EXHIBIT 10.8
Salary and Incentive Award Deferral Plan
for
Selected Employees of Honeywell International Inc. and its
Affiliates
Amended and Restated
as of January 1, 2002
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1. Eligibility
Those employees of Honeywell International Inc. (the "Corporation") and its
affiliates who are designated by the Management Development and Compensation
Committee (the "Committee") shall be eligible to participate in this
supplemental non-qualified Salary and Incentive Award Deferral Plan for Selected
Employees of Honeywell International Inc. and its Affiliates (the "Plan").
2. Participation
An eligible employee may become a participant in the Plan (a "Participant")
by filing a timely written deferral election with the Corporation. Such election
shall request that a portion of the compensation elements described in paragraph
3(a) and paragraph 3(b) be credited to an unfunded deferred compensation account
maintained for the Participant under the Plan (the "Participant Account" or
"Account"). A Participant's direction, if accepted by the Corporation, shall
become effective for the pay period or payment date in the next succeeding
calendar year (or for a newly eligible Participant, for the next succeeding pay
period or payment date after the receipt of the direction by the Corporation),
and shall continue in effect until the Participant terminates such direction,
effective as of the end of the calendar year, or is no longer eligible to be a
Participant. Any modification of Participant's direction shall be effective only
with respect to compensation payable with respect to pay periods in the calendar
year next following the date such direction is received by the Corporation.
3. Contributions to Participant Accounts
(a) Base Annual Salary. A Participant in Career Band 6 and above (or a
Participant who occupies a position equivalent thereto) may, prior to the
beginning of any calendar year (and with respect to a newly eligible
Participant, within thirty days after first becoming so eligible) elect to defer
an aggregate amount of base annual salary otherwise payable in such subsequent
calendar year (or with respect to a newly eligible Participant, in the remainder
of the calendar year), exclusive of any bonus or any other compensation or
allowance paid or payable by the Corporation or its affiliates (the "Base Annual
Salary"). The amount deferred under this paragraph 3(a) shall not be greater
than fifty percent (50%) of the Participant's Base Annual Salary for such pay
period.
(b) Incentive Awards. A Participant may, to the extent that the Honeywell
International Inc. Incentive Compensation Plan For Executive Employees (the
"Incentive Plan") (or any successor plan) permits deferrals of an incentive
award (the "Incentive Award") payable thereunder, elect to defer an amount not
greater than one hundred percent of such Incentive Award. Any amount so deferred
shall be deemed to be deferred under this Plan but shall, to the extent the
provisions of the Incentive Plan are not inconsistent with this Plan, otherwise
be subject to the terms of the Incentive Plan. Any deferral of an Incentive
Award shall be made by filing an appropriate deferral election with the
Corporation not later than the date established by the Corporation from time to
time.
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(c) Deferral Amounts. All amounts determined under this paragraph 3 which
are the subject of a written deferral election (the "Deferral Amounts") shall,
in accordance with the relevant Participant direction, be credited to a
Participant Account maintained under the Plan on the same day the Base Annual
Salary or Incentive Award would otherwise have been payable.
4. Deferral Requirements
Amounts may be deferred under this Plan for a minimum period of three years
or such shorter period as may be approved by the Committee. Except as otherwise
provided in paragraphs 9 or 10 or as approved by Committee, no amount shall be
withdrawn from a Participant Account prior to the earlier of: three years
following the last day of the calendar year in which the Deferral Amounts were
earned; the date the Participant reaches normal retirement age and is eligible
to receive a benefit under a pension plan of the Corporation or one of its
affiliates; the date of Participant's death; or the date the Participant ceases
to be employed by the Corporation or any of its affiliates. Notwithstanding the
preceding provisions of this Section 4, a Participant may request an immediate
withdrawal of all or a portion of such Participant's Account prior to any date
described above or prior to the date the Account has been completely withdrawn,
provided that such a request and withdrawal shall be subject to such penalties,
restrictions or conditions as may be established by the Corporation from time to
time. The penalty shall be a percentage of the amount requested to be withdrawn,
calculated as the difference between (a) 6%, and (b) 50% of the amount, if any,
by which 10% exceeds the interest rate on 10-year U.S. Treasury Bonds on the
first business day of the calendar quarter during which the withdrawal request
is made.
