountable for the use or application by the
Company of Securities or the proceeds thereof.

SECTION 605. May Hold Securities.

The Trustee, any Authenticating Agent, any Paying Agent, any Security
Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Securities and, subject to TIA
Sections 310(b) and 311, may otherwise deal with the Company with the same
rights it would have if it were not Trustee, Authenticating Agent, Paying Agent,
Security Registrar or such other agent.

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SECTION 606. Money Held in Trust.

Money held by the Trustee in trust hereunder need not be segregated from
other funds except to the extent required by law. The Trustee shall be under
no liability for interest on any money received by it hereunder except as
otherwise agreed with the Company.

SECTION 607. Compensation and Reimbursement.

The Company agrees

(1) to pay to the Trustee from time to time reasonable compensation
for all services rendered by it hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee
of an express trust);

(2) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision
of this Indenture (including the reasonable compensation and the expenses
and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad
faith; and

(3) to indemnify the Trustee and its agents for, and to hold it
harmless against, any loss, liability or expense incurred without
negligence or bad faith on its part, arising out of or in connection with
the acceptance or administration of the trust or trusts hereunder,
including the costs and expenses of defending itself against any claim or
liability in connection with the exercise or performance of any of its
powers or duties hereunder.

The obligations of the Company under this Section 607 to compensate and
indemnify the Trustee and to pay or reimburse the Trustee for expenses,
disbursements and advances shall constitute additional indebtedness hereunder
and shall survive the satisfaction and discharge of this Indenture. Such
additional indebtedness shall be a senior claim to that of the Securities upon
all property and funds held or collected by the Trustee as such, except funds
held in trust for the payment of principal of (and premium, if any) or interest
on particular Securities, and the Securities are hereby subordinated to each
senior claim.

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SECTION 608. Disqualification; Conflicting Interests.

The provisions of TIA Section 310(b) shall apply to the Trustee.

SECTION 609. Corporate Trustee Required; Eligibility.

There shall at all times be a Trustee hereunder which shall be eligible to
act under TIA Section 310(a)(1) and shall have a combined capital and surplus
of at least $50,000,000 and subject to supervision or examination by Federal,
State or District of Columbia authority. If such Corporation publishes reports
of condition at least annually, pursuant to law or to the requirements of said
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such Corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section, it shall resign immediately in
the manner and with the effect hereinafter specified in this Article. Neither
the Company, nor any Person directly or indirectly controlling, controlled by or
under common control with the Company, shall act as Trustee hereunder.

SECTION 610. Resignation and Removal; Appointment of Successor.

(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 611.

(b) The Trustee may resign at any time with respect to the Securities of
one or more series by giving written notice thereof to the Company. If the
instrument of acceptance by a successor Trustee required by Section 611 shall
not have been delivered to the Trustee within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee with respect
to the Securities of such series.

(c) The Trustee may be removed at any time with respect to the Securities
of any series by Act of the Holders of a majority in principal amount of the
Outstanding Securities of such series, delivered to the Trustee and to the
Company.

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(d) If at any time:

(1) the Trustee shall fail to comply with TIA Section 310(b) after
written request therefor by the Company or by any Holder who has been a
bona fide Holder of a Security for at least six months, or

(2) the Trustee shall cease to be eligible under Section 609 and
shall fail to resign after written request therefor by the Company or by
any such Holder, or

(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,

then, in any such case, (i) the Company by a Board Resolution may remove the
Trustee with respect to all Securities, or (ii) subject to Section 514, any
Holder who has been a bona fide Holder of a Security for at least six months
may, on behalf of himself and all others similarly situated, petition any court
of competent jurisdiction for the removal of the Trustee with respect to all
Securities and the appointment of a successor Trustee or Trustees.

(e) If the Trustee shall resign, be removed or become incapable of acting,
or if a vacancy shall occur in the office of Trustee for any cause, with respect
to the Securities of one or more series, the Company, by a Board Resolution,
shall promptly appoint a successor Trustee or Trustees with respect to the
Securities of that or those series (it being understood that any such successor
Trustee may be appointed with respect to the Securities of one or more or all
of such series and that at any time there shall be only one Trustee with respect
to the Securities of any particular series) and shall comply with the applicable
requirements of Section 611. If, within one year after such resignation, removal
or incapability, or the occurrence of such vacancy, a successor Trustee with
respect to the Securities of any series shall be appointed by Act of the Holders
of a majority in principal amount of the Outstanding Securities of such series
delivered to the Company and the retiring Trustee, the successor Trustee so
appointed shall, forthwith upon its acceptance of such appointment in accordance
with the applicable requirements of Section 611, become the successor Trustee
with respect to the Securities of such series and to that extent supersede the
successor Trustee appointed by the Company. If no successor Trustee with respect
to the Securities of any series shall have been so appointed by the Company or
the Holders and accepted appointment in the manner required by Section 611, any
Holder who has been a bona fide Holder of a Security of such series for at least
six months may, on behalf of himself and all others similarly situated,

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petition any court of competent jurisdiction for the appointment of a successor
Trustee with respect to the Securities of such series.

(f) The Company shall give notice of each resignation and each removal of
the Trustee with respect to the Securities of any series and each appointment of
a successor Trustee with respect to the Securities of any series by mailing
written notice of such event by first-class mail, postage prepaid, to all
Holders of Securities of such series as their names and addresses appear in the
Security Register. Each notice shall include the name of the successor Trustee
with respect to the Securities of such series and the address of its Corporate
Trust Office.

SECTION 611. Acceptance of Appointment by Successor.

(a) In case of the appointment hereunder of a successor Trustee with
respect to all Securities, every such successor Trustee so appointed shall
execute, acknowledge and deliver to the Company and to the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Trustee shall become effective and such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee; but, on the request
of the Company or the successor Trustee, such retiring Trustee shall, upon
payment of its charges, execute and deliver an instrument transferring to such
successor Trustee all the rights, powers and trusts of the retiring Trustee and
shall duly assign, transfer and deliver to such successor Trustee all property
and money held by such retiring Trustee hereunder.

(b) In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one or more (but not all) series, the Company, the
retiring Trustee and each successor Trustee with respect to the Securities of
one or more series shall execute and deliver an indenture supplemental hereto
wherein each successor Trustee shall accept such appointment and which (1) shall
contain such provisions as shall be necessary or desirable to transfer and
confirm to, and to vest in, each successor Trustee all the rights, powers,
trusts and duties of the retiring Trustee with respect to the Securities of that
or those series to which the appointment of such successor Trustee relates, (2)
if the retiring Trustee is not retiring with respect to all Securities, shall
contain such provisions as shall be deemed necessary or desirable to confirm
that all the rights, powers, trusts and duties of the retiring Trustee with
respect to the Securities of that or those series as to which the retiring
Trustee is not retiring shall continue to be vested in the retiring Trustee, and
(3) shall add to or change any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee, it being understood that nothing herein or
in such supplemental indenture shall constitute such Trustees co-trustees of
the

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same trust and that each such Trustee shall be trustee of a trust or trusts
hereunder separate and apart from any trust or trusts hereunder administered by
any other such Trustee; and upon the execution and delivery of such supplemental
indenture the resignation or removal of the retiring Trustee shall become
effective to the extent provided therein and each such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee with respect to the
Securities of that or those series to which the appointment of such successor
Trustee relates; but, on request of the Company or any successor Trustee, such
retiring Trustee shall duly assign, transfer and deliver to such successor
Trustee all property and money held by such retiring Trustee hereunder with
respect to the Securities of that or those series to which the appointment of
such successor Trustee relates. Whenever there is a successor Trustee with
respect to one or more (but less than all) series of securities issued pursuant
to this Indenture, the terms "Indenture" and "Securities" shall have the
meanings specified in the provisos to the respective definitions of those terms
in Section 101 which contemplate such situation.

(c) Upon request of any such successor Trustee, the Company shall execute
any and all instruments for more fully and certainly vesting in and confirming
to such successor Trustee all such rights, powers and trusts referred to in
paragraph (a) and (b) of this Section, as the case may be.

(d) No successor Trustee shall accept its appointment unless at the time
of such acceptance such successor Trustee shall be qualified and eligible under
this Article.

SECTION 612. Merger, Conversion, Consolidation or Succession to Business.

Any Corporation into which the Trustee may be merged or converted or with
which it may be consolidated, or any Corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
Corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder, provided such
Corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities shall have been authenticated,
but not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Securities so authenticated with the same effect
as if such successor Trustee had itself authenticated such Securities; in case
any of the Securities shall not have been authenticated by the Trustee then in
office, any successor by merger, conversion or consolidation to such Trustee
may authenticate such Securities either in the name of such predecessor
hereunder or in the name of the successor Trustee; and in all

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such cases such certificates shall have the full force which it is anywhere in
the Securities or in this Indenture provided that the certificate of the Trustee
shall have; provided, however, that the right to adopt the certificate of
authentication of any predecessor Trustee or to authenticate Securities in the
name of any predecessor Trustee shall apply only to its successor or successors
by merger, conversion or consolidation.

SECTION 613. Preferential Collection of Claims Against Company.

The Trustee shall comply with TIA Section 311(a). A Trustee which has
resigned or been removed is subject to TIA Section 311(a) to the extent
indicated therein.

SECTION 614. Appointment of Authenticating Agent.

At any time when any of the Securities remain Outstanding the Trustee,
with the concurrence of the Company, may appoint an Authenticating Agent or
Agents with respect to one or more series of Securities which shall be
authorized to act on behalf of the Trustee to authenticate Securities of such
series, and Securities so authenticated shall be entitled to the benefits of
this Indenture and shall be valid and obligatory for all purposes as if
authenticated by the Trustee hereunder. Wherever reference is made in this
Indenture to the authentication and delivery of Securities by the Trustee or the
Trustee's certificate of authentication, such reference shall be deemed to
include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of
the Trustee by an Authenticating Agent. Each Authenticating Agent shall be
acceptable to the Company and shall at all times be a Corporation organized and
doing business under the laws of the United States of America, any State thereof
or the District of Columbia authorized under such laws to act as Authenticating
Agent, having a combined capital and surplus of not less than $50,000,000 and
subject to supervision or examination by Federal, State or District of Columbia
authority. If such Authenticating Agent publishes reports of condition at least
annually, pursuant to law or to the requirements of said supervising or
examining authority, then for the purposes of this Section, the combined capital
and surplus of such Authenticating Agent shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time an Authenticating Agent shall cease to be eligible in
accordance with the provisions of this Section, such Authenticating Agent shall
resign immediately in the manner and with the effect specified in this Section.

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Any Corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any Corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any Corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such Corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.

An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company. The Trustee may at any time terminate
the agency of an Authenticating Agent by giving written notice thereof to such
Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall mail written notice of
such appointment by first class mail, postage prepaid, to all Holders of
Securities of the series with respect to which such Authenticating Agent will
serve, as their names and addresses appear in the Security Register. Any
successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating Agent.
No successor Authenticating Agent shall be appointed unless eligible under the
provisions of this Section.

The Company agrees to pay to each Authenticating Agent from time to time
reasonable compensation for its services under this Section.

If an appointment with respect to one or more series is made pursuant to
this Section, the Securities of such series may have endorsed thereon, in
addition to the Trustee's certificate of authentication, an alternate
certificate of authentication in the following form:

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This is one of the Securities of the series designated herein and issued
pursuant to the within-mentioned Indenture.

THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
as Trustee

-------------------------------------
As Authenticating Agent

By
-------------------------------------
Authorized Officer

ARTICLE SEVEN

HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY

SECTION 701. Company to Furnish Trustee Names and Addresses of Holders.

If the Trustee is not acting as Security Registrar for the Securities of
any series, the Company will furnish or cause to be furnished to the Trustee.

(a) at intervals of no more than six months commencing after the
first issue of such series, a list, in such form as the Trustee may
reasonably require, of the names and addresses of the Holders as of a date
not more than 15 days prior to the time such information is furnished, and

(b) at such other times as the Trustee may request in writing,
within 30 days after the receipt by the Company of any such request, a list
of similar form and content as of a date not more than 15 days prior to the
time such list is furnished.

SECTION 702. Preservation of Information; Communications to Holders.

(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 701 and the names and
addresses of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee

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may destroy any list furnished to it as provided in Section 701 upon receipt of
a new list so furnished.

(b) The rights of Holders to communicate with other Holders with respect
to their rights under this Indenture or under the Securities, and the
corresponding rights and privileges of the Trustee, shall be as provided by TIA
Section 312(b).

(c) Every Holder of Securities, by receiving and holding the same, agrees
with the Company and the Trustee that neither the Company nor the Trustee nor
any agent of either of them shall be held accountable by reason of the
disclosure of any such information as to the names and addresses of the Holders
in accordance with Section 702(b), regardless of the source from which such
information was derived, and that the Trustee shall not be held accountable by
reason of mailing any material pursuant to a request made under Section 702(b).

SECTION 703. Reports by Trustee.

Within 60 days after May 1 of each year commencing with the later of May 1,
1993 or the first May 1 after the first issuance of Securities pursuant to this
Indenture, the Trustee shall transmit by mail to all Holders of Securities as
provided in TIA Section 313(c) a brief report dated as of such May 1 if required
by TIA Section 313(a). A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each stock exchange upon
which any Securities are listed, with the Commission and with the Company. The
Company will notify the Trustee when any Securities are listed on any stock
exchange.

SECTION 704. Reports by Company.

The Company shall:

(1) file with the Trustee, within 15 days after the Company is
required to file the same with the Commission, copies of the annual reports
and of the information, documents and other reports (or copies of such
portions of any of the foregoing as the Commission may from time to time by
rules and regulations prescribe) which the Company may be required to file
with the Commission pursuant to Section 13 or Section 15 (d) of the
Securities Exchange Act of 1934; or, if the Company is not required to file
information, documents or reports pursuant to either of said Sections, then
it shall file with the Trustee and the Commission, in accordance with rules
and regulations prescribed from time to time by the Commission, such of the
supplementary and periodic information, documents and reports which may be
required pursuant to Section 13 of the Securities Exchange Act of 1934 in

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respect of a security listed and registered on a national securities
exchange as may be prescribed from time to time in such rules and
regulations;

(2) file with the Trustee and the Commission, in accordance with
rules and regulations prescribed from time to time by the Commission, such
additional information, documents and reports with respect to compliance by
the Company with the conditions and covenants of this Indenture as may be
required from time to time by such rules and regulations;

(3) transmit by mail to all Holders, as their names and addresses
appear in the Security Register, within 30 days after the filing thereof
with the Trustee, such summaries of any information, documents and reports
required to be filed by the Company pursuant to paragraphs (1) and (2) of
this Section as may be required by rules and regulations prescribed from
time to time by the Commission; and

(4) furnish to the Trustee, within 120 days after the end of each
fiscal year of the Company ending after the date hereof, a brief
certificate of the Company's principal executive officer, principal
financial officer or principal accounting officer as to his or her
knowledge of the Company's compliance with all conditions and covenants
under this Indenture. For purposes of this paragraph, such compliance shall
be determined without regard to any period of grace or requirement of
notice provided under this Indenture.

ARTICLE EIGHT

CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE

SECTION 801. Company May Consolidate, Etc., Only on Certain Terms.

The Company 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
Company is merged or the Person which acquires by conveyance or transfer,
or which leases, the properties and assets of the Company substantially as
an entirety shall be a Corporation, partnership or trust, shall be
organized and validly existing under the laws of the United States of
America any State thereof or the District of Columbia and shall expressly
assume, by an indenture supplemental hereto, executed and delivered to the
Trustee, in form satisfactory to the Trustee, the due and punctual payment
of the

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principal of (and premium, if any) and interest on all the Securities and
the performance or observance of every covenant of this Indenture on the
part of the Company to be performed or observed;

(2) immediately after giving effect to such transaction, no Event
of Default, and no event which, after notice or lapse of time or both,
would become an Event of Default, shall have happened and be continuing;
and

(3) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that such consolidation, merger,
conveyance, transfer or lease and, if a supplemental indenture is required
in connection with such transaction, such supplemental indenture, comply
with this Article and that all conditions precedent herein provided for
relating to such transaction have been complied with.

SECTION 802. Successor Substituted.

Upon any consolidation of the Company with, or merger by the Company into,
any other Person or any conveyance, transfer or lease of the properties and
assets of the Company substantially as an entirety in accordance with Section
801, the successor Person formed by such consolidation or into which the Company
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
Company under this Indenture with the same effect as if such successor Person
had been named as the Company herein, and thereafter, except in the case of a
lease, the predecessor Person shall be relieved of all obligations and covenants
under this Indenture and the Securities.

ARTICLE NINE

SUPPLEMENTAL INDENTURES

SECTION 901. Supplemental Indentures Without Consent of Holders.

Without the consent of any Holders, the Company, when authorized by or
pursuant to a Board Resolution, and the Trustee, at any time and from time to
time, may enter into one or more indentures supplemental hereto, in form
satisfactory to the Trustee, for any of the following purposes:

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(1) to evidence the succession of another Person to the Company and
the assumption by any such successor of the covenants of the Company
herein and in the Securities; or

(2) to add to the covenants of the Company for the benefit of the
Holders of all or any series of Securities (and if such covenants are to be
for the benefit of less than all series of Securities, stating that such
covenants are expressly being included solely for the benefit of one or
more specified series) or to surrender any right or power herein conferred
upon the Company; or

(3) to add any additional Events of Default (and if such Events of
Default are to be for the benefit of less than all series of Securities,
stating that such Events of Default are being included solely for the
benefit of such series); or

(4) to add to or change any of the provisions of this Indenture to
such extent as shall be necessary to permit or facilitate the issuance of
Securities in bearer form, registrable or not registrable as to principal,
and with or without interest coupons; or

(5) to add to, change or eliminate any of the provisions of this
Indenture in respect of one or more series of Securities, provided that any
such addition, change or elimination (i) shall neither (A) apply to any
Security of any series created prior to the execution of such supplemental
indenture and entitled to the benefit of such provision nor (B) modify the
rights of the Holder of any such Security with respect to such provision or
(ii) shall become effective only when there is no such Security
Outstanding; or

(6) to secure the Securities; or

(7) to establish the form or terms of Securities of any series as
permitted by Sections 201 and 301; or

(8) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities of one or
more series and to add to or change any of the provisions of this Indenture
as shall be necessary to provide for or facilitate the administration of
the trusts hereunder by more than one Trustee, pursuant to the requirements
of Section 611(b); or

(9) to cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein, or to
make any other provisions with respect to matters or questions arising
under

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this Indenture, provided such action shall not adversely affect the
interests of the Holders of Securities of any series in any material
respect.

SECTION 902. Supplemental Indentures with Consent of Holders.

With the consent of the Holders of not less than a majority in aggregate
principal amount of the Outstanding Securities of each series affected by such
supplemental indenture, by Act of said Holders delivered to the Company and the
Trustee, the Company, when authorized by a Board Resolution, and the Trustee may
enter into an indenture or indentures supplemental hereto for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of modifying in any manner the rights of the
Holders of Securities of such series under this Indenture; provided, however,
that no such supplemental indenture shall, without the consent of the Holder of
each Outstanding Security affected thereby,

(1) change the Stated Maturity of the principal of, or any
installment of principal of or interest on, any such Security, or reduce
the principal amount thereof or the rate of interest thereon or any premium
payable upon the redemption thereof, or reduce the amount of the principal
of an Original Issue Discount Security that would be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section
502, or change any Place of Payment where, or the coin or currency in
which, any such Security or any premium or the interest thereon is payable,
or impair the right to institute suit for the enforcement of any such
payment on or after the Stated Maturity thereof (or, in the case of
redemption or repayment, on or after the Redemption Date or any repayment
date), or

(2) reduce the percentage in principal amount of the Outstanding
Securities of any series, the consent of whose Holders is required for any
such supplemental indenture, or the consent of whose Holders is required
for any waiver of compliance with certain provisions of this Indenture or
certain defaults hereunder and their consequences provided for in this
Indenture, or

(3) modify any of the provisions of this Section 902, Section 513
or Section 1010, except to increase any such percentage or to provide that
certain other provisions of this Indenture cannot be modified or waived
without the consent of the Holder of each Outstanding Security affected
thereby; provided however, that this Clause shall not be deemed to require
the consent of any Holder with respect to changes in the references to "the
Trustee" and concomitant changes in this Section 902 and Section 1010, or
the deletion of this proviso, in accordance with the requirements of
Sections 611(b) and 901(8).

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A supplemental indenture which changes or eliminates any covenant or other
provision of this Indenture which has expressly been included solely for the
benefit of one or more particular series of Securities, or which modifies the
rights of the Holders of Securities of such series with respect to such covenant
or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Securities of any other series.

The Company may, but shall not be obligated to, fix a record date for the
purpose of determining the Persons entitled to consent to any indenture
supplemental hereto. If a record date is fixed for such purpose, the Holders on
such record date or their duly designated proxies, and only such Persons, shall
be entitled to consent to such supplemental indenture, whether or not such
Holders remain Holders after such record date; provided, that unless such
consent shall have become effective by virtue of the requisite percentage having
been obtained prior to the date which is 90 days after such record date, any
such consent previously given shall automatically and without further action by
any Holder be canceled and of no further effect.

It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.

SECTION 903. Execution of Supplemental Indentures.

In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 601) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.

SECTION 904. Effect of Supplemental Indentures.

Upon the execution of any supplemental indenture under this Article, this
Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby to the extent provided therein.

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SECTION 905. Conformity with Trust Indenture Act.

Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act as then in effect.

SECTION 906. Reference in Securities to Supplemental Indentures.

Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in a form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities of any series so modified as to conform, in the opinion of the
Trustee and the Company, to any such supplemental indenture may be prepared and
executed by the Company and authenticated and delivered by the Trustee in
exchange for Outstanding Securities of such series.

SECTION 907. Notice of Supplemental Indentures.

Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of Section 902, the Company
shall give notice thereof to the Holders of each Outstanding Security so
affected, pursuant to Section 106, setting forth in general terms the substance
of such supplemental indenture.

