EXHIBIT 10.25
[HONEYWELL LOGO] Memorandum
Date: February 13, 2002
To: Xxxxx X. Xxxxxxx
From: Xxxxxx X. Xxxxxxxxx
Subject: Employment Separation Agreement and Release
This Employment Separation Agreement and Release ("Agreement and Release")
confirms our mutual understanding regarding your rights and benefits incident to
your termination of employment with Honeywell International Inc., its
predecessor companies, affiliates, subsidiaries and business units, past and
present ("Honeywell" or the "Company"). By signing this Agreement and Release,
you hereby acknowledge that these benefits are in full satisfaction of all
rights to termination or severance related benefits for which you may have been
eligible or may claim to be eligible under any agreement or promise, to include
the Honeywell International Inc. Severance Plan for Senior Executives ("Senior
Severance Plan"), whether written or oral, express or implied, or any Company
sponsored severance plan or program.
Date of Termination
You have previously agreed to your separation from service from the Company.
Accordingly, your last day of active employment will be February 28, 2002.
Vacation Pay
Unused current year accrued vacation pay shall be paid periodically in
accordance with your normal pay cycle. You are entitled to 3 days of unused
current year accrued vacation pay. Current year vacation pay ceases to accrue as
of your last day of active employment.
After your current year accrued vacation, you shall be entitled to 20 days of
pay attributable to your grandfathered vacation transition amount. Your
grandfathered vacation transition amount shall be paid periodically in
accordance with your normal pay cycle ("Grandfathered Vacation Period").
Severance Pay
Based on the Senior Severance Plan, you would be entitled to $2,752,500 as part
of your severance package. However, you are obligated to the Company for
$1,071,268 due to a Supplemental Executive Retirement Plan ("SERP") overfunding
and $736,287.98 for an outstanding tax loan. Therefore, the net amount due to
you is $944,944.02, hereinafter
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referred to as the "Final Salary Continuation Amount". See Exhibit A for a
detailed summary. Provided you sign and return this Agreement and Release in the
form provided to you, at the end of your Grandfathered Vacation Period you shall
receive 36 months of base salary continuation ("Salary Continuation Period") at
the annualized rate of $314,981.34. The determination of the annualized rate is
explained in detail hereinafter in this Agreement. Your Salary Continuation
Period shall extend from April 3, 2002 through April 2, 2005. The period
commencing on the day following your last day of active employment and ending on
the last day of your Salary Continuation Period is referred to herein as the
"Benefit Period".
The Company reserves the right in its sole discretion to continue your salary,
but not at a rate in excess of the annualized rate of $314,981.34, and/or
certain benefits while you review this Agreement and Release, provided that this
salary and benefits continuation shall in no event be construed as a waiver by
the Company of the provision in the Senior Severance Plan making benefits
contingent on execution of a release of claims in favor of the Company. You
agree that the salary continuation and benefits continuation you receive during
the review period will be credited against the salary continuation and benefits
continuation described in the Agreement and Release. If you choose not to sign
and return this Agreement and Release in the form provided to you, then you will
be required to reimburse the Company for any Consideration (as hereinafter
defined) paid to you hereunder.
All vacation and base salary continuation benefits are subject to federal, state
and other applicable taxes and withholdings.
Group Insurance Coverage
Provided you sign and return the Agreement and Release in the form provided to
you, you may elect to retain your coverage in the Company's group insurance
plans for active employees through the end of the month in which your Benefit
Period ends, except as otherwise provided below. The employee share of any
premiums shall automatically be deducted from your salary continuation amounts
unless you notify us, in writing, that you wish to cancel your insurance
coverage. Notwithstanding any provision herein to the contrary, eligibility for
short-term disability coverage, long-term disability coverage and any business
travel insurance that you may have will terminate as of your last day of active
employment. You may elect to retain any Group Universal Life Insurance Program
(GUL) coverage you have through your Benefit Period. If you wish to continue
your GUL insurance beyond the Benefit Period on a direct pay basis, you can
contact CIGNA at 000-000-0000.
As noted above, your active Honeywell group health insurance coverage will
expire on April 30, 2005. At that time, you may elect to continue your group
medical and dental insurance coverage pursuant to the federal COBRA law,
assuming you have not allowed this coverage to expire during the Benefit Period.
Honeywell's COBRA administrator will be contacting you at the end of your
Benefit Period to provide you with further details and election forms. COBRA
coverage is totally employee paid and is generally available at the rate of one
hundred two percent (102%) of the applicable premium.
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Flexible Spending Accounts
Provided you sign and return this Agreement and Release in the form provided to
you, you may elect to retain your coverage in the Company's Section 125 plan,
including both health and dependent care flexible spending accounts, through the
end of the month in which your Benefit Period ends. Any amounts you elect to
contribute to a flexible spending account shall automatically be deducted from
your vacation pay or base salary continuation amounts. If, at the time you cease
to be treated as an active employee for Section 125 plan purposes, you are
eligible to continue coverage in your health flexible spending account pursuant
to the federal COBRA law, you will be notified by the Company's COBRA
administrator.
Honeywell Savings Plan and Supplemental Savings Plan
You have a non-forfeitable right to your entire account balance, including your
Company match account, in the Honeywell Savings and Ownership Plan I (the
"Savings Plan"). You also have a non-forfeitable right to your account (if any)
in the Honeywell Supplemental Savings Plan. You may continue to participate in
the Savings Plan and the Honeywell Supplemental Savings Plan during your Benefit
Period to the extent otherwise permissible under applicable law. Your current
deductions will continue until the end of your Benefit Period unless you decide
to change or terminate your contributions. At the end of your Benefit Period,
you will receive information relating to the distribution of your Savings Plan
account balance, if any. Your account (if any) in the Honeywell Supplemental
Savings Plan will be paid to you in accordance with your previous payment
election(s).
Loan payments, if any, will continue to be withheld during your Benefit Period.
At the end of your Benefit Period you will have 90 days in which to repay any
loan or it will default and be treated as taxable income, subject to regular
taxes and an additional early withdrawal penalty (unless an exception to such
early withdrawal penalty applies).
Pension Plans
You participated in Honeywell's Retirement Earnings Plan. However, you have not
vested in this benefit and therefore no retirement benefit is payable from this
plan.
You also participated in the Honeywell International Supplemental Executive
Retirement Plan ("SERP"). In December 2000, $1,400,000 was funded by the Company
in your name in order to provide you with this SERP benefit. You are eligible to
receive a SERP benefit in accordance with the terms of your pension letter dated
December 17, 2001. The annual SERP benefit amount at age 60 is $36,139, which is
increased at 5% per year until the end of your Salary Continuation Period. The
amount payable on May 1, 2005, following your Salary Continuation Period, is
$39,685.08 per year. The value of this SERP benefit in the form of a lump sum
payment is $394,732, based upon a payment date of April 4, 2002. This lump sum
has been determined using the interest rate and
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mortality assumptions that are currently in effect under the SERP. In lieu of
receiving this SERP benefit in the form described above, a lump sum payment will
be made to you as part of the transfer of funds from your Escrow Account (see
below).
Honeywell will also reimburse you for reasonable accountants' fees related to
the above transaction.
Escrow Account
In order to provide for your retirement benefit under the SERP, in December,
2000, the Company funded an escrow account in the amount of $1,400,000. Upon
re-calculation it was determined that this account was funded in excess of what
was necessary in order to provide you with the SERP benefit described above.
In addition, the Company provided to you two loans, in the amounts of $576,940
and $112,000, in order for you to meet your tax obligations incident to the
funding of this SERP benefit. The excess funding, combined with the loan
repayment and interest accrued, result in an obligation from you to the Company.
