Exhibit (10)(a)
SUNDSTRAND CORPORATION
Corporate offices
0000 Xxxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxxx, Xxxxxxxx 00000-0000
Phone (000) 000-0000
TWX 910-4255
Telex 25-7440
August 7, 1996
Xx. Xxxxx X. Xxxxxxxx
0000 Xxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Dear Xxx:
The purpose of this letter agreement is to set forth terms
and conditions under which you will resign your employment with
Sundstrand Corporation ("Sundstrand") and the Company, effective
as of the earliest of (a) December 31, 1996, (b) the date of your
acceptance of employment with another employer, or (c) such other
date as you determine to be effective 14 days after written
notice to the Secretary of the Company (the "Resignation Date").
When used in this letter agreement, "Company" shall include
Sundstrand and all of the subsidiary companies owned or
controlled by Sundstrand, as well as any business entity in which
Sundstrand has an equity interest. Your signing below will
indicate your agreement with the provisions of this letter
agreement, which supersedes all prior negotiations,
understandings and agreements and constitutes the entire
agreement between Sundstrand and you, with both parties intending
to be legally bound and acknowledging that modifications hereto
may be made only in writing.
Until the Resignation Date you will remain on Sundstrand's
payroll, with participation in all benefit plans and programs in
which you currently participate, but subject to modifications
effective to any such plan or program which apply to all
participants in the plans. In the event the Resignation Date
precedes December 31, 1996, Sundstrand will pay you, within 10
days after the Resignation Date and in a lump sum, an amount
equal to your salary for the period from the Resignation Date
through December 31, 1996. You will receive a bonus payment
pursuant to the Officer Incentive Compensation Plan for the year
1996 as though you were employed through December 31, 1996,
computed and paid in accordance with the provisions of the plan.
Such payment shall be made at the same time as bonuses are paid
to officers participating in the plan, but in no event prior to
February 28, 1997, or later than March 15, 1997. It is
recognized that, in the performance of your duties, you will be
gone from time to time to seek other employment.
Xxxxx X. Xxxxxxxx
August 7, 1996
Page 2
All options under the Sundstrand Corporation Stock
Incentive Plan (the "Stock Plan") that are not exercisable as of
the Resignation Date will be made exercisable as of such date and
will remain exercisable for a period of one year thereafter. As
of the date of this letter agreement, you have options for 19,000
shares of Sundstrand common stock, of which 5,000 options are
currently exercisable. Unless the Resignation Date occurs
earlier, 2,250 options will become exercisable on November 15,
1996, and 2,500 will become exercisable on December 1, 1996. Any
options which became exercisable prior to the Resignation Date
will not have the exercise period affected by the Resignation
Date.
You currently own 4,000 restricted shares of Sundstrand
common stock under the Stock Plan and 8,700 restricted shares
under the 1989 Restricted Stock Plan. None of these restricted
shares is scheduled to vest from the date of this letter
agreement through December 31, 1996. Sundstrand will repurchase
all these restricted shares (the "Restricted Shares") at the
price you paid for them ($.25 per share). Additionally,
Sundstrand will pay you, subject to the provisions of the
following paragraph, the "Value of the Restricted Shares", which
shall be determined by multiplying the number of the Restricted
Shares by the average of the closing prices on the New York Stock
Exchange of one share of Sundstrand common stock during the 30
calendar-day period preceding the Resignation Date, less the $.25
per share paid you pursuant to the preceding sentence.
