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
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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
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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.
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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
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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.
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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;
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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
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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
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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.
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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
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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
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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
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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
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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.
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(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.
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(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