AlliedSignal Inc. Severance Plan
For Senior Executives
Restated
as of
1/1/94
PART I
GENERAL PROVISIONS
ARTICLE I -- PURPOSE AND AUTHORITIES
1.01 The purpose of this Plan is to provide for the payment of severance related benefits to selected
employees of AlliedSignal Inc. and its subsidiaries in the event of an involuntary Termination.
1.02 This Plan is comprised of Part I -- general provisions relating to the operation of the Plan and Part
II -- special provisions which become effective only upon Change in Control.
1.03 As set forth herein, this Plan constitutes an amendment and restatement as of January 1, 1994, of the
Severance Plan for Senior Executives established by Allied Corporation on March 31, 1983 and amended and
restated by AlliedSignal Inc. as of April 25, 1988, January 1, 1990 and April 29, 1991.
1.04 This Plan was established and has been amended and restated by Allied Corporation and its successor
AlliedSignal Inc. by authority of the respective Boards of Directors as set forth in resolutions dated
March 31, 1983, April 25, 1988 , December 15, 1989, April 29, 1991 and February 4, 1994.
1.05 This Plan is intended to be an unfunded plan for a select group of management and highly compensated
employees.
1.06 Interpretation of this Plan and the effect of its provisions shall be governed by the laws of the State
of New Jersey.
1.07 If any provision of this Plan is held illegal or invalid for any reason, the other provisions of this
Plan shall not be affected.
ARTICLE II -- DEFINITIONS
2.01 AlliedSignal -- means AlliedSignal Inc., a Delaware corporation and its subsidiaries.
2.02 Annual Base Salary -- means an amount equal to the product of Base Salary and twelve.
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2.03 Annual Incentive Compensation -- Except as provided in Section 8.01, means
(A) For employees who either become Participants after April 29, 199l or who are Participants as of
April 29, 1991, are not in pay status and elect prior to June 30, 1991 to have Annual Incentive
Compensation calculated based on the following formula, the product of (a) times (b) where (a) is the
target percentage which would be utilized in determining the Incentive Award for the Participant in the
calendar year in which Participant's Involuntary Termination occurs and (b) is Annual Base Salary.
2.04 Base Salary -- means the monthly base salary payable to a Participant at the highest rate in effect
during any of the thirty-six months preceding Involuntary Termination.
2.05 Board of Directors means the Board of Directors of AlliedSignal.
2.06 Career Band -- means the salary and position classification adopted by AlliedSignal for use after
January 1, 1994.
2.07 Change in Control -- is deemed to occur at the time (i) when any entity, person or group (other than
AlliedSignal, any subsidiary or any savings, pension or other benefit plan for the benefit of employees
of AlliedSignal 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 AlliedSignal) for all, or any part of, the Common Stock, (iii) of
a merger in which AlliedSignal will not survive as an independent, publicly owned corporation, a
consolidation, or a sale, exchange or other disposition of all or substantially all of AlliedSignal's
assets, (iv) 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 shareowners of AlliedSignal, 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 Management Development and
Compensation Committee of the Board of Directors, in its discretion, determines to be a change in
control for purposes of this Plan.
2.08 Code -- means the Internal Revenue Code of 1986, as amended from time to time.
2.09 Common Stock -- means the Common Stock of AlliedSignal or such other stock into which the Common Stock
may be changed as a result of split-ups, recapitalizations, reclassifications and the like.
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2.10 Determination Year -- means a calendar year within which performance is measured for purposes of
determining the amount of Incentive Awards payable for that year.
2.11 Effective Date -- means March 31, 1983.
2.12 Gross Cause -- Except as provided in Section 8.02, means conduct by a Participant which is fraud,
misappropriation of AlliedSignal property or intentional misconduct damaging to such property or
business of AlliedSignal, or the commission of a crime.
2.13 Incentive Award -- means an Incentive Compensation Award or any other annual incentive award determined
under the Incentive Compensation Plan for Executive Employees of AlliedSignal Inc. and its Affiliates
and any predecessor or successor plan but shall not include any Performance Improvement Award or any
other long-term incentive award under any such plan.