ARTICLE TEN

COVENANTS

SECTION 1001. Payment of Principal, Premium and Interest.

The Company covenants and agrees for the benefit of each series of
Securities that it will duly and punctually pay the principal of (and premium,
if any) and interest on the Securities of that series in accordance with the
terms of the Securities and this Indenture. In the absence of contrary
provisions with respect to the Securities of any series, interest on the
Securities of any series may, at the option of the Company, be paid by check
mailed to the address of the Person entitled thereto as it appears on the
Security Register.

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SECTION 1002. Maintenance of Office or Agency.

The Company will maintain in each Place of Payment for any series of
Securities an office or agency where Securities of that series may be presented
or surrendered for payment, where Securities of that series may be surrendered
for registration of transfer or exchange and where notices and demands to or
upon the Company in respect of the Securities of that series and this Indenture
may be served. The Company will give prompt written notice to the Trustee of the
location and any change in the location of such office or agency. If at any time
the Company shall fail to maintain any such required office or agency or shall
fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee, and the Company hereby appoints the Trustee as its agent
to receive all such presentations, surrenders, notices and demands.

The Company may also from time to time designate one or more other offices
or agencies where the Securities of one or more series may be presented or
surrendered for any or all such purposes and may from time to time rescind such
designations; provided, however, that no such designation or rescission shall in
any manner relieve the Company of its obligation to maintain an office or agency
in each Place of Payment for Securities of any series for such purposes. The
Company will give prompt written notice to the Trustee of any such designation
or rescission and of any change in the location of any such other office or
agency.

SECTION 1003. Money for Securities Payments to Be Held in Trust.

If the Company shall at any time act as its own Paying Agent with respect
to any series of Securities, it will, on or before each due date of the
principal of (and premium, if any) or interest on any of the Securities of that
series, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum in the currency in which such series of Securities is payable
sufficient to pay the principal (and premium, if any) or interest so becoming
due until such sums shall be paid to such Persons or otherwise disposed of as
herein provided and will promptly notify the Trustee of its failure so to act.

Whenever the Company shall have one or more Paying Agents for any series of
Securities, it will, prior to each due date of the principal of (and premium, if
any) or interest on any Securities of that series, deposit with a Paying Agent a
sum sufficient to pay the principal (and premium, if any) or interest so
becoming due, such sum to be held in trust for the benefit of the Persons
entitled to such principal, premium or interest, and (unless such Paying Agent
is the Trustee) the Company will promptly notify the Trustee of its failure so
to act.

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The Company will cause each Paying Agent for any series of Securities other
than the Trustee to execute and deliver to the Trustee an instrument in which
such Paying Agent shall agree with the Trustee, subject to the provisions of
this Section, that such Paying Agent will:

(1) hold all sums held by it for the payment of the principal of
(and premium, if any) or interest on Securities of that series in trust for
the benefit of the Persons entitled thereto until such sums shall be paid
to such Persons or otherwise disposed of as herein provided;

(2) give the Trustee notice of any default by the Company (or any
other obligor upon the Securities of that series) in the making of any
payment of principal (and premium, if any) or interest on the Securities of
that series; and

(3) at any time during the continuance of any such default, upon
the written request of the Trustee, forthwith pay to the Trustee all sums
so held in trust by such Paying Agent.

The Company may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, pay, or by Company
Order direct any Paying Agent to pay, to the Trustee all sums held in trust by
the Company or such Paying Agent, such sums to be held by the Trustee upon the
same trusts as those upon which such sums were held by the Company or such
Paying Agent, and, upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
money.

Any money deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal of (and premium, if any)
or interest on any Security of any series and remaining unclaimed for two years
after such principal (and premium, if any) or interest has become due and
payable shall be paid to the Company on Company Request, or (if then held by the
Company) shall be discharged from such trust; and the Holder of such Security
shall thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in a newspaper published in
the English language, customarily published on each Business Day and of general
circulation in the Borough of Manhattan, The City of New York, notice that such
money remains unclaimed and that, after a date specified therein, which shall
not be less than 30 days from the date of such publication, any unclaimed
balance of such money then remaining will be repaid to the Company on Company
Request.

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SECTION 1004. Existence.

Subject to Article Eight, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its existence,
rights (charter and statutory) and franchises; provided, however, that the
Company shall not be required to preserve any such right or franchise if the
Board of Directors shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and that the loss
thereof is not disadvantageous in any material respect to the Holders.

SECTION 1005. Maintenance of Properties.

The Company will cause all properties used or useful in the conduct of its
business or the business material to be maintained and kept in good condition,
repair and working order and supplied with all necessary equipment and will
cause to be made all necessary repairs, renewals, replacements, betterments and
improvements thereof, all as in the judgment of the Company may be necessary so
that the business carried on in connection therewith may be properly and
advantageously conducted at all times; provided, however, that nothing in this
Section shall prevent the Company from discontinuing the operation or
maintenance of any of such properties if such discontinuance is, in the judgment
of the Company, desirable in the conduct of its business and not disadvantageous
in any material respect to the Holders.

SECTION 1006. Payment of Taxes and Other Claims.

The Company will pay or discharge or cause to be paid or discharged, before
the same shall become delinquent, (1) all taxes, assessments and governmental
charges levied or imposed upon it or upon its income, profits or property, and
(2) all lawful claims for labor, materials and supplies which, if unpaid, might
by law become a lien upon its property; PROVIDED, HOWEVER, that the Company
shall not be required to pay or discharge or cause to be paid or discharged any
such tax, assessment, charge or claim whose amount, applicability or validity is
being contested in good faith.

SECTION 1007. Restriction on Secured Debt.

(a) The Company will not itself, and will not permit any Restricted
Subsidiary to, incur, issue, assume or guarantee any notes, bonds, debentures or
other similar

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evidences of indebtedness for money borrowed (notes, bonds, debentures or other
similar evidences of indebtedness for money borrowed being hereinafter in this
Article called "Debt"), secured by pledge of, or mortgage or other lien on, any
Principal Property, now owned or hereafter owned by the Company or any
Restricted Subsidiary, or any shares of stock or Debt of any Restricted
Subsidiary (pledges, mortgages and other liens being hereinafter in this Article
called "Lien" or "Liens"), without effectively providing that the Securities of
each series then Outstanding (together with, if the Company shall so determine,
any other Debt of the Company or such Restricted Subsidiary then existing or
thereafter created which is not subordinate to the Securities of each series
then Outstanding) shall be secured equally and ratably with (or prior to) such
secured Debt, so long as such secured Debt shall be so secured; PROVIDED,
HOWEVER, that this Section shall not apply to, and there shall be excluded from
secured Debt in any computation under this Section, Debt secured by:

(1) Liens on any Principal Property acquired, constructed or improved
by the Company or any Restricted Subsidiary after the date of this
Indenture which are created or assumed contemporaneously with such
acquisition, construction or improvement, or within 120 days before or
after the completion thereof, to secure or provide for the payment of all
or any part of the cost of such acquisition, construction or improvement
(including related expenditures capitalized for Federal income tax purposes
in connection therewith) incurred after the date of this Indenture;

(2) Liens of or upon any property, shares of capital stock or Debt
existing at the time of acquisition thereof, whether by merger,
consolidation, purchase, lease or otherwise (including Liens of or upon
property, shares of capital stock or indebtedness of a corporation existing
at the time such corporation becomes a Restricted Subsidiary);

(3) Liens in favor of the Company or any Restricted Subsidiary;

(4) Liens in favor of the United States of America or any State
thereof, or any department, agency or instrumentality or political
subdivision of the United States of America or any State thereof or
political entity affiliated therewith, or in favor of any other country, or
any political subdivision thereof, to secure partial, progress, advance or
other payments, or other obligations, pursuant to any contract or statute
or to secure any Debt incurred for the purpose of financing all or any part
of the cost of acquiring, constructing or improving the property subject to
such Liens (including Liens incurred in connection with pollution control,
industrial revenue or similar financings);

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(5) Liens imposed by law, such as mechanics', workmen's, repairmen's,
materialmen's, carriers', warehousemen's, vendors' or other similar liens
arising in the ordinary course of business, or governmental (federal, state
or municipal) liens arising out of contracts for the sale of products or
services by the Company or any Restricted Subsidiary, or deposits or
pledges to obtain the release of any of the foregoing;

(6) pledges or deposits under workmen's compensation laws or similar
legislation and Liens of judgments thereunder which are not currently
dischargeable, or good faith deposits in connection with bids, tenders,
contracts (other than for the payment of money) or leases to which the
Company or any Restricted Subsidiary is a party, or deposits to secure
public or statutory obligations of the Company or any Restricted
Subsidiary, or deposits in connection with obtaining or maintaining
self-insurance or to obtain the benefits of any law, regulation or
arrangement pertaining to unemployment insurance, old age pensions, social
security or similar matters, or deposits of cash or obligations of the
United States of America to secure surety, appeal or customs bonds to which
the Company or any Restricted Subsidiary is a party, or deposits in
litigation or other proceedings such as, but not limited to, interpleader
proceedings;

(7) Liens created by or resulting from any litigation or other
proceeding which is being contested in good faith by appropriate
proceedings, including Liens arising out of judgments or awards against the
Company or any Restricted Subsidiary with respect to which the Company or
such Restricted Subsidiary is in good faith prosecuting an appeal or
proceedings for review; or Liens incurred by the Company or any Restricted
Subsidiary for the purpose of obtaining a stay or discharge in the course
of any litigation or other proceeding to which the Company or such
Restricted Subsidiary is a party;

(8) Liens for taxes or assessments or governmental charges or levies
not yet due or delinquent, or which can thereafter be paid without penalty,
or which are being contested in good faith by appropriate proceedings;

(9) Liens consisting of easements, rights-of-way, zoning
restrictions, restrictions on the use of real property, and defects and
irregularities in the title thereto, landlords' liens and other similar
liens and encumbrances none of which interfere materially with the use of
the property covered thereby in the ordinary course of the business of the
Company or such Restricted Subsidiary and which do not, in the opinion of
the Company, materially detract from the value of such properties; or

(10) any extension, renewal or replacement (or successive extensions,
renewals or replacements), as a whole or in part, of any Lien referred to
in the

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foregoing clauses (1) to (9), inclusive; provided, that (i) such extension,
renewal or replacement Lien shall be limited to all or a part of the same
property, shares of stock or Debt that secured the Lien extended, renewed
or replaced (plus improvements on such property) and (ii) the Debt secured
by such Lien at such time is not increased.

(b) Notwithstanding the restrictions contained in subdivision (a) of this
Section, the Company and its Restricted Subsidiaries, or any of them, may incur,
issue, assume or guarantee Debt secured by Liens without equally and ratably
securing the Securities of each series then Outstanding, provided, that at the
time of such incurrence, issuance, assumption or guarantee, after giving effect
thereto and to the retirement of any Debt which is concurrently being retired,
the aggregate amount of all outstanding Debt secured by Liens which could not
have been incurred, issued, assumed or guaranteed by the Company or a
Restricted Subsidiary without equally and ratably securing the Securities of
each series then Outstanding except for the provisions of this subdivision (b)
does not at such time exceed 10% of Consolidated Net Tangible Assets of the
Company.

SECTION 1008. Restriction on Sale and Leaseback Transactions.

(a) The Company will not itself, and it will not permit any Restricted
Subsidiary to, enter into any arrangement with any bank, insurance company or
other lender or investor (not including the Company or any Restricted
Subsidiary) or to which any such lender or investor is a party, providing for
the leasing by the Company or a Restricted Subsidiary for a period, including
renewals, in excess of three years of any Principal Property which has been or
is to be sold or transferred by the Company or any Restricted Subsidiary to such
lender or investor or to any person to whom funds have been or are to be
advanced by such lender or investor on the security of such Principal Property
(herein referred to as a "Sale and Leaseback Transaction") unless either:

(1) The Company or such Restricted Subsidiary would, at the time of
entering into such arrangement, be entitled, without equally and ratably
securing the Securities of each series then Outstanding, to incur Debt
secured by a Lien on such property, pursuant to paragraphs (1) to (10),
inclusive, of Section 1007; or

(2) the Company within 120 days after the sale or transfer shall
have been made by the Company or by a Restricted Subsidiary, applies an
amount equal to the greater of (i) the net proceeds of the sale of the
Principal Property sold and leased back pursuant to such arrangement or
(ii) the fair market value of the Principal Property so sold and leased
back at the time of entering into such arrangement (as determined by any
two of the following: the

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Chairman or a Vice Chairman of the Board of the Company, its President, its
Chief Financial Officer, its Vice President of Finance, its Treasurer or
its Controller) to the retirement of Funded Debt of the Company; provided,
that the amount to be applied to the retirement of Funded Debt of the
Company shall be reduced by (A) the principal amount of any Securities
delivered within 120 days after such sale to the Trustee for retirement and
cancellation, and (B) the principal amount of Funded Debt, other than
Securities, voluntarily retired by the Company within 120 days after such
sale. Notwithstanding the foregoing, no retirement referred to in this
clause (a)(2) may be effected by payment at maturity or pursuant to any
mandatory sinking fund payment or mandatory prepayment provision.

(b) Notwithstanding the restrictions contained in subdivision (a) of this
Section, the Company and its Restricted Subsidiaries, or any of them, may enter
into a Sale and Leaseback Transaction, provided, that at the time of such
transaction, after giving effect thereto, the aggregate amount of all
Attributable Debt in respect of Sale and Leaseback Transactions existing at such
time which could not have been entered into except for the provisions of this
subdivision (b) does not at such time exceed 10% of Consolidated Net Tangible
Assets of the Company.

SECTION 1009. Defeasance of Certain Obligations.

The following provisions shall apply to the Securities of each series
unless specifically otherwise provided in a Board Resolution, Officers'
Certificate or indenture supplemental hereto provided pursuant to Section 301.
The Company may omit to comply with any term, provision or condition set forth
in Sections 1005, 1006, 1007 and 1008 and any such omission with respect to
Sections 1005, 1006, 1007 and 1008 shall not be an Event of Default, in each
case with respect to the Securities of that series, provided that the following
conditions have been satisfied:

(1) with reference to this Section 1009, the Company has deposited
or caused to be irrevocably deposited with the Trustee (or another trustee
satisfying the requirements of Section 609) as trust funds in trust,
specifically pledged as security for, and dedicated solely to, the benefit
of the Holders of the Securities of that series, (i) money in an amount, or
(ii) U.S. Government Obligations which through the payment of interest and
principal in respect thereof in accordance with their terms will provide
not later than one day before the due date of any payment referred to in
clause (A) or (B) of this subparagraph (1) money in an amount, or (iii) a
combination thereof, sufficient, in the opinion of a nationally recognized
firm of independent

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<PAGE>

public accountants expressed in a written certification thereof delivered
to the Trustee, to pay and discharge (A) the principal of (and premium, if
any) and each instalment of principal (and premium, if any) and interest on
the Outstanding Securities on the Stated Maturity of such principal or
installments of principal and interest and (B) any mandatory sinking fund
payments or analogous payments applicable to the Securities of such series
on the day on which such payments are due and payable in accordance with
the terms of this Indenture and of such Securities;

(2) such deposit shall not cause the Trustee with respect to the
Securities of that series to have a conflicting interest as defined in
Section 608 and for purposes of the Trust Indenture Act with respect to the
Securities of any series;

(3) such deposit will not result in a breach or violation of, or
constitute a default under, this Indenture or any other agreement or
instrument to which the Company is a party or by which it is bound;

(4) no Event of Default or event which with notice or lapse of
time would become an Event of Default with respect to the Securities of
that series shall have occurred and be continuing on the date of such
deposit;

(5) the Company has delivered to the Trustee an Opinion of Counsel
to the effect that Holders of the Securities of such series will not
recognize income, gain or loss for Federal income tax purposes as a result
of such deposit and defeasance of certain obligations and will be subject
to Federal income tax on the same amount and in the same manner and at the
same times as would have been the case if such deposit and defeasance had
not occurred; and

(6) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent
herein provided for relating to the defeasance contemplated in this
Section have been complied with.

SECTION 1010. Waiver of Certain Covenants.

The Company may omit in any particular instance to comply with any term,
provision or condition set forth in Sections 1004 to 1008, inclusive, with
respect to the Securities of any series if before the time for such compliance
the Holders of not less than a majority in aggregate principal amount of the
Outstanding Securities of such series shall, by Act of such Holders, either
waive such compliance in such instance or generally waive compliance with such
term, provision or condition, but

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<PAGE>

no such waiver shall extend to or affect such term, provision or condition
except to the extent so expressly waived, and, until such waiver shall become
effective, the obligations of the Company and the duties of the Trustee in
respect of any such term, provision or condition shall remain in full force and
effect.

The Company may, but shall not be obligated to, fix a record date for the
purpose of determining the Persons entitled to waive any such term, provision or
condition. If a record date is fixed for such purpose, the Holders on such
record date or their duly designated proxies, and only such Persons, shall be
entitled to waive any such term, provision or condition hereunder, whether or
not such Holders remain Holders after such record date; provided that unless the
Holders of not less than a majority in principal amount of the Outstanding
Securities of such series shall have waived such term, provision or condition
prior to the date which is 90 days after such record date, any such waiver
previously given shall automatically and without further action by any Holder be
canceled and of no further effect.

ARTICLE ELEVEN

REDEMPTION OF SECURITIES

SECTION 1101. Applicability of Article.

Securities of any series which are redeemable before their Stated Maturity
shall be redeemable in accordance with their terms and (except as otherwise
specified as contemplated by Section 301 for Securities of any series) in
accordance with this Article.

SECTION 1102. Election to Redeem; Notice to Trustee.

The election of the Company to redeem any Securities shall be evidenced by
an Officers' Certificate. The Company shall, at least 45 days prior to the
Redemption Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee of

(1) such Redemption Date,

(2) if the Securities of such series have different terms and less
than all of the Securities of such series are to be redeemed, the terms of
the Securities to be redeemed, and

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(3) if less than all the Securities of such series with identical
terms are to be redeemed, the principal amount of such Securities to be
redeemed.

In the case of any redemption of Securities prior to the expiration of any
restriction on such redemption provided in the terms of such Securities or
elsewhere in this Indenture, the Company shall furnish the Trustee with an
Officers' Certificate evidencing compliance with such restriction.

SECTION 1103. Selection by Trustee of Securities to Be Redeemed.

If less than all the Securities of like tenor of any series are to be
redeemed, the particular Securities to be redeemed shall be selected not more
than 60 days prior to the Redemption Date by the Trustee, from the Outstanding
Securities of like tenor of such series not previously called for redemption, by
such method as the Trustee shall deem fair and appropriate and which may provide
for the selection for redemption of portions (equal to the minimum authorized
denomination for Securities of like tenor of that series or any integral
multiple thereof) of the principal amount of Securities of such series of a
denomination larger than the minimum authorized denomination for Securities of
that series.

The Trustee shall promptly notify the Company in writing of the Securities
selected for redemption and, in the case of any Securities selected for partial
redemption, the principal amount thereof to be redeemed.

For all purposes of this Indenture, unless the context otherwise requires,
all provisions relating to the redemption of Securities shall relate, in the
case of any Securities redeemed or to be redeemed only in part, to the portion
of the principal amount of such Securities which has been or is to be redeemed.

SECTION 1104. Notice of Redemption.

Notice of redemption shall be given by first-class mail, postage prepaid,
mailed not less than 30 nor more than 60 days prior to the Redemption Date, to
each Holder of Securities to be redeemed, at each such Holder's address
appearing in the Security Register.

All notices of redemption shall state:

(1) the Redemption Date,

(2) the Redemption Price,

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(3) if less than all the Outstanding Securities of like tenor of any
series are to be redeemed, the identification (and, in the case of partial
redemption, the principal amounts) of the particular Securities to be
redeemed,

(4) that on the Redemption Date the Redemption Price will become due
and payable upon each such Security to be redeemed and, if applicable, that
interest thereon will cease to accrue on and after said date,

(5) the place or places where such Securities are to be surrendered
for payment of the Redemption Price, and

(6) that the redemption is for a sinking fund, if such is the case.

Notice of redemption of Securities to be redeemed at the election of the
Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company.

SECTION 1105. Deposit of Redemption Price.

On or prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 1003) an amount of
money in immediately available funds sufficient to pay the Redemption Price of,
and (except if the Redemption Date shall be an Interest Payment Date) accrued
interest on, all the Securities which are to be redeemed on that date.

SECTION 1106. Securities Payable on Redemption Date.

Notice of redemption having been given as aforesaid, the Securities so to
be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Securities shall cease to bear interest. Upon surrender of any
such Security for redemption in accordance with said notice, such Security shall
be paid by the Company at the Redemption Price, together with accrued interest
to the Redemption Date; provided, however, that, unless otherwise specified as
contemplated by Section 301, installments of interest whose Stated Maturity is
on or prior to the Redemption Date shall be payable to the Holders of such
Securities, or one or more Predecessor Securities, registered as such at the
close of business on the relevant Regular Record Dates according to their terms
and the provisions of Section 307.

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<PAGE>

If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal (and premium, if any) shall, until paid,
bear interest from the Redemption Date at the rate prescribed therefor in the
Security.

SECTION 1107. Securities Redeemed in Part.

Any Security which is to be redeemed in part shall be surrendered at a
Place of Payment for such series (with, if the Company or the Trustee so
requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the Holder thereof
or such Holder's attorney duly authorized in writing), and the Company shall
execute, and the Trustee shall authenticate and deliver to the Holder of such
Security without service charge, a new Security or Securities of the same series
and of like tenor, of any authorized denomination as requested by such Holder,
in aggregate principal amount equal to and in exchange for the unredeemed
portion of the principal of the Security so surrendered; provided, however, that
if a Global Security is so surrendered, such new Security so issued shall be a
new Global Security in a denomination equal to the unredeemed portion of the
principal of the Global Security so surrendered.

ARTICLE TWELVE

SINKING FUNDS

SECTION 1201. Applicability of Article.

The provisions of this Article shall be applicable to any sinking fund for
the retirement of Securities of a series except as otherwise specified as
contemplated by Section 301 for Securities of such series.

