EXECUTIVE LONG-TERM INCENTIVE COMPENSATION PLAN
HON INDUSTRIES INC.
AS ADOPTED ON APRIL 30, 1984, AMENDED ON NOVEMBER 4, 1986,
RESTATED ON FEBRUARY 5, 1987, AND AMENDED ON
JULY 7, 1988, OCTOBER 29, 1991,
FEBRUARY 14, 1994, MAY 9, 1994, NOVEMBER 14, 1994,
FEBRUARY 13, 1995 AND MAY 8, 1995
1. Purpose of Plan. The purpose of the Plan is to provide reward for
performance and incentive for future endeavor to selected executives who
have major influence on profitability and contribute to the long-term
success of the Company by making them participants in that success, to
focus the attention of executives on the long-range interests of the
shareholders rather than just quarterly or annual profits, and to base the
reward on the performance of the Company rather than the performance of the
stock market.
2. Administration of Plan. The Board of Directors shall have full power to
interpret and administer this Plan from time to time in accordance with the
By-laws of the Company, except to the extent provided in the Company's
Stock-Based Compensation Plan or to the extent that the Board of Directors
may have delegated its powers to the Human Resources and Compensation
Committee (the 'Committee'). Decisions of the Board of Directors or the
Committee, as the case may be, shall be final, conclusive, and binding upon
all parties. (As amended May 8, 1995.)
3. Participants. Any executive of HON INDUSTRIES Inc., or its subsidiaries,
may be selected by the Board of Directors to participate in the Plan, but
the intent is to involve only the few key executives who have major
influence on long-range success and profitability.
4. Form of Awards. Awards under the Plan will be in the form of rights to the
appreciation in value of units of permanent capital assigned to
participants. Awards may be in units of permanent capital applicable to
HON INDUSTRIES Inc., or of any HON INDUSTRIES' division or subsidiary. For
purposes of calculating appreciation hereunder, an award period measured in
calendar years shall be deemed to mean and be the equivalent of the
corresponding Company fiscal year. For purposes of calculating
appreciation hereunder, an award period measured in calendar years shall be
deemed to mean and be the equivalent of the corresponding Company fiscal
year. (As amended February 13, 1995.)
For purposes of the Plan, permanent capital is determined by the Board of
Directors and is generally defined as total assets less current liabilities
(excluding current portions of long-term debt and capital lease obligations
from current liabilities).
The appreciation in value of units of permanent capital assigned to
participants shall be limited in all respects to appreciation resulting
from the earnings of HON INDUSTRIES Inc., or of an applicable HON
INDUSTRIES' division or subsidiary. Appreciation will exclude non-operating
items
such as gains and losses from sales of assets and sales, transfers,
or redemptions of permanent capital.
In determining annual appreciation, no allocations of parent company
expense to operating companies will be made, but parent company charges for
services requested and performed, and parent company costs directly
attributable to operating companies will be made. Local, state, and federal
income taxes; sales taxes; investment tax credits; and other adjustments
are computed and allocated to operating companies on as near an actual
basis as possible. Interest on long-term debt and capital lease obligations
is not deducted from earnings in the determination of appreciation in value
of awards.
Calculation of the appreciation and value of a participant's award
following a change in corporate control shall be made in a manner
consistent with that made by the Corporation prior to the change in
corporate control. (As adopted November 14, 1994.)
5. Grant of Awards. Awards may be made at any time at the discretion of the
Board of Directors.
6. Duration of Awards. Awards may be granted for a period of any length up to
five years, from the designated start of a calendar year. (As amended
October 29, 1991, and February 13, 1995.)
In the event a participant transfers employment (to or from) within HON
INDUSTRIES Inc., or any related division or subsidiary during the term of
an award, such award may be terminated by the Board of Directors and such
award will be paid out in accordance with Section 7 herein, or as otherwise
determined by the Board of Directors. (As amended October 29, 1991.)
7. Payment. Upon final determination at the end of the award period of the
appreciation and value of an award by the Board of Directors, the
appreciation on such award will be paid in cash to the participant in three
annual installments unless (a) the participant requests and the Board
approves a different payout schedule, (b) the participant requests and the
Committee approves payment in shares of Bonus Stock issued under the
Company's Stock-Based Compensation Plan which shares may be issued at the
election of the participant (i) at once, or (ii) in three annual
installments, and (c) the participant is receiving payment following
termination of employment following a change in corporate control, in which
case payment shall be made no later than 90 days following the end of the
year in which such termination takes place. The number of shares of Bonus
Stock to be paid shall be determined by dividing the cash amount of the
award by the average closing prices of a share of the Company's common
stock for the 20 trading days immediately preceding the date of such
payment, with cash paid in lieu of any fractional share. Provision for all
income tax withholding and other employment taxes shall be made pursuant to
Section 5.5 of the Stock-Based Compensation Plan. If a participant is an
officer of the Company, the
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participant's request to receive shares of Bonus Stock under this Paragraph
7 shall not be honored unless it is irrevocable and made in writing
delivered to the Committee at least six months before the award, if any,
would be payable. (As amended May 9, 1994, November 14, 1994, and May 8,
1995.)