5. Interest Equivalents
Deferral Amounts shall accrue additional amounts equivalent to interest
("Interest Equivalents"), compounded daily, from the date the Deferral Amount is
credited to the Account to the date of distribution. A single rate for
calculating Interest Equivalents shall be established by the Committee, in its
sole discretion, for all Deferral Amounts credited to Participant Accounts in
each calendar year. The rate established by the Committee shall not exceed the
greater of (i) 10% or (ii) 200% of the 10-year U.S. Treasury Bond rate at the
time of determination. Such Interest Equivalents, once established for a
calendar year, shall remain in effect with respect to Deferral Amounts credited
to Participant Accounts during the calendar year until the Deferral Amounts are
distributed.
The rate of notional interest established by the Committee shall be set
forth on Schedule A attached hereto and made a part hereof. Any portion of such
rate designated as the "Contingent Rate" shall become nonforfeitable only if the
Participant is still employed by the Corporation or any affiliate at the end of
the third full calendar year following the calendar year in which the Deferral
Amount relates, provided, however, in the event a Participant terminates
employment with the Corporation or an affiliate prior to such date for reasons
other than gross cause, the Committee shall treat such portion as nonforfeitable
in the event the Participant's employment with the Corporation or Affiliate is
involuntarily terminated (including a termination for "good reason" under any
applicable severance plan of the Corporation or affiliate) or is terminated for
such reasons as the Committee may determine from time to time in its
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sole discretion. Notwithstanding the preceding sentence, in the event a
Participant withdraws any portion of the Deferral Amount prior to the end of the
third full calendar year following the calendar year to which the Deferral
Amount relates, the amount of Contingent Rate interest credited with respect to
such Deferred Amount at the time of withdrawal shall remain credited to such
Account subject to the provisions of the preceding sentence but shall not be
credited with any Interest Equivalents after such date ("Frozen Contingent
Interest"). The rate established by the Committee and set forth on Schedule A
shall remain in effect until superceded by action of the Committee and amendment
of such Schedule A.
Notwithstanding anything in the Plan to the contrary, from and after the
occurrence of a Change in Control, the rate at which Deferral Amounts accrue
Interest Equivalents may not be decreased.
6. Participant Accounts
All amounts credited to a Participant's Account pursuant to paragraphs 3
and 4 shall be unfunded general obligations of the Corporation, and no
Participant shall have any claim to or security interest in any asset of the
Corporation on account thereof.
7. Distribution from Accounts
At the time a Participant makes an election pursuant to paragraph 3, the
Participant shall also make an election with respect to the distribution of the
Deferral Amounts and Interest Equivalents accrued thereon which are credited to
the Participant's Account pursuant to such election. A Participant may elect to
receive such distribution in one lump-sum payment or in a number of
approximately equal annual payments (provided the payment period may not include
more than fifteen such installments). The lump-sum or the first installment
shall be paid as soon as practicable during the month of January of the calendar
year designated by the Participant. Except as otherwise provided in paragraphs
8, 9 and 10, all installment payments following the initial installment payment
shall be paid in cash as soon as practicable during the month of January of each
succeeding calendar year until the entire amount in the Account shall have been
paid. Notwithstanding the foregoing, in the event a Participant's employment
with the Company is terminated either voluntarily (other than on account of
retirement as defined in the qualified pension plan in which the Participant
participates or for "good reason" under any applicable severance plan of the
Company) or for "gross cause" (as defined in the AlliedSignal Inc. Severance
Plan for Senior Executives), the nonforfeitable portion of such Participant's
Deferred Amounts for performance years beginning after 1997 for amounts deferred
under paragraph 3(b) or after 1998 for amount deferred under paragraph 3(a)
(including the vested portion of any applicable notional interest credited
thereto) shall be distributed in a lump sum as soon as practicable in January of
the calendar year following such termination of employment. Any Frozen
Contingent Interest credited to the Participant's Account shall be payable to
the Participant in one lump sum after the date the Frozen Contingent Interest
becomes nonforfeitable pursuant to Paragraph 5.