The minimum amount of any sinking fund payment provided for by the terms of
Securities of any series is herein referred to as a "mandatory sinking fund
payment", and any payment in excess of such minimum amount provided for by the
terms of Securities of any series is herein referred to as an "optional sinking
fund payment". If provided for by the terms of Securities of any series, the
cash amount of any sinking fund payment may be subject to reduction as provided
in Section 1202. Each sinking fund payment shall be applied to the redemption of
Securities of any series as provided for by the terms of Securities of such
series.

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SECTION 1202. Satisfaction of Sinking Fund Payments with Securities.

The Company (1) may deliver Outstanding Securities of like tenor of a
series (other than any previously called for redemption) and (2) may apply as a
credit Securities of like tenor of a series which have been redeemed either at
the election of the Company pursuant to the terms of such Securities or through
the application of permitted optional sinking fund payments pursuant to the
terms of such Securities, in each case in satisfaction of all or any part of any
sinking fund payment with respect to the Securities of like tenor of such series
required to be made pursuant to the terms of such Securities as provided for by
the terms of such series; provided that such Securities have not been previously
so credited. Such Securities shall be received and credited for such purpose by
the Trustee at the Redemption Price specified in such Securities for redemption
through operation of the sinking fund and the amount of such sinking fund
payment shall be reduced accordingly.

SECTION 1203. Redemption of Securities for Sinking Fund.

Not less than 60 days prior to each sinking fund payment date for
Securities of like tenor of a series, the Company will deliver to the Trustee an
Officers' Certificate specifying the amount of the next ensuing sinking fund
payment for such Securities pursuant to the terms of such Securities, the
portion thereof, if any, which is to be satisfied by payment of cash and the
portion thereof, if any, which is to be satisfied by delivering and crediting
Securities of like tenor of that series pursuant to Section 1202 and, at the
time of delivery of such Officers' Certificate, will also deliver to the Trustee
any Securities to be so delivered. Not less than 45 days before each such
sinking fund payment date the Trustee shall select the Securities to be redeemed
upon such sinking fund payment date in the manner specified in Section 1103 and
cause notice of the redemption thereof to be given in the name of and at the
expense of the Company in the manner provided in Section 1104. Such notice
having been duly given. the redemption of such Securities shall be made upon the
terms and in the manner stated in Sections 1106 and 1107.

This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.

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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and the respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.

HONEYWELL INC.

By /s/ Paul N. Saleh
-------------------------------
Paul N. Saleh
Vice President and Treasurer

Attest:

/s/ Sigurd Ueland, Jr.
---------------------------------
Sigurd Ueland, Jr.
Vice President and Secretary

[SEAL] THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
as Trustee

By /s/ Ronald A. DeSorbo
--------------------------------
Ronald A. DeSorbo
Vice President

Attest:

/s/ Mary Lewicki
---------------------------------
Mary Lewicki
Assistant Secretary

[SEAL]

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<PAGE>

STATE OF MINNESOTA )
) SS.
COUNTY OF HENNEPIN )

On the day of August, ___ 1994 before me personally came Paul N. Saleh to
me known, who, being by me duly sworn, did depose and say that he is Vice
President and Treasurer of Honeywell Inc., one of the Corporations described in
and which executed the foregoing instrument; that he knows the seal of said
Corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by authority of the Board of Directors of said
Corporation, and that he signed his name thereto by like authority.

[SEAL]
----------------------------------
Notary Public

STATE OF NEW YORK )
) SS.
COUNTY OF KINGS )

On the day of August,____ 1994 before me personally came Ronald A. DeSorbo
to me known, who, being by me duly sworn, did depose and say that he is Vice
President of The Chase Manhattan Bank (National Association), one of the
Corporations described in and which executed the foregoing instrument; that he
knows the seal of said Corporation; that the seal affixed to said instrument
is such corporate seal; that it was so affixed by authority of the Board of
Directors of said Corporation, and that he signed his name thereto by like
authority.

[SEAL]
----------------------------------
Notary Public

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Exhibit(10)(iii)(a)

HONEYWELL KEY EMPLOYEE SEVERANCE PLAN
(AMENDED AND RESTATED EFFECTIVE SEPTEMBER 20, 1994)

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 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 order to induce the Corporation's key employees to remain in the employ
of the Corporation, the Corporation has established the Honeywell Key Employee
Severance Plan (this "Plan") under which the severance benefits set forth herein
shall be paid to covered employees designated by the Personnel Committee of the
Board from time to time (the "Key Employees") in the event their 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 PLAN. Before a change in control of the Corporation, this Plan
shall continue until such time as the Board, acting in its sole discretion,
elects to modify, supersede or terminate this Plan as provided in Section 7.
This Plan shall automatically continue in effect for a period of two (2) years
following a change in control of the Corporation; provided, however, that the
expiration of the term of this Plan shall not adversely affect the rights of any
Key Employee under this Plan which have accrued prior to the expiration of the
term of this Plan.

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 Plan, a "change in control of the Corporation" shall be deemed
to have occurred if:

<PAGE>

(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 subsidiary of the Corporation, any
"person" (as hereinabove defined) acting on behalf of the Corporation as
underwriter pursuant to an offering who is temporarily holding securities
in connection with such offering, 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 thirty percent (30%) or more of
the combined voting power of the Corporation's then outstanding securities;
or

(ii) during any period of not more than two (2) consecutive years
(not including any period prior to the adoption of this Plan), individuals
who at the beginning of such period constitute the Board, and any new
director (other than a director designated by a "person" (as hereinabove
defined) 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, 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 (1)
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) more than fifty percent (50%) of
the combined voting power of the voting securities of the Corporation or
such surviving entity outstanding immediately after such merger or
consolidation or (2) 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 thirty percent (30%)
of the combined voting power of the Corporation's then outstanding
securities; 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).

<PAGE>

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, a
Key Employee shall be entitled to the benefits provided in Subsection
4(iii) upon the subsequent termination of such Key Employee's employment
during the term of this Plan unless such termination is (a) because of the
Key Employee's death or Disability, (b) by the Corporation for Cause, or
(c) by the Key Employee other than for Good Reason. In the event a Key
Employee's 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,
the Key Employee shall not be entitled to any benefits hereunder.

(ii) DISABILITY. If, as a result of a Key Employee's incapacity due
to physical or mental illness, the Key Employee shall have been absent from
the full-time performance of the Key Employee's duties with the Corporation
for six (6) consecutive months, and within thirty (30) days after written
notice of termination is given, the Key Employee shall not have returned to
the full-time performance of duties, for purposes of this Plan the Key
Employee's employment may be terminated for "Disability."

(iii) CAUSE. Termination by the Corporation of a Key Employee's
employment for "Cause" shall mean termination (a) upon the willful and
continued failure by the Key Employee to substantially perform the Key
Employee's duties with the Corporation (other than any such failure
resulting from the Key Employee's 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)) or by the Key
Employee for Good Reason (as defined in Subsection 3(iv))), after a written
demand for substantial performance is delivered to the Key Employee by the
Board, which demand specifically identifies the manner in which the Board
believes that the Key Employee has not substantially performed the Key
Employee's duties, or (b) the willful engaging by the Key Employee in
conduct which is demonstrably and materially injurious to the Corporation,
monetarily or otherwise. For purposes of this Subsection 3(iii), no act,
or failure to act, on the Key Employee's part shall be deemed "willful"
unless done, or omitted to be done, by the Key Employee in bad faith and
without reasonable belief that the Key Employee's action or omission was in
or not opposed to the best interest of the Corporation. Notwithstanding
the foregoing, the Key Employee shall not be deemed to have been terminated
for Cause unless and until there shall have been delivered to the Key
Employee 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 the Key Employee and an
opportunity for the Key Employee, together with the Key Employee's counsel,
to be heard before the Board), finding that in the good faith opinion of
the Board the Key Employee was guilty of conduct set forth above in this
Subsection 3(iii) and specifying the particulars thereof in detail.

<PAGE>

(iv) GOOD REASON. A Key Employee shall be entitled to terminate
employment for Good Reason. For purposes of this Plan, "Good Reason" shall
mean, without the Key Employee's 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 Subsection 3(vi)) specified in the Notice of Termination (as
defined in Subsection 3(v)) given in respect thereof:

(a) the assignment to the Key Employee of any duties
inconsistent with the position in the Corporation that such
Key Employee held immediately prior to the change in
control of the Corporation, or an adverse alteration in the
nature or status of the Key Employee's responsibilities or
the conditions of the Key Employee's employment from those
in effect immediately prior to such change in control of
the Corporation;

(b) a reduction by the Corporation in the Key Employee's 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 requiring the Key Employee to be based more
than fifty (50) miles from the Corporation's offices at
which such Key Employee is 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 the Key
Employee's business travel obligations immediately prior to
the change in control of the Corporation;

(d) the failure by the Corporation to pay to the Key Employee
any portion of such Key Employee's current compensation or
compensation under any deferred compensation program of the
Corporation within seven (7) days of the date such
compensation is due;

(e) the failure by the Corporation to continue in effect any
compensation or benefit plan or perquisites in which the
Key Employee participates immediately prior to the change
in control of the Corporation which is material to the Key
Employee's total compensation (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

<PAGE>

the Corporation to continue such Key Employee's
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
the Key Employee's 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 the
Key Employee with benefits substantially similar to those
enjoyed by such Key Employee under any of the Corporation's
life insurance, medical, dental, accident, or disability
plans in which the Key Employee was 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 the
Key Employee with the number of paid vacation days to which
the Key Employee is entitled on the basis of the Key
Employee's 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 the obligations and
liabilities under this Plan, as contemplated in Section 5
hereof; or

(h) any purported termination of the Key Employee's 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 Plan.

The Key Employee's right to terminate employment pursuant to this
Subsection (iv) shall not be affected by such Key Employee's incapacity due
to physical or mental illness. A Key Employee's continued employment shall
not constitute consent to, or a waiver of rights with respect to, any
circumstance constituting Good Reason hereunder.

(v) NOTICE OF TERMINATION. Any purported termination of a Key
Employee's employment by the Corporation or by such Key Employee 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 Plan relied
upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Key Employee's employment
under the provision so indicated.

<PAGE>

(vi) DATE OF TERMINATION. "Date of Termination" shall mean (a) if a
Key Employee's employment is terminated for Disability, thirty (30) days
after Notice of Termination is given (provided that such Key Employee shall
not have returned to the full-time performance of such Key Employee's
duties during such thirty (30)-day period), and (b) if a Key Employee's
employment is terminated pursuant to Subsections (iii) or (iv) hereof or
for any other reason (other than death or Disability), the date specified
in the Notice of Termination (which, in the case of a termination for Cause
shall not be less than thirty (30) days from the date such Notice of
Termination is given, and 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); 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 shall be the date on which the dispute is finally
determined, whether 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 a Key Employee such Key
Employee's full compensation in effect when the notice giving rise to the
dispute was given and continue the Key Employee as a participant in all
Compensation Plans, life insurance, medical, dental, accident or liability
plans and any similar plans in which the Key Employee was participating
when the notice giving rise to the dispute was given, until the dispute is
finally resolved in accordance with this Subsection (vi). Amounts paid
under this Subsection (vi) are in addition to all other amounts due under
this Plan, and shall not be offset against or reduce any other amounts due
under this Plan and shall not be reduced by any compensation earned by a
Key Employee as the result of employment by another employer.

4. COMPENSATION DURING DISABILITY OR UPON TERMINATION. Following a change
in control of the Corporation, a Key Employee shall be entitled to the following
during a period of disability, or upon termination of such Key Employee's
employment, as the case may be, provided that such period or termination occurs
during the term of this Plan:

(i) During any period that the Key Employee fails to perform the Key
Employee's full-time duties with the Corporation as a result of incapacity
due to physical or mental illness, the Key Employee shall continue to
receive such Key Employee's base salary at a rate in effect at the
commencement of any such period, together with all compensation payable to
the Key Employee under the Corporation's disability plan or program or
other similar plan during such period, until the Key Employee's
participation in

6
<PAGE>

this Plan is terminated pursuant to Section 3(ii) hereof. Thereafter, or
in the event the Key Employee's employment shall be terminated by reason of
the Key Employee's death, the Key Employee's 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 the Key Employee's employment shall be terminated by the
Corporation for Cause or by the Key Employee other than for Good Reason,
the Corporation shall pay such Key Employee the Key Employee's full base
salary through the Date of Termination at the rate in effect at the time
Notice of Termination is given or in effect on the date immediately
preceding the date of the change in control of the Corporation, whichever
is higher, plus all other amounts or benefits to which the Key Employee is
entitled under any Compensation Plan then in effect, and the Corporation
shall have no further obligations to the Key Employee under this Plan.

(iii) If the Key Employee's employment by the Corporation shall be
terminated by the Key Employee for Good Reason or by the Corporation other
than for Cause or Disability, then the Key Employee shall be entitled to
the following:

(a) the Corporation shall pay to such Key Employee the Key
Employee's full base salary through the Date of Termination
at the rate in effect at the time Notice of Termination is
given, or in effect on the date immediately preceding the
date of the change in control of the Corporation, whichever
is higher, no later than the fifth day following the Date
of Termination, plus all other amounts to which the Key
Employee is entitled under any Compensation Plan of the
Corporation, at the time such payments are due;

(b) in lieu of any further salary payments to the Key Employee
for periods subsequent to the Date of Termination, the
Corporation shall pay as severance pay to such Key
Employee, at the time specified in Subsection (iv), a lump
sum severance payment equal to one and one-half times the
sum of the Key Employee's annual salary and "on-plan" bonus
under the Corporate Executive Compensation Plan based on
(i) in the case of salary, the Key Employee's annual salary
in effect as of the Date of Termination or in effect on the
date immediately preceding the date of the change in
control of the Corporation, whichever is higher, and (ii)
in the case of "on-plan" bonus, the "on-plan" bonus under
the Corporate Executive Compensation Plan in effect as of
the Date of Termination or the average of the annual
bonuses paid to the Key Employee during the three (3) year
period immediately preceding the date of the change in
control of the Corporation,

7
<PAGE>

whichever is higher, and in either case, without regard to
any prorata adjustment for any portion of the year;

(d) the Corporation shall pay to the Key Employee all legal
fees and expenses incurred by the Key Employee as a result
of such termination (including all such fees and expenses,
if any, incurred in contesting or disputing any such
termination or in seeking to obtain or enforce any right or
benefit provided by this Plan 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) for a one and one-half year period after such termination,
the Corporation shall arrange to provide the Key Employee
with benefits substantially similar to those which the Key
Employee was receiving or entitled to receive under the
Corporation's life, disability, accident and group health
insurance plans (including organ transplant, dental,
vision, hearing, and prescription drug coverage), or any
similar plans in which the Key Employee was participating
immediately prior to the Date of Termination at a cost to
the Key Employee which is no greater than that cost in
effect at the Date of Termination or the date immediately
preceding the date of the change in control of the
Corporation, whichever is lower. Benefits otherwise
receivable by the Key Employee pursuant to this Paragraph
(e) shall be reduced to the extent comparable benefits are
actually received by the Key Employee during the one and
one-half year period following the Key Employee's
termination, and the Key Employee shall report to the
Corporation any such comparable benefits actually received
by him or her.

(iv) PAYMENT YIELDING HIGHEST NET AMOUNT. Notwithstanding the
provisions of Subsection (iii) hereof, if:

(i) any payments or benefits received or to be received by the
Key Employee, whether pursuant to the terms of this Plan or
any other plan, arrangement or agreement with the
Corporation, any person whose actions result in a change in
control of the Corporation or any person affiliated with
the Corporation or such person,

<PAGE>

constitute "parachute payments" (such payments or benefits
being hereinafter referred to as the "Parachute Payments")
within the meaning of Section 280G(b)(2) of the Code, and

(ii) the aggregate present value of the Parachute Payments
reduced by any excise tax imposed under Section 4999 of the
Code (or any similar tax that may hereafter be imposed)
(the "Excise Tax") would be less than three (3) times the
Key Employee's "base amount", as defined in Section
280G(b)(3) of the Code,

then, in lieu of that portion of the Parachute Payments to which the Key
Employee would otherwise be entitled under Subsection (iii) hereof, the
Corporation shall pay to such Key Employee under this Subsection (iv), no later
than the fifth day following the Date of Termination, a lump sum amount (if any)
such that the aggregate present value of the Parachute Payments is equal to 2.99
times the Key Employee's base amount.

For purposes of the preceding paragraph, the Key Employee's base amount, the
present value of the Parachute Payments, the amount of the Excise Tax and all
other appropriate matters shall be determined by the Corporation's independent
auditors in accordance with the principles of Section 280G of the Code and based
upon the advice of tax counsel selected by such auditors.

(v) The payments provided for in Subsections 4(iii)(a), (b) and (d)
above, shall be made not later than the fifth day following the Date of
Termination; provided, however, that if the amounts of such payments cannot
be finally determined on or before such day, the Corporation shall pay to a
Key Employee 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 rate provided in
Section 1274(b)(2)(8) of the Code (the "Applicable Rate")) from the date
that the estimated payments were made to the date the remainder of such
payments is made as soon as the amount thereof can be determined but in no
event later than the thirtieth day after the Date of Termination. 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 the Key Employee, payable on the fifth day after
demand by the Corporation (together with interest at the Applicable Rate).

(vi) Except as required in Subsection 4(iii)(e) hereof, a Key Employee
shall not be required to mitigate the amount of any payment provided for in
this Section 4 by seeking other 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 the Key Employee as the result of employment
by another employer, by retirement benefits, by offset against any amount
claimed to be owed by the Key Employee to the Corporation, or otherwise;
provided, however, that if during the one and one-half year period
subsequent to such Key Employee's Date of Termination, the Key Employee
directly competes with

<PAGE>

the Corporation by making use of trade secrets or other proprietary
knowledge that the Key Employee obtained while employed by 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 the Key Employee
under this Section 4.

5. SUCCESSORS: BINDING PLAN.

(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 the obligations and liabilities under this Plan in the
same manner and to the same extent that the Corporation would be bound if
no such succession had taken place. Failure of the Corporation to obtain
such assumption prior to the effectiveness of any such succession shall
entitle the Key Employee to compensation from the Corporation in the same
amount and on the same terms to which such Key Employee would be entitled
hereunder if the Key Employee terminated 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
Plan, "Corporation" shall mean the Corporation as hereinbefore defined and
any successor to its business and/or assets as aforesaid which assumes and
agrees to be bound by the terms of this Plan by operation of law, or
otherwise.

(ii) The rights created under this Plan shall inure to the benefit of
and be enforceable by a Key Employee and such Key Employee's personal or
legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Key Employee should die while
any amount would still be payable to such Key Employee hereunder had the
Key Employee continued to live, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this Plan to the Key
Employee's devisee, legatee or other designee or, if there is no such
designee, to the Key Employee's estate.

6. NOTICES. Any notice or other communication required or permitted
pursuant to the terms of this Plan shall be in writing, addressed to the
intended recipient at his or her last known address, or to such other address as
either party may have furnished to the other in writing in accordance herewith,
provided that notice of change of address shall be effective only upon receipt
and provided further that all notices to the Corporation shall be directed to
the attention of the Personnel Committee. All such notices shall be sent (i) by
certified or registered mail and shall be deemed received three (3) business
days after the date of mailing; (ii) by Federal Express or similar overnight
courier and shall be deemed received one (1) business day after delivery to
Federal Express or similar overnight courier; or (iii) by personal service and
shall be deemed received on the same day as service.

<PAGE>

7. AMENDMENT, SUSPENSION AND TERMINATION. Prior to a change in control
of the Corporation, the Board retains the right, at any time and from time to
time, to alter, amend, change, suspend, substitute, delete, revoke or terminate
this Plan in whole or in part, for any reason, and without either the consent
of, or prior notification to any person. The Board shall have the right to
delegate its authority and power hereunder, or any portion thereof, to any
committee of the Board, and the right to rescind any such delegation to such
committee in whole or in part. Following the occurrence of a change in control
of the Corporation, the Board may not terminate this Plan or amend this Plan
in any manner adverse to any Key Employee.

8. MISCELLANEOUS. 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 Plan. The validity,
interpretation, construction and performance of the terms of this Plan 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. The obligations of the Corporation under this Plan
shall survive the expiration of the term of this Plan.

9. VALIDITY. The invalidity or unenforceability of any provision of this
Plan shall not affect the validity or enforceability of any other provision of
this Plan, which shall remain in full force and effect.

10. ARBITRATION. Any dispute or controversy arising under or in connection
with this Plan shall be settled exclusively by binding arbitration, conducted
before a panel of three arbitrators in the city of Minneapolis, in accordance
with the rules of the American Arbitration Association then in effect; provided,
however, that a Key Employee shall be entitled to seek specific performance of
such Key Employee's rights under Subsection 3(vi) during the pendency of any
dispute or controversy arising under or in connection with this Plan. Judgment
may be entered on the arbitrator's award in any court having jurisdiction.

11. PRIOR AGREEMENTS. This Plan sets forth the entire agreement of the
parties hereto in respect of the subject matter contained herein. Any other
prior agreements, arrangements or understandings between a Key Employee and the
Corporation remain binding and in full force and effect consistent with the
terms and conditions thereof and shall not be affected by this Plan.