If payment is made in cash installments, interest will accrue on any unpaid
balance at the annual interest rate (compounded quarterly) equal to one-
half percentage point below the current prime rate charged by The Northern
Trust Company, Chicago, Illinois, on each interest calculation date.
8. Vesting. An award shall vest on January 1 and shall be payable, together
with interest, on or before February 28 of the calendar year following the
end of the award period. A participant whose employment terminates for any
reason after the end of the award period shall retain rights to payment
under Section 7 of the Plan. (As amended February 13, 1995.)
A participant whose employment terminates before the end of the award
period for any reason other than as specified in the immediately following
paragraph will not retain rights to payment under the Plan. (As amended May
9, 1994 and November 14, 1994.)
A participant whose employment terminates before the end of the award
period for reasons of death, disability, or retirement after age 62, or for
any reason following a change in corporate control, shall retain rights to
payment under Section 7 of the Plan. Payment will be made to such
participant based upon the appreciation and value of such participant's
award through the end of the year in which such termination takes place.
For purposes of this Plan, 'change in corporate control' means (a) the
acquisition by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the 'Exchange Act')) (a 'Person') of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or
more of either (i) the then outstanding shares of common stock of the
Company (the 'Outstanding Company Common Stock') or (ii) the combined
voting power of the then outstanding voting securi ties of the Company
entitled to vote generally in the elec tion of Directors (the 'Outstanding
Company Voting Securi ties'); provided, however, that for purposes of this
subsection (a), the following acquisitions shall not constitute a Change of
Control: (i) any acquisition directly from the Company, (ii) any
acquisition by the Company, (iii) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company or (iv) any acqui sition by any
corporation pursuant to a transaction which complies with clauses (i), (ii)
and (iii) of subsection (c) of this Section 8; or (b) individuals who, as
of the date hereof, constitute the Board (the 'Incumbent Board') cease for
any reason to constitute at least two-thirds of the Board; provided,
however, that any individual becoming a
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Director subsequent to the date hereof whose election, or nomination for
election by the Company's shareholders, was approved by a vote of at least
three-quarters of the Direc tors then comprising the Incumbent Board shall
be considered as though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened election
contest with respect to the election or removal of Directors or other
actual or threatened solicitation of proxies or consents by or on be half
of a Person other than the Board; or (c) consummation of a reorganization,
merger or consolidation or sale or other disposition of all or
substantially all of the assets of the Company (a 'Business Combination'),
in each case, un less, following such Business Combination, (i) all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 50% of,
respectively, the then out standing shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of Directors, as the case may be, of the
corporation resulting from such Business Combination (including, without
limita tion, a corporation which as a result of such transaction owns the
Company or all or substantially all of the Company's assets either directly
or through one or more subsidiaries) in substantially the same proportions
as their ownership, immediately prior to such Business Combination of the
Outstanding Company Common Stock and Outstanding Company Voting Securities,
as the case may be, (ii) no Person (ex cluding any corporation resulting
from such Business Com bination or any employee benefit plan (or related
trust) of the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of the
corporation resulting from such Business Combination or the combined voting
power of the then outstanding voting securities of such corporation except
to the extent that such ownership existed prior to the Business Combination
and (iii) at least a majority of the members of the Board of Directors of
the corporation resulting from such Business Combination were members of
the Incumbent Board at the time of the execution of the initial agreement,
or of the action of the Board, providing for such Business Combination; or
(d) approval by the shareholders of the Company of a complete liquidation
or dissolution of the Company. (As amended November 14, 1994.)
9. Cost. Costs application to the Plan will be allocated between HON
INDUSTRIES Inc. and its divisions and subsidiaries as determined by the
Board of Directors.
10. Participant Rights. A participant shall have no rights under the Plan
unless expressly provided for in Sections 1 through 10. The Plan does not
constitute nor shall it be construed to extend any right of employment
whatsoever to any participant.
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11. Duration of Plan. The Plan may be terminated or amended by the Board of
Directors at its sole discretion at any time. Termination will not cancel
or otherwise affect awards made prior to the termination of the Plan.
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Executive Long-Term Incentive Compensation Plan - HON Industries Inc.
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