Exhibit 10.22
EARLY RETIREMENT AGREEMENT
EARLY RETIREMENT AGREEMENT (this "Agreement"), dated as of July 3,
2001, by and between Honeywell International, Inc., a Delaware corporation (the
"Company"), and Xxxxxxx X. Xxxxxxxxxx ("Executive").
WHEREAS, Executive has expressed his intention to retire from
employment with the Company and, in connection with his retirement, the Company
and Executive have determined to settle all of their respective rights and
obligations in respect of his Employment Agreement (as defined below) and other
matters pertaining to Executive's services with the Company;
NOW, THEREFORE, in consideration of their mutual promises, the Company
and Executive agree as follows:
1. Retirement and Resignation. Effective as of the date hereof (the
"Effective Date"), the Executive shall retire from active employment and hereby
resigns, effective as of the Effective Date, (i) as Chairman of the Board of
Directors and Chief Executive Officer of the Company and (ii) from employment
with and as a member of the Board of Directors of the Company and each of its
subsidiaries and affiliates.
2. Provision of Consulting Services. During the period beginning on the
Effective Date and continuing until the second anniversary of the Effective Date
(the "Consulting Period"), the Executive shall provide consulting services
commensurate with his status and experience with respect to matters related to
strategic acquisitions as shall be reasonably requested from time to time by the
Chairman of the Board of Directors of the Company. The Executive shall provide
consulting services to Company as needed and when reasonably requested, provided
that, without his prior consent, Executive shall not be required to devote more
than 50 hours in any calendar month to the performance of any consulting
services hereunder. The Executive shall determine the time and location at which
he shall perform such services, subject to the right of the Company to
reasonably request by advance written notice that such services be performed at
a specific time and at a specific location. The Executive shall honor any such
request unless he has a conflicting business commitment that would preclude him
from performing such services at the time and/or place requested by the Company,
and in such circumstances shall make reasonable efforts to arrange a mutually
satisfactory alternative. The Company shall use its reasonable best efforts not
to require the performance of consulting services in any manner that
unreasonably interferes with any other business activity of the Executive.
3. Cancellation of the Employment Agreement. The Executive and the
Company are parties to an Employment Agreement (the "Employment
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Agreement"), dated and effective as of December 1, 1999. The term of the
Employment Agreement would have expired December 31, 2004. The Employment
Agreement is hereby canceled and the parties shall have no further obligations
to each other thereunder except as specifically provided in this Agreement.
4. Unpaid Accrued Benefits. The Company shall promptly pay to the
Executive any portion of the Executive's base salary, and accrued but unused
vacation, through the Effective Date that has not yet been paid. The Executive
shall receive second quarter 2001 dividends with respect to his Restricted Units
(as defined in the Employment Agreement). In addition, Executive shall be paid,
at the time annual cash bonuses are paid to other senior executive officers of
the Company in accordance with the Company's Incentive Compensation Plan for
Executive Employees, a prorated annual cash bonus in an amount equal to the
product of (i) the annual cash bonus that would have been payable to Executive
for 2001 under such plan had Executive not terminated his employment with the
Company based solely on the Company's performance factor (and without regard to
any other adjustment permitted under such plan) times (ii) a fraction, the
numerator of which is the number of days during 2001 prior to and including the
date of Executive's retirement in accordance with Section 1, and the denominator
of which is 365. The Company shall also pay or provide to the Executive all
compensation and benefits due and payable to the Executive, or as to which the
Executive has vested rights (including, without limitation, rights as a retiree
of the Company based on his age and service), in accordance with the terms and
conditions of the Company's compensation and benefit plans, programs or
arrangements as in effect immediately prior to the Effective Date (except as
otherwise expressly provided in the Agreement).
5. Retirement Benefits.
(a) Separation Payment. Executive shall be entitled to a separation
payment (the "Separation Payment") in an amount equal to three times the sum of
his annual base salary, as in effect immediately prior to the Effective Date,
plus his Minimum Target Bonus (as defined in the Employment Agreement). The
Separation Payment shall be paid in one lump-sum payment on January 2, 2002 (the
sum of Executive's annual base salary and Minimum Target Bonus is hereafter
referred to as his "Annual Cash Compensation").
(b) SERP Benefit.
