Deferred Compensation Plan for Non-Employee Directors
of AlliedSignal Inc.
-----------------------------------------------------
(As Amended Effective January 1, 1997)
1. ELIGIBILITY
Each member of the Board of Directors (the 'Board') of AlliedSignal Inc.
(the 'Corporation') who is not an employee of the Corporation or any of its
subsidiaries (a 'Director') is eligible to participate in the Deferred
Compensation Plan for Non-Employee Directors of AlliedSignal Inc. (the 'Plan').
2. DEFINITIONS
(a) Committee. The Nominating and Board Affairs Committee of the Board
or any successor.
(b) Common Stock. The publicly traded common stock of the Corporation or
any successor.
(c) Compensation. All amounts payable for services as a Director,
including amounts payable for services as a member or chairman of a committee of
the Board.
(d) Elective Deferrals. Compensation deferred by a Director under the
Plan after December 31, 1996 (other than Non-Elective Deferrals and Lump-Sum
Compensation, as defined below).
(e) Lump-Sum Compensation. A one-time lump-sum amount for each Director
serving on December 31, 1996 who elected such amount in satisfaction of any
benefits under the Retirement Plan for Non-Employee Directors of AlliedSignal
Inc. (the 'Retirement Plan'), which amount is automatically deferred under the
Plan.
(f) Non-Elective Deferrals. Effective January 1 of each year after 1996,
$15,000 of annual Compensation for Directors not eligible for a benefit under
the Retirement Plan, which amount is automatically deferred under the Plan.
(g) Pre-1997 Elective Deferrals. Compensation deferred by a Director
under the Plan prior to January 1, 1997.
- 2 -
(h) Retirement. As used in the Plan, the term 'retirement' or 'retire'
shall include any termination of a Director's Board service except, in the case
of Lump-Sum Compensation, any termination which the Board determines to have
resulted from gross cause. 'Gross cause' means fraud, misappropriation or
intentional misconduct damaging to the property or business of the Corporation
or any of its subsidiaries, or commission of a crime.
(i) Secretary. The Secretary of the Corporation.
3. INVESTMENT OPTIONS
Amounts deferred under the Plan shall be invested as described below.
(a) Pre-1997 Elective Deferrals. These amounts have been credited to a
deferred compensation account (the 'Director's account') either (i) in cash with
interest as described in paragraphs 5(b) and (c) below or (ii) in shares of
Common Stock, as elected by the Director, and will remain in the form elected
until paid out.
(b) Elective Deferrals. A Director may elect to have these amounts
credited to the Director's account in cash (i) with interest as described in
paragraph 5(c) below or (ii) which is valued as if invested in one or more of
the funds available for investments by participants in the AlliedSignal Savings
Plan as described in paragraph 5(g) below. All such amounts will be paid out in
cash.
(c) Non-Elective Deferrals. These amounts will be credited to the
Director's account on January 1 of each year in the form of equivalent shares of
Common Stock, calculated based on 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 immediately preceding December 31 (or, if there were no sales on
such day, for the last preceding day on which there were sales) and valued as
described in paragraph 5(f) below. For any person who becomes a Director after
January 1, a pro rata portion of the annual amount based on the number of days
remaining in the calendar year will be credited to the Director's account on the
Director's first day of service in the form of equivalent shares of Common
Stock, calculated based on such mean for the first day of service (or, if there
were no sales on such day, for the last preceding day on which there were
sales). All such amounts will be paid out in cash after retirement from the
Board.
(d) Lump-Sum Compensation. This amount will be credited to the
Director's account, effective January 1, 1997, either (i) 100% in the form of
equivalent shares of Common Stock, calculated based on the mean between the
highest and lowest sales prices of the Common Stock as reported on the New York
Stock Exchange Composite Tape for
- 3 -
December 31, 1996 and valued as described in paragraph 5(f) below, or (ii) 50%
in the form of equivalent shares of Common Stock, calculated and valued as
described in (i), and 50% in cash with interest at the rate of 10% per annum, as
elected by the Director prior to January 1, 1997. All such amounts will be paid
out in cash after retirement from the Board.
4. PARTICIPATION
(a) Elective Deferrals.
(i) Time of Election. Prior to the beginning of any calendar
year, each Director who is not then participating in the Plan (other
than by virtue of Non-Elective Deferrals and/or Lump-Sum Compensation)
may elect to participate in the Plan by directing that all or any part
of the Director's Compensation which otherwise would have been payable
currently for services as a Director during such calendar year shall be
credited to the Director's account as Elective Deferrals. Any person who
shall become a Director during any calendar year may elect, before the
Director's term begins, to defer payment of all or any part of the
Director's Compensation for the remainder of such calendar year.
(ii) Form and Duration of Election. An election to make Elective
Deferrals shall be made by written notice executed by the Director and
filed with the Secretary. Such election shall continue in effect for
succeeding calendar years unless the Director terminates such election
by written notice filed with the Secretary. Any such termination shall
become effective as of the end of the calendar year in which such notice
is given and only with respect to Compensation payable for services as a
Director thereafter. Amounts credited to the Director's account prior to
the effective date of termination shall not be affected by such
termination and shall be distributed only in accordance with the terms
of the Plan.
(iii) Adjustment of Future Deferrals. Prior to the beginning of
any calendar year, a Director participating in the Plan may file another
written notice with the Secretary electing to change the amount of
Elective Deferrals to be credited to the Director's account for services
as a Director commencing with such calendar year. Amounts credited to
the Director's account prior to the effective date of such change shall
not be affected by such change and shall be distributed only in
accordance with the terms of the Plan,
(iv) Adjustment of Investment Options. A Director may elect to
change the investment options with respect to those portions of the
Director's account applicable to Elective Deferrals which are valued as
if invested in one or more of
- 4 -
the funds available for investments by participants in the AlliedSignal
Savings Plan. Any such election to reallocate amounts among the
investment funds shall be made by written notice executed by the
Director and filed with the Secretary, may be made no more often than
once each calendar quarter during the 30-day period beginning on the
third business day following an earnings release by the Corporation, and
shall be effective on the first business day following receipt by the
Secretary.
(b) Non-Elective Deferrals. No participation election is required for
Non-Elective Deferrals since the crediting of such amounts to the Director's
account will be automatic.
(c) Lump-Sum Compensation. No participation election is required for
Lump-Sum Compensation since the crediting of such amounts to the Director's
account, in accordance with the irrevocable investment option elected by the
Director prior to January 1, 1997, will be automatic.
5. THE DIRECTOR'S ACCOUNT
(a) All Compensation which a Director has elected to defer under the
Plan shall be credited to the Director's account consistent with the Director's
investment options, as described in paragraph 3. All credits shall be made as
unfunded book entries and the Director shall not have any interest in any
amounts credited to the Director's account until distributed in accordance with
the Plan.
(b) Amounts credited to the Director's account in cash for services as a
Director during 1993 or any prior calendar year shall accrue amounts equivalent
to interest commencing on the date such amounts would otherwise have been paid,
at a rate per annum for each calendar quarter fixed by the Treasurer of the
Corporation at the commencement of such calendar quarter based upon the sum of
(i) the average quoted rate for three-month U.S. Treasury Bills for the last
full week of the preceding calendar quarter, and (ii) a rate per annum of three
percent.
(c) Amounts credited to the Director's account in cash for services as a
Director during 1994 or any subsequent calendar year, other than cash amounts
referred to in Paragraph 5(g), Lump-Sum Compensation and Non-Elective Deferrals,
shall accrue amounts equivalent to interest commencing on the date such amounts
would otherwise have been paid, at the same rates per annum as those fixed for
deferrals with respect to the relevant calendar years under the AlliedSignal
Inc. Incentive Compensation Plan for Executive Employees, as amended from time
to time.
