Exhibit (10)(iii)(m)
________________, 1994
Name
Address
City
Dear ________:
Honeywell Inc. (the "Corporation") considers it essential to the best
interests of its stockholders to foster the continuous employment of key
management personnel. In this connection, the Board of Directors (the "Board")
recognizes that, as is the case with many publicly held corporations, the
possibility of a change in control of the Corporation may exist and that such
possibility, and the uncertainty and questions which it may raise among
management, may result in the departure or distraction of management personnel
to the detriment of the Corporation and its stockholders.
The Board has determined that appropriate steps should be taken to
reinforce and encourage the continued attention and dedication of members of the
Corporation's management, including you, to their assigned duties without
distraction in the face of potentially disturbing circumstances arising from the
possibility of a change in control of the Corporation. In that regard, the
Board has determined that this letter agreement (this "Agreement") will better
serve the above-stated objective than the letter agreement entered into between
you and the Corporation dated ________________ (the "Prior Agreement"), which is
hereby terminated.
In order to induce you to remain in the employ of the Corporation, the
Corporation agrees that you shall receive the severance benefits set forth in
this Agreement in the event your employment with the Corporation is terminated
under the circumstances described below subsequent to a "change in control of
the Corporation" (as defined in Section 2).
1. TERM OF AGREEMENT. This Agreement shall replace the Prior Agreement,
shall commence as of the date hereof, and shall continue in effect through
December 31, 1995; provided, however, that commencing on January 1, 1996 and
each January 1 thereafter, the term
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Page 2
of this Agreement shall automatically be extended for one additional year
unless, not later than October 1 of the preceding year, the Corporation shall
have given notice that it does not wish to extend this Agreement; and provided,
further, that if a change in control of the Corporation, as defined in Section
2, shall have occurred during the original or extended term of this Agreement,
this Agreement shall continue in effect for a period of not less than thirty-six
(36) months beyond the month in which such change in control of the Corporation
occurred. In no event, however, shall the term of this Agreement extend beyond
the end of the calendar month in which your 65th birthday occurs.
2. CHANGE IN CONTROL. No benefits shall be payable hereunder unless there
shall have been a change in control of the Corporation, as set forth below. For
purposes of this Agreement, a "change in control of the Corporation" shall be
deemed to have occurred if:
(i) any "person", as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") (other than the
Corporation, any subsidiary of the Corporation, any "person" (as hereinabove
defined) acting on behalf of the Corporation as underwriter pursuant to an
offering who is temporarily holding securities in connection with such offering,
any trustee or other fiduciary holding securities under an employee benefit plan
of the Corporation, or any corporation owned, directly or indirectly, by the
stockholders of the Corporation in substantially the same proportions as their
ownership of stock of the Corporation), is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Corporation representing thirty percent (30%) or more of the
combined voting power of the Corporation's then outstanding securities;
(ii) during any period of not more than two consecutive years (not
including any period prior to the execution of this Agreement), individuals who
at the beginning of such period constitute the Board of Directors of the
Corporation (the "Board"), and any new director (other than a director
designated by a "person" (as hereinabove defined) who has entered into an
agreement with the Corporation to effect a transaction described in clause (i),
(iii) or (iv) of this Section) whose election by the Board or nomination for
election by the Corporation's stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either were directors
at the beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute at least a majority
thereof;
(iii) the stockholders of the Corporation approve a merger or consolidation
of the Corporation with any other corporation, other than (1) a merger or
consolidation which would result in the voting securities of the Corporation
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than fifty percent (50%) of the combined voting power of
the voting securities of the Corporation or such surviving entity outstanding
immediately after such merger or consolidation or (2) a merger or consolidation
effected to implement a recapitalization of the Corporation (or similar
transaction) in which no "person" (as hereinabove defined) acquires more
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than thirty percent (30%) of the combined voting power of the Corporation's then
outstanding securities; or
(iv) the stockholders of the Corporation approve a plan of complete
liquidation of the Corporation or an agreement for the sale or disposition by
the Corporation of all or substantially all of the Corporation's assets (or any
transaction having a similar effect).
3. TERMINATION FOLLOWING CHANGE IN CONTROL.
(i) GENERAL. If any of the events described in Section 2 constituting a
change in control of the Corporation shall have occurred, you shall be entitled
to such benefits provided in Section 4 which may be applicable, upon the
subsequent termination of your employment during the term of this Agreement,
unless such termination is (a) because of your death or Disability, (b) by the
Corporation for Cause, or (c) by you other than for Good Reason. In the event
your employment with the Corporation is terminated for any reason prior to the
occurrence of a change in control of the Corporation and subsequently a change
in control of the Corporation shall have occurred, you shall not be entitled to
any benefits hereunder.
(ii) DISABILITY. If, as a result of your incapacity due to physical or
mental illness, you shall have been absent from the full-time performance of
your duties with the Corporation for six (6) consecutive months, and within
thirty (30) days after written notice of termination is given, you shall not
have returned to the full-time performance of your duties, for purposes of this
Agreement your employment may be terminated for "Disability."
(iii) CAUSE. Termination by the Corporation of your employment for "Cause"
shall mean termination (a) upon the willful and continued failure by you to
substantially perform your duties with the Corporation (other than any such
failure resulting from your incapacity due to physical or mental illness or any
such actual or anticipated failure after the issuance of a Notice of Termination
(as defined in Subsection 3(v)) by you for Good Reason (as defined in Subsection
3(iv))), within ten (10) days after a written demand for substantial performance
is delivered to you by the Board, which demand specifically identifies the
manner in which the Board believes that you have not substantially performed
your duties, or (b) the willful engaging by you in conduct which is clearly and
materially injurious to the Corporation, monetarily or otherwise. For purposes
of this Subsection, no act, or failure to act, on your part shall be deemed
"willful" unless done, or omitted to be done, by you in bad faith and without
reasonable belief that your action or omission was in or not opposed to the best
interest of the Corporation. Notwithstanding the foregoing, you shall not be
deemed to have been terminated for Cause unless and until there shall have been
delivered to you a copy of a resolution duly adopted by the affirmative vote of
not less than three-quarters (3/4) of the entire membership of the Board at a
meeting of the Board (after reasonable notice to you and an opportunity for you,
together with your counsel, to be heard before the Board), finding that in the
good faith opinion of the Board you were guilty of conduct set forth above in
this Subsection and specifying the particulars thereof in detail.