The Corporation may from time to time allow Participants to request
new elections with respect to the distribution of all Deferral Amounts and
Interest Equivalents accrued thereon that are credited to such Participant under
the Plan (other than any
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such amounts currently payable to a Participant). The Corporation shall reserve
the right to accept or reject any such request at any time and such election
shall be subject to such restrictions and limitations as the Corporation shall
determine in its sole discretion, provided that any new election shall generally
be required to be made at least twelve (12) months prior to any scheduled
payment date.
Notwithstanding any provision in this Plan to the contrary, if all or a
portion of a Participant's Account is determined to be includible in the
Participant's gross income and subject to income tax at any time prior to the
time such Account would otherwise be paid, the Participant's Account or that
portion of the Participant's Account shall be distributed to the Participant.
For this purpose, an amount is determined to be includible in the Participant's
gross income upon the earliest of: (i) a final determination by the Internal
Revenue Service addressed to the Participant which is not appealed, (ii) a final
determination by the United States Tax Court or any other federal court
affirming an IRS determination, or (iii) an opinion addressed to the Corporation
by the tax counsel for the Corporation that, by reason of the Code, Treasury
Regulations, published Internal Revenue Service rulings, court decisions or
other substantial precedent, the amount is subject to federal income tax prior
to payment.
8. Distribution on Death
If a Participant should die before all amounts credited to the
Participant's Account have been distributed, the balance in the Account shall be
paid as soon as practical thereafter to the beneficiary designated in writing by
the Participant. Payment to a beneficiary pursuant to a designation by a
Participant shall be made in one lump sum to the designated beneficiary as soon
as practicable following the death of the Participant. Such beneficiary
designations shall be effective when received by the Corporation, and shall
remain in effect until rescinded or modified by the Participant by an
appropriate written direction. If no beneficiary is properly designated by the
Participant or if the designated beneficiary shall have predeceased the
Participant, such balance in the Account shall be paid to the estate of the
Participant.
9. Payment in the Event of Hardship
Upon receipt of a request from a Participant, delivered in writing to the
Corporation along with a Certificate of Unavailability of Other Resources form,
the Committee, the Senior Vice President - Human Resources and Communications,
or his designee, may cause the Corporation to accelerate (or require the
subsidiary of the Corporation which employs or employed the Participant to
accelerate) payment of all or any part of the Deferral Amount and Interest
Equivalents credited to the Participant's Account, if it finds in its sole
discretion that payment of such amounts in accordance with the Participant's
prior election under paragraph 3 would result in severe financial hardship to
the Participant and such hardship is the result of an unforeseeable emergency
caused by circumstances beyond the control of the Participant. Acceleration of
payment may not be made under this paragraph 9 to the extent that such hardship
is or may be relieved (i) through reimbursement or compensation by insurance or
otherwise, (ii) by liquidation of the Participant's assets, to the extent the
liquidation of assets would not itself cause severe financial hardship or (iii)
by cessation of deferrals under this Plan or any tax-qualified savings plan of
the Corporation.
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10. Change in Control
(a) Initial Lump Sum Election. Notwithstanding any election made pursuant
to paragraph 7, a Participant may file a written election with the Corporation
to have the Deferral Amounts and Interest Equivalents accrued thereon which are
credited thereafter to the Participant's Account paid in one lump-sum payment as
soon as practicable following a Change in Control, but in no event later than 90
days after such Change in Control. The Interest Equivalents on any Deferred
Amount payable pursuant to this paragraph 10(a) shall include the "Contingent
Rate" credited to such Deferred Amount without regard to whether such amount has
become nonforfeitable as provided in paragraph 5 at the time payment is made
under this paragraph 10(a).