(i) Subject to the terms and conditions set forth herein, the
Executive shall receive a supplemental retirement benefit (the "SERP
Benefit"), in the form of an unreduced 100% joint and survivor annuity
for his life and that of his current spouse, with the annual benefit
equal to (1) the product of (A) 70% times (B) the Executive's Annual
Cash Compensation reduced by (2) the actuarial equivalent value of the
aggregate annual vested benefit (expressed as a life annuity commencing
on the third anniversary of the date hereof) payable to the Executive
under the terms of
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any and all "defined benefit plans" (as defined in Section 3(35) of the
Employee Retirement Income Security Act of 1974, as amended), including
any excess benefit or supplemental retirement plans or agreements,
whether or not heretofore funded, maintained by the Company or any of
its subsidiaries or affiliates. The actuarial present value of the SERP
Benefit shall be paid to the Executive (or, if he shall not survive, to
his spouse, if then living, or otherwise to his estate) in one lump sum
on January 2, 2002. The lump sum amount shall be calculated in
accordance with Section 4.3 of the Company's Supplemental Executive
Retirement Program for Executives in Career Band 6 and Above, but
applying the discount rate (5.78%) applicable thereunder for lump sum
payments to be paid on the Effective Date.
(ii) Notwithstanding anything in Section 4(b)(i) to the
contrary, if the Company publicly announces that (x) it has entered
into a definitive agreement which, if consummated, would result in a
change in the ownership or effective control of the Company or in the
ownership of a substantial portion of the assets of the Company, or (y)
it has adopted a plan of reorganization or similar plan, which, if
consummated, - would result in the distribution of a substantial
portion of the value of the Company's assets to its shareholders, the
Executive may, by written notice to the Company prior to the date that
is 30 days after the date on which such announcement is made, elect to
receive the SERP Benefit on the date such transaction or such
reorganization is consummated. The Company shall use its reasonable
best efforts to provide written notice to the Executive of such
announcement within five business days of the date on which such
announcement is made.
(iii) The Executive has heretofore executed a Promissory Note
(the "Promissory Note"), dated January 2, 2001, in favor of the
Company. The loan evidenced by the Promissory Note was made by the
Company to the Executive to partially offset the Executive's income tax
liability resulting from the Company's funding of a portion of the SERP
Benefit in 2000. The Executive agrees to pay to the Company, within 60
days following the commencement of the payment of the SERP Benefit (the
date on which the Executive makes such payment, the "Loan Repayment
Date"), the then principal amount outstanding under the Promissory
Note. Any interest accrued under the Promissory Note as of the
Effective Date is hereby forgiven and, from and after the Effective
Date, no interest shall accrue in respect of any unpaid principal. On
the Loan Repayment Date, the Company shall pay to the Executive an
amount equal to the interest on $464,000 (which amount represents the
income tax liability paid by the Executive in excess of the amount
loaned by the Company) at a rate of 6% per annum compounded
semi-annually on June 30 and December 31, for the period beginning on
April 15, 2001 and ending on the Loan Repayment Date (such amount the
"Interest Payment"). The Company shall also pay to the Executive an
additional amount or amounts as a gross-up for any income tax liability
incurred by the
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Executive as a result of the operation of this Section 4(b)(iii)
(including any income recognized by reason of the gross-up obligation
set forth in this sentence) or the deemed income recognition to the
Executive under Section 7872 of the Code in respect of the period after
the Effective Date during which the Promissory Note remains outstanding
and no interest is accrued in respect thereof.
(c) Retirement Perquisites. From and after the Effective Date and
continuing during his lifetime, the Company agrees to provide the Executive with
facilities, services and other arrangements substantially comparable to those
provided to him during his service as Chief Executive Officer, including office
and clerical support, executive transportation and other security services,
financial and tax planning services, continued access to certain other general
facilities and services and reimbursements for properly documented expenses, if
any, incurred on behalf of the Company and at the request of his successor, but
excluding the use of Company-owned aircraft for personal travel.
(d) Benefits Continuation. For the three year period beginning on the
Effective Date, the Company shall also provide the Executive and his eligible
dependents, if applicable; all benefits (other than participation in any defined
benefit pension plan or any plan providing short-term or long-term disability
benefits or business travel accident insurance) that would otherwise have been
made available to the Executive under the terms of the Company's compensation
and benefit plans, programs or arrangements had the Executive remained employed
as a senior officer until the third anniversary of the Effective Date. Without
limiting the generality of the forgoing, until the third anniversary of the
Effective Date, the Executive shall be entitled to a continuation of (x) any
relocation benefit the Executive is receiving as of the Effective Date in
connection with his relocation from Minneapolis, Minnesota to the New Jersey/New
York area and (y) coverage under the Executive Life Insurance policy as in
effect on the Effective Date.
