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[CONFORMED COPY]
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1994. COMMISSION FILE NUMBER 1-1035
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ROCKWELL INTERNATIONAL CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 95-1054708
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
2201 SEAL BEACH BOULEVARD, 90740-8250
SEAL BEACH, CALIFORNIA (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
</TABLE>
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (412) 565-4090 (OFFICE OF
THE SECRETARY)
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SECURITIES REGISTERED PURSUANT
TO SECTION 12(B) OF THE ACT:
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<CAPTION>
NAME OF EACH EXCHANGE ON WHICH
TITLE OF EACH CLASS REGISTERED
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$4.75 Convertible Preferred Stock, Series A New York and Boston Stock Exchanges
$1.35 Convertible Preferred Stock, Series B New York Stock Exchange
Common Stock, $1 Par Value New York, Boston, Chicago, Pacific,
Philadelphia, Basel, Frankfurt,
Geneva, Lausanne, London, Tokyo,
Toronto and Zurich Stock Exchanges
8 7/8% Notes due September 15, 1999 New York Stock Exchange
8 3/8% Notes due February 15, 2001 New York Stock Exchange
6 3/4% Notes due September 15, 2002 New York Stock Exchange
</TABLE>
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SECURITIES REGISTERED PURSUANT
TO SECTION 12(G) OF THE ACT:
CLASS A COMMON STOCK, $1 PAR VALUE
(TITLE OF CLASS)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]
The aggregate market value of registrant's voting stock held by
non-affiliates of registrant at November 30, 1994, was approximately $7.2
billion.
181,360,245 shares of registrant's Common Stock, par value $1 per share,
and 36,477,298 shares of registrant's Class A Common Stock, par value $1 per
share, were outstanding on November 30, 1994.
DOCUMENTS INCORPORATED BY REFERENCE
Proxy Statement for the Annual Meeting of Shareowners of registrant to be
held on February 1, 1995. Certain information therein is incorporated by
reference into Part III hereof.
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PART I
ITEM 1. BUSINESS.
Rockwell International Corporation (the Company or Rockwell), a Delaware
corporation incorporated in 1928, is a diversified corporation engaged in
research, development and manufacture of many products for commercial and
government markets. In fiscal 1994, 65% