Employment Agreement

Amendment to Employment Agreement

Letter Agreement

Retention Agreement

Severance Agreement

Amendment to Severance Agreement

Amendment 2 to Severance Agreement

 

 

 

 

 

 

 

                                                                  Exhibit 10.24
 
 
                              EMPLOYMENT AGREEMENT
 
         THIS AGREEMENT, dated as of February 18, 2002, by and between Honeywell
International Inc. ("Honeywell"), a Delaware corporation (together with its
successors and assigns permitted under this Agreement, the "Company"), and David
M. Cote ("Executive").
 
                              W I T N E S S E T H:
 
         WHEREAS, the Company and Executive desire to enter into an Agreement
under which Executive will serve the Company in the initial capacities of
President, Chief Executive Officer and following retirement of the current
Chairman, as Chairman of the Board of Directors of the Company on the terms and
conditions set forth in this Agreement;
 
         NOW, THEREFORE, in consideration of the execution and delivery of these
presents, the mutual promises contained herein and other good and valuable
consideration, receipt of which is mutually acknowledged, the Company and
Executive, as the parties hereto, hereby agree as follows:
 
         1. DEFINITIONS.
 
              (a) "Base Salary" shall mean the salary provided for in Section
4(a) below, or any increased salary granted to Executive pursuant to Section
4(a).
 
              (b) "Board of Directors" or "Board" shall mean the Board of
Directors of the Company.
 
              (c) "Cause" shall mean the conviction of Executive for the
commission of a felony or willful gross neglect or willful gross misconduct by
Executive in carrying out Executive's duties that results, in either case, in
material harm to the business or to the reputation of the Company. No act or
failure to act on the part of Executive shall be considered "willful" unless it
is done, or omitted to be done, by Executive in bad faith or without reasonable
belief that Executive's action or omission was in the best interests of the
Company.
 
              (d) "Change in Control" shall have the meaning set forth in the
Severance Plan.
 
              (e) "Compensation Committee" shall mean the Management Development
and Compensation Committee of the Board of Directors.
 
              (f) "Confidential Information" shall mean all secret, confidential
or proprietary information, knowledge or data relating to the Company or any of
its affiliated companies and their respective businesses that Executive obtains
during Executive's employment by the Company or any of its affiliated companies
and that is not public knowledge (other than as a result of Executive's
violation of Section 8) or as described in the Agreement Relating to
Intellectual Property and Confidential Information, attached as Exhibit A
hereto.
 
              (g) "Disability" shall mean that Executive is disabled within the
meaning of the Company's long-term disability policy or, if there is no such
policy in effect, that Executive
 
 
 
 
 
 
<PAGE>
 
 
 
 
                                      -2-
 
 
has been substantially unable, for 120 business days within a period of 180
consecutive business days, to perform 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 Executive or Executive's legal
representative, has determined that Executive is disabled.
 
              (h) "Disability Effective Date" shall mean the 30th day after
receipt by Executive of Notice of Disability pursuant to Section 5(a) of this
Agreement.
 
              (i) "Effective Date" shall mean the later of (a) the date that
this Agreement is executed by the Company and Executive or (b) the date on which
Executive's termination of employment with TRW, Inc, as Chief Executive Officer
and Chairman of the Board, becomes effective and Executive can commence full
time employment with the Company under this Agreement.
 
              (j) "Good Reason" shall mean, without Executive's written consent:
 
                   (i) Any of the following:
 
                        (1) the failure of Executive to be elected Chairman of
              the Board on or before July 1, 2002, or the failure of Executive
              to be retained as Chief Executive Officer of the Company during
              the Term of Employment or as Chairman of the Board once so
              elected;
 
                        (2) the assignment to Executive of any duties or
              responsibilities materially inconsistent with those customarily
              associated with the positions to be held by Executive during the
              applicable period pursuant to this Agreement, or any other action
              by the Company that results in a significant diminution in
              Executive's position, authority, duties or responsibilities;
 
                        (3) failure by the Company to comply with paragraph (c)
              of Section 10 of this Agreement;
 
                        (4) any material breach of this Agreement by the Company
              that is not remedied by the Company promptly after receipt of
              Notice thereof from Executive;
 
                        (5) the Company giving Notice to Executive that the term
              of the Agreement will no longer be extended in accordance with
              Section 2 of this Agreement; or
 
                        (6) any factor that would be considered "Good Reason"
              under Part II of the Severance Plan (as defined below). For the
              avoidance of doubt, "Good Reason" under the Severance Plan shall
              include failure of Executive to continue as Chairman and Chief
              Executive Officer of the surviving corporation after a Change in
              Control.
 
                   (ii) A termination of employment by Executive for Good Reason
         shall be effectuated by giving the Company Notice ("Notice of
         Termination for Good
 
 
 
 
 
 
<PAGE>
 
 
 
 
                                      -3-
 
 
         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 Executive relies. A
         termination of employment by Executive for Good Reason shall be
         effective on the fifteenth 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 Executive from asserting
         such fact or circumstance in an attempt to enforce any right under or
         provision of this Agreement.
 
                   (iv) A termination of Executive's employment by Executive
         without Good Reason shall be effected by giving the Company at least 90
         days' written Notice of the termination, unless the Company elects to
         make it effective earlier.
 
              (k) "Incentive Plan" shall mean the AlliedSignal Inc. Incentive
Compensation Plan for Executive Employees and any successor to such plan
 
              (l) "Notice" shall mean any notice provided pursuant to Section
11(b) of this Agreement.
 
              (m) "Salary Deferral Plan" shall mean the Salary Deferral Plan for
Selected Employees of Honeywell International Inc. and its Affiliates (Career
Band 6 and Above or Employees Who Occupy Positions Equivalent Thereto), and any
successor to such plan.
 
              (n) "SERP Benefit" shall mean an annual supplemental retirement
benefit provided pursuant to Section 4(e) of this Agreement.
 
              (o) "Severance Plan" shall mean the Honeywell International Inc.
Severance Plan for Senior Executives, as amended and restated effective as of
December 20, 2001, or any successor to such plan.
 
              (p) "Special Board Meeting for Cause" shall mean a meeting of the
Board called and held specifically and exclusively for the purpose of
considering Executive's termination for Cause, that takes place not less than
five nor more than thirty business days after Executive receives the Notice of
Termination for Cause pursuant to Section 5(b) of this Agreement.
 
              (q) "Stock Plan" shall mean the 1993 Stock Plan for Employees of
Honeywell International Inc. and its Affiliates, or any successor to such plan.
 
              (r) "Term of Employment" shall mean, initially, the five-year
period from the Effective Date to the fifth anniversary of such date, and such
additional period of employment as provided in Section 2 below.
 
 
 
 
 
 
<PAGE>
 
 
 
 
                                      -4-
 
 
         2. TERM OF EMPLOYMENT.
 
         Executive and the Company agree that Executive shall be employed by the
Company from the Effective Date through the fifth anniversary of the Effective
Date under the terms set forth in this Agreement; provided that commencing on
the second anniversary of the Effective Date, the term of this Agreement shall
be extended automatically for one (1) additional day for each day that elapses
after such date (so that the remaining Term of Employment is always three (3)
years), unless either Party provides Notice to the other that such automatic
extension of the Term of Employment shall cease.
 
         Notwithstanding the foregoing, the Term of Employment may be earlier
terminated by either party hereto in accordance with the provisions of Section 5
of this Agreement.
 
         3. POSITION, DUTIES AND RESPONSIBILITIES.
 
         Executive shall be nominated and elected to be a member of the Board of
Directors and President and Chief Executive Officer of the Company, reporting to
the Chairman of the Board as of the Effective Date of this Agreement. Executive
shall assume and begin performing the duties of these offices as of the
Effective Date and shall, during his tenure as Chief Executive Officer, be an
ex-officio member of each committee of the Board. Upon the earlier of (a) July
1, 2002 (which is the expected retirement date of the current Chairman of the
Board) or (b) such earlier date as the current Chairman ceases to be Chairman
for any reason, Executive shall be nominated and upon election shall assume the
duties of Chairman of the Board, as well as continue as its Chief Executive
Officer, and shall serve thereafter in those capacities at the pleasure of the
Board. To the extent Executive's service as an officer or director of the
Company, or appointment to Chairman of the Board, is contingent on a favorable
vote of the shareowners or the Board, it is expressly understood that any
failure to secure such a favorable vote shall not relieve the Company of its
obligation to make the payments or to provide the benefits described herein.
 
         During Executive's Term of Employment, Executive shall have the powers,
duties and responsibilities as are customarily assigned to the Chief Executive
Officer and, as applicable, to the President, and after election as Chairman of
the Board, shall also have the powers, duties and responsibilities as are
customarily assigned to such position, and such other duties and
responsibilities not inconsistent therewith as may from time to time be assigned
to him by the Board.
 
         During the Term of Employment, Executive shall devote substantially all
of his business time and attention to the business and affairs of the Company
and shall use his best efforts, skills and abilities to promote its interests.
During the Term of Employment, Executive shall not, without the consent of the
Board of Directors, engage, directly or indirectly, in any other business for
compensation or profit except that he may, with the approval of the Board of
Directors, serve as a director of any other corporation which, on the advice of
counsel for the Company, is not considered to be in competition with the Company
for purposes of antitrust laws, and he may receive compensation therefor.
Notwithstanding the foregoing, it shall not be considered a violation of this
Agreement for Executive to manage his personal investments or serve on industry,
civic or charitable boards or committees, so long as such activities do not
 
 
 
 
 
 
<PAGE>
 
 
 
 
 
                                      -5-
 
conflict with or significantly interfere with the effective performance of
Executive's responsibilities as an executive officer of the Company and Chairman
of the Board in accordance with this Agreement.
 
         During the Term of Employment, Executive shall be based at the
Company's principal headquarters in Morristown, New Jersey, except for travel
reasonably required for the performance of Executive's duties and
responsibilities hereunder.
 
         4. COMPENSATION.
 
              (a) BASE SALARY. As compensation for Executive's services under
this Agreement, the Company shall pay Executive an annual Base Salary of
$1,500,000, payable in accordance with the Company's regular payroll practice
for its senior executives, as in effect from time to time. During the Term of
Employment, the annual Base Salary shall be reviewed from time to time for
increase (but not decrease without Executive's consent) at the discretion of the
Compensation Committee.
 
              (b) INCENTIVE COMPENSATION. As further compensation, Executive
shall be eligible for annual awards under the Incentive Plan, with a short-term
incentive compensation target opportunity of at least 125% of annual Base Salary
("Target Bonus"). Notwithstanding any provision of the Incentive Plan to the
contrary, the short term incentive award payable to Executive from the Company
with respect to calendar year 2002 shall be no less than $1,875,000, without
proration, payable in the first quarter of 2003 in accordance with the Company's
normal practice.
 
              (c) BENEFITS.
 
                   (i) General. During the Term of Employment, Executive shall
         be entitled to participate in all savings and retirement plans as are
         made available to senior officers of the Company, including
         non-qualified supplemental executive retirement plans (subject,
         however, to the provisions of this Agreement), and Executive and/or
         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.
 
                   (ii) Fringe Benefits and Executive Perquisites. In addition,
         Executive shall be entitled to participate in all fringe benefit and
         perquisite practices, policies and programs of the Company as are made
         available to the senior officers of the Company. Such perquisites
         currently include, without limitation, the annual executive flexible
         perquisite allowance and executive excess liability insurance coverage
         of $10,000,000 per occurrence. The Company shall also reimburse
         Executive for relocation expenses in accordance with the Company's
         Executive Relocation Policy.
 
 
 
 
 
<PAGE>
 
 
 
 
                                      -6-
 
 
                   During the Term of Employment, the Company shall also provide
         Executive with use of Company-owned aircraft for travel in accordance
         with the Company's security requirements.
 
              (d) EQUITY AWARDS.
 
                   (i) Make Whole Equity Awards. In order to keep Executive
         whole in respect of equity compensation he is forfeiting from his
         previous employer, the Company shall, as of the Effective Date of this
         Agreement, grant Executive equity awards pursuant to the Stock Plan, as
         set forth in this Section 4(d)(i)(A) and (B).
 
                        (A) Restricted Unit Grant. As of the Effective Date, the
                   Company shall grant Executive a total of 770,000 Restricted
                   Units pursuant to the Stock Plan. Dividend equivalent cash
                   payments will be awarded to Executive pursuant to such
                   Restricted Units when dividends are paid to shareholders. The
                   restrictions on such Restricted Units shall lapse on the
                   following dates:
 
                   o    55,500 Restricted Units--restrictions lapse on November
                        11, 2002;
 
                   o    14,137 Restricted Unit--restrictions lapse on February
                        22, 2003;
 
                   o    6,963 Restricted Units--restrictions lapse on February
                        22, 2004;
 
                   o    315,200 Restricted Units--restrictions lapse on February
                        1, 2006;
 
                   o    378,200 Restricted Units--restrictions lapse on July 1,
                        2012.
 
                        (B) Stock Option Grant. The Company shall grant
                   Executive a total of 652,200 non-qualified options to
                   purchase common stock of the Company ("Stock Options"). Such
                   Stock Options shall have a ten-year term and shall have a per
                   share exercise price equal to the fair market value (as
                   defined in the Stock Plan) of the Company Stock on the
                   Effective Date. The Stock Options shall vest and become
                   exercisable on the following schedule:
 
                   o    139,800 Stock Options to become exercisable on November
                        11, 2002;
 
                   o    28,550 Stock Options to become exercisable on February
                        22, 2003;
 
                   o    48,576 Stock Options to be exercisable on February 22,
                        2003;
 
                   o    386,698 Stock Options to vest on the Effective Date and
                        become exercisable on the first anniversary of the
                        Effective Date;
 
 
 
 
 
 
<PAGE>
 
 
 
 
 
                                      -7-
 
                   o    48,576 Stock Options to become exercisable on February
                        22, 2004;
 
                   (ii) Make Whole Cash Payments. In order to keep Executive
         whole in respect of certain cash compensation he is (or may be)
         forfeiting from his previous employer, the Company shall pay to
         Executive before the end of the first quarter of 2002, a cash amount of
         $2,700,000 (which represents the estimated amount of the annual bonus
         for 2001 and the 2001 strategic incentive award that would have been
         paid to Executive had he remained in employment with his previous
         employer); provided, however, that the amount of such cash payment
         shall be offset by any 2001 annual bonus and 2001 strategic incentive
         award that Executive receives from his previous employer. In addition,
         before the end of the first quarter of 2003, the Company shall pay
         Executive the amount of $2,250,000 (which represents the estimated
         amount of the 2002 strategic incentive award that would have been paid
         to Executive had he remained in employment with his previous employer);
         provided, however, that the amount of such cash payment shall be offset
         by any 2002 strategic incentive award that Executive receives from his
         previous employer; and provided further, that Executive shall forfeit
         the right to such payment if he terminates his employment without Good
         Reason, is terminated by the Company for Cause, or terminates
         employment on account of death or Disability prior to such date.
 
                   (iii) Sign On Equity Awards. As further compensation for
         Executive's services under this Agreement, as of the Effective Date,
         the Company shall grant to Executive 1,000,000 Stock Options, pursuant
         to the Stock Plan and subject to such additional terms and conditions
         as specified in subparagraphs (iii)(A) and (B), respectively, of this
         Section 4(d). The Stock Options shall have a ten year term and shall
         have a per share exercise price equal to the fair market value (as
         defined in the Stock Plan) of the Company Stock on the Effective Date.
 
                        (A) Basic Stock Option Grant. Subject to the provisions
                   hereof, 675,000 of such Stock Options shall vest and become
                   exercisable with respect to 40% of such shares of Company
                   Stock subject thereto on the first anniversary of such award,
                   and with respect to an additional 30% of the shares subject
                   thereto on each of the two succeeding anniversary dates of
                   such award, as long as Executive is employed by the Company
                   on each such date.
 
                        (B) Performance Option Grant. In order to incent
                   Executive to increase shareholder value, subject to the
                   provisions hereof, 325,000 of such Stock Options shall vest
                   and become exercisable with respect to 40% of the shares of
                   Company Stock subject thereto on the fourth anniversary of
                   such award, and with respect to an additional 30% of the
                   shares of Company stock subject thereto on the fifth and
                   sixth anniversary, respectively, of the grant date of such
                   award, as long as Executive is employed by the Company on
                   each such date. Notwithstanding the foregoing, vesting of
                   such Performance Options shall accelerate (x) with respect to
                   40% of the shares of Company Stock subject
 
 
 
 
 
 
<PAGE>
 
 
 
 
                                      -8-
 
 
                   thereto, at the end of the first consecutive twenty (20) day
                   trading period following the first anniversary of the
                   Effective Date during which the average closing price of
                   Company Stock is at least 25% higher than the exercise price
                   of such Stock Options; (y) with respect to 30% of the shares
                   of Company Stock subject thereto, at the end of the first
                   consecutive twenty (20) day trading period following the
                   first anniversary of the Effective Date during which the
                   average closing price of Company Stock is at least 50% higher
                   than the exercise price of such Stock Options; and (z) with
                   respect to 30% of the shares of Company Stock subject
                   thereto, at the end of the first consecutive twenty (20) day
                   trading period following the first anniversary of the
                   Effective Date during which the average closing price of
                   Company Stock is at least 75% higher than the exercise price
                   of such Stock Options.
 
                   (iv) 2002 Long Term Incentive Awards. Subject to the
         provisions hereof, on the Effective Date, the Company shall grant to
         Executive 550,000 Stock Options as his 2002 Stock Option grant,
         pursuant to the Stock Plan. Such Stock Options shall have a ten year
         term and shall have a per share exercise price equal to the fair market
         value (as defined in the Stock Plan) of the Company Stock on the date
         of grant. Such Stock Options shall vest and become exercisable with
         respect to 40% of such shares of Company Stock subject thereto on the
         first anniversary of such award, and with respect to an additional 30%
         of the shares subject thereto on each of the two succeeding anniversary
         dates of such award, as long as Executive is employed by the Company on
         each such date.
 
                   (v) Additional Long-Term Incentive Awards. During the Term of
         Employment after 2002, Executive shall be eligible annually to be
         granted additional Stock Options, restricted units and other equity
         awards at the discretion of the Compensation Committee, based on a
         target value of 230% of Executive's then current Base Salary and Target
         Bonus; provided that such Stock Option awards shall be on terms no less
         favorable than contemporaneous awards granted to other senior
         executives of the Company, and further provided that the basis for
         determining the value of such awards shall be no less favorable to
         Executive than the basis on which such determinations are made for
         contemporaneous equity awards to other senior executives of the
         Company.
 
                   (vi) Transferability of Equity Awards. The Stock Options
         granted to Executive pursuant to this Agreement shall be transferable
         solely by will, the laws of descent and distribution, by transfer to a
         member or members of Executive's immediate family, trust or family
         partnership.
 
              (e) ADDITIONAL RETIREMENT BENEFIT.
 
                   (i) Subject to the terms and conditions set forth herein,
         upon termination of Executive's employment with the Company, Executive
         shall be entitled to payment by the Company of a SERP Benefit,
         expressed as a life annuity commencing on Executive's sixtieth
         birthday, equal to (1) the product of (A) 60%, times (B) Executive's
         Final Average Compensation (as defined below), minus (2) the sum of the
         annual vested
 
 
 
 
 
 
<PAGE>
 
 
 
 
                                      -9-
 
 
         retirement benefits (each expressed as a life annuity commencing on
         Executive's sixtieth birthday) payable to 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 by any of Executive's prior employers;
         provided, however, if Executive's employment is terminated by the
         Company for Cause or by Executive without Good Reason prior to the
         fifth anniversary of the Effective Date, Executive shall forfeit such
         SERP Benefit. The SERP Benefit shall be reduced by 4% for each year (or
         pro rata for any portion thereof) during which Executive collects his
         SERP Benefit prior to attainment of age 60. In the event of Executive's
         death (whether or not payment of the SERP Benefit has commenced), an
         annual survivor benefit equal to 75% of the SERP Benefit shall be
         payable to Executive's surviving spouse (if any) commencing on the date
         Executive would have attained age 60 and continuing 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, including, without limitation, interest rate and
         mortality assumptions, as are applicable to retirement benefits payable
         under the supplemental retirement plan of the Company in which
         Executive participates as of the date on which Executive's employment
         terminates; provided, however, that if Executive is entitled to
         severance pay under the Severance Plan upon termination of his
         employment, payment of the SERP Benefit shall not commence until
         expiration of the Severance Period; and provided, further, however,
         that for purposes of computing SERP Benefit payable prior to
         Executive's attainment of age 60, it shall be assumed that benefits
         under the plans referred to in Section 4(e)(i)(2) above commenced at
         the same time as such SERP Benefit. For purposes of this Section 4(e),
         Final Average Compensation shall mean the average of Executive's base
         salary and bonus with respect to the three calendar years coincident
         with or immediately preceding the end of Executive's employment with
         the Company; provided that in the event Executive has completed fewer
         than three years of employment with the Company at the time of such
         termination of employment, then such average amounts shall be based
         upon such shorter period. For purposes of this Section 4(e), Final
         Average Compensation and Service shall take into account up to twelve
         months of severance payments made under Section 5(a) hereof, which
         payments shall be treated as having been made over the first twelve
         months of the Severance Period (as defined in the Severance Plan).
 
                   (iii) Executive may, prior to his termination of employment
         with the Company, elect in writing, on the appropriate forms provided
         by the Company, to have his SERP Benefit , determined in accordance
         with this Section 4(d), payable in the form of an actuarially
         equivalent lump sum.
 
              (f) EXECUTIVE LIFE INSURANCE. The Company will provide life
insurance coverage for Executive in the amount of $10,000,000 through purchase
or assumption of a split dollar life insurance policy or such other insurance
product as may replicate his executive life split dollar policy with his prior
employer.
 
 
 
 
 
<PAGE>
 
 
 
 
 
                                      -10-
 
 
         5. TERMINATION OF EMPLOYMENT.
 
              (a) DEATH OR DISABILITY. Executive's employment shall terminate
automatically upon Executive's death during the Term of Employment. The Company
shall be entitled to terminate Executive's employment because of Executive's
Disability during the Term of Employment. A termination of Executive's
employment by the Company for Disability shall be communicated to Executive by
written notice, and shall be effective on the Disability Effective Date, unless
Executive returns to full-time performance of Executive's duties before the
Disability Effective Date.
 
              (b) TERMINATION BY THE COMPANY.
 
                   (i) The Company may terminate Executive's employment during
         the Term of Employment for Cause or without Cause.
 
                   (ii) A termination of Executive's employment for Cause shall
         be not be effective unless it is accomplished in accordance with the
         following procedures. The Company shall give Executive written notice
         ("Notice of Termination for Cause") of its intention to terminate
         Executive's employment for Cause, setting forth in reasonable detail
         the specific conduct of 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. Executive shall be given an opportunity to be heard at the
         Special Board Meeting for Cause. Executive's termination for Cause
         shall be effective when and if a resolution is duly adopted at the
         Special Board Meeting for Cause stating that, in the good faith opinion
         of the Board, 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 preclude the Company from asserting,
         such fact or circumstance in an attempt to enforce any right under or
         provision of this Agreement.
 
              (c) TERMINATION BY EXECUTIVE. Executive may voluntarily terminate
his employment with or without Good Reason, with such effect as described in
Section 6 of this Agreement.
 
              (d) DATE OF TERMINATION. The "Date of Termination" means the date
of Executive's death, the Disability Effective Date or the date on which the
termination of Executive's employment by the Company for Cause or without Cause
or the voluntary termination by Executive is effective.
 
         6. OBLIGATIONS OF THE COMPANY UPON EARLY TERMINATION.
 
              (a) DEATH OR DISABILITY. If Executive's employment is terminated
by reason of Executive's death during the Term of Employment, the Company shall
pay to Executive's designated beneficiaries (or, if there is no such
beneficiary, to Executive's estate or legal representative), (i) any portion of
Executive's annual Base Salary through the Date of Termination that has not yet
been paid, (ii) an amount equal to the product of (A) the target
 
 
 
 
 
 
<PAGE>
 
 
 
                                      -11-
 
 
bonus that 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; (iii)
the benefits described in Section 4(e) hereof, to the extent such benefits have
become non-forfeitable, and (iv) such compensation and benefits as shall be
payable to Executive pursuant to the terms of the Company's compensation and
benefit plans, programs or arrangements as in effect immediately prior to the
Date of Termination. If Executive's employment is terminated prior to the fifth
anniversary of the Effective Date by reason of Executive's Disability, the
Company shall continue to pay Executive, through the fifth anniversary of the
Effective Date, an amount equal to his Base Salary and target Incentive
Compensation, less any payments received by Executive from any source
(including, without limitation, disability insurance (whether or not provided
through the Company) or Social Security) on account of Executive's Disability;
and thereafter Executive shall be eligible to receive reduced SERP benefits,
payable pursuant to Section 4(e) of this Agreement. If Executive's employment is
terminated by reason of Executive's death or Disability during the Term of
Employment, all restrictions on Executive's outstanding Restricted Units shall
immediately lapse, other outstanding equity awards shall fully vest and any
outstanding Stock Options shall be exercisable for the greater of one (1) year
after the Date of Termination or the post employment exercise period provided
for under the terms of the plan and agreement evidencing such equity awards;
provided that in no event shall the exercise period extend beyond the term of
such equity award.
 
              (b) BY THE COMPANY OTHER THAN FOR CAUSE; TERMINATION BY EXECUTIVE
FOR GOOD REASON In the event of the termination of Executive's employment during
the Term of Employment by the Company other than for Cause or by Executive for
Good Reason, except as otherwise provided in this Agreement, the consequences of
such termination shall be determined in accordance with the Company's Severance
Plan, which is incorporated by reference in this Agreement, with the additions
and modifications in respect of Executive as set forth below; provided, that on
and after the Effective Date of this Agreement, such Severance Plan shall not be
amended, modified or terminated in any way that would adversely affect
Executive. Executive shall be treated as an "Officer Participant" under the
terms of the Severance Plan. The "Severance Period" for purposes of the
Severance Plan, in Executive's case, shall be thirty-six months. The "Severance
Pay Factor" for purposes of the Severance Plan, in Executive's case, shall 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 Executive's employment by the Company other than for Cause or (ii)
termination of Executive's employment at the initiative of Executive for Good
Reason.
 
              If during the Term of Employment, the Company terminates
Executive's employment for any reason other than Cause, death or Disability, or
Executive terminates his employment for Good Reason, (i) all of Executive's then
outstanding Restricted Units granted under Section 4(d)(i)(A) as to which the
restrictions have not lapsed, and all other equity awards, other than
Performance Options granted pursuant to Section 4(d)(iii)(B) or other
performance based equity awards as of such Date of Termination, shall remain
outstanding and shall be treated for all purposes as if Executive remained
employed by the Company through the date on which such restrictions are
scheduled to lapse or such Options are scheduled to become
 
 
 
 
 
 
<PAGE>
 
 
 
 
 
                                      -12-
 
 
exercisable and such Options, once vested, shall be exercisable in accordance
with their terms and the terms of the Stock Plan; (ii) any Performance Option
granted pursuant to Section 4(d)(iii)(B) or other performance based equity award
granted to Executive that has not become vested and exercisable as of such Date
of Termination shall terminate and be of no further force and effect and the
Performance Options or other equity awards which have become vested and
exercisable shall remain vested and exercisable in accordance with their terms
and the terms of the Stock Plan; (iii) the Company shall promptly pay to
Executive any portion of Executive's annual Base Salary and pro-rata bonus
through the Date of Termination that has not yet been paid; and (iv) the Company
shall pay or provide to Executive the benefits described in Section 4(e) hereof
and such compensation and benefits as shall be payable to 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.
 
              (c) BY THE COMPANY FOR CAUSE; BY EXECUTIVE OTHER THAN FOR GOOD
REASON. In the event of Executive's termination of employment by the Company for
Cause or by Executive other than for Good Reason, during the Term of Employment,
(i) the Company shall pay to Executive in a lump sum in cash immediately
following the Date of Termination, any portion of Executive's annual Base Salary
earned through the Date of Termination that has not been paid; (ii) all then
unvested equity awards or restricted units as to which restrictions have not yet
lapsed shall be forfeited and all previously vested options and other vested
equity awards granted on or after the Effective Date shall be treated according
to the provisions of the plan and agreements under which such awards were
granted; and (iii) the Company shall pay or provide to Executive such
compensation and benefits as shall be payable to 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.
 
         7. NON-EXCLUSIVITY OF RIGHTS.
 
         Nothing in this Agreement shall prevent or limit 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 Executive may qualify (but,
other than as expressly provided in Section 6 hereof, excluding in each case,
any severance plan or arrangement of the Company or any of its affiliated
companies). Vested benefits and other amounts that Executive is otherwise
entitled to receive under any plan, policy, practice or program of, or any
contract or 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.
 
         8. CONFIDENTIAL INFORMATION; NON-COMPETITION; NON-SOLICITATION.
 
         Executive shall hold in a fiduciary capacity for the benefit of the
Company and shall not communicate, divulge or disseminate Confidential
Information at any time during or after Executive's employment with the Company,
except with the prior written consent of the Company or as otherwise required by
law or legal process. Executive shall execute the Company's standard Agreement
Relating to Intellectual Property and Confidential Information (as modified for
consistency with this Agreement), a copy of which is attached hereto as
 
 
 
 
 
 
<PAGE>
 
 
 
 
                                      -13-
 
 
 
Exhibit "A" and made a part hereof. Executive agrees that on or prior to his
Date of Termination, whether at the instance of Executive or the Company, and
regardless of the reasons therefor, Executive will deliver to the Company, and
not keep or deliver to anyone else, any and all notes, files, memoranda, papers
and, in general, any and all physical matter containing information, including
any and all documents significant to the conduct of the business of the Company
or any subsidiary or affiliate of the Company which are in his possession,
except for any documents for which the Company or any subsidiary or affiliate of
the Company has given written consent to removal at the Date of Termination .
 
         Executive agrees that during the Term of Employment and for a period of
two years after his Date of Termination, Executive will not, without the written
consent of the Board, directly or indirectly, (a) engage or be interested in, as
owner, partner, shareholder, employee, director, officer, agent, consultant or
otherwise, with or without compensation, any "Competing Business" or assist any
Competing Business, or (b) alone or in concert with others, employ or seek to
employ, induce or solicit for employment, 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 employment or solicitation , or (c) directly or
through any third party, 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.
For purposes of this Section 8, Competing Business shall mean any business
entity or group of business entities, regardless of whether organized as a
corporation, partnership (general or limited), joint venture, association or
other organization or entity ("Business Entity") that designs, develops,
produces, offers for sale or sells a product or service that can be used as a
substitute for, or is generally intended to satisfy the same customer needs for,
any one or more products or services designed, developed, manufactured, produced
or offered for sale or sold by a Company business on the Date of Termination
("Competing Products or Services"). Notwithstanding the foregoing, a Business
Entity shall not be treated as a Competing Business under this Section 8 if the
Company and the Competing Business, respectively, each derived less than 10% of
their revenues from Competing Products or Services during the preceding 12 month
period.
 
         In the event any of the foregoing covenants shall be determined by any
court of competent jurisdiction to be unenforceable by reason of extending for
too great a period of time, over too great a geographical area or by reason of
its being too extensive in any other respect, it shall be interpreted to extend
only over the maximum period of time for which it may be enforceable, over the
maximum geographical area as to which it may be enforceable, and/or to the
maximum extent in all other respects as to which it may be enforceable, all as
determined by such court in such action. The invalidity or unenforceability of
any particular provision of this Section 8 shall not affect the other provisions
hereof, which shall continue in full force and effect. Executive agrees that the
Company's remedies at law would be inadequate in the event of a breach or
threatened breach of Section 8 of this Agreement; accordingly, the Company shall
be entitled, in addition to its rights at law, to seek an injunction or other
equitable relief without the need to post a bond.
 
         Nothing herein, however, will prohibit Executive from acquiring or
holding not more than one percent of any class of publicly traded securities of
any such business; provided that
 
 
 
 
 
 
<PAGE>
 
 
 
 
 
                                      -14-
 
 
such securities entitle 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 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 judgment on any arbitration award may be entered in any court of competent
jurisdiction. Each party shall bear its own costs, fees (including attorneys'
fees) and expenses of such arbitration; provided, however that in the event
Executive prevails in his arbitration claims, the Company shall reimburse
Executive for reasonable attorneys' fees incurred by Executive that are related
solely to the claims with respect to which he has prevailed. The Company shall
pay reasonable legal and other professional fees and expenses incurred by
Executive in connection with the preparation and negotiation of this Agreement
 
         10. SUCCESSORS; SURVIVORSHIP.
 
              (a) This Agreement is personal to Executive and, without the prior
written consent of the Company, no rights under the Agreement may be assigned by
Executive otherwise than by will or the laws of descent and distribution. The
respective rights and obligations of the Parties hereto shall survive any
termination of Executive's employment to the extent necessary to the intended
preservation of such rights and obligations. This Agreement shall inure to the
benefit of and be enforceable by Executive's legal representatives to the extent
applicable.
 
              (b) This Agreement shall inure to the benefit of and be binding
upon the Company and its successors and assigns.
 
              (c) The Company shall take such actions as legally permissible to
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) GOVERNING LAW; ENTIRE AGREEMENT. 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 embodies the entire Agreement of the parties; it may not
be amended or modified except by a written agreement executed by the parties
hereto or their respective successors and legal representatives.
 
 
 
 
 
 
<PAGE>
 
 
 
 
 
                                      -15-
 
 
              (b) NOTICES. 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 Executive:
 
              David M. Cote
              c/o Honeywell International Inc.
              101 Columbia Road
              Morristown, New Jersey 07962
 
         With a copy to;
 
              Robert J. Stucker
              Vedder Price Kaufman & Kammholz
              222 North LaSalle
              Suite 2600
              Chicago, Illinois 60601
 
 
         If to the Company:
 
              Honeywell International Inc.
              101 Columbia Road
              Morristown, New Jersey 07962
              Attention: General Counsel
 
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) PARTIAL INVALIDITY. 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) THIS AGREEMENT CONTROLS. Except as specifically provided
herein, the terms of this Agreement shall supersede and control over any
inconsistent provisions of any plan, policy, program, arrangement or agreement
of the Company.
 
              (e) INCOME TAX WITHHOLDING. 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.
 
 
 
 
 
 
<PAGE>
 
 
 
 
                                      -16-
 
 
 
              (f) NO WAIVER. Executive's or the Company's failure to insist upon
strict compliance with any provisions of, or to assert any right under, 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.
 