<PAGE>

Exhibit (10)(iii)(b)

HONEYWELL SUPPLEMENTARY EXECUTIVE RETIREMENT PLAN
FOR MID-CAREER HIRES
(MID-CAREER SERP)
(Effective September 20, 1994)

TABLE OF CONTENTS

ARTICLE I - DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 ACT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 AUGMENTED YEARS OF CREDITED SERVICE FOR BENEFIT ACCRUAL. . . . . 1
1.3 BASE PLAN. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 CODE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 COMPANY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.6 CORPORATE EXECUTIVE COMPENSATION PLAN (CECP) . . . . . . . . . . 2
1.7 EARLY RETIREMENT . . . . . . . . . . . . . . . . . . . . . . . . 2
1.8 EARNINGS LIMITATION. . . . . . . . . . . . . . . . . . . . . . . 2
1.9 EFFECTIVE DATE . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.10 HONEYWELL. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.11 NORMAL RETIREMENT. . . . . . . . . . . . . . . . . . . . . . . . 3
1.12 PARTICIPANT. . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.13 PERMANENT AND TOTAL DISABILITY . . . . . . . . . . . . . . . . . 3
1.14 PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.15 PREDECESSOR EMPLOYER . . . . . . . . . . . . . . . . . . . . . . 3
1.16 SPOUSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

ARTICLE II - PLAN FORMULA. . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.1 MID-CAREER SERP FORMULA. . . . . . . . . . . . . . . . . . . . . 4

ARTICLE III - BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.1 NORMAL RETIREMENT. . . . . . . . . . . . . . . . . . . . . . . . 6
3.2 EARLY RETIREMENT . . . . . . . . . . . . . . . . . . . . . . . . 6

<PAGE>

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 SURVIVING SPOUSE BENEFIT. . . . . . . . . . . . . . . . 8
3.7 SURVIVING CHILDREN'S BENEFIT . . . . . . . . . . . . . . . . . . 8
3.8 VESTED PARTICIPANT'S BENEFIT . . . . . . . . . . . . . . . . . . 9

ARTICLE IV - PAYMENT OF BENEFITS . . . . . . . . . . . . . . . . . . . . . . 10
4.1 FORM OF PAYMENT TO PARTICIPANT . . . . . . . . . . . . . . . . . 10
4.2 TIME OF PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . 11
4.3 PAYMENT SUBSEQUENT TO A 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

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

<PAGE>

TABLE I
ACTUARIAL ASSUMPTIONS FOR LUMP SUM PAYMENTS . . . . . . . . . . . . . . 22

TABLE II:
VESTED ACCRUED BENEFITS UNDER THE MID-CAREER SERP THROUGH
DECEMBER 31, 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

TABLE III:
ACTUARIAL EQUIVALENT OF ANNUITY AND INDIVIDUALIZED SERP ARRANGEMENTS. . 24

<PAGE>

HONEYWELL SUPPLEMENTARY EXECUTIVE RETIREMENT PLAN
FOR MID-CAREER HIRES
(MID-CAREER SERP)
(Amended and Restated Effective September 20, 1994)

ARTICLE I - DEFINITIONS

1.1 ACT. The Employee Retirement Income Security Act of 1974, as
from time to time amended.

1.2 AUGMENTED YEARS OF CREDITED SERVICE FOR BENEFIT ACCRUAL. One year of
credited service for benefits for each of the first 5 "Years of Credited Service
For Benefit Accrual" which the Participant has completed under the Base Plan,
and one-half year of credited service for benefits for each of the next 10
"Years of Credited Service for Benefit Accrual" subsequently completed by the
Participant under the Base Plan. In no event shall the Augmented Years of
Credited Service for Benefit under this Plan exceed

(i) ten; or

(ii) the number of years and months of the Participant's employment
with his or her Predecessor Employer (unless such prior
employment is less than 5 full years); or

(iii) that number of Augmented Years of Credited Service for Benefit
Accrual which when added to his or her "Years of Credited Service
for Benefit Accrual" under the Base Plan equals 30,

<PAGE>

whichever is least. Augmented Years of Credited Service for Benefit Accrual
will be computed on the basis of years and full months of "Credited Service for
Benefit Accrual" under the Base Plan; if such aggregate includes a fraction of a
month, such fraction, if less than 15 days, will be disregarded, and if 15 days
or more, will be treated as a full month.

1.3 BASE PLAN. The Honeywell Retirement Benefit Plan, as from time to time
amended.

1.4 CODE. The Internal Revenue Code of 1986, as from time to time amended.

1.5 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.

1.6 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.

1.7 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.

1.8 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 (as it may be adjusted from time
to time pursuant to the Code).

1.9 EFFECTIVE DATE. The effective date of this Plan is September 15, 1992.

1.10 HONEYWELL. Honeywell Inc., a Delaware corporation.

<PAGE>

1.11 NORMAL RETIREMENT. "Normal Retirement" by a Participant on or after his
or her "Social Security Retirement Age" as defined in his or her Base Plan.

1.12 PARTICIPANT. An employee of the Company who was covered under the
Corporate Executive Compensation Plan at the time of his or her cessation of
active work with the Company, who is a participant in the Base Plan on or after
the Effective Date, and who is nominated by the Personnel Committee to
participate in this Plan.

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.

1.14 PLAN. This Honeywell Mid-Career Hire Supplementary Executive Retirement
Plan ("Mid-Career SERP").

1.15 PREDECESSOR EMPLOYER. The last employer for whom Participant was engaged
on a substantially full-time basis prior to his or her date of hire by Honeywell
as an employee, partner, officer, director, or principal. The term shall also
include any "Affiliated Company", as defined in the Base Plan, of the
Predecessor Employer.

1.16 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 by applying the laws of the state or country in which it
determines that the Participant is domiciled at the time of such determination
of status.

<PAGE>

ARTICLE II - PLAN FORMULA

2.1 MID-CAREER SERP FORMULA. That annual benefit equal to Paragraph (a),
minus Paragraph (b), less Paragraph (c).

(a) The applicable benefit computed with respect to the Participant 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 the
amount of any "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
the Base Plan; and

(v) by including "Augmented Credited Service for Benefit Accrual"
under this Mid-Career SERP, if the Mid-Career SERP is applicable
to the Participant.

<PAGE>

(b) the applicable benefit computed with respect to the Participant under
the Base Plan:

(v) by excluding "Augmented Credited Service for Benefit Accrual"
under this Mid-Career SERP, if such Plan is applicable to the
Participant.

(c) the actuarial equivalent of the annual benefit payable with respect
to the Participant under individualized annuity or supplementary
executive retirement arrangements provided by Honeywell and specified
on Table III.

<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 and
benefits under any other annuity or supplementary retirement arrangement
provided by the Company, in accordance with the Mid-Career 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 and benefits under any
other annuity or supplementary retirement arrangement provided by the Company,
in accordance with the Mid-Career 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 this Plan, each Participant's accrued benefit
under this Plan shall become immediately and fully vested and shall be paid to
the Participant in accordance with Section 4.3(a) of this Plan.

For purposes of this Plan, a "Change in Control" of Honeywell 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 Honeywell, any subsidiary of Honeywell, any "person" (as
hereinabove defined) acting on behalf of Honeywell as underwriter
pursuant to an offering who is temporarily holding securities in
connection with such offering, any trustee or other fiduciary holding
securities under an employee benefit plan of Honeywell or any
corporation owned, directly or indirectly, by the stockholders of
Honeywell in substantially the same proportions as their ownership of
stock of Honeywell), is or becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of Honeywell representing 30 percent or

<PAGE>

more of the combined voting power of Honeywell's then outstanding
securities;

(b) during any period not to exceed two consecutive years (not including
any period prior to the Effective Date), individuals who at the
beginning of such period constitute the Board of Directors of
Honeywell (the "Board"), and any new director (other than a director
designated by a "person" who has entered into an agreement with
Honeywell to effect a transaction described in clause (a), (c) or (d)
of this Section) whose election by the Board of nomination for
election by Honeywell'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 Honeywell approve a merger or consolidation of
Honeywell with any other corporation, other than (i) a merger or
consolidation which would result in the voting securities of
Honeywell 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 Honeywell or
such surviving entity outstanding immediately after such merger or
consolidation or (ii) a merger or consolidation effected to implement
a recapitalization of Honeywell (or similar transaction) in which no
"person" (as hereinabove defined) acquires more than 30 percent of
the combined voting power of Honeywell's then outstanding securities;
or

(d) the stockholders of Honeywell approve a plan of complete liquidation
of Honeywell or an agreement for the sale or disposition by Honeywell
of all or substantially all of the Company's assets (or any
transaction having a similar effect).

<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 less the benefits under any other individualized
annuity or supplementary retirement arrangement provided by the Company, 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 less the benefits
under any other individualized annuity or supplementary retirement arrangement
provided by the Company, in accordance with the Mid-Career 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 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 less the benefits under any other individualized annuity
or supplementary retirement arrangement provided by the Company, in accordance
with the Mid-Career SERP Formula as prescribed in Section 2.1.

<PAGE>

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
less the benefits under any other individualized annuity or supplementary
retirement arrangement provided by the Company, in accordance with the Mid-
Career 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 any recipient
ceases to be a Child and the remaining such Children shall thereupon receive an
equal share of such benefit.

3.8 VESTED PARTICIPANT'S BENEFIT. Upon the receipt of benefits by a
Participant under his or her Base Plan who is not eligible for Early Retirement
but for whom a specified accrued benefit has been determined under this Plan in
accordance with Section 8.3 of this Plan, he or she shall be eligible for life
for an annual benefit determined by calculating the Participant's "Vested
Terminated Participant Benefit" under the Participant's Base Plan in accordance
with the Mid-Career SERP Formula as prescribed in Section 2.1.

<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 this 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 this Plan.

(b) LUMP SUM FORM OF PAYMENT.
Notwithstanding the provisions of Paragraph (a) of 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 this
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 of Honeywell, 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 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

<PAGE>

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 Sections 3.5
and 3.6 of this 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 this 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 within 3 years 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 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

<PAGE>

in Table I, which may be modified from time to time by the Board of
Directors of Honeywell) 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 (hereinafter referred to as "IRS") 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 IRS; 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 Code, published IRS 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.

The Company shall undertake at its sole expense to defend any tax claims
described herein which are asserted by the IRS 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 IRS, by any state revenue authority or by a lower court. The Company
also agrees to

<PAGE>

reimburse any Participant for any interest or penalties in respect of
Federal or state tax claims hereunder upon receipt of documentation of
same. Any distributions from this 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 of Honeywell, 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 and then
reduced by a penalty, which shall be forfeited to the Company which is equal to
10 percent of the present value of any 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.

<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.

<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 except in the event of a Change in
Control as defined in Section 3.3; 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 a Change
in Control as defined in Section 3.3, the Board may not amend or terminate the
Plan in any manner that shall adversely affect a benefit payable on the Normal
or Early Retirement, death or Permanent and Total Disability of, or any
available optional form of payment to, a Participant for a period of 3 years
from the date of the Change in Control. 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 4.3(a) of the Plan.

<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 this 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.

<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 beneficiary. 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 vested accrued benefit is
determined with respect to any other Participant in this 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. Attached hereto

<PAGE>

as Table II is a list of the Participants described in subparts (ii) and (iii)
above and the amount of their accrued benefits under this Plan which became
vested in 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.

<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 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 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 this 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 that
material or information is necessary; and

<PAGE>

(d) An explanation of this 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

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,
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
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

<PAGE>

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.

<PAGE>

TABLE I
ACTUARIAL ASSUMPTIONS FOR LUMP SUM PAYMENTS

(Effective 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>

TABLE II

VESTED ACCRUED BENEFITS UNDER THE MID-CAREER
SERP THROUGH DECEMBER 31, 1993

The following Participant, who was determined in accordance with the provisions
of Section 8.3(iii) of this Plan, has a vested accrued benefit under this Plan
payable at his "Social Security Retirement Age", as defined in the Base Plan, in
the indicated monthly amounts as calculated on a life annuity basis:

NAME MONTHLY LIFE ANNUITY PAYABLE
AT SOCIAL SECURITY RETIREMENT AGE
-------------------------------------------------------------------------------

Grierson, James J. . . . . . . . . . . . . . . . . . . . . . . . . . . $3,505.43

<PAGE>

TABLE III

ACTUARIAL EQUIVALENT OF ANNUITY
AND INDIVIDUALIZED SERP ARRANGEMENTS

The following are the actuarial equivalents computed on a monthly life only
basis of the individualized annuity or SERP arrangements provided by the Company
to the specified Participants:

PARTICIPANT ARRANGEMENT MONTHLY AMOUNT

<PAGE>

Exhibit (10)(iii)(c)

HONEYWELL-NORWEST RABBI TRUST AGREEMENT

(Amended and Restated Effective September 20, 1994)

TABLE OF CONTENTS

ARTICLE I - THE TRUST AND TRUST FUND . . . . . . . . . . . . . . . . . . . . 3
1.1 ESTABLISHMENT OF TRUST . . . . . . . . . . . . . . . . . . . . . 3
1.2 PAYMENTS TO PLANS' PARTICIPANTS AND THEIR BENEFICIARIES. . . . . 5

ARTICLE II - RELEASE OF THE TRUST FUNDS . . . . . . . . . . . . . . . . . . 8
2.1 TRUSTEE RESPONSIBILITY REGARDING PAYMENTS TO PLANS'
PARTICIPANTS AND THEIR BENEFICIARIES WHEN COMPANY IS
INSOLVENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.2 RECAPTURE OF EXCESS ASSETS . . . . . . . . . . . . . . . . . . . 10
2.3 RETURN OF ASSETS TRANSFERRED TO TRUSTEE UPON POTENTIAL CHANGE
IN CONTROL . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

ARTICLE III - TRUST FUND AND INVESTMENT AUTHORITY. . . . . . . . . . . . . . 12
3.1 TRUST FUND . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.2 INVESTMENT AUTHORITY . . . . . . . . . . . . . . . . . . . . . . 12
3.3 INVESTMENT MANAGERS. . . . . . . . . . . . . . . . . . . . . . . 15

ARTICLE IV - CHANGE IN CONTROL . . . . . . . . . . . . . . . . . . . . . . . 16
4.1 CHANGE IN CONTROL. . . . . . . . . . . . . . . . . . . . . . . . 16
4.2 POTENTIAL CHANGE IN CONTROL. . . . . . . . . . . . . . . . . . . 17
4.3 NOTICE TO TRUSTEE. . . . . . . . . . . . . . . . . . . . . . . . 18

ARTICLE V - TRUSTEE ACCOUNTING; RESPONSIBILITY . . . . . . . . . . . . . . . 19
5.1 TRUSTEE ACCOUNTING . . . . . . . . . . . . . . . . . . . . . . . 19
5.2 RESPONSIBILITIES OF TRUSTEE. . . . . . . . . . . . . . . . . . . 20

<PAGE>

ARTICLE VI - RESIGNATION AND REMOVAL OF TRUSTEE, SUCCESSOR TRUSTEE . . . . . 23
6.1 RESIGNATION AND REMOVAL OF TRUSTEE . . . . . . . . . . . . . . . 23
6.2 APPOINTMENT OF SUCCESSOR . . . . . . . . . . . . . . . . . . . . 24

ARTICLE VII - AMENDMENT OR TERMINATION . . . . . . . . . . . . . . . . . . . 26
7.1 AMENDMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.2 TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . . 26

ARTICLE VIII - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 27
8.1 INVALID PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . 27
8.2 NON-ASSIGNMENT . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.3 GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.4 EFFECTIVE DATE . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.5 FURTHER ASSURANCES . . . . . . . . . . . . . . . . . . . . . . . 27
8.6 NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.7 STATUS OF EXECUTIVES . . . . . . . . . . . . . . . . . . . . . . 28
8.8 GENDER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.9 SUCCESSORS . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.10 COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . . 29

EXHIBIT A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
HONEYWELL SUPPLEMENTARY RETIREMENT PLANS. . . . . . . . . . . . . . . . 30

EXHIBIT B. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
HONEYWELL SUPPLEMENTARY RETIREMENT PLANS' PAYMENT
SCHEDULE AND PARTICIPANTS' VALUATION AS OF MARCH
1, 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

EXHIBIT C. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ACTUARIAL ASSUMPTIONS AND METHODOLOGY . . . . . . . . . . . . . . . . . 32

EXHIBIT D. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SCHEDULE OF TRUSTEE FEES. . . . . . . . . . . . . . . . . . . . . . . . 33

<PAGE>

HONEYWELL-NORWEST RABBI TRUST AGREEMENT

(Amended and Restated Effective September 20, 1994)

AGREEMENT made as of the 26 day of February, 1993, and amended as of September
20, 1994, by and between Honeywell Inc., a corporation organized under the laws
of the State of Delaware (hereinafter referred to as the "Company"), and Norwest
Bank Minnesota, NA, a national banking association (hereinafter referred to as
the "Trustee").

WITNESSETH:

WHEREAS, in addition to the benefits provided under the Honeywell Retirement
Benefit Plan to certain management employees and retirees under said plan (who
are sometimes hereinafter called "Executives" or referred to singly as
"Executive"), or their beneficiaries, selected by the Company, the Company has
adopted supplemental retirement plans as listed in Exhibit A as the same have
been or may hereafter be amended or restated (hereinafter called the "Plans" or,
where the context requires the singular, the "Plan"); and

WHEREAS, the Company has incurred, or expects to incur liability under the terms
of such Plans, with respect to the individuals participating in such Plans;

WHEREAS, the Company wishes to establish a trust (hereinafter called "Trust")
and to contribute to the Trust assets that shall be held therein, subject to the
claims of the Company's creditors in the event of the Company's Insolvency, as
herein defined, until paid to the Plans' participants and their beneficiaries in
such manner and at such times as specified in the Plans;

<PAGE>

WHEREAS, it is the intention of the parties that the Trust shall constitute an
unfunded arrangement and shall not affect the status of the Plans as unfunded
plans maintained for the purpose of providing deferred compensation for a select
group of management or highly compensated employees for purposes of Title I of
the Employee Retirement Income Security Act of 1974, as amended;

WHEREAS, it is the intention of the Company to make contributions to the Trust
to provide itself with a source of funds to assist it in the meeting of its
liabilities under the Plans;

NOW, THEREFORE, the parties do hereby establish the Trust and agree that the
Trust shall be comprised, held and disposed of as follows:

<PAGE>

ARTICLE I - THE TRUST AND TRUST FUND

1.1 ESTABLISHMENT OF TRUST.

(a) The Company hereby deposits with the Trustee in trust $4 million,
which shall become the principal of the Trust to be held, administered
and disposed of by Trustee as provided in this Trust Agreement.

(b) The Trust hereby established shall be irrevocable.

(c) The Trust is intended to be a grantor trust, of which the Company is
the grantor, within the meaning of subpart E, part I, subchapter J,
chapter 1, subtitle A of the Internal Revenue Code of 1986, as amended
(hereinafter referred to as the "Code"), and shall be construed
accordingly.

(d) The principal of the Trust, and any earnings thereon shall be held
separate and apart from other funds of the Company and shall be used
exclusively for the uses and purposes of the Plans' participants and
general creditors as herein set forth. The Plans' participants and
their beneficiaries shall have no preferred claim on, or any
beneficial ownership interest in any assets of the Trust. Any rights
created under the Plans and this Trust Agreement shall be mere
unsecured contractual rights of the Plans' participants and their
beneficiaries against the Company. Any assets held by the Trust will
be subject to the claims of the Company's general creditors under
federal and state law in the event of Insolvency, as defined in
Section 2.1 herein.

(e) The Company, in its sole discretion, may at any time, or from time to
time, make additional deposits of cash or other property in trust with
the Trustee to augment the principal to be held, administered and
disposed of by the Trustee as provided in this Trust Agreement.
Neither the Trustee nor any Plan's participant or beneficiary shall
have any right to compel such additional deposits. Not later than
seven (7) days after the occurrence of a Potential Change in Control
of the Company (as defined in Article IV hereof), the Company shall
deliver to the Trustee to be held

<PAGE>

in trust hereunder an additional amount of cash (or marketable
securities having a fair market value equal to such amount, or some
combination thereof) representing the sum of the amounts, after taking
into account the current cash surrender value of life insurance
contacts owned by the Trust and the fair market value of other assets
then held in the Trust, determined by the Company's actuaries, using
the assumptions and methodology set forth in Exhibit B, that will be
sufficient to fund the Company's obligations to pay the Executives' or
their beneficiaries' projected benefits under the Plans, plus such
other amounts as may be necessary for expenses and other costs of
maintaining the Trust (such sum, collectively, the "Funding Amount").
In the event of a Potential Change in Control of the Company, the
Company may at six-month intervals commencing on the date of such
Potential Change in Control or more frequently as determined by the
Company, unless the Trust Funds (as defined in Section 3.1(a)) shall
theretofore have been released pursuant to Article II hereof,
recalculate the Funding Amount as of the end of the month immediately
preceding such six-month or such other more frequent interval date,
treating the Potential Change in Control as having occurred at the end
of such month. If the amount so calculated exceeds the fair market
value of the assets then held in the Trust (as determined above), the
Company may pay to the Trustee an amount in cash (or marketable
securities having a fair market value equal to such amount, or some
combination thereof) equal to such excess. If the Funding Amount so
calculated is less than the fair market value of the assets held in
trust, the Trustee, upon receipt of a written request from the
Company, which written request is received by the Trustee prior to the
occurrence of a Change in Control of the Company, shall distribute to
the Company such difference in cash.

(f) Upon a Change in Control of the Company, the Company shall, as soon as
possible, but in no event longer than 10 days following the Change in
Control of the Company, as defined herein, make an irrevocable
contribution to the Trust of the excess, if any, of the Funding Amount
over fair market value of the assets then held in the Trust (as
determined

<PAGE>

above) determined as of the date on which the Change in Control of the
Company occurred.

(g) The Company shall provide the Trustee with a certified copy of the
Plans and all amendments thereto and of the resolutions of the Board
of Directors of the Company approving the Plans and all amendments
thereto, promptly upon their adoption or, if later, the date of this
Trust Agreement.

1.2 PAYMENTS TO PLANS' PARTICIPANTS AND THEIR BENEFICIARIES.

(a) The Company shall deliver to the Trustee a schedule (the "Payment
Schedule") in the format and as initially provided in Exhibit C that
indicates the amounts payable in respect of each Plan's participant
(and his or her beneficiaries), that provides a formula or other
instructions acceptable to Trustee for determining the amounts so
payable, the form in which such amount is to be paid (as provided for
or available under the Plans), and the time of commencement for
payment of such amounts. Except as otherwise provided herein, the
Trustee shall make payments to the Plans' participants and their
beneficiaries in accordance with such Payment Schedule. The Trustee
shall make provision for the reporting and withholding of any federal
or state taxes that may be required to be withheld with respect to the
payment of benefits pursuant to the terms of the Plans and shall pay
amounts withheld to the appropriate taxing authorities or determine
that such amounts have been reported, withheld and paid by the
Company. A modified Payment Schedule shall be delivered by the
Company to the Trustee annually upon each anniversary of the effective
date of this Trust Agreement and upon the occurrence of any event
requiring a modification of the Payment Schedule. Following a Change
in Control of the Company, the Company shall also furnish a Payment
Schedule or modified Payment Schedule for any or all Plan(s) upon
request by the Trustee at any other time.

