HONEYWELL INTERNATIONAL INC.
Severance Plan for Corporate Staff Employees
(Involuntary Termination Following a Change in Control)
Effective February 6, 1988
Amended and Restated as of October 24, 2000
HONEYWELL INTERNATIONAL INC.
Severance Plan for Corporate Staff Employees
(Involuntary Termination following a Change in Control)
Article I Purpose
1.1 The purpose of this Plan is to provide severance benefits to
Corporate Staff Employees of Honeywell International Inc. in the
event of the Involuntary Termination of their employment following
a Change in Control. This Plan constitutes the amendment and
restatement, as of October 24, 2000, of the Severance Plan for
Corporate Staff Employees (Involuntary Termination following a
Change in Control) established by Honeywell International Inc.
(formerly AlliedSignal Inc.) as of February 6, 1988, and amended
and restated effective October 21, 1988 and April 1, 1999.
Article II Definitions
2.1 Affiliated Company - means (a) any member of a controlled group of
corporations as defined in Section 414(b) of the Code of which
Honeywell International Inc. or a predecessor of Honeywell
International Inc. is or was a member, (b) any unincorporated
trade or business which is under common control with Honeywell
International Inc. as determined under Section 414(c) of the Code,
or (c) any organization, employment with which is counted as
employment with Honeywell International Inc. or a predecessor of
Honeywell International Inc. under the provisions of Section
414(m), (n), or (o) of the Code.
2.2 Honeywell International Inc. - means Honeywell International Inc.,
a Delaware corporation, and its subsidiaries, and any successors
thereto.
2.3 Annual Incentive Compensation - means the product of (a) times (b)
where (a) is such employee's target award level under the
Incentive Compensation Plan for Executive Employees of Honeywell
International Inc. and its Subsidiaries, or any successor plan,
for the most recent incentive period ended prior to the Change in
Control, and (b) is Base Salary. Long-term performance incentive
awards shall not be considered in determining Annual Incentive
Compensation.
2.4 Base Salary - means the annual base salary, exclusive of bonus,
incentive or other extra compensation but inclusive of overtime
(in the case of non-exempt Participants), being paid to a
Participant at the time of Involuntary Termination of employment.
2.5 Board of Directors - means the Board of Directors of Honeywell
International Inc.
2.6 Change in Control - is deemed to occur at the time (a) when any
entity, person or group (other than Honeywell International Inc.,
any subsidiary or any savings,
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pension or other benefit plan for the benefit of employees of
Honeywell International Inc.) 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,
(b) of the purchase of shares of Common Stock pursuant to a tender
offer or exchange offer (other than any offer by Honeywell
International Inc.) for all, or any part of, the Common Stock, (c)
of a merger in which Honeywell International Inc. will not survive
as an independent, publicly owned corporation, a consolidation, or
a sale, exchange or other disposition of all or substantially all
of Honeywell International Inc.'s assets, (d) of a substantial
change in the composition of the Board of Directors during any
period of two consecutive years such that individuals who at the
beginning of such period were members of the Board of Directors
cease for any reason to constitute at least a majority thereof,
unless the election, or the nomination for election by the
stockholders of Honeywell International Inc., 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 (e) of any transaction or other event which the
Compensation Committee of the Board of Directors, in its
discretion, determines to be a change in control for purposes of
this Plan.
2.7 Code - means the Internal Revenue Code of 1986, as amended from
time to time.
2.8 Common Stock - means the Common Stock of Honeywell International
Inc. or such other stock into which the Common Stock may be
changed as a result of split-ups, recapitalizations,
reclassifications and the like.
2.9 Corporate Staff Employee - means a salaried or non-union hourly
employee of Honeywell International Inc. employed in Career Bands
1 through 7 who (a) is not associated with a strategic business
unit of Honeywell International Inc. (including Business
Services), and (b) who (i) has a reporting relationship, prior to
a Change in Control, either direct or through one or more other
employees, to one of the then Senior Vice Presidents of Honeywell
International Inc., (ii) prior to a Change in Control, held a
position similar to a position which on April 1, 1999 had a
reporting relationship, either direct or indirect or through one
or more other employees, to one of the then Senior Vice Presidents
of Honeywell International Inc., or (iii) reported prior or
subsequent to a Change in Control directly to the Chairman and
Chief Executive Officer of Honeywell International Inc. or the
President and COO of Honeywell International Inc. Corporate Staff
Employee shall not include any 1988 Plan Employee.