              (g) NO ASSIGNMENT. The rights and benefits of 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 Executive to anticipate, alienate, assign, sell,
transfer, pledge, encumber or charge the same shall be void. Payments hereunder
shall not be considered assets of Executive in the event of insolvency or
bankruptcy.
 
              (h) COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, and said counterparts
shall constitute the same instrument.
 
         IN WITNESS WHEREOF, Executive has hereunto set 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.
 
[Seal]                                             HONEYWELL INTERNATIONAL INC.
 
Attest: /s/ Peter M. Kreindler                     By: /s/ Lawrence A. Bossidy
                                                       ------------------------
                                                       Lawrence A. Bossidy
                                                       Chairman of the Board
 
                                                       /s/ David M. Cote
                                                   ----------------------------
                                                       David M. Cote

 

<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>3
<FILENAME>ex10-7.txt
<DESCRIPTION>EXHIBIT 10.7
<TEXT>
<PAGE>
 
 
                   
 
 
 

EX-10.17 14 c56028_ex10-17.htm

Exhibit 10.17

AMENDMENT TO THE EMPLOYMENT AGREEMENT BETWEEN HONEYWELL
INTERNATIONAL, INC. AND DAVID M. COTE, DATED FEBRUARY 18, 2002

     WHEREAS, Honeywell International Inc. (the “Company”) and Mr. David M. Cote (the “Executive”) entered into an employment agreement dated February 18, 2002 (the “Employment Agreement”) which was intended to set forth certain terms and conditions relating to the compensation and benefits for which Executive would be eligible during his employment with the Company; and

      WHEREAS, the Company and the Executive wish to amend the Employment Agreement to the extent necessary to comply with Section 409A of the Internal Revenue Code of 1986, as amended and the regulations promulgated thereunder.

     NOW, THEREFORE, the Employment Agreement is hereby amended effective December 31, 2008 in the following manner:

1.     

The first and second sentences of Section 1(j)(ii) and the first sentence of Section 1(j)(iv) of the Employment Agreement shall be amended by replacing the phrases “termination of employment” and “termination of Executive’s employment” with the phrase “Termination of Employment.”

 

2.     

The following new Sections 1(s), 1(t) and 1(u) shall be added to the Employment Agreement:

 

 

“(s)

Section 409A’ shall mean Section 409A of the Internal Revenue Code of 1986, as amended and the regulations promulgated with respect thereto.

 

 

(t)

Separation from Service’ shall have the meaning ascribed to such term under Section 409A.”

 

 

(u)

Termination of Employment’ shall mean a termination of Executive’s employment with the Company that also qualifies as a Separation from Service. In the event of a termination of Executive’s employment with the Company that fails to qualify as a Separation from Service, a Termination of Employment shall be deemed to occur upon Executive’s subsequent Separation from Service.”

 

3.     

Section 4(e) of the Employment Agreement shall be replaced in its entirety with the following language:

 

 

“(e)

Additional Retirement Benefit.

 

 

 

     (i)  Subject to the terms and conditions set forth herein, upon a Termination of Employment other than by reason of Executive’s death, Executive shall be entitled to payment by the Company of a SERP Benefit, expressed as a life annuity commencing on Executive’s sixtieth birthday, and providing for annual payments to Executive equal to (1) the product of (A) 60%, times (B) Executive’s Final Average Compensation (as defined below), minus (2) the sum

 

 

 

 

 

 

 

 

 


 

 

of the annual vested retirement benefits (each expressed as a life annuity commencing on Executive’s sixtieth birthday) payable to 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 by any of Executive’s prior employers. The SERP Benefit shall be reduced by 4% for each year (or pro rata for any portion thereof) during which Executive collects his SERP Benefit prior to the attainment of age 60. For purposes of this Section 4(e), (A) Final Average Compensation shall mean the average of Executive’s base salary and bonus with respect to the three calendar years coincident with or immediately preceding Executive’s Termination of Employment, and (B) Final Average Compensation and Service shall take into account up to twelve months of severance payments made under Section 5(a) hereof, which payments shall be treated as having been made over the first twelve months of the Severance Period (as defined in the Severance Plan).

 

 

 

     If Executive dies before he receives his SERP Benefit, Executive’s surviving spouse (determined as of the date of Executive’s death) shall be entitled to an annual survivor benefit equal to 75% of the SERP Benefit commencing on the later of the date Executive would have attained age 60 or his Termination of Employment, and continuing for her life. No survivor benefit is payable if Executive receives the lump sum value of the SERP Benefit following his Termination of Employment; provided, however, that the survivor benefit described in this paragraph shall be taken into account when valuing the lump sum actuarial equivalent value of the SERP Benefit.

 

 

 

     (ii)  Subject to Section 4(e)(iii) below, (A) the actuarial equivalent value of the SERP Benefit or survivor benefit, as applicable, shall be paid in a single lump sum to Executive or his surviving spouse as of the first day of the month following 105 days after the later of Executive’s 60th birthday or Executive’s Termination of Employment; and (B) the SERP Benefit shall in all other respects be subject to such terms and conditions, including, without limitation, interest rate and mortality assumptions, as are applicable to retirement benefits payable under the supplemental retirement plan of the Company in which Executive participates as of the date on which Executive’s Termination of Employment occurs; provided, however, that for purposes of computing the SERP Benefit payable prior to Executive’s attainment of age 60, it shall be assumed that benefits under the plans referred to in Section 4(e)(i)(2) above commenced at the same time as the SERP Benefit.

 

 

 

     (iii)  If Executive is a ‘Specified Employee’ within the meaning of Section 409A at the time of the Executive’s Termination of Employment, the single lump sum payment under this Section 4(e) to which Executive would otherwise be entitled during the first six months following his Termination of Employment shall be deferred and paid in a lump sum on the first day of the seventh month following such Termination of Employment (or, if earlier, the first

 

 

2


 

 

day of the month following the date of Executive’s death), with no interest or earnings accruing on such payment during the deferral period.”

 

4.     

Section 4(f) of the Employment Agreement shall be replaced in its entirety with the following language:

 

 

Executive Life Insurance. The Company shall reimburse Executive for the cost of the annual premium incurred by Executive pursuant to the life insurance policy maintained by Executive, as required by the terms of the Deferred Compensation Arranagement dated August 4, 2006 between the Company and Executive.”

 

5.     

Section 5 of the Employment Agreement shall be amended as follows:

 

 

(i)     

The first sentence of Section 5(a) shall be replaced in its entirety with the following language: “A Termination of Employment shall automatically occur upon Executive’s death during the Term of Employment.”

 

 

(ii)     

The phrase “termination of Executive’s employment” in the third sentence of Section 5(a) and the first sentence of Section 5(b)(ii), and the phrase “Executive’s termination” in the fourth sentence of Section 5(b)(ii) shall each be replaced with the phrase “Termination of Employment.”

 

 

(iii)     

Section 5(d) of the Employment Agreement shall be replaced in its entirety with the following language:

 

 

 

Date of Termination. The ‘Date of Termination’ means the date of Executive’s death, the Disability Effective Date or the date on which the Termination of Employment by the Company for Cause or without Cause or the voluntary Termination of Employment by Executive is effective.”

 

6.     

The first sentence of Section 6(a) of the Employment Agreement shall be replaced in its entirety with the following language:

 

 

“Upon a Termination of Employment by reason of Executive’s death during the Term of Employment, the Company shall pay to Executive’s designated beneficiaries (or, if there is no such beneficiary, to Executive’s estate or legal representative), (i) as soon as reasonably practicable following Executive’s Termination of Employment but in no event later than the 15th day of the third month following the end of the calendar year in which such Termination of Employment occurs, (1) any portion of Executive’s annual Base Salary through the Date of Termination that has not yet been paid, and (2) an amount equal to the product of (A) the target bonus that 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; (ii) the benefits described in Section 4(e) hereof, and (iii) such compensation and benefits as shall be payable to Executive pursuant to the terms of the Company’s

 

3


 

compensation and benefit plans, programs or arrangements as in effect immediately prior to the Date of Termination.”

 

 

7.     

The phrase “If the Executive’s employment is terminated” in the final sentence of Section 6(a) of the Employment Agreement shall be replaced with the phrase “Upon a Termination of Employment.”

 

8.     

The first paragraph of Section 6(b) of the Employment Agreement shall be replaced in its entirety with the following language:

 

 

By the Company Other Than for Cause; Termination by Executive for Good Reason. Upon a Termination of Employment during the Term of Employment by the Company other than for Cause or by Executive for Good Reason, except as otherwise provided in this Agreement, the consequences of such termination shall be determined in accordance with the Company’s Severance Plan, which is incorporated by reference in this Agreement, with the additions and modifications in respect of Executive as set forth below; provided, that on and after the Effective Date of this Agreement, such Severance Plan shall not be amended, modified or terminated in any way that would adversely affect Executive (it being understood that any amendment required to be made to the Severance Plan under Section 409A shall not be considered to adversely affect the Executive). Executive shall be treated as an “Officer Participant” under the terms of the Severance Plan. The “Severance Period” for purposes of the Severance Plan, in Executive’s case, shall be thirty-six months. The “Severance Pay Factor” for purposes of the Severance Plan, in Executive’s case, shall be equal to the number of months of Executive’s Severance Period. “Covered Termination” for purposes of the Severance Plan shall mean any (i) Termination of Employment by the Company other than for Cause or (ii) Termination of Employment at the initiative of Executive for Good Reason.

 

9.     

The following new paragraph shall be added immediately following the second paragraph of Section 6(b):

 

 

“Notwithstanding the foregoing, if Executive is a “Specified Employee” within the meaning of Section 409A at the time of Executive’s Termination of Employment, the payment of the pro-rata bonus under clause (iii) of this Section 6(b) to which Executive would otherwise be entitled during the first six months following his Termination of Employment shall be deferred and paid in a lump sum on the first day of the seventh month following such Termination of Employment (or, if earlier, the date of the Executive’s death), with no interest or earnings accruing on such payments during the deferral period.”

 

10.     

The first sentence of Section 6(c) of the Employment Agreement shall be amended by (i) replacing the lead-in phrase “In the event of Executive’s termination of employment” with the phrase “In the event of a Termination of Employment” and (ii) adding the language “(but in no event later than the 15th day of the third month following the end of the calendar year in which such Date of Termination occurs)” between the phrases “immediately following

 

4


 

the Date of Termination” and “, any portion of Executive’s annual Base Salary” in subclause (i) of Section 6(c).

 

11.     

The penultimate sentence of Section 9 shall be amended by adding the following language to the end of such sentence:

 

 

“; provided further that any such reimbursement shall occur no later than the last day of the calendar year following the calendar year in which Executive incurred the reimbursable attorneys’ fees.”

 

12.     

The second sentence of Section 10(a) of the Employment Agreement shall be amended by replacing the phrase “termination of Executive’s employment” with the phrase “Termination of Employment.”

 

13.     

Section 11 of the Employment Agreement shall be amended by adding the following language as new Section 11(i):

 

 

“Section 409A. The Company and Executive intend that this Agreement shall comply with Section 409A and shall be interpreted, operated and administered accordingly.”

 

 

HONEYWELL INTERNATIONAL INC.

 

 

 

 

 

 

 

/s/ Mark James

 

Mark James

 

Senior Vice President – Human Resources and

 

Communications

 

 

 

 

 

DAVID M. COTE

 

 

 

 

 

/s/ Davis M. Cote

 

Dated: December 31, 2008

5


 
 

EX-10.1 2 c67090_ex10-1.htm

 

Exhibit 10.1

 

 

 

July 29, 2011

 

 

Mr. David M. Cote

Chairman and Chief Executive Officer

Honeywell International Inc.

101 Columbia Road

Morristown, NJ 07962

 

Re: Equity Grant Enhancements

 

Dear Dave:

 

I am pleased to confirm additional terms and conditions of your benefits package. The enhanced equity benefits described in this letter agreement (the “Agreement”) were recommended by the Management Development and Compensation Committee of the Board of Directors and approved by the Board of Directors at its meeting on July 29, 2011, and will be effective as of the date you execute this letter. The terms and conditions of these enhanced equity benefits can be summarized as follows:

 

1.      Stock Option Vesting

 

If you retire from Honeywell after April 1, 2015 and otherwise satisfy the conditions more fully described in Paragraph 7 below, all outstanding, unvested stock options that were (i) granted prior to April 1, 2015, and (ii) granted more that twelve (12) months prior to your retirement date, shall become vested on your retirement date. If all or a portion of any such stock option grant is subject to performance conditions, vesting in that portion of the award will occur at the end of the related performance cycle (even if this occurs after retirement), but only to the extent Honeywell determines that the applicable performance conditions have been satisfied. Any such options that have, or potentially could have, their vesting dates accelerated under this Agreement shall hereinafter be referred to as the “Retention Options.”

 

2.      Time to Exercise

 

Notwithstanding anything contained in the 2006 Stock Incentive Plan of Honeywell International Inc. and its Affiliates and the 2011 Stock Incentive Plan of Honeywell International Inc. and its Affiliates, as well as any successor plans (collectively the “Honeywell Stock Plans”) or associated Award Agreements to the contrary, if any Retention Options vest pursuant to Paragraph 1 above, you shall have the full remaining term to exercise (i.e., typically 10 years from the date of each stock option grant) any vested stock options granted prior to April 1, 2015.

 

3.      Change in Control

 

In the event of a Change in Control (as defined in the 2011 Stock Incentive Plan of Honeywell International Inc. and its Affiliates) of the Company prior to April 1, 2015, your unvested stock options shall become nonforfeitable in accordance with the applicable Honeywell Stock Plans. If, after a Change in Control, your Honeywell stock options are not cashed out, the period within which you have to exercise any stock options shall be governed by this Agreement, in conjunction with the applicable Honeywell Stock Plans and Award Agreements.

 


4.      Termination Other Than for Cause

 

In the event you are involuntarily terminated by the Company other than for Cause (as defined in your employment contract dated February 18, 2002, as amended from time to time) prior to April 1, 2015, any unvested Retention Options that were granted more than twelve (12) months prior to your date of termination shall become vested as of your date of termination and you shall thereafter have the full remaining term to exercise those Retention Options. Notwithstanding the foregoing, in the event any such Retention Options are subject to performance conditions, vesting in such Retention Options will not occur, if at all, until the end of the related performance cycle (even if this occurs after termination of employment), and only to the extent Honeywell determines that the applicable performance conditions have been satisfied.

 

5.      Termination for Cause

 

In the event you are terminated by the Company for Cause (as defined in your employment contract dated February 18, 2002, as amended from time to time) prior to April 1, 2015, this Agreement shall immediately terminate and your rights with respect to all of your stock options, whether vested or unvested, shall be treated under the terms of the applicable Honeywell Stock Plans and Award Agreements.

 

6.      Death or Disability

 

In the event of your death or Disability (as defined in the 2011 Stock Incentive Plan of Honeywell International Inc. and its Affiliates) after the execution of this Agreement, you/your estate shall have the full remaining term to exercise any stock options granted to you prior to April 1, 2015. Notwithstanding the foregoing, in the event any stock options are subject to performance conditions, this Paragraph 6 shall only apply only to the extent such stock options vest in accordance with the terms of the applicable Honeywell Stock Plans and Award Agreements.

 

7.      Conditions Applicable to Retention Options

 

The rights and benefits described in this Agreement are subject to the following terms and conditions:

 

 

-2-


 

If the Company determines, in its sole judgment, that you have not satisfied any of these conditions, or that you have violated or threatened to violate the terms of any noncompetition, nonsolicit, confidentiality or intellectual property covenants applicable to you under any other written agreement between you and the Company, Honeywell shall have the right, along with any other legal or equitable remedies of which it may be able to avail itself, to withhold and/or recoup the value of any consideration you realize pursuant to this Agreement. This Agreement is intended to supplement, not supersede, any other rights Honeywell may have to recoup equity awards under the terms of the applicable stock plans or award agreements, or to pursue to other rights or remedies described more fully in any other agreement between you and the Company.

 

8.      Modification and Waiver

 

This Agreement may be amended or modified only by an agreement in writing. The failure by the Company to declare a breach or otherwise to assert its rights under this Agreement shall not be construed as a waiver of any right the Company has under this Agreement.

 

9.      Effect of Stock Plans and Award Agreements

 

All other terms and conditions of your equity grants shall remain subject to the terms and conditions of the applicable stock plans and award agreements.

 

10.      Section 409A

 

These extraordinary equity vesting provisions are subject to the requirements of Internal Revenue Code Section 409A, and you agree that this Agreement may be modified to the extent necessary to comply therewith.

 

Please indicate your acceptance of the terms and conditions of this letter by returning a signed copy of this letter to my attention.

 

Congratulations,

 

 

/s/ D. Scott Davis

D. Scott Davis

Chairman

Management Development and Compensation Committee

of the Board of Directors

Honeywell International Inc.

 

Read and Accepted:

 

 

/s/ David M. Cote                     Date: August 4, 2011

David M. Cote

 

-3-


 
 
 
 
 
 
 

 

 

 

EX-99.2 4 c79482_ex99-2.htm

 

Exhibit 99.2

 

http://www.sec.gov/Archives/edgar/data/773840/000093041314004838/image_002.gif

 

December 10, 2014

 

 

Mr. David M. Cote

Chairman and Chief Executive Officer

Honeywell International Inc.