In consideration of the cancellation of this obligation, you agree to accept the
Final Salary Continuation Amount of $944,944.02 (see Exhibit A). Furthermore,
you will receive a lump sum payment of the entire value of your portion of the
SERP escrow account ($1,400,000 plus interest) payable to you no earlier than
the first day of your Salary Continuation Period, April 3, 2002.
Short-Term Incentive Compensation Plan
For the year 2001, your incentive award will be based upon individual and
company performance and your ICP target of 75%. The Company reserves sole
discretion regarding the amount and payment, of any bonus attributable to all or
any portion of the calendar year ending December 31, 2001. If the Corporation
elects to award you a bonus with respect to all or any portion of such calendar
year, it will be paid in accordance with the provisions of the AlliedSignal Inc.
Incentive Compensation Plan for Executive Employees during March 2002. Any such
bonus shall not include any period for which you have already received or will
receive a short-term incentive compensation award.
During your Salary Continuation Period, you will not be eligible for a
short-term incentive compensation award in accordance with the terms of the
Senior Severance Plan. Rather, the dollar value of a short-term incentive
compensation award was incorporated into the Final Salary Continuation Amount
(see Exhibit A).
Stock Options
You currently have 132,000 vested stock options and an additional 168,000 will
vest as scheduled. You may exercise the vested stock options in accordance with
the following schedule:
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#
Grant Exercise Vested as Term to
Date Price of 4/2/02 Exercise
-----------------------------------------------------
7/21/00 $35.29 92,000 4/2/05
-----------------------------------------------------
7/16/01 $36.27 40,000 4/2/05
-----------------------------------------------------
Total 132,000
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o Treatment of the following unvested options:
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#
Grant Exercise Unvested Options to Term to
Date Price on 4/2/02 Comments Vest Exercise
----------------------------------------------------------------------------------------------------------------------
7/21/00 $35.29 138,000 o Will vest as scheduled, 69,000 on 7/21/02 138,000 4/2/05
and 69,000 on 7/21/03
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7/21/00 $35.29 50,000 o Forfeit all on 4/2/02 (EPS Performance 0 NA
Options)
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7/16/01 $36.27 60,000 o Will vest as scheduled, 30,000 on 1/1/03 30,000 4/2/05
and forfeit 30,000 on 4/2/02
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Total 248,000 168,000
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You may access your stock option account via the internet at
xxx.xxxxxxxxxxxxx.xxx, via the Honeywell Intranet, or by contacting the
Honeywell Stock Option Service Center at Xxxxxxx Xxxxx Xxxxxx at 0-000-000-0000.
Restricted Units
Your unvested restricted units will be treated as follows:
o Restricted Units - the 15,000 time based restricted units will vest as
scheduled on July 21, 2003.
o Performance Restricted Units - the 15,000 performance contingent restricted
units will be canceled on April 2, 2002 and Executive shall have no right
to receive any payment in respect of such restricted units.
Deferred Incentive Compensation and Deferred Salary
Your eligibility to participate in the Deferred Incentive and Deferred Salary
programs will cease at the end of your Grandfathered Vacation Period. Any
deferred incentive compensation and deferred salary account balances, plus
interest, will be paid in accordance with your previous payment and change in
control elections. You will be vested in the premium interest rate for all your
deferred incentive compensation and deferred salary accounts.
Special Cash Retention Bonus
Your final retention bonus of $90,000 was integrated into the Final Salary
Continuation Amount and will not be paid separately to you on July 1, 2002 (see
Exhibit A).
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Unemployment Insurance
You may be eligible for unemployment benefits. You should contact your local
unemployment office. The Company will not oppose an application for unemployment
benefits.
Executive Third Party Liability Insurance Coverage
Your participation in the Company-sponsored third-party liability insurance
coverage program will expire on your last day of active employment, February 28,
2002.