(e) Treatment of Equity Awards. All of the Executive's outstanding
equity awards shall be treated in accordance with the terms of the plan and
agreements evidencing such equity awards, including, without limitation, the
Employment Agreement; provided, however, that the Performance Option (as defined
in the Employment Agreement) and the Restricted Units shall be canceled as of
the Effective Date, and the Executive shall have no right to receive any payment
in respect of such Performance Option or Restricted Units except as specifically
provided in this agreement.
(f) Tax Indemnity. Notwithstanding anything in this Agreement to the
contrary, the provisions of Section 5(d) of the Employment Agreement shall
remain in full force and effect as though incorporated herein and made a part
hereof.
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(g) Deferred Salary and Incentive Compensation. The Executive's
participation in the deferred incentive and deferred salary program shall end as
of the Effective Date; provided, however, that previously deferred compensation
shall be paid in accordance with the Executive's election. The Executive shall
continue to earn the 11% rate on his bonus and salary deferrals made prior to
the Effective Date.
(h) No Mitigation. In no event shall the Executive be obligated to seek
other employment or take any other action by way of mitigation of the amounts
payable to the Executive under any of the provisions of this Agreement and such
amounts shall not be reduced, regardless of whether the Executive obtains other
employment.
6. Confidential Information. The Executive shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or any of its affiliated companies and
their respective businesses that the Executive obtained during the Executive's
employment by the Company or any of its affiliated companies and that is not
public knowledge (other than as a result of the Executive's violation of this
Section 6) ("Confidential Information"). The Executive shall not communicate,
divulge or disseminate Confidential Information at any time, except with the
prior written consent of the Company or as otherwise required by law or legal
process.
7. Competition; Solicitation. For two years after the Effective Date,
the Executive will not, without the written consent of the Board of Directors,
directly or indirectly, (i) knowingly engage or be interested in (as owner,
partner, stockholder, employee, director, officer, agent, consultant or
otherwise), with or without compensation, any business which is in competition
with any line of business actively being conducted on the Effective Date by the
Company or any of its subsidiaries, and (ii) hire any person who was employed by
the Company or any of its subsidiaries or affiliates (other than persons
employed in a clerical or other nonprofessional position) within the six-month
period preceding the date of such hiring, or solicit, entice, persuade or induce
any person or entity doing business with the Company and its subsidiaries and
affiliates, to terminate such relationship or to refrain from extending or
renewing the same. Nothing herein, however, will prohibit the Executive from
acquiring or holding not more than one percent of any class of publicly traded
securities of any such business; provided that such securities entitle the
Executive to no more than one percent of the total outstanding votes entitled to
be cast by security holders of such business in matters on which such security
holders are entitled to vote.
8. Cooperation and Nondisclosure. Each of the Executive and the Company
agree to cooperate fully with the other party hereto in any matters that have
given or may give rise to a legal claim against such other party and of which
the Executive or the Company, as the case may be, is knowledgeable. This
requires the Executive or the Company, as the case may be, without limitation,
to (1) make himself or itself available upon reasonable request to provide
information and assistance
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to the other party on such matters without additional compensation, except for
out of pocket costs, provided however that reasonable compensation shall be
provided as mutually agreed, if such assistance requires a significant amount of
time, (2) maintain the confidentiality of all privileged or confidential
information of the other party, including without limitation attorney-client
privileged communications and attorney work product, unless disclosure is
expressly authorized by the other party, and (3) notify the other party promptly
of any requests to the Executive or the Company, as the case may be, for
information related to any pending or potential legal claim or litigation
involving the other party, reviewing any such request with the Executive or a
designated representative of the Company, as the case may be, prior to
disclosing any such information, and permitting the Executive or a
representative of the Company, as the case may be, to be present during any
communication of such information. To the extent that the Executive is required
to provide assistance to the Company on such matters, the Company will provide
appropriate legal counsel for the Executive.