101 Columbia Road

Morristown, New Jersey 07962

 

Re: Equity Grant Enhancements

 

Dear Dave:

 

I am pleased to confirm additional terms and conditions of your benefits package. The enhanced equity benefits described in this letter agreement (the “Agreement”) were recommended by the Management Development and Compensation Committee of the Board of Directors and approved by the Board of Directors at its meeting on October 31, 2014, and will be effective as of December 11, 2014. The terms and conditions of these enhanced equity benefits can be summarized as follows:

 

1.

Stock Option Vesting

 

If you retire from Honeywell after December 31, 2017 and otherwise satisfy the conditions more fully described in Paragraph 9 below, all outstanding, unvested stock options that were (i) granted after April 1, 2015 and prior to January 1, 2018, and (ii) granted more than six (6) months prior to your retirement date (except the Board of Directors may, in its sole and absolute discretion, waive this 6-month carve out) shall become vested on your retirement date. If all or a portion of any such stock option grant is subject to performance conditions, vesting in that portion of the award will occur at the end of the related performance cycle (even if this occurs after retirement), but only to the extent Honeywell determines that the applicable performance conditions have been satisfied. Any such options that have, or potentially could have, their vesting dates accelerated under this Agreement shall hereinafter be referred to as the “New Retention Options.”

 

2.

Time to Exercise

 

Notwithstanding anything contained in the 2011 Stock Incentive Plan of Honeywell International Inc. and its Affiliates, as well as any successor plans (collectively the “Honeywell Stock Plans”) or associated Award Agreements to the contrary, if any New Retention Options vest pursuant to Paragraph 1 above, you shall have the full remaining term to exercise (i.e., typically 10 years from the date of each stock option grant) any such New Retention Options.

 

3.

Special Performance Option Grant

 

In order to further incent you to remain with the Company, you will receive a special grant of stock options (“Performance Options”) with an initial grant date target value of five million dollars ($5,000,000).1 The actual number of stock options earned as Performance Options shall be determined by comparing the

 


1 The target number of options to be granted shall be determined by dividing $5 million by the grant date per share value of an option in Honeywell stock, as determined by FAS123 Solutions using base valuation assumptions consistent with those used to determine the value of Honeywell’s regular equity grants, adjusted to consider the performance features of this award.

 

Page 1 of 5


 

Exhibit 99.2

 

Company’s Total Shareholder Return to the Total Shareholder Return of each company in the Compensation Peer Group, as described more fully in the Performance Options Award Agreement attached hereto as Exhibit A. The performance cycle for the Performance Options shall be the three (3) year period commencing January 1, 2015 and ending December 31, 2017. The Performance Options that are determined to be earned at the end of the performance cycle will vest in their entirety on December 31, 2017, provided you are still employed by Honeywell as its CEO on such date. Once vested, you shall have the full remaining term to exercise such Performance Options. The Performance Options shall be subject to the terms and conditions set forth in the Special Performance Stock Option Award Agreement attached hereto as Exhibit A.

 

4.

ICP and Growth Plan Awards

 

Notwithstanding anything in the Honeywell Incentive Compensation Plan (“ICP Plan”) or the Honeywell Stock Plans to the contrary, if you retire from Honeywell after December 31, 2017 and otherwise satisfy the conditions more fully described in Paragraph 9 below, you shall receive, as scheduled, any unpaid tranche for a Growth Plan performance cycle that was completed prior to your retirement, based on the actual calculated performance achieved during such performance cycle. In addition, you shall receive (i) a prorated incentive compensation award, and (ii) a prorated Growth Plan award, for the calendar year or Growth Plan cycle, as applicable, in which your retirement occurs. Such prorated incentive compensation award shall be calculated by starting with a bonus amount that is consistent with prior awards and performance, and pro-rating such amount for the percentage of the year during which you were not retired (with no obligation to be employed on the date bonuses are actually paid to officers). The prorated Growth Plan award shall be determined by multiplying the Growth Plan award to which you would have been entitled had you remained employed for the entire Growth Plan cycle by a fraction, the numerator of which is the number of days in the Growth Plan cycle that you remained employed by the Company as CEO, and the denominator of which is 730. Any prorated incentive compensation award and Growth Plan award paid hereunder shall be paid at the same time as such awards are paid to other Honeywell officers. Notwithstanding the foregoing, the Board of Directors may, in its sole discretion, increase (but not decrease) the prorated incentive compensation award and/or prorated Growth Plan award described herein.

 

5.

Change in Control

 

In the event of a Change in Control (as defined in the Honeywell Stock Plans) of the Company prior to January 1, 2018, and to the extent adjusted or exchanged pursuant to the terms of the Honeywell Stock Plans, any New Retention Options and Performance Options that have not vested or been terminated as of the date of the Change in Control will continue to vest in accordance with the terms of the applicable Award Agreement; provided, however, that (x) if you incur an involuntary Termination of Employment not for Cause (as defined in your employment contract dated February 18, 2002, as amended from time to time) or a voluntary Termination of Employment for Good Reason (as defined in the Honeywell Stock Plans) on or before the second anniversary of the date of the Change in Control and before January 1, 2018, the unvested portion of such awards will immediately vest in accordance with the applicable Award Agreement. To the extent the New Retention Options and Performance Options are not adjusted or exchanged upon a Change in Control prior to January 1, 2018, any such awards that have not vested or terminated as of the date of the Change in Control will immediately vest. If the Change in Control occurs before the Performance Cycle has ended, the Actual Award will be based on the Target Award or other level of substantially achieved performance, as determined by the Committee prior to the Change in Control.

 

6.       Termination Other Than for Cause

 

In the event you are involuntarily terminated by the Company other than for Cause (as defined in your employment contract dated February 18, 2002, as amended from time to time) prior to January 1, 2018, any unvested New Retention Options that were granted more than six (6) months prior to your date of

 

Page 2 of 5


 

Exhibit 99.2

 

termination shall become vested as of your date of termination and you shall thereafter have the full remaining term to exercise those New Retention Options. Notwithstanding the foregoing, in the event any such New Retention Options are subject to performance conditions, vesting in such New Retention Options will not occur, if at all, until the end of the related performance cycle (even if this occurs after termination of employment), and only to the extent Honeywell determines that the applicable performance conditions have been satisfied.

 

In addition, in the event you are involuntarily terminated by the Company other than for Cause (as defined in your employment contract dated February 18, 2002, as amended from time to time) prior to January 1, 2018, you shall nevertheless be treated as still being employed by the Company through December 31, 2017 solely for purposes of determining your rights to your Performance Options granted pursuant to Paragraph 3 above.

 

7.

Termination for Cause

 

In the event you are terminated by the Company for Cause (as defined in your employment contract dated February 18, 2002, as amended from time to time) prior to January 1, 2018, this Agreement shall immediately terminate and your rights with respect to all of your stock options, whether vested or unvested, shall be treated under the terms of the applicable Honeywell Stock Plans and Award Agreements.

 

8.        Death or Disability

 

In the event of your death or Disability (as defined in the Honeywell Stock Plans) after the execution of this Agreement, you/your estate shall have the full remaining term to exercise any New Retention Options. Notwithstanding the foregoing, in the event any New Retention Options are subject to performance conditions, vesting in such New Retention Options will not occur, if at all, until the end of the related performance cycle (even if this occurs after your death or Disability), and only to the extent Honeywell determines that the applicable performance conditions have been satisfied.

 

9.        Conditions Applicable to Benefits Granted Under This Agreement

 

The rights and benefits described in this Agreement (including both the New Retention Options and the Performance Options) are subject to the following terms and conditions:

 

 

Page 3 of 5


 

Exhibit 99.2

 

 

If the Company determines, in its sole judgment, that you have not satisfied any of these conditions, or that you have violated the terms of any noncompetition, nonsolicit, confidentiality or intellectual property covenants applicable to you under any other written agreement between you and the Company, Honeywell shall have the right, along with any other legal or equitable remedies of which it may be able to avail itself, to withhold and/or recoup the value of any consideration you realize pursuant to this Agreement. This Agreement is intended to supplement, not supersede, any other rights Honeywell may have to recoup equity awards under applicable law (including Sarbanes-Oxley and Dodd-Frank) or the terms of the applicable stock plans or award agreements, or to pursue to other rights or remedies described more fully in any other agreement between you and the Company.

 

10.       Modification and Waiver

 

This Agreement may be amended or modified only by an agreement in writing. The failure by the Company to declare a breach or otherwise to assert its rights under this Agreement shall not be construed as a waiver of any right the Company has under this Agreement.

 

11.

Effect of Stock Plans and Award Agreements

 

All other terms and conditions of your equity grants shall remain subject to the terms and conditions of the applicable stock plans and award agreements.

 

12.       Section 409A

 

These extraordinary equity vesting provisions are subject to the requirements of Internal Revenue Code Section 409A, and you agree that this Agreement may be modified to the extent necessary to comply therewith.

 

13.       Other Agreements

 

This Agreement does not amend any prior agreements you have with the Company, including that certain letter agreement dated July 29, 2011 between you and Honeywell (the “2011 Agreement”). Rather, such other agreements and this Agreement are to be read independently of each other with respect to the awards and benefits covered thereby.

 

Notwithstanding the foregoing, and effective as of April 1, 2015, the obligation to provide twelve (12) months of notice and transition services under the 2011 Agreement shall be waived. In addition, effective as of April 1, 2015, the carve-out for excluded grants under the 2011 Agreement is also hereby amended by replacing twelve (12) months with six (6) months.

 

Page 4 of 5


 

Exhibit 99.2

 

14.       Not an Agreement to Retire

 

Nothing contained herein shall be construed as an agreement for you to voluntarily retire from Honeywell as CEO as of any specific date after December 31, 2017. Rather, this Agreement is to be construed merely as an agreement between you and the Board of Directors to incent you to remain as Honeywell CEO at least through December 31, 2017, and any inducements to incent you to remain with the Company after such date shall be negotiated at the appropriate time in the future.

 

Please indicate your acceptance of the terms and conditions of this letter by returning a signed copy of this letter to my attention.

 

 

Congratulations,

 

 

 

/s/ D. Scott Davis

D. Scott Davis

Chairman

Management Development and Compensation Committee

Board of Directors

Honeywell International Inc.

 

 

Read and Accepted:

 

 

/s/ David M. Cote

Date: December 11, 2014

David M. Cote

 

 

 

 

 

 

 

 

Page 5 of 5


 

EXHIBIT A

 

2011 STOCK INCENTIVE PLAN OF

HONEYWELL INTERNATIONAL INC. AND ITS AFFILIATES

 

SPECIAL PERFORMANCE STOCK OPTION AWARD AGREEMENT

STOCK OPTION AWARD AGREEMENT made in Morris Township, New Jersey, as of December 11, 2014 (the “Grant Date”), between Honeywell International Inc. (the “Company”) and David M. Cote (the “Employee”).

1.

Definitions. For purposes of this Agreement, the following definitions apply:

 

a.

“Actual Award” means the product of (i) the Plan Payout Percentage (as determined under Section 4), and (ii) your Target Award.

 

b.

“Compensation Peer Group” means the companies listed on Attachment A. If there is any change in the corporate capitalization of a company in the Compensation Peer Group during a Measurement Period (such as a stock split, corporate transaction or any partial or complete liquidation), the Committee, in its sole discretion, may take such change into account in determining the Total Shareholder Return of that company. If any company included in the Compensation Peer Group ceases to exist or to be publicly traded during the Measurement Period, or undergoes any other similar change, the Committee shall determine the consequences of such event for purposes of this Agreement, including without limitation, the replacement of such company in the Compensation Peer Group.

 

c.

“Measurement Period” means the three year period commencing January 1, 2015 and ending December 31, 2017.

 

d.

“Performance Cycle” means the three year period commencing January 1, 2015 and ending December 31, 2017.

 

e.

“Target Award” means the number of stock options awarded to you for the Performance Cycle under Section 2 of this Agreement.

 

f.

“Total Shareholder Return” means the ratio of (A) a company’s share price as of the last trading day of a Measurement Period (determined using the average closing share price over the 30 preceding trading days) plus earned dividends per share during the Measurement Period, over (B) the company’s share price as of the first trading day of a Measurement Period (determined using the average closing share price over the 30 preceding trading days). Dividends are assumed earned and reinvested on the ex-dividend date.

 

Page 1 of 11


 

 

2.

Grant of Options. The Company has granted you an Option to purchase [tbd - $5 million value/per option value] Shares of Common Stock, subject to the provisions of this Agreement and the 2011 Stock Incentive Plan for Employees of Honeywell International Inc. and its Affiliates (the “Plan”). This Option is a nonqualified Option.

 

3.

Actual Award. Notwithstanding Section 2 above, you shall have the Option to purchase the number of Shares determined by the Actual Award.

 

4.

Performance Measures. For the Measurement Period, the Company’s Total Shareholder Return will be compared to the Total Shareholder Return of each company in the Compensation Peer Group, and the Total Shareholder Return of the Compensation Peer Group and the Company shall be ranked.

 

The Plan Payout Percentage shall be determined based on the following for the Performance Cycle:

 

 

TSR RANK

PLAN PAYOUT PERCENTAGE

 

At or below 35th percentile of Peer Group

 

0%

 

60th percentile of Peer Group

 

100%

 

85th percentile of Peer Group or Above

 

150%

 

The Plan Payout Percentage for TSR ranks between 35% and 60% shall be interpolated by 4% for each percentage change in rank, while the Plan Payout Percentage for TSR ranks between 60% and 85% shall be interpolated by 2% for each percentage change in rank.

 

5.

Exercise Price. The purchase price of the Shares covered by the Option will be $98.04 per Share.

 

6.

Vesting. Subject to Section 17, you shall receive an Option to purchase the number of Shares determined by the Actual Award on the later of December 31, 2017 or the date the Performance Measures are approved as required by the terms of the Plan if you are employed by the Company on such date, and you shall have until the expiration date specified in Section 10 to exercise the Option.

 

7.

Death or Disability. Subject to Section 17, if your Termination of Employment occurs because of your death or you incur a Disability before the last day of the Performance Cycle, the Performance Cycle shall continue and on the later of December 31, 2017 or the date the Performance Measures are approved as required by the terms of the Plan, you or your estate shall receive an Option to purchase the number of Shares determined by the Actual Award. Subject to Section 17, regardless of when your death or Disability occurs, you or your executor, as the case may be, shall have until the expiration date specified in Section 10 to exercise the Option.

 

8.

Involuntary Termination Not for Cause. Subject to Section 17, if your Termination of Employment occurs due to an involuntary termination by the Company not for Cause before the last day of the Performance Cycle, the Performance Cycle shall continue and on the later of December 31, 2017 or the date the Performance Measures are approved as

 

Page 2 of 11


 

 

 

required by the terms of the Plan, you shall receive an Option to purchase the number of Shares determined by the Actual Award. Subject to Section 17, regardless of when your Termination of Employment occurs, you shall have until the expiration date specified in Section 10 to exercise the Option.

 

9.

Voluntary Termination of Employment, Termination of Employment for Cause. If your Termination of Employment occurs due to a voluntary termination for any reason or an involuntary termination by the Company for Cause before the last day of the Performance Cycle, the Option shall be forfeited in full as of your Termination of Employment. If your Termination of Employment occurs due to an involuntary termination by the Company for Cause after vesting occurs, any unexercised Shares shall be immediately cancelled.

 

10.

Term of Option. The Option must be exercised prior to the close of the New York Stock Exchange (“NYSE”) on December 10, 2024, subject to earlier termination or cancellation as provided in this Agreement. If the NYSE is not open for business on December 10, 2024, the Option will expire at the close of the NYSE on the business day immediately preceding December 10, 2024.

 

11.

Change in Control. If you incur an involuntary Termination of Employment not for Cause (as defined in Section 2.7 of the Plan) or a voluntary Termination of Employment for Good Reason (as defined in Section 5.4(d) of the Plan) on or before the second anniversary of the date of a Change in Control occurring before December 31, 2017, and if the Performance Cycle has not ended when your Termination of Employment occurs, the Option will vest in the amount of the Target Award as of your Termination of Employment. If the vested Option is adjusted or exchanged pursuant to Section 5.3(c), 5.3(d)(ii), 5.3(e) or 5.3(f) of the Plan in connection with a Change in Control, subject to Section 17, you shall have until the expiration date specified in Section 10 to exercise the Option.

 

12.

Payment of Exercise Price. You may pay the Exercise Price by cash, certified check, bank draft, wire transfer, postal or express money order, or any other alternative method specified in the Plan and expressly approved by the Committee. Notwithstanding the foregoing, you may not tender any form of payment that the Committee determines, in its sole and absolute discretion, could violate any law or regulation.

 

13.

Exercise of Option. Subject to the terms and conditions of this Agreement, the Option may be exercised by contacting the Honeywell Stock Option Service Center, managed by Morgan Stanley by telephone at 1-888-723-3391 or 1-801-617-7414, or on the internet at www.benefitaccess.com. If the Option is exercised after your death, the Company will deliver Shares only after the Committee has determined that the person exercising the Option is the duly appointed executor or administrator of your estate or the person to whom the Option has been transferred by your will or by the applicable laws of descent and distribution.

 

14.

Withholdings. The Company or your local employer shall have the power and the right to deduct or withhold, or require you to remit to the Company or your local employer, an amount sufficient to satisfy taxes imposed under the laws of any country, state, province, city

 

Page 3 of 11


 

 

 

or other jurisdiction, including but not limited to income taxes, capital gain taxes, transfer taxes, and social security contributions, and National Insurance Contributions, that are required by law to be withheld with respect to the grant of the Option, any exercise of the your rights under this Agreement, the sale of Shares acquired from the exercise of the Option, and/or payment of dividends on Shares acquired pursuant to the Option.

