SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
June 16, 1999
________________________________________________
Date of report (Date of earliest event reported)
HONEYWELL INC.
______________________________________________________
(Exact Name of Registrant as Specified in Charter)
Delaware 1-971 41-0415010
(State of (Commission File No.) (IRS Employer
Incorporation) Identification No.)
Honeywell Plaza
Minneapolis, Minnesota
Telephone: (612) 951-1000
____________________________________________________________
(Address of Principal Executive Offices)
Item 5. Other Events.
As previously reported, on June 4, 1999, AlliedSignal Inc., a
Delaware corporation ("AlliedSignal"), Honeywell Inc., a Delaware
corporation, and Blossom Acquisition Corp., a Delaware corporation and a
wholly-owned direct subsidiary of AlliedSignal, entered into an Agreement
and Plan of Merger (the "Merger Agreement"). Pursuant to Section 6.7 of
the the Merger Agreement, at the Effective Time (as defined in the Merger
Agreement), AlliedSignal (to be renamed "Honeywell International Inc." at
the Effective Time) will enter into an employment agreement with Michael R.
Bonsignore substantially in the form attached as an exhibit to the Merger
Agreement. A copy of such exhibit to the Merger Agreement is attached
hereto as Exhibit 10.1.
Item 7. Financial Statements, Pro Forma
Financial Information and Exhibits.
(c) Exhibits
10.1 Form of Employment Agreement between AlliedSignal
(to be renamed "Honeywell International Inc.") and
Michael R. Bonsignore.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, the Registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
Dated: June 15, 1999
HONEYWELL INC.
By: /s/ Edward D. Grayson
______________________________
Name: Edward D. Grayson
Title: Vice President and
General Counsel
EXHIBIT INDEX
Exhibit No. Description
----------- -----------
10.1 Form of Employment Agreement between AlliedSignal
(to be renamed "Honeywell International Inc.") and
Michael R. Bonsignore.
Exhibit 10.1
EMPLOYMENT AGREEMENT
THIS AGREEMENT by and between Honeywell International Inc., a
Delaware corporation (the "Company"), and Michael R. Bonsignore (the
"Executive"), dated and effective as of the Effective Time (as hereinafter
defined).
W I T N E S S E T H:
WHEREAS, the Company has entered into an Agreement and Plan of
Merger (the "Merger Agreement"), dated as of June 4, 1999, by and among the
Company (previously named "AlliedSignal Inc."), Honeywell Inc., a Delaware
corporation ("Honeywell"), and Blossom Acquisition Corp, a Delaware
corporation ("Acquisition"), pursuant to which Acquisition will merge into
Honeywell (the "Merger") and Honeywell will become a wholly-owned
subsidiary of the Company; and
WHEREAS, the Company expects the Executive to play a critical
role in the integration of the business and operations of Honeywell with
those of the Company and to make essential contributions to the future
growth and success of the Company; and;
WHEREAS, the Company wishes to provide for the employment by the
Company of the Executive, and the Executive wishes to serve the Company, in
the capacities and on the terms and conditions set forth in this Agreement;
NOW, THEREFORE, it is hereby agreed as follows:
1. TERM. The Term of this Agreement shall commence as of the
Effective Time (as defined in the Merger Agreement) and end on December 31,
2004. During the Term, the Company shall employ the Executive, and the
Executive shall serve the Company, on the terms and conditions set forth in
this Agreement, for an initial period (the "Initial Period") and a second
period (the "Subsequent Period"). The Initial Period shall begin at the
Effective Time and end on the earlier of (a) the retirement of the current
Chairman of the Company's Board of Directors (the "Current Chairman") on
April 1, 2000; or (b) such earlier date as the Current Chairman ceases to
be Chairman for any reason. The Subsequent Period shall begin at the end
of the Initial Period and end upon expiration of the Term. Notwithstanding
the foregoing, in the event the transactions contemplated by the Merger
Agreement are not consummated, this Agreement shall be null and void.
2. POSITION AND DUTIES. (a) During the Initial Period the
Executive shall serve as the Chief Executive Officer of the Company and
during the Subsequent Period the Executive shall serve as both the Chief
Executive Officer of the Company and as the Chairman of the Company's Board
of Directors; in each case with such duties and responsibilities as are
customarily assigned to such positions, and such other duties and
responsibilities not inconsistent therewith as may from time to time be
assigned to him by the Board of Directors of the Company (the "Board"), and
which duties and responsibilities shall be consistent with those exercised
for such position by the Current Chairman. Without limiting the generality
of the foregoing, during the Term the Executive shall act as (i) the senior
officer of the Company, (ii) the primary spokesperson to shareholders and
the investment community, (iii) the person primarily responsible for
establishing policy and direction for the Company and (iv) the person to
whom the senior executives of the Company report. As of the Effective
Time, the Company shall cause the Executive to be elected as a member of
the Board, to serve as a member of the class of directors with the longest
tenure as of the Effective Time. Thereafter, during the Term, the Company
shall cause the Executive to be included in the slate of persons nominated
to serve as directors on the Board and shall use its best efforts
(including, without limitation, the solicitation of proxies) to have the
Executive elected and reelected to the Board for the duration of the Term.