_________________, 1994
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(iv) GOOD REASON. You shall be entitled to terminate your employment for
Good Reason. For purposes of this Agreement, "Good Reason" shall mean, without
your express written consent, the occurrence after a change in control of the
Corporation of any of the following circumstances unless, in the case of
paragraphs (a), (e), (f), (g) or (h), such circumstances are fully corrected
prior to the Date of Termination (as defined in Subsection 3(vi)) specified in
the Notice of Termination (as defined in Subsection 3(v)) given in respect
thereof:
(a) the assignment to you of any duties inconsistent with the status
of the position in the Corporation that you held immediately prior to the
change in control of the Corporation or an adverse alteration in the nature
or status of your responsibilities or in the quality or amount of office
accommodations or assistance provided to you, from those in effect
immediately prior to such change in control of the Corporation;
(b) a reduction by the Corporation in your annual base salary as in
effect on the date immediately prior to the change in control of the
Corporation or as the same may be increased from time to time thereafter;
(c) the Corporation's moving you to be based more than 50 miles from
the Corporation's offices at which you are principally employed immediately
prior to the date of the change in control of the Corporation except for
required travel on the Corporation's business to an extent substantially
consistent with your business travel obligations immediately prior to such
change in control of the Corporation;
(d) the failure by the Corporation to pay to you any portion of your
current compensation or compensation under any deferred compensation
program of the Corporation within seven (7) days of the date such
compensation is due:
(e) the failure by the Corporation to continue in effect any
compensation or benefit plan or perquisites in which you participate
immediately prior to the change in control of the Corporation which is
material to your total compensation, including but not limited to the
Corporation's Corporate Executive Compensation Plan, Performance Stock
Program, Stock and Incentive Plan, Stock Recognition Plan, Supplementary
Retirement Plan, Financial Planning Program, Corporate Club Membership
Plan, Honeywell Executive Automobile Plan or Personal Automobile Plan, any
supplementary executive retirement plans of the Corporation you may be
covered under, or any successor plans (collectively, the "Compensation
Plans"), unless an equitable arrangement (embodied in an ongoing substitute
or alternative plan) has been made with respect to such plan, or the
failure by the Corporation to continue your participation therein (or in
such substitute or alternative plan) on a basis not materially less
favorable, both in terms of the amount of benefits provided and the level
of your participation relative to other participants, than existed at the
time of the change in control of the Corporation;
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(f) the failure by the Corporation to continue to provide you with
benefits substantially similar to those enjoyed by you under any of the
Corporation's life insurance, medical, dental, accident or disability plans
in which you were participating at the time of the change in control of the
Corporation, the taking of any action by the Corporation which would
directly or indirectly materially reduce any of such benefits, or the
failure by the Corporation to provide you with the number of paid vacation
days to which you are entitled on the basis of your years of service with
the Corporation in accordance with the Corporation's normal vacation policy
in effect at the time of the change in control of the Corporation;
(g) the failure of the Corporation to obtain a satisfactory agreement
from any successor to assume and agree to perform this Agreement, as
contemplated in Section 5 hereof; or
(h) any purported termination of your employment that is not effected
pursuant to a Notice of Termination satisfying the requirements of
Subsection (v) hereof (and, if applicable, the requirements of Subsection
(iii) hereof), which purported termination shall not be effective for
purposes of this Agreement.
Your right to terminate your employment pursuant to this Subsection shall not be
affected by your incapacity due to physical or mental illness. Your continued
employment shall not constitute consent to, or a waiver of rights with respect
to, any circumstance constituting Good Reason hereunder.
(v) NOTICE OF TERMINATION. Any purported termination of your employment
by the Corporation or by you shall be communicated by written Notice of
Termination to the other party hereto in accordance with Section 6. "Notice of
Termination" shall mean a notice that shall indicate the specific termination
provision in this Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of your
employment under the provision so indicated.
(vi) DATE OF TERMINATION. "Date of Termination" shall mean (a) if your
employment is terminated for Disability, thirty (30) days after Notice of
Termination is given (provided that you shall not have returned to the full-time
performance of your duties during such thirty (30)-day period); (b) if your
employment is terminated pursuant to Subsection (iii) or (iv) hereof, the date
specified in the Notice of Termination (which, in the case of a termination for
Cause shall not be less than thirty (30) days from the date such Notice of
Termination is given) and in the case of a termination for Good Reason shall not
be less than fifteen (15) nor more than sixty (60) days from the date such
Notice of Termination is given, (c) if your employment is terminated by you for
any other reason (other than for Good Reason or for Disability) the date
specified in the Notice of Termination shall not be less than thirty (30) days
from the date such Notice of Termination is
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given; and (d) if your employment is terminated by the Corporation for any other
reason (other than for Cause or for Disability), the date specified in the
Notice of Termination, which shall be the last day of a layoff period specified
in paragraph (e) of Subsection 4(iv); provided, however, that if within fifteen
(15) days after any Notice of Termination is given, or, if later, prior to the
Date of Termination (as determined without regard to this proviso), the party
receiving such Notice of Termination notifies the other party that a dispute
exists concerning the termination, then the Date of Termination (other than the
Date of Termination where clause (d) of this Subsection (vi) is applicable)
shall be the date on which the dispute is finally determined, either by mutual
written agreement of the parties, by a binding arbitration award, or by a final
judgment, order or decree of a court of competent jurisdiction (which is not
appealable or with respect to which the time for appeal therefrom has expired
and no appeal has been perfected); and provided, further, that the Date of
Termination shall be extended by a notice of dispute only if such notice is
given in good faith and the party giving such notice pursues the resolution of
such dispute with reasonable diligence. Notwithstanding the pendency of any
such dispute, the Corporation will continue to pay you your full compensation in
effect when the notice giving rise to the dispute was given and continue you as
a participant in all Compensation Plans, life insurance, medical, dental,
accident or disability plans and any similar plans in which you were
participating when the notice giving rise to the dispute was given, until the
dispute is finally resolved in accordance with this Subsection. Amounts paid
under this Subsection are in addition to all other amounts due under this
Agreement, and shall not be offset against or reduce any other amounts due under
this Agreement and shall not be reduced by any compensation earned by you as the
result of employment by another employer.
4. COMPENSATION DURING DISABILITY OR UPON TERMINATION. Following a change
in control of the Corporation, you shall be entitled to the following during a
period of Disability, upon termination of your employment, or upon the cessation
of your active service during a layoff period, as the case may be, provided that
such period, termination, or cessation of your active service occurs during the
term of this Agreement:
(i) During any period that you fail to perform your full-time duties with
the Corporation as a result of incapacity due to physical or mental illness, you
shall continue to receive your base salary at the rate in effect at the
commencement of any such period, together with all compensation payable to you
under the Corporation's disability plan or program or other similar plan during
such period, until this Agreement is terminated pursuant to Subsection 3(ii)
hereof. Thereafter, or in the event your employment shall be terminated by
reason of your death, your benefits shall be determined under the Corporation's
retirement, insurance and other Compensation Plans then in effect in accordance
with the terms of such programs.
(ii) If your employment shall be terminated by the Corporation for Cause or
by you other than for Good Reason or Disability, the Corporation shall pay you
your full base salary through the Date of Termination at the rate in effect at
the time Notice of Termination is given, plus all other amounts or benefits to
which you are entitled under any Compensation Plan of the
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Corporation then in effect, and the Corporation shall have no further
obligations to you under this Agreement.