2.14 Involuntary Termination -- Except as provided in Section 8.04, means severance of the employment
relationship at AlliedSignal's initiative for reasons other than death or Gross Cause. Notwithstanding
the preceding sentence, in the event of a sale or transfer of a facility or line of business that causes
a severance of the employment relationship with AlliedSignal, an Involuntary Termination shall be deemed
to have occurred only if the Participant is not offered substantially comparable employment with the new
employer, all as determined by the Named Fiduciary, in his or her sole discretion.
2.15 Named Fiduciary -- means the person defined in Sections 5.01 and 11.01.
2.16 (a) Participant -- means an Existing Participant, an Officer Participant or a New Participant.
(b) Existing Participant -- Except as further defined in Section 3.01, means an individual who, on July
1, 1993, was an employee of AlliedSignal in Salary Grade 20 or above or an employee of any other Plan
Sponsor who had adopted the Plan with respect to the employee and the employee was on that date in a
position comparable to a position with AlliedSignal of Salary Grade 20 or above.
(c) Officer Participant -- Except as further defined in Section 3.01, means an individual (other than an
Existing Participant) who is an officer of AlliedSignal as determined by the Named Fiduciary in his or
her sole discretion.
(d) New Participant -- Except as further defined in Section 3.01, means an individual (other than an
Existing Participant) who is employed by AlliedSignal in a position evaluated in Career Band 6 or above
or employed by another Plan Sponsor who has adopted the Plan with respect to the employee in a position
comparable to a position with AlliedSignal of Career Band 6 or above, all as determined by the Named
Fiduciary in his or her sole discretion.
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2.17 Plan -- means the AlliedSignal Inc. Severance Plan for Senior Executives.
2.18 Plan Administrator -- means AlliedSignal or such other entity or person as AlliedSignal may designate to
administer the terms and conditions of the Plan.
2.19 Plan Sponsor -- means AlliedSignal, any successor to or affiliate of AlliedSignal (or a principal
subsidiary) including, but only following Change in Control, any other person, organization or entity
that agrees in writing to be a Plan Sponsor for a period of time which extends at least throughout the
two-year period following Change in Control.
2.20 Pro Rata Factor -- means, (i) for the Determination Year in which Involuntary Termination occurs, a
fraction the numerator of which is equal to the number of calendar months which have elapsed from the
first day of the calendar month following Involuntary Termination through December 31st of the
Determination Year and the denominator of which is twelve, and (ii) for any subsequent Determination
Year shall mean a fraction, the numerator of which is equal to the Severance Pay Factor, reduced by the
number of calendar months which have elapsed from the first day of the calendar month following
Involuntary Termination through December 31st of the year preceding the Determination Year and the
denominator of which is twelve. Provided, however, that the Pro Rata Factor shall never be greater than
1.0.
2.21 Salary Grade -- means the salary and position classification used by AlliedSignal prior to January 1,
1994 or any comparable salary and position classification used by any other Plan Sponsor.
2.22 Severance Pay Factor -- means, with respect to any Participant, the relevant factor specified in Section
4.02.
2.23 Severance Period -- means the period, commencing on the first day of the first month following
Involuntary termination, which is comprised of the number of consecutive months equal to the lesser of
(i) the Severance Pay Factor or (ii) the number of months occurring before the first day of the month
following the Participant's attainment of age 65 or, if later, eligibility to receive an unreduced
retirement benefit under a plan or program maintained by a Plan Sponsor.
ARTICLE III -- PARTICIPATION
3.01 An employee of a Plan Sponsor who is at any time a Participant shall continue to be a Participant in the
Plan until the employment relationship with the Plan Sponsor is severed for reasons other than an
Involuntary Termination, or if earlier in time, the employee ceases to be employed in a position
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equivalent to Career Band 6 or above. Provided, however, that any employee who ceases to be employed in
a position equivalent to Career Band 6 or above on or after Change in Control shall nevertheless
continue to be a Participant in the Plan.
3.02 A Participant in the Plan who is at any time the subject of an Involuntary Termination and, therefore,
entitled to benefits under Article IV shall continue to be a Participant until all of the benefits for
which he or she is entitled under Article IV, as of the date of his or her Involuntary Termination, have
been paid.
