Exhibit 10.7
HONEYWELL INTERNATIONAL INC. SEVERANCE PLAN
FOR SENIOR EXECUTIVES
Amended and restated, effective as of January 1,
2009
PART I
GENERAL PROVISIONS
1. Purpose .
The purpose of the Honeywell International Inc.
Severance Plan for Senior Executives (the “Plan”) is to
provide severance related benefits to selected eligible employees
of a Honeywell Employer (as defined in Part II of the Plan) who are
employed in a position in Career Band 6 or above and whose
employment relationship is involuntarily terminated at the
initiative of the Employer for reasons other than Gross Cause (as
defined below). This Plan is intended to be an unfunded plan for a
select group of management or highly compensated employees for
purposes of ERISA (as defined below).
This Plan is comprised of Part I—general
provisions relating to the operation of the Plan, and Part
II—special provisions that become effective only upon a
Change in Control (as defined below). As set forth herein, this
Plan constitutes the amendment and restatement, as of January 1,
2009, 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, April 29,
1991, January 1, 1994, May 1, 1999 and amended and restated by the
Company as of December 20, 2001. The Plan is now hereby amended and
restated effective as of January 1, 2009 to implement changes
required pursuant to and consistent with Section 409A of the
Code.
As
used throughout the Plan unless otherwise clearly or necessarily
indicated by context:
(a) “ Annual Base Salary ” means an
amount equal to the product of Base Salary and twelve.
(b) “ Annual Incentive Compensation ”
means, except as provided in Section 19(b), the product of (i)
times (ii), where (i) is the target percentage that would be
utilized in determining the Incentive Award for the Participant in
the calendar year in which Participant ’ s Covered
Termination occurs, and (ii) is Annual Base Salary.
(c) “ Base Salary ” means the monthly
base salary payable to a Participant at the highest rate in effect
during any of the 36 months preceding a Covered
Termination.
(d) “ Board ” means the Board of
Directors of the Company.
(e) “ Career Band ” means the salary and
position classification system adopted by the Company for use after
January 1, 1994.
(f) “ Change in Control ” is deemed to
occur at the time (i) when any entity, person or group (other than
the Company, any subsidiary or any savings, pension or other
benefit plan for the benefit of employees of the Company 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 Company) for all, or any part of,
the Common Stock, (iii) of a merger in which the Company will not
survive as an independent, publicly owned corporation, (iv) of a
consolidation, or a sale, exchange or other disposition of all or
substantially all of the Company ’ s assets, (v) 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 shareowners of the
Company, 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 (vi) of any transaction or other
event which the Management Development and Compensation Committee
of the Board, in its discretion, determines to be a Change in
Control for purposes of this Plan.
(g) “ Code ” means the Internal Revenue
Code of 1986, as amended from time to time, together with
applicable final regulations issued thereunder.
(h) “ Common Stock ” means the common
stock of the Company or such other stock into which the common
stock may be changed as a result of split-ups, recapitalizations,
reclassifications and any similar transaction.
(i) “ Company ” means Honeywell
International Inc., a Delaware corporation.
(j) “ Covered Termination ” means, except
as provided in Section 19(c), a Participant ’ s
Discharge. 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 the Employer, a
Covered Termination also shall be deemed to have occurred only if
the Participant is not offered substantially comparable employment
with the new employer, as determined by the Plan Administrator, in
its sole discretion. In addition, following a Change in Control, a
Covered Termination shall include any geographic relocation of the
Participant ’ s position to a new location which is
more than fifty (50) miles from the location of the Participant
’ s position immediately prior to a Change in
Control.
(k) “ Discharge ” means an involuntary
termination of a Participant ’ s employment
relationship by the Employer for reasons other than death or Gross
Cause.
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(l) “ Determination Year ” means a
calendar year within which performance is measured for purposes of
determining the amount of Incentive Awards payable for that
year.
(m) “ Effective Date ” means March 31,
1983.
(n) “ Employer ” means the Company and
its participating divisions, subsidiaries, strategic business units
and their respective successors.
(o) “ ERISA ” means the Employee
Retirement Income Security Act of 1974, as amended from time to
time, together with applicable final regulations issued
thereunder.