(iii) If your employment by the Corporation shall be terminated by you for
Good Reason, then you shall be entitled to the following:
(a) the Corporation shall pay to you your full base salary through the
Date of Termination at the rate in effect at the time Notice of Termination
is given, or in effect on the date immediately preceding the date of the
change in control of the Corporation, whichever is higher, no later than
the fifth day following the Date of Termination, plus all other amounts to
which you are entitled under any Compensation Plan, at the time such
payments are due;
(b) in lieu of any further salary payments to you for periods
subsequent to the Date of Termination, the Corporation shall pay as
severance pay to you, at the time specified in Subsection (vi), a lump sum
severance payment equal to three times the sum of your (1) annual salary as
in effect as of your Date of Termination or in effect on the date
immediately preceding the date of the change in control of the Corporation,
whichever is higher, and (2) "on-plan" bonus under the Corporate Executive
Compensation Plan or the average of the annual bonuses paid to you (without
regard to any prorata adjustment thereof for any portion of a year) during
the three year period immediately preceding the date of the change in
control of the Corporation, whichever is higher;
(c) your rights under the Compensation Plans shall be governed by the
terms of those respective plans;
(d) the Corporation shall pay to you all legal fees and expenses
incurred by you as a result of such termination (including all such fees
and expenses, if any, reasonably incurred in contesting or disputing by
arbitration or otherwise, any such termination or in seeking to obtain or
enforce any right or benefit provided by this Agreement or in connection
with any tax audit or proceeding to the extent attributable to the
application of section 4999 of the Internal Revenue Code of 1986, as
amended (the "Code"), to any payment or benefit provided hereunder; and
(e) for a three year period after such termination, the Corporation
shall arrange to provide you with benefits substantially similar to those
which you were receiving or entitled to receive under the Corporation's
life, disability, accident and group health insurance plans or any similar
plans in which you were participating immediately prior to the Date of
Termination ("Welfare Plan Benefits") at a cost to you which is no greater
than that cost to you in effect at the Date of Termination; provided,
however, that to the extent any such coverage is prohibited by any judicial
or legislative authority, the Corporation shall make alternative
arrangements to provide you with Welfare Plan
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Benefits, including, but not limited to, providing you with a payment in an
amount equal to your cost of purchasing the Welfare Plan Benefits.
Benefits otherwise receivable by you pursuant to this paragraph (e) shall
be reduced to the extent comparable benefits are actually received on your
behalf during the three year period following your termination. You hereby
agree to report to the Corporation any such comparable benefits actually
received by you.
(iv) If your employment by the Corporation shall be terminated by the
Corporation other than for Cause or Disability, then you shall be entitled to
the following:
(a) the Corporation shall pay to you your full base salary through the
date the Notice of Termination is given at the rate in effect at the time
Notice of Termination is given or on the date immediately preceding the
date of the change in control of the Corporation, whichever is higher, no
later than the fifth day following the date of the Notice of Termination,
plus all other amounts to which you are entitled under any Compensation
Plan, at the time such payments are due;
(b) in lieu of any further salary payments to you for periods
subsequent to the date the Notice of Termination is given, the Corporation
shall pay as severance pay to you, at the time specified in Subsection
(vi), a lump sum severance payment equal to three times the sum of your (1)
annual salary as in effect at the time Notice of Termination is given or on
the date immediately preceding the date of the change in control of the
Corporation, whichever is higher, and (2) "on-plan" bonus under the
Corporate Executive Compensation Plan or the average of the annual bonuses
paid to you (without regard to any prorata adjustment thereof for any
portion of a year) during the three year period immediately preceding the
date of the change in control of the Corporation, whichever is higher;
(c) your rights under the Compensation Plans shall be governed by the
terms of those respective plans which are applicable to a laid off
employee;
(d) the Corporation shall pay to you all legal fees and expenses
incurred by you as a result of such cessation of active service and
placement on layoff or termination (including all such fees and expenses,
if any, incurred in contesting or disputing any such layoff or termination
or in seeking to obtain or enforce any right or benefit provided by this
Agreement or in connection with any tax audit or proceeding to the extent
attributable to the application of Section 4999 of the Code, to any payment
or benefit provided hereunder);
(e) you shall be placed on layoff status without recall rights for all
purposes in accordance with the Corporation's policies in effect
immediately prior to the date of the change in control of the Corporation,
receive continued accrual of credited service for
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benefits under the provisions of the Honeywell Retirement Benefit Plan in
effect immediately prior to the change in control of the Corporation during
such layoff period, and retention of your employment status for the greater
of (1) two years from the date of the cessation of your active service if
your years of credited service for benefits under such Plan are less than
two years or (2) the number of your years of credited service for benefits
under such Plan up to a maximum of five years; and
(f) for a three year period after your cessation of active service,
the Corporation shall arrange to provide you with benefits substantially
similar to those which you were receiving or entitled to receive under the
Corporation's life, disability, accident and group health insurance plans
or any similar plans in which you were participating immediately prior to
the date the Notice of Termination was given ("Welfare Plan Benefits")
including but not limited to providing you with a payment in an amount
equal to your cost of purchasing the Welfare Plan Benefits at a cost to you
which is no greater than that cost to you in effect at the time the Notice
of Termination is given; provided, however, that to the extent any such
coverage is prohibited by any judicial or legislative authority, the
Corporation shall make alternative arrangements to provide you with Welfare
Plan Benefits, including but not limited to providing you with a payment in
an amount equal to your cost of purchasing the Welfare Plan Benefits.
Benefits otherwise receivable by you pursuant to this paragraph (f) shall
be reduced to the extent comparable benefits are actually received by you
during the three year period following your cessation of active service.
You hereby agree to report to the Corporation any such comparable benefits
actually received by you.
(v) If any payments under this Agreement or any other payments or benefits
received or to be received by you in connection with a change in control of the
Corporation, your termination of employment, or your cessation of active service
(whether pursuant to the terms of this Agreement or any other plan, arrangement
or agreement with the Corporation, or any person affiliated with the
Corporation) (the "Severance Payments"), will be subject to the tax (the "Excise
Tax") imposed by section 4999 of the Code (or any similar tax that may hereafter
be imposed), the Corporation shall pay at the time specified below, an
additional amount (the "Gross-Up Payment") such that the net amount retained by
you, after deduction of any Excise Tax on the Severance Payments and any
federal, state and local income tax and Excise Tax upon the payment provided for
by this Subsection 4(v), shall be equal to the Severance Payments. For purposes
of determining whether any of the Severance Payments will be subject to the
Excise Tax and the amount of such Excise Tax, (a) all Severance Payments shall
be treated as "parachute payments" within the meaning of section 280G(b)(2) of
the Code, and all "excess parachute payments" within the meaning of section
280G(b)(1) shall be treated as subject to the Excise Tax, unless in the opinion
of tax counsel selected by the Corporation's independent auditors and acceptable
to you such Severance Payments (in whole or in part) do not constitute parachute
payments, or such excess parachute payments (in whole or in part) represent
reasonable compensation for services actually rendered within the meaning of
section 280G(b)(4) of the Code in excess of the base
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amount within the meaning of section 280G(b)(3) of the Code, or are otherwise
not subject to the Excise Tax, (b) the amount of the Severance Payments which
shall be treated as subject to the Excise Tax shall be equal to the lesser of
(1) the total amount of the Severance Payments or (2) the amount of excess
parachute payments within the meaning of section 280G(b)(1) (after applying
clause (a), above), and (c) the value of any non-cash benefits or any deferred
payment or benefit shall be determined by the Corporation's independent auditors
in accordance with the principles of section 280G(d)(3) and (4) of the Code.