ARTICLE IV -- BENEFITS
4.01 Eligibility for Pay, Benefit and Pension Service Continuation -- A Participant who is the subject of an
Involuntary Termination shall receive the benefits described in this Article IV.
4.02 Pay, Benefit and Pension Service Continuation for Existing Participants
(A) Pay Continuation
(i) An Existing Participant shall receive a benefit in an amount equal to his or her
Base Salary multiplied by the relevant Severance Pay Factor determined as follows:
SALARY GRADE AS
OF SEVERANCE PAY
JULY 1, 1993 FACTOR
--------------- -------------
20 and 21 18
22 and 23 24
24 and above 36
provided, however, that the Severance Pay Factor of an Existing Participant, whose Salary Grade is
reduced after a Change in Control, shall not be reduced.
(ii) An Officer Participant shall receive a benefit in an amount equal to his or her Base Salary multiplied
by a Severance Pay Factor of 18.
(iii) A New Participant shall receive a benefit in an amount equal to his or her Base Salary
multiplied by a Severance pay factor of 12.
(B) Annual Incentive Compensation -- An Existing Participant or an Officer Participant shall receive a
benefit in an amount equal to Annual Incentive Compensation multiplied by the relevant Pro Rata
Factor. The Pro Rata Factor shall be determined for the calendar year in which Involuntary
Termination occurs and each
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calendar year thereafter through the end of the calendar year in which the Severance Period ends.
(C) Benefit Continuation -- For the Severance Period, the Plan Sponsor will continue the Participant's
employee benefits, including, without limitation, continuation of the Participant's savings plan
participation (to the extent permissible under Section 401(a) of the Code) and 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, (i) that such
level of continued benefits shall not exceed the level of benefits in effect on the date of the
Participant's Involuntary Termination, (ii) that such continuation of benefits will cease on the
date similar benefits are provided the Participant by a subsequent employer, (iii) executive
perquisites, such as automobiles or memberships, will be governed by the terms of the particular
program, and (iv) that no employee benefit shall be continued for a longer period of time than that
provided by the terms of the controlling employee benefit plan applicable to the Participant on the
date of the Participant's Involuntary Termination.
(D) Pension Service Continuation -- Except as otherwise provided by an applicable pension plan, and,
subject to the requirements for qualification of Section 401(a) of the Code, only the first twelve
(12) months of the Severance Period, Pay Continuation and Annual Incentive Compensation will be
recognized for purposes of the vesting and pension calculation provisions of the AlliedSignal
Retirement Program or any other plan sponsored by a Plan Sponsor and in which the Participant
participates. The normal policy for qualifying leaves remains applicable thereafter.
4.03 Benefit Limitations
(A) Except as provided in paragraph (B) of this Section 4.03, any benefit determined to be payable to a
Participant under any other severance plan sponsored or funded by a Plan Sponsor shall be reduced by
the amount of any similar benefit payable to the Participant under the Plan (excluding any benefit
payable under Section 9.01) regardless of whether the benefit determined under the Plan is payable
at an earlier or a later date than payments under such other severance plan.
(B) Any benefit determined to be payable under the Plan, except any benefit payable under Section 9.01,
to a Participant who was not eligible to participate in this Plan prior to April 25, 1988 will be
reduced to the extent of any duplication of benefits between the Plan and any benefits that may be
payable to the Participant under arrangements existing prior to April 25, 1988.
4.04 Benefit Payments -- Except as provided in Sections 10.01 and 10.02, the benefit described in Section
4.02(A) shall be paid in equal monthly installments during the Severance Period, and the benefit
described in Section 4.02(B) shall be paid annually
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as soon after the end of the Determination Year as is practical. No benefit shall be payable under
Section 4.02(B) for any Determination Year with respect to which the Pro Rata Factor is less than or
equal to zero.
4.05 Forfeiture of Benefits -- Notwithstanding anything to the contrary in the Plan and except as provided in
Section 10.03, a Participant receiving benefits or entitled to receive benefits under the Plan shall
cease to receive such benefits under the Plan and the right to receive any benefits in the future under
the Plan shall be forfeited, in the event the Participant, as determined by the Named Fiduciary, (i) is
convicted of a felony, (ii) commits any fraud or misappropriates property, proprietary information,
intellectual property or trade secrets of AlliedSignal or any successor thereto for personal gain or
for the benefit of another party, (iii) actively recruits and offers employment to any management
employee of AlliedSignal or any successor thereto, or (iv) engages in intentional misconduct
substantially damaging to the property or business of AlliedSignal or any successor thereto.
4.06 Payment of Benefits Upon Incompetence or Death -- In the event the Named Fiduciary is presented with
evidence satisfactory to it that a Participant receiving benefits or entitled to receive benefits is
adjudged to be legally incompetent, the remainder of such Participant's unpaid benefits shall be paid to
the Participant's conservator, legal representative or any other person deemed by the Named Fiduciary to
have assumed responsibility for the maintenance of such person receiving or entitled to receive
benefits. In the event a Participant receiving benefits or entitled to receive benefits dies, the
remainder of such Participant's unpaid benefits shall be paid to the Participant's designated
beneficiary. A Participant may designate a beneficiary in the form and manner prescribed by the Named
Fiduciary. Any designation of a beneficiary may be revoked by filing a later designation or revocation.
In the absence of an effective designation of a beneficiary by a Participant or upon the death of all
beneficiaries on or before a Participant's death, the remainder of the Participant's unpaid benefits
shall be paid to the Participant's spouse or, if none, to the Participant's estate. Any payment made
pursuant to this Section 4.06 shall be a discharge of any liability under the Plan therefor.
ARTICLE V -- ADMINISTRATION
5.01 Authorities. Except as provided in Section 11.01, the Plan shall be administered by AlliedSignal acting
through a Named Fiduciary who shall have the powers and authorities as described in this Section. The
Named Fiduciary shall be the Senior Vice President-Human Resources, or such other person as the Board of
Directors may appoint, and he shall have full discretionary authority to manage and control the
operation and administration of the Plan, including the power to interpret provisions of the Plan,
promulgate regulations, determine benefit eligibility, delegate his powers and duties hereunder and take
such other action as may be necessary to implement the provisions of the Plan.
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The Named Fiduciary may retain attorneys, consultants, accountants or other persons (who may be
employees of AlliedSignal) to render advice and assistance and may delegate any of the authorities
conferred on him under this Plan to such persons as he shall determine to be necessary to effect the
discharge of his duties hereunder. The Named Fiduciary, AlliedSignal and its officers and directors
shall be entitled to rely upon the advice, opinions and determinations of any such persons. Any exercise
of the authorities set forth in this Section, whether by the Named Fiduciary or his delegee, shall be
final and binding upon AlliedSignal and the Participants.
5.02 Benefit Claims. Except as provided in Sections 11.03, 11.04 and 11.05, all claims for benefit payments
under the Plan shall be submitted in writing by Participants to the person designated by the Named
Fiduciary to make determinations as to eligibility for benefits under the Plan and such person shall
notify the Participant in writing within 60 days after receipt as to whether the claim has been granted
or denied. In the event the claim is denied, such notice shall (i) set forth the specific reason or
reasons for denial, (ii) make reference to the pertinent Plan provisions on which the denial is based,
(iii) describe any additional material or information necessary before the Participant's request may be
acted upon favorably, and (iv) explain the procedure for appealing the adverse determination.
5.03 Benefit Appeals. Except as provided in Sections 11.04, 11.05 and 11.06, a Participant whose claim for
benefits has been denied may, within 60 days of receipt of any adverse benefit determination, appeal
such denial to the Named Fiduciary. All appeals shall be in the form of a written statement and shall
(i) set forth all of the reasons in support of favorable action on the appeal, (ii) identify those
provisions of the Plan upon which the claimant is relying, and (iii) include copies of any other
documents or other materials which may support favorable consideration of the claim. The Named Fiduciary
shall decide the issues presented within 60 days after receipt of such request, but this period may be
extended for up to an additional 60 days in unusual cases provided that written notice of the extension
is furnished to the claimant prior to the commencement of the extension. The decision of the Named
Fiduciary shall be set forth in writing, include specific reasons for the decision, refer to pertinent
Plan provisions on which the decision is based, and shall be binding on all persons affected thereby.