9. Non-Disparagement. The Executive agrees not to make disparaging or
derogatory comments about, or to otherwise disparage, demean or impugn the
reputation of the Company, its officers, directors, employees, or consultants or
their respective families, and the Company agrees not to make disparaging or
derogatory comments about, or to otherwise disparage, demean or impugn the
reputation of the Executive or his family.
10. Release.
(a) Additional Consideration. The Company offers the Executive the
benefits provided under Section 4 hereof (collectively, the "Retirement
Benefits") in exchange and consideration for the Executive's entering into this
Agreement. By signing this Agreement, Executive agrees that (i) the Separation
Payment is in full payment of all benefits to which he may be entitled under any
current or former severance pay plans or policies or agreements sponsored by the
Company or any of its subsidiaries or affiliates, (ii) at least a substantial
portion of such Retirement Benefits (the "Additional Consideration") is in
addition to any other benefit to which he may otherwise be entitled under any
current or former sponsored, insurance, savings, employee stock ownership,
disability, early retirement, pension or other benefit plans or policies of the
Company or any of its subsidiaries or affiliates and (iii) the Additional
Consideration is a valuable benefit to which he is not otherwise entitled.
(b) Executive's Release. In exchange for the Additional Consideration,
Executive hereby waives and hereby releases, knowingly and willingly, the
Company, its subsidiaries, affiliates, successors and predecessors and its
employees, agents, directors and officers, past and present (collectively, the
"Company Releasees"), from the Released Claims (as defined herein). The
Executive acknowledges and understands that, except as expressly provided
herein, this paragraph is intended to prevent him from making any claims against
the Company
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Releasees regarding any Released Claim. In exchange for the Additional
Consideration, the Executive agrees and covenants not to xxx and not to bring an
action of any kind against the Company Releasees before any court or other forum
related to the Released Claims. If the Executive breaches the terms of this
Section 10(b) by bringing an action seeking personal relief for himself against
the Company, he agrees to pay the Company's attorneys' fees it incurs in
defending against such suit.
(c) Definition of Released Claims. For purposes of this Section 10, the
term "Released Claims" means any and all claims of any nature whatsoever
Executive may have arising out of his employment and/or the termination of his
employment with the Company, known or unknown, including but not limited to any
claims he may have under federal, state or local employment, labor, or
anti-discrimination laws, statutes and case law. Released Claims specifically
include claims arising under the federal Age Discrimination in Employment Act,
the Employee Retirement Income Security Act ("ERISA"), any New Jersey
employment, labor, or anti-discrimination law, statute or case law and any and
all other applicable state, county or local statutes, ordinances or regulations
including claims for attorneys' fees. Notwithstanding the forgoing, this release
does not apply to, and the term Released Claims does not include, (i) claims for
benefits under benefit plans (other than any plan providing severance or other
termination benefits) sponsored or maintained by the Company or any of its
subsidiaries or affiliates, whether or not subject to ERISA, (ii) claims arising
out of obligations expressly undertaken in this Agreement, and (iii) claims
arising out of any act or omission occurring after the date of this Agreement.
(d) Company's Release. In consideration of the Company's execution and
performance under this Agreement, the Company hereby waives and releases the
Executive from and agrees to defend and indemnify to the fullest extent
permitted under applicable law the Executive against, all claims, actions,
liabilities, damages, costs, and expenses (including attorneys' fees) arising
from his performance of duties, in good faith, in the normal course of business
and within the proper scope of his employment duties and responsibilities during
his period of employment with the Company. Notwithstanding the forgoing, (i) the
Company will not provide the indemnity to the Executive with respect to any
settlement he may enter into with any claimant unless all of the terms of such
settlement have previously been approved in writing by the Company, and (ii) the
Company will not reimburse the Executive for the costs and expense (including
attorneys' fees) of any claim, counterclaim, or cross-claim brought by the
Executive or on his behalf unless approved in writing by the Company. It is
expressly understood that, as a condition of the Company's agreement to
indemnify the Executive, the Executive agrees to cooperate fully with the
investigation, defense and settlement of any pending or future claims or actions
brought against the Company.