During the Term, the Executive shall report solely to the Board. Until the
second anniversary of the Effective Time, (i) the removal of the Executive
from the position of Chief Executive Officer or Chairman of the Board, (ii)
prior to the effective date of his election as Chairman of the Board, the
reversal of such election, or (iii) any change in Executives duties and
responsibilities hereunder not concurred in by the Executive shall require
the affirmative vote of at least 75% of the members of the Board (excluding
the Executive); provided, however, that if, at any time prior to such
secondary anniversary, the persons (other than the Executive) designated by
Honeywell pursuant to Section 2.2(a) of the Merger Agreement ("Merger
Agreement Designees") shall represent less than 25% of the members of the
Board (excluding the Executive), then such removal, reversal or change, as
applicable, shall require, in addition to the vote of the Board otherwise
required therefor by this Section 2(a), the affirmative vote of at least
one Merger Agreement Designee.
(b) During the Term, and excluding any periods of vacation and
sick leave to which the Executive is entitled, the Executive shall devote
his full attention and time during normal business hours to the business
and affairs of the Company and, to the extent necessary to discharge the
responsibilities assigned to the Executive under this Agreement, use the
Executive's reasonable best efforts to carry out such responsibilities
faithfully and efficiently. It shall not be considered a violation of the
foregoing for the Executive to manage his personal investments or serve on
corporate, industry, civic or charitable boards or committees, so long as
such activities do not significantly interfere with the performance of the
Executive's responsibilities as an executive officer of the Company in
accordance with this Agreement.
(c) During the Term, the Executive shall be based at the
Company's principal headquarters in Morristown, New Jersey, except for
travel reasonably required for the performance of the Executive's duties
hereunder.
3. COMPENSATION. (a) BASE SALARY. During the Term, the
Executive shall receive an annual base salary ("Annual Base Salary") of not
less than $1.5 million. The Annual Base Salary shall be payable in
accordance with the Company's regular payroll practice for its senior
executives, as in effect from time to time. During the Term, the Annual
Base Salary shall be reviewed by the Management Development and
Compensation Committee of the Board (the "Compensation Committee") for
possible increase at least annually. Any increase in the Annual Base
Salary shall not limit or reduce any other obligation of the Company under
this Agreement. The Annual Base Salary shall not be reduced below any such
increased amount, and the term "Annual Base Salary" shall thereafter refer
to the Annual Base Salary as so increased.
(b) INCENTIVE COMPENSATION. The Executive shall receive an
annual cash bonus from the Company with respect to 1999 which is equal to
the excess if any of (x) $1 million over (y) the cash bonus paid or
payable to the Executive in respect of 1999 (or any portion thereof) under
Honeywell's annual incentive plans (including any such amounts payable by
reason of shareholder approval of or consummation of the Merger). Such
cash bonus amount shall be paid in accordance with the Company's normal
practice. Commencing on January 1, 2000, the Executive shall have a
minimum target bonus of not less than 100 percent of his Annual Base Salary
(the "Minimum Target Bonus").
(c) OTHER BENEFITS. During the Term: (1) the Executive shall
be entitled to participate in all savings and retirement plans (including
non-qualified supplemental executive retirement plans, subject, however, to
the provisions of this Agreement), and shall be entitled to participate in
all fringe benefit and perquisite practices, policies and programs of the
Company made available to the senior officers of the Company and (2) the
Executive and/or the Executive's eligible dependents, as the case may be,
shall be eligible for participation in, and shall receive all benefits
under, all welfare benefit plans, practices, policies and programs provided
by the Company, including, without limitation, medical, prescription,
dental, disability, salary continuance, employee life insurance, group life
insurance, accidental death and travel accident insurance plans and
programs to the same extent, and subject to the same terms, conditions,
cost-sharing requirements and the like, as are made available to the senior
officers of the Company. In addition to perquisites made available to
senior officers of the Company, the Company shall provide Executive with an
annual financial planning allowance of up to $50,000, a car and driver, use
of Company-owned aircraft for personal travel in accordance with the
Company's security requirements, and a gross-up of any imputed income tax
payable by reason of travel by the Executive's spouse on Company-owned
aircraft when accompanying the Executive on his business travel. The
Company shall reimburse the Executive for relocation expenses in accordance
with the Company's Executive Relocation Policy, a copy of which has been
made available to the Executive.