(b) The entitlement of a Plan participant or his or her beneficiaries to
benefits under the Plans shall be determined by the Company or such
party as it

<PAGE>

designates under the Plans, and any claim for such benefits shall be
considered and reviewed under the procedures set out in the Plans.

(c) The Company may make payment of benefits directly to Plans'
participants or their beneficiaries as they become due under the terms
of the Plans. The Company shall notify the Trustee of its decision to
make payment of benefits directly prior to the time amounts are
payable to participants or their beneficiaries. In addition, if the
principal of the Trust, and any earnings thereon, are not sufficient
to make payments of benefits in accordance with the terms of the
Plans, the Company shall make the balance of each such payment as it
falls due. The Trustee shall notify the Company where principal and
earnings are not sufficient and shall thereafter reduce the amounts
payable to the Plans' participants or their beneficiaries by
multiplying such amounts by a fraction, the numerator of which is the
value of the Trust Fund and the denominator of which is the sum of the
actuarial present value of the Plans' participants' (or their
beneficiaries') estimated monthly accrued benefits shown on Exhibit C.
The actuarial present values shall be calculated as of the date that
the monthly benefits are to be paid. Upon a Change in Control of the
Company, a modified Payment Schedule will be prepared.

(d) In the event any Executive is determined to be subject to federal
income tax on any amount payable under the Trust prior to the time of
payment hereunder, the entire amount determined to be so taxable shall
be distributed by the Trustee to such Executive. An amount 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 (hereinafter referred to as the "IRS") addressed to the
Executive 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 IRS;
or

<PAGE>

(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 Code, published IRS rulings,
court decisions or other substantial precedent, amounts
hereunder are subject to federal 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 IRS or by any state
revenue authority against any Executive, including attorneys' fees and
costs of appeal, and shall have the sole authority to determine
whether or not to appeal any determination made by the IRS, by any
state revenue authority or by a lower court. The Company shall also
reimburse any Executive for any interest or penalties in respect of
federal or state tax claims hereunder upon receipt of documentation of
same. In addition, the Company shall reimburse any Executive for the
amount of excise taxes paid by the Executive pursuant to a
determination of the IRS under Section 4999 of the Code, as it may be
amended from time to time, with respect to the payment made to the
Executive by the Trust and with respect to any such reimbursement,
following a final determination of a federal court affirming any such
determination by the IRS. Any distributions from the Trust Fund to an
Executive under this Section 1.2(d) shall be applied to reduce Company
liabilities to such Executive under the Plans.

<PAGE>

ARTICLE II - RELEASE OF THE TRUST FUNDS

2.1 TRUSTEE RESPONSIBILITY REGARDING PAYMENTS TO PLANS' PARTICIPANTS AND THEIR
BENEFICIARIES WHEN COMPANY IS INSOLVENT.

(a) The Trustee shall cease payment of benefits to the Plans' participants
and their beneficiaries if the Company is Insolvent. The Company
shall be considered "Insolvent" for purposes of this Trust Agreement
if:

(i) the Company is unable to pay its debts as they become due;
or

(ii) the Company is subject to a pending proceeding as a debtor
under the United States Bankruptcy Code; or

(iii) the Company shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now
or hereafter in effect, or consent to the entry of an
order for relief in an involuntary case under any such
law, or consent to the appointment of taking possession by
receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of the Company or for
any substantial part of its property, or make any
assignment for the benefit of creditors, or take any
corporate action in furtherance of any of the foregoing.

(b) At all times during the continuance of the Trust, as provided in
Section 1.1(d) hereof, the principal and income of the Trust shall be
subject to claims of general creditors of the Company under federal
and state law as set forth below:

(i) The Board of Directors and the Chief Executive Officer of
the Company shall have the duty to inform the Trustee in
writing of the Company's Insolvency. If a person claiming
to be a creditor of the Company alleges in writing to
Trustee that the Company has become Insolvent, the Trustee
shall determine whether the Company is Insolvent and,
pending such determination, the

<PAGE>

Trustee shall discontinue payment of benefits to Plans'
participants or their beneficiaries.

(ii) Unless the Trustee has actual knowledge of the
Company's Insolvency, or has received notice from the
Company or a person claiming to be a creditor alleging
that the Company is Insolvent, the Trustee shall have
no duty to inquire whether the Company is Insolvent.
The Trustee may in all events rely on such evidence
concerning the Company's solvency as may be furnished
to the Trustee and that provides the Trustee with a
reasonable basis for making a determination concerning
the Company's solvency.

(iii) If at any time the Trustee has determined that the
Company is Insolvent, the Trustee shall discontinue
payments to Plans' participants or their beneficiaries
and shall hold the assets of the Trust for the benefit
of the Company's general creditors. Nothing in this
Trust Agreement shall in any way diminish any rights
as general creditors of the Company with respect to
benefits due under the Plans or otherwise.

(iv) The Trustee shall resume the payment of benefits to
the Plans' participants or their beneficiaries in
accordance with Section 1.2 of this Trust Agreement
only after the Trustee has determined that the Company
is not Insolvent (or is no longer Insolvent).

(c) Provided that there are sufficient assets, if the Trustee discontinues
the payment of benefits from the Trust pursuant to Section 2.1(b)
hereof and subsequently resumes such payments, the first payment
following such discontinuance shall include the aggregate amount of
all payments due to the Plans' participants or their beneficiaries
under the terms of the Plans for the period of such discontinuance,
less the aggregate amount of any payments made to the Plans'
participants or their beneficiaries by the Company in lieu of the
payments provided for hereunder during any such period of
discontinuance.

<PAGE>

2.2 RECAPTURE OF EXCESS ASSETS.

(a) In the event the Trust shall hold Excess Assets (as defined in
subsection (b)), the Company, at its option, may direct the Trustee to
return part or all of such Excess Assets to the Company.

(b) "Excess Assets" is that market value of assets of the Trust which are
in excess of one hundred twenty-five percent (125%) of the present
value of all benefits payable under the Plans on a pre-tax basis to
the Plans' participants and their beneficiaries.

(c) The calculation required by Section 2.2(b) shall be based on the terms
of the Plans and the actuarial assumptions and methodology set forth
in Exhibit B, except that life insurance contracts owned by the Trust
shall be valued at their current cash surrender value. Before a
Change in Control of the Company, the calculation shall be made by the
Company or a qualified actuary or consultant selected by the Company.
After a Change in Control of the Company, the calculation shall be
made by a qualified actuary or consultant selected by the Trustee.

(d) Excess Assets shall be returned to the Company in the following order
of priority:

(i) Cash and cash equivalents;

(ii) All taxable investments of the Trust (other than cash and
cash equivalents and contracts with insurers), in such
order as the Company may request;

(iii) All non-taxable investments of the Trust (other than cash
and cash equivalents and contracts with insurers), in such
order as the Company may request; and

(iv) Contracts with insurers.

<PAGE>

2.3 RETURN OF ASSETS TRANSFERRED TO TRUSTEE UPON POTENTIAL CHANGE IN CONTROL.
In the event the Company delivers funds to the Trustee pursuant to Section
1.1(e) upon a Potential Change in Control of the Company, any such amount
which shall have been transferred pursuant to Section 1.1(e), including any
additional amounts transferred as a result of recalculations at six-month
intervals, shall be returned to the Company no later than the 30th day
following receipt by the Trustee of a notice that the Board of Directors
has adopted a resolution that such Potential Change of Control of the
Company has lapsed unless at any time prior to such return date a Change in
Control of the Company or another Potential Change in Control of the
Company shall have occurred; provided, however, that in no event shall the
corpus of the Trust after any transfer of funds pursuant to this Section
2.3 be less than the corpus of the Trust immediately prior to the initial
transfer of additional funds to the Trust after the occurrence of a
Potential Change in Control of the Company pursuant to Section 1.1(e).

<PAGE>

ARTICLE III - TRUST FUND AND INVESTMENT AUTHORITY

3.1 TRUST FUND.

(a) As used in this Trust Agreement, the term "Trust Fund" shall mean the
amounts delivered to the Trustee as described in Section 1.1(a) hereof
all amounts delivered thereafter pursuant to Section 1.1(e) and
Section 1.1(f) hereof, plus all interest and dividends paid in respect
thereof (and less such amounts distributed from the Trust pursuant to
Sections 1.2, 2.1, 2.2 and 5.2(i) hereof), in whatever form held or
invested as provided in this Trust Agreement.

(b) The Trust is intended to be a trust of which the Company is treated as
the owner for federal income tax purposes in accordance with the
provisions of Sections 671 through 679 of the Code. If the Trustee,
in its sole discretion, deems it necessary or advisable for the
Company or the Trustee to undertake or refrain from undertaking any
actions (including, but not limited to, making or refraining from
making any elections or filings) in order to ensure that the Company
is at all times treated as the owner of the Trust for federal income
tax purposes, the Company or the Trustee will undertake or refrain
from undertaking (as the case may be) such actions. The Company
hereby irrevocably authorizes the Trustee to be its attorney-in-fact
for the purpose of performing any act which the Trustee, in its sole
discretion, deems necessary or advisable in order to accomplish the
purposes and the intent of this Agreement.

(c) During the term of the Trust, all income received by the Trust, net of
expenses and taxes, shall be accumulated and reinvested.

3.2 INVESTMENT AUTHORITY. Prior to a Change in Control of the Company, the
Trust Fund shall be invested primarily in insurance contracts or policies. The
Trustee shall have the investment discretion and power to invest and reinvest
in, or exchange assets for, any such insurance contracts or policies (including,
by way of example and not by limitation, variable insurance policies where the
cash value is invested in equity or other funds subject to the control of the
insurance carrier and which may increase or

<PAGE>

decrease in value with the performance of the fund over time), or other
properties (as investments in such other properties may be directed by the
Company or, absent such direction, as the Trustee deems advisable without being
limited in the selection of investments by any statutes, rules of law, custom or
usage). After a Change in Control of the Company, the Trustee shall have and
exercise sole investment discretion with respect to all assets of the Trust,
including the power to appoint an Investment Manager (who may be an affiliate of
the Trustee). Subject to the foregoing, the Trustee shall possess the powers
conferred upon the Trustee either expressly by, or by necessary implication of,
the other provisions of this Trust Agreement, and all other powers, not
inconsistent with law or equity, as may be necessary and proper to attain the
objectives of this Trust Agreement. By way of illustration, and not by way of
limitation, the Trustee shall have power:

(i) to enter into any annuity or other contract or policy with an
insurance company or companies, either as an investment or
otherwise, provided that the Trustee shall be the sole owner of
all such contracts or policies and all such contracts or policies
shall be held as assets of the Trust;

(ii) to invest such amounts as it reasonably determines to be
appropriate for administrative convenience or short term
liquidity needs in interest-bearing depository accounts
established within the Trustee's banking department;

(iii) to purchase, receive or subscribe for any securities or other
property;

(iv) to exercise any conversion privilege or subscription right
available in connection with any such property; to oppose or to
consent to the reorganization, consolidation, merger or
readjustments of the finances of any corporation, entity or
association, or to the sale, mortgage, pledge or lease of the
property of any corporation, entity or association any of the
securities of which may at any time be held by it and to do any
act with reference thereto, including the exercise of options,
the making of agreements or subscriptions and

<PAGE>

the payment of expenses, assessments or subscriptions, which may
be deemed necessary or advisable in connection therewith and to
hold and retain any securities or other property which it may so
acquire; and to deposit any such property with any protective,
reorganization or similar committee, and to pay part of the
expenses and compensation of any such committee and any
assessments levied with respect to any property so deposited;

(v) to commence or defend suits or legal proceedings and to represent
the Trust in all suits or legal proceedings; to settle,
compromise or submit to arbitration any claims, debts or damages
due or owing to or from the Trust;

(vi) subject to Section 5.2(e) and Section 5.2(f), to have and possess
any or all of the rights of an owner with respect to any life
insurance contract or policy held in the Trust Fund including,
without limiting the generality of the foregoing, the rights to
receive or apply dividends or distributive shares or loans on
account of any such policy as may be available; to sell, assign
or pledge the policy; to surrender the policy; and to exercise
any option or privilege granted in the policy;

(vii) to register any securities held by it hereunder in its own name
or in the name of a nominee with or without the addition of words
indicating that such securities are held in a fiduciary capacity
and to hold any securities in bearer form and to deposit any
securities or other property in a depository or a clearing
corporation;

(viii) to make, execute and deliver, as Trustee, any and all deeds,
leases, mortgages, conveyances, waivers, releases or other
instruments in writing necessary or desirable for the
accomplishment of any of the powers listed in this Section 3.2;

(ix) to invest in securities (including stock or rights to acquire
stock) or obligations issued by the Company; and

<PAGE>

(x) to take any and all actions as may be necessary or desirable for
the administration of the Trust and the protection of the Trust
Fund.

All rights associated with assets of the Trust shall be exercised by the
Trustee or the person designated by the Trustee, and shall in no event be
exercisable by or rest with Plan participants except that voting rights
with respect to Trust assets will be exercised by the Company. Provided,
however, the Company shall have the right at anytime prior to a Change in
Control of the Company, and from time to time prior to a Change in Control
of the Company in its sole discretion, to substitute assets of equal fair
market value for any asset held by the Trust. This right is exercisable by
the Company in a non-fiduciary capacity without the approval or consent of
any person in a fiduciary capacity.

Prior to a Change in Control of the Company, if an investment requirement or
directed investment transaction under or pursuant to this Section 3.2 violates
any duty to diversify, to maintain liquidity or to meet any other investment
standard under the Trust or applicable law, the entire responsibility shall rest
upon the Company.

3.3 INVESTMENT MANAGERS. After a Change in Control of the Company, the Trustee
may from time to time appoint one or more Investment Managers to manage any
portion of the Trust Fund and, with respect to such portion, to direct the
Trustee with respect to effecting investment transactions on behalf of the Trust
Fund and exercising such other powers as may be granted to Investment Managers
hereunder.

<PAGE>

ARTICLE IV - CHANGE IN CONTROL

4.1 CHANGE IN CONTROL. For purposes of this Trust Agreement, 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 subsidiary of the Company, any "person"
(as hereinabove defined) acting on behalf of the Company as
underwriter pursuant to an offering who is temporarily holding
securities in connection with such offering, 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 owners" (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;

(b) during any period of not more than 2 consecutive years (not including
any period prior to January 17, 1989), 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 4.1) whose election by the Board or 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;

<PAGE>

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 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.

4.2 POTENTIAL CHANGE IN CONTROL.

For purposes of this Trust Agreement, a "Potential Change in Control" of
the Company shall have occurred if:

(a) the Company enters into any agreement the consummation of which would
result in the occurrence of a Change in Control of the Company; or

(b) any "person" (as defined in Section 4.1(a)) (including the Company)
publicly announces an intention to take actions which if consummated
would result in a Change in Control of the Company; or

(c) securities representing more than l0 percent of the combined voting
power of the Company's then outstanding securities are acquired by any
person (as defined in Section 4.1(a)), (other than the Company, any
subsidiary of the Company, any "person" (as defined in Section 4.1(a))
acting on behalf of the Company as underwriter pursuant to an offering
who is temporarily holding securities in connection with such
offering, 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), unless such person has reported or is

<PAGE>

required to report such ownership (which shall not represent in excess
of 25 percent of the combined voting power of the Company's then
outstanding securities) on Schedule 13G under the Exchange Act (or any
comparable or successor report) or on Schedule 13D under the Exchange
Act (or any comparable or successor report) which Schedule 13D does
not state any intention to, or reserve the right to, control or
influence the management or policies of the Company or engage in any
of the actions specified in Item 4 (or any comparable Item) of such
Schedule 13D (other than the disposition of the securities) and,
within 10 days of being requested by the Company to advise it
regarding the same, certifies to the Company that (i) such person
acquired such securities of the Company in excess of 14.9 percent of
the combined voting power of the Company's than outstanding securities
inadvertently and (ii) such person, together with its affiliates, will
not acquire any additional securities of the Company while the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of
more than 14.9 percent of the combined voting power of the Company's
then outstanding securities; provided, however, that if the person
requested to so certify fails to do so within 10 days, then such
occurrence shall become a Potential Change in Control of the Company
immediately after the expiration of such 10 day period; or

(d) the Board adopts a resolution to the effect that a Potential Change in
Control of the Company has occurred.

4.3 NOTICE TO TRUSTEE. The Board of Directors and the Chief Executive Officer
of the Company shall have the duty to inform the Trustee in writing that a
Potential Change in Control of the Company or Change in Control of the Company
has occurred and such notice shall be given within 5 days of the occurrence of
such Potential Change in Control of the Company or Change in Control of the
Company. The Trustee may rely on such notice or on any other actual notice
reasonably satisfactory to the Trustee, of such a Change in Control of the
Company or Potential Change in Control of the Company which the Trustee may
receive.

<PAGE>

ARTICLE V - TRUSTEE ACCOUNTING; RESPONSIBILITY

5.1 TRUSTEE ACCOUNTING.

(a) The duties and responsibilities of the Trustee shall be limited to
those expressly set forth in this Trust Agreement, and no implied
covenants or obligations shall be read into this Trust Agreement
against the Trustee.

(b) If, pursuant to Section 2.1 hereof, all or any part of the Trust Fund
is at any time attached, garnished, or levied upon by any court order,
or in case the payment, assignment, transfer, conveyance or delivery
of any such property shall be stayed or enjoined by any court order,
or in case any order, judgment or decree shall be made or entered by a
court affecting such property or any part thereof, then and in any of
such events the Trustee shall notify the Company and, upon its
direction, the Trustee shall rely upon and comply with any such order,
writ, judgment or decree, or take such other steps which the Company
may direct, and it shall not be liable to the Company (or any of its
subsidiaries) or any Executive by reason of following such directive
or taking any action thereon, in the event that direction is not
provided by the Company, even though such order, writ, judgment or
decree subsequently may be reversed, modified, annulled, set aside or
vacated.

(c) The Trustee shall maintain such books, records and accounts as may be
necessary for the proper administration of the Trust Fund, and shall
render to the Company, on or prior to each February 15 following the
date of this Trust Agreement until the termination of this Trust
Agreement (and within 45 days of such termination), an accounting with
respect to the Trust Fund as of the end of the then most recent
calendar year (or as of the date of such termination). In the absence
of the filing in writing with the Trustee by the Company of exceptions
or objections to any such report within one year the Company shall be
deemed to have approved such account; and in such case, the Trustee
shall, to the maximum extent permitted by law, be released, relieved
and discharged with respect to all matters and things set forth in
such accounts as though such account had

<PAGE>

been settled by the decree of a court of competent jurisdiction in any
action or proceeding in which the Company, all other persons having
fiduciary responsibility with respect to the Trust, and all persons
having any beneficial interest in the Plans were parties. No person
other than the Company may require an accounting or bring any action
against the Trustee with respect to the Trust or its actions as
Trustee.

5.2 RESPONSIBILITIES OF TRUSTEE.

(a) The Trustee shall act with the care, skill, prudence and diligence
under the circumstances then prevailing that a prudent person acting
in like capacity and familiar with such matters would use in the
conduct of an enterprise of a like character and with like aims;
provided, however, that the Trustee shall incur no liability to any
person for any action taken pursuant to a direction, request or
approval given by the Company which is contemplated by, and in
conformity with, the terms of the Plans or this Trust and is given in
writing by the Company. In the event of a dispute between the Company
and an Executive, the Trustee may apply to a court of competent
jurisdiction to resolve the dispute.

(b) If the Trustee undertakes or defends any litigation arising in
connection with this Trust Agreement, the Company agrees to indemnify
the Trustee against the Trustee's costs, expenses and liabilities
(including, without limitation, reasonable attorneys' fees and
expenses) relating thereto and to be primarily liable for such
payments. If the Company does not pay such costs, expenses and
liabilities in a reasonably timely manner, the Trustee may obtain
payment from the Trust.

(c) The Trustee may consult with legal counsel (who may also be counsel
for the Company generally) with respect to any of its duties or
obligations hereunder and may receive reimbursement for the payment of
its reasonable and proper expenses and compensation from the Company,
or, if not paid by the Company, directly from the Trust Fund.

<PAGE>

(d) The Trustee may hire agents, accountants, actuaries, investment
advisors, financial consultants or other professionals to assist it in
performing any of its duties or obligations hereunder and may receive
reimbursement for the payment of their reasonable and proper expenses
and compensation from the Company, or, if not paid by the Company,
directly from the Trust Fund.

(e) The Trustee shall have, without exclusion, all powers conferred on
trustees by applicable law, unless expressly provided otherwise
herein, provided, however, that if an insurance policy is held as an
asset of the Trust, the Trustee shall have no power to name a
beneficiary of the policy other than the Trust, to assign the policy
(as distinct from conversion of the policy to a different form) other
than to a successor Trustee, or to loan to any person the proceeds of
any borrowing against such policy.

(f) However, notwithstanding the provisions of paragraph Section 5.2(e)
above, the Trustee may, prior to a Change in Control of the Company,
loan to the Company the proceeds of any borrowing against an insurance
policy held as an asset of the Trust.

(g) Notwithstanding any powers granted to the Trustee pursuant to this
Trust Agreement or by applicable law, the Trustee shall not have any
power that could give this Trust the objective of carrying on a
business and dividing the gains therefrom, within the meaning of
section 301.7701-2 of the Procedure and Administrative Regulations
promulgated pursuant to the Code.

(h) The Trustee shall also be fully protected in relying upon any notice
given hereunder which it in good faith believes to be genuine and
executed and delivered in accordance with this Trust.