Flexible Perquisite Program
The dollar value of your right to the Company's flexible perquisite program
through the end of the calendar year is $37,500 based on three remaining
quarters of 2002. In lieu of receiving a quarterly flexible perquisite allowance
of $12,500 for the second, third and fourth quarters of 2002, the dollar value
of this benefit was incorporated into the Final Salary Continuation Amount (see
Exhibit A).
Other Officer Benefits and Perquisites
Your coverage under the Supplemental Long Term Disability and the Survivor
Benefit programs will end as of your last day of active employment, February 28,
2002.
Executive Outplacement
Executive outplacement assistance is available to you for up to 12 months,
ending February 28, 2003. The Company has several national agreements with
premier outplacement firms. Executive outplacement assistance will be
coordinated through your Human Resources office or by contacting Xxx Xxxx, Human
Resources Corporate Functions, (000) 000-0000.
Consideration for the Release
The severance pay, continuation of group insurance plan participation during
your Salary Continuation Period, executive outplacement assistance and other
benefits specified in the Agreement and Release to which you would not otherwise
be entitled (the "Consideration") are all things of value that will be available
to you only in return for your signed Agreement and Release in the form provided
to you. If you choose not to sign this Agreement and Release in the form
provided to you, you will still receive the vacation pay described herein. Your
group insurance plan participation will generally end no later than the month in
which your last day of active employment falls. Other payments and benefits will
generally cease on your last day of active employment.
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Contingencies
In order to receive the benefits under this Agreement and Release, you must
return this signed Agreement and Release to me at Honeywell International Inc.,
000 Xxxxxxxx Xxxx, Xxxxxxxxxx, Xxx Xxxxxx 00000, no later than March 12, 2002.
Provided that you have signed and returned this Agreement and Release, in the
event of your death after your last day of active employment, payment of any
remaining salary continuation amounts owing under this Agreement and Release
will be made to your designated beneficiary or, if none, to your estate.
However, employee benefits continuation will generally cease effective with your
death.
In the event that before the end of your Benefit Period you accept a position
with the Company, all payments and benefits under this Agreement and Release
will terminate as of the date of your employment with the Company resumes. In
such event, all payments and benefits paid to you before you are reinstated or
rehired shall be considered to be valuable legal consideration to which you were
not otherwise entitled and the Release of Claims, Confidentiality and Dispute
Resolution provisions of this Agreement and Release shall remain in effect and
fully enforceable.
Subject to the preceding paragraph, your acceptance of a position with another
company will not affect your eligibility for benefits under this Agreement and
Release. However, the Company reserves the right to cancel your benefits in the
event that, either before or after your termination of employment, you (a) are
convicted of a felony, (b) commit any fraud or misappropriate property,
proprietary information, intellectual property or trade secrets of the Company
for personal gain or for the benefit of another party, (c) actively recruit and
offer employment to any management employee of the Company, (d) engage in
intentional misconduct substantially damaging to the property or business of the
Company, (e) make false or misleading statements about the Company or its
products, officers or employees to competitors or customers or potential
customers of the Company, or to current or former employees of the Company, or
(f) materially breach any of the terms of this Agreement and Release.
While receiving salary continuation benefits pursuant to this Agreement and
Release you will not be eligible to return to work at Honeywell as a Honeywell
employee, as a leased employee or as an independent contractor or consultant.
While receiving salary continuation benefits and for at least six months after
your Salary Continuation Period ends, you will not be eligible to return to work
at Honeywell as an employee of a Honeywell vendor.