2.10 ERISA - means the Employee Retirement Income Security Act of 1974,
as amended from time to time.
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2.11 Gross Cause - means fraud, misappropriation of Honeywell
International Inc. property or intentional misconduct damaging to
such property or business of Honeywell International Inc., or the
commission of a crime.
2.12 Hour of Service - means each hour for which a Participant is
directly or indirectly paid by Honeywell International Inc., a
predecessor of Honeywell International Inc. or an Affiliated
Company for performance of duties and for reasons other than
performance of duties and includes regular time, overtime,
vacations, holidays, sickness, disability, paid layoff, and
similar paid periods. Hours of Service shall be computed and
credited in accordance with Department of Labor Regulation Section
2530.200b-2(b) and (c), as amended from time to time.
2.13 Involuntary Termination - means (a) termination by Honeywell
International Inc. of the Participant's employment during the
Protected Period, other than upon mandatory retirement in
compliance with applicable law, death or for Gross Cause, or (b)
termination of employment by a Participant during the Protected
Period following (i) a reduction in the Participant's Pay or
employee benefits other than a reduction which is generally
applicable to all salaried and non-union hourly employees of
Honeywell International Inc., (ii) permanent elimination of the
Participant's position, not including transfer pursuant to the
sale of a facility or line of business in which the Participant is
offered substantially comparable employment with the new employer,
(iii) a material change in the position, function,
responsibilities or reporting level or in the standard of
performance required of the Participant, (iv) any geographic
relocation of a Participant's position (as determined immediately
prior to a Change in Control) to a new location, or (v) an action
by Honeywell International Inc. that under applicable law
constitutes constructive discharge.
2.14 1988 Plan Employee - means an individual who (i) met the
definition of Corporate Staff Employee under the Plan immediately
prior to its amendment and restatement on April 1, 1999 (the "1988
Plan Definition"), (ii) who ceased to meet the Plan's definition
of Corporate Staff Employee solely by reason of the April 1, 1999
amendment of such definition, and (iii) satisfies the 1988 Plan
Definition as of the Change in Control. 1988 Plan Employees shall
have their benefits, if any, determined solely with reference to
the Plan as amended and restated effective October 21, 1988, a
copy of which is attached hereto as Exhibit A.
2.15 Participant - means a Corporate Staff Employee.
2.16 Pay - means Base Salary and, as to a Participant employed in Band
5 or above, Annual Incentive Compensation.
2.17 Plan - means the Honeywell International Inc. Severance Plan for
Corporate Staff Employees (Involuntary Termination Following a
Change in Control).
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2.18 Plan Administrator - means the person or entity identified in
Section 5.01 to administer the terms and conditions of the Plan.
2.19 Plan Sponsor - means Honeywell International Inc. Any successor to
Honeywell International Inc. (or a principal subsidiary) shall be
deemed a Plan Sponsor.
2.20 Protected Period - means, with respect to each Participant, the
period beginning on the date of a Change in Control that occurs
after he or she becomes a Participant and ending at the expiration
of twenty-four (24) months following such Change in Control.
2.21 Year of Service - means any consecutive 12-month period commencing
on a Participant's date of hire or rehire with Honeywell
International Inc., any predecessor of Honeywell International
Inc. or an Affiliated Company, and anniversaries thereof during
which the Participant has completed at least 1,000 Hours of
Service.
Article III Participation
3.1 The benefits provided under the Plan are limited solely to
Participants.
Article IV Eligibility for and Continuation of Pay, Benefits and Pension
Service
4.1 Eligibility for Pay, Benefit and Pension Service Continuation
In the event of the Involuntary Termination of a Participant's
employment during the Protected Period, Pay, benefit and pension
service continuation shall be provided to the Participant by
Honeywell International Inc. (or any successor to Honeywell
International Inc.) in accordance with this Article IV.
4.2 Pay, Benefit and Pension Service Continuation
A) Pay Continuation - A Participant shall receive Base Salary,
paid in accordance with his or her normal payroll period,
and, as to Participants employed in Career Band 5 or above,
Annual Incentive Compensation, paid annually, for the period
specified in Schedule A attached hereto.