For purposes of determining the amount of the Gross-Up Payment, you shall be
deemed to pay federal income taxes at your highest marginal rate of federal
income taxation in the calendar year in which the Gross-Up Payment is to be made
and state and local income taxes at your highest marginal rate of taxation in
the state and locality of your residence on the Date of Termination (or earlier
cessation of your active service), net of the maximum reduction in federal
income taxes which could be obtained from deduction of such state and local
taxes. In the event that the Excise Tax is subsequently determined to be less
than the amount taken into account hereunder at the time of termination of your
employment (or earlier cessation of your active service), you shall repay to the
Corporation at the time that the amount of such reduction in Excise Tax is
finally determined the portion of the Gross-Up Payment attributable to such
reduction (plus the portion of the Gross-Up Payment attributable to the Excise
Tax and federal and state and local income tax imposed on the Gross-Up Payment
being repaid by you if such repayment results in a reduction in Excise Tax
and/or a federal and state and local income tax deduction) plus interest on the
amount of such repayment from the date the Gross-Up Payment was initially made
to the date of repayment at the rate provided in section 1274(b)(2)(B) of the
Code (the "Applicable Rate"). In the event that the Excise Tax is determined to
exceed the amount taken into account hereunder at the time of the termination of
your employment or earlier cessation of your active service (including by reason
of any payment the existence or amount of which cannot be determined at the time
of the Gross-Up Payment), the Corporation shall make an additional Gross-Up
Payment in respect of such excess (plus any interest payable with respect to
such excess) at the time that the amount of such excess is finally determined.
Any payment to be made to you under this paragraph shall be payable within five
(5) days of your Date of Termination (or within five (5) days of your earlier
cessation of active service).
(vi) The payments provided for in Subsection (iii)(b) and Subsection
(iv)(b), shall be made not later than the fifth day following the Date of
Termination or the date of your cessation of active service, whichever is
earlier; provided, however, that if the amounts of such payments cannot be
finally determined on or before such day, the Corporation shall pay to you on
such day an estimate, as determined in good faith by the Corporation, of the
minimum amount of such payments and shall pay the remainder of such payments
(together with interest from the date that the estimated payments were made to
the date the remainder of such payments is made at the Applicable Rate) as soon
as the amount thereof can be determined but in no event later than the thirtieth
day after the Date of Termination or date of cessation of your active service,
whichever may be earlier. In the event that the amount of the estimated
payments exceeds the amount subsequently determined to have been due, such
excess shall constitute a loan by the Corporation
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to you, payable on the fifth day after demand by the Corporation (together with
interest from the date that the estimated payments were made to the date of
repayment at the Applicable Rate).
(vii) Except as required in Subsection (iii)(e) and Subsection (iv)(f)
hereof, you shall not be required to mitigate the amount of any payment provided
for in this Section 4 by seeking other employment or otherwise, nor shall the
amount of any payment or benefit provided for in this Section 4 be reduced by
any compensation earned by you as the result of employment by another employer,
by retirement benefits, by offset against any amount claimed to be owed by you
to the Corporation, or otherwise; provided, however, that if during the three
year period subsequent to your Date of Termination or earlier cessation of your
active service, you directly compete with the Corporation by making use of trade
secrets or other proprietary knowledge you obtained while employed by the
Corporation in violation of the commitment to protect such proprietary or trade
secret information set forth in the "Honeywell Employment Agreement" attached to
your "Application for Employment" with the Corporation, all income earned as a
result of such use of information shall be remitted to the Corporation to the
extent payments were made to you under this Section 4.
5. SUCCESSORS; BINDING AGREEMENT. (i) The Corporation will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Corporation to (A) expressly assume and agree to perform this Agreement in the
same manner and to the same extent that the Corporation would be required to
perform it if no such succession had taken place and (B) agree to notify you of
the assumption of the Agreement within 10 days of such assumption. Failure of
the Corporation to obtain any such assumption and agreement prior to the
effectiveness of any such succession shall be a breach of this Agreement and
shall entitle you to compensation from the Corporation in the same amount and on
the same terms to which you would be entitled hereunder if you terminate your
employment for Good Reason following a change in control of the Corporation,
except that for purposes of implementing the foregoing, the date on which any
such succession becomes effective shall be deemed the Date of Termination. As
used in this Agreement, "Corporation" shall mean the Corporation and any
successor to its business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, or otherwise.
(ii) This Agreement shall inure to the benefit of and be enforceable by
you and your personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If you should die while
any amount would still be payable to you hereunder had you continued to live,
all such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to your devisee, legatee or other designee or,
if there is no such designee, to your estate.
6. NOTICE. For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and ,
addressed to your address set forth on the first page of this Agreement,
provided that all notices to the Corporation shall be directed to the
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attention of the Board of Directors, Honeywell Inc., Honeywell Plaza,
Minneapolis, Minnesota, 55408, with a copy to the Secretary of the Corporation,
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notice of change of address shall be
effective only upon receipt. All such notices shall be sent (i) by certified or
registered mail and shall be deemed received three (3) business days after the
date of mailing; (ii) by Federal Express or similar overnight courier and shall
be deemed received one (1) business day after delivery to Federal Express or
similar overnight courier; or (iii) by personal service and shall be deemed
received on the same day as service.
7. MISCELLANEOUS. No provision of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing and signed by you and such officer of the Corporation as may be
authorized by the Board. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar of dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not expressly set forth in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of Minnesota without regard to its conflicts of law
principles. All references to sections of the Code shall be deemed also to
refer to any successor provisions to such sections. Any payments provided for
hereunder shall be paid net of any applicable withholding required under
federal, state or local law, except for any withholding that may be required
under Section 4999 of the Code. The obligations of the Corporation under this
Agreement shall survive the expiration of the term of this Agreement.
8. VALIDITY. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
9. COUNTERPARTS. This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
10. ARBITRATION. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by binding
arbitration, conducted before a panel of three arbitrators in the city of
Minneapolis or, at your option, in the city where you are principally employed
immediately prior to the date of a change in control of the Corporation, in
accordance with the rules of the American Arbitration Association then in
effect; provided, however, that you shall be entitled to seek specific
performance of your rights under Subsection 3(vi) during the pendency of any
dispute or controversy arising under or in connection with this Agreement.
Judgment may be entered on the arbitrator's award in any court having
jurisdiction.
_________________, 1994
Page 13
11. PRIOR AGREEMENT. This Agreement supersedes the Prior Agreement, which
is hereby terminated and canceled. Any other prior agreements, arrangements or
understandings between you and the Corporation (other than the Prior Agreement)
remain binding and in full force and effect consistent with the terms and
conditions thereof and shall not be affected by this Agreement.
If this letter sets forth our agreement on the subject matter hereof,
kindly sign and return this original letter to the Corporation which will then
constitute our agreement on this subject. The enclosed copy is for your
personal records.
Sincerely,
Honeywell Inc.