(d) EQUITY AWARDS. (i) As of the Effective Time, the
Compensation Committee shall grant to the Executive a non-qualified option
(the "Option") to purchase 1.0 million shares of the Company's common stock
("Company Stock") pursuant to the Company's 1993 Stock Plan for Employees
of AlliedSignal Inc. and its Affiliates (the "Stock Plan"). The Option
shall (x) have a ten year term, (y) have a per share exercise price equal
to the fair market value (as defined in the Stock Plan) of the Company
Stock on the day on which the Effective Time occurs and (z) subject to the
provisions hereof, vest and become exercisable with respect to 40% of the
shares of Company Stock subject thereto on December 31, 2000 and with
respect to an additional 30% of the shares subject thereto on each of
December 31, 2001 and December 31, 2002 so long as the Executive is
employed by the Company on each such date. In the event of the termination
of the Executive's employment with the Company for any reason (other than a
termination by the Company for Cause or a voluntary resignation by the
Executive without Good Reason (as each term is defined herein)) (a
"Qualifying Termination"), the Option will become fully vested and
exercisable. To the extent that the Option has become vested and
exercisable, it will remain so vested and exercisable for the remainder of
its term.
(ii) As of the Effective Time, the Compensation Committee shall
grant to the Executive a non-qualified option to purchase 500,000 shares of
Company Stock pursuant to the Stock Plan (the "Performance Option").
Notwithstanding any provision of the Stock Plan to the contrary, the
Performance Option shall (x) have a ten year term, (y) have a per share
exercise price equal to the fair market value of the Company Stock on the
day on which the Effective Time occurs and (z) vest and become exercisable
in accordance with (A) or (B) below, as follows:
(A) With respect to 40% of the shares of Company Stock subject
thereto, on April 1, 2001, if and only if the growth in
Consolidated Earnings Per Share (as defined below) for calendar
year 2000 over calendar year 1999 is at least equal to the
targeted growth for such year set by the Compensation Committee,
as set forth on Appendix A hereto; with respect to an additional
30% of the shares subject thereto, on April 1, 2002, if and only
if the growth in Consolidated Earnings Per Share for calendar
year 2001 over calendar year 2000 is at least equal to the
targeted growth for such year set by the Compensation Committee,
as set forth on Appendix A hereto; and with respect to an
additional 30% of the shares subject thereto, on April 1, 2003,
if and only if the growth in Consolidated Earnings Per Share for
calendar year 2002 over calendar year 2001 is at least equal to
the targeted growth for such year set by the Compensation
Committee, as set forth on Appendix A hereto; or
(B) With respect to 100% of the shares of Company Stock subject
thereto, on April 1, 2003, if and only if the cumulative growth
in Consolidated Earnings Per Share for the three-year calendar
period commencing January 1, 2000 and ending December 31, 2002
over calendar year 1999 is at least equal to the cumulative
Consolidated Earnings Per Share target set by the Compensation
Committee for such three-year period, as set forth on Appendix A
hereto.
In the event of a Qualifying Termination prior to April 1, 2003 or a
voluntary resignation by the Executive after December 31 2002 and prior to
April 1, 2003, any portion of the Performance Option which has not become
vested and exercisable as of the date of such termination shall remain
outstanding and shall be treated for all purposes as if the Executive
remained employed by the Company through April 1, 2003. To the extent that
any portion of the Performance Option (AA) has not become vested and
exercisable pursuant to paragraphs (A) or (B) above by April 1, 2003, the
portion of the Performance Option which is unvested and not exercisable on
such date shall terminate and be of no further force and effect, and (BB)
has become vested and exercisable, the portion of the Performance Option
which has become vested and exercisable shall remain vested and exercisable
for the remainder of its term. For purposes of the Performance Option,
"Consolidated Earnings Per Share" for a calendar year shall mean
consolidated net income for that year as shown on the consolidated
statement of income for the Company, adjusted to omit the effects of
extraordinary items, gain or loss on the disposal of a business segment
(other than provisions for operating losses or income during the phase-out
period), unusual or infrequently occurring events or transactions and the
cumulative effects of changes in accounting principles, all as determined
in accordance with generally accepted accounting principles; divided by the
weighted average number of outstanding shares of Company Stock for the
calendar year.
(iii) As of the Effective Time, the Compensation Committee shall
also grant 375,000 restricted stock units to the Executive (such units, the
"Restricted Units") pursuant to the Stock Plan. Notwithstanding any
provision of the Stock Plan to the contrary, and subject to the provisions
hereof, the restrictions on the Restricted Units shall lapse solely upon
the attainment of the performance criteria set forth below:
As to one-third of the Restricted Units, on April 1, 2001, if and
only if the Company's Operating Margin (as defined below) for
calendar year 2000 is at least equal to the target for such year
set by the Compensation Committee, as set forth on Appendix B
hereto; as to an additional one-third of the Restricted Units, on
April 1, 2002, if and only if the Company's Operating Margin for
calendar year 2001 is at least equal to the target for such year
set by the Compensation Committee, as set forth on Appendix B
hereto; and as to an additional one-third of the Restricted Units
on April 1, 2003, if and only if the Company's Operating Margin
for calendar year 2002 is at least equal to the target for such
year set by the Compensation Committee, as set forth on Appendix
B hereto.