Within 10 days following the Resignation Date, Sundstrand
shall determine whether there is any deficiency in the amount of
the collateral you have provided for your loan under the Elected
Officers' Loan Program (the "Loan Program"). In determining
whether a deficiency exists, Sundstrand shall take into
consideration the average of two appraisals which you obtain, at
your discretion, at least 10 days but not more than 20 days prior
to the Resignation Date from reliable appraisal experts of
residential property in the areas of the city of Rockford and
Winnebago, Xxxxx and XxXxxxx Counties (the "Appraisers"). The
Appraisers engaged will be subject to Sundstrand's advance
approval, which approval will not be unreasonably withheld. The
Appraisers shall determine the reasonable market value, as of the
Resignation Date, of your Xxxxx County residence which is part of
the collateral you have provided for your loan under the Loan
Program (which market value may not exceed the greater of the
price at which it is presently listed for sale or its then listed
price). If having considered the average of the appraisals, less
the customary real estate commission in Xxxxx County, the
Executive Vice President and Chief Financial Officer of
Sundstrand determines that the collateral for your loan under the
Loan Program is deficient, the amount of any deficiency so
Xxxxx X. Xxxxxxxx
August 7, 1996
Page 3
determined will be withheld from the amount due you as the Value
of the Restricted Shares and shall be applied to pay down your
loan under the Loan Program so that your collateral will then be
sufficient for the remaining loan balance. If your Xxxxx County
residence is sold before your Resignation Date, you agree to
apply the net proceeds to the repayment of your loan and,
following such repayment if the Executive Vice President and
Chief Financial Officer of Sundstrand determines there is a
deficiency in the collateral for the remaining loan balance,
Sundstrand agrees to accept as collateral an interest in the
Restricted Shares equal in amount to the deficiency of the
collateral. Payment of the Value of the Restricted Shares, plus
the $.25 per share repurchase price, less the amount of any Loan
Program collateral deficiency, will be paid to you in cash within
ten days after Sundstrand's determination following the
Resignation Date of such deficiency, if any. You agree that,
upon the sale of your Xxxxx County residence, before or after the
Resignation Date, the net proceeds from such sale will be applied
to the repayment of your loan under the Loan Program, unless
prior to such sale you have repaid such loan. You further agree
that, upon the later of your Resignation Date or the sale of your
Xxxxx County residence, you will fully liquidate your outstanding
loan balance under the Loan Program.
Following the Resignation Date and pursuant to the Federal
law commonly known as "COBRA", you will receive a notice
announcing your right to elect continued coverage for yourself
and your eligible dependent under Sundstrand's medical plan for
active employees. In the event you elect to continue the
coverage, Sundstrand will charge you the active employee premium
rate for the level of coverage you elect until the first to occur
of the date (a) that is 18 months following the Resignation Date,
(b) on which you are covered under comparable coverage from
another employer, or (c) as of which you rescind your coverage
election and/or cease premium payment. It is further understood
that if such coverage shall cease because of the operation of
clause "(a)" in the preceding sentence, you will have 6 months
thereafter of COBRA continuation at the regular COBRA premium for
the level of coverage you elect, such coverage to continue until
the first to occur of (x) the expiration of such 6-month period,
(y) the date on which you are covered under comparable coverage
from another employer, or (z) the date as of which you rescind
your coverage election and/or cease paying the premium.
In the event you have not secured other employment by
February 1, 1997, you and your spouse may arrange through Sundstrand
to have a physical examination performed at a medical facility generally
used by Sundstrand's elected officers for such purpose; provided
that you must notify Sundstrand of your desire to have such
medical examination by no later than February 28, 1997, and such
Xxxxx X. Xxxxxxxx
August 7, 1996
Page 4
medical examination must be completed by no later than April 30,
1997. The examination must be scheduled by Sundstrand in order
for its cost to be paid by Sundstrand, and the examination that
will be ordered for you and your spouse will be that which is
otherwise provided to an elected officer and spouse with age and
medical histories similar to those of yourself and your spouse.
Sundstrand will pay expenses attendant to this physical
examination except those related to transportation to and lodging
at the site of the examination, which expenses shall be borne by
you.
But for the fact that your Resignation Date will occur prior
to February 28, 1997, you would on that date have become vested
in a (1) deferred retirement benefit under the Sundstrand
Corporation Retirement Plan-Aerospace (the "Aerospace Plan"), (2)
a supplemental pension benefit from the non-tax-qualified
Sundstrand Corporation Supplemental Retirement Plan ((1) and
(2)collectively, "Pension Plan"), and (3) a Sundstrand matching
contribution under its 401(k) program. In order that you may
vest in and have a nonforfeitable right to these benefits,
Sundstrand will consider you as reinstated to employment whether
or not you are physically capable of employment on February 28,
1997, and terminate your employment the same day. This day of
reinstatement will give rise to no other compensation or benefit
eligibility, its sole purpose being to allow your vesting in
Pension Plan benefits and the matching contribution under the
401(k) program. Only for purposes of applying the Aerospace
Plan's early retirement reduction factors in lieu of actuarial
factors in the calculation of your total Pension Plan benefit
will your resignation be treated as a layoff due to corporate
restructuring. Consequently, Section 6.5 of the Aerospace Plan
will apply to the calculation of your benefit, and the benefit
will be calculated in accordance with the table contained in
Section 4.2 of the Aerospace Plan as such Section is in effect on
July 22, 1996. Deeming your resignation to be a layoff for the
sole purpose expressed in this paragraph will give rise to no
other benefit or entitlement normally available to laidoff
employees under any Sundstrand plan, policy or practice.
From the effective date of this agreement until the
earlier of December 31, 1996, or the date you secure other
employment, Sundstrand will cover the expenses of an outplacement
counselor of your selection, up to a maximum of $7,500. You
should instruct the selected counselor to xxxx Sundstrand
directly for the performance of such services. Such billing
shall be kept in confidentiality by Sundstrand and reasonable
efforts will be taken by Sundstrand to ensure privacy in this
matter. All other expenses attendant to your obtaining other
employment are your sole responsibility.
Xxxxx X. Xxxxxxxx
August 7, 1996
Page 5
If requested by you, Sundstrand will provide a favorable
letter of recommendation to a prospective employer from the
current Chief Financial Officer or the current Chairman of the
Board of Sundstrand.
Your deferred compensation will continue to be paid in
accordance with the terms of the deferral, and those terms will
not be changed with respect to you.
You acknowledge that the payment of taxes with respect to
any payments or benefits provided by Sundstrand is your sole
responsibility, whether or not income taxes are withheld by
Sundstrand, and you agree to hold Sundstrand harmless from any
obligation in connection therewith.
You acknowledge that you are an officer of Sundstrand and
several of the Companies and (a) are privy to and have knowledge
of trade secrets and other Confidential Information (defined
below), and (b) have occupied a position of trust and confidence
with respect to the Company's business and Confidential
Information. For purposes of this letter agreement,
"Confidential Information" shall mean trade secrets and
information regarding all aspects relative to the financial
affairs and financial projections of the Company, existing and
proposed products, processes, techniques, know-how, programs,
costs, margins and pricing structures, business plans, market
analyses and marketing plans, sales figures and customer
relationships, customer lists, and any other information
regarding the Company not generally known or a matter of public
knowledge or available from other sources without restrictions
and not bound to any obligation of confidentiality to the
Company. You agree that from and after the date hereof you will
not, without the written consent of Sundstrand's Chief Executive
Officer, disclose to others any trade secrets or other
Confidential Information of which you have knowledge. The
foregoing notwithstanding, you agree at all times to comply with
the terms and conditions of that certain "Employee Patent and
Confidential Information Agreement" executed by you on or about
your date of hire, February 28, 1992. You also agree immediately
to turn over, at the Resignation Date, to Sundstrand all copies
of documents and other written, printed or graphic matter and
computer materials in your possession or control that relate to
the Company's business.