(i) The Trustee shall be reimbursed by the Company for its reasonable
expenses incurred in connection with the performance of its duties
hereunder and shall be paid reasonable fees for the performance of
such duties in accordance with Exhibit D attached to this Trust
Agreement,

<PAGE>

which may be revised upon agreement of the parties effective as of
each anniversary of the effective date of this Trust Agreement
commencing with the second anniversary of this Trust Agreement. Such
fees and expenses shall be deducted by the Trustee from the Trust Fund
at the times stipulated in Exhibit D.

(j) The Trustee shall not be responsible for the preparation and filing of
any reports or returns required by law to be filed with any federal or
state governmental authorities with respect to the Trust; provided,
however, that the Trustee shall, upon request of the Company, supply
the necessary information for preparation of such reports or returns
and shall, if necessary and at the direction of the Company, sign any
such reports or returns as Trustee.

(k) In the event that the Company engages a third party administrator to
assist the Company in the performance of its duties under this Trust
Agreement, all directions to the Trustee shall be made by the Company.

<PAGE>

ARTICLE VI - RESIGNATION AND REMOVAL OF THE TRUSTEE, SUCCESSOR TRUSTEE

6.1 RESIGNATION AND REMOVAL OF TRUSTEE.

(a) The Trustee may resign at any time by written notice to the Company,
which shall be effective 120 days after receipt of such notice unless
the Company and the Trustee agree otherwise.

(b) The Trustee may be removed by the Company on 15 days written notice to
the Trustee or upon shorter notice accepted by Trustee;

(c) Upon a Change in Control of the Company, as defined herein, the
Trustee may not be removed by the Company for 2 years after the Change
in Control of the Company;

(d) If the Trustee resigns within 2 years after a Change in Control of the
Company, as defined herein, the Company shall apply to a court of
competent jurisdiction for the appointment of a successor Trustee or
for instructions;

(e) If the Trustee is removed by the Company more than 2 years after a
Change in Control of the Company, as defined herein, the Trustee shall
select a successor Trustee in accordance with the provisions of
Section 6.2(b) hereof prior to the effective date of the Trustee's
removal.

(f) Upon resignation or removal of the Trustee and appointment of a
successor Trustee, all assets of the Trust shall subsequently be
transferred to the successor Trustee. The transfer shall be completed
within 180 days after receipt of notice of resignation, removal or
transfer, unless the Company extends the time limit.

(g) If the Trustee resigns or is removed, a successor shall be appointed,
in accordance with Section 6.2 or 6.1(d), as the case may be, hereof,
by the effective date or resignation or removal under paragraphs (a)
or (b) of this

<PAGE>

Section 6.1. If no such appointment has been made, the Trustee may
apply to a court of competent jurisdiction for appointment of a
successor or for instructions. All expenses of the Trustee in
connection with the proceeding shall be allowed as administrative
expenses of the Trust.

6.2 APPOINTMENT OF SUCCESSOR.

(a) If the Trustee resigns in accordance with Section 6.1(a) hereof, more
than 2 years after a Change in Control of the Company or the Trustee
is removed pursuant to Section 6.1(b) prior to a Change in Control of
the Company, the Company may appoint any third party, such as a bank
trust department or other party that may be granted corporate trustee
powers under state law, as a successor to replace the Trustee upon
resignation or removal. The appointment shall be effective when
accepted in writing by the new Trustee, who shall have all of the
rights and powers of the former Trustee, including ownership rights in
the Trust assets. The former Trustee shall execute any instrument
necessary or reasonably requested by Company or the successor Trustee
to evidence the transfer.

(b) If the Trustee is removed pursuant to the provisions of Section 6.1(e)
hereof more than 2 years after a Change in Control of the Company and
selects a successor Trustee, the Trustee may appoint any third party
such as a bank trust department or other party that may be granted
corporate trustee powers under state law. The appointment of a
successor Trustee shall be effective when accepted in writing by the
new Trustee. The new Trustee shall have all the rights and powers of
the former Trustee, including ownership rights in Trust assets. The
former Trustee shall execute any instrument necessary or reasonably
requested by the successor Trustee to evidence the transfer.

(c) The successor Trustee need not examine the records and acts of any
prior Trustee and may retain or dispose of existing Trust assets,
subject to Sections 5.1 and 5.2 hereof. The successor Trustee shall
not be responsible for and the Company shall indemnify and defend the
successor Trustee from any claim or liability resulting from any
action or

<PAGE>

inaction of any prior Trustee or from any other past event, or any
condition existing at the time it becomes successor Trustee.

<PAGE>

ARTICLE VII - AMENDMENT OR TERMINATION

7.1 AMENDMENT. This Trust Agreement may be amended by a written instrument
executed by Trustee and the Company. Notwithstanding the foregoing, no such
amendment shall conflict with the terms of the Plans or shall make the Trust
revocable.

7.2 TERMINATION.

(a) The Trust shall not terminate until the date on which Plan
participants and their beneficiaries are no longer entitled to
benefits pursuant to the terms of the Plans. Upon termination of the
Trust, any assets remaining in the Trust shall be returned to the
Company.

(b) Upon written approval of participants or beneficiaries entitled to
payment of benefits pursuant to the terms of the Plans, the Company
may terminate this Trust prior to the time all benefit payments under
the Plans have been made. All assets in the Trust at termination
shall be returned to the Company.

(c) This Agreement may not be amended by the Company for 2 years following
a Change in Control of the Company, as defined herein.

<PAGE>

ARTICLE VIII - MISCELLANEOUS

8.1 INVALID PROVISIONS. Any provision of this Trust Agreement prohibited by
law shall be ineffective to the extent of any such prohibition, without
invalidating the remaining provisions hereof.

8.2 NON-ASSIGNMENT. Benefits payable to Plans' participants and their
beneficiaries under this Trust Agreement may not be anticipated, assigned
(either at law or in equity), alienated, pledged, encumbered or subjected to
attachment, garnishment, levy, execution or other legal or equitable process.

8.3 GOVERNING LAW. This Trust Agreement shall be governed by and construed in
accordance with the laws of the State of Minnesota without regard to its
principles of conflicts of laws.

8.4 EFFECTIVE DATE. The effective date of this amended and restated Trust
Agreement shall be September 20, 1994.

8.5 FURTHER ASSURANCES. The Company shall at any time and from time to time,
upon the reasonable request of the Trustee, execute and deliver such further
instruments and do such further acts as may be necessary or proper to effectuate
the purposes of this Trust.

8.6 NOTICES. Whenever in this Trust Agreement it shall be required or
permitted that notice or demand be given or served by either party to this Trust
Agreement, or by an Executive, such notice or demand shall be given or served in
writing and sent to the parties at the addresses set forth below:

If to Company: Honeywell Inc.
ATTN: Vice President, Corporate
Compensation and Benefits
Honeywell Plaza
Minneapolis, MN 55408
Fax: (612)951-2266

If to Trustee: Norwest Bank Minnesota, NA

<PAGE>

ATTN: Ms. Jill Greene
6th Street and Marquette
Minneapolis, MN 55479-0035
Fax: (612) 667-4620

If to an Executive, to the address of such Executive as listed next to his or
her name on his or her Payment Schedule.

All such notices shall be sent (i) by certified or registered mail and shall be
deemed to be received 3 days after the date of mailing; (ii) by Federal Express
or similar overnight courier and shall be deemed to be received one business day
after delivery to Federal Express or similar overnight courier; (iii) by
facsimile transmission and shall be deemed to be received on the date of
transmission on a business day, or on the first business day following
transmission if transmitted on a non-business day, or on the first business day
following transmission if transmitted on a non-business day provided that
telephonic confirmation of receipt of the transmission has been received
promptly after transmission; or (iv) by personal service and shall be deemed to
be received on the same day as service. Any such address or facsimile number
may be changed from time to time by either party serving notices as above
provided.

8.7 STATUS OF EXECUTIVES. Executives have only the Company's unfunded and
unsecured promise to pay benefits under the Plans and the status of a general
unsecured creditor.

8.8 GENDER. Neither the gender nor the number (singular or plural) of any word
shall be construed to exclude another gender or number when a different gender
or number would be appropriate.

<PAGE>

8.9 SUCCESSORS. This Trust Agreement shall be binding upon and inure to the
benefit of any successor to the Company or its business as the result of merger,
consolidation, reorganization, transfer of assets or otherwise and any
subsequent successor thereto. In the event of any such merger, consolidation,
reorganization, transfer of assets or other similar transaction, the successor
thereto shall promptly notify the Trustee in writing of its successorship and
furnish the Trustee with the Payment Schedule specified in Section 1.2 of this
Trust Agreement. In no event shall any such transaction described herein
suspend or delay the rights of Executives to receive payments hereunder.

8.10 COUNTERPARTS. This Trust Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
shall together constitute only one Trust Agreement.

IN WITNESS WHEREOF, the parties have executed this amended and restated
Trust Agreement as of the effective date set forth in Section 8.4 hereof.

HONEYWELL INC. NORWEST BANK MINNESOTA, NA

By ____________________________ By_____________________________
Michael R. Bonsignore Name _______________________
Its Chairman and Chief Its Authorized Vice President
Executive Officer

<PAGE>

EXHIBIT A

HONEYWELL SUPPLEMENTARY RETIREMENT PLANS
(AMENDED AND RESTATED EFFECTIVE SEPTEMBER 20, 1994)

Honeywell Supplementary Retirement Plan
Honeywell Supplementary Executive Retirement Plan
for Benefits in Excess of Limits under
Tax Reform Act of 1986
Honeywell Supplementary Executive Retirement Plan
for CECP Participants
Honeywell Supplementary Executive Retirement Plan for
Compensation in Excess of $200,000
Honeywell Supplementary Executive Retirement Plan for
Mid-Career Hires
G. Nichols Simonds Supplementary Executive Retirement
Plan
D. Larry Moore Supplementary Executive Retirement
Agreement
Pelham Supplementary Executive Retirement
Agreement
Yamashita Supplementary Executive Retirement
Agreement

<PAGE>
EXHIBIT B

ACTUARIAL ASSUMPTIONS AND METHODOLOGY

Mortality: 85% of 1983 Group Annuity Mortality Table has been
used, with separate rates for males and females, for
healthy lives, and the OASDI Mortality Table has been
used for disabled lives.

Discount Rate: 8.5% per annum, compounded annually.

Future Earnings
Levels: 6.0% per year

Employee Turnover: None

Retirement Age: It has been assumed that the following early retirement
utilization scale will be experienced:
Age % Retiring Age % Retiring
-----------------------------------
55 2 62 20
56 3 63 15
57 3 64 20
58 4 65 40
59 5 66 25
60 8 67 25
61 10 68 100

Disability: None

Expenses and
Contingencies: None

Inflation: 4% per year

Wage Base
Increases: 6% per year

Form of Benefit
Distribution: Life Annuity or actual retirement form for participants in
pay status.

Cost Method: Aggregate method (Actuarial Present Value of Total Projected
Benefits under the Plans were determined).

<PAGE>

EXHIBIT C

HONEYWELL SUPPLEMENTARY RETIREMENT PLANS' PAYMENT SCHEDULE
AND PARTICIPANTS' VALUATION AS OF _______________________

Estimated
Monthly
Social Active/ Accrued Benefit Actuarial Present
Security Retired Form of Payable_____in the Value of Estimated Lump Sum Optional
Name Number Status Payment Event of Retirement* Monthly Accrued Benefit** Form of Distribution
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>

<FN>
* All Plans Combined (Total Benefit less Qualified Plan Benefit)

** Calculated as of ____________________, assuming early retirement on
that date and using actuarial equivalent factors pursuant to the Plan
documents. This schedule will be revised as of each benefit
distribution date. Actual benefit payment amounts will be provided by
Honeywell prior to any benefit distribution.
</TABLE>

<PAGE>
EXHIBIT D

SCHEDULE OF TRUSTEE FEES

1. BASIC TRUSTEE FEE

The basic annual trustee fee for
all services contemplated by the
Trust Agreement other than the
annual Additional Trustee Fees
attributable to enhanced services
set forth in Paragraph 2 $10,000.00

2. ADDITIONAL ANNUAL TRUSTEE FEES

(a) Monitoring and processing
of Recapture of Excess
Assets by Company pursuant
to Section 2.2 $5,000.00

(b) Payment of Benefits directly
to retired Executives
(including federal and state
tax withholding) $10,000.00

3. ACTIVITY-RELATED FEES

(a) Security transactions (other
than money market buys and sells) $25 per transaction

(b) Money market buys and sells $3 per transaction

<PAGE>

payments or expenses to Honeywell $15 per transaction

(d) Lumps sum payment of benefits
directly to retired executives $15 per payment

(e) Recurring (periodic) payments
directly to retirees $3 per payment

The basic Trustee fee for the initial 12 months of Trustee services and
each anniversary thereafter shall be paid in advance and deducted from the
Trust Fund. Activity related fees and additional Trustee fees (determined
on a pro rata basis which is based upon the period of time during which
the applicable services are rendered) shall be paid in arrears and
deducted from the Trust Fund on each anniversary of the effective date of
the Trust Agreement.

<PAGE>
Exhibit (10)(iii)(d)

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.

1
<PAGE>
(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.

2
<PAGE>
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;

(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.

3
<PAGE>
(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 DEFINITION. 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 subsidiary of the Company, any
"person" (as hereinabove defined) acting on behalf of the Company as
underwriter pursuant to an offering who is temporarily holding securities in
connection with such offering, 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 not more than 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), (c) or (d) 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).

9.2 EFFECT. 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.

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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Exhibit (10)(iii)(e)

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.

<PAGE>

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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<PAGE>

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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<PAGE>

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.

(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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<PAGE>

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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<PAGE>

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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<PAGE>

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 subsidiary of the
Company, any "person" (as hereinabove defined) acting on behalf of the Company
as underwriter pursuant to an offering who is temporarily holding securities in
connection with such offering, 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 not more than 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),
(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% 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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<PAGE>

(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;

(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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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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Exhibit (10)(iii)(g)

HONEYWELL CORPORATE EXECUTIVE COMPENSATION PLAN
(Amended and Restated Effective February 21, 1995)

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.

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.

<PAGE>

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.

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.

<PAGE>

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.

2.24 PLAN. This Honeywell Corporate Executive Compensation Plan, as amended and
restated effective February 21, 1995.

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

<PAGE>

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).

<PAGE>

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.

<PAGE>

(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.

<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.

<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.

5.6 DETERMINING ORGANIZATIONAL INFLUENCE WEIGHTINGS. Unless otherwise approved
by the Chief Executive Officer, the Unit's Leveraged Incentive Percentage

<PAGE>

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.

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

<PAGE>

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.

(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-

<PAGE>

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.

<PAGE>

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 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.

<PAGE>

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 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

<PAGE>

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 prior to 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,

(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 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

<PAGE>

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 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.

<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 subsidiary of the Company, any "person"
(as hereinabove defined) acting on behalf of the Company as
underwriter pursuant to an offering who is temporarily holding
securities in connection with such offering, 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

<PAGE>

representing 30 percent or more of the combined voting power of the
Company's then outstanding securities;

(b) during any period of not more than 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

<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.
Notwithstanding the foregoing, the Incentive Award for any Participant who
becomes a Participant in the Plan after January 1 of any year solely as a result
of ceasing to be a participant in the Honeywell Senior Management Performance
Incentive Plan, shall be pro-rated only to the extent such person was not an
employee of the Company during such year.

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.

<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.

<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;

(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.

<PAGE>

Exhibit (10)(iii)(h)

HONEYWELL SUPPLEMENTARY EXECUTIVE RETIREMENT PLAN
FOR COMPENSATION IN EXCESS OF $200,000
($200K SERP)
(Amended and Restated Effective September 20, 1994)

TABLE OF CONTENTS

ARTICLE I - DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 ACT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 BASE PLAN. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 CODE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 COMPANY. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 CORPORATE EXECUTIVE COMPENSATION PLAN (CECP) . . . . . . . . . 2
1.6 EARLY RETIREMENT . . . . . . . . . . . . . . . . . . . . . 2
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.15 SPOUSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

ARTICLE II - PLAN FORMULA. . . . . . . . . . . . . . . . . . . . . . . . . 4
2.1 $200K SERP FORMULA . . . . . . . . . . . . . . . . . . . . . . 4

ARTICLE III - BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.1 NORMAL RETIREMENT. . . . . . . . . . . . . . . . . . . . . . . 6
3.2 EARLY RETIREMENT . . . . . . . . . . . . . . . . . . . . . . . 6

<PAGE>

3.3 CHANGE IN CONTROL. . . . . . . . . . . . . . . . . . . . . . . 6
3.4 PERMANENT AND TOTAL DISABILITY . . . . . . . . . . . . . . . . 7
3.5 IMMEDIATE PRE-RETIREMENT SURVIVING SPOUSE BENEFIT. . . . . . . 8
3.6 DEFERRED SURVIVING SPOUSE BENEFIT. . . . . . . . . . . . . . . 8
3.7 SURVIVING CHILDREN'S BENEFIT . . . . . . . . . . . . . . . . . 8

ARTICLE IV - PAYMENT OF BENEFITS . . . . . . . . . . . . . . . . . . . . . 10
4.1 FORM OF PAYMENT TO PARTICIPANT . . . . . . . . . . . . . . . . 10
4.2 TIME OF PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . 11
4.3 PAYMENT SUBSEQUENT TO A 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

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
ACTUARIAL ASSUMPTIONS FOR LUMP SUM PAYMENT. . . . . . . . . . . . . . 22

<PAGE>

TABLE II
VESTED ACCRUED BENEFITS UNDER THE $200K SERP THROUGH DECEMBER 31,
1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

<PAGE>

HONEYWELL SUPPLEMENTARY EXECUTIVE RETIREMENT PLAN
FOR COMPENSATION IN EXCESS OF $200,000
($200K SERP)
(Amended and Restated Effective September 20, 1994)

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. "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.

1.7 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 (as it may be adjusted from time
to time pursuant to the Code).

<PAGE>

1.8 EFFECTIVE DATE. The original effective date of this Plan is July 1, 1989.

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. "Normal Retirement" by a Participant on or after his or
her "Social Security Retirement Age" as defined under his or her Base Plan.

1.14 PLAN. This Honeywell Supplementary Executive Retirement Plan for
Compensation in Excess of $200,000 ($200K SERP).

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

<PAGE>

Plan by applying the laws of the state or country in which it determines that
the Participant is domiciled at the time of such determination of status.

<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 for a Participant under the Base Plan:

(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;

(v) by excluding "Augmented Credited Service for Benefit Accrual"
under the Mid-Career SERP, if the Mid-Career SERP is applicable
to the Participant.

(b) the applicable benefit computed for a Participant under the Base Plan:

<PAGE>

(i) by excluding under the definition of "Earnings" for the purpose
of arriving at "Final Average Earnings" under the Base Plan the
amount of any "Earnings" under the Base Plan which are in excess
of the Earnings Limitation;

(v) by excluding "Augmented Credited Service for Benefit Accrual"
under the Mid-Career SERP, if such Plan is applicable to the
Participant.

<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.

For purposes of this Plan, a "Change in Control" of Honeywell shall have
occurred if:

<PAGE>

(b) during any period of not more than two consecutive years (not
including any period prior to the Effective Date), individuals who at
the beginning of such period constitute the Board of Directors of
Honeywell (the "Board"), and any new director (other than a director
designated by a "person" who has entered into an agreement with
Honeywell to effect a transaction described in clause (a), (c) or (d)
of this Section) whose election by the Board or nomination for
election by Honeywell'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 Honeywell approve a merger or consolidation of
Honeywell with any other corporation, other than (i) a merger or
consolidation which would result in the voting securities of Honeywell
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 Honeywell or such surviving entity
outstanding immediately after such merger or consolidation or (ii) a
merger or consolidation effected to implement a recapitalization of
Honeywell (or similar transaction) in which no "person" (as
hereinabove defined) acquires more than 30 percent of the combined
voting power of Honeywell's then outstanding securities; or

<PAGE>

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 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 $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 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

<PAGE>

portion of the benefit payable to each such Child shall be redetermined as of
the last day of the month following the date any recipient ceases to be a Child
and the remaining such Children shall thereupon receive an equal share of such
benefit.

<PAGE>

ARTICLE IV - PAYMENT OF BENEFITS

(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 this
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 (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 of Honeywell, 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
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

<PAGE>

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 this 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 this 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 within 3 years 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 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

<PAGE>

I, which may be modified from time to time by the Board of Directors
of Honeywell) 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 (hereinafter referred to as "IRS") 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 IRS; or

<PAGE>

any Participant for any interest or penalties in respect of Federal or
state tax claims hereunder upon receipt of documentation of same. Any
distributions from this 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 of Honeywell, 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, and then
reduced by a penalty, which shall be forfeited to the Company which is equal, to
10 percent of the present value of any 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.

<PAGE>

ARTICLE V - ADMINISTRATION OF THE PLAN

<PAGE>

ARTICLE VI - AMENDMENT AND TERMINATION

6.1 AMENDMENT AND TERMINATION. The Board of Directors of Honeywell may amend
or terminate the Plan at any time except in the event of a Change in Control as
defined in Section 3.3; 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 a Change in
Control, this Plan may not be amended or terminated in any manner that shall
adversely affect a benefit payable on the Normal or Early Retirement, death or
Permanent and Total Disability of, or any available optional form of payment to,
a Participant for a period of 3 years from the date of the Change in Control. 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.

<PAGE>

ARTICLE VII - GENERAL CONDITIONS

7.2 APPLICABLE LAW. All questions pertaining to the construction, validity and
effect of this 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.

<PAGE>

ARTICLE VIII - FUNDING

<PAGE>

as Table II is a list of the Participants described in subparts (ii) and (iii)
above and the amount of their accrued benefits under this Plan which became
vested in 1993.

<PAGE>

ARTICLE IX - CLAIMS PROCEDURE

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.

(a) The specific reason or reasons for the denial;

(b) Specific reference to pertinent provisions of this 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 that
material or information is necessary; and

<PAGE>

(d) An explanation of this 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.

(a) May request a review upon written application to the Personnel
Committee;

(b) May review pertinent documents; and

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, 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
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

<PAGE>

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.

