AGREEMENT
AGREEMENT, dated as of May 6, 1994 between AlliedSignal
Inc., a Delaware corporation (the 'Corporation'), and
Lawrence A. Bossidy (the 'Executive').
WHEREAS, the Corporation and Executive are parties to
an Agreement dated as of December 19, 1991 (the 'December
1991 Agreement') under which Executive has served the
Corporation in the capacities of Chairman of the Board of
Directors and Chief Executive Officer;
WHEREAS, the December 1991 Agreement was modified by
letter agreement dated August 12, 1992;
WHEREAS, the Corporation desires to extend Executive's
term of employment through April 1, 2000, the first day of
the month immediately following Executive's attainment of
age 65, and to provide an incentive for Executive to remain
with the Corporation through retirement and achieve
extraordinary operating results for the benefit of the
Corporation and its shareowners; and
WHEREAS, Executive has committed that he will remain with
the Corporation through retirement;
NOW, THEREFORE, in consideration of the execution and
delivery of these presents, the mutual promises contained
herein and other good and valuable consideration, the
parties hereto hereby agree that the December 1991 Agreement
as amended is further amended and restated to read in its
entirety as follows:
Section 1. Term and Capacity of Employment
(a) The Corporation and Executive agree that Executive
shall be employed by the Corporation from the date of this
Agreement through April 1, 2000 under the terms set forth in
this Agreement. Executive, for so long as he is elected a
member of and Chairman of the Board of Directors of the
Corporation, shall perform the duties of that office.
Executive also shall continue as the Chief Executive Officer
of the Corporation and shall serve in that capacity through
the term of this Agreement at the pleasure of the Board of
Directors of the Corporation.
(b) During the term of his employment under this
Agreement, Executive shall have the powers, responsibilities
and authorities of Chief Executive Officer and Chairman of
the Board of Directors of the Corporation as established by
custom and practice on the date first set forth herein.
(c) During the term of his employment under this
Agreement, Executive shall during reasonable business hours
perform his duties hereunder (reasonable sick leave and
vacations excepted) and shall not during such term, 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 of the Corporation, serve as a director of any
other corporation which, on the advice of counsel for the
Corporation, is not considered to be in competition with the
Corporation for purposes of the antitrust laws, and he may
receive compensation therefor.
Section 2. Compensation
(a) As compensation for Executive's services under
this Agreement, the Corporation shall, commencing on June 1,
1994, pay Executive a salary at the rate of $2,000,000 per
year, payable in equal monthly installments. Executive's
salary for the month of May 1994 shall be at the rate set by
the Board of Directors of the Corporation in October, 1992.
(b) As further compensation, Executive shall be
eligible for awards under the AlliedSignal Inc. Incentive
Compensation Plan for Executive Employees (the 'Incentive
Plan') (with a target bonus opportunity of at least 80
percent of salary) and any plan which is a successor to that
plan. Executive's annual incentive bonus on account of
service in calendar year 1994, in the event that the
Corporation meets its financial targets for the year, shall
be no less than $1,850,000.
(c) As further compensation, Executive shall receive
as of May 6, 1994 the following awards under the 1993 Stock
Plan for Employees of AlliedSignal Inc. and its Affiliates
(the 'Stock Plan'):
(i) an award of 1,500,000 Stock Options with the
terms set forth in Exhibit A hereto; and
(ii) awards of 250,000, 50,000, and 75,000 Units
with the restrictions and conditions set forth,
respectively, in Exhibits B through D hereto.
Section 3. Life Insurance and Long-Term Disability
Benefits
The Corporation shall provide life insurance
coverage for the benefit of Executive as set forth in
Appendix E hereto. The Corporation shall also provide
Executive with long-term disability benefits as set forth in
Appendix F hereto.
Section 4. Retirement Benefits
(a) Upon termination of Executive's employment with
the Corporation for any reason other than death, the
Corporation shall pay to Executive a benefit equal to (i) an
annuity for Executive's lifetime consisting of annual
payments, each equal to 60 percent of Executive's final
average compensation, reduced by the sum of the amounts of
the comparable annuity payable under the Corporation's
Salaried Employees' Pension Plan and Supplemental Retirement
Plan for Executives and Key Executives ('Supplemental
Retirement Plan') and the comparable annuity payable under
the pension plans of Executive's predecessor employer
determined in accordance with the provisions of paragraph
(c) of this Section 4 and (ii) upon Executive's death, an
annuity payable to his surviving spouse for her lifetime
equal to 50 percent of the annuity payable for Executive's
lifetime. The benefit payable under this paragraph (a) shall
be reduced by three percentage points for each full year or
a pro rata portion thereof on account of any period of less
than a full year that termination of Executive's employment
precedes Executive's sixty-second birthday.
(b) In the event Executive's employment with the
Corporation is terminated by reason of death, the
Corporation will pay a benefit equal to an annuity for the
lifetime of his spouse, if she shall survive, equal to 50
percent of the monthly payments that would have been payable
pursuant to paragraph (a)(i) of this Section 4 (without
taking into account the reductions provided therein) for
Executive's lifetime if his employment had terminated at or
after age 62. The benefit payable under this paragraph
shall be reduced by the sum of (i) the Survivor Benefit
payable under the Corporation's Executive Benefit Program,
and (ii) the Preretirement Survivor's Benefit payable under
the Salaried Employees' Pension Plan and Supplemental
Retirement Plan and (iii) any comparable benefit payable
under the supplementary pension plan of Executive's
predecessor employer (net after offsetting payments under
the qualified pension plan and the excess benefit plan of
such employer). Any reductions provided under the preceding
sentence shall be determined on a comparable annuity basis.
The benefit determined under this paragraph (b) shall be
paid to Executive's surviving spouse, except to the extent
he has made a beneficiary designation to the contrary under
paragraph (d) of this Section 4.
(c) The amount of the benefits payable from the pension
plans of Executive's predecessor employer comprising the
reduction described in paragraph (a)(i) of this Section 4
shall be determined as of the date Executive's employment
with the Corporation terminates and shall be equal to the
amount of the comparable annuity values of any periodic
payments he is then receiving or may become eligible to
receive and the comparable annuity value of any lump-sum
payment previously received under the qualified pension
plan, excess benefit plan and supplementary plan of such
predecessor employer. With respect to any such benefits
which are not then in payment status it shall be assumed for
purposes of this determination that Executive has elected to
receive such benefits in the form of a comparable annuity
coincidental with termination of employment or the earliest
possible date thereafter. Provided, however, that in the
circumstances where Executive's employment with the
Corporation terminates on or after his sixty-second birthday
or Executive's employment is terminated by reason of death,
or Executive is disabled or is the subject of an Involuntary
Termination (as defined in Section 5 of this Agreement)
while employed by the Corporation, the amount of the benefit
subject to determination under this paragraph (c) of Section
4 shall be limited to the comparable annuity payable under
the supplementary pension plan of Executive's predecessor
employer (net after offsetting payments under the qualified
pension plan and the excess benefit plan of such employer).
(d) Executive at any time prior to termination of his
employment with the Corporation (i) may elect to have any
benefit payable under paragraph (a) or (b) of this Section 4
paid in the form of a lump-sum payment and (ii) may
designate a beneficiary other than his surviving spouse to
receive any benefit payable under paragraph (b) of this
Section 4. The elections provided by (i) and (ii) may be
made at the same time or different times. The amount of such
lump-sum payment shall be equal to the present value of the
benefit determined to be payable to, or on behalf of,
Executive under paragraph (a) or (b) of this Section 4 as of
the date Executive's employment is terminated. For purposes
of this paragraph (d), 'present value' shall be determined
by application of the interest rate and mortality
assumptions utilized under the Corporation's Supplemental
Retirement Plan. Any election by Executive under this
paragraph (d) may be revoked any time prior to termination
of his employment and a new election may be made at that
time or any time thereafter prior to such termination. A
designation or change of beneficiary under this paragraph
(d) must be in writing on forms authorized by the
Corporation, must be executed by the Executive and will not
be effective until filed with the Corporation.
(e) Any benefit which becomes payable pursuant to this
Section 4, shall be paid by the Corporation (i) in the case
of a benefit determined pursuant to paragraph (a) or
paragraph (b) of this Section 4, commencing on a date, and
(ii) in the case of a lump-sum benefit described in
paragraph (d) of this Section 4, on a date, which is not
later than the first day of the month immediately following
the month in which Executive's employment with the
Corporation terminates.
(f) Solely for the purposes of this Section 4 and for
no other purpose: 'employment' or 'while in the employ' of
the Corporation shall include any period during which
severance payments are payable under the Corporation's
Severance Plan for Senior Executives (the 'Severance Plan')
or disability payments are payable under the arrangements
described in Appendix F of this Agreement; references to
employment being 'terminated' refer to termination whether
voluntary or involuntary on the part of Executive or at the
request of the Corporation; 'comparable annuity' means an
annuity payable for the joint lifetimes of Executive and his
spouse, with a benefit payable to Executive's
surviving spouse for the period following his death which is
equal to one-half of the benefit payable for Executive's
lifetime; 'total compensation' means salary, short term
incentive compensation awards (which in the case of short
term incentive compensation paid on account of service in
1991 shall be deemed to equal the greater of $800,000 or the
amount of short term incentive compensation actually paid to
him by the Corporation on account of service in 1991), any
additional payments in respect of incentive compensation,
and annual severance payments pursuant to the Severance
Plan, but excluding in all circumstances any incentive
compensation payments attributable to long-term awards; and
'final average compensation' means the average of
Executive's highest three calendar years' total
compensation, provided that if Executive does not receive
compensation from the Corporation for at least three
calendar years, then 'final average compensation' shall be
the sum of the total compensation received by Executive in
respect of the period he is employed by the Corporation
divided by three; except that if prior to December 31, 1994
Executive's employment terminates due to death or
Involuntary Termination (as such term is defined in the
Severance Plan as modified in Executive's case by Section 5
of this Agreement) the average of Executive's highest three
calendar years' of total compensation shall be deemed to be
equal to the greater of $1,800,000 or the average of the
total compensation received by him for the full calendar
years he is employed by the Corporation. The foregoing
definitions shall not apply for purposes of computing the
annual benefit payable to Executive under the Corporation's
Salaried Executives' Pension Plan; such computation shall be
made in accordance with the Corporation's usual policies.
Section 5. Early Termination
In the event of the termination of Executive's
employment, the consequences of such termination shall be
determined in accordance with the Severance Plan, which is
incorporated by reference in this Agreement, with the
additions and modifications in respect of the Executive as
set forth below. 'Severance Period' for purposes of the
Severance Plan shall, in Executive's case, be thirty-six
months. 'Severance Pay Factor' for purposes of the
Severance Plan shall, in Executive's case, be equal to the
number of months of Executive's Severance Period.
'Involuntary Termination' for purposes of the Severance Plan
and this Agreement shall have the meaning set forth in
Section 2.14, or if applicable Section 8.04, of the
Severance Plan, as modified by application of the term
'Gross Cause' as defined in this Section 5, and shall, in
Executive's case, also mean termination of Executive's
employment at the initiative of Executive within six months
following (i) any act or failure to act by the Board of
Directors of the Corporation which would cause Executive (A)
to be removed from the office of Chief Executive Officer or
the office of Chairman of the Board of Directors on a date
earlier than Executive's sixty-fifth birthday or (B) to not
be nominated for election as a director by the shareowners
of the Corporation at any meeting of shareowners of the
Corporation held for that purpose on a date earlier than
Executive's sixty-fifth birthday; (ii) any significant
diminution in the powers, responsibilities and authorities
described in Section 1(b) of this Agreement; or (iii) the
failure of the Corporation to obtain, within 45 days after a
merger, consolidation, sale or similar transaction, the
written assumption of its obligation to perform this
Agreement by any successor. 'Gross Cause' for purposes of
the Severance Plan and this Agreement shall, in Executive's
case mean (i) conviction of a felony; or (ii) willful gross
neglect or willful gross misconduct in carrying out
Executive's duties resulting, in either case, in material
economic harm to the Corporation, unless Executive believed
in good faith that such act or non-act was in the best interests
of the Corporation. Notwithstanding the provisions of Sections
4.05 and 10.03 of the Severance Plan, Executive shall not forfeit
any benefits unless he is guilty of Gross Cause as defined in this
Section 5.