You agree not to divulge or to disclose, without the prior
written permission from Sundstrand's Chief Executive Officer, at
any time in the future any information concerning the terms of
this letter agreement unless required by court process or order of
court or otherwise required by law. Sundstrand will share the terms of
this letter agreement only with those individuals who have a need to
Xxxxx X. Xxxxxxxx
August 7, 1996
Page 6
know or as required by law in order to maintain your privacy. In
view of the positions you held with the Company, you agree not to
engage in any conduct harmful to the Company or its employees or
businesses and not to publish or otherwise make any statement
which is critical of the Company, its employees, businesses or
products.
You hereby unconditionally release and forever discharge
the Company, its directors, officers, employees and agents, and
their respective predecessors, successors, heirs, personal
representatives and assigns, from any and all actions, claims,
rights, lawsuits, damages and expenses (including attorneys'
fees) of any kind, known or unknown, fixed or contingent,
liquidated or unliquidated, in law or in equity, which you or
your heirs or personal representatives now or in the future may
have, or have ever had, arising from your employment and other
relationships with the Company, except for a breach of this
agreement by Sundstrand. This includes a waiver of any claim you
may have under local, state or federal law, including but not
limited to the Illinois Human Rights Law, the Civil Rights Act of
1964, the Employee Retirement Income Security Act, the Americans
with Disabilities Act, the Consolidated Omnibus Budget
Reconciliation Act of 1985 (in connection with your waiver of any
right you may have to receive a COBRA notice, in regard to your
limited reinstatement on February 28, 1997), and the Age
Discrimination in Employment Act of 1967, as amended by the Older
Workers Benefit Protection Act , in each case as amended, and the
Illinois doctrines of defamation, libel, slander, invasion of
privacy, intentional infliction of emotional distress,
interference with contractual relations, retaliatory discharge,
employment contracts, wrongful discharge, implied contracts or
implied covenants of good faith, fair dealing, any other statute,
authority or law and all other civil rights, human rights and
anti-discrimination statutes, codes, executive orders,
regulations, rules, and ordinances. You agree not to xxx the
Company or any of the other released entities or persons with
respect to claims covered by the foregoing release.
You hereby acknowledge and agree that, in the event of a material
breach of this letter agreement by you, damages constitute an inadequate
remedy at law and that the Company shall be entitled to specific performance
of the terms of this letter agreement, attorneys' fees and/or injunctive
relief. This letter agreement shall be construed in accordance with the laws
of the State of Illinois (other than its conflicts of laws principles)
applicable to contracts made and to be performed entirely within Illinois,
and you and Sundstrand agree that Illinois shall have exclusive personal
jurisdiction over both parties in any lawsuit with respect to this letter
agreement or your employment and other relationships with the Company,
Xxxxx X. Xxxxxxxx
August 7, 1996
Page 7
and venue for any such suit shall lie in any state or federal
court in the City of Rockford, Illinois.
You acknowledge and agree that you would not otherwise be
entitled to receive from Sundstrand the consideration set forth
in the second through ninth paragraphs of this letter agreement,
but for the agreement of Sundstrand herein to provide such
consideration. In the event that the release provisions of this
letter agreement are found by a court and/or agency of competent
jurisdiction to be invalid or unenforceable because of action
taken by you, you agree that you will return to Sundstrand all
consideration and the value of the other benefits provided to you
pursuant to the provisions of this letter agreement.
As to your release and waiver of rights under the Age
Discrimination in Employment Act, you acknowledge that you are
hereby advised to consult with an attorney prior to executing
this release and have been given a period of 21 days within which
to consider its terms. You further acknowledge being informed
that for a period of 7 days following your execution of this
letter agreement, you have the right to revoke said document and
that it shall not become effective or enforceable until such
revocation period has expired.
Very truly yours,
SUNDSTRAND CORPORATION
/s/ Xxxxxxx X. Xxxxxxxxx
Xxxxxxx X. Xxxxxxxxx
Vice President and General
Counsel and Secretary
I have read and agree to the terms and conditions stated above.
Date: August 12, 1996 /s/ Xxxxx X. Xxxxxxxx
__________________ _________________________
Xxxxx X. Xxxxxxxx