_____________________________
By:__________________________
Michael R. Bonsignore
Chairman and
Chief Executive Officer
Agreed to as of this ____
day of __________, 1994
_____________________________
________________, 1994
Name
Address
City
Dear ________:
Honeywell Inc. (the "Corporation") considers it essential to the best
interests of its stockholders to foster the continuous employment of key
management personnel. In this connection, the Board of Directors (the "Board")
recognizes that, as is the case with many publicly held corporations, the
possibility of a change in control of the Corporation may exist and that such
possibility, and the uncertainty and questions which it may raise among
management, may result in the departure or distraction of management personnel
to the detriment of the Corporation and its stockholders.
The Board has determined that appropriate steps should be taken to
reinforce and encourage the continued attention and dedication of members of the
Corporation's management, including you, to their assigned duties without
distraction in the face of potentially disturbing circumstances arising from the
possibility of a change in control of the Corporation. In that regard, the
Board has determined that this letter agreement (this "Agreement") will better
serve the above-stated objective than the letter agreement entered into between
you and the Corporation dated ________________ (the "Prior Agreement"), which is
hereby terminated.
In order to induce you to remain in the employ of the Corporation, the
Corporation agrees that you shall receive the severance benefits set forth in
this Agreement in the event your employment with the Corporation is terminated
under the circumstances described below subsequent to a "change in control of
the Corporation" (as defined in Section 2).
1. TERM OF AGREEMENT. This Agreement shall replace the Prior Agreement,
shall commence as of the date hereof, and shall continue in effect through
December 31, 1995; provided, however, that commencing on January 1, 1996 and
each January 1 thereafter, the term
________________, 1994
Page 2
of this Agreement shall automatically be extended for one additional year
unless, not later than October 1 of the preceding year, the Corporation shall
have given notice that it does not wish to extend this Agreement; and provided,
further, that if a change in control of the Corporation, as defined in Section
2, shall have occurred during the original or extended term of this Agreement,
this Agreement shall continue in effect for a period of not less than thirty-six
(36) months beyond the month in which such change in control of the Corporation
occurred. In no event, however, shall the term of this Agreement extend beyond
the end of the calendar month in which your 65th birthday occurs.
2. CHANGE IN CONTROL. No benefits shall be payable hereunder unless there
shall have been a change in control of the Corporation, as set forth below. For
purposes of this Agreement, a "change in control of the Corporation" shall be
deemed to have occurred if:
(i) any "person", as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") (other than the
Corporation, any subsidiary of the Corporation, any "person" (as hereinabove
defined) acting on behalf of the Corporation as underwriter pursuant to an
offering who is temporarily holding securities in connection with such offering,
any trustee or other fiduciary holding securities under an employee benefit plan
of the Corporation, or any corporation owned, directly or indirectly, by the
stockholders of the Corporation in substantially the same proportions as their
ownership of stock of the Corporation), is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Corporation representing thirty percent (30%) or more of the
combined voting power of the Corporation's then outstanding securities;
(ii) during any period of not more than two consecutive years (not
including any period prior to the execution of this Agreement), individuals who
at the beginning of such period constitute the Board of Directors of the
Corporation (the "Board"), and any new director (other than a director
designated by a "person" (as hereinabove defined) who has entered into an
agreement with the Corporation to effect a transaction described in clause (i),
(iii) or (iv) of this Section) whose election by the Board or nomination for
election by the Corporation's stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either were directors
at the beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute at least a majority
thereof;
(iii) the stockholders of the Corporation approve a merger or consolidation
of the Corporation with any other corporation, other than (1) a merger or
consolidation which would result in the voting securities of the Corporation
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than fifty percent (50%) of the combined voting power of
the voting securities of the Corporation or such surviving entity outstanding
immediately after such merger or consolidation or (2) a merger or consolidation
effected to implement a recapitalization of the Corporation (or similar
transaction) in which no "person" (as hereinabove defined) acquires more
________________, 1994
Page 3
than thirty percent (30%) of the combined voting power of the Corporation's then
outstanding securities; or
(iv) the stockholders of the Corporation approve a plan of complete
liquidation of the Corporation or an agreement for the sale or disposition by
the Corporation of all or substantially all of the Corporation's assets (or any
transaction having a similar effect).
3. TERMINATION FOLLOWING CHANGE IN CONTROL.
(i) GENERAL. If any of the events described in Section 2 constituting a
change in control of the Corporation shall have occurred, you shall be entitled
to such benefits provided in Section 4 which may be applicable, upon the
subsequent termination of your employment during the term of this Agreement,
unless such termination is (a) because of your death or Disability, (b) by the
Corporation for Cause, or (c) by you other than for Good Reason. In the event
your employment with the Corporation is terminated for any reason prior to the
occurrence of a change in control of the Corporation and subsequently a change
in control of the Corporation shall have occurred, you shall not be entitled to
any benefits hereunder.
(ii) DISABILITY. If, as a result of your incapacity due to physical or
mental illness, you shall have been absent from the full-time performance of
your duties with the Corporation for six (6) consecutive months, and within
thirty (30) days after written notice of termination is given, you shall not
have returned to the full-time performance of your duties, for purposes of this
Agreement your employment may be terminated for "Disability."
(iii) CAUSE. Termination by the Corporation of your employment for "Cause"
shall mean termination (a) upon the willful and continued failure by you to
substantially perform your duties with the Corporation (other than any such
failure resulting from your incapacity due to physical or mental illness or any
such actual or anticipated failure after the issuance of a Notice of Termination
(as defined in Subsection 3(v)) by you for Good Reason (as defined in Subsection
3(iv))), within ten (10) days after a written demand for substantial performance
is delivered to you by the Board, which demand specifically identifies the
manner in which the Board believes that you have not substantially performed
your duties, or (b) the willful engaging by you in conduct which is clearly and
materially injurious to the Corporation, monetarily or otherwise. For purposes
of this Subsection, no act, or failure to act, on your part shall be deemed
"willful" unless done, or omitted to be done, by you in bad faith and without
reasonable belief that your action or omission was in or not opposed to the best
interest of the Corporation. Notwithstanding the foregoing, you shall not be
deemed to have been terminated for Cause unless and until there shall have been
delivered to you a copy of a resolution duly adopted by the affirmative vote of
not less than three-quarters (3/4) of the entire membership of the Board at a
meeting of the Board (after reasonable notice to you and an opportunity for you,
together with your counsel, to be heard before the Board), finding that in the
good faith opinion of the Board you were guilty of conduct set forth above in
this Subsection and specifying the particulars thereof in detail.