B) Benefit Continuation - For the period of Pay continuation,
Honeywell International Inc. will continue the Participant's
employee benefits, including, without limitation, vacation
accruals, continuation of the Participant's savings plan
participation (to the extent permissible under Section
401(a) of the Code), basic and contributory life and medical
insurance (including qualified dependents) at the active
employee coverage level and prevailing employee contribution
rate, if any; provided, however, that (a) such level of
continued benefits shall not exceed the level of benefits in
effect on the date of the Participant's Involuntary
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Termination, prior to any reduction thereto, (b) such
continuation of life and medical benefits will cease on the
date similar benefits are provided the Participant by a
subsequent employer, and (c) the executive flex-perk
allowance will be continued during the entire severance pay
period, subject to 4.2(D).
C) Pension Service Continuation - Participants entitled to
benefits under the Plan shall become 100% vested in their
defined benefit pension plan benefits (all defined benefit
plans in which a Participant has accrued a benefit are
collectively referred to as the "DB Plans"). During their
Pay continuation period, Participants shall continue to be
credited with additional age and service credit for purposes
of benefit accrual (up to a maximum of twelve (12) months of
a Participant's Pay continuation period), vesting and
eligibility under the DB Plans in which they participate. At
the end of a Participant's Pay continuation period,
Participants shall immediately be credited with three (3)
years of age and service, respectively, for purposes of
benefit accruals, vesting and eligibility under the DB
Plans; provided, however, that such three (3) years of
additional age shall be credited only if such additional age
credits would (either alone or in conjunction with a bridge
leave of absence) enable a Participant to be eligible for
immediate payment of an early or normal retirement benefit
under the applicable defined benefit pension plan in which
the Participant participates. The normal policy for
qualifying bridge leaves of absence, as reflected in the
applicable defined benefit pension plan in which the
Participant participates, shall remain applicable
thereafter. Notwithstanding the foregoing, a Participant
shall be eligible for the additional three (3) years of age
and service credit under the DB Plans only if such
Participant executes a general release of claims against
Honeywell International Inc., its subsidiaries and
affiliates in a form and manner prescribed by the Plan
Administrator.
D) If any payment to a Participant made pursuant to the terms
of this Plan (including payments from any benefit or
compensation plan or program sponsored or funded by
Honeywell International Inc. but excluding payments and
benefits provided upon a change in control under the
AlliedSignal Severance Plan for Senior Executives, Honeywell
Inc. Tier 1A and Tier 1B agreements, and any similar plan or
arrangement under which participants have their benefits
increased because of taxes under Section 4999 of the Code)
is determined to be an "excess parachute payment" within the
meaning of Section 280G or any successor or substitute
provision of the Code, with the effect that either the
Participant is liable for the payment of the tax described
in Section 4999 or any successor or substitute provision of
the Code (hereafter the "Section 4999 tax") or Honeywell
International Inc. has withheld the amount of the Section
4999 tax, an additional benefit shall be paid pursuant to
this Plan
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to such affected Participant, in an amount, which when added
to all payments constituting "parachute payments" for
purposes of Section 280G or any successor or substitute
provision of the Code, is sufficient to cause the remainder
of (i) the sum of the "parachute payments", including any
payments made pursuant to this subparagraph D), less (ii)
the amount of all state, local and federal income taxes and
the Section 4999 tax attributable to such payments and
penalties and interest on any amount of Section 4999 tax,
other than penalties and interest on any amount of Section
4999 tax with respect to which such payment was paid to the
Participant on or before the due date of the Participant's
federal income tax return on which such Section 4999 tax
should have been paid, to be equal to the remainder of (iii)
sum of the "parachute payments", excluding any payments made
pursuant to this subparagraph D), less (iv) the amount of
all state, local and federal income taxes attributable to
such payments determined as though the Section 4999 tax and
penalties and interest on any amount of Section 4999 tax,
other than penalties and interest on any amount of Section
4999 tax with respect to which a payment made pursuant to
this subparagraph D) was paid to the Participant on or
before the due date of the Participant's federal income tax
return on which such Section 4999 tax should have been paid,
did not apply. Notwithstanding the foregoing, payments to be
made pursuant to this subparagraph D), when added to
benefits provided under Section 4.2.B)(c), shall not in the
aggregate exceed three million dollars ($3,000,000) or such
greater amount as approved by Honeywell International Inc.
or its successor. In the event such payments exceed the
limitation described above, the designation of the type and
order of such payments to be reduced hereunder shall be made
by the Plan Administrator in his sole discretion. In such
case, a Participant shall, to the extent otherwise allowable
by law, be entitled to waive all or any portion of his or
her right to any benefit triggered by a Change in Control in
order to avoid the imposition of any tax under Section 4999
of the Code or any successor or substitute provision of the
Code.