Section 6. Participation in Other Benefit Plans and
Compensation Arrangements
While employed by the Corporation, Executive shall be
entitled to participate in each of the Corporation's plans
for the benefit of its salaried employees and in all other
compensation arrangements or programs which are or may
hereafter be made available to the senior executives of the
Corporation. It is anticipated that Executive will incur
expenses necessary to the discharge of his duties hereunder,
and the Corporation shall reimburse Executive for those
expenses, in accordance with its established policies and
such other arrangements as may be approved by the
Corporation from time to time.
Section 7. Resolution of Disputes
Any disputes arising under or in connection with this
Agreement shall, at the election of Executive, be resolved
by arbitration, to be held in Manhattan, in accordance with
the rules and procedures of the American Arbitration
Association. All costs, fees and expenses of any arbitration
in connection with this Agreement that results in any
decision requiring the Corporation to make a payment to
Executive shall be borne by, and be the obligation of, the
Corporation.
Section 8. Survivorship
The respective rights and obligations of the parties
hereunder shall survive any termination of Executive's
employment to the extent necessary to effect the intended
preservation of such rights and obligations.
Section 9. Entire Agreement, Governing Law
(a) This Agreement embodies the entire agreement of
the parties hereto, and it may be modified only by an
agreement in writing signed by both parties.
(b) This Agreement shall be interpreted and governed
by the laws of the State of New York without reference to
principles of conflict of laws.
Section 10. Undertaking by Corporation in Case of Sale or
Liquidation of Assets
The Corporation agrees that, in the event of the sale
or liquidation of all or substantially all of the assets of
the Corporation, it shall take whatever action it legally
can in order to cause the assignee or transferee of such
assets expressly to assume the liabilities, obligations and
duties of the Corporation hereunder.
IN WITNESS WHEREOF, AlliedSignal Inc. has caused this
Agreement to be signed in its corporate name by one of its
directors and its corporate seal to be hereunto affixed and
to be attested by its General Counsel, and Lawrence A.
Bossidy has hereunto set his hand, all as of the day and
year first above written.
[Corporate Seal] AlliedSignal Inc.
Attest:
/s/ Peter M. Kreindler By: /s/ Delbert C. Staley
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General Counsel Delbert C. Staley,
Director and Chairman
of the Management
Development and
Compensation Committee
/s/ L. A. Bossidy
-------------------
Lawrence A. Bossidy
APPENDIX A TO EMPLOYMENT AGREEMENT OF
LAWRENCE A. BOSSIDY
1993 Stock Plan for Employees
of AlliedSignal Inc. and its Affiliates
OPTION AGREEMENT
(With Limited Stock Appreciation Rights)
OPTION AGREEMENT made in Morris Township, New Jersey,
as of the 6th day of May 1994 between AlliedSignal Inc., a
Delaware corporation (the 'Corporation') and Lawrence A.
Bossidy, a regular full-time employee of the Corporation
(the 'Executive').
1. The Corporation has this day granted to the
Executive the option (the 'Option') to purchase all or any
part of an aggregate of 1,500,000 shares of its common stock
(the 'Common Stock') and limited stock appreciation rights
(the 'Limited Rights') with respect to all such shares under
the 1993 Stock Plan for Employees of AlliedSignal Inc. and
its Affiliates (the 'Stock Plan'), subject to the provisions
of this Agreement. The Executive hereby accepts the grant
and agrees to be bound by the terms and conditions of this
Agreement with respect thereto.
2. The purchase price of the shares of Common Stock
covered by the Option shall be $34.38 per share.
3. The term of the Option and the Limited Rights
shall be for a period of ten years from the date hereof,
subject to earlier termination or cancellation as provided
in the Stock Plan or this Agreement.
4. The Option is a non-qualified Option for federal
income tax purposes.
5. The Option shall become exercisable as to 100% of
the covered shares at the earliest of the Executive's
attainment of age 65, the Executive's death or total
disability (as defined in the Stock Plan) or on April 1st of
the calendar year immediately following the occurrence of a
Qualifying Event. For purposes of this Agreement
'Qualifying Event' shall mean a series of three consecutive
calendar years beginning after 1993, as to each of which the
Corporation has reported an annual rate of growth in
Consolidated Earnings Per Share equal to or greater than 15%
over the prior year's Consolidated Earnings Per Share. For
purposes of this Agreement 'Consolidated Earnings Per Share'
for a calendar year shall mean consolidated net income for
that year as shown on the consolidated statement of income
for the Corporation, adjusted to omit the effects of
extraordinary items, gain or loss on the disposal of a
business segment(other than provisions for operating losses
or income during the phase-out period), unusual or
infrequently occurring events or transactions and the
cumulative effects of changes in accounting principles,
all as determined in accordance with generally accepted
accounting principles; divided by the weighted average
number of outstanding shares of Common Stock for the
calendar year. Prior thereto, the Option shall become
exercisable in cumulative installments as follows: to the
extent of 10% of the number of shares specified in paragraph
1 of this Agreement on each of May 6, 1995, May 6, 1996,
May 6, 1997, May 6, 1998 and May 6, 1999.
6. Exercise of the Option is subject to the
conditions that to the extent required at the time of exercise
(a) the shares of Common Stock covered by the Option shall be duly
listed, upon official notice of issuance, upon the New York
Stock Exchange and (b) a Registration Statement under the
Securities Act of 1933 with respect to such shares shall be
effective.
7. The Option and the Limited Rights shall not be
transferable by the Executive otherwise than by will, the
laws of descent and distribution, or by transfer to a member
or members of the Executive's immediate family as provided
in paragraph 14 of the Plan, and the Option may be exercised
during the lifetime of the Executive only by the Executive,
by the Executive's guardian or legal representative or by an
immediate family member transferee.
8. If and to the extent that the Option is
exercisable, upon the occurrence of an acceleration date
(as defined in the Stock Plan) the Limited Rights shall entitle
the Executive to receive a cash payment as described in the
Stock Plan. The Option shall cease to be exercisable to the
extent of the number of shares of Common Stock with respect
to which the Executive receives such cash payment.
9. Nothing in this Agreement or the Stock Plan shall
confer upon the Executive any right to continue in the
employ of the Corporation, any of its subsidiaries or any
parent or interfere in any way with the right of the
Corporation, any such subsidiary or parent to terminate such
employment at any time.
10. Subject to the terms and conditions of this
Agreement, the Option may be exercised by written notice to
the Corporation, at 101 Columbia Road, Morristown, New
Jersey 07962, attention of the Director-Compensation, Shared
Services Department, who will also have forms available for
any such exercise.
11. The Corporation shall have the right, prior to the
payment of cash in connection with the Limited Rights or the
issuance of any shares or the payment of cash in connection
with the exercise of the Option, to withhold or require
payment by the Executive of any amounts necessary to satisfy
applicable tax requirements.
12. Except as otherwise provided in this Agreement,
the exercise of the Option and the receipt of any cash
payment as the holder of Limited Rights are subject to the
provisions of the Stock Plan, as the Stock Plan may be
amended from time to time, and any rules and regulations
which may be prescribed thereunder, provided that, unless
otherwise required by law, no amendment may, without the
consent of the Executive, adversely affect the rights of the
Executive under this Agreement. A copy of the Stock Plan,
as in effect on the date hereof, and the prospectus, dated
December 20, 1993, have been delivered to the Executive,
receipt of which is hereby acknowledged by the Executive.
13. The Corporation and the Executive agree that the
validity, performance, interpretation and other incidents of
this Agreement shall be governed by the law of the State of
Delaware.
IN WITNESS WHEREOF, the Corporation has caused this
Agreement to be duly executed by its Chairman of the
Management Development and Compensation Committee, and the
Executive has duly executed this Agreement, all as of the
day and year first above written.
AlliedSignal Inc.
/s/ L.A. Bossidy By: /s/ Delbert C. Staley
- ------------------- --------------------------
Lawrence A. Bossidy Delbert C. Staley
Director and
Chairman, Management
Development and
Compensation
Committee
APPENDIX B TO EMPLOYMENT AGREEMENT OF
LAWRENCE A. BOSSIDY
1993 Stock Plan for Employees of
AlliedSignal Inc. and its Affiliates
RESTRICTED UNIT AGREEMENT
RESTRICTED UNIT AGREEMENT made in Morris
Township, New Jersey as of the 6th day of May 1994 between
AlliedSignal Inc., a Delaware corporation (the 'Corporation')
and Lawrence A. Bossidy, a regular full-time employee of the
Corporation (the 'Executive').
1. The Corporation hereby awards to the Executive
250,000 Restricted Units under the 1993 Stock Plan for
Employees of AlliedSignal Inc. and its Affiliates (the
'Plan'), subject to the provisions of this Agreement. The
award shall be effective as of May 6, 1994. The Executive
hereby accepts the award and agrees to be bound by the terms
and conditions of this Agreement with respect thereto.
2. The Corporation shall establish and maintain a
Restricted Unit account for and on behalf of the Executive
and shall record in such account the number of Restricted
Units awarded to the Executive. The Executive shall be paid
currently an amount equal to the cash dividends paid by the
Corporation upon one share of its common stock (the 'Common
Stock') for each Restricted Unit then credited to the
Executive's account ('Dividend Equivalents'). Any Dividend
Equivalents not paid currently to the Executive shall be
credited to the Executive's account, shall not be subject to
forfeiture and may bear interest at a rate and subject to
such terms as determined by the Management Development and
Compensation Committee (the 'Committee'). No shares of
Common Stock shall be issued to the Executive at the time
the award is made, and the Executive shall not be, nor have
any of the rights or privileges of, a shareowner of the
Corporation with respect to any Restricted Units recorded in
the account.
3. Unless otherwise provided by law, the Executive
shall not have a disposable interest in the Restricted Unit
account, and any attempted disposition of the account by the
Executive, whether by transfer, alienation, anticipation,
pledge, encumbrance, assignment or any other means, whether
such disposition be voluntary, or involuntary, or by
judgment, levy, attachment, garnishment or any other legal
or equitable proceedings (including bankruptcy), shall be
null and void and have no effect.
4. The Executive shall not have any interest in any
fund or specific asset of the Corporation by reason of this
award or the Restricted Unit account established for the
Executive.
5. The restrictions applicable to the Restricted Units
shall lapse on April 1st of the calendar year immediately
following the occurrence of a Qualifying Event. For
purposes of this Agreement, 'Qualifying Event' shall mean a
series of three consecutive calendar years beginning after
1993, as to each of which the Corporation has reported an
annual rate of growth in Consolidated Earnings Per Share
equal to or greater than 15% over the prior year's
Consolidated Earnings Per Share. For purposes of this
Agreement 'Consolidated Earnings Per Share' for a calendar
year shall mean consolidated net income for that year as
shown on the consolidated statement of income for the
Corporation, adjusted to omit the effects of extraordinary
items, gain or loss on the disposal of a business
segment(other than provisions for operating losses or income
during the phase-out period), unusual or infrequently
occurring events and transactions and the cumulative effects
of changes in accounting principles, all as determined in
accordance with generally accepted accounting principles;
divided by the weighted average number of outstanding shares
of Common Stock for the calendar year. However, all
restrictions applicable to the Restricted Units shall lapse
or terminate upon the Executive's death, total disability
(as defined in the Plan), attainment of age 65 or the
occurrence of an acceleration date (as defined in the Plan).