________________, 1994
Page 4
(iv) GOOD REASON. You shall be entitled to terminate your employment for
Good Reason. For purposes of this Agreement, "Good Reason" shall mean, without
your express written consent, the occurrence after a change in control of the
Corporation of any of the following circumstances unless, in the case of
paragraphs (a), (e), (f), (g) or (h), such circumstances are fully corrected
prior to the Date of Termination (as defined in Subsection 3(vi)) specified in
the Notice of Termination (as defined in Subsection 3(v)) given in respect
thereof:
(a) the assignment to you of any duties inconsistent with the status
of the position in the Corporation that you held immediately prior to the
change in control of the Corporation or an adverse alteration in the nature
or status of your responsibilities or in the quality or amount of office
accommodations or assistance provided to you, from those in effect
immediately prior to such change in control of the Corporation;
(b) a reduction by the Corporation in your annual base salary as in
effect on the date immediately prior to the change in control of the
Corporation or as the same may be increased from time to time thereafter;
(c) the Corporation's moving you to be based more than 50 miles from
the Corporation's offices at which you are principally employed immediately
prior to the date of the change in control of the Corporation except for
required travel on the Corporation's business to an extent substantially
consistent with your business travel obligations immediately prior to such
change in control of the Corporation;
(d) the failure by the Corporation to pay to you any portion of your
current compensation or compensation under any deferred compensation
program of the Corporation within seven (7) days of the date such
compensation is due:
(e) the failure by the Corporation to continue in effect any
compensation or benefit plan or perquisites in which you participate
immediately prior to the change in control of the Corporation which is
material to your total compensation, including but not limited to the
Corporation's Corporate Executive Compensation Plan, Performance Stock
Program, Stock and Incentive Plan, Stock Recognition Plan, Supplementary
Retirement Plan, Financial Planning Program, Corporate Club Membership
Plan, Honeywell Executive Automobile Plan or Personal Automobile Plan, any
supplementary executive retirement plans of the Corporation you may be
covered under, or any successor plans (collectively, the "Compensation
Plans"), unless an equitable arrangement (embodied in an ongoing substitute
or alternative plan) has been made with respect to such plan, or the
failure by the Corporation to continue your participation therein (or in
such substitute or alternative plan) on a basis not materially less
favorable, both in terms of the amount of benefits provided and the level
of your participation relative to other participants, than existed at the
time of the change in control of the Corporation;
________________, 1994
Page 5
(f) the failure by the Corporation to continue to provide you with
benefits substantially similar to those enjoyed by you under any of the
Corporation's life insurance, medical, dental, accident or disability plans
in which you were participating at the time of the change in control of the
Corporation, the taking of any action by the Corporation which would
directly or indirectly materially reduce any of such benefits, or the
failure by the Corporation to provide you with the number of paid vacation
days to which you are entitled on the basis of your years of service with
the Corporation in accordance with the Corporation's normal vacation policy
in effect at the time of the change in control of the Corporation;
(g) the failure of the Corporation to obtain a satisfactory agreement
from any successor to assume and agree to perform this Agreement, as
contemplated in Section 5 hereof; or
(h) any purported termination of your employment that is not effected
pursuant to a Notice of Termination satisfying the requirements of
Subsection (v) hereof (and, if applicable, the requirements of Subsection
(iii) hereof), which purported termination shall not be effective for
purposes of this Agreement.
Your right to terminate your employment pursuant to this Subsection shall not be
affected by your incapacity due to physical or mental illness. Your continued
employment shall not constitute consent to, or a waiver of rights with respect
to, any circumstance constituting Good Reason hereunder.
(v) NOTICE OF TERMINATION. Any purported termination of your employment
by the Corporation or by you shall be communicated by written Notice of
Termination to the other party hereto in accordance with Section 6. "Notice of
Termination" shall mean a notice that shall indicate the specific termination
provision in this Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of your
employment under the provision so indicated.
(vi) DATE OF TERMINATION. "Date of Termination" shall mean (a) if your
employment is terminated for Disability, thirty (30) days after Notice of
Termination is given (provided that you shall not have returned to the full-time
performance of your duties during such thirty (30)-day period); (b) if your
employment is terminated pursuant to Subsection (iii) or (iv) hereof, the date
specified in the Notice of Termination (which, in the case of a termination for
Cause shall not be less than thirty (30) days from the date such Notice of
Termination is given) and in the case of a termination for Good Reason shall not
be less than fifteen (15) nor more than sixty (60) days from the date such
Notice of Termination is given, (c) if your employment is terminated by you for
any other reason (other than for Good Reason or for Disability) the date
specified in the Notice of Termination shall not be less than thirty (30) days
from the date such Notice of Termination is
________________, 1994
Page 6
given; and (d) if your employment is terminated by the Corporation for any other
reason (other than for Cause or for Disability), the date specified in the
Notice of Termination, which shall be the last day of a layoff period specified
in paragraph (e) of Subsection 4(iv); provided, however, that if within fifteen
(15) days after any Notice of Termination is given, or, if later, prior to the
Date of Termination (as determined without regard to this proviso), the party
receiving such Notice of Termination notifies the other party that a dispute
exists concerning the termination, then the Date of Termination (other than the
Date of Termination where clause (d) of this Subsection (vi) is applicable)
shall be the date on which the dispute is finally determined, either by mutual
written agreement of the parties, by a binding arbitration award, or by a final
judgment, order or decree of a court of competent jurisdiction (which is not
appealable or with respect to which the time for appeal therefrom has expired
and no appeal has been perfected); and provided, further, that the Date of
Termination shall be extended by a notice of dispute only if such notice is
given in good faith and the party giving such notice pursues the resolution of
such dispute with reasonable diligence. Notwithstanding the pendency of any
such dispute, the Corporation will continue to pay you your full compensation in
effect when the notice giving rise to the dispute was given and continue you as
a participant in all Compensation Plans, life insurance, medical, dental,
accident or disability plans and any similar plans in which you were
participating when the notice giving rise to the dispute was given, until the
dispute is finally resolved in accordance with this Subsection. Amounts paid
under this Subsection are in addition to all other amounts due under this
Agreement, and shall not be offset against or reduce any other amounts due under
this Agreement and shall not be reduced by any compensation earned by you as the
result of employment by another employer.
4. COMPENSATION DURING DISABILITY OR UPON TERMINATION. Following a change
in control of the Corporation, you shall be entitled to the following during a
period of Disability, upon termination of your employment, or upon the cessation
of your active service during a layoff period, as the case may be, provided that
such period, termination, or cessation of your active service occurs during the
term of this Agreement:
(i) During any period that you fail to perform your full-time duties with
the Corporation as a result of incapacity due to physical or mental illness, you
shall continue to receive your base salary at the rate in effect at the
commencement of any such period, together with all compensation payable to you
under the Corporation's disability plan or program or other similar plan during
such period, until this Agreement is terminated pursuant to Subsection 3(ii)
hereof. Thereafter, or in the event your employment shall be terminated by
reason of your death, your benefits shall be determined under the Corporation's
retirement, insurance and other Compensation Plans then in effect in accordance
with the terms of such programs.
(ii) If your employment shall be terminated by the Corporation for Cause or
by you other than for Good Reason or Disability, the Corporation shall pay you
your full base salary through the Date of Termination at the rate in effect at
the time Notice of Termination is given, plus all other amounts or benefits to
which you are entitled under any Compensation Plan of the
________________, 1994
Page 7
Corporation then in effect, and the Corporation shall have no further
obligations to you under this Agreement.