- 5 -
(d) Amounts credited to the Director's account in cash as a result of
the conversion of shares or equivalent shares to cash pursuant to paragraph 7(a)
shall accrue amounts equivalent to interest commencing on the date of such
conversion, at the higher of the two rates provided under paragraphs 5(b) and
(c), regardless of the calendar year or years to which the underlying deferral
of shares or equivalent shares relates. The determination of which rate is
higher shall be made each calendar quarter and, for purposes of such
determination, the rate provided under paragraph 5(c) for cash amounts deferred
with respect to the then current calendar year shall be compared to the rate
provided under paragraph 5(b) for the then current calendar quarter.
(e) Amounts determined pursuant to this paragraph 5 shall be compounded
at the end of each calendar quarter and credited to the Director's account.
Amounts credited to the Director's account in cash shall continue to accrue
amounts equivalent to interest in accordance with paragraphs 5(b), (c) or (d)
until distributed in accordance with the Plan.
(f) Amounts credited to the Director's account in shares or equivalent
shares of Common Stock shall accrue amounts equivalent to cash or stock
dividends as declared by the Board. For Pre-1997 Elective Deferrals, such
equivalent amounts shall continue to accrue amounts equivalent to interest or
dividends. For Non-Elective Deferrals and Lump-Sum Compensation, such equivalent
amounts shall be credited to the Director's account as if reinvested in Common
Stock. Amounts credited to the Director's account in equivalent shares of Common
Stock shall be valued on the same basis as investments by participants in the
AlliedSignal Common Stock Fund under the AlliedSignal Savings Plan, as indicated
in paragraph 5(g).
(g) Amounts credited to the Director's account in cash but which are
valued as if invested in one or more of the funds available for investment by
participants in the AlliedSignal Savings Plan shall be valued on the same basis
as investments by participants in such funds (excluding any charge for expenses
and, with respect to the AlliedSignal Common Stock Fund, excluding any liquidity
reserves and assuming reinvestment of dividend equivalents).
6. DISTRIBUTION FROM ACCOUNTS
(a) Form of Election.
(i) Pre-1997 Elective Deferrals. The aggregate amount of
Pre-1997 Elective Deferrals credited to a Director's account shall be
distributed in accordance with the Director's distribution election in
effect at the time such amounts were credited to the Director's account,
as modified effective January 1, 1997 by a Director's special one-time
election to take advantage of the Federal
- 6 -
Source Tax Law (4 U.S.C. ss.114). If no distribution election was in
effect, such amounts shall be paid on the first business day of the
calendar year immediately following the year in which the Director
ceases to be a Director.
(ii) Elective Deferrals. At the time a Director makes a
participation election pursuant to paragraph 4(a), the Director shall
also file with the Secretary a written election with respect to the
distribution of the aggregate amount credited to the Director's account
pursuant to such participation election. A Director may elect to receive
such amount in one lump-sum payment or in a number of approximately
equal installments (provided the payout period does not exceed 10
years). The Director may also elect to have the lump-sum payment or the
first installment paid (A) on the first business day of the calendar
year immediately following the year in which the Director ceases to be a
Director, (B) on the first business day of such calendar year as the
Director may elect, or (C) as soon as practicable following the
Director's death. Except in the case of the Director's death, in which
event paragraph 8 shall govern, subsequent installments shall be paid on
the first business day of each succeeding installment period until the
entire amount credited to the Director's account shall have been paid.
Absent such an election, except in the case of death, the amount of
Elective Deferrals in the Director's account shall be paid on the first
business day of the calendar year immediately following the year in
which the Director ceases to be a Director.
(iii) Lump-Sum Compensation. The aggregate amount credited to a
Director's account as Lump-Sum Compensation shall be distributed in
accordance with the distribution election filed by the Director with the
Secretary prior to January 1, 1997. Such distribution election shall
have included an election to receive such amount in one lump-sum payment
or in a number of approximately equal installments (provided the payout
period does not exceed 10 years), and an election to have the lump-sum
payment or the first installment paid (A) on the first business day of
the calendar year immediately following the year in which the Director
ceases to be a Director, (B) on the first business day of a calendar
year which is such number of years following retirement as the Director
may elect, or (C) as soon as practicable following the Director's death.