(p) “ Gross Cause ” means any of the
following: (i) clear and convincing evidence of a significant
violation of the Company ’ s Code of Business Conduct;
(ii) the misappropriation, embezzlement or willful destruction of
Company property of significant value; (iii)(A) the willful failure
to perform, (B) gross negligence in the performance of, or (C)
intentional misconduct in the performance of, significant duties
that results in material harm to the business of the Company; (iv)
the conviction (treating a nolo contendere plea as a conviction) of
a felony (whether or not any right to appeal has been or may be
exercised); or (v) clear and convincing evidence of the willful
falsification of any financial records of the Company that are used
in compiling the Company ’ s financial statements or
related disclosures, with the intent of violating Generally
Accepted Accounting Principles or, if applicable, International
Financial Reporting Standards. In the case of a determination under
Part I of the Plan, Gross Cause shall be determined (i) by the
Chief Executive Officer of the Company, with the concurrence of the
Company ’ s Board of Directors and with the advice of
the Company ’ s functional leaders with expertise in
such matters, with respect to any officer of the Company elected by
the Board of Directors, and (ii) by the Plan Administrator, with
the advice of the Company ’ s functional leaders with
expertise in such matters, with respect to all other Plan
Participants.
(q) “ Incentive Award ” means an
incentive compensation award or any other annual incentive award
determined under the Honeywell International Inc. Incentive
Compensation Plan for Executive Employees, 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.
(r) “ Named Fiduciary ” means the Plan
Administrator and/or such other committee, entity or person as the
Company or the Plan Administrator may designate to administer the
terms and conditions of the Plan, as the case may be.
(s) “ Notice Period ” means the notice
period provided under applicable law (whether working or
non-working), if any.
(t) “ Participant ” means an Existing
Participant, an Officer Participant or a New Participant, each
defined as follows:
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(i) “ Existing Participant ” means,
except as further defined in Part II an individual who, on July 1,
1993, was an employee of an Employer in Salary Grade 20 or above or
in a position comparable to a position of Salary Grade 20 or
above.
(ii) “ Officer Participant ” means, except
as further defined in Part II, an individual (other than an
Existing Participant) who is an officer of an Employer in Career
Band 7 as determined by the Plan Administrator in his or her sole
discretion.
“
New Participant ” means
an individual (other than an Existing Participant and an Officer
Participant) who is employed by an Employer in a position evaluated
in Career Band 6 or above or in a position comparable to a position
in Career Band 6 or above, all as determined by the Plan
Administrator in his or her sole discretion.
(u) “ Pay Continuation ” means the
component of the severance benefit described in Section
3(a)(i).
(v) “ Plan Administrator ” means the
person defined in Section 7 and Section 22(a).
(w) “ Pro Rata Factor ” means (i) for the
Determination Year in which a Covered 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 the Covered 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 the Covered
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.
(x) “ Prorated Annual Incentive Compensation
” means the component of the severance benefit
described in Section 3(a)(ii).
(y) “ Salary Grade ” means the salary and
position classification used by the Company prior to January 1,
1994, or any comparable salary and position classification used by
any other Employer.
(z) “ Severance Pay Factor ” means, with
respect to any Participant, the relevant factor specified in
Section 3(a)(i)(A).
(aa) “ Severance Period ” means the period
commencing on the first day of the first month following a Covered
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 qualified defined benefit pension plan maintained by an
Employer. In the event of a Change in Control, the Severance Period
will commence immediately following the expiration of the Notice
Period (if any) referenced in Section 4(b) hereof;
provided,
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however,
that the amounts attributable to the Notice Period shall be paid in
accordance with the “ short-term deferral exception
” under Treas. Reg. § 1.409A
-1(b)(4).
(bb) “ Specified Employee ” means any
Participant who, at any time during the twelve (12) month period
ending on the identification date (as determined by the Vice
President, Compensation and Benefits or its delegate), is a
“ specified employee ” under Section 409A
of the Code, as determined by the Vice President –
Compensation and Benefits (or his delegate), which determination of
“ specified employees, ” including the
number and identity of persons considered “ specified
employees ” and identification date, shall be made by
the Vice President – Compensation and Benefits (or his
delegate) in accordance with the provisions of Sections 416(i) and
409A of the Code.