ARTICLE VI -- PLAN AMENDMENTS
6.01 AlliedSignal reserves the right to amend the Plan from time to time subject only to the limitations set
forth in this Section. No amendment shall have the effect of reducing a benefit that would otherwise be
payable to an employee who is a Participant on the date any such amendment is made.
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PART II
SPECIAL PROVISIONS
WHICH BECOME EFFECTIVE ONLY UPON CHANGE IN CONTROL
ARTICLE VII -- CHANGE IN CONTROL
7.01 The provisions of this Part II become effective upon Change in Control and, in addition to the
provisions of Part I that are not superseded by provisions of this Part II, shall control (i) the
determination of eligibility for, the amount of, and the time of payment of benefits under the Plan to
any Existing Participant or Officer Participant who is the subject of an Involuntary Termination which
occurs within the two year period following the Change in Control, (ii) the terms of payment for any
Existing Participant or Officer Participant whose Severance Period extends beyond the Change in Control
and (iii) the determination of eligibility for, the amount of, and the time of payment of benefits under
Article IX of the Plan to any Existing Participant or Officer Participant.
7.02 Without derogation to the effect the provisions of this Part may have on the determination of any
Participant's eligibility for benefits under the Plan or the amount of such benefits, it is intended
that this Part will assure that the purposes of this Plan, as they may affect Existing Participants and
Officer Participants will not be adversely affected by the unique circumstances which may exist
following Change in Control. The provisions of this Part will have no effect whatsoever prior to a
Change in Control.
ARTICLE VIII -- DEFINITIONS
8.01 Annual Incentive Compensation -- Notwithstanding the provisions of Section 2.03, means the product of
Annual Base Salary and the greater of (i) the target percentage utilized in determining Incentive Awards
as in effect for employees within the same Salary Grade as the Participant for the Determination Year
preceding Change in Control or (ii) the average of the percentages applied in determining the
Participant's Incentive Award in the last three Determination Years prior to the date of Involuntary
Termination (or such lesser period as the Participant may have been employed).
8.02 Gross Cause -- Notwithstanding the provisions of Section 2.11, means any act or acts constituting a
felony committed against a Plan Sponsor, its property or business.
8.03 Good Reason -- means any one or more of the following:
(A) A material change in the Participant's duties and responsibilities as they existed in the period
immediately preceding Change in Control.
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(B) Any significant reduction in Base Salary or Annual Incentive Compensation.
(C) Any significant reduction in benefit coverages available to the Participant under AlliedSignal's
medical benefit plans for active employees or comparable medical benefit plans of any other Plan
Sponsor or any significant increase in premiums to be paid by the Participant for such benefits.
(D) Any reduction in the economic value of awards granted under AlliedSignal's long term incentive plan
or comparable long-term incentive plan of any other Plan Sponsor in which the Participant
participates.
(E) Any significant reduction in the rate of AlliedSignal's contribution to its savings plan or of any
other Plan Sponsor's contribution to a savings plan comparable to AlliedSignal's savings plans or
any significant reduction in the rate of benefit accrual under the Allied Corporation Salaried
Employees' Pension Plan or any other comparable pension plan sponsored by a Plan Sponsor in which
the Participant participates.
(F) Any significant reduction in the benefit coverages available to the Participant under the Long Term
Disability Plan of AlliedSignal or any comparable long term disability plan of any other Plan
Sponsor or any significant increase in premiums to be paid by the Participant for such benefits.
(G) Any significant reduction in the life insurance benefits available to the Participant including any
change affecting AlliedSignal's Executive Life Insurance Program or comparable program of any other
Plan Sponsor, or any significant increase in premiums to be paid by the Participant for such
benefits.
(H) Any geographic relocation of the Participant's position to a new location which is more than
seventy-five (75) miles from the location of the Participant's position immediately prior to a
Change in Control.
(I) Any action by a Plan Sponsor that under applicable law constitutes constructive discharge.
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(J) Any failure to pay the benefit determined under Section 9.02 within the time required under Sections
10.01 or 10.02.
For purposes of this section the term 'significant reduction' shall mean a reduction or series of
reductions with respect to the same form of benefit or remuneration which are greater than 10% or which
do not affect all persons covered by the plan or program in question. For purposes of this section the
term 'significant increase' shall mean an increase or a series of increases in the Participant's
percentage of total premiums for a benefit which are greater than 10% or which do not affect all persons
covered by the plan or program in question.
8.04 Involuntary Termination -- Notwithstanding the provisions of Section 2.13, means severance of the
employment relationship (i) at the initiative of the Participant for Good Reason or (ii) at a Plan
Sponsor's initiative for reasons other than death or Gross Cause. Notwithstanding the preceding
sentence, in the event of a sale or transfer of a facility or line of business that causes a severance
of the employment relationship, an Involuntary Termination shall be deemed to have occurred only if the
new employer has not agreed in writing to be a Plan Sponsor with respect to the Participant or the
Participant is not employed by the new employer.
8.05 Participant -- For purposes of this Part II, means an Existing Participant or an Officer Participant.
ARTICLE IX -- ENHANCEMENT BENEFIT
9.01 If, following Change in Control, any payment to a Participant from a Plan Sponsor or from any benefit or
compensation plan or program sponsored or funded by a Plan Sponsor is determined to be an 'excess
parachute payment' pursuant to 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 the Plan Sponsor
has withheld the amount of the Section 4999 tax, an additional benefit (hereafter the 'Enhancement
Benefit') shall be paid from this Plan to such affected Participant.
9.02 The Enhancement Benefit payable shall be 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
Enhancement Benefit, 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 an Enhancement
Benefit 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
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payments', excluding any Enhancement Benefit, 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 an Enhancement Benefit 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.
ARTICLE X -- BENEFIT PAYMENTS AND FORFEITURES
10.01 Benefit Payments -- Notwithstanding the provisions of Section 4.04, benefits which are determined to be
payable to a Participant under Sections 4.02(A) and 4.02(B) on or after a Change in Control shall be
paid within thirty days following the later of the Change in Control or the Involuntary Termination, in
a single payment equal to the sum of (i) the total amount of the benefit remaining payable under Section
4.02(A) and (ii) the amount of the benefit remaining payable under Section 4.02(B) for all Determination
Years which are coextensive, in whole or part, with the Severance Period. Benefits which are determined
to be payable to a Participant under Section 9.01 shall be paid within thirty days following the later
of a Change in Control or the date the 'parachute payments' referred to in Section 9.01 are made in a
single payment equal to the amount of the benefit determined under Section 9.02. If any benefit is paid
later than the time provided in this Section 10.01, such late payment shall be credited with interest
for the period from the date payment should have been made to the date actually made at a rate equal to
the average quoted rate for three-month U.S. Treasury Bills for the week preceding the date of payment,
as determined by the new Named Fiduciary, plus six percentage points.
10.02 Subsequent Benefit Payments -- Notwithstanding the provisions of Section 4.04, in the event the Internal
Revenue Service assesses a Section 4999 tax due which is in excess of the amount determined by the Plan
Sponsor under Section 9.02, a Participant shall be paid within thirty days following the date the
Participant gives notice to the new Named Fiduciary of proof of payment of the Section 4999 tax in a
single payment equal to the amount of the additional benefit determined under Section 9.02, based upon
the amount of the Section 4999 tax paid in excess of any Section 4999 tax with respect to which any
Enhancement Benefit was previously paid. If any benefit is paid later than the time provided in this
Section 10.02, such late payment shall be credited with interest for the period from the date payment
should have been made to the date actually made at a rate equal to the average quoted rate for
three-month U.S.Treasury Bills for the week preceding the date of payment, as determined by the new
Named Fiduciary, plus six percentage points.
10.03 Forfeiture of Benefits -- Notwithstanding the provisions of Section 4.05, a Participant receiving
benefits or entitled to receive benefits under the Plan shall cease to receive such benefits under the
Plan and the right to receive any benefits in the future under the Plan shall be forfeited, in the event
the Participant, as determined by the new
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Named Fiduciary, (i) is convicted of a felony committed against a Plan Sponsor, its property or
business, (ii) commits any fraud or misappropriates property, proprietary information, intellectual
property or trade secrets of AlliedSignal or any successor thereto for personal gain or for the benefit
of another party, or (iii) actively recruits and offers employment to any management employee of
AlliedSignal or any successor thereto.
ARTICLE XI -- ADMINISTRATION
11.01 New Named Fiduciary -- On or before a Change in Control, AlliedSignal, its successors, or persons
operating under its control or on its behalf (hereafter the 'Corporation') shall appoint a person
independent of the Corporation and any Plan Sponsor to be the new Named Fiduciary upon the occurrence of
a Change in Control and the Senior Vice President -- Human Resources shall immediately provide to the
new Named Fiduciary such information with respect to each Participant in the Plan as shall be necessary
to enable the new Named Fiduciary to determine the amount of any benefit which is then or may thereafter
become payable to such Participants.
11.02 Authority -- Upon the occurrence of a Change in Control the new Named Fiduciary shall have exclusive
authority to make initial determinations of eligibility for benefits under the Plan, subject to the
requirements of Section 11.06. The new Named Fiduciary may, in reviewing any recommendation for benefit
eligibility pursuant to this Article, rely on representations made by the Corporation or a Plan Sponsor
pursuant to Section 11.03. However, in the event that none of the recommendations are agreed to by the
Participant, the new Named Fiduciary shall refer the disputed claim for benefits under this Plan for
resolution as provided in Section 11.06. Any recommendation by the new Named Fiduciary under this
Article, any determination by the new Named Fiduciary as to the eligibility for or the amount of
benefits which are not in dispute and any judicial determination pursuant to Section 11.06 shall be
final and binding on the Corporation and the Plan Sponsor. The Corporation and the responsible Plan
Sponsor shall make payments to Participants as directed by the new Named Fiduciary or pursuant to
judicial determination pursuant to Section 11.06.
11.03 Corporate or Plan Sponsor Recommendations -- Upon the occurrence of a Change in Control, the Corporation
and any Plan Sponsor may make recommendations to the new Named Fiduciary with respect to benefit
determinations for affected Participants under the Plan and the new Named Fiduciary shall immediately
forward any such recommendation to the affected Participant. If the recommendation is agreed to in
writing by the Participant, the new Named Fiduciary shall advise the Corporation and any responsible
Plan Sponsor, and the Corporation or Plan Sponsor, whichever is responsible, shall immediately make
payment.
11.04 Independent Recommendations -- In the case of a recommendation which is not agreed to by the affected
Participant, the new Named Fiduciary shall immediately review the recommendation of the Corporation or
responsible Plan Sponsor and within 15 days of
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notice of the dispute from the Participant, determine whether it is in accordance with the terms of the
Plan and notify the Corporation or responsible Plan Sponsor and the Participant of its findings. If
the new Named Fiduciary determines that the recommendation is not in accordance with the terms of the
Plan and that an adjustment is necessary and the Participant agrees in writing to such adjustment, the
new named Fiduciary shall advise the Corporation or responsible Plan Sponsor, and the Corporation or
responsible Plan Sponsor shall immediately make payment. Any such adjustment determined by the new
Named Fiduciary, whether agreed to by the Participant or not, shall be final and binding upon the
Corporation or responsible Plan Sponsor and may not be challenged by either of them.
11.05 Direct Application -- Upon notice to the new Named Fiduciary by an affected Participant, as to whom the
Corporation or responsible Plan Sponsor has made no recommendation, that an Involuntary Termination has
occurred, the Corporation or responsible Plan Sponsor shall be notified by the new Named Fiduciary and
given 15 days from the date the Participant gave notice to the new Named Fiduciary within which to make
a recommendation as to benefit determination. The new Named Fiduciary shall also make its own
independent determination as to the benefit payable under the terms of the Plan. Within 21 days of
receipt of the notice from the affected Participant the new Named Fiduciary shall transmit to the
Participant its own recommendation and that of the Corporation or responsible Plan Sponsor if such is
available. If either recommendation is accepted in writing by the affected Participant the new Named
Fiduciary shall advise the Corporation or responsible Plan Sponsor, and the Corporation or responsible
Plan Sponsor shall immediately make payment. Any recommendation by the new Named Fiduciary shall be
final and binding upon the Corporation or responsible Plan Sponsor and may not be challenged by either
of them.