 

15.

Transfer of Option. You may not transfer the Option or any interest in the Option except by will or the laws of descent and distribution or except as permitted by the Committee and as specified in the Plan.

 

16.

Requirements for and Forfeiture of Award.

 

a.

General. The Award is expressly contingent upon you complying with the terms, conditions and definitions contained in this Section 16 and in any other agreement that governs your noncompetition with Honeywell, your nonsolicitation of Honeywell’s employees, customers, suppliers, business partners and vendors, and/or your conduct with respect to Honeywell’s trade secrets and proprietary and confidential information. For purposes of this Section 16, the term “Honeywell” is defined as Honeywell International Inc. (a Delaware corporation having a place of business at Columbia Road and Park Avenue, Morris Township, Morris County, New Jersey), its predecessors, designees and successors, as well as its past, present and future operating companies, divisions, subsidiaries, affiliates and other business units, including businesses acquired by purchase of assets, stock, merger or otherwise.

 

b.

Remedies.

 

1.

You expressly agree and acknowledge that the forfeiture provisions of subsection 16.b.2. of this Agreement shall apply if, from the Award Date until the date that is twenty-four (24) months after your Termination of Employment for any reason, you (i) enter into an employment, consultation or similar agreement or arrangement (including any arrangement for service as an agent, partner, stockholder, consultant, officer or director) with any entity or person engaged in a business in which Honeywell is engaged if the business is competitive (in the sole judgment of the Committee) with Honeywell and the Committee has not approved the agreement or arrangement in writing, or (ii) make any statement, publicly or privately (other than to your spouse and legal advisors), which would be disparaging (as defined below) to Honeywell or its businesses, products, strategies, prospects, condition, or reputation or that of its directors, employees, officers or members; provided, however, that nothing shall preclude you from making any statement in good faith which is required by any applicable law or regulation or the order of a court or other governmental body, or (iii) write or contribute to a book, article or other media publication, whether in written or electronic format, that is in any way descriptive of Honeywell or your career with Honeywell without first submitting a draft thereof, at least thirty (30) days in advance, to the Honeywell International Inc. Senior Vice

 

Page 4 of 11


 

 

 

President and General Counsel, whose judgment about whether such book, article or other media publication is disparaging shall be determinative; or such a book, article or other media publication is published after a determination that it is disparaging.

 

For purposes of this subsection 16.b.1, the term “disparaging” shall mean any statement or representation (whether oral or written and whether true or untrue) which, directly or by implication, tends to create a negative, adverse, or derogatory impression about the subject of the statement or representation or which is intended to harm the reputation of the subject of the statement or representation.

 

2.

In addition to the relief described in any other agreement that governs your noncompetition with Honeywell, your nonsolicitation of Honeywell’s employees, customers, suppliers, business partners and vendors, and/or your conduct with respect to Honeywell’s trade secrets and proprietary and confidential information, if the Committee determines, in its sole judgment, that you have violated the terms of any such agreement or you have engaged in an act that violates subsection 16.b.1. of this Agreement, (i) any portion of the Option you have not exercised (whether vested or unvested) shall immediately be cancelled, and you shall forfeit any rights you have with respect to the Option as of the date of the Committee’s determination, and (ii) you shall immediately deliver to the Company Shares equal in value to the gross amount of any profit you realized upon an exercise of the Option during the period beginning twelve (12) months prior to your Termination of Employment and ending on the date of the Committee’s determination.

 

3.

Notwithstanding anything in the Plan or this Agreement to the contrary, you acknowledge that the Company may be entitled or required by law, Company policy or the requirements of an exchange on which the Shares are listed for trading, to recoup compensation paid to you pursuant to the Plan, and you agree to comply with any Company request or demand for recoupment.

 

17.

Special Vesting and Forfeiture Conditions.

 

a.

Conditions Applicable to this Agreement. The rights and benefits described in this Agreement are subject to the following terms and conditions:

 

1.

Prior to January 1, 2018, you may not engage (which includes pursuing any CEO opportunities you may become aware of through unsolicited contacts), or knowingly permit another person to engage on your behalf, in an external CEO search unless you have been involuntarily terminated other than for Cause prior to January 1, 2018; and

 

2.

Prior to January 1, 2018, and other than your current responsibilities with (i) the Federal Reserve Bank of New York as a Class B Director, (ii) Kohlberg Kravis Roberts & Co. as an Advisory Board member, (iii) the Council on

 

Page 5 of 11


 

 

 

Foreign Relations as a Board Director, and (iv) Temasek Holdings Limited as a Board Director, you may not accept a position with another company, organization or entity, including any governmental agency or quasi-governmental body, unless(i) you have been involuntarily terminated other than for Cause prior to January 1, 2018, or (ii) the Company’s Board of Directors has otherwise consented to your service in such position. Notwithstanding the foregoing, once you have provided the six (6) month notice described below, you may engage in discussions for post-retirement roles (other than CEO roles or as Board members of firms that are significant competitors of Honeywell) with other companies without Board of Director advance approval; and

 

3.

You must provide the Board of Directors with six (6) months notice before you voluntarily terminate your employment for any reason, including retirement; provided, however, you shall not be treated as not having satisfied this condition if you die or become Disabled (as defined in the 2011 Stock Incentive Plan of Honeywell International Inc. and its Affiliates). Notwithstanding the foregoing, the notice period may be shortened, in the sole and absolute discretion the Board of Directors, if the Board determines that a shorter notice period is in the Company’s best interest; and

 

4.

You have not violated or threatened to violate the terms of any noncompetition, nonsolicit, confidentiality or intellectual property covenants applicable to you under any other written agreement between you and the Company; and

 

5.

You must not be terminated for Cause (as defined in your employment contract dated February 18, 2002, as amended from time to time).

 

b.

If the Company determines, in its sole judgment, that you have not satisfied any of these conditions, or that you have violated or threatened to violate the terms of any noncompetition, nonsolicit, confidentiality or intellectual property covenants applicable to you under any other written agreement between you and the Company, the Company shall have the right, along with any other legal or equitable remedies of which it may be able to avail itself, to withhold and/or recoup the value of any consideration you realize pursuant to this Agreement. This Section 17 is intended to supplement, not supersede, any other rights the Company may have to recoup equity awards under the terms of the applicable stock plans or award agreements, or to pursue to other rights or remedies described more fully in any other agreement between you and the Company.

 

For the avoidance of doubt, if the Company determines before the end of the Performance Cycle that you have not satisfied the requirements of this Section 17, the Option shall immediately be cancelled and you shall forfeit all rights under this Agreement. If the Company determines that you have not satisfied the requirements of this Section 17 after vesting occurs and before the exercise period has ended, any vested portion of the Option you have not exercised shall immediately be cancelled,

 

Page 6 of 11


 

and you shall forfeit any rights you have with respect to the Option as of the date of the Company’s determination, and you shall immediately deliver to the Company Shares equal in value to the gross amount of any profit you realized upon an exercise of the Option provided under this Agreement.

 

18.

Adjustments. Any adjustments to the Option will be governed by Section 5.3 of the Plan.

 

19.

Restrictions on Exercise. Exercise of the Option is subject to the conditions that, to the extent required at the time of exercise, (i) the Shares covered by the Option will be duly listed, upon official notice of issuance, upon the NYSE, and (ii) a Registration Statement under the Securities Act of 1933 with respect to the Shares will be effective. The Company will not be required to deliver any Common Stock until all applicable federal and state laws and regulations have been complied with and all legal matters in connection with the issuance and delivery of the Shares have been approved by counsel of the Company.

 

20.

Disposition of Securities. By accepting the Award, you acknowledge that you have read and understand the Company’s policy, and are aware of and understand your obligations under U.S. federal securities laws in respect of trading in the Company’s securities, and you agree not to use the Company’s “cashless exercise” program (or any successor program) at any time when you possess material nonpublic information with respect to the Company or when using the program would otherwise result in a violation of securities law. The Company will have the right to recover, or receive reimbursement for, any compensation or profit realized on the exercise of the Option or by the disposition of Shares received upon exercise of the Option to the extent that the Company has a right of recovery or reimbursement under applicable securities laws.

 

21.

Plan Terms Govern. The exercise of the Option, the disposition of any Shares received upon exercise of the Option, and the treatment of any gain on the disposition of these Shares are subject to the terms of the Plan and any rules that the Committee may prescribe. The Plan document, as may be amended from time to time, is incorporated into this Agreement. Capitalized terms used in this Agreement have the meaning set forth in the Plan, unless otherwise stated in this Agreement. In the event of any conflict between the terms of the Plan and the terms of this Agreement, the Plan will control unless otherwise stated in this Agreement. By accepting the Award, you acknowledge receipt of the Plan and the prospectus, as in effect on the date of this Agreement.

 

22.              Personal Data.

 

a.

By entering into this Agreement, and as a condition of the grant of the Option, you expressly consent to the collection, use, and transfer of personal data as described in this Section to the full extent permitted by and in full compliance with applicable law.

 

b.

You understand that your local employer holds, by means of an automated data file, certain personal information about you, including, but not limited to, name, home address and telephone number, date of birth, social insurance number, salary, nationality, job title, any shares or directorships held in the Company, details of all

 

Page 7 of 11


 

 

 

options or other entitlement to shares awarded, canceled, exercised, vested, unvested, or outstanding in your favor, for the purpose of managing and administering the Plan (“Data”).

 

c.

You further understand that part or all of your Data may be also held by the Company or its Affiliates, pursuant to a transfer made in the past with your consent, in respect of any previous grant of options or awards, which was made for the same purposes of managing and administering of previous award/incentive plans, or for other purposes.

 

d.

You further understand that your local employer will transfer Data to the Company or its Affiliates among themselves as necessary for the purposes of implementation, administration, and management of your participation in the Plan, and that the Company or its Affiliates may transfer data among themselves, and/or each, in turn, further transfer Data to any third parties assisting the Company in the implementation, administration, and management of the Plan (“Data Recipients”).

 

e.

You understand that the Company or its Affiliates, as well as the Data Recipients, are or may be located in your country of residence or elsewhere, such as the United States. You authorize the Company or its Affiliates, as well as the Data Recipients, to receive, possess, use, retain, and transfer Data in electronic or other form, for the purposes of implementing, administering, and managing your participation in the Plan, including any transfer of such Data, as may be required for the administration of the Plan and/or the subsequent holding of Shares on your behalf, to a broker or third party with whom the Shares may be deposited.

 

f.

You understand that you may show your opposition to the processing and transfer of your Data, and, may at any time, review the Data, request that any necessary amendments be made to it, or withdraw your consent herein in writing by contacting the Company. You further understand that withdrawing consent may affect your ability to participate in the Plan.

 

23.

Discretionary Nature and Acceptance of Award. By accepting this Award, you agree to be bound by the terms of this Agreement and acknowledge that:

 

a.

The Company (and not your local employer) is granting your Option. Furthermore, this Agreement is not derived from any preexisting labor relationship between you and the Company, but rather from a mercantile relationship.

 

b.

The Company may administer the Plan from outside your country of residence and United States law will govern all options granted under the Plan.

 

c.

Benefits and rights provided under the Plan are wholly discretionary and, although provided by the Company, do not constitute regular or periodic payments.

 

d.

The benefits and rights provided under the Plan are not to be considered part of your salary or compensation under your employment with your local employer for

 

Page 8 of 11


 

 

 

purposes of calculating any severance, resignation, redundancy or other end of service payments, vacation, bonuses, long-term service awards, indemnification, pension or retirement benefits, or any other payments, benefits or rights of any kind. You waive any and all rights to compensation or damages as a result of the termination of employment with your local employer for any reason whatsoever insofar as those rights result, or may result, from the loss or diminution in value of such rights under the Plan or your ceasing to have any rights under, or ceasing to be entitled to any rights under, the Plan as a result of such termination.

 

e.

The grant of the Option hereunder, and any future grant of an option under the Plan, is entirely voluntary, and at the complete discretion of the Company. Neither the grant of the Option nor any future grant by the Company will be deemed to create any obligation to make any future grants, whether or not such a reservation is explicitly stated at the time of such a grant. The Company has the right, at any time and/or on an annual basis, to amend, suspend or terminate the Plan; provided, however, that no such amendment, suspension, or termination will adversely affect your rights hereunder.

 

f.

The Plan will not be deemed to constitute, and will not be construed by you to constitute, part of the terms and conditions of employment. Neither the Company nor your local employer will incur any liability of any kind to you as a result of any change or amendment, or any cancellation, of the Plan at any time.

 

g.

Participation in the Plan will not be deemed to constitute, and will not be deemed by you to constitute, an employment or labor relationship of any kind with the Company.

 

24.

Limitations. Nothing in this Agreement or the Plan gives you any right to continue in the employ of the Company or any of its Affiliates or to interfere in any way with the right of the Company or any Affiliate to terminate your employment at any time. Payment of Shares is not secured by a trust, insurance contract or other funding medium, and you do not have any interest in any fund or specific asset of the Company by reason of the Option. You have no rights as a shareowner of the Company pursuant to the Option until Shares are actually delivered you.

 

25.

Incorporation of Other Agreements. This Agreement and the Plan constitute the entire understanding between you and the Company regarding the Option. This Agreement supersedes any prior agreements, commitments or negotiations concerning the Option.

 

26.

Severability. The invalidity or unenforceability of any provision of this Agreement will not affect the validity or enforceability of the other provisions of the Agreement, which will remain in full force and effect. Moreover, if any provision is found to be excessively broad in duration, scope or covered activity, the provision will be construed so as to be enforceable to the maximum extent compatible with applicable law.

 

27.

Governing Law. The Plan, this Agreement, and all determinations made and actions taken under the Plan or this Agreement shall be governed by the internal substantive laws, and not

 

Page 9 of 11


 

 

 

the choice of law rules, of the State of Delaware and construed accordingly, to the extent not superseded by applicable federal law.

 

28.

Acknowledgements. By accepting this Agreement, you agree to the following: (i) you have carefully read, fully understand and agree to all of the terms and conditions described in this Agreement, the Plan, the Plan’s prospectus and all accompanying documentation; and (ii) you understand and agree that this Agreement and the Plan constitute the entire understanding between you and the Company regarding the Option, and that any prior agreements, commitments or negotiations concerning the Option are replaced and superseded.

 

29.

Award Acceptance. To retain this Award, you must accept it by signing the Agreement below and, by signing this Agreement, you will be deemed to consent to the application of the terms and conditions set forth in this Agreement and the Plan.

 

 

 

I Accept:

 

 

 

 

 

DAVID M. COTE

 

Date

 

Page 10 of 11


 

ATTACHMENT A

PEER GROUP

3M Company

Alcoa Inc.

The Boeing Company

The Dow Chemical Company

E. I. du Pont de Nemours and Company

Emerson Electric Co.

General Dynamics Corp.

General Electric Company

Johnson Controls Inc.

Lockheed Martin Corporation

Northrop Grumman Corporation

Raytheon Co.

Textron Inc.

United Technologies Corp.

 

 

 

 

Page 11 of 11


 
 
 
 
 
 
 
 
 
 

EX-10.7 6 c56028_ex10-7.htm

Exhibit 10.7

HONEYWELL INTERNATIONAL INC. SEVERANCE PLAN
FOR SENIOR EXECUTIVES

Amended and restated, effective as of January 1, 2009

PART I 
GENERAL PROVISIONS

1. Purpose.

     The purpose of the Honeywell International Inc. Severance Plan for Senior Executives (the “Plan”) is to provide severance related benefits to selected eligible employees of a Honeywell Employer (as defined in Part II of the Plan) who are employed in a position in Career Band 6 or above and whose employment relationship is involuntarily terminated at the initiative of the Employer for reasons other than Gross Cause (as defined below). This Plan is intended to be an unfunded plan for a select group of management or highly compensated employees for purposes of ERISA (as defined below).

     This Plan is comprised of Part I—general provisions relating to the operation of the Plan, and Part II—special provisions that become effective only upon a Change in Control (as defined below). As set forth herein, this Plan constitutes the amendment and restatement, as of January 1, 2009, of the Severance Plan for Senior Executives established by Allied Corporation on March 31, 1983 and amended and restated by AlliedSignal Inc. as of April 25, 1988, January 1, 1990, April 29, 1991, January 1, 1994, May 1, 1999 and amended and restated by the Company as of December 20, 2001. The Plan is now hereby amended and restated effective as of January 1, 2009 to implement changes required pursuant to and consistent with Section 409A of the Code.

     As used throughout the Plan unless otherwise clearly or necessarily indicated by context:

     (a) Annual Base Salary means an amount equal to the product of Base Salary and twelve.

     (b) Annual Incentive Compensation means, except as provided in Section 19(b), the product of (i) times (ii), where (i) is the target percentage that would be utilized in determining the Incentive Award for the Participant in the calendar year in which Participants Covered Termination occurs, and (ii) is Annual Base Salary.

     (c) Base Salary means the monthly base salary payable to a Participant at the highest rate in effect during any of the 36 months preceding a Covered Termination.

     (d) Board means the Board of Directors of the Company.


     (e) Career Band means the salary and position classification system adopted by the Company for use after January 1, 1994.

     (f) Change in Control is deemed to occur at the time (i) when any entity, person or group (other than the Company, any subsidiary or any savings, pension or other benefit plan for the benefit of employees of the Company or its subsidiaries) which theretofore beneficially owned less than 30% of the Common Stock then outstanding acquires shares of Common Stock in a transaction or series of transactions that results in such entity, person or group directly or indirectly owning beneficially 30% or more of the outstanding Common Stock, (ii) of the purchase of shares of Common Stock pursuant to a tender offer or exchange offer (other than an offer by the Company) for all, or any part of, the Common Stock, (iii) of a merger in which the Company will not survive as an independent, publicly owned corporation, (iv) of a consolidation, or a sale, exchange or other disposition of all or substantially all of the Companys assets, (v) of a substantial change in the composition of the Board during any period of two consecutive years such that individuals who at the beginning of such period were members of the Board cease for any reason to constitute at least a majority thereof, unless the election, or the nomination for election by the shareowners of the Company, of each new director was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of the period, or (vi) of any transaction or other event which the Management Development and Compensation Committee of the Board, in its discretion, determines to be a Change in Control for purposes of this Plan.

     (g) Code means the Internal Revenue Code of 1986, as amended from time to time, together with applicable final regulations issued thereunder.

     (h) Common Stock means the common stock of the Company or such other stock into which the common stock may be changed as a result of split-ups, recapitalizations, reclassifications and any similar transaction.

     (i) Company means Honeywell International Inc., a Delaware corporation.

     (j) Covered Termination means, except as provided in Section 19(c), a Participants Discharge. Notwithstanding the preceding sentence, in the event of a sale or transfer of a facility or line of business that causes a severance of the employment relationship with the Employer, a Covered Termination also shall be deemed to have occurred only if the Participant is not offered substantially comparable employment with the new employer, as determined by the Plan Administrator, in its sole discretion. In addition, following a Change in Control, a Covered Termination shall include any geographic relocation of the Participants position to a new location which is more than fifty (50) miles from the location of the Participants position immediately prior to a Change in Control.

     (k) Discharge means an involuntary termination of a Participants employment relationship by the Employer for reasons other than death or Gross Cause.

2


     (l) Determination Year means a calendar year within which performance is measured for purposes of determining the amount of Incentive Awards payable for that year.

     (m) Effective Date means March 31, 1983.

     (n) Employer means the Company and its participating divisions, subsidiaries, strategic business units and their respective successors.

     (o) ERISA means the Employee Retirement Income Security Act of 1974, as amended from time to time, together with applicable final regulations issued thereunder.

     (p) Gross Cause means any of the following: (i) clear and convincing evidence of a significant violation of the Companys Code of Business Conduct; (ii) the misappropriation, embezzlement or willful destruction of Company property of significant value; (iii)(A) the willful failure to perform, (B) gross negligence in the performance of, or (C) intentional misconduct in the performance of, significant duties that results in material harm to the business of the Company; (iv) the conviction (treating a nolo contendere plea as a conviction) of a felony (whether or not any right to appeal has been or may be exercised); or (v) clear and convincing evidence of the willful falsification of any financial records of the Company that are used in compiling the Companys financial statements or related disclosures, with the intent of violating Generally Accepted Accounting Principles or, if applicable, International Financial Reporting Standards. In the case of a determination under Part I of the Plan, Gross Cause shall be determined (i) by the Chief Executive Officer of the Company, with the concurrence of the Companys Board of Directors and with the advice of the Companys functional leaders with expertise in such matters, with respect to any officer of the Company elected by the Board of Directors, and (ii) by the Plan Administrator, with the advice of the Companys functional leaders with expertise in such matters, with respect to all other Plan Participants.

     (q) Incentive Award means an incentive compensation award or any other annual incentive award determined under the Honeywell International Inc. Incentive Compensation Plan for Executive Employees, and any predecessor or successor plan, but shall not include any performance improvement award or any other long-term incentive award under any such plan.

     (r) Named Fiduciary means the Plan Administrator and/or such other committee, entity or person as the Company or the Plan Administrator may designate to administer the terms and conditions of the Plan, as the case may be.

     (s) Notice Period means the notice period provided under applicable law (whether working or non-working), if any.

     (t) Participant means an Existing Participant, an Officer Participant or a New Participant, each defined as follows:

3


          (i) Existing Participant means, except as further defined in Part II an individual who, on July 1, 1993, was an employee of an Employer in Salary Grade 20 or above or in a position comparable to a position of Salary Grade 20 or above.

          (ii) Officer Participant means, except as further defined in Part II, an individual (other than an Existing Participant) who is an officer of an Employer in Career Band 7 as determined by the Plan Administrator in his or her sole discretion.

New Participant means an individual (other than an Existing Participant and an Officer Participant) who is employed by an Employer in a position evaluated in Career Band 6 or above or in a position comparable to a position in Career Band 6 or above, all as determined by the Plan Administrator in his or her sole discretion.

     (u) Pay Continuation means the component of the severance benefit described in Section 3(a)(i).

     (v) Plan Administrator means the person defined in Section 7 and Section 22(a).

     (w) Pro Rata Factor means (i) for the Determination Year in which a Covered Termination occurs, a fraction the numerator of which is equal to the number of calendar months which have elapsed from the first day of the calendar month following the Covered Termination through December 31st of the Determination Year, and the denominator of which is twelve, and (ii) for any subsequent Determination Year shall mean a fraction, the numerator of which is equal to the Severance Pay Factor, reduced by the number of calendar months which have elapsed from the first day of the calendar month following the Covered Termination through December 31st of the year preceding the Determination Year, and the denominator of which is twelve; provided, however, that the Pro Rata Factor shall never be greater than 1.0.

     (x) Prorated Annual Incentive Compensation means the component of the severance benefit described in Section 3(a)(ii).

     (y) Salary Grade means the salary and position classification used by the Company prior to January 1, 1994, or any comparable salary and position classification used by any other Employer.

     (z) Severance Pay Factor means, with respect to any Participant, the relevant factor specified in Section 3(a)(i)(A).

     (aa) Severance Period means the period commencing on the first day of the first month following a Covered Termination, which is comprised of the number of consecutive months equal to the lesser of (i) the Severance Pay Factor, or (ii) the number of months occurring before the first day of the month following the Participants attainment of age 65 or, if later, eligibility to receive an unreduced retirement benefit under a qualified defined benefit pension plan maintained by an Employer. In the event of a Change in Control, the Severance Period will commence immediately following the expiration of the Notice Period (if any) referenced in Section 4(b) hereof; provided,

4


however, that the amounts attributable to the Notice Period shall be paid in accordance with the short-term deferral exception under Treas. Reg. §1.409A -1(b)(4).

     (bb) Specified Employee means any Participant who, at any time during the twelve (12) month period ending on the identification date (as determined by the Vice President, Compensation and Benefits or its delegate), is a specified employee under Section 409A of the Code, as determined by the Vice President  Compensation and Benefits (or his delegate), which determination of specified employees, including the number and identity of persons considered specified employees and identification date, shall be made by the Vice President  Compensation and Benefits (or his delegate) in accordance with the provisions of Sections 416(i) and 409A of the Code.

2. Participation.

     (a) An employee of an Employer who is at any time a Participant in the Plan shall continue as a Participant in the Plan until the earlier of (i) the date the employment relationship with the Employer is severed for reasons other than a Covered Termination, or (ii) the date the employee ceases to be employed in a position equivalent to Career Band 6 or above; provided, however, any employee who ceases to be employed in a position equivalent to Career Band 6 or above on or after a Change in Control shall nevertheless continue to be a Participant in the Plan.

     (b) A Participant in the Plan who is at any time the subject of a Covered Termination shall continue to be a Participant in the Plan until all of the benefits for which he or she is entitled under Section 3 of the Plan, if any, have been paid.

3. Severance Benefits.

     (a) Eligibility for Benefits. Subject to Section 3(b) below, a Participant who is the subject of a Covered Termination shall receive the benefits described in this Section 3.

          (i) Pay Continuation.

               (A) An Existing Participant shall receive a benefit in an amount equal to his or her Base Salary multiplied by the relevant Severance Pay Factor determined as follows (a detailed schedule of each Existing Participants Severance Pay Factor is attached hereto as Exhibit A):

Salary Grade as of July 1, 1993

Severance Pay Factor

20 and 21

18

22 and 23

24

24 and above

36

 

5


     Provided, however, that the Severance Pay Factor of an Existing Participant, whose Salary Grade is reduced after a Change in Control, shall not be reduced for purposes of this Plan.

               (B) An Officer Participant shall receive a benefit in an amount equal to his or her Base Salary multiplied by a Severance Pay Factor of 18 (or 36 in the case of an Officer Participant who is an Executive Vice President or Senior Vice President), or following a Change in Control, a Severance Pay Factor of 24 (36 in the case of an Officer Participant who is an Executive Vice President or Senior Vice President).

               (C) A New Participant shall receive a benefit in an amount equal to his or her Base Salary multiplied by a Severance Pay Factor of 12.

          (ii) Annual Incentive Compensation. An Existing Participant or an Officer Participant shall receive a benefit in an amount equal to his or her Annual Incentive Compensation multiplied by the applicable Pro Rata Factor. The Pro Rata Factor shall be determined for the calendar year in which a Covered Termination occurs and each calendar year thereafter through the end of the calendar year in which the Severance Period ends.

          (iii) Benefit Continuation. For the duration of the Severance Period, the Participant shall be entitled to the continuation of the following employee benefits:

               (A) Basic and contributory medical insurance (including for qualified dependents) (Health Plan Coverage), at the active employee coverage level and prevailing active employee contribution rate, if any; provided, however, (1) that such level of Health Plan Coverage shall not exceed the level of Health Plan Coverage in effect on the date of the Participants Covered Termination, (2) that such continuation of Health Plan Coverage will cease on the earlier of (I) the first month that similar benefits are provided to the Participant by a subsequent employer, (II) the first month in which the Participant fails to pay to the Employer the prevailing active employee contribution rate, (III) the end of the Severance Period, or (IV) the date on which such coverage must terminate pursuant to the terms of the controlling health insurance benefit plan applicable to the Participant on the date of such Participants Covered Termination, and (3) the Employer-paid portion of the monthly premium for the Health Plan Coverage shall be imputed as income to the Participant as may be required under section 105(h) of the Code, subject to applicable withholding from amounts otherwise payable to the Participant.

               (B) Basic and contributory life insurance (including for qualified dependents) (Life Insurance Coverage), at the active employee coverage level and prevailing active employee contribution rate, if any; provided, however, (1) that such level of Life Insurance Coverage shall not exceed the level of Life Insurance Coverage in effect on the date of the Participants Covered Termination, (2) that such continuation of Life Insurance Coverage will cease on the earlier of (I) the date similar benefits are provided the Participant by a subsequent employer, (II) the first month in which the

6


Participant fails to pay to the Employer the prevailing active employee contribution rate, (III) the end of the Severance Period, or (IV) the date on which such coverage must terminate pursuant to the terms of the controlling life insurance benefit plan applicable to the Participant on the date of such Participants Covered Termination, and (3) the Employer-paid contributions required to maintain the Life Insurance Coverage will be imputed as income to the Participant as may be required by applicable law.

          (iv) Pension Service Continuation. Except as otherwise provided by an applicable pension plan and, subject to the requirements for qualification of Section 401(a) of the Code, only the first twelve (12) months of the Severance Period, Pay Continuation and Prorated Annual Incentive Compensation will be recognized for purposes of the vesting and pension calculation provisions of the AlliedSignal Inc. Retirement Program or any other pension plan sponsored by an Employer in which the Participant participates. The normal policy for qualifying leaves remains applicable thereafter.

     (b) Benefits Conditioned on Release and Non-Competition. Notwithstanding anything in this Section 3 to the contrary, all benefits under this Plan except benefits provided pursuant to Part II, shall be provided in consideration for, and may be conditioned upon, (i) the execution and non-revocation of a release by the Participant of all current or future claims, known or unknown, arising on or before the date of the release against the Employer, its subsidiaries, affiliates and their respective officers, directors and employees in a form and manner prescribed by the Plan Administrator, and (ii) the execution of a non-competition agreement by the Participant in favor of the Company and its subsidiaries and affiliates in a form and manner prescribed by the Plan Administrator. Additionally, no severance benefits shall be payable under this Section 3 unless the Participant has returned to the Employer all property of the Employer and any information of a proprietary nature in his or her possession.

     (c) Benefit Limitations.

          (i) Except as provided in subparagraph (ii) below, any benefit determined to be payable to a Participant under any other severance plan sponsored or funded by an Employer shall be reduced by the amount of any similar benefit payable to the Participant under this Plan (excluding any benefit payable under Section 20(a)).

          (ii) Any benefit determined to be payable under this Plan (excluding any benefit payable under Section 20(a)) to a Participant who was not eligible to participate in this Plan prior to April 25, 1988 will be reduced to the extent of any duplication of benefits between the Plan and any benefits that may be payable to the Participant under arrangements existing prior to April 25, 1988.

7


          (iii) Notwithstanding any provision of the Plan to the contrary, for a Participant who is a U.S. taxpayer subject to the requirements of Section 409A of the Code, the time and form of payment of any payment that is provided by this Plan and also by the terms of the Honeywell International Inc. Severance Plan for Corporate Staff Employees (Involuntary Termination Following a Change in Control) or any other severance pay plan that applies to such Participant shall be determined in accordance with the terms of this Plan.

4. Benefit Payments.

     (a) Form and Timing of Payments. Except as provided in Sections 21(a) and 21(b) and unless delay of payment is required pursuant to Section 15(b)(ii), any Pay Continuation shall be paid in equal monthly installments over the Severance Period, with the first installment commencing within 60 days after the Covered Termination, and any Prorated Annual Incentive Compensation shall be paid in the January after the end of the Determination Year. No Prorated Annual Incentive Compensation shall be payable for any Determination Year with respect to which the Pro Rata Factor is less than or equal to zero.

     (b) Interim Incentive Compensation Payments. In the event that a Participants employment is terminated pursuant to a Covered Termination within two years following a Change in Control, the Participant shall be paid an additional amount, with respect to any Notice Period equal to the product of (1) the amount of annual incentive compensation that such Participant would earn for the year of termination under the incentive compensation plan in which such Participant participated immediately prior to such termination (assuming performance at the target level of performance), and (2) a fraction, the numerator of which is the sum of the number of days in the Participants Notice Period, and the denominator of which is 365; provided, however, the numerator of such fraction shall not include any period for which the Participant has already received or will receive a short-term incentive compensation award. Any amount payable pursuant to this Section 4(b) shall be paid in a single lump sum payment no later than March 15th of the year following the year in which the Covered Termination occurs.

5. Forfeiture of Benefits.

      Notwithstanding anything to the contrary in the Plan and except as provided in Section 21(c), a Participant receiving benefits or otherwise entitled to receive benefits under this Plan shall cease to receive such benefits under the Plan and the right to receive any benefits in the future under the Plan shall be forfeited, in the event the Participant, either before or after termination of employment, as determined by the Named Fiduciary, in its sole discretion (a) is convicted of a felony, (b) commits any fraud or misappropriates property, proprietary information, intellectual property or trade secrets of the Employer for personal gain or for the benefit of another party, (c) actively recruits

8


and offers employment to any management employee of the Employer, (d) engages in intentional misconduct substantially damaging to the property or business of any Employer, (e) makes false or misleading statements about the Employer or its products, officers or employees to (A) competitors or customers or potential customers of the Employer, or (B) current or former employees of the Employer, or (f) violates the terms of the release or non-competition agreement described in Section 3(b) of the Plan.

6. Payment of Benefits Upon Incompetence or Death.

     In the event the Named Fiduciary is presented with evidence satisfactory to it that a Participant receiving benefits or entitled to receive benefits is adjudged to be legally incompetent, the remainder of such Participant’s unpaid benefits shall be paid to the Participant’s conservator, legal representative or any other person deemed by the Named Fiduciary to have assumed responsibility for the maintenance of such person receiving or entitled to receive benefits at the same time and in the same form as such unpaid benefits would be paid to the Participant prior to such adjudication. In the event a Participant receiving benefits or entitled to receive benefits dies, the remainder of such Participant’s unpaid benefits shall be paid to the Participant’s beneficiary (as determined in the following paragraph) at the same time and in the same form as such unpaid benefits would have been paid to the Participant had the Participant survived.

     A Participant may designate a beneficiary in the form and manner prescribed by the Named Fiduciary. Any designation of a beneficiary may be revoked by filing a later designation or revocation. In the absence of an effective designation of a beneficiary by a Participant or upon the death of all designated beneficiaries on or before a Participant’s death, the remainder of the Participant’s unpaid benefits shall be paid to the Participant’s spouse or, if none, to the Participant’s estate. Any payment made pursuant to this Section 6 shall be a discharge of any liability under the Plan therefor.

7. Administration.

     (a) Plan Administration. Except as provided in Section 22(a), the Plan shall be administered by the Plan Administrator, who may act through one or more Named Fiduciaries under this Plan who shall have the powers and authorities as described in this Section 7. The Plan Administrator shall be the Senior Vice President, Human Resources and Communications, or such other person as the Board may appoint. The Plan Administrator shall have the authority to appoint and remove any other Named Fiduciary at his or her discretion.

     Any person acting on behalf of the Named Fiduciary shall serve without additional compensation. The Named Fiduciary shall keep or cause to be kept such records and shall prepare or cause to be prepared such returns or reports as may be required by law or necessary for the proper administration of the Plan.

