Caterpillar Tractor will sell a unit to Sundstrand.

An agreement in principle calls for the Turbomach division of San Diego-based Solar Turbines to be sold for $100 million in cash plus royal payments to Sundstrand Corp. of Rockford, Ill. Turbomach, which makes small gas turbine engines for aircraft auxiliary power, generated product sales in 1984 of $73.3 million. Sundstrand intends to keep Turbomach’s operations and its 500 employees in San Diego, officials said.