(iii) If your employment by the Corporation shall be terminated by you for
Good Reason, then you shall be entitled to the following:
(a) the Corporation shall pay to you your full base salary through the
Date of Termination at the rate in effect at the time Notice of Termination
is given, or in effect on the date immediately preceding the date of the
change in control of the Corporation, whichever is higher, no later than
the fifth day following the Date of Termination, plus all other amounts to
which you are entitled under any Compensation Plan, at the time such
payments are due;
(b) in lieu of any further salary payments to you for periods
subsequent to the Date of Termination, the Corporation shall pay as
severance pay to you, at the time specified in Subsection (vi), a lump sum
severance payment equal to two times the sum of your (1) annual salary as
in effect as of your Date of Termination or in effect on the date
immediately preceding the date of the change in control of the Corporation,
whichever is higher, and (2) "on-plan" bonus under the Corporate Executive
Compensation Plan or the average of the annual bonuses paid to you (without
regard to any prorata adjustment thereof for any portion of a year) during
the three year period immediately preceding the date of the change in
control of the Corporation, whichever is higher;
(c) your rights under the Compensation Plans shall be governed by the
terms of those respective plans;
(d) the Corporation shall pay to you all legal fees and expenses
incurred by you as a result of such termination (including all such fees
and expenses, if any, reasonably incurred in contesting or disputing by
arbitration or otherwise, any such termination or in seeking to obtain or
enforce any right or benefit provided by this Agreement or in connection
with any tax audit or proceeding to the extent attributable to the
application of section 4999 of the Internal Revenue Code of 1986, as
amended (the "Code"), to any payment or benefit provided hereunder; and
(e) for a two year period after such termination, the Corporation
shall arrange to provide you with benefits substantially similar to those
which you were receiving or entitled to receive under the Corporation's
life, disability, accident and group health insurance plans or any similar
plans in which you were participating immediately prior to the Date of
Termination ("Welfare Plan Benefits") at a cost to you which is no greater
than that cost to you in effect at the Date of Termination; provided,
however, that to the extent any such coverage is prohibited by any judicial
or legislative authority, the Corporation shall make alternative
arrangements to provide you with Welfare Plan
________________, 1994
Page 8
Benefits, including, but not limited to, providing you with a payment in an
amount equal to your cost of purchasing the Welfare Plan Benefits.
Benefits otherwise receivable by you pursuant to this paragraph (e) shall
be reduced to the extent comparable benefits are actually received on your
behalf during the two year period following your termination. You hereby
agree to report to the Corporation any such comparable benefits actually
received by you.
(iv) If your employment by the Corporation shall be terminated by the
Corporation other than for Cause or Disability, then you shall be entitled to
the following:
(a) the Corporation shall pay to you your full base salary through the
date the Notice of Termination is given at the rate in effect at the time
Notice of Termination is given or on the date immediately preceding the
date of the change in control of the Corporation, whichever is higher, no
later than the fifth day following the date of the Notice of Termination,
plus all other amounts to which you are entitled under any Compensation
Plan, at the time such payments are due;
(b) in lieu of any further salary payments to you for periods
subsequent to the date the Notice of Termination is given, the Corporation
shall pay as severance pay to you, at the time specified in Subsection
(vi), a lump sum severance payment equal to two times the sum of your (1)
annual salary as in effect at the time Notice of Termination is given or on
the date immediately preceding the date of the change in control of the
Corporation, whichever is higher, and (2) "on-plan" bonus under the
Corporate Executive Compensation Plan or the average of the annual bonuses
paid to you (without regard to any prorata adjustment thereof for any
portion of a year) during the three year period immediately preceding the
date of the change in control of the Corporation, whichever is higher;
(c) your rights under the Compensation Plans shall be governed by the
terms of those respective plans which are applicable to a laid off
employee;
(d) the Corporation shall pay to you all legal fees and expenses
incurred by you as a result of such cessation of active service and
placement on layoff or termination (including all such fees and expenses,
if any, incurred in contesting or disputing any such layoff or termination
or in seeking to obtain or enforce any right or benefit provided by this
Agreement or in connection with any tax audit or proceeding to the extent
attributable to the application of Section 4999 of the Code, to any payment
or benefit provided hereunder);
(e) you shall be placed on layoff status without recall rights for all
purposes in accordance with the Corporation's policies in effect
immediately prior to the date of the change in control of the Corporation,
receive continued accrual of credited service for
________________, 1994
Page 9
benefits under the provisions of the Honeywell Retirement Benefit Plan in
effect immediately prior to the change in control of the Corporation during
such layoff period, and retention of your employment status for the greater
of (1) two years from the date of the cessation of your active service if
your years of credited service for benefits under such Plan are less than
two years or (2) the number of your years of credited service for benefits
under such Plan up to a maximum of five years; and
(f) for a two year period after your cessation of active service, the
Corporation shall arrange to provide you with benefits substantially
similar to those which you were receiving or entitled to receive under the
Corporation's life, disability, accident and group health insurance plans
or any similar plans in which you were participating immediately prior to
the date the Notice of Termination was given ("Welfare Plan Benefits")
including but not limited to providing you with a payment in an amount
equal to your cost of purchasing the Welfare Plan Benefits at a cost to you
which is no greater than that cost to you in effect at the time the Notice
of Termination is given; provided, however, that to the extent any such
coverage is prohibited by any judicial or legislative authority, the
Corporation shall make alternative arrangements to provide you with Welfare
Plan Benefits, including but not limited to providing you with a payment in
an amount equal to your cost of purchasing the Welfare Plan Benefits.
Benefits otherwise receivable by you pursuant to this paragraph (f) shall
be reduced to the extent comparable benefits are actually received by you
during the two year period following your cessation of active service. You
hereby agree to report to the Corporation any such comparable benefits
actually received by you.
(v) If any payments under this Agreement or any other payments or benefits
received or to be received by you in connection with a change in control of the
Corporation, your termination of employment, or your cessation of active service
(whether pursuant to the terms of this Agreement or any other plan, arrangement
or agreement with the Corporation, or any person affiliated with the
Corporation) (the "Severance Payments"), will be subject to the tax (the "Excise
Tax") imposed by section 4999 of the Code (or any similar tax that may hereafter
be imposed), the Corporation shall pay at the time specified below, an
additional amount (the "Gross-Up Payment") such that the net amount retained by
you, after deduction of any Excise Tax on the Severance Payments and any
federal, state and local income tax and Excise Tax upon the payment provided for
by this Subsection 4(v), shall be equal to the Severance Payments. For purposes
of determining whether any of the Severance Payments will be subject to the
Excise Tax and the amount of such Excise Tax, (a) all Severance Payments shall
be treated as "parachute payments" within the meaning of section 280G(b)(2) of
the Code, and all "excess parachute payments" within the meaning of section
280G(b)(1) shall be treated as subject to the Excise Tax, unless in the opinion
of tax counsel selected by the Corporation's independent auditors and acceptable
to you such Severance Payments (in whole or in part) do not constitute parachute
payments, or such excess parachute payments (in whole or in part) represent
reasonable compensation for services actually rendered within the meaning of
section 280G(b)(4) of the Code in excess of the base
________________, 1994
Page 10
amount within the meaning of section 280G(b)(3) of the Code, or are otherwise
not subject to the Excise Tax, (b) the amount of the Severance Payments which
shall be treated as subject to the Excise Tax shall be equal to the lesser of
(1) the total amount of the Severance Payments or (2) the amount of excess
parachute payments within the meaning of section 280G(b)(1) (after applying
clause (a), above), and (c) the value of any non-cash benefits or any deferred
payment or benefit shall be determined by the Corporation's independent auditors
in accordance with the principles of section 280G(d)(3) and (4) of the Code.