(b) Revocation of Lump-Sum Election. A Participant may revoke an election
made pursuant to paragraph 10(a) (including an election not to be paid in one
lump sum upon a Change in Control) by filing an appropriate written notice with
the Corporation. A revocation notice filed pursuant to this paragraph 10(b)
shall be subject to such terms and conditions as the Corporation shall establish
and shall be effective with respect to any or all of the Participant's Deferral
Amounts and Interest Equivalents accrued thereon which are credited to such
Participant under the Plan. Any such election shall be subject to such
restrictions and limitations as the Corporation shall determine in its sole
discretion.
(c) Limitation on Elections. Any election made pursuant to paragraph 10(a)
or 10(b) shall not be effective unless filed with the Corporation at least 90
days prior to a Change in Control.
(d) Definition of Change in Control. For purposes of the Plan, a Change in
Control is deemed to occur at the time (i) when an entity, person or group
(other than the Corporation, any subsidiary or savings, pension or other benefit
plan for the benefit of employees of the Corporation or its subsidiaries) which
theretofore beneficially owned less than 30% of the Corporation's common stock
(the "Common Stock") then outstanding, acquires shares of Common Stock in a
transaction or a series of transactions that results in such entity, person or
group directly or indirectly owning beneficially 30% or more of the outstanding
Common Stock, (ii) of the purchase of Common Stock pursuant to a tender offer or
exchange offer (other than an offer by the Corporation) for all, or any part of,
the Common Stock (iii) of a merger in which the Corporation will not survive as
an independent, publicly owned corporation, a consolidation, a sale, exchange or
other disposition of all or substantially all of the Corporation's assets, (iv)
of a substantial change in the composition of the Board during any period of two
consecutive years such that individuals who at the beginning of such period were
members of the Board cease for any reason to constitute at least a majority
thereof, unless the election, or the nomination for election by the shareowners
of the Corporation, of each new director was approved by a vote of at least
two-thirds of the directors then still in office who were directors at the
beginning of the period, or (v) of any transaction or other event which the
Committee, in its sole discretion, determines to be a Change in Control for
purposes of the Plan.
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11. Miscellaneous
(a) No Alienation of Benefits. Except insofar as may otherwise be required
by law, no amount payable at any time under the Plan shall be subject in any
manner to alienation by anticipation, sale, transfer, assignment, bankruptcy,
pledge, attachment, charge, or encumbrance of any kind nor in any manner be
subject to the debts or liabilities of any person and any attempt to so alienate
or subject any such amount, whether presently or thereafter payable, shall be
void. If any person shall attempt to, or shall alienate, sell, transfer, assign,
pledge, attach, charge, or otherwise encumber any amount payable under the Plan,
or any part thereof, or if by reason of such person's bankruptcy or other event
happening at any such time such amount would be made subject to the person's
debts or liabilities or would otherwise not be enjoyed by that person, then the
Corporation, if it so elects, may direct that such amount be withheld and that
same or any part thereof be paid or applied to or for the benefit of such
person, the person's spouse, children or other dependents, or any of them, in
such manner and proportion as the Corporation may deem proper.
(b) No Right or Interest in Corporation's Assets. Neither the Corporation
nor any of its Affiliates shall be required to reserve or otherwise set aside
funds for the payment of obligations arising under this Plan. The Corporation
may, in its sole discretion, establish funds, segregate assets or take such
other action as it shall determine necessary or appropriate to secure the
payment of its obligations arising under this Plan. This Plan is intended to be
unfunded for tax purposes and for purposes of Title I of the Employee Retirement
Income Security Act of 1974, as amended. Nothing contained herein, and no action
taken pursuant to the provisions of this Plan shall create or be construed to
create a trust of any kind, or a fiduciary relationship between the Corporation
and any Participant or any other person. To the extent that any person acquires
a right to receive payments under this Plan, such right shall be no greater than
the right of an unsecured creditor of the Corporation.
(c) Administration. The Corporation shall have sole discretion and
authority to administer the Plan, including the authority to interpret its
terms, promulgate regulations thereunder, determine eligibility to participate
in the Plan and make any finding of fact which may be necessary to determine the
obligation of the Plan with respect to the payment of benefits.