Dividend equivalents will be awarded pursuant to the Stock Plan with
respect to such Restricted Units. In the event of a Qualifying Termination
prior to April 1, 2003 or a voluntary resignation by the Executive after
December 31, 2002 and prior to April 1, 2003, all Restricted Units as to
which the restrictions have not lapsed as of the date of such termination
shall remain outstanding and shall be treated for all purposes as if the
Executive remained employed by the Company through April 1, 2003. All
Restricted Units as to which the restrictions have not lapsed as of April
1, 2003 shall expire. The Executive shall have no right to receive any
payment in respect of any Restricted Units that expire pursuant to the
preceding sentence. For purposes of the Restricted Units, "Operating
Margin" for a calendar year shall mean net sales less operating expenses,
including cost of goods sold and sales, general and administration expenses
and other recurring operating expenses, determined in accordance with
generally accepted accounting principles, but adjusted to omit the effects
of unusual or infrequently occurring events or transactions, including,
without limitation, restructuring charges and gain or loss on any business
disposition, including without limitation of any strategic business unit or
strategic business enterprise.
(iv) During the Term, the Executive shall be entitled to be
granted additional options to acquire Company Stock, restricted stock units
and other equity awards at the discretion of the Compensation Committee.
(e) ADDITIONAL RETIREMENT BENEFIT. (i) Subject to the terms and
conditions set forth herein, the Executive shall be entitled to payment by
the Company of an annual supplemental retirement benefit (the "SERP
Benefit"), expressed as a life annuity commencing on the Executive's sixty-
fifth birthday, equal to (1) the product of (A) 60% times (B) the
Executive's Final Average Compensation (as defined below), minus (2) the
aggregate annual vested benefit (expressed as a life annuity commencing on
the Executive's sixty-fifth birthday) payable to the Executive under the
terms of any "defined benefit plan" (as defined in Section 3(35) of the
Employee Retirement Income Security Act of 1974, as amended) or plans,
including excess benefit or supplemental retirement plans or agreements,
maintained by the Company or H. As of the Effective Time, the Executive
shall be fully vested in the SERP Benefit. The SERP Benefit shall be
reduced by 3% for each year (or pro rata for any portion thereof) during
which the Executive collects his SERP Benefit prior to January 1, 2003.
Following the Executive's death (whether or not the payment of the SERP
Benefit has commenced), an annual survivor benefit equal to 50% of the SERP
Benefit shall be payable to the Executive's surviving spouse (if any) for
her life.
(ii) The SERP Benefit shall be payable at such time and in such
manner and shall in all other respects be subject to such terms and
conditions as are applicable to retirement benefits payable under the
supplemental retirement of the Company in which Executive participates as
of the date on which Executive's employment terminates (which plan shall
recognize salary and bonus in computing benefits thereunder and shall
permit Executive to elect to receive benefits in a lump sum); provided,
however, that if the Executive is entitled to severance pay under the
"Severance Plan" (as defined below) upon termination of his employment,
payment of the SERP Benefit shall not commence until expiration of the
"Severance Period" (as defined below); and provided, further, however, that
for purposes of computing SERP Benefit payable prior to January 1, 2003, it
shall be assumed that benefits under the plans referred to in Section
3(e)(i)(2) above commenced at the same time as such SERP Benefit. For
purposes of this Section 3(e), Final Average Compensation shall mean the
greater of (x) the average of the Executive's base salary and bonus with
respect to the three calendar years coincident with or immediately
preceding the end of the Executive's employment with the Company (including
for this purpose, if applicable, base salary and bonus paid or payable to
the Executive by H) and (y) the Executive's "Final Average Earnings" (as
defined in the H Retirement Benefit Plan as in effect on June 4, 1999, but
without regard to (A) the benefit limitation under Section 415 of the Code
(as hereinafter defined), (B) the compensation limitation under Section
401(a)(17) of the Code and (C) the exclusion from the definition of
earnings under such plan of any amounts of deferred compensation)
determined as of December 31, 1999. For purposes of this Section 3(e),
(aa) Final Average Compensation shall take into account severance payments
made under Section 5(a) hereof which payments shall be treated as having
been made over the Severance Period (as defined in the Severance Plan
referred to in Section 5(a)) and (bb) the Executive will be treated as
having remained employed by the Company during the Severance Period.
(iii) The Company agrees to provide the Executive for the period
beginning at the end of the Term (or in the event of a voluntary
resignation on or after January 1, 2003, from and after the Date of
Termination in connection therewith) and for the remainder of his life
thereafter the facilities, services and other arrangements that were
provided to him during the Term (including office and clerical support,
executive transportation and other security services, financial and tax
planning services, continued access to certain other general facilities and
services and reimbursements for properly documented expenses, if any,
incurred on behalf of the Company and at the request of his successor, but
excluding the use of Company-owned aircraft for personal travel).