Except in the case of the Director's death, in which event paragraph 8
shall govern, subsequent installments shall be paid on the first
business day of each succeeding installment period until the entire
amount credited to the Director's account shall have been paid. Absent
such an election, except in the case of death, the amount of Lump-Sum
Compensation in the Director's account shall be paid on the first
business day of the calendar year immediately following the year in
which the Director ceases to be a Director.
- 7 -
(iv) Non-Elective Deferrals. Although no participation election
is required for Non-Elective Deferrals, each Director prior to the
beginning of any calendar year may file with the Secretary a written
election with respect to the distribution of the aggregate amount of
Non-Elective Deferrals credited to the Director's account for the next
calendar year. Any person who shall become a Director during any
calendar year may file with the Secretary before the Director's term
begins a written election with respect to the distribution of the
aggregate amount of Non-Elective Deferrals credited to the Director's
account for the remainder of such calendar year. Any such election shall
continue in effect for Non-Elective Deferrals credited to the Director's
account in succeeding calendar years, unless the Director files a new
written election prior to the beginning of any calendar year. A Director
may elect to receive such amount in one lump-sum payment or in a number
of approximately equal installments (provided the payout period does not
exceed 10 years). The Director may also elect to have the lump-sum
payment or the first installment paid (A) on the first business day of
the calendar year immediately following the year in which the Director
ceases to be a Director of the Corporation, (B) on the first business
day of a calendar year which is such number of years following
retirement as the Director may elect, or (C) as soon as practicable
following the Director's death. Except in the case of the Director's
death, in which event paragraph 8 shall govern, subsequent installments
shall be paid on the first business day of each succeeding installment
period until the entire amount credited to the Director's account shall
have been paid. Absent such an election, except in the case of death,
the amount of Non-Elective Deferrals credited to the Director's account
shall be paid on the first business day of the calendar year immediately
following the year in which the Director ceases to be a Director.
(b) Adjustment of Method of Distribution of Future Deferrals. Whether or
not a Director has filed a notice pursuant to paragraph 4(a)(iii) electing to
change the amount of Elective Deferrals to be credited to the Director's
account, a Director participating in the Plan may, prior to the beginning of any
calendar year, file another written notice with the Secretary electing to change
the method of distribution of the aggregate amount of Elective Deferrals
credited to the Director's account for services as a Director commencing with
such calendar year. Amounts credited to the Director's account prior to the
effective date of such change shall not be affected by such change and shall be
distributed only in accordance with the election in effect at the time such
amounts were credited to the Director's account.
(c) Aggregate Amounts. References to the aggregate amounts credited to
the Director's account include accrued amounts equivalent to interest and
dividends.