Nothing in this Agreement shall limit the discretion of the
Committee to shorten or terminate the period during which
restrictions shall be applicable to any of the Restricted
Units or to waive any conditions for the lapse or
termination of restrictions with respect to all or any
portion of the Restricted Units.
6. Except as otherwise provided in this Agreement, if
the Executive does not remain a regular full-time employee
of the Corporation, any of its subsidiaries or any parent or
any combination thereof until the lapse or termination of
the restrictions applicable to the Restricted Units, the
Restricted Units with respect to which the restrictions have
not lapsed or terminated shall be forfeited and all rights
of the Executive with respect to such Restricted Units shall
terminate. Nothing in this Agreement or the Plan shall
confer upon the Executive any right to continue in the
employ of the Corporation, any of its subsidiaries or any
parent or interfere in any way with the right of the
Corporation, any such subsidiary or parent to terminate such
employment at any time.
7. Except upon the occurrence of an acceleration date
and except as otherwise provided in this Agreement, the
Corporation shall, as soon as practicable following the
lapse or termination of restrictions applicable to any
portion of the Restricted Units, deliver to the Executive or
the Executive's beneficiary or estate, as the case may be,
one share of Common Stock for each Restricted Unit with
respect to which the restrictions have lapsed ('vested
unit') and cash equal to any Dividend Equivalents
credited to the Executive's account with respect to each
such vested unit and the interest thereon; provided,
however, that the Committee may, in its sole discretion,
elect to pay cash or part cash and part Common Stock in lieu
of delivering only Common Stock for the vested units. If a
cash payment is made in lieu of delivering Common Stock, the
amount of such cash payment shall be equal to the mean
between the highest and lowest sales prices of the Common
Stock as reported on the New York Stock Exchange Composite
Tape for the date on which payment is made, or if there are
no sales on such date, on the next preceding day on which
there were sales.
8. If the Executive desires that payment of vested
units (and any Dividend Equivalents credited to the
Executive's account with respect to such vested units and
the interest thereon) be made at a date later than that
provided in paragraph 7 of this Agreement, the Executive
shall, prior to the date on which the restrictions
applicable to such units lapse or terminate, make a request
in writing to the Committee to have such payment
deferred. The Executive shall submit a suggested payment
schedule with the request for deferment. The Committee may,
in its sole discretion, determine whether to permit such
deferment of payment in the manner requested by the
Executive. Should a deferred payment schedule not be
accepted, then payment shall be made in accordance with the
provisions of paragraph 7 of this Agreement. Any deferred
payment schedule accepted by the Committee shall be binding
on the Executive and may not thereafter be revoked. However,
when circumstances are deemed justifiable by the Committee,
it may, upon agreement with the Executive or the Executive's
estate, make payment of the account other than in
strict compliance with the deferred payment schedule.
9. Upon the occurrence of an acceleration date (as
defined in the Plan), all outstanding vested units
(including Restricted Units whose restrictions have lapsed
as a result of the occurrence of such acceleration date and
vested units where payment was previously deferred) shall be
converted into cash as soon as practicable but in no event
later than 90 days after such acceleration date in an amount
equal to the total number of vested units credited to the
Executive's account multiplied by the 'Multiplication
Factor' (as defined in the Plan). All vested units and
credited Dividend Equivalents (other than vested units and
credited Dividend Equivalents where payment was previously
deferred and no election was made for a lump sum payment)
shall be payable in cash as soon as practicable but in no
event later than 90 days after such acceleration date.
10. The Corporation shall have the right, prior to the
crediting or payment of any Dividend Equivalent, the
issuance or delivery of any shares of Common Stock or the
payment of cash in lieu of shares hereunder, to withhold or
require payment by the Executive of any amounts necessary to
satisfy applicable tax requirements.
11. This Agreement is subject to the provisions of the
Plan as it may be amended from time to time, and any rules
and regulations which may be prescribed thereunder by the
Committee, provided that, unless otherwise required by law,
no amendment may, without the consent of the Executive,
adversely affect the rights of the Executive under this
Agreement. A copy of the Plan, as in effect on the date
hereof, and the prospectus, dated December 20, 1993, have
been delivered to the Executive, receipt of which is hereby
acknowledged by the Executive.
12. The Corporation and the Executive agree that the
validity, performance, interpretation and other incidents of
this Agreement shall be governed by the law of the State of
Delaware.
IN WITNESS WHEREOF, the Corporation has caused this
Agreement to be duly executed by its Chairman of the
Management Development and Compensation Committee, and the
Executive has duly executed this Agreement, all as of the
day and year first above written.
AlliedSignal Inc.
/s/ L.A. Bossidy By: /s/ Delbert C. Staley
- ------------------- --------------------------
Lawrence A. Bossidy Delbert C. Staley
Director and Chairman,
Management Development
and Compensation
Committee
APPENDIX C TO EMPLOYMENT AGREEMENT OF
LAWRENCE A. BOSSIDY
1993 Stock Plan for Employees of
AlliedSignal Inc. and its Affiliates
RESTRICTED UNIT AGREEMENT
RESTRICTED UNIT AGREEMENT made in Morris Township, New
Jersey as of the 6th day of May 1994 between AlliedSignal
Inc., a Delaware corporation (the 'Corporation') and
Lawrence A. Bossidy, a regular full-time employee of the
Corporation (the 'Executive').