4. TERMINATION OF EMPLOYMENT. (a) DEATH OR DISABILITY. The
Executive's employment shall terminate automatically upon the Executive's
death during the Term. The Company shall be entitled to terminate the
Executive's employment because of the Executive's Disability during the
Term. "Disability" means that the Executive is disabled within the meaning
of the Company's long-term disability policy or, if there is no such policy
in effect, that (i) the Executive has been substantially unable, for 120
business days within a period of 180 consecutive business days, to perform
the Executive's duties under this Agreement, as a result of physical or
mental illness or injury, and (ii) a physician selected by the Company or
its insurers, and acceptable to the Executive or the Executive's legal
representative, has determined that the Executive is disabled. A
termination of the Executive's employment by the Company for Disability
shall be communicated to the Executive by written notice, and shall be
effective on the 30th day after receipt of such notice by the Executive
(the "Disability Effective Date"), unless the Executive returns to full-
time performance of the Executive's duties before the Disability Effective
Date.
(b) TERMINATION BY THE COMPANY. (i) Subject to Section 2(a)
hereof, the Company may terminate the Executive's employment during the
Term for Cause or without Cause. "Cause" means the conviction of the
Executive for the commission of a felony, or willful gross misconduct by
the Executive that results in material and demonstrable damage to the
business or reputation of the Company. No act or failure to act on the
part of the Executive shall be considered "willful" unless it is done, or
omitted to be done, by the Executive in bad faith or without reasonable
belief that the Executive's action or omission was in the best interests of
the Company. Any act or failure to act that is based upon authority given
pursuant to a resolution duly adopted by the Board, or the advice of
counsel for the Company, shall be conclusively presumed to be done, or
omitted to be done, by the Executive in good faith and in the best
interests of the Company.
(ii) A termination of the Executive's employment for Cause
shall not be effective unless it is accomplished in accordance with the
following procedures. The Company shall give the Executive written notice
("Notice of Termination for Cause") of its intention to terminate the
Executive's employment for Cause, setting forth in reasonable detail the
specific conduct of the Executive that it considers to constitute Cause and
the specific provision(s) of this Agreement on which it relies, and stating
the date, time and place of the Special Board Meeting for Cause. The
"Special Board Meeting for Cause" means a meeting of the Board called and
held specifically and exclusively for the purpose of considering the
Executive's termination for Cause, that takes place not less than five nor
more than thirty business days after the Executive receives the Notice of
Termination for Cause. The Executive shall be given an opportunity,
together with counsel, to be heard at the Special Board Meeting for Cause.
The Executive's termination for Cause shall be effective when and if a
resolution is duly adopted at the Special Board Meeting for Cause by
affirmative vote of three-quarters of the entire membership of the Board
(other than the Executive) but in any event, in accordance with Section
2(a) hereof, to the extent, applicable stating that, in the good faith
opinion of the Board, the Executive is guilty of the conduct described in
the Notice of Termination for Cause and that such conduct constitutes Cause
under this Agreement. The failure to set forth any fact or circumstance in
a Notice of Termination for Cause shall not constitute a waiver of the
right to assert, and shall not include the Company from asserting, such
fact or circumstance in an attempt to enforce any right under or provision
of this Agreement.
(c) GOOD REASON. (i) The Executive may terminate employment
for Good Reason or without Good Reason. "Good Reason" means, without the
Executive's written consent:
(A) the failure of the Executive to become the Chairman of the
Board upon the expiration of the Initial Period or the failure
of the Executive to be retained as Chief Executive Officer of
the Company during the Term or as Chairman of the Board during
the Subsequent Period;
(B) the assignment to the Executive of any duties or
responsibilities inconsistent in any respect with those
customarily associated with the positions to be held by the
Executive during the applicable period pursuant to this
Agreement, or any other action by the Company that results in a
diminution in the Executive's position, authority, duties or
responsibilities, other than an isolated, insubstantial and
inadvertent action that is not taken in bad faith and is
remedied by the Company promptly after receipt of notice thereof
from the Executive;
(C) any failure by the Company to comply with any provision of
Section 3 of this Agreement, other than an isolated,
insubstantial and inadvertent failure that is not taken in bad
faith and is remedied by the Company promptly after receipt of
notice thereof from the Executive;
(D) any requirement by the Company that the Executive's services
be rendered primarily at a location more than 50 miles from the
location provided for in paragraph (c) of Section 2 of this
Agreement (except for travel reasonably required for the
performance of the Executive's duties hereunder);
(E) any failure by the Company to comply with paragraph (c) of
Section 10 of this Agreement;
(F) any other material breach of this Agreement by the Company
that is not remedied by the Company promptly after receipt of
notice thereof from the Executive.
(ii) A termination of employment by the Executive for Good
Reason shall be effectuated by giving the Company written notice ("Notice
of Termination for Good Reason") of the termination, setting forth in
reasonable detail the specific conduct of the Company that constitutes Good
Reason and the specific provision(s) of this Agreement on which the
Executive relies. A termination of employment by the Executive for Good
Reason shall be effective on the fifth business day following the date when
the Notice of Termination for Good Reason is given, unless the notice sets
forth a later date (which date shall in no event be later than 30 days
after the notice is given).