Release Of Claims
In exchange for the Consideration, you, Xxxxx X. Xxxxxxx, do hereby waive and do
hereby release, knowingly and willingly, Honeywell International Inc., its
future parent corporations, its predecessor companies, its past, present and
future divisions, subsidiaries, affiliates and related companies and their
successors and assigns and all
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past, present and future directors, officers, employees and agents of these
entities, personally and as directors, officers, employees and agents
(collectively the "Honeywell Group"), from any and all claims of any nature
whatsoever you have arising out of your employment and/or the termination of
your employment with the Honeywell Group, known or unknown, including but not
limited to any claims you may have under federal, state or local employment,
labor, or anti-discrimination laws, statutes and case law and specifically
claims arising under the federal Age Discrimination in Employment Act, the Civil
Rights Acts of 1866 and 1964, as amended, the Americans with Disabilities Act,
Executive Order 11246, the Employee Retirement Income Security Act, the Family
and Medical Leave Act, the Rehabilitation Act of 1973, the Fair Labor Standards
Act, the Labor-Management Relations Act, the Equal Pay Act and the Worker
Adjustment Retraining and Notification Act, the New Jersey Law against
Discrimination, as amended, the New Jersey Equal Pay Act, the New Jersey
Smokers' Rights Law, the New Jersey Family Leave Act, the New Jersey
Constitution, the New Jersey Conscientious Employee Protection Act, New Jersey
common law, Claims under the Arizona Civil Rights Act, Arizona Equal Pay Law,
the Arizona Constitution, Arizona common law and any and all other applicable
state, county or local ordinances, statutes or regulations and any and all other
applicable state, county or local statutes, ordinances or regulations and any
other applicable state, county or local law, ordinance or statute including
claims for attorneys' fees; provided, however, that this release does not apply
to claims for benefits under Honeywell Group sponsored benefit plans covered
under the Employee Retirement Income Security Act (other than claims for
severance benefits), does not apply to claims arising out of obligations
expressly undertaken in this Agreement and Release, and does not apply to claims
arising out of any act or omission occurring after the date you sign this
Agreement and Release. Any rights to benefits (other than severance benefits)
under Honeywell Group sponsored benefit plans are governed exclusively by the
written plan documents. You acknowledge and understand that you have accepted
the Consideration referenced in this Agreement and Release in full satisfaction
of all claims and obligations of the Honeywell Group to you regarding any matter
or incident up to the date you execute this Agreement and Release and you
affirmatively intend to be legally bound thereby.
You hereby agree and acknowledge that you are not entitled to receive any
additional payments or benefits from the Honeywell Group related to your
employment or termination of employment other than as expressly provided herein.
Cooperation and Nondisclosure
As further consideration for the benefits you receive under this Agreement and
Release, you agree to cooperate fully with the Company in any matters that have
given or may give rise to a legal claim against the Company, and of which you
are knowledgeable as a result of your employment with the Company. This requires
you, without limitation, to (1) make yourself available upon reasonable request
to provide information and assistance to the Company on such matters without
additional compensation, except for your out of pocket costs, (2) maintain the
confidentiality of all Company privileged or confidential information including,
without limitation, attorney-client privileged
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communications and attorney work product, unless disclosure is expressly
authorized by the Company's law department, and (3) notify the Company promptly
of any requests to you for information related to any pending or potential legal
claim or litigation involving the Company, reviewing any such request with a
designated representative of the Company prior to disclosing any such
information, and permitting a representative of the Company to be present during
any communication of such information.
Confidentiality
You, Xxxxx X. Xxxxxxx, agree not to disclose or cause any other person to
disclose to third parties, including employees of the Company, the terms of this
Agreement and Release; provided, however, that you have the right to disclose
the terms of this Agreement and Release to your spouse, your financial/tax
advisor and your attorney and in response to a governmental inquiry, including a
governmental tax audit or a judicial subpoena. You understand that your breach
of this confidentiality provision shall excuse the Company from performing
further under this Agreement and Release, and the Company shall be entitled to
repayment of the Consideration provided hereunder upon demand. You agree that
neither this Agreement and Release nor any version of this Agreement and Release
shall be admissible in any forum as evidence against the Company or you except
in a proceeding to enforce this Agreement and Release. This Agreement and
Release does not constitute an admission of wrongdoing by either party.