- 8 -
7. CHANGE IN CONTROL
(a) Conversion of Shares. Notwithstanding anything to the contrary in
the Plan, shares of Common Stock and equivalent shares of Common Stock credited
to a Director's account shall be converted to cash, as soon as practicable
following a Change in Control but in no event later than 90 days after the
Change in Control, in an amount equal to the total number of shares or
equivalent shares of Common Stock, and fractional interests thereof, credited to
the Director's account, multiplied by the Multiplication Factor. 'Multiplication
Factor' shall mean (A) in the case of an acquisition of Common Stock described
in paragraph 7(d)(i), the Acquisition Price per Share, (B) in the event of the
occurrence of an Offer as defined in paragraph 7(d)(ii), the Offer Price per
Share, (C) in the case of an event described in paragraph 7(d)(iii), the Merger
Price per Share, or (D) in the case of a change in the composition of the Board
as described in paragraph 7(d)(iv), the highest Fair Market Value per Share of
the Common Stock for any day during (i) the ninety-day period ending on or
within 89 days following the date of the Change in Control which the Committee,
in its sole discretion, shall select prior to the Change in Control, or (ii) if
the Committee shall not have selected a ninety-day period pursuant to clause (i)
of this sentence prior to the Change in Control, the ninety-day period ending on
the 45th day following the date of the Change in Control. 'Acquisition Price per
Share' shall mean the greater of (A) the highest price per share stated on the
Schedule 13D or any amendment thereto filed by the holder of 30% or more of the
Corporation's voting power which gives rise to the Change in Control, and (B)
the highest Fair Market Value per Share of Common Stock during the ninety-day
period ending on the date the Change in Control occurs. 'Offer Price per Share'
shall mean the greater of (A) the highest price per share of Common Stock paid
in any Offer, which Offer is in effect at any time during the ninety-day period
ending on the date on which the Change in Control occurs, or (B) the highest
Fair Market Value per Share of Common Stock during such ninety-day period. Any
securities or property which are part or all of the consideration paid for
shares of Common Stock in the Offer shall be valued in determining the Offer
Price per Share at the higher of (A) the valuation placed on such securities or
property by the corporation, person or other entity making such Offer or (B) the
valuation placed on such securities or property by the Committee. 'Merger Price
per Share' shall mean the greater of (A) the fixed or formula price for the
acquisition of shares of Common Stock occurring pursuant to such event described
in paragraph 7(d)(iii) if such fixed or formula price is determinable on the
date on which the Change in Control occurs, and (B) the highest Fair Market
Value per Share of Common Stock during the ninety-day period ending on the date
on which the Change in Control occurs. Any securities or property which are part
or all of the consideration paid for shares of Common Stock pursuant to such
event shall be valued in determining the Merger Price per Share at the higher of
(A) the valuation placed on such securities or property by the corporation,
person or other entity which is a party with the Corporation to an event
described in paragraph 7(d)(iii), or (B) the valuation
- 9 -
placed on such securities or property by the Committee. For purposes of this
paragraph (7)(a), 'Fair Market Value per Share of Common Stock' for any day
shall be the mean between the highest and lowest sales prices of Common Stock as
reported on the New York Stock Exchange Composite Tape for such day.
(b) Interest Equivalents. Notwithstanding anything to the contrary in
the Plan, in the event of a Change in Control (i) the Plan may not be amended to
reduce the formulas contained in paragraph 5 which determine the rate at which
amounts equivalent to interest accrue with respect to cash amounts credited to a
Director's account, including cash amounts attributable to the conversion of
shares or equivalent shares in a Director's account pursuant to paragraph 7(a),
and (ii) the Plan Administrator referred to in paragraph 10(c) shall fix rates
under the formulas contained in paragraph 5 in lieu of the Treasurer of the
Corporation.
(c) Payment on a Change in Control. In the event of a Change in Control,
the aggregate amount credited to the Director's account under the Plan shall be
paid in one lump-sum payment as soon as practicable following the Change in
Control but in no event more than 90 days after the Change in Control.
Notwithstanding the foregoing, any election with respect to Pre-1997 Elective
Deferrals in which a Director did not elect a lump-sum payment on a Change in
Control shall remain in effect.
(d) Definition of Change in Control. For purposes of the Plan, a Change
in Control is deemed to occur at the time (i) when any entity, 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) which theretofore beneficially owned less than 30% of the Common
Stock then outstanding acquires shares of Common Stock in a transaction or
series of transactions that results in such entity, person or group directly or
indirectly owning beneficially 30% or more of the outstanding Common Stock, (ii)
of the purchase of shares of Common Stock pursuant to a tender offer or exchange
offer (other than an offer by the Corporation) for all, or any part of, the
Common Stock ('Offer'), (iii) of a merger in which the Corporation will not
survive as an independent, publicly owned corporation, a consolidation, or 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 stockholders 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 discretion, determines to be a Change in
Control for purposes of the Plan.