1. The Corporation hereby awards to the Executive
50,000 Restricted Units under the 1993 Stock Plan for
Employees of AlliedSignal Inc. and its Affiliates (the
'Plan'), subject to the provisions of this Agreement. The
award shall be effective as of May 6, 1994. The Executive
hereby accepts the award and agrees to be bound by the terms
and conditions of this Agreement with respect thereto.
2. The Corporation shall establish and maintain a
Restricted Unit account for and on behalf of the Executive
and shall record in such account the number of Restricted
Units awarded to the Executive. The Executive's Restricted
Unit account shall be credited currently with an amount
equal to the cash dividends paid by the Corporation upon
one share of its common stock (the 'Common Stock') for each
Restricted Unit then credited to the Executive's account
('Dividend Equivalents'). Dividend Equivalents credited to
the Executive's account shall be subject to the same
restrictions applicable to the Restricted Units and bear
interest at a rate and subject to such terms as determined
by the Management Development and Compensation Committee
(the 'Committee'). No shares of Common Stock shall be
issued to the Executive at the time the award is made, and
the Executive shall not be, nor have any of the rights or
privileges of, a shareowner of the Corporation with respect
to any Restricted Units recorded in the account.
3. Unless otherwise provided by law, the Executive
shall not have a disposable interest in the Restricted Unit
account, and any attempted disposition of the account by the
Executive, whether by transfer, alienation, anticipation, pledge,
encumbrance, assignment or any other means, whether such
disposition be voluntary, or involuntary, or by judgment,
levy, attachment, garnishment or any other legal or
equitable proceedings (including bankruptcy), shall be null
and void and have no effect.
4. The Executive shall not have any interest in any
fund or specific asset of the Corporation by reason of this
award or the Restricted Unit account established for the
Executive.
5. Any provision of the Plan to the contrary
notwithstanding, the restrictions applicable to the
Restricted Unit account shall lapse solely on April 1st of
the first calendar year immediately following the occurrence
of a Qualifying Event. For purposes of this Agreement
'Qualifying Event' shall mean a series of four consecutive
calendar years beginning after 1993, as to each of which the
Corporation has reported an annual rate of growth in
Consolidated Earnings Per Share equal to or greater than 15%
over the prior year's Consolidated Earnings Per Share. For
purposes of this Agreement 'Consolidated Earnings Per Share'
for a calendar year shall mean consolidated net income for
that year as shown on the consolidated statement of income
for the Corporation, adjusted to omit the effects of
extraordinary items, gain or loss on the disposal of a
business segment(other than provisions for operating losses
or income during the phase-out period), unusual or
infrequently occurring events and transactions and the
cumulative effects of changes in accounting principles, all
as determined in accordance with generally accepted
accounting principles; divided by the weighted average
number of outstanding shares of Common Stock for the
calendar year. Nothing in this Agreement shall limit the
discretion of the Committee to shorten or terminate the
period during which restrictions shall be applicable to the
Restricted Unit account or to waive any conditions for the
lapse or termination of restrictions with respect to all or
any portion of the Restricted Unit account.
6. If the Executive does not remain a regular full-time
employee of the Corporation, any of its subsidiaries or any
parent or any combination thereof until the lapse or
termination of the restrictions applicable to the Restricted
Unit account, the Restricted Unit account shall be forfeited
and all rights of the Executive thereto shall terminate.
Nothing in this Agreement or the Plan shall confer upon the
Executive any right to continue in the employ of the
Corporation, any of its subsidiaries or any parent or
interfere in any way with the right of the Corporation, any
such subsidiary or parent to terminate such employment at
any time.
7. Unless the Executive has made an election to the
contrary as provided in paragraph 8, the Corporation shall,
as soon as practicable following the lapse or termination of
restrictions applicable to any portion of the Restricted
Units, deliver to the Executive or the Executive's
beneficiary or estate, as the case may be, one share of
Common Stock for each Restricted Unit with respect to which
the restrictions have lapsed ('vested unit') and cash equal
to any Dividend Equivalents credited to the Executive's
account with respect to each such vested unit and the
interest thereon; provided, however, that the Committee may,
in its sole discretion, elect to pay cash or part cash and
part Common Stock in lieu of delivering only Common Stock
for the vested units. If a cash payment is made in lieu of
delivering Common Stock, the amount of such cash payment
shall be equal to the mean between the highest and lowest
sales prices of the Common Stock as reported on the New York
Stock Exchange Composite Tape for the date on which payment
is made, or if there are no sales on such date, on the next
preceding day on which there were sales.
8. If the Executive desires that payment of vested
units (and any Dividend Equivalents credited to the
Executive's account with respect to such vested units and
the interest thereon) be made at a date later than that
provided in paragraph 7 of this Agreement, the Executive
shall, prior to the date on which the restrictions
applicable to such units lapse or terminate, make a request
in writing to the Committee to have such payment
deferred. The Executive shall submit a suggested payment
schedule with the request for deferment. The Committee may,
in its sole discretion, determine whether to permit such
deferment of payment in the manner requested by the
Executive. Should a deferred payment schedule not be
accepted, then payment shall be made in accordance with the
provisions of paragraph 7 of this Agreement. Any deferred
payment schedule accepted by the Committee shall be binding
on the Executive and may not thereafter be revoked. However,
when circumstances are deemed justifiable by the Committee,
it may, upon agreement with the Executive or the Executive's
estate, make payment of the account other than in strict
compliance with the deferred payment schedule.
9. Upon the occurrence of an acceleration date (as
defined in the Plan), all outstanding vested units
(including vested units where payment was previously
deferred) shall be converted into cash as soon as
practicable but in no event later than 90 days after such
acceleration date in an amount equal to the total number of
vested units credited to the Executive's account multiplied
by the 'Multiplication Factor' (as defined in the Plan).