     (b) Powers and Duties of Named Fiduciary. The Named Fiduciary shall have the full discretionary power and authority to construe and interpret the Plan (including, without limitation, supplying omissions from, correcting deficiencies in, or resolving

9


inconsistencies or ambiguities in, the language of the Plan); to determine all questions of fact arising under the Plan, including questions as to eligibility for and the amount of benefits; to establish such rules and regulations (consistent with the terms of the Plan) as it deems necessary or appropriate for administration of the Plan; to delegate responsibilities to others to assist it in administering the Plan; and to perform all other acts it believes reasonable and proper in connection with the administration of the Plan. The Named Fiduciary shall be entitled to rely on the records of the Employer in determining any Participants entitlement to and the amount of benefits payable under the Plan. Any determination of the Named Fiduciary, including interpretations of the Plan and determinations of questions of fact, shall be final and binding on all parties.

     The Named Fiduciary may retain attorneys, consultants, accountants or other persons (who may be employees of the Employer) to render advice and assistance and may delegate any of the authorities conferred on him under this Plan to such persons as he shall determine to be necessary to effect the discharge of his duties hereunder. The Plan Administrator, or other Named Fiduciary, the Employer, the Company and its officers and directors shall be entitled to rely upon the advice, opinions and determinations of any such persons. Any exercise of the authorities set forth in this Section 7, whether by the Plan Administrator, or other Named Fiduciary or his delegee, shall be final and binding upon the Employer and all Participants.

     (c) Plan Year. The plan year shall be the calendar year.

     (d) Indemnification. To the extent permitted by law, the Employer shall indemnify any Named Fiduciary from all claims for liability, loss, or damage (including payment of expenses in connection with defense against such claims) arising from any act or failure to act in connection with the Plan.

8. Claims and Appeals Procedures.

Except as provided in Sections 22(c)-(f), the Plan’s benefit claims and appeals procedures shall be as follows:

     (a) Any request or claim for Plan benefits must be made in writing and shall be deemed to be filed by a Participant when a written request is made by the claimant or the claimant’s authorized representative which is reasonably calculated to bring the claim to the attention of the Named Fiduciary.

     (b) The Named Fiduciary shall provide notice in writing to any Participant when a claim for benefits under the Plan has been denied in whole or in part. Such notice shall be provided within 60 days of the receipt by the Named Fiduciary of the Participant’s claim or, if special circumstances require, and the Participant is so notified in writing, within 120 days of the receipt by the Named Fiduciary of the Participant’s claim. The notice shall be written in a manner calculated to be understood by the claimant and shall:

          (i) set forth the specific reasons for the denial of benefits;

10


          (ii) contain specific references to Plan provisions relative to the denial;

          (iii) describe any material and information, if any, necessary for the claim for benefits to be allowed, that had been requested, but not received by the Named Fiduciary; and

          (iv) advise the Participant that any appeal of the Named Fiduciarys adverse determination must be made in writing to the Named Fiduciary within 60 days after receipt of the initial denial notification, and must set forth the facts upon which the appeal is based.

     (c) If notice of the denial of a claim is not furnished within the time periods set forth above, the claim shall be deemed denied and the claimant shall be permitted to proceed to the review procedures set forth below. If the Participant fails to appeal the Named Fiduciary’s denial of benefits in writing and within 60 days after receipt by the claimant of written notification of denial of the claim (or within 60 days after a deemed denial of the claim), the Named Fiduciary’s determination shall become final and conclusive.

     (d) If the Participant appeals the Named Fiduciary’s denial of benefits in a timely fashion, the Plan Administrator shall re-examine all issues relevant to the original denial of benefits. Any such claimant, or his or her duly authorized representative may review any pertinent documents, as determined by the Plan Administrator, and submit in writing any issues or comments to be addressed on appeal.

     (e) The Plan Administrator shall advise the Participant and such individual’s representative of its decision which shall be written in a manner calculated to be understood by the claimant, and include specific references to the pertinent Plan provisions on which the decision is based. Such response shall be made within 60 days of receipt of the written appeal, unless special circumstances require an extension of such 60-day period for not more than an additional 60 days. Where such extension is necessary, the claimant shall be given written notice of the delay. Any decision of the Plan Administrator shall be binding on all persons affected thereby.

     (f) Arbitration.

          (i) Any dispute, controversy, or claim arising out of or relating to any Plan benefit, including, without limitation, any dispute, controversy or claim as to whether the decision of the Named Fiduciary respecting the benefits under this Plan or interpretation of this Plan is arbitrary and capricious, that is not settled in accordance with the procedures outlined in Section 8, shall be settled by final and binding arbitration in accordance with the American Arbitration Association Employment Dispute Resolution or other applicable rules. Before resorting to arbitration, an aggrieved Participant must first follow the review procedure outlined in this Section of the Plan. If there is still a dispute after the procedures in this Section have been exhausted, the Participant must request arbitration in writing within six (6) months after the Plan Administrator issues, or is deemed to have issued, its determination under subparagraph (e) above.

11


          (ii) The arbitrator shall be selected by mutual agreement of the parties, if possible. If the parties fail to reach agreement upon appointment of an arbitrator within 30 days following receipt by one party of the other partys notice of desire to arbitrate, the arbitrator shall be selected from a panel or panels of persons submitted by the American Arbitration Association (the AAA). The selection process shall be that which is set forth in the AAA Employment Dispute Resolution Rules, except that, if the parties fail to select an arbitrator from one or more panels, AAA shall not have the power to make an appointment but shall continue to submit additional panels until an arbitrator has been selected.

          (iii) All fees and expenses of the arbitration, including a transcript if requested, will be borne by the Company. The arbitrator shall have no power to amend, add to or subtract from this Plan. The award shall be admissible in any court or agency seeking to enforce or render unenforceable this Plan or any portion thereof. Any action to enforce or vacate the arbitrators award shall be governed by the Federal Arbitration Act, if applicable.

9. Unfunded Obligation.

     All benefits payable under this Plan shall constitute an unfunded obligation of the Employer. Payments shall be made, as due, from the general funds of the Employer. This Plan shall constitute solely an unsecured promise by the Employer to pay severance benefits to employees to the extent provided herein.

10. Inalienability of Benefits.

     No Participant shall have the power to transfer, assign, anticipate, mortgage or otherwise encumber any rights or any amounts payable under this Plan; nor shall any such rights or amounts payable under this Plan be subject to seizure, attachment, execution, garnishment or other legal or equitable process, or for the payment of any debts, judgments, alimony, or separate maintenance, or be transferable by operation of law in the event of bankruptcy, insolvency, or otherwise. In the event a person who is receiving or is entitled to receive benefits under the Plan attempts to assign, transfer or dispose of such right, or if an attempt is made to subject such right to such process, such assignment, transfer or disposition shall be null and void.

11. Withholding.

     The Employer shall have the right to withhold any taxes required to be withheld with respect to any payments due under this Plan. Each Participant, however, shall be responsible for the payment of all individual tax liabilities relating to any such benefits.

12. Amendment or Termination.

     Except to the extent otherwise provided in Section 22(i), the Company reserves the right to amend or terminate the Plan at any time without prior notice to or the consent of any employee. No amendment or termination shall adversely affect the rights of any Participant whose employment terminated prior to such amendment or termination.

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However, except as provided in Section 22(i), any Participant whose employment continues after amendment of the Plan shall be governed by the terms of the Plan as so amended. Any Participant whose employment continues after termination of the Plan shall have no right to a benefit under the Plan.

13. Plan Not a Contract of Employment; Employers Policies Control.

     Nothing contained in this Plan shall give an employee the right to be retained in the employment of an Employer. This Plan is not a contract of employment between the Employer and any employee.

     Any dispute involving issues of employment other than claims for benefits under this Plan shall be governed by the appropriate employment dispute resolution policies and procedures of the Employer.

14. Action by an Employer.

     Unless expressly indicated to the contrary herein, any action required to be taken by the Company may be taken by action of its Board or by any appropriate officer or officers traditionally responsible for such determination or actions, or such other individual or individuals as may be designated by the Board or any such officer.

15. Governing Law.

     (a) ERISA. The Plan is an employee welfare benefit plan within the meaning of Section 3(1) of ERISA, and will be construed in accordance with the provisions of ERISA.

     (b) Section 409A of the Code.

          (i) Interpretation. Notwithstanding the other provisions hereof, this Plan is intended to comply with the applicable requirements of Section 409A of the Code and this Plan shall be interpreted to avoid any penalty sanctions under Section 409A of the Code. Accordingly, all provisions herein, or incorporated by reference, shall be construed and interpreted to comply with Section 409A of the Code and, if necessary, any such provision shall be deemed amended to comply with Section 409A of the Code. All payments to be made upon a termination of employment under this Plan may only be made upon a separation from service under Section 409A of the Code. If any payment or benefit cannot be provided or made at the time specified herein without incurring sanctions under Section 409A of the Code, then such benefit or payment shall be provided in full at the earliest time thereafter when such sanctions will not be imposed. For purposes of Section 409A of the Code, each payment made under this Plan shall be treated as a separate payment and each installment and the right to a series of installment payments under this Plan is to be treated as a right to a series of separate payments. In no event may the Participant, directly or indirectly, designate the calendar year of payment.

          (ii) Payment Delay. To the maximum extent permitted under Section 409A of the Code, the severance benefits provided under this Plan are intended to comply

13


with the short-term deferral exception under Treas. Reg. §1.409A -1(b)(4), and any remaining amount is intended to comply with the separation pay exception under Treas. Reg. §1.409A -1(b)(9)(iii); provided, however, if on the date of the Participants termination of employment, Honeywells stock is publicly-traded on an established securities market or otherwise and the Participant is a Specified Employee, then all cash severance payments payable to the Participant under this Plan that are deemed as deferred compensation subject to the requirements of Section 409A of the Code and payable within six (6) months following the Participants separation from service shall be postponed for a period of six (6) months following the Participants separation from service with Honeywell. The postponed amounts shall be paid to the Participant in a lump sum within thirty (30) days after the date that is six (6) months following the Participants separation from service with Honeywell, without earnings or interest. If the Participant dies during such six-month period and prior to payment of the postponed cash amounts hereunder, the amounts delayed on account of Section 409A of the Code shall be paid to the Participants beneficiary within sixty (60) days after Participants death, without earnings or interest.

          (iii) Reimbursements. All reimbursements provided under this Plan shall be made or provided in accordance with the requirements of Section 409A of the Code, including, where applicable, the requirement that (A) any reimbursement is for expenses incurred during the Participants lifetime (or during a shorter period of time specified in this Plan), (B) the amount of expenses eligible for reimbursement during a calendar year may not affect the expenses eligible for reimbursement in any other calendar year, (C) the reimbursement of an eligible expense will be made on or before the last day of the taxable year following the year in which the expense is incurred, and (D) the right to reimbursement is not subject to liquidation or exchange for another benefit. Any tax gross up payments to be made hereunder shall be made not later than the end of the Participants taxable year next following the Participants taxable year in which the related taxes are remitted to the taxing authority.

16. Severability.

     If any provision of this Plan shall be held illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts of this Plan, but this Plan shall be construed and enforced as if said illegal or invalid provision had never been included herein.

17. Coordination of Benefits.

In the event that (i) a Participant in the Plan is covered by another severance plan of Honeywell International Inc. or an affiliate which provides benefits similar to those provided under the Plan, and (ii) such Participant becomes entitled to benefits under the Plan and such other plan, each benefit to which the Participant is entitled shall contain those rights and features which combine the most favorable rights and features of such benefit under the Plan and such other plan; provided, however, that in no event shall there be any duplication of such benefit. Notwithstanding any provision of the Plan to the contrary, for a Participant who is a U.S. taxpayer subject to the requirements of Section 409A of the Code, the time and form of payment of any payment that is provided by this Plan and also by the terms of the Honeywell International Inc. Severance Plan for Corporate Staff Employees (Involuntary Termination Following a Change in Control) or any other severance pay plan that applies to such Participant shall be determined in accordance with the terms of this Plan.

14


of the Code at the time of payment shall be paid at the same time and in the same payment form as the benefits paid under the other severance plan described above.

PART II 
SPECIAL PROVISIONS THAT BECOME EFFECTIVE
ONLY UPON CHANGE IN CONTROL

18. Change in Control.

     (a) The provisions of this Part II become effective upon a Change in Control and, in addition to the provisions of Part I that are not superseded by provisions of this Part II, shall control (i) the determination of eligibility for, the amount of, and the time of payment of benefits under the Plan to any Existing Participant or Officer Participant who is the subject of a Covered Termination which occurs within the two-year period following the Change in Control, (ii) the terms of payment for any Existing Participant or Officer Participant whose Severance Period extends beyond the Change in Control, and (iii) the determination of eligibility for, the amount of, and the time of payment of benefits under Section 21 of the Plan to any Existing Participant or Officer Participant.

     (b) Without derogation to the effect the provisions of this Part II may have on the determination of any Participants eligibility for benefits under the Plan or the amount of such benefits, it is intended that this Part II will assure that the purposes of this Plan, as they may affect Existing Participants or Officer Participants, will not be adversely affected by the unique circumstances which may exist following a Change in Control. The provisions of this Part II will have no effect whatsoever prior to a Change in Control.

19. Definitions.

     (a) Honeywell Employer means the Employer and any other person, organization or entity that agrees in writing to be bound by the terms of the Plan for a period of time that extends through the two-year period following a Change in Control.

     (b) Annual Incentive Compensation means, notwithstanding the provisions of Section 1(b), the product of Annual Base Salary and the greater of (i) the target percentage utilized in determining Incentive Awards as in effect for the most recent Determination Year ended prior to the Change in Control, or (ii) the average of the target percentages applied in determining the Participants Incentive Award in the last three Determination Years prior to the date of Covered Termination (or such lesser period as the Participant may have been employed).

     (c) Covered Termination means, notwithstanding the provisions of Section 1(j), severance of the employment relationship (i) at the initiative of the Participant for Good Reason, or (ii) at a Honeywell Employers initiative for reasons other than death or Gross Cause. Notwithstanding the preceding sentence, in the event of a sale or transfer of a facility or line of business that causes a severance of the employment relationship, a Covered Termination shall be deemed to have occurred only if the new employer has not agreed in writing to be a Honeywell Employer with respect to the Participant or the Participant is not employed by the new employer.

15


     (d) Existing Participant for purposes of this Part II means (i) an individual who, on July 1, 1993, was an employee of an Employer in Salary Grade 20 or above or in a position comparable to Salary Grade 20 or above, or (ii) an individual who, as of April 1, 1999, is determined by the Senior Vice President, Human Resources and Communications to be in a position comparable to Salary Grade 20, and is or reports directly to a functional Senior Vice President of the Company.

     (e) Good Reason means any one or more of the following:

          (i) A material diminution in the Participants authority, duties and/or responsibilities as they existed immediately preceding the Change in Control.

          (ii) A material decrease in base compensation.

          (iii) A material reduction in the aggregate benefits available to the Participant where such reduction does not apply to all similarly-situated employees.

          (iv) Any geographic relocation of the Participants position to a new location which is more than fifty (50) miles from the location of the Participants position immediately prior to a Change in Control.

          (v) Any action by a Honeywell Employer that under applicable law constitutes constructive discharge.

          (vi) The failure of any entity that is a successor to the Company or any of its affiliates (whether direct or indirect, by purchase, merger, consolidation or otherwise) to become a Honeywell Employer or otherwise expressly assume and agree to honor this Plan, if such action, assumption or agreement is legally required to make this Plan enforceable against the successor.

      Notwithstanding the foregoing, Good Reason shall not be deemed to have occurred unless the Participant provides written notice to the Company or its successor, as applicable, identifying the event or omission constituting the reason for a Good Reason termination no more than ninety (90) days following the first occurrence of such event or omission. Within thirty (30) days after notice has been provided to the Company or its successor, as applicable, the Company or its successor, as applicable, shall have the opportunity, but not the obligation, to cure such event or conditions that give rise to a Good Reason termination. If the Company or its successor, as applicable, fails to cure the events or conditions giving rise to Participant’s Good Reason termination by the end of the thirty (30) day cure period, the Participant’s employment shall terminate at the end of the thirty (30) day cure period.

     (f) Gross Cause means any of the following: (i) clear and convincing evidence of a significant violation of the Companys Code of Business Conduct; (ii) the misappropriation, embezzlement or willful destruction of Company property of significant value; (iii)(A) the willful failure to perform, (B) gross negligence in the performance of, or (C) intentional misconduct in the performance of, significant duties that results in material harm to the business of the Company; (iv) the conviction (treating

16


a nolo contendere plea as a conviction) of a felony (whether or not any right to appeal has been or may be exercised); or (v) clear and convincing evidence of the willful falsification of any financial records of the Company that are used in compiling the Companys financial statements or related disclosures, with the intent of violating Generally Accepted Accounting Principles or, if applicable, International Financial Reporting Standards. In the case of a determination under Part II of the Plan, Gross Cause shall be determined by the New Plan Administrator.

     (g) New Plan Administrator shall mean such person or persons appointed pursuant to Section 22 to administer the Plan upon the occurrence of a Change in Control.