(iii) The failure to set forth any fact or circumstance in a
Notice of Termination for Good Reason shall not constitute a waiver of the
right to assert, and shall not preclude the Executive from asserting such
fact or circumstance in an attempt to enforce any right under or provision
of this Agreement.
(iv) A termination of the Executive's employment by the
Executive without Good Reason shall be effected by giving the Company 30
days written notice of the termination.
(d) DATE OF TERMINATION. The "Date of Termination" means the
date of the Executive's death, the Disability Effective Date or the date on
which the termination of the Executive's employment by the Company for
Cause or without Cause or by the Executive for Good Reason or without Good
Reason is effective.
5. OBLIGATIONS OF THE COMPANY UPON TERMINATION. (a) OTHER THAN
FOR CAUSE, DEATH OR DISABILITY, OR FOR GOOD REASON. In the event of the
termination of Executive's employment during the Term, except as otherwise
provided in this Agreement, the consequences of such termination shall be
determined in accordance with the Company's Severance Plan for Senior
Executives or any successor thereto (the "Severance Plan"), which is
incorporated by reference in this Agreement, with the additions and
modifications in respect of the Executive as set forth below. The
Executive shall be treated as an "Officer Participant" under the Severance
Plan. The "Severance Period" for purposes of the Severance Plan shall, in
Executive's case, be thirty-six months. The "Severance Pay Factor" for
purposes of the Severance Plan shall, in Executive's case, be equal to the
number of months of Executive's Severance Period. "Covered Termination"
for purposes of the Severance Plan shall mean (i) any termination of the
Executive's employment by the Company other than for Cause (as defined in
Section 4(b) of this Agreement) and (ii) any termination of the Executive's
employment by the Executive for Good Reason (as defined in Section 4(c) of
this Agreement). Benefit Payments under the Severance Plan shall be made
in a lump-sum, within thirty days after the Date of Termination. There
will be no forfeiture of benefits pursuant to Section 20(c) of the
Severance Plan unless the Executive's employment has been terminated for
Cause (as defined in Section 4(b) hereof) and in no event shall the
Executive forfeit any portion of the benefits described in Section 3(e)
hereof. In addition, if during the Term, the Company terminates the
Executive's employment for any reason other than Cause, death or
Disability, or the Executive terminates his employment for Good Reason, (i)
all of the Executive's then outstanding equity awards (other than the
Option, Performance Option and Restricted Units, which shall be treated in
the manner set forth in Section 3(d) hereof) shall be treated in accordance
with the terms of the plan and agreements evidencing such equity awards and
(ii) the Company shall promptly pay to the Executive any portion of the
Executive's Annual Base Salary and bonus through the Date of Termination
that has not yet been paid. The Company shall also pay or provide to the
Executive, in the event of such a termination, the benefits described in
Section 3(e) hereof and all compensation and benefits payable to the
Executive under the terms of the Company's compensation and benefit plans,
programs or arrangements as in effect immediately prior to the Date of
Termination.
(b) DEATH AND DISABILITY. If the Executive's employment is
terminated by reason of the Executive's death or Disability during the
Term, the Company shall pay to the Executive or, in the case of the
Executive's death, to the Executive's designated beneficiaries (or, if
there is no such beneficiary, to the Executive's estate or legal
representative), in a lump sum in cash within 30 days after the Date of
Termination, the sum of the following amounts: (1) any portion of the
Executive's Annual Base Salary and bonus through the Date of Termination
that has not yet been paid; (2) an amount equal to the product of (A) the
target bonus that the Executive would have been eligible to earn for the
period during which such termination occurs, and (B) a fraction, the
numerator of which is the number of days in such period through the Date of
Termination, and the denominator of which is the total number of days in
the relevant period; and (3) the benefits described in Section 3(e) hereof
and all compensation and benefits payable to the Executive under the terms
of the Company's compensation and benefit plans, programs or arrangements
as in effect immediately prior to the Date of Termination. If the
Executive's employment is terminated by reason of the Executive's death or
Disability during the Term, all of the Executive's then outstanding equity
awards (other than the Option, Performance Option and Restricted Units,
which shall be treated in the manner set forth in Section 3(d) hereof)
shall be treated in accordance with the terms of the plan and agreements
evidencing such equity awards.
(c) BY THE COMPANY FOR CAUSE; BY THE EXECUTIVE OTHER THAN FOR
GOOD REASON. If the Executive's employment is terminated by the Company
for Cause or the Executive voluntarily terminates employment other than for
Good Reason during the Term, (1) the Company shall pay to the Executive in
a lump sum in cash immediately prior to the Date of Termination, any
portion of the Executive's Annual Base Salary and bonus earned through the
Date of Termination that has not been paid; (2) all then unvested equity
awards shall, except as otherwise provided in Section 3(d) hereof, be
forfeited and all previously vested options and other vested equity awards
granted on or after the Effective Time shall be treated according to the
provisions of the plan and agreements under which such awards were granted;
and (3) the Company shall also pay or provide to the Executive the benefits
described in Section 3(e) hereof and all compensation and benefits payable
to the Executive under the terms of the Company's compensation and benefit
plans, programs or arrangements as in effect immediately prior to the Date
of Termination.