<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>

TABLE II

VESTED ACCRUED BENEFITS UNDER THE $200K
SERP THROUGH DECEMBER 31, 1993

The following Participants, who were determined in accordance with the
provisions of Section 8.3(ii) or Section 8.3(iii) of this Plan, have a vested
accrued benefit under this Plan payable at his or her "Social Security
Retirement Age", as defined in the Base Plan, or, for those shown with earlier
dates, on the earlier designated actual retirement date, in the indicated
monthly amounts as calculated on a life annuity basis:

NAME SOCIAL SECURITY RETIREMENT AGE MONTHLY LIFE ANNUITY
OR ACTUAL EARLIER RETIREMENT DATE
--------------------------------------------------------------------------------

Bonsignore, Michael R. . . .66 . . . . . . . . . . . . . . . . . . . .$12,338.72
Boyle, Fosten A. . . . . .3-31-94. . . . . . . . . . . . . . . . . . . $3,942.94
Burns, John R. . . . . . .2-28-94. . . . . . . . . . . . . . . . . . . . .$56.21
Dewane, John R.. . . . . . .65 . . . . . . . . . . . . . . . . . . . . $3,863.15
Grierson, James J. . . . . .66 . . . . . . . . . . . . . . . . . . . . $2,658.61
Hurd, Edward T.. . . . . . .66 . . . . . . . . . . . . . . . . . . . . $5,233.47
Larkin, David. . . . . . . .66 . . . . . . . . . . . . . . . . . . . . $2,269.38
Moore, D. Larry. . . . . . .65 . . . . . . . . . . . . . . . . . . . .$16,971.85
Renier, James J. . . . . .4-30-94. . . . . . . . . . . . . . . . . . .$27,377.00
Rosso, Jean-Pierre P.. . . .66 . . . . . . . . . . . . . . . . . . . . $2,771.88
Vignali, Carl L. . . . . . .65 . . . . . . . . . . . . . . . . . . . . $1,852.22
Woessner, Gregg C. . . . .2-28-94. . . . . . . . . . . . . . . . . . . $2,040.16

<PAGE>

Exhibit (10)(iii)(i)

HONEYWELL SUPPLEMENTARY EXECUTIVE RETIREMENT PLAN
FOR CECP PARTICIPANTS
(CECP SERP)
(Amended Through September 20, 1994)

TABLE OF CONTENTS

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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.15 SPOUSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

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 . . . . . . . . . . . . . . . . . 7

<PAGE>

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
3.8 VESTED PARTICIPANT'S BENEFIT . . . . . . . . . . . . . . . . . . 9

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 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:
ACTUARIAL ASSUMPTIONS FOR LUMP SUM PAYMENTS . . . . . . . . . . . . . . 22

<PAGE>

TABLE II:
VESTED ACCRUED BENEFITS UNDER THE CECP SERP THROUGH
DECEMBER 31, 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

<PAGE>

HONEYWELL SUPPLEMENTARY EXECUTIVE RETIREMENT PLAN
FOR CECP PARTICIPANTS
(CECP SERP)
(Amended Through September 20, 1994)

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.

1.6 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>

1.8 EFFECTIVE DATE. The original effective date of this Plan is 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 was covered under the
Corporate Executive Compensation Plan at the time of his or her cessation of
active work with the Company, and 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.
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.

1.14 PLAN. This Honeywell Supplementary Executive Retirement Plan for
Corporate Executive Compensation Plan ("CECP SERP") Participants, effective
January 1, 1985 and amended through September 15, 1992.

<PAGE>

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 by applying the laws of the state or country in which it
determines that the Participant is domiciled at the time of such determination
of status.

<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 for 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 the
amount of any "Earnings" under the Base Plan which are in excess
of the Earnings Limitation;

(v) by excluding "Augmented Credited Service for Benefit Accrual"
under the Mid-Career SERP, if the Mid-Career SERP is applicable
to the Participant.

(b) the applicable benefit computed for a Participant under the Base Plan:

<PAGE>

(v) by excluding "Augmented Credited Service for Benefit Accrual"
under the Mid-Career SERP, if applicable.

<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.

For purposes of this Plan, a "Change in Control" of Honeywell 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 Honeywell, any subsidiary of Honeywell, any "person" (as
hereinabove defined) acting on behalf of Honeywell as underwriter
pursuant to an offering who is temporarily holding securities in
connection with such offering, any trustees or other fiduciary
holding securities under an employee benefit plan of Honeywell or
any corporation owned, directly or indirectly, by the stockholders
of Honeywell in substantially the same proportions as their
ownership of stock of Honeywell and excluding Honeywell subsidiaries
and underwriters), is or becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of Honeywell representing 30% or more of the combined
voting power of Honeywell's then outstanding securities;

<PAGE>

(b) during any period not to exceed two consecutive years (not including
any period prior to the Effective Date), individuals who at the
beginning of such period constitute the Board of Directors of
Honeywell (the "Board"), and any new director (other than a director
designated by a "person" who has entered into an agreement with
Honeywell to effect a transaction described in clause (a), (c) or
(d) of this Section) whose election by the Board of nomination for
election by Honeywell'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 Honeywell approve a merger or consolidation of
Honeywell with any other corporation, other than (i) a merger or
consolidation which would result in the voting securities of
Honeywell 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 Honeywell
or such surviving entity outstanding immediately after such merger
or consolidation or (ii) a merger or consolidation effected to
implement a recapitalization of Honeywell (or similar transaction)
in which no "person" (as hereinabove defined) acquires more than 30
percent of the combined voting power of Honeywell's then outstanding
securities; or

(d) the stockholders of Honeywell approve a plan of complete liquidation
of Honeywell or an agreement for the sale or disposition by
Honeywell 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 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

<PAGE>

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.

<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 this 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 this 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 this 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 of Honeywell, at
least 13 months prior to the Participant's Early Retirement, Normal
Retirement. Such Spouse's consent must acknowledge the effect 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

<PAGE>

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 this 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 this 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 within 3 years 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 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

<PAGE>

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 (hereinafter referred to as "IRS") 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
IRS; 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 Code, published IRS 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.

<PAGE>

any Participant for any interest or penalties in respect of Federal or
state tax claims hereunder upon receipt of documentation of same. Any
distributions from this 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 of Honeywell, 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, and then
reduced by a penalty, which shall be forfeited to the Company which is equal, to
10 percent of the present value of any 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.

<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. The interpretations of such Committee shall be final.

<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 except in the event of a Change in
Control as defined in Section 3.3; 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 a Change
in Control as defined in Section 3.3, the Board may not amend or terminate the
Plan in any manner that shall adversely affect a benefit payable on the Normal
or Early Retirement, death or Permanent and Total Disability of, or any
available optional form of payment to, a Participant for a period of 3 years
from the date of the Change in Control. 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 4.3(a) of the Plan.

<PAGE>

ARTICLE VII - GENERAL CONDITIONS

<PAGE>

ARTICLE VIII - FUNDING

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 vested accrued benefit is
determined with respect to any other Participant in this 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. Attached hereto

<PAGE>

as Table II is a list of the Participants described in subparts (ii) and (iii)
above and the amount of their accrued benefits under this Plan which became
vested in 1993.

<PAGE>

ARTICLE IX - CLAIMS PROCEDURE

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.

(a) The specific reason or reasons for the denial;

(b) Specific reference to pertinent provisions of this 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
that material or information is necessary; and

<PAGE>

(d) An explanation of this 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.

(a) May request a review upon written application to the Personnel
Committee,

(b) May review pertinent documents; and

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 ,
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
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

<PAGE>

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.

<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>

TABLE II

VESTED ACCRUED BENEFITS UNDER THE CECP
SERP THROUGH DECEMBER 31, 1993

The following Participant, who was determined in accordance with the provisions
of Section 8.3 (ii) or Section 8.3(iii) of this Plan, has a vested accrued
benefit under this Plan payable at his actual early retirement date under the
Base Plan, in the indicated monthly amount as calculated on a life annuity
basis:

NAME MONTHLY LIFE ANNUITY
--------------------------------------------------------------------------------

Burns, John R. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $286.98

<PAGE>

Exhibit (10)(iii)(j)

HONEYWELL
SUPPLEMENTARY RETIREMENT PLAN
(SRP)
(Amended and Restated Effective September 20, 1994)

TABLE OF CONTENTS

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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.15 SPOUSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

ARTICLE II - PLAN FORMULA. . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.1 SRP FORMULA. . . . . . . . . . . . . . . . . . . . . . . . . . . 4

<PAGE>

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
3.8 VESTED PARTICIPANT'S BENEFIT . . . . . . . . . . . . . . . . . . . 9

ARTICLE IV - PAYMENT OF BENEFITS . . . . . . . . . . . . . . . . . . . . . . 10
4.1 FORM OF PAYMENT. . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.2 TIME OF PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.3 PAYMENT SUBSEQUENT TO A 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

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

TABLE I:
ACTUARIAL ASSUMPTIONS FOR LUMP SUM PAYMENTS . . . . . . . . . . . . . . 19

TABLE II:
VESTED ACCRUED BENEFITS UNDER THE SRP THROUGH
DECEMBER 31, 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

<PAGE>

HONEYWELL
SUPPLEMENTARY RETIREMENT PLAN
(SRP)
(Amended and Restated Effective September 20, 1994)

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.

<PAGE>

1.8 EFFECTIVE DATE. The original effective date of this Plan is April 20,
1976.

1.9 HONEYWELL. Honeywell Inc., a Delaware corporation.

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 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.

1.14 PLAN. This Honeywell Supplementary Retirement Plan.

1.15 SPOUSE. A person who is formally married to a Participant as determined by
the

<PAGE>

Honeywell Pension and Retirement Administrative Committee for purposes of the
Base Plan by applying the laws of the state or country in which it determines
that the Participant is domiciled at the time of such determination of status.

<PAGE>

ARTICLE II - PLAN FORMULA

2.1 SRP FORMULA. That annual benefit equal to Paragraph (a) minus Paragraph
(b);

(a) The applicable benefit computed for a Participant under the Base Plan:

(v) by excluding "Augmented Credited Service for Benefit Accrual"
under the Mid-Career SERP, if such Mid-Career SERP is applicable
to the Participant.

(b) the applicable benefit computed for a Participant under the Base Plan:

<PAGE>

(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;

(v) by excluding "Augmented Credited Service for Benefit Accrual"
under the Mid-Career SERP, if such Plan is applicable to the
Participant.

<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 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
Formula as prescribed in Section 2.1.

(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 Honeywell, any subsidiary of Honeywell, any "person" (as
hereinabove defined) acting on behalf of Honeywell as underwriter
pursuant to an offering who is temporarily holding securities in
connections with such offering, any trustee or other fiduciary holding
securities under an employee benefit plan of Honeywell or any
corporation owned, directly or indirectly, by the stockholders of
Honeywell in substantially the same proportions as their ownership of
stock of Honeywell), is or becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of Honeywell representing 30 percent or more of the
combined voting power of Honeywell's then outstanding securities;

(b) during any period of not more than two consecutive years (not
including

<PAGE>

any period prior to the Effective Date), individuals who at the
beginning of such period constitute the Board of Directors of
Honeywell (the "Board"), and any new director (other than a director
designated by a "person" who has entered into an agreement with
Honeywell to effect a transaction described in clause (a), (c) or (d)
of this Section) whose election by the Board of nomination for
election by Honeywell'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 Honeywell approve a merger or consolidation of
Honeywell with any other corporation, other than (i) a merger or
consolidation which would result in the voting securities of Honeywell
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 Honeywell or such surviving entity
outstanding immediately after such merger or consolidation or (ii) a
merger or consolidation effected to implement a recapitalization of
Honeywell (or similar transaction) in which no "person" (as
hereinabove defined) acquires more than 30 percent of the combined
voting power of Honeywell's then outstanding securities; or

<PAGE>

in accordance with the SRP 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 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 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 SRP 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

<PAGE>

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.

<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 this 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 this 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 this
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 of Honeywell, 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 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

<PAGE>

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 this 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
this 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 within 3 years
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 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

<PAGE>

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 (hereinafter referred to as "IRS") 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 IRS; 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 Code, published IRS rulings, court decisions or
other substantial precedent, amounts accrued on a Participants
behalf hereunder are subject to Federal or state income tax prior
to payment.

<PAGE>

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 this 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 of Honeywell, 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 which is equal to 10 percent of
the present value of any 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.

<PAGE>

ARTICLE V - ADMINISTRATION OF THE PLAN

<PAGE>

ARTICLE VI - AMENDMENT AND TERMINATION

6.1 AMENDMENT AND TERMINATION. The Board of Directors of Honeywell may amend
or terminate the Plan at any time except in the event of a Change in Control as
defined in Section 3.3; 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 a Change in
Control, this Plan may not be amended or terminated in any manner that shall
adversely affect a benefit payable on the Normal or Early Retirement, death or
Permanent and Total Disability of, or any available optional form of payment to,
a Participant for a period of 3 years from the date of the Change in Control.
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
4.3(a) of the Plan.

<PAGE>

ARTICLE VII - GENERAL CONDITIONS

7.1 NON-ASSIGNABILITY OF THE RIGHT TO RECEIVE BENEFITS. The right to receive
benefits under this 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 this 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.

<PAGE>

ARTICLE VIII - FUNDING

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 vested accrued
benefit is determined with respect to any other Participant in this 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. Attached
hereto

<PAGE>

as Table II is a list of the Participants described in subparts (ii) and (iii)
above and the amount of their accrued benefits under this Plan which became
vested in 1993, if any.

<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>

TABLE II

VESTED ACCRUED BENEFITS UNDER THE SRP THROUGH DECEMBER 31, 1993

NAME SOCIAL SECURITY RETIREMENT AGE MONTHLY LIFE ANNUITY
OR ACTUAL EARLIER RETIREMENT DATE
--------------------------------------------------------------------------------

Boyle, Fosten A. . . . . . . . . . . 3-31-94 . . . . . . . . . . . . . $1,786.50
Burns, Dallas. . . . . . . . . . . . 2-28-94 . . . . . . . . . . . . . $1,718.97
Moore, D. Larry. . . . . . . . . . . . 65. . . . . . . . . . . . . . . $1,979.95
Renier, James J. . . . . . . . . . . 4-30-94 . . . . . . . . . . . . .$14,884.88
Woessner, Gregg. . . . . . . . . . . 2-28-94 . . . . . . . . . . . . . $2,093.01

<PAGE>

Exhibit (10)(iii)(k)

HONEYWELL SUPPLEMENTARY EXECUTIVE RETIREMENT PLAN
FOR BENEFITS IN EXCESS OF LIMITS UNDER TAX REFORM ACT OF 1986
(TRA SERP)
(Amended and Restated Effective September 20, 1994)

TABLE OF CONTENTS

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
1.18 TRA '86 AMENDMENT DATE . . . . . . . . . . . . . . . . . . . . 3
1.19 TWO HUNDRED THOUSAND ($200K) SERP. . . . . . . . . . . . . . . 3

ARTICLE II - PLAN FORMULA. . . . . . . . . . . . . . . . . . . . . . . . . 4
2.1 TRA SERP FORMULA . . . . . . . . . . . . . . . . . . . . . . . 4

<PAGE>

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. . . . . . . . . . . . . . . 12
3.7 SURVIVING CHILDREN'S BENEFIT . . . . . . . . . . . . . . . . . 14
3.8 Vested Participant'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

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. . . . . . . . . . . . . . . . . . . . . . . 23
9.1 FILING OF A CLAIM FOR BENEFITS . . . . . . . . . . . . . . . . 23
9.2 NOTIFICATION TO CLAIMANT OF DECISION . . . . . . . . . . . . . 23
9.3 CONTENT OF NOTICE. . . . . . . . . . . . . . . . . . . . . . . 23
9.4 REVIEW PROCEDURE . . . . . . . . . . . . . . . . . . . . . . . 24

<PAGE>

9.5 DECISION ON REVIEW. . . . . . . . . . . . . . . . . . . . . . . . . 25

TABLE I:
ACTUARIAL ASSUMPTIONS FOR LUMP SUM PAYMENTS . . . . . . . . . . . . 27

TABLE II:
VESTED ACCRUED BENEFITS UNDER THE TRA
SERP THROUGH DECEMBER 31, 1993. . . . . . . . . . . . . . . . . . . 28

<PAGE>

HONEYWELL SUPPLEMENTARY EXECUTIVE RETIREMENT PLAN
FOR BENEFITS IN EXCESS OF LIMITS UNDER TAX REFORM ACT OF 1986
(TRA SERP)
(Amended and Restated Effective September 20, 1994)

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 (as
it may be adjusted from time to time pursuant to the Code).

1.9 EFFECTIVE DATE. The original effective date of this Plan is July 1,
1989.

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 was covered under the
Corporate Executive Compensation Plan at the time of his or her cessation
of active work with 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 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.

<PAGE>

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. This 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 by applying the laws of the state or country
in which it determines that the Participant is domiciled at the time of
such determination of status.

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.

<PAGE>

ARTICLE II - PLAN FORMULA

2.1 TRA SERP FORMULA. That annual benefit equal to Paragraph (a) minus
Paragraph (b).

(a) The applicable benefit computed for a Participant 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 the amount of any "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

<PAGE>

(v) by excluding "Augmented Credited Service for Benefits
Accrual" under the Mid-Career SERP, if the Mid-Career SERP
is applicable to the Participant.

(b) the applicable benefit computed for a Participant 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 the amount of any "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.

<PAGE>

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
annual "Normal Retirement Benefit" provided to him or her under
the Excess Benefit Plan.

<PAGE>

(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 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

<PAGE>

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 this 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 this Plan.

For purposes of this Plan, a "Change in Control" of Honeywell 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 Honeywell, any subsidiary of Honeywell, any
"person" (as hereinabove defined) acting on behalf of Honeywell
as underwriter pursuant to an offering who is temporarily holding
securities in connection with such offering, any trustees or
other fiduciary holding securities under an employee benefit plan
of Honeywell or any corporation owned, directly or indirectly, by
the stockholders of Honeywell in substantially the same
proportions as their ownership of stock of Honeywell), 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

<PAGE>

more of the combined voting power of the Company's then outstanding
securities;

(b) during any period of not more than two consecutive years (not
including any period prior to the Effective Date), individuals
who at the beginning of such period constitute the Board of
Directors of Honeywell (the "Board"), and any new director (other
than a director designated by a "person" who has entered into an
agreement with Honeywell to effect a transaction described in
clause (a), (c) or (d) of this Section) whose election by the
Board of nomination for election by Honeywell'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 Honeywell approve a merger or consolidation
of Honeywell with any other corporation, other than (i) a merger
or consolidation which would result in the voting securities of
Honeywell 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
Honeywell or such surviving entity outstanding immediately after
such merger or consolidation or (ii) a merger or consolidation
effected to implement a recapitalization of Honeywell (or similar
transaction) in which no "person" (as hereinabove defined)
acquires more than 30 percent of the combined voting power of
Honeywell's then outstanding securities; or

(d) the stockholders of Honeywell approve a plan of complete
liquidation of Honeywell or an agreement for the sale or
disposition by Honeywell of all or substantially all of the
Company's assets (or any transaction having a similar effect).

<PAGE>

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 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.

<PAGE>

(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 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

<PAGE>

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.

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 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 "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

<PAGE>

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 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.

<PAGE>

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.

3.8 VESTED PARTICIPANT'S BENEFIT. Upon the receipt of benefits by a
Participant under his or her Base Plan who is not eligible for Early
Retirement but for whom a specified accrued benefit has been determined
under this Plan in accordance with Section 8.3 of this Plan, he or she
shall be eligible for life for an annual benefit determined by calculating
the Participant's "Vested Terminated Participant Benefit" under the
Participant's Base Plan in accordance with the TRA SERP Formula as
prescribed in Section 2.1.

<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 this 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 this 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 this 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 of Honeywell, 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 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

<PAGE>

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 this 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 this 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 within 3 years 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 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

<PAGE>

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 (hereinafter referred to as "IRS") 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
IRS; 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 Code, published IRS 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.

The Company shall undertake at its sole expense to defend any tax
claims described herein which are asserted by the IRS 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 IRS, by any state revenue authority or by a
lower court. The Company also agrees to reimburse

<PAGE>

any Participant for any interest or penalties in respect of Federal or
state tax claims hereunder upon receipt of documentation of same. Any
distributions from this 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 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 of Honeywell, 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 which is equal to 10 percent of the
present value of any 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.

<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.

<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 except in the event of a Change
in Control as defined in Section 3.3, 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 a Change in Control as defined in Section 3.3,
the Board of Directors may not amend or terminate the Plan in any manner
that shall adversely affect a benefit payable on the Normal or Early
Retirement, death or Permanent and Total Disability of, or any available
optional form of payment to, a Participant for a period of 3 years from
such date of the Change in Control. 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 3.3(a) of the Plan.

<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 this 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.

<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 beneficiary. 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 vested accrued benefit
is determined with respect to any other Participant in this 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.
Attached hereto

<PAGE>

as Table II is a list of the Participants described in subparts (ii) and
(iii) above and the amount of their accrued benefits under this Plan which
became vested in 1993, if any.

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.

<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 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 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 this 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
that material or information is necessary; and

<PAGE>

(d) An explanation of this 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

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 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

<PAGE>

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.

<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), 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>

TABLE II

VESTED ACCRUED BENEFITS UNDER THE TRA
SERP THROUGH DECEMBER 31, 1993

The following Participant(s), who were determined in accordance
with the provisions of Section 8.3(ii) or Section 8.3(iii) of
this Plan, have a vested accrued benefit under this Plan payable
at his or her "Social Security Retirement Age", as defined in the
Base Plan, in the indicated monthly amounts as calculated on a
life annuity basis:

NAME MONTHLY LIFE ANNUITY PAYABLE
AT SOCIAL SECURITY RETIREMENT AGE
----------------------------------------------------------

No Participants were determined to have a vested accrued benefit
under this Plan through December 31, 1993.