4.3 Benefit Limitations
To avoid duplication of benefits, the amount of any similar
benefits under this Plan shall be offset and reduced by the amount
of any similar benefit provided the Participant under other
severance plans sponsored by Honeywell International Inc. for
which the Participant may be eligible, regardless of whether the
payments under this Plan are made at an earlier or a later date
than payments under a similar plan would have been made. In
addition, notwithstanding any plan provisions to the contrary, to
the extent a Participant who was a former employee of Honeywell
Inc. would be eligible for benefits under both this Plan and
another severance plan sponsored by Honeywell Inc., such
Participant shall only be entitled to benefits
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under this Plan to the extent such Participant waives his or her
rights to benefits under such other severance plan.
Article V Administration
5.1 Plan Administrator
Prior to the occurrence of a Change in Control, Honeywell
International Inc.'s Vice President-Worldwide Human Resources
shall be the Plan Administrator within the meaning of ERISA
Section 3(16)(A), and the named fiduciary within the meaning of
ERISA Section 402. In the event of an impending Change in Control,
Honeywell International Inc.'s Vice President-Worldwide Human
Resources shall appoint a person independent of Honeywell
International Inc. or persons operating under its control or on
its behalf (hereafter, the "Corporation") to be the new Plan
Administrator effective upon the occurrence of a Change in Control
and the Vice President-Worldwide Human Resources shall immediately
provide to the new Plan Administrator such information with
respect to each Participant as shall be necessary to enable the
new Plan Administrator to determine the amount of any benefit
which is then or may thereafter become payable to such
Participant.
5.2 Powers and Duties of Plan Administrator.
Except as otherwise provided in this Section, the Plan
Administrator shall have the full discretionary power and
authority to (i) determine the amount and timing of any benefit
payable under the Plan, (ii) construe and interpret the Plan
(including, without limitation, supplying omissions from,
correcting deficiencies in, or resolving inconsistencies or
ambiguities in, the language of the Plan), (iii) determine all
questions of fact arising under the Plan, including questions as
to eligibility for and the amount of benefits, (iv) establish such
rules and regulations (consistent with the terms of the Plan) as
it deems necessary or appropriate for administration of the Plan,
(v) delegate responsibilities to others to assist it in
administering the Plan, and (vi) perform all other acts it
believes reasonable and proper in connection with the
administration of the Plan. The Plan Administrator shall be
entitled to rely on the records of the Corporation in determining
any Participant's entitlement to and the amount of benefits
payable under the Plan.
5.3 Benefit Claims and Appeals.
Any request or claim for Plan benefits shall be deemed to be filed
when a written request is made by the claimant or the claimant's
authorized representative which is reasonably calculated to bring
the claim to the attention of the Plan Administrator.
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The Plan Administrator shall provide notice in writing to any
claimant when a claim for benefits under the Plan has been
denied in whole or in part. Such notice shall be provided
within 90 days of the receipt by the Plan Administrator of the
claimant's claim or, if special circumstances require, and the
claimant is so notified in writing, within 180 days of the
receipt by the Plan Administrator of the claimant's claim. The
notice shall be written in a manner calculated to be
understood by the claimant and shall:
(i) set forth the specific reasons for the denial
of benefits;
(ii) contain specific references to Plan provisions
relative to the denial;
(iii) describe any material and information, if any,
necessary for the claim for benefits to be
allowed, that had been requested, but not
received by the Plan Administrator; and
(iv) advise the claimant that any appeal of the Plan
Administrator's adverse determination must be
made in writing to the Plan Administrator
within 60 days after receipt of the initial
denial notification, and must set forth the
facts upon which the appeal is based.
If notice of the denial of a claim is not furnished within the
time periods set forth above, the claim shall be deemed denied and
the claimant shall be permitted to proceed to the review
procedures set forth below. If the claimant fails to appeal the
Plan Administrator's denial of benefits in writing and within 60
days after receipt by the claimant of written notification of
denial of the claim (or within 60 days after a deemed denial of
the claim), the Plan Administrator's determination shall become
final and conclusive.
If the claimant appeals the Plan Administrator's denial of
benefits in a timely fashion, the Plan Administrator shall
re-examine all issues relevant to the original denial of benefits.
Any such claimant or his or her duly authorized representative may
review any pertinent documents, as determined by the Plan
Administrator, and submit in writing any issues or comments to be
addressed on appeal.