All vested units and credited Dividend Equivalents (other
than vested units and credited Dividend Equivalents where
payment was previously deferred and no election was made for
a lump sum payment) shall be payable in cash as soon as
practicable but in no event later than 90 days after such
acceleration date.
10. The Corporation shall have the right, prior to the
crediting or payment of any Dividend Equivalent, the
issuance or delivery of any shares of Common Stock or the
payment of cash in lieu of shares hereunder, to withhold or
require payment by the Executive of any amounts necessary to
satisfy applicable tax requirements.
11. Except as otherwise provided herein, this
Agreement is subject to the provisions of the Plan as it may
be amended from time to time, and any rules and regulations
which may be prescribed thereunder by the Committee,
provided that, unless otherwise required by law, no
amendment may, without the consent of the Executive,
adversely affect the rights of the Executive under this
Agreement. A copy of the Plan, as in effect on the date
hereof, and the prospectus, dated December 20, 1993, have
been delivered to the Executive, receipt of which is hereby
acknowledged by the Executive.
12. The Corporation and the Executive agree that the
validity, performance, interpretation and other incidents of
this Agreement shall be governed by the law of the State of
Delaware.
IN WITNESS WHEREOF, the Corporation has caused this
Agreement to be duly executed by its Chairman of the
Management Development and Compensation Committee, and the
Executive has duly executed this Agreement, all as of the
day and year first above written.
AlliedSignal Inc.
/s/ L.A. Bossidy By: /s/ Delbert C. Staley
- ------------------- --------------------------
Lawrence A. Bossidy Delbert C. Staley
Director and
Chairman, Management
Development and
Compensation Committee
APPENDIX D TO EMPLOYMENT AGREEMENT OF
LAWRENCE A. BOSSIDY
1993 Stock Plan for Employees of
AlliedSignal Inc. and its Affiliates
RESTRICTED UNIT AGREEMENT
RESTRICTED UNIT AGREEMENT made in Morris Township,
New Jersey as of the 6th day of May 1994 between AlliedSignal
Inc., a Delaware corporation (the 'Corporation') and
Lawrence A. Bossidy, a regular full-time employee of the
Corporation (the 'Executive').
1. The Corporation hereby awards to the Executive
75,000 Restricted Units under the 1993 Stock Plan for
Employees of AlliedSignal Inc. and its Affiliates (the
'Plan'), subject to the provisions of this Agreement. The
award shall be effective as of May 6, 1994. The Executive
hereby accepts the award and agrees to be bound by the terms
and conditions of this Agreement with respect thereto.
2. The Corporation shall establish and maintain a
Restricted Unit account for and on behalf of the Executive
and shall record in such account the number of Restricted
Units awarded to the Executive. The Executive's Restricted
Unit account shall be credited currently with an amount
equal to the cash dividends paid by the Corporation upon one
share of its common stock (the 'Common Stock') for each
Restricted Unit then credited to the Executive's account
('Dividend Equivalents'). Dividend Equivalents credited to
the Executive's account shall be subject to the same
restrictions applicable to the Restricted Units and bear
interest at a rate and subject to such terms as determined
by the Management Development and Compensation Committee
(the 'Committee'). No shares of Common Stock shall be
issued to the Executive at the time the award is made, and
the Executive shall not be, nor have any of the rights or
privileges of, a shareowner of the Corporation with respect
to any Restricted Units recorded in the account.
3. Unless otherwise provided by law, the Executive
shall not have a disposable interest in the Restricted Unit
account, and any attempted disposition of the account by the
Executive, whether by transfer, alienation, anticipation,
pledge, encumbrance, assignment or any other means, whether
such disposition be voluntary, or involuntary, or by
judgment, levy, attachment, garnishment or any other legal
or equitable proceedings (including bankruptcy), shall be
null and void and have no effect.
4. The Executive shall not have any interest in any
fund or specific asset of the Corporation by reason of this
award or the Restricted Unit account established for the
Executive.
5. Any provision of the Plan to the contrary
notwithstanding, the restrictions applicable to the
Restricted Unit account shall lapse solely on April 1st of
the first calendar year immediately following the occurrence
of a Qualifying Event. For purposes of this Agreement,
'Qualifying Event' shall mean a series of five consecutive
calendar years beginning after 1993, as to each of which the
Corporation has reported an annual rate of growth in
Consolidated Earnings Per Share equal to or greater than 15%
over the prior year's Consolidated Earnings Per Share. For
purposes of this Agreement, 'Consolidated Earnings Per
Share' for a calendar year shall mean consolidated net
income for that year as shown on the consolidated statement
of income for the Corporation, adjusted to omit the effects
of extraordinary items, gain or loss on the disposal of a
business segment(other than provisions for operating losses
or income during the phase-out period), unusual or
infrequently occurring events and transactions and the
cumulative effects of changes in accounting principles, all
as determined in accordance with generally accepted
accounting principles; divided by the weighted average
number of outstanding shares of Common Stock for the
calendar year. Nothing in this Agreement shall limit the
discretion of the Committee to shorten or terminate the
period during which restrictions shall be applicable to the
Restricted Unit account or to waive any conditions for the
lapse or termination of restrictions with respect to all or
any portion of the Restricted Unit account.
6. If the Executive does not remain a regular full-time
employee of the Corporation, any of its subsidiaries or any
parent or any combination thereof until the lapse or
termination of the restrictions applicable to the Restricted
Unit account, the Restricted Unit account shall be forfeited
and all rights of the Executive thereto shall terminate.
Nothing in this Agreement or the Plan shall confer upon the
Executive any right to continue in the employ of the
Corporation, any of its subsidiaries or any parent or
interfere in any way with the right of the Corporation, any
such subsidiary or parent to terminate such employment at
any time.