<PAGE>

Exhibit (10)(iii)(m)

________________, 1994

Name
Address
City

Dear ________:

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 (this "Agreement") will better
serve the above-stated objective than the letter agreement entered into between
you and the Corporation dated ________________ (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, 1995; provided, however, that commencing on January 1, 1996 and
each January 1 thereafter, the term

<PAGE>

________________, 1994
Page 2

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 of the Corporation
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 subsidiary of the Corporation, any "person" (as hereinabove
defined) acting on behalf of the Corporation as underwriter pursuant to an
offering who is temporarily holding securities in connection with such offering,
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 thirty percent (30%) or more of the
combined voting power of the Corporation's then outstanding securities;

(ii) during any period of not more than 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 of Directors of the
Corporation (the "Board"), and any new director (other than a director
designated by a "person" (as hereinabove defined) 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, 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 (1) 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) more than fifty percent (50%) of the combined voting power of
the voting securities of the Corporation or such surviving entity outstanding
immediately after such merger or consolidation or (2) a merger or consolidation
effected to implement a recapitalization of the Corporation (or similar
transaction) in which no "person" (as hereinabove defined) acquires more

<PAGE>
_________________, 1994
Page 3

than thirty percent (30%) of the combined voting power of the Corporation's then
outstanding securities; 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 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.

<PAGE>
_________________, 1994
Page 4

(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 Subsection 3(vi)) specified in
the Notice of Termination (as defined in Subsection 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 of the Corporation;

(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 business travel obligations immediately prior to such
change in control of the Corporation;

(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:

(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, 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;

<PAGE>
_________________, 1994
Page 5

(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 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
Cause shall not be less than thirty (30) days from the date such Notice of
Termination is given) and 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) if your employment is terminated by you for
any other reason (other than for Good Reason or for Disability) the date
specified in the Notice of Termination shall not be less than thirty (30) days
from the date such Notice of Termination is

<PAGE>

_________________, 1994
Page 6

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 Subsection 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 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 Subsection 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 Plans 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 or Disability, 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

<PAGE>
_________________, 1994
Page 7

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, or in effect on the date immediately preceding the date of the
change in control of the Corporation, whichever is higher, no later than
the fifth day following the Date of Termination, plus all other amounts to
which you are entitled under any Compensation Plan, 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 times the sum of your (1) annual salary as
in effect as of your Date of Termination or in effect on the date
immediately preceding the date of the change in control of the Corporation,
whichever is higher, and (2) "on-plan" bonus under the Corporate Executive
Compensation Plan or the average of the annual bonuses paid to you (without
regard to any prorata adjustment thereof for any portion of a year) during
the three year period immediately preceding the date of the change in
control of the Corporation, whichever is higher;

(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

<PAGE>
_________________, 1994
Page 8

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. You hereby
agree to report to the Corporation any such comparable benefits actually
received by you.

(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 or on the date immediately preceding the
date of the change in control of the Corporation, whichever is higher, 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, at the time such payments are due;

(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 or on
the date immediately preceding the date of the change in control of the
Corporation, whichever is higher, and (2) "on-plan" bonus under the
Corporate Executive Compensation Plan or the average of the annual bonuses
paid to you (without regard to any prorata adjustment thereof for any
portion of a year) during the three year period immediately preceding the
date of the change in control of the Corporation, whichever is higher;

(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 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

<PAGE>
__________________, 1994
Page 9

benefits under the provisions of the Honeywell Retirement Benefit Plan in
effect immediately prior to the change in control of the Corporation during
such layoff period, and retention of your employment status for the greater
of (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 credited service for benefits
under such Plan up to a maximum 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 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.
You hereby agree to report to the Corporation any such comparable benefits
actually received by you.

(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

<PAGE>
_________________, 1994
Page 10

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 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 from the date the Gross-Up Payment was initially made
to the date of 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 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 from the date that the estimated payments were made to
the date the remainder of such payments is made 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

<PAGE>
_________________, 1994
Page 11

to you, payable on the fifth day after demand by the Corporation (together with
interest from the date that the estimated payments were made to the date of
repayment 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 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 you 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 ,
addressed to your address set forth on the first page of this Agreement,
provided that all notices to the Corporation shall be directed to the

<PAGE>
__________________, 1994
Page 12

attention of the Board of Directors, Honeywell Inc., Honeywell Plaza,
Minneapolis, Minnesota, 55408, 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. All such notices shall be sent (i) by certified or
registered mail and shall be deemed received three (3) business days after the
date of mailing; (ii) by Federal Express or similar overnight courier and shall
be deemed received one (1) business day after delivery to Federal Express or
similar overnight courier; or (iii) by personal service and shall be deemed
received on the same day as service.

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 of the Corporation 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 this
Agreement 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 of the Corporation, 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 Subsection 3(vi) during the pendency of any
dispute or controversy arising under or in connection with this Agreement.
Judgment may be entered on the arbitrator's award in any court having
jurisdiction.

<PAGE>
_________________, 1994
Page 13

11. PRIOR AGREEMENT. This Agreement supersedes the Prior Agreement, which
is hereby terminated and canceled. Any other prior agreements, arrangements or
understandings between you and the Corporation (other than the Prior Agreement)
remain binding and in full force and effect consistent with the terms and
conditions thereof and shall not be affected by this Agreement.

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 ____
day of __________, 1994

_____________________________

<PAGE>

________________, 1994

Name
Address
City

Dear ________:

<PAGE>
________________, 1994
Page 2

(iii) the stockholders of the Corporation approve a merger or consolidation
of the Corporation with any other corporation, other than (1) 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) more than fifty percent (50%) of the combined voting power of
the voting securities of the Corporation or such surviving entity outstanding
immediately after such merger or consolidation or (2) a merger or consolidation
effected to implement a recapitalization of the Corporation (or similar
transaction) in which no "person" (as hereinabove defined) acquires more

<PAGE>
________________, 1994
Page 3

than thirty percent (30%) of the combined voting power of the Corporation's then
outstanding securities; 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.

<PAGE>
________________, 1994
Page 4

<PAGE>
________________, 1994
Page 5

(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

<PAGE>
________________, 1994
Page 6

<PAGE>
________________, 1994
Page 7

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:

(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 two times the sum of your (1) annual salary as
in effect as of your Date of Termination or in effect on the date
immediately preceding the date of the change in control of the Corporation,
whichever is higher, and (2) "on-plan" bonus under the Corporate Executive
Compensation Plan or the average of the annual bonuses paid to you (without
regard to any prorata adjustment thereof for any portion of a year) during
the three year period immediately preceding the date of the change in
control of the Corporation, whichever is higher;

(e) for a two 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

<PAGE>
________________, 1994
Page 8

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 two year period following your termination. You hereby
agree to report to the Corporation any such comparable benefits actually
received by you.

(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:

(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 two times the sum of your (1)
annual salary as in effect at the time Notice of Termination is given or on
the date immediately preceding the date of the change in control of the
Corporation, whichever is higher, and (2) "on-plan" bonus under the
Corporate Executive Compensation Plan or the average of the annual bonuses
paid to you (without regard to any prorata adjustment thereof for any
portion of a year) during the three year period immediately preceding the
date of the change in control of the Corporation, whichever is higher;

(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;

<PAGE>
________________, 1994
Page 9

(f) for a two 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 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 two year period following your cessation of active service. You
hereby agree to report to the Corporation any such comparable benefits
actually received by you.

<PAGE>
________________, 1994
Page 10

<PAGE>
________________, 1994
Page 11

to you, payable on the fifth day after demand by the Corporation (together with
interest from the date that the estimated payments were made to the date of
repayment 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 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 two 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.

<PAGE>
________________, 1994
Page 12

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.

<PAGE>
----------------, 1994
Page 13

Sincerely,

Honeywell Inc.
_____________________________

By:__________________________
Michael R. Bonsignore
Chairman and
Chief Executive Officer

Agreed to as of this ____
day of __________, 1994

_____________________________

<PAGE>

Exhibit (10)(iii)(n)

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 Honeywell Inc. common
stock having a par value of $1.50 per share ("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
July 19, 1994.

5. FEES

ANNUAL 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 elects 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 value of shares of Common Stock payable
in lieu of the Annual Retainer, or the elected percentage thereof, shall equal
110% of the amount of the Annual Retainer, and the number thereof shall be
determined based on the Fair Market Value (as defined in Section 9 hereunder) on
the date of the Company's Annual Meeting of Shareholders.

(b) If selected, the value of shares of Common Stock payable
in lieu of the Meeting Fees occurring within a calendar quarter shall equal 110%
of the amount of such Meetings Fees and the number thereof shall be determined
by taking 110% of the total cash amount of Meeting Fees for the quarterly period
and dividing the amount by the Fair Market Value determined as of the last
trading day for such quarter.

(c) All shares of Common Stock issued to a Participant in
lieu of cash payments for the Annual Retainer or Meeting Fees shall be subject
to the restriction that they may not be sold or transferred until the earliest
to occur of the following:

(i) five years shall lapse from the date the applicable
shares are credited to the Participant's account (the
"Restriction Period");

(ii) the Participant's death or disability;

(iii) the Participant, after being nominated to the Board, is
not elected by the shareholders in an election for the
Board;

(iv) the Board determines that the Participant will not be
nominated for election to the Board;

-2-
<PAGE>

(v) the Participant's service on the Board terminates
because of his or her resignation at the request of the
Nominating Committee of the Board or his or her removal
by action of the Company's stockholders;

(vi) the Participant's service on the Board terminates
because the Participant has taken a position with a
governmental agency in public service that does not
permit membership on the board of directors of a
publicly-held corporation; or

(vii) the occurrence of a Change in Control, as set forth in
Section 14.

All shares of Common Stock subject to the foregoing restrictions are herein
referred to as "Restricted Shares".

(d) In the event restrictions lapse, as provided in sections
7(c)(i)-(vii) above, a certificate for the applicable shares, free and clear of
restrictions, will be delivered to the Director as soon as practicable
thereafter. If the Participant's service on the Board terminates prior to the
end of the Restriction Period for any reason other than those identified in
sections 7(c)(ii)-(vii) above, the Director shall immediately forfeit the shares
to the Company.

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.

(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,

-3-
<PAGE>

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, as set forth in Section 14.

(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
shares of 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 the Company during the Restriction Period as
set forth in Section 7(c)(i). Any dividends or distributions, payable in cash
or in kind, with respect to the Common Stock, shall be paid to the Participant.
All Common Stock issued hereunder shall be fully paid and non-assessable and the
Participant shall have all voting rights with respect thereto. 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).

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

-4-
<PAGE>

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
Honeywell 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. CHANGE IN CONTROL. A "Change in Control" shall be deemed to have
occurred if any one or more of the following events has occurred:

(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 not more than two consecutive years (not
including any period prior to the effective date of this 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 paragraph's (a), (b) or (c) of
this Section 14) 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 approve a merger or consolidation of the Company
with any other person, other than (i) a merger or consolidation which would
result in the

-5-
<PAGE>

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 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).

15. 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. No income
will be recognized by a Participant at the time of issuance of Restricted
Shares, unless an election under Internal Revenue Code Section 83(b) is made by
the Participant.

16. 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.

17. 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.

18. 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.

-6-

<PAGE>
EXHIBIT (11)

HONEYWELL INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
FOR THE FIVE YEARS ENDED DECEMBER 31, 1994
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Primary:
Income:
Income from continuing operations........................... $ 278.9 $ 322.2 $ 399.9 $ 331.1 $ 371.8
Income from discontinued operations......................... 10.1
----------- ----------- ----------- ----------- -----------
Income before extraordinary item and cumulative effect of
accounting changes......................................... 278.9 322.2 399.9 331.1 381.9
Extraordinary item -- loss on early redemption of debt...... (8.6)
Cumulative effect of accounting changes (Note).............. (144.5)
----------- ----------- ----------- ----------- -----------
Net income................................................ $ 278.9 $ 322.2 $ 246.8 $ 331.1 $ 381.9
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Shares:
Weighted average of shares outstanding during the year...... 129,440,052 134,242,394 138,525,414 140,868,222 151,759,942
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Earnings per share:
Continuing operations....................................... $ 2.15 $ 2.40 $ 2.88 $ 2.35 $ 2.45
Discontinued operations..................................... 0.07
----------- ----------- ----------- ----------- -----------
Income before extraordinary item and cumulative effect of
accounting changes........................................ 2.15 2.40 2.88 2.35 2.52
Extraordinary item -- loss on early redemption of debt...... (0.06)
Cumulative effect of accounting changes (Note).............. (1.04)
----------- ----------- ----------- ----------- -----------
Net income................................................ $ 2.15 $ 2.40 $ 1.78 $ 2.35 $ 2.52
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Assuming full dilution:
Income:
Income from continuing operations........................... $ 278.9 $ 322.2 $ 399.9 $ 331.1 $ 371.8
Income from discontinued operations......................... 10.1
----------- ----------- ----------- ----------- -----------
Income before extraordinary item and cumulative effect of
accounting changes........................................ 278.9 322.2 399.9 331.1 381.9
Extraordinary item -- loss on early redemption of debt...... (8.6)
Cumulative effect of accounting changes (Note).............. (144.5)
----------- ----------- ----------- ----------- -----------
Net income................................................ $ 278.9 $ 322.2 $ 246.8 $ 331.1 $ 381.9
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Shares:
Weighted average of shares outstanding during the year...... 129,440,052 134,242,394 138,525,414 140,868,222 151,759,942
Shares issuable in connection with stock plans less shares
purchaseable from proceeds................................ 541,811 1,069,901 1,599,395 2,120,234 1,410,826
----------- ----------- ----------- ----------- -----------
Total shares.............................................. 129,981,863 135,312,295 140,124,809 142,988,456 153,170,768
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Earnings per share:
Continuing operations....................................... $ 2.15 $ 2.38 $ 2.85 $ 2.32 $ 2.43
Discontinued operations..................................... 0.06
----------- ----------- ----------- ----------- -----------
Income before extraordinary item and cumulative effect of
accounting changes........................................ 2.15 2.38 2.85 2.32 2.49
Extraordinary item -- loss on early redemption of debt...... (0.06)
Cumulative effect of accounting changes..................... (1.03)
----------- ----------- ----------- ----------- -----------
Net income................................................ $ 2.15 $ 2.38 $ 1.76 $ 2.32 $ 2.49
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
<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>

<PAGE>
EXHIBIT (12)

HONEYWELL INC. AND SUBSIDIARIES
COMBINED WITH PROPORTIONAL SHARES OF 50% OWNED COMPANIES
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
FOR THE FIVE YEARS ENDED DECEMBER 31, 1994
(DOLLARS IN MILLIONS)

<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Income from continuing operations before income taxes................. $ 369.70 $ 478.50 $ 634.70 $ 509.40 $ 516.40
Deduct:
Equity income....................................................... 10.50 17.80 15.80 14.60 11.50
--------- --------- --------- --------- ---------
Subtotal............................................................ 359.20 460.70 618.90 494.80 504.90
Add (Deduct):
Dividends from less than 50% owned companies........................ 2.37 2.10 1.54 1.44 1.42
Proportional share of income (loss) before income taxes of 50% owned
companies.......................................................... (2.83) .30 .79 .31 .25
--------- --------- --------- --------- ---------
Adjusted income....................................................... 358.74 463.10 621.23 496.55 506.57
--------- --------- --------- --------- ---------
Fixed charges
Interest on indebtedness:
Honeywell Inc. and subsidiaries..................................... 72.89 65.46 87.54 87.23 103.76
50% owned companies................................................. .02
--------- --------- --------- --------- ---------
Subtotal............................................................ 72.89 65.46 87.54 87.23 103.78
Amortization of debt expense.......................................... 2.61 2.54 2.36 2.17 2.24
Interest portion of rent expense...................................... 45.64 44.75 42.68 39.87 38.94
--------- --------- --------- --------- ---------
Total fixed charges................................................... 121.14 112.75 132.58 129.27 144.96
--------- --------- --------- --------- ---------
Total available income................................................ $ 479.88 $ 575.85 $ 753.81 $ 625.82 $ 651.53
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Ratio of earnings to fixed charges.................................... 3.96 5.11 5.69 4.84 4.49
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>

<PAGE>

HONEYWELL INC. AFFILIATES -- JANUARY 1, 1995
<TABLE>
<CAPTION>

A %
I COUNTRY OWNED COMPANY *
- --------------------- ----- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
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:DEL. 100 HONEYWELL OVERSEAS FINANCE COMPANY (HOFC)
A UNITED STATES:DEL. 100 HONEYWELL REALTY, INC.
A UNITED STATES:DEL. 100 HONEYWELL TCAS INC.
A UNITED STATES:IL. 49 FOSTER / HONEYWELL JOINT VENTURE (Partnership)
A UNITED STATES:DEL. 50 GE / MICROSWITCH CONTROL INC.
I UNITED STATES:DEL. 100 MINNEAPOLIS-HONEYWELL REGULATOR COMPANY INC.
A UNITED STATES:CALIF. 100 HONEYWELL PROFIMATICS, INC.
A GERMANY 100 PROFIMATICS EUROPE G.m.b.H.
A CANADA 49 COMCEPT CANADA, INC.
I UNITED STATES: CALIF. 100 TETRA TECH SYSTEMS, INC.
I 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
A ENGLAND 100 HONEYWELL INFORMATION SYSTEMS LIMITED
I ENGLAND 100 HONEYWELL LEASING LIMITED
A ENGLAND 100 HONEYWELL PROFIMATICS 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
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.
I CANADA 100 2526-9648 QUEBEC INC.
A CHILE 100 HONEYWELL CHILE S.A.
A CHINA 55 SINOPEC HONEYWELL (TIANJIN) LIMITED
A CHINA 100 HONEYWELL (TIANJIN) LIMITED
<PAGE>

HONEYWELL INC. AFFILIATES -- JANUARY 1, 1995

A %
I COUNTRY OWNED COMPANY *
- --------------------- ----- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
A DENMARK 100 HONEYWELL A/S
A DENMARK 100 HONEYWELL EJENDOMSVIRKE A/S
I DOMINICAN REPUBLIC 100 HONEYWELL DOMINICANA C. POR A.
A FINLAND 100 HONEYWELL OY
A FINLAND 100 KIINTEISTOHUOLTO MERATEK OY
I FINLAND 100 VM-KIINTEISTOHUOLTO OY
A FINLAND 80.1 HONEYWELL-AHLSTROM ADVANCED CONTROLS OY
A FINLAND 100 TULLINTORIN KIINTEISTPALVELU OY
A FRANCE 99.9 HONEYWELL S.A.
A FRANCE 99.9 DAVILOR TECHNOLOGIE S.A.
A FRANCE 99.9 HONEYWELL AEROSPACE S.A.
A FRANCE 99.9 AURIS S.A.
A FRANCE 99.9 APPLICATEL S.A.
A FRANCE 99.9 ALARME ET PROTECTION - SOCOMEX S.A.
A FRANCE 99.9 ALARME ET PROTECTION S.A.
A FRANCE 99.9 HONEYWELL GERDS S.A.
A GERMANY 100 HONEYWELL HOLDING AG
A GERMANY 100 INGENIEURBETRIEB 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 GERMANY 100 HONEYWELL SAFETY MANAGEMENT SYSTEMS G.m.b.H.
A GERMANY 100 METALLWERKE NEHEIM GOEKE & CO.
A FRANCE 100 MNG FRANCE E.U.R.L.
A BULGARIA 100 HONEYWELL EOOD
A CZECH REPUBLIC 100 HONEYWELL SERVICE AND ENGINEERING CSFR spol.sr.o.
A HUNGARY 100 HONEYWELL SZABALYOZASTECHNIKAI 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 CENTRA-BUERKLE G.m.b.H.
A SWITZERLAND 100 HONEYWELL CENTRABUERKLE AG
A GERMANY 100 B&S KAELTE-WAERME KLIMA G.m.b.H.- GARCHING
A GERMANY 100 B&S KAELTE-WAERME KLIMA G.m.b.H.- STUTTGART
A GERMANY 100 B&S KAELTE-WAERME KLIMA G.m.b.H.- MEERBUSCH
A GERMANY 100 ERG BETRIEBSGESELLSCHAFT m.b.H.
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 70 STERCH CONTROLS
A UKRAINE 100 HONEYWELL LIMITED
A HONG KONG 100 HONEYWELL LIMITED
A INDIA 100 HONEYWELL INDIA SOFTWARE OPERATION PTE. LIMITED
A INDIA 39.5 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 100 TECHNOREG 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.

<PAGE>

HONEYWELL INC. AFFILIATES -- JANUARY 1, 1995

A %
I COUNTRY OWNED COMPANY *
- --------------------- ----- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
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 CHINA 100 DALIAN YAMATAKE CONTROL INSTRUMENTS CO., LTD.
A CHINA 60 YAMATAKE-SIC BUILDING AUTOMATION CO., LTD.
A CHINA 52.9 YAMATAKE-SIC CONTROL 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.
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 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 100 HONEYWELL SAFETY MANAGEMENT SYSTEMS B.V.
A SINGAPORE 100 HONEYWELL SAFETY MANAGEMENT SYSTEMS PTE. LTD.
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 NORWAY 100 HONEYWELL MILJOPARTNER A/S
A NORWAY 100 HONEYWELL KOLBERG SERVICE 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 INUCONTROL AB
A SWITZERLAND 100 HONEYWELL AG
A TAIWAN 100 HONEYWELL TAIWAN LIMITED
A THAILAND 100 HONEYWELL SYSTEMS (THAILAND) LIMITED
A VENEZUELA 100 HONEYWELL C.A.
I VENEZUELA 100 SERVICIOS HONEYWELL C.A.
A PANAMA 100 HONEYWELL PANAMA, S.A.

<FN>
NOTE: A = ACTIVE
I = INACTIVE

* 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 (23)

CONSENT OF INDEPENDENT AUDITORS

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 Nos. 33-62300 and 33-57135 on Form S-3, of our report dated February
13, 1995, appearing in this Annual Report on Form 10-K of Honeywell Inc. for the
year ended December 31, 1994.

Deloitte & Touche LLP
Minneapolis, Minnesota
March 28, 1995

<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 M. HJERPE, 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, 1994, with full power to file
such report, with all amendments and exhibits thereto and other documents in
connection therewith.