11.06 Disputed Recommendations -- If an affected Participant does not agree in writing within 30 days of
transmittal to accept any of the recommendations made pursuant to Sections 11.03, 11.04 or 11.05 the new
Named Fiduciary shall consider the amount in excess of the highest recommendation to be a claim for
benefits which is in dispute and shall, with respect to such amount, initiate an action in interpleader
pursuant to Rule 22 of the Federal Rules of Civil Procedure or analogous rules, before a court of
competent jurisdiction. The new Named Fiduciary shall not assert any claim or take any position in this
proceeding based on its interpretation of the terms of the Plan, other than the provisions of this
Article XI.
11.07 Attorneys Fees and Costs -- If a Participant is paid or is determined to be entitled to receive benefits
(i) in excess of any recommendation made by the Corporation or responsible Plan Sponsor pursuant to
Sections 11.03 or 11.05, or (ii) in a case where the Corporation or responsible Plan Sponsor have made
no recommendation pursuant to Sections 11.03 or 11.05, the new Named Fiduciary shall advise the
Corporation or responsible Plan Sponsor, and the Corporation or responsible Plan Sponsor shall
immediately pay or reimburse the affected Participant for the full amount of any attorneys' fees and
other expenses the affected Participant incurred in pursuing his or
15
her claim for benefits. The payment or reimbursement shall include the standard hourly rates charged by
each such attorney, any and all other expenses related to the action incurred by or on behalf of the
affected Participant, the costs and expenses of any experts utilized to prepare the claim and any court
costs assessed against the affected Participant.
11.08 Undisputed Benefits -- Prior to the resolution of amounts in dispute under Section 11.06, the
Participant shall be paid immediately by the Corporation or responsible Plan Sponsor in accordance with
the terms of the Plan, the higher of (i) the amount recommended, if any, by the Corporation or the
responsible Plan Sponsor, or (ii) the amount recommended by the new Named Fiduciary.
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Appendix
AlliedSignal Inc. Severance Plan
For Senior Executives
APRIL 29, 1991 AMENDMENT
The Plan was amended on April 29, 1991 to add a new Section 2.03 and the
following provision ceased to be effective on that date.
2.03 Annual Incentive Compensation -- Except as provided in Section 8.01, means the product of (a) times (b)
where (a) is the lesser of 1) the average of the percentages applied in determining Incentive Awards,
with respect to the Determination Year, for employees within the same Salary Grade as the Participant,
or if none, for employees in positions similar to the position of the Participant or, 2) the average of
the percentages applied in determining the Participant's Incentive Award in the last three Determination
Years prior to the date of Involuntary Termination (or such lesser period as the Participant may have
been employed) and (b) is Annual Base Salary.
ELECTION BY PARTICIPANTS
All Participants in the Plan as of April 29, 1991 have elected to have
Annual Incentive Compensation determined in accordance with the provisions of
Section 2.03(A) of the amended Plan in the event they later became eligible for
a benefit under the Plan. Accordingly Section 2.03(B) of the amended Plan as set
forth below is no longer applicable to any Participant.
2.03 (B) For all Participants other than those denominated in paragraph (A)
of this Section 2.03, the product of (a) times (b) where (a) is the lesser of
(i) the average of the percentages applied in determining Incentive awards, with
respect to the Determination Year, for employees within the same Salary Grade as
the Participant, or if none, for employees in positions similar to the position
of the Participant or (ii) the average of the percentages applied in determining
the Participant's Incentive award in the last three Determination Years prior to
the date of Involuntary Termination (or such lesser period as the Participant
may have been employed) and (b) is Annual Base Salary.
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Severance Plan for Senior Executives - AlliedSignal Inc.
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