20. Enhancement Benefit.

     (a) If, following a Change in Control, any payment to a Participant from a Honeywell Employer or from any benefit or compensation plan or program sponsored or funded by a Honeywell Employer is determined to be an excess parachute payment within the meaning of Section 280G of the Code or any successor or substitute provision of the Code, with the effect that either the Participant is liable for the payment of the tax described in Section 4999 or any successor or substitute provision of the Code (hereafter the Section 4999 Tax) or the Honeywell Employer has withheld the amount of the Section 4999 Tax, an additional benefit (hereafter the Enhancement Benefit) shall be paid from this Plan to such affected Participant.

     (b) The Enhancement Benefit payable shall be an amount, which when added to all payments constituting parachute payments for purposes of Section 280G of the Code or any successor or substitute provision of the Code, is sufficient to cause the remainder of (i) the sum of the parachute payments, including any Enhancement Benefit, less (ii) the amount of all state, local and federal income taxes and the Section 4999 Tax attributable to such payments and penalties and interest on any amount of Section 4999 Tax, other than penalties and interest on any amount of Section 4999 Tax with respect to which an Enhancement Benefit was paid to the Participant on or before the due date of the Participants federal income tax return on which such Section 4999 Tax should have been paid, to be equal to the remainder of (iii) sum of the parachute payments, excluding any Enhancement Benefit, less (iv) the amount of all state, local and federal income taxes attributable to such payments determined as though the Section 4999 Tax and penalties and interest on any amount of Section 4999 Tax, other than penalties and interest on any amount of Section 4999 Tax with respect to which an Enhancement Benefit was paid to the Participant on or before the due date of the Participants federal income tax return on which such Section 4999 Tax should have been paid, did not apply.

     (c) In the event of a Change in Control, the provisions of this Section 20 shall be applicable to all Participants, as defined in Section 1(s).

17


21. Benefit Payments and Forfeiture of Benefits.

     (a) Benefit Payments. Notwithstanding the provisions of Section 4, unless delay is required pursuant to Section 15(b)(ii), benefits that are determined to be payable to a Participant under Sections 3(a)(i) and 3(a)(ii) on or after a Change in Control shall be paid within 60 days following the later of the Change in Control or the Covered Termination, in a single lump sum payment equal to the sum of (i) the total amount of the benefit remaining payable under Section 3(a)(i), and (ii) the amount of the benefit remaining payable under Section 3(a)(ii) for all Determination Years which are coextensive, in whole or part, with the Severance Period; provided, however, that the single lump sum payable pursuant to this Section will only be paid if the Change in Control constitutes a change in control event under Section 409A of the Code, otherwise, the payment shall be paid (or continue to be paid, if in pay status) in the same form and at the same times as provided under Section 4(a). The requirements of Section 3(b) shall have no application to benefits payable after a Change in Control. Unless delay is required pursuant to Section 15(b)(ii), benefits which are determined to be payable to a Participant under Section 20(a) shall be paid within thirty days following the later of a Change in Control or the date the parachute payments referred to in Section 20 are made, in a single payment equal to the amount of the benefit determined under Section 20(b). If any benefit is paid later than the time provided in this Section 21(a), such late payment shall be credited with interest for the period from the date payment should have been made to the date actually made at a rate equal to the average quoted rate for three-month U.S. Treasury Bills for the week preceding the date of payment, as determined by the New Plan Administrator, plus six percentage points.

     (b) Subsequent Benefit Payments. Notwithstanding the provisions of Section 4, in the event the Internal Revenue Service assesses a Section 4999 Tax due which is in excess of the amount determined by the Honeywell Employer under Section 20(b), a Participant shall be paid within 60 days following the date the Participant gives notice to the New Plan Administrator of proof of payment of the Section 4999 Tax in a single payment equal to the amount of the additional benefit determined under Section 20(b), based upon the amount of the Section 4999 Tax paid in excess of any Section 4999 Tax with respect to which any Enhancement Benefit was previously paid. If any benefit is paid later than the time provided in this Section 21(b), such late payment shall be credited with interest for the period from the date payment should have been made to the date actually made at a rate equal to the average quoted rate for three-month U.S. Treasury Bills for the week preceding the date of payment, as determined by the New Plan Administrator, plus six percentage points.

     (c) Forfeiture of Benefits. Notwithstanding the provisions of Section 5, a Participant receiving benefits or entitled to receive benefits under the Plan shall cease to receive such benefits under the Plan and the right to receive any benefits in the future under the Plan shall be forfeited, in the event the Participant, as determined by the New Plan Administrator, (i) is convicted of a felony committed against an Honeywell Employer, its property or business, (ii) commits any fraud or misappropriates property, proprietary information, intellectual property or trade secrets of an Honeywell Employer for personal gain or for the benefit of another party, or (iii) actively recruits and offers employment to any management employee of an Honeywell Employer.

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22. Administration.

     (a) New Plan Administrator. On or before a Change in Control, the Company, its successors, or persons operating under its control or on its behalf (hereafter the Corporation) shall appoint a person independent of the Corporation to be the New Plan Administrator upon the occurrence of a Change in Control and the Plan Administrator shall immediately provide to the New Plan Administrator such information with respect to each Participant in the Plan as shall be necessary to enable the New Plan Administrator to determine the amount of any benefit which is then or may thereafter become payable to such Participants.

     (b) Authority. Upon the occurrence of a Change in Control, the New Plan Administrator shall have exclusive authority to make initial determinations of eligibility for the benefits under the Plan, subject to the requirements of Section 22(f). The New Plan Administrator may, in reviewing any recommendation for benefit eligibility pursuant to this Section 22, rely on representations made by the Corporation or a Honeywell Employer pursuant to Section 22(c). However, in the event that none of the recommendations are agreed to by the Participant, the New Plan Administrator shall refer the disputed claim for benefits under this Plan for resolution as provided in Section 22(f). Any recommendation by the New Plan Administrator under this Section 22, any determination by the New Plan Administrator as to the eligibility for or the amount of benefits which are not in dispute and any judicial determination pursuant to Section 22(f) shall be final and binding on the Corporation and the Honeywell Employer. The Corporation and the responsible Honeywell Employer shall make payments to Participants as directed by the New Plan Administrator or pursuant to judicial determination pursuant to Section 22(f).

     (c) Corporation or Honeywell Employer Recommendations. Upon the occurrence of a Change in Control, the Corporation and any Honeywell Employer may make recommendations to the New Plan Administrator with respect to benefit determinations for affected Participants under the Plan and the New Plan Administrator shall immediately forward any such recommendation to the affected Participant. If the recommendation is agreed to in writing by the Participant, the New Plan Administrator shall advise the Corporation and any responsible Honeywell Employer, and the Corporation or Honeywell Employer, whichever is responsible, shall make payment in accordance with the provisions of Section 21.

     (d) Independent Recommendations. In the case of a recommendation which is not agreed to by the affected Participant, the New Plan Administrator shall immediately review the recommendation of the Corporation or responsible Honeywell Employer and within 15 days of notice of the dispute from the Participant, determine whether it is in accordance with the terms of the Plan and notify the Corporation or responsible Honeywell Employer and the Participant of its findings. If the New Plan Administrator determines that the recommendation is not in accordance with the terms of the Plan and that an adjustment is necessary and the Participant agrees in writing to such adjustment, the New Plan Administrator shall advise the Corporation or responsible Honeywell Employer, and the Corporation or responsible Honeywell Employer shall

19


make payment in accordance with the provisions of Section 21. Any such adjustment determined by the New Plan Administrator, whether agreed to by the Participant or not, shall be final and binding upon the Corporation or responsible Honeywell Employer and may not be challenged by either of them.

     (e) Direct Application. Upon notice to the New Plan Administrator by an affected Participant, as to whom the Corporation or responsible Honeywell Employer has made no recommendation, that a Covered Termination has occurred, the Corporation or responsible Honeywell Employer shall be notified by the New Plan Administrator and given 15 days from the date the Participant gave notice to the new Plan Administrator within which to make a recommendation as to benefit determination. The New Plan Administrator shall also make its own independent determination as to the benefit payable under the terms of the Plan. Within 15 days of receipt of the notice from the affected Participant, the New Plan Administrator shall transmit to the Participant its own recommendation and that of the Corporation or responsible Honeywell Employer if such is available. If either recommendation is accepted in writing by the affected Participant, the New Plan Administrator shall advise the Corporation or responsible Honeywell Employer, and the Corporation or responsible Honeywell Employer shall make payment in accordance with the terms of Section 21. Any recommendation by the New Plan Administrator shall be final and binding upon the Corporation or responsible Honeywell Employer and may not be challenged by either of them.

     (f) Disputed Recommendation. If an affected Participant does not agree in writing within 15 days of transmittal to accept any of the recommendations made pursuant to Sections 22(c), 22(d) or 22(e), the New Plan Administrator (1) shall consider the amount in excess of the highest recommendation to be a claim for benefits which is in dispute and shall, with respect to such amount, initiate an action in interpleader pursuant to Rule 22 of the Federal Rules of Civil Procedure or analogous rules, before a court of competent jurisdiction, and (2) cause the Corporation or responsible Honeywell Employer to pay the Participant the higher of (A) the amount recommended, if any, by the Corporation or the responsible Honeywell Employer, or (B) the amount recommended by the New Plan Administrator, in accordance with the terms of Section 21. The New Plan Administrator shall not assert any claim or take any position in the interpleader proceeding based on its interpretation of the terms of the Plan, other than the provisions of this Section 22.

     (g) Attorneys Fees and Costs. If a Participant is paid or is determined to be entitled to receive benefits (i) in excess of any recommendation made by the Corporation or responsible Honeywell Employer pursuant to Sections 22(c) or 22(e), or (ii) in a case where the Corporation or responsible Honeywell Employer have made no recommendation pursuant to Sections 22(c) or 22(e), the New Plan Administrator shall advise the Corporation or responsible Honeywell Employer, and the Corporation or responsible Honeywell Employer shall immediately pay or reimburse, in accordance with Section 15(b)(iii) above, the affected Participant for the full amount of any attorneys fees and other expenses the affected Participant incurred in pursuing his or her claim for benefits. The payment or reimbursement shall include the standard hourly rates charged by each such attorney, any and all other expenses related to the action incurred by or on

20


behalf of the affected Participant, the costs and expenses of any experts utilized to prepare the claim, and any court costs assessed against the affected Participant.

     (h) Amendment or Termination. This Plan may not be amended or terminated after a Change in Control; provided, however, the Plan may be amended if the purpose of the amendment is to increase benefits hereunder or if the purpose of the amendment is to comply with Section 409A of the Code.

     (i) No Waiver. No waiver by a Participant at any time of any breach by the Company of, or of any lack of compliance with, any condition or provision of this Plan to be performed by the Company shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. In no event shall the failure by a Participant to assert any right under the Plan (including, but not limited to, failure to assert the existence of Good Reason conditions which would enable a Participant to trigger his own termination under clause (i) of Section 19(c)) be deemed a waiver of such right or any other right provided under the Plan, it being intended that a Participant who has perfected a right under the Plan (including, but not limited to, a Participants right to trigger his own termination under clause (i) of Section 18(b)) shall be entitled to assert that right in accordance with the terms of the Plan unless the Participant affirmatively elects, in writing, to waive such right.

21


HONEYWELL INTERNATIONAL INC. SEVERANCE PLAN
FOR SENIOR EXECUTIVES

Exhibit A

ACTIVE PARTICIPANTS IN SENIOR SEVERANCE PROGRAM

36 Months (base and target bonus)
Peter M. Kreindler

22


 
 
 
 

EX-10.7 3 c60039_ex10-7.htm

Exhibit 10.7

AMENDMENT 
TO THE 
HONEYWELL INTERNATIONAL INC
.
SEVERANCE PLAN FOR SENIOR EXECUTIVES
(Amended and restated, effective as of January 1, 2009)

                    Pursuant to the authority granted to proper officers of Honeywell International Inc. (the “Company”) by the Management Development and Compensation Committee of the Board of Directors on December 11, 2009, the Honeywell International Inc. Severance Plan for Senior Executives (Amended and Restated, effective as of January 1, 2009) is hereby amended effective January 1, 2010 by replacing paragraph 20(c) in its entirety with the following new paragraph 20(c):

 

 

 

“(c)     In the event of a Change in Control, the provisions of this Section 20 shall be applicable to each Participant, as defined in Section 1(t), who is a Participant on December 31, 2009.

 

 

 

For the avoidance of doubt, no Participant who becomes a Participant on or after January 1, 2010 shall be eligible for the Enhancement Benefit described in this Section 20. If it is determined that such a Participant is entitled to receive payments, benefits and other compensation from the Honeywell Employers (whether paid or payable pursuant to the terms of this Plan or otherwise) that would subject the Participant to an excise tax under Section 4999 of the Code, then the Participant may elect to receive either (1) all payments, benefits and other compensation from the Honeywell Employers less any applicable income taxes and the excise tax imposed under Section 4999 of the Code (i.e., without any Enhancement Benefit), or (2) the amount that maximizes the payments, benefits and other compensation from the Honeywell Employers to the Participant without causing any such payment, benefit or other compensation to be an ‘excess parachute payment’ (as defined under Section 280G of the Code and regulations and rulings thereunder) less any applicable income taxes.”

 

 

 

 

HONEYWELL INTERNATIONAL INC.

 

 

 

/s/ Mark James

 

Mark James

 

Senior Vice President – Human Resources and Communications

Dated: January 12, 2010


 
 
 

EX-10.6 2 c72130_ex10-6.htm

Exhibit 10.6

 

AMENDMENT TO THE

HONEYWELL INTERNATIONAL INC.

SEVERANCE PLAN FOR SENIOR EXECUTIVES

As Amended and Restated as of January 1, 2009

WITNESSETH

 

WHEREAS, Honeywell International Inc. (the “Corporation”) is the sponsor of the Honeywell International Inc. Severance Plan for Senior Executives (the “Plan”); and

 

WHEREAS, Section 12 of the Plans reserves to the Corporation the right to amend the Plans at any time; and

 

WHEREAS, the Corporation is desirous of amending the Plans in certain particulars;

 

NOW, THEREFORE, the Plans are hereby amended, effective January 1, 2013, as follows:

 

1.                  Section 15(b) is amended to read as follows:

(b) Section 409A of the Code.

(i)                 Interpretation. Notwithstanding the other provisions hereof, this Plan is intended to comply with the applicable requirements of Section 409A of the Code and this Plan shall be interpreted to avoid any penalty sanctions under Section 409A of the Code. Accordingly, all provisions herein, or incorporated by reference, shall be construed and interpreted to comply with Section 409A of the Code and, if necessary, any such provision shall be deemed amended to comply with Section 409A of the Code. All payments to be made upon a termination of employment under this Plan may only be made upon a “separation from service” under Section 409A of the Code. If any payment or benefit cannot be provided or made at the time specified herein without incurring sanctions under Section 409A of the Code, then such benefit or payment shall be provided in full at the earliest time thereafter when such sanctions will not be imposed. For purposes of Section 409A of the Code, each payment made under this Plan shall be treated as a separate payment and each installment and the right to a series of installment payments under this Plan is to be treated as a right to a series of separate payments. In no event may the Participant, directly or indirectly, designate the calendar year of payment.

(ii)               Payment Delay. To the maximum extent permitted under Section 409A of the Code, the severance benefits provided under this Plan are intended to comply with the “short-term deferral exception” under Treas. Reg. §1.409A-1(b)(4), and any remaining amount is intended to comply with the “separation pay exception” under Treas. Reg. §1.409A-1(b)(9)(iii); provided, however, if on the date of the Participant’s termination of employment, Honeywell’s stock is publicly-traded on an established securities market or otherwise and the Participant is a Specified Employee, then all cash severance payments payable to the Participant under this Plan that are deemed as deferred compensation subject to the requirements of Section 409A of the Code and payable within six (6) months following the Participant’s “separation from service” shall be postponed for a period of six (6) months following the Participant’s “separation from service” with Honeywell. The postponed amounts shall be paid to the Participant in a lump sum within thirty (30) days after the date that is six (6) months following the Participant’s “separation from service” with Honeywell, without earnings or interest. If the Participant dies during such six-month period and prior to payment of the postponed cash amounts hereunder, the amounts delayed on account of Section 409A of the Code shall be paid to the Participant’s beneficiary within sixty (60) days after Participant’s death, without earnings or interest.

 

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(iii)             Reimbursements. All reimbursements provided under this Plan shall be made or provided in accordance with the requirements of Section 409A of the Code, including, where applicable, the requirement that (A) any reimbursement is for expenses incurred during the Participant’s lifetime (or during a shorter period of time specified in this Plan), (B) the amount of expenses eligible for reimbursement during a calendar year may not affect the expenses eligible for reimbursement in any other calendar year, (C) the reimbursement of an eligible expense will be made on or before the last day of the taxable year following the year in which the expense is incurred, and (D) the right to reimbursement is not subject to liquidation or exchange for another benefit. Any tax gross up payments to be made hereunder shall be made not later than the end of the Participant’s taxable year next following the Participant’s taxable year in which the related taxes are remitted to the taxing authority.

(iv)             Multiple Calendar Years. Notwithstanding any provision of the Plan to the contrary, any payments of severance benefits under this Plan that (i) are, or may be, deferred compensation subject to Code Section 409A (“409A Severance Benefits”), and (ii) are subject to a release of claims pursuant to Section 3(b), where the period for execution and non-revocation of the Release spans more than one calendar year, any payment of 409A Severance Benefits that is contingent on the execution of the Release shall not be paid until the second calendar year, or later if required by the applicable terms of the Plan.  In no event may a Participant, either directly or indirectly, designate the calendar year of payment of any 409A Severance Benefits.

 

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