- 10 -
8. DISTRIBUTION ON DEATH
If a Director should die before all amounts credited to the Director's
account shall have been paid in accordance with the Director's prior elections,
the balance in such account (including all unpaid installments if installment
payments had been elected by the Director under paragraph 6) shall be paid as
soon as practicable following the Director's death to the beneficiary designated
in writing by the Director and filed with the Secretary of the Corporation. The
payable balance shall be paid to the estate of the Director if (a) no such
designation has been made or (b) the designated beneficiary shall have
predeceased the Director and no further designation has been made. A Director
may change the designated beneficiary at any time during the Director's lifetime
by filing a subsequent designation in writing with the Secretary of the
Corporation.
9. PAYMENT IN THE EVENT OF HARDSHIP
Upon receipt of a request from a Director or a Director's designated
beneficiary, delivered in writing to the Secretary, the Committee may cause the
Corporation to accelerate payment promptly of all or any part of the unpaid
balance credited to the Director's account (other than amounts credited as
Lump-Sum Compensation and Non-Elective Deferrals) if it finds in its sole
discretion that continued deferral of such amount would result in hardship to
the Director or the person otherwise entitled to receive it. For this purpose,
'hardship' means an unanticipated financial emergency that is caused by an event
beyond the control of the Director or other person entitled to receive payment
and that would result in severe financial hardship to such person if
acceleration of payment were not permitted.
10. MISCELLANEOUS
(a) The right of a Director to receive any amount credited to the
Director's account shall not be transferable or assignable by the Director,
except by will or by the laws of descent and distribution. To the extent that
any person acquires a right to receive any amount credited to a Director's
account hereunder, such right shall be no greater than that of an unsecured
general creditor of the Corporation. Except as expressly provided herein, any
person having an interest in any amount credited to a Director's account under
the Plan shall not be entitled to payment until the date the amount is due and
payable. No person shall be entitled to anticipate any payment by assignment,
alienation, sale, pledge, encumbrance or transfer in any form or manner prior to
actual or constructive receipt thereof.
(b) The Corporation shall not be required to reserve or otherwise set
aside funds or shares of Common Stock for the payment of its obligations
hereunder. With
- 11 -
respect to Pre-1997 Elective Deferrals, the Corporation shall make available as
and when required a sufficient number of shares of Common Stock to meet the
needs of the Plan. To the extent that registration of such shares under the
Securities Act of 1933 shall be required prior to their resale, the Corporation
undertakes to either file a registration statement relating to such shares or
include such shares in another registration statement to be filed within a
reasonable time.
(c) Prior to a Change in Control, the Committee shall interpret the Plan
and make all determinations deemed necessary or desirable for the Plan's
implementation. The determination of the Committee shall be conclusive. The
Committee may obtain such advice or assistance as it deems appropriate from
persons not serving on the Committee. The Senior Vice President responsible for
Human Resources or other appropriate officer of the Corporation shall, prior to
any Change in Control, name as Plan Administrator any person or entity
(including, without limitation, a bank or trust company). Following a Change in
Control, the Plan Administrator shall interpret the Plan and make all
determinations deemed necessary or desirable for the Plan's implementation. The
determination of the Plan Administrator shall be conclusive. The Corporation
shall provide the Plan Administrator with such records and information as are
necessary for the proper administration of the Plan. The Plan Administrator
shall rely on such records and other information as the Plan Administrator shall
in its judgment deem necessary or appropriate in determining the eligibility of
a Director and the amount payable to a Director under the Plan.
(d) The Board may at any time amend or terminate the Plan provided that
no amendment or termination shall impair the rights of a Director with respect
to amounts then credited to the Director's account.
(e) Each Director participating in the Plan will receive a statement at
least quarterly indicating the amounts credited to the Director's account as of
the end of the preceding calendar quarter.
(f) If adjustments are made to outstanding shares of Common Stock as a
result of stock dividends, split-ups, recapitalizations, mergers, consolidations
and the like, an appropriate adjustment will also be made in the number of
shares or equivalent shares of Common Stock credited to the Director's account.
Deferred Compensation Plan for Non-Employee Directors - AlliedSignal Inc.
Was this helpful?