7. Unless the Executive has made an election to the
contrary as provided in paragraph 8, the Corporation shall,
as soon as practicable following the lapse or termination of
restrictions applicable to any portion of the Restricted
Units, deliver to the Executive or the Executive's
beneficiary or estate, as the case may be, one share of
Common Stock for each Restricted Unit with respect to which
the restrictions have lapsed ('vested unit') and cash equal
to any Dividend Equivalents credited to the Executive's
account with respect to each such vested unit and the
interest thereon; provided, however, that the Committee may,
in its sole discretion, elect to pay cash or part cash and
part Common Stock in lieu of delivering only Common Stock
for the vested units. If a cash payment is made in lieu of
delivering Common Stock, the amount of such cash payment
shall be equal to the mean between the highest and lowest
sales prices of the Common Stock as reported on the New York
Stock Exchange Composite Tape for the date on which payment
is made, or if there are no sales on such date, on the next
preceding day on which there were sales.
8. If the Executive desires that payment of vested
units (and any Dividend Equivalents credited to the
Executive's account with respect to such vested units and
the interest thereon) be made at a date later than that
provided in paragraph 7 of this Agreement, the Executive
shall, prior to the date on which the restrictions
applicable to such units lapse or terminate, make a
request in writing to the Committee to have such payment
deferred. The Executive shall submit a suggested payment
schedule with the request for deferment. The Committee may,
in its sole discretion, determine whether to permit such
deferment of payment in the manner requested by the
Executive. Should a deferred payment schedule not be
accepted, then payment shall be made in accordance with the
provisions of paragraph 7 of this Agreement. Any deferred
payment schedule accepted by the Committee shall be binding
on the Executive and may not thereafter be revoked. However,
when circumstances are deemed justifiable by the Committee,
it may, upon agreement with the Executive or the Executive's
estate, make payment of the account other than in strict
compliance with the deferred payment schedule.
9. Upon the occurrence of an acceleration date (as
defined in the Plan), all outstanding vested units
(including vested units where payment was previously
deferred) shall be converted into cash as soon as
practicable but in no event later than 90 days after such
acceleration date in an amount equal to the total number of
vested units credited to the Executive's account multiplied
by the 'Multiplication Factor' (as defined in the Plan).
All vested units and credited Dividend Equivalents (other
than vested units and credited Dividend Equivalents where
payment was previously deferred and no election was made for
a lump sum payment) shall be payable in cash as soon as
practicable but in no event later than 90 days after such
acceleration date.
10. The Corporation shall have the right, prior to the
crediting or payment of any Dividend Equivalent, the
issuance or delivery of any shares of Common Stock or the
payment of cash in lieu of shares hereunder, to withhold or
require payment by the Executive of any amounts necessary to
satisfy applicable tax requirements.
11. Except as otherwise provided herein, this
Agreement is subject to the provisions of the Plan as it may
be amended from time to time, and any rules and regulations
which may be prescribed thereunder by the Committee,
provided that, unless otherwise required by law, no
amendment may, without the consent of the Executive,
adversely affect the rights of the Executive under this
Agreement. A copy of the Plan, as in effect on the date
hereof, and the prospectus, dated December 20, 1993, have
been delivered to the Executive, receipt of which is hereby
acknowledged by the Executive.
12. The Corporation and the Executive agree that the
validity, performance, interpretation and other incidents of
this Agreement shall be governed by the law of the State of
Delaware.
IN WITNESS WHEREOF, the Corporation has caused this
Agreement to be duly executed by its Chairman of the
Management Development and Compensation Committee, and the
Executive has duly executed this Agreement, all as of the
day and year first above written.
AlliedSignal Inc.
/s/ L.A. Bossidy By: /s/ Delbert C. Staley
- ------------------- --------------------------
Lawrence A. Bossidy Delbert C. Staley
Director and
Chairman, Management
Development and
Compensation Committee
APPENDIX E TO EMPLOYMENT AGREEMENT OF
LAWRENCE A. BOSSIDY
Life Insurance
- ---- ---------
Corporation Insurance Plans
- ----------- --------- -----
Salaried Employees Life Insurance Plan
Non-contributory--Two times base salary $4,000,000(a)
Supplemental Life Insurance--
Four times base salary $8,000,000(a)
Group Universal Life
Up to five times base salary
(as previously elected by Executive)
Split-Dollar Policies
Metropolitan Life Insurance
Company Flexible-Premium
Adjustable Life Policies(b)
#883215036U
#883215037U
#917590655U
Northwestern Mutual
Life Insurance Policies(c)
#7589713
#7945757
#8357499
#8441286
#8746278
#9369664
(a): Assumes a base annual salary of $2,000,000.
Insurance to increase as salary increases, except that in
the case of the Supplemental Life Insurance the coverage
increases as salary increases only until Executive attains
age 60.
(b): Policies are currently owned by Executive's
Insurance Trust (the 'Trust') and are subject to the terms
of the Insurance Agreement entered into with the Corporation
on July 26, 1991 and related Collateral Assignments of the
same date.
(c): Policies are owned by Executive and are
subject to the terms of the Insurance Agreement entered into
with the Corporation on July 26, 1991 and the related
Collateral Assignment of the same date.
APPENDIX F TO EMPLOYMENT AGREEMENT OF
LAWRENCE A. BOSSIDY
Long Term Disability Benefits
- ---- ---- ---------- --------
After six months of salary continuation, Executive shall be
paid a monthly benefit equal to $166,666* for the first five
years of his disability and $83,333* for the next five years
of his disability; provided, however, that no benefits will
be paid after the date the Executive attains age 65. These
benefits will be reduced by any benefits paid to Executive
pursuant to the Executive Benefit Program, the Voluntary
Employees' Beneficiary Association Long-Term Disability
Income Plan or any other longterm disability program
sponsored by the Corporation.
* These amounts assume a base annual salary of
$2,000,000. If base annual salary is increased, these
amounts will increase proportionally.
Agreement - AlliedSignal Inc. and Lawrence A. Bossidy
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