11. Dispute Resolution; Attorneys' Fees. All disputes arising under or
related to the employment or retirement of the Executive or the provisions of
this Agreement shall be settled by arbitration under
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the rules of the American Arbitration Association then in effect, such
arbitration to be held in Morristown, New Jersey, as the sole and exclusive
remedy of either party and judgment on any arbitration award may be entered in
any court of competent jurisdiction. The Company agrees to pay, as incurred, to
the fullest extent permitted by law, all legal fees and expenses that the
Executive may reasonably incur as a result of any contest (regardless of the
outcome) by the Company, the Executive or others of the validity or
enforceability of or liability under, or otherwise involving, any provision of
this Agreement, together with interest on any delayed payment at the applicable
federal rate provided for in Section 7872(f)(2)(A) of the Code. The Company
shall also pay all reasonable legal fees and expenses incurred by the Executive
in connection with the preparation and negotiation of this Agreement.
12. Successors.
(a) This Agreement is personal to the Executive and, without the prior
written consent of the Company, shall not be assignable by the Executive (except
that Executive's rights to all or any portion the Retirement Benefits payable
hereunder may transfer upon his death in the manner provided herein or by will
or pursuant to the laws of descent and distribution). This Agreement shall inure
to the benefit of and be enforceable by the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.
(c) The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company expressly to
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would have been required to perform it if no such
succession had taken place. As used in this Agreement, the "Company" shall mean
both the Company as defined above and any such successor that assumes and agrees
to perform this Agreement, by operation of law or otherwise.
13. Miscellaneous.
(a) This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New Jersey, without reference to principles of
conflict of laws. The captions of this Agreement are not part of the provisions
hereof and shall have no force or effect. This Agreement may not be amended or
modified except by a written agreement executed by the parties hereto or their
respective successors and legal representatives.
(b) All notices and other communications under this Agreement shall be
in writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
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If to the Executive:
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-----------------------------
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If to the Company:
Honeywell International, Inc.
000 Xxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attention: General Counsel
or to such other address as either party furnishes to the other in writing in
accordance with this paragraph (b) of Section 13. Notices and communications
shall be effective when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement. If any provision of this Agreement shall be held invalid or
unenforceable in part, the remaining portion of such provision, together with
all other provisions of this Agreement, shall remain valid and enforceable and
continue in full force and effect to the fullest extent consistent with law.
(d) Notwithstanding any other provision of this Agreement, the Company
may withhold from amounts payable under this Agreement all federal, state, local
and foreign taxes that are required to be withheld by applicable laws or
regulations.
(e) The Executive's or the Company's failure to insist upon strict
compliance with any provisions of, or to assert, any right under, this Agreement
shall not be deemed to be a waiver of such provision or right or of any other
provision of or right under this Agreement.
(f) The rights and benefits of the Executive under this Agreement may
not be anticipated, assigned, alienated or subject to attachment, garnishment,
levy, execution or other legal or equitable process except as required by law.
Any attempt by the Executive to anticipate, alienate, assign, sell, transfer,
pledge, encumber or charge the same shall be void. Payments hereunder shall not
be considered assets of the Executive in the event of insolvency or bankruptcy.
(g) This Agreement may be executed in several counterparts, each of
which shall be deemed an original, and said counterparts shall constitute but
one and the same instrument.
(h) Executive acknowledges and certifies that he:
o has read and understands all of the terms of this Agreement
and does not rely on any representation or statement, written
or oral, not set forth in this Agreement;
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o has had a reasonable period of time to consider this
Agreement;
o is signing this Agreement knowingly and voluntarily;
o has been advised in writing to consult with an attorney before
signing this Agreement;
o was provided with the right to consider the terms of this
Agreement for 21 days and, by executing this Agreement, waives
any and all rights to the balance of the 21 day review period;
and
o has the right to revoke this Agreement within seven days after
executing this Agreement, by providing written notice of
revocation to the Secretary of the Company. If the Executive
revokes this Agreement during this seven-day period, it shall
become null and void in its entirety and the Employment
Agreement shall be deemed to continue in full force and effect
as though this Agreement had never been executed.
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization of its Board, the Company has caused this
Agreement to be executed in its name on its behalf, all as of the day and year
first above written.
Honeywell International, Inc.
[Seal]
Attest:
/s/ Xxxxx X. Xxxxxxxxx By: /s/ Xxxxxx X. Xxxxxxx
---------------------- ---------------------
Xxxxx X. Xxxxxxxxx Xxxxxx X. Xxxxxxx
Director and Chairman
of the Management
Development and
Compensation Committee
/s/ Xxxxxxx X. Xxxxxxxxxx
-------------------------
Xxxxxxx X. Xxxxxxxxxx
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