You acknowledge and agree that any agreements signed by you relating to
intellectual property and confidential information acquired by you as a result
of your employment with the Company remain in full force and effect and place
legal obligations upon you that continue beyond your employment with the
Company. Exhibit B attached hereto and made a part hereof sets forth, in all
material respects, the confidentiality covenants you have made with respect to
knowledge acquired during your employment with the Company. You acknowledge and
agree that you are reaffirming those covenants as part of this Agreement and
Release. Exhibit C attached hereto and made a part hereof sets forth, in all
material respects, your acknowledgement of your obligations upon termination of
employment regarding Intellectual Property and Confidential Material.
Dispute Resolution
In the event of any claim regarding or dispute over the enforceability of this
Agreement and Release or any part thereof (other than determinations under ERISA
benefit plans), the parties agree to submit such dispute or claim to binding
arbitration in Morristown, New Jersey or the closest American Arbitration
Association to Morristown, New Jersey; provided, however, that this provision is
expressly not intended to apply to any dispute covered by a claims appeal
procedure contained in any ERISA plan document (other than a severance plan
document). New Jersey law will apply to any dispute or claim regarding this
Agreement or Release. To be timely filed, any such claim or dispute must be
submitted to the Company for binding arbitration within the limitations period
set by applicable federal or state law. The arbitrator shall be chosen by mutual
agreement between you and the Company from among available arbitrators
recommended by the
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American Arbitration Association. The arbitration hearing will take place with
all due speed. The arbitrator shall render an award within 30 days of the
arbitration hearing. The arbitrator shall have no power to amend, add to or
subtract from this Agreement and Release. The award shall be admissible in any
court or agency action seeking to enforce or render unenforceable this Agreement
and Release or any portion thereof. The party determined by the Arbitrator(s) to
have breached this Agreement or Release shall pay the legal fees of the
non-breaching party.
Severability; Entire Agreement; No Oral Modifications; No Waivers
Should any of the provisions of this Agreement and Release (other than the
Release of Claims provision) be determined to be invalid by a court of competent
jurisdiction, the parties agree that this shall not affect the enforceability of
the other provisions of the Agreement and Release. In such case, the parties
shall renegotiate the invalidated provision(s) in good faith to effectuate
its/their purpose and to conform the provision(s) to applicable law. This
Agreement and Release constitutes a single integrated contract expressing the
entire agreement of the parties with respect to the subject matter hereof and
supersedes all prior and contemporaneous oral and written agreements and
discussions with respect to the subject matter hereof. This Agreement and
Release may be amended or modified only by an agreement in writing. The failure
by the Company to declare a breach or otherwise to assert its rights under this
Agreement and Release shall not be construed as a waiver of any right the
Company has under this Agreement and Release.
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Acknowledgments And Certifications
You, Xxxxx X. Xxxxxxx, acknowledge and certify that you:
(a) have read and understand all of the terms of this Agreement and Release
and do not rely on any representation or statement, written or oral, not
set forth in this Agreement and Release;
(b) have had a reasonable period of time to consider this Agreement and
Release;
(c) are signing this Agreement and Release knowingly and voluntarily;
(d) have been advised to consult with an attorney before signing this
Agreement and Release;
(e) have the right to consider the terms of this Agreement and Release for 21
days and if you take fewer than 21 days to review this Agreement and
Release, you hereby waive any and all rights to the balance of the 21 day
review period; and
(f) have the right to revoke this Agreement and Release within seven days
after signing it, by providing written notice of revocation to Xxxxxx X.
Xxxxxxxxx. If you revoke this Agreement and Release during this seven-day
period, it becomes null and void in its entirety.
THIS IS A LEGALLY ENFORCEABLE DOCUMENT.
HONEYWELL INTERNATIONAL INC.
/s/ Xxxxx X. Xxxxxxx By: /s/ Xxxxxx X. Xxxxxxxxx
-------------------- ------------------------
Xxxxx X. Xxxxxxx Xxxxxx X. Xxxxxxxxx
Senior Vice President
Human Resources
Dated: February 18, 2002 Dated: February 18, 2002
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