The Plan Administrator shall advise the claimant and such
individual's representative of its decision, which shall be
written in a manner calculated to be understood by the claimant,
and include specific references to the pertinent Plan provisions
on which the decision is based. Such response shall be made within
60 days of receipt of the written appeal, unless special
circumstances require an extension of such 60-day period for not
more than an additional 60 days. Where such extension is
necessary, the claimant shall be given written notice of the
delay. If the decision on review is not furnished within the time
set forth above, the claim shall be deemed denied on review.
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5.4 Plan Year
The plan year shall be the calendar year.
5.5 Indemnification.
To the extent permitted by law, the Corporation shall indemnify
the Plan Administrator from all claims for liability, loss, or
damage (including payment of expenses in connection with defense
against such claims) arising from any act or failure to act in
connection with the Plan.
Article VI Unfunded Obligation.
6.1 All benefits payable under this Plan shall constitute an unfunded
obligation of the Corporation. Payments shall be made, as due,
from the general funds of Corporation. This Plan shall constitute
solely an unsecured promise by the Corporation to pay severance
benefits to participants to the extent provided herein.
Article VII Inalienability of Benefits.
7.1 No Participant shall have the power to transfer, assign,
anticipate, mortgage or otherwise encumber any rights or any
amounts payable under this Plan; nor shall any such rights or
amounts payable under this Plan be subject to seizure, attachment,
execution, garnishment or other legal or equitable process, or for
the payment of any debts, judgments, alimony, or separate
maintenance, or be transferable by operation of law in the event
of bankruptcy, insolvency, or otherwise. In the event a person who
is receiving or is entitled to receive benefits under the Plan
attempts to assign, transfer or dispose of such right, or if an
attempt is made to subject such right to such process, such
assignment, transfer or disposition shall be null and void.
Nothing in this Section 7.1 shall prevent a Participant from
waiving all or any portion of any benefit triggered by a Change in
Control in accordance with Section 4.2.D).
Article VIII Withholding
8.1 The Corporation shall have the right to withhold any taxes
required to be withheld with respect to any payments due under
this Plan.
Article IX Amendment or Termination.
9.1 Plan Amendments - The Board of Directors reserves the right to
amend the Plan from time to time prior to a Change in Control.
However, no amendment shall
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reduce any benefit being paid or then payable to a Participant.
Further, no amendment shall reduce the benefits provided by the
Plan to persons who were Participants as of the date of such
amendment or adversely affect in any manner the rights of persons
who were Participants as of the date of such amendment to benefits
provided under this Plan. This Plan may not be amended or
terminated after a Change in Control; provided, however, the Plan
may be amended if the purpose of the amendment is to increase
benefits hereunder.
Notwithstanding anything in this Plan to the contrary, the Vice
President-Worldwide Human Resources shall be permitted to amend
the Plan to reflect changes in Honeywell International Inc.'s
organization; provided, however, that no such amendment (i) shall
increase or decrease benefits under the Plan, or (ii) increase the
total number of Participants by more than five percent (5%) during
any twelve month period.
9.2 Plan Termination - The Board of Directors reserves the right to
terminate the Plan. However, such termination shall not adversely
affect the rights of persons who were Participants as of the date
of such termination.
Article X. Plan Not a Contract of Employment; Honeywell International Inc.'s
Policies Control.
10.1 Nothing contained in this Plan shall give an employee the right to
be retained in the employment of Honeywell International Inc..
This Plan is not a contract of employment between Honeywell
International Inc. and any employee. Any dispute involving issues
of employment, other than claims for benefits under this Plan,
shall be governed by the appropriate employment dispute resolution
policies and procedures of Honeywell International Inc..
Article XI Action by the Honeywell International Inc.
11.1 Unless expressly indicated to the contrary herein, any action
required to be taken by Honeywell International Inc. may be taken
by action of its Board of Directors or by any appropriate officer
or officers traditionally responsible for such determination or
actions, or such other individual or individuals as may be
designated by the board of directors or any such officer.
Article XII Governing Law
12.1 The Plan is an employee welfare benefit plan within the meaning of
Section 3(1) of ERISA, and will be construed in accordance to
ERISA's requirements.
Article XIII Severability
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13.1 If any provision of this Plan shall be held illegal or invalid for
any reason, said illegality or invalidity shall not affect the
remaining parts of this Plan, but this Plan shall be construed and
enforced as if said illegal or invalid provision had never been
included herein.
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SCHEDULE A
Severance Plan for Corporate Staff Employees - Honeywell International Inc.
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