For purposes of determining the amount of the Gross-Up Payment, you shall be
deemed to pay federal income taxes at your highest marginal rate of federal
income taxation in the calendar year in which the Gross-Up Payment is to be made
and state and local income taxes at your highest marginal rate of taxation in
the state and locality of your residence on the Date of Termination (or earlier
cessation of your active service), net of the maximum reduction in federal
income taxes which could be obtained from deduction of such state and local
taxes. In the event that the Excise Tax is subsequently determined to be less
than the amount taken into account hereunder at the time of termination of your
employment (or earlier cessation of your active service), you shall repay to the
Corporation at the time that the amount of such reduction in Excise Tax is
finally determined the portion of the Gross-Up Payment attributable to such
reduction (plus the portion of the Gross-Up Payment attributable to the Excise
Tax and federal and state and local income tax imposed on the Gross-Up Payment
being repaid by you if such repayment results in a reduction in Excise Tax
and/or a federal and state and local income tax deduction) plus interest on the
amount of such repayment from the date the Gross-Up Payment was initially made
to the date of repayment at the rate provided in section 1274(b)(2)(B) of the
Code (the "Applicable Rate"). In the event that the Excise Tax is determined to
exceed the amount taken into account hereunder at the time of the termination of
your employment or earlier cessation of your active service (including by reason
of any payment the existence or amount of which cannot be determined at the time
of the Gross-Up Payment), the Corporation shall make an additional Gross-Up
Payment in respect of such excess (plus any interest payable with respect to
such excess) at the time that the amount of such excess is finally determined.
Any payment to be made to you under this paragraph shall be payable within five
(5) days of your Date of Termination (or within five (5) days of your earlier
cessation of active service).
(vi) The payments provided for in Subsection (iii)(b) and Subsection
(iv)(b), shall be made not later than the fifth day following the Date of
Termination or the date of your cessation of active service, whichever is
earlier; provided, however, that if the amounts of such payments cannot be
finally determined on or before such day, the Corporation shall pay to you on
such day an estimate, as determined in good faith by the Corporation, of the
minimum amount of such payments and shall pay the remainder of such payments
(together with interest from the date that the estimated payments were made to
the date the remainder of such payments is made at the Applicable Rate) as soon
as the amount thereof can be determined but in no event later than the thirtieth
day after the Date of Termination or date of cessation of your active service,
whichever may be earlier. In the event that the amount of the estimated
payments exceeds the amount subsequently determined to have been due, such
excess shall constitute a loan by the Corporation
________________, 1994
Page 11
to you, payable on the fifth day after demand by the Corporation (together with
interest from the date that the estimated payments were made to the date of
repayment at the Applicable Rate).
(vii) Except as required in Subsection (iii)(e) and Subsection (iv)(f)
hereof, you shall not be required to mitigate the amount of any payment provided
for in this Section 4 by seeking other employment or otherwise, nor shall the
amount of any payment or benefit provided for in this Section 4 be reduced by
any compensation earned by you as the result of employment by another employer,
by retirement benefits, by offset against any amount claimed to be owed by you
to the Corporation, or otherwise; provided, however, that if during the two year
period subsequent to your Date of Termination or earlier cessation of your
active service, you directly compete with the Corporation by making use of trade
secrets or other proprietary knowledge you obtained while employed by the
Corporation in violation of the commitment to protect such proprietary or trade
secret information set forth in the "Honeywell Employment Agreement" attached to
your "Application for Employment" with the Corporation, all income earned as a
result of such use of information shall be remitted to the Corporation to the
extent payments were made to you under this Section 4.
5. SUCCESSORS; BINDING AGREEMENT. (i) The Corporation will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Corporation to (A) expressly assume and agree to perform this Agreement in the
same manner and to the same extent that the Corporation would be required to
perform it if no such succession had taken place and (B) agree to notify you of
the assumption of the Agreement within 10 days of such assumption. Failure of
the Corporation to obtain any such assumption and agreement prior to the
effectiveness of any such succession shall be a breach of this Agreement and
shall entitle you to compensation from the Corporation in the same amount and on
the same terms to which you would be entitled hereunder if you terminate your
employment for Good Reason following a change in control of the Corporation,
except that for purposes of implementing the foregoing, the date on which any
such succession becomes effective shall be deemed the Date of Termination. As
used in this Agreement, "Corporation" shall mean the Corporation and any
successor to its business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, or otherwise.
(ii) This Agreement shall inure to the benefit of and be enforceable by
you and your personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If you should die while
any amount would still be payable to you hereunder had you continued to live,
all such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to your devisee, legatee or other designee or,
if there is no such designee, to your estate.
6. NOTICE. For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and ,
addressed to your address set forth on the first page of this Agreement,
provided that all notices to the Corporation shall be directed to the
________________, 1994
Page 12
attention of the Board of Directors, Honeywell Inc., Honeywell Plaza,
Minneapolis, Minnesota, 55408, with a copy to the Secretary of the Corporation,
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notice of change of address shall be
effective only upon receipt. All such notices shall be sent (i) by certified or
registered mail and shall be deemed received three (3) business days after the
date of mailing; (ii) by Federal Express or similar overnight courier and shall
be deemed received one (1) business day after delivery to Federal Express or
similar overnight courier; or (iii) by personal service and shall be deemed
received on the same day as service.
7. MISCELLANEOUS. No provision of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing and signed by you and such officer of the Corporation as may be
authorized by the Board. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar of dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not expressly set forth in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of Minnesota without regard to its conflicts of law
principles. All references to sections of the Code shall be deemed also to
refer to any successor provisions to such sections. Any payments provided for
hereunder shall be paid net of any applicable withholding required under
federal, state or local law, except for any withholding that may be required
under Section 4999 of the Code. The obligations of the Corporation under this
Agreement shall survive the expiration of the term of this Agreement.
8. VALIDITY. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
9. COUNTERPARTS. This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
10. ARBITRATION. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by binding
arbitration, conducted before a panel of three arbitrators in the city of
Minneapolis or, at your option, in the city where you are principally employed
immediately prior to the date of a change in control of the Corporation, in
accordance with the rules of the American Arbitration Association then in
effect; provided, however, that you shall be entitled to seek specific
performance of your rights under Subsection 3(vi) during the pendency of any
dispute or controversy arising under or in connection with this Agreement.
Judgment may be entered on the arbitrator's award in any court having
jurisdiction.
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Page 13
11. PRIOR AGREEMENT. This Agreement supersedes the Prior Agreement, which
is hereby terminated and canceled. Any other prior agreements, arrangements or
understandings between you and the Corporation (other than the Prior Agreement)
remain binding and in full force and effect consistent with the terms and
conditions thereof and shall not be affected by this Agreement.
If this letter sets forth our agreement on the subject matter hereof,
kindly sign and return this original letter to the Corporation which will then
constitute our agreement on this subject. The enclosed copy is for your
personal records.
Sincerely,
Honeywell Inc.
_____________________________
By:__________________________
Michael R. Bonsignore
Chairman and
Chief Executive Officer
Agreed to as of this ____
day of __________, 1994
_____________________________