(d) Whether or not Executive's employment is terminated
hereunder, if any payments under this Agreement or any other payments or
benefits received or to be received by the Executive in connection with the
Merger, a change in control of the Company, termination of the Executive's
employment, or cessation of the Executive's active service (whether
pursuant to the terms of this Agreement or any other plan, arrangement or
agreement with the Company, or any person affiliated with the Company) (the
"Severance Payments"), will be subject to the tax (the "Excise Tax")
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended
(the "Code") (or any similar tax that may hereafter be imposed), the
Company shall pay at the time specified below, an additional amount (the
"Gross-Up Payment") such that the net amount retained by the Executive,
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 5(d), 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 Company's independent auditors and acceptable to the
Executive ("tax counsel"), such Severance Payments (in whole or in part) do
not constitute parachute payments, or such excess parachute payments (in
whole or in part) represent reasonable compensation for services actually
rendered within the meaning of Section 280G(b)(4) of the Code in excess of
the base amount within the meaning of Section 280G(b)(3) of the Code, or
are otherwise not subject to the Excise Tax, (b) the amount of the
Severance Payments which shall be treated as subject to the Excise Tax
shall be equal to the lesser of (1) the total amount of the Severance
Payments or (2) the amount of excess parachute payments within the meaning
of Section 280G(b)(1) (after applying clause (a), above), and (c) the value
of any non-cash benefits or any deferred payment or benefit shall be
determined by the Company'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, the Executive shall be
deemed to pay federal income taxes at Executive's 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 Executive's highest
marginal rate of taxation in the state and locality of Executive's
residence on the Date of Termination (or, as applicable, at the Effective
Time), 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, the Executive shall repay to the Company 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 the Executive 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
(including by reason of any payment the existence or amount of which cannot
be determined at the time of the Gross-Up Payment), the Company 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 under this paragraph
shall be payable within five (5) days of the determination of tax counsel
that such a payment is required hereunder and, if applicable, within five
(5) days of a final determination that additional Excise Tax is payable.
6. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall
prevent or limit the Executive's continuing or future participation in any
plan, program, policy or practice provided by the Company or any of its
affiliated companies for which the Executive may qualify (but, other than
as expressly provided in Section 5 hereof, excluding in each case, any
severance plan or arrangement of the Company or any of its affiliated
companies) nor shall anything in this Agreement limit or otherwise affect
such rights as the Executive may have under any contract or agreement with
the Company or any of its affiliated companies. Vested benefits and other
amounts that the Executive is otherwise entitled to receive under any plan,
policy, practice or program of, or any contract of agreement with, the
Company or any of its affiliated companies on or after the Date of
Termination shall be payable in accordance with the terms of each such
plan, policy, practice, program, contract or agreement, as the case may be,
except as explicitly modified by this Agreement.
7. FULL SETTLEMENT. The Company's obligation to make the
payments provided for in, and otherwise to perform its obligations under,
this Agreement shall not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action that the Company may
have against the Executive or others. In no event shall the Executive be
obligated to seek other employment or take any other action by way of
mitigation of the amounts payable to the Executive under any of the
provisions of this Agreement such amounts shall not be reduced, regardless
of whether the Executive obtains other employment.
8. CONFIDENTIAL INFORMATION; COMPETITION; SOLICITATION. The
Executive shall hold in a fiduciary capacity for the benefit of the Company
all secret or confidential information, knowledge or data relating to the
Company or any of its affiliated companies and their respective businesses
that the Executive obtains during the Executive's employment by the Company
or any of its affiliated companies and that is not public knowledge (other
than as a result of the Executive's violation of this Section 8)
("Confidential Information"). The Executive shall not communicate, divulge
or disseminate Confidential Information at any time during or after the
Executive's employment with the Company, except with the prior written
consent of the Company or as otherwise required by law or legal process.
If the Executive resigns without Good Reason or if the Executive is
terminated by the Company with Cause prior to the end of the Term, then for
two years after the Date of Termination, the Executive will not, without
the written consent of the Board, directly or indirectly, (A) knowingly
engage or be interested in (as owner, partner, stockholder, employee,
director, officer, agent, consultant or otherwise), with or without
compensation, any business in the United States and Canada which is in
competition with any line of business actively being conducted on the Date
of Termination by the Company or any of its subsidiaries, and (B) hire any
person who was employed by the Company or any of its subsidiaries or
affiliates (other than persons employed in a clerical or other non-
professional position) within the six-month period preceding the date of
such hiring, or solicit, entice, persuade or induce any person or entity
doing business with the Company and its subsidiaries and affiliates, to
terminate such relationship or to refrain from extending or renewing the
same. Nothing herein, however, will prohibit the Executive from acquiring
or holding not more than one percent of any class of publicly traded
securities of any such business; provided that such securities entitle the
Executive to no more than one percent of the total outstanding votes
entitled to be cast by security holders of such business in matters on
which such security holders are entitled to vote.