(d) Amendment. The Corporation may amend, modify or terminate the Plan at
any time, or from time to time; provided, however, that no change to the Plan
shall impair the right of any Participant with respect to amounts then credited
to an Account; and further provided that during a Potential Change in Control
Period (as defined in Section 11(h) hereof) and from and after the occurrence of
a Change in Control, the Plan may not, without the consent of the Participant,
be amended in any manner which would adversely affect such Participant's rights
and expectations with respect to Deferred Amounts credited to such Participant's
Account immediately prior to such amendment.
(e) Accounting. Each Participant shall receive periodic statements (not
less frequently than annually) setting forth the cumulative Deferral Amounts and
Interest Equivalents credited to, and any distributions from, the Participant's
Account.
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(f) Facility of Payments. If the Corporation shall find that any person to
whom any amount is payable under the plan is unable to care for his or her
affairs because of illness or accident, or is a minor, or has died, then any
payment due the person or the person's estate (unless a prior claim therefore
has been made by a duly appointed legal representative), may, if the Corporation
so elects in its sole discretion, be paid to the person's spouse, a child, a
relative, an institution having custody of such person, or any other person
deemed by the Corporation to be a proper recipient on behalf of such person
otherwise entitled to payment. Any such payment shall be a complete discharge of
the liability of the Corporation and the Plan therefore.
(g) Governing Law. The Plan is intended to constitute an unfunded deferred
compensation arrangement for a select group of management or highly compensated
personnel and all rights thereunder shall be governed by and construed in
accordance with the laws of New York.
(h) Potential Change in Control Period. A "Potential Change in Control
Period" shall commence when: (i) the Corporation enters into an agreement, the
consummation of which would result in the occurrence of a Change in Control;
(ii) the Corporation or any person or group publicly announces an intention to
take or to consider taking actions which, if consummated, would result in a
Change in Control; (iii) any person or group (other than the Corporation, any
subsidiary or any savings, pension or other benefit plan for the benefit of
employees of the Corporation or its subsidiaries) becomes the beneficial owner,
directly or indirectly, of securities of the Corporation representing 15% or
more of either the then outstanding shares of common stock of the Corporation or
the combined voting power of the Corporation's then outstanding securities (not
including in the securities beneficially owned by such person or group any
securities acquired directly from the Corporation or its affiliates); or (iv)
the Board adopts a resolution to the effect that, for purposes of the Plan, a
Potential Change in Control Period has commenced. The Potential Change in
Control Period shall continue until the earlier of (A) a Change in Control, or
(B) the adoption by the Board of a resolution stating that, for purposes of the
Plan, the Potential Change in Control Period has expired.
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SCHEDULE A
Notional Interest Rate
Deferred Incentive Awards (Band 6 and Above)
Year Award Earned Vested Rate Contingent Rate Total Rate
- ----------------- ---------------- --------------- ----------------
1975 - 1992 Treasury bills + N/A Treasury bills +
3%* 3%*
1993 - 1997 10% N/A 10%
1998 - 2000 8% 3% 11%
2001 + 7% 3% 10%
*/Three-month Treasury bill average rate for the immediately preceding calendar
quarter as reported by the Federal Reserve Bank; rate changes each calendar
quarter.
Deferred Incentive Awards (Band 5 and Below)
Year Award Earned Vested Rate Contingent Rate Total Rate
- ----------------- ---------------- --------------- ----------------
1975 - 1997 Treasury bills + N/A Treasury bills +
3%* 3%*
1998 + 6% 3% 9%
*/Three-month Treasury bill average rate for the immediately preceding calendar
quarter as reported by the Federal Reserve Bank; rate changes each calendar
quarter.
Deferred Salary (Band 6 and Above)
Year Salary Earned Vested Rate Contingent Rate Total Rate
- ------------------ ----------- --------------- ----------
1994 - 1998 10% N/A 10%
1999 - 2001 8% 3% 11%
2002 + 7% 3% 10%