2. Participation .
(a) An
employee of an Employer who is at any time a Participant in the
Plan shall continue as a Participant in the Plan until the earlier
of (i) the date the employment relationship with the Employer is
severed for reasons other than a Covered Termination, or (ii) the
date the employee ceases to be employed in a position equivalent to
Career Band 6 or above; provided, however, any employee who ceases
to be employed in a position equivalent to Career Band 6 or above
on or after a Change in Control shall nevertheless continue to be a
Participant in the Plan.
(b) A
Participant in the Plan who is at any time the subject of a Covered
Termination shall continue to be a Participant in the Plan until
all of the benefits for which he or she is entitled under Section 3
of the Plan, if any, have been paid.
3. Severance Benefits .
(a) Eligibility for Benefits . Subject to Section 3(b) below, a Participant
who is the subject of a Covered Termination shall receive the
benefits described in this Section 3.
(i) Pay Continuation .
(A) 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 (a detailed
schedule of each Existing Participant ’ s Severance
Pay Factor is attached hereto as Exhibit A):
|
Salary
Grade as of July 1, 1993
|
|
Severance
Pay Factor
|
|
|
20 and
21
|
|
18
|
|
22 and
23
|
|
24
|
|
24 and
above
|
|
36
|
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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 for
purposes of this Plan.
(B) 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 (or 36 in the case of an Officer
Participant who is an Executive Vice President or Senior Vice
President), or following a Change in Control, a Severance Pay
Factor of 24 (36 in the case of an Officer Participant who is an
Executive Vice President or Senior Vice President).
(C) 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.
(ii) Annual Incentive Compensation
. An Existing Participant or an
Officer Participant shall receive a benefit in an amount equal to
his or her Annual Incentive Compensation multiplied by the
applicable Pro Rata Factor. The Pro Rata Factor shall be determined
for the calendar year in which a Covered Termination occurs and
each calendar year thereafter through the end of the calendar year
in which the Severance Period ends.
(iii) Benefit Continuation . For the duration of the Severance Period, the
Participant shall be entitled to the continuation of the following
employee benefits:
(A) Basic and contributory medical insurance
(including for qualified dependents) ( “ Health Plan
Coverage ” ), at the active employee coverage level
and prevailing active employee contribution rate, if any; provided,
however, (1) that such level of Health Plan Coverage shall not
exceed the level of Health Plan Coverage in effect on the date of
the Participant ’ s Covered Termination, (2) that such
continuation of Health Plan Coverage will cease on the earlier of
(I) the first month that similar benefits are provided to the
Participant by a subsequent employer, (II) the first month in which
the Participant fails to pay to the Employer the prevailing active
employee contribution rate, (III) the end of the Severance Period,
or (IV) the date on which such coverage must terminate pursuant to
the terms of the controlling health insurance benefit plan
applicable to the Participant on the date of such Participant
’ s Covered Termination, and (3) the Employer-paid
portion of the monthly premium for the Health Plan Coverage shall
be imputed as income to the Participant as may be required under
section 105(h) of the Code, subject to applicable withholding from
amounts otherwise payable to the Participant.
(B) Basic and contributory life insurance (including
for qualified dependents) ( “ Life Insurance Coverage
” ), at the active employee coverage level and
prevailing active employee contribution rate, if any; provided,
however, (1) that such level of Life Insurance Coverage shall not
exceed the level of Life Insurance Coverage in effect on the date
of the Participant ’ s Covered Termination, (2) that
such continuation of Life Insurance Coverage will cease on the
earlier of (I) the date similar benefits are provided the
Participant by a subsequent employer, (II) the first month in which
the
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Participant
fails to pay to the Employer the prevailing active employee
contribution rate, (III) the end of the Severance Period, or (IV)
the date on which such coverage must terminate pursuant to the
terms of the controlling life insurance benefit plan applicable to
the Participant on the date of such Participant ’ s
Covered Termination, and (3) the Employer-paid contributions
required to maintain the Life Insurance Coverage will be imputed as
income to the Participant as may be required by applicable
law.
(iv) 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 Prorated
Annual Incentive Compensation will be recognized for purposes of
the vesting and pension calculation provisions of the AlliedSignal
Inc. Retirement Program or any other pension plan sponsored by an
Employer in which the Participant participates. The normal policy
for qualifying leaves remains applicable thereafter.
(b) Benefits Conditioned on Release and
Non-Competition .