9. DISPUTE RESOLUTION; ATTORNEYS' FEES. All disputes arising
under or related to the employment of the Executive or the provisions of
this agreement shall be settled by arbitration under the rules of the
American Arbitration Association then in effect, such arbitration to be
held in Morristown, New Jersey, as the sole and exclusive remedy of either
party and judgement on any arbitration award may be entered in any court of
competent jurisdiction. The Company agrees to pay, as incurred, to the
fullest extent permitted by law, all legal fees and expenses that the
Executive may reasonably incur as a result of any contest (regardless of
the outcome) by the Company, the Executive or others of the validity or
enforceability of or liability under, or otherwise involving, any provision
of this Agreement, together with interest on any delayed payment at the
applicable federal rate provided for in Section 7872(f)(2)(A) of the Code.
The Company shall also pay all reasonable legal fees and expenses incurred
by the Executive in connection with the preparation and negotiation of this
Agreement.
10. SUCCESSORS. (a) This Agreement is personal to the
Executive and, without the prior written consent of the Company, shall not
be assignable by the Executive otherwise than by will or the laws of
descent and distribution. This Agreement shall inure to the benefit of and
be enforceable by the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be binding
upon the Company and its successors and assigns.
(c) The Company shall 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 Company expressly to
assume and agree to perform this Agreement in the same manner and to the
same extent that the Company would have been required to perform it if no
such succession had taken place. As used in this Agreement, the "Company"
shall mean both the Company as defined above and any such successor that
assumes and agrees to perform this Agreement, by operation of law or
otherwise.
11. MISCELLANEOUS. (a) This Agreement shall be governed by,
and construed in accordance with, the laws of the State of New Jersey,
without reference to principles of conflict of laws. The captions of this
Agreement are not part of the provisions hereof and shall have no force or
effect. This Agreement may not be amended or modified except by a written
agreement executed by the parties hereto or their respective successors and
legal representatives.
(b) All notices and other communications under this Agreement
shall be in writing and shall be given by hand delivery to the other party
or by registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
If to the Executive:
__________________
__________________
__________________
If to the Company:
Honeywell International Inc.
101 Columbia Road
P.O. Box 3000
Morristown, NJ 07962-2496
or to such other address as either party furnishes to the other in writing
in accordance with this paragraph (b) of Section 11. Notices and
communications shall be effective when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement. If any provision of this Agreement shall be
held invalid or unenforceable in part, the remaining portion of such
provision, together with all other provisions of this Agreement, shall
remain valid and enforceable and continue in full force and effect to the
fullest extent consistent with law.
(d) Notwithstanding any other provision of this Agreement, the
Company may withhold from amounts payable under this Agreement all federal,
state, local and foreign taxes that are required to be withheld by
applicable laws or regulations.
(e) The Executive's or the Company's failure to insist upon
strict compliance with any provisions of, or to assert, any right under,
this Agreement (including, without limitation, the right of the Executive
to terminate employment for Good Reason pursuant to paragraph (c) of
Section 4 of this Agreement) shall not be deemed to be a waiver of such
provision or right or of any other provision of or right under this
Agreement.
(f) The Executive and the Company acknowledge that, as of the
Effective Time, this Agreement supersedes (i) the change in control letter
agreement between the Executive and Honeywell, dated as of [ ] and
(ii) any other agreement between them concerning the subject matter hereof
and that, following the Effective Time, no such agreement shall be of any
further force or effect.
(g) The rights and benefits of the Executive under this
Agreement may not be anticipated, assigned, alienated or subject to
attachment, garnishment, levy, execution or other legal or equitable
process except as required by law. Any attempt by the Executive to
anticipate, alienate, assign, sell, transfer, pledge, encumber or charge
the same shall be void. Payments hereunder shall not be considered assets
of the Executive in the event of insolvency or bankruptcy.
(h) This Agreement may be executed in several counterparts, each
of which shall be deemed an original, and said counterparts shall
constitute but one and the same instrument.
IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's hand and, pursuant to the authorization of its Board, the
Company has caused this Agreement to be executed in its name on its behalf,
all as of the day and year first above written.
HONEYWELL INTERNATIONAL INC.
By: ___________________________
Title:
_______________________________
Michael R. Bonsignore
APPENDIX A
Consolidated Earnings Per Share Growth
Calendar Year Growth in Consolidated EPS
------------- --------------------------
2000 vs. 1999 20%
2001 vs. 2000 17%
2002 vs. 2001 16%
Cumulative Consolidated Earnings Per Share Growth
Cumulative Consolidated Earnings Per Share over the three-year calendar
period commencing January 1, 2000 and ending December 31, 2002 must be at
least 53% greater than the Consolidated Earnings Per Share for calendar
year 1999.
APPENDIX B
Calendar Year Target Operating Margin
------------- -----------------------
2000 15%
2001 16%
2002 17%