Notwithstanding anything in this Section 3 to the contrary, all
benefits under this Plan except benefits provided pursuant to Part
II, shall be provided in consideration for, and may be conditioned
upon, (i) the execution and non-revocation of a release by the
Participant of all current or future claims, known or unknown,
arising on or before the date of the release against the Employer,
its subsidiaries, affiliates and their respective officers,
directors and employees in a form and manner prescribed by the Plan
Administrator, and (ii) the execution of a non-competition
agreement by the Participant in favor of the Company and its
subsidiaries and affiliates in a form and manner prescribed by the
Plan Administrator. Additionally, no severance benefits shall be
payable under this Section 3 unless the Participant has returned to
the Employer all property of the Employer and any information of a
proprietary nature in his or her possession.
(c) Benefit Limitations .
(i) Except as provided in subparagraph (ii) below,
any benefit determined to be payable to a Participant under any
other severance plan sponsored or funded by an Employer shall be
reduced by the amount of any similar benefit payable to the
Participant under this Plan (excluding any benefit payable under
Section 20(a)).
(ii) Any benefit determined to be payable under this
Plan (excluding any benefit payable under Section 20(a)) 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.
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(iii) Notwithstanding any provision
of the Plan to the contrary, for a Participant who is a U.S.
taxpayer subject to the requirements of Section 409A of the Code,
the time and form of payment of any payment that is provided by
this Plan and also by the terms of the Honeywell International Inc.
Severance Plan for Corporate Staff Employees (Involuntary
Termination Following a Change in Control) or any other severance
pay plan that applies to such Participant shall be determined in
accordance with the terms of this Plan.
4. Benefit Payments .
(a) Form and Timing of Payments
. Except as provided in Sections
21(a) and 21(b) and unless delay of payment is required pursuant to
Section 15(b)(ii), any Pay Continuation shall be paid in equal
monthly installments over the Severance Period, with the first
installment commencing within 60 days after the Covered
Termination, and any Prorated Annual Incentive Compensation shall
be paid in the January after the end of the Determination Year. No
Prorated Annual Incentive Compensation shall be payable for any
Determination Year with respect to which the Pro Rata Factor is
less than or equal to zero.
(b) Interim Incentive Compensation
Payments . In the event
that a Participant ’ s employment is terminated
pursuant to a Covered Termination within two years following a
Change in Control, the Participant shall be paid an additional
amount, with respect to any Notice Period equal to the product of
(1) the amount of annual incentive compensation that such
Participant would earn for the year of termination under the
incentive compensation plan in which such Participant participated
immediately prior to such termination (assuming performance at the
target level of performance), and (2) a fraction, the numerator of
which is the sum of the number of days in the Participant
’ s Notice Period, and the denominator of which is
365; provided, however, the numerator of such fraction shall not
include any period for which the Participant has already received
or will receive a short-term incentive compensation award. Any
amount payable pursuant to this Section 4(b) shall be paid in a
single lump sum payment no later than March 15 th of the
year following the year in which the Covered Termination
occurs.
5. Forfeiture of Benefits .
Notwithstanding anything to the contrary in the
Plan and except as provided in Section 21(c), a Participant
receiving benefits or otherwise entitled to receive benefits under
this 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, either before or
after termination of employment, as determined by the Named
Fiduciary, in its sole discretion (a) is convicted of a felony, (b)
commits any fraud or misappropriates property, proprietary
information, intellectual property or trade secrets of the Employer
for personal gain or for the benefit of another party, (c) actively
recruits
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and offers
employment to any management employee of the Employer, (d) engages
in intentional misconduct substantially damaging to the property or
business of any Employer, (e) makes false or misleading statements
about the Employer or its products, officers or employees to (A)
competitors or customers or potential customers of the Employer, or
(B) current or former employees of the Employer, or (f) violates
the terms of the release or non-competition agreement described in
Section 3(b) of the Plan.
6. 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 at the same time and in the same form
as such unpaid benefits would be paid to the Participant prior to
such adjudication. 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 beneficiary (as determined in the following
paragraph) at the same time and in the same form as such unpaid
benefits would have been paid to the Participant had the
Participant survived.
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 designated 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 6 shall be a
discharge of any liability under the Plan therefor.
7. Administration .
(a) Plan Administration . Except as provided in Section 22(a), the Plan
shall be administered by the Plan Administrator, who may act
through one or more Named Fiduciaries under this Plan who shall
have the powers and authorities as described in this Section 7. The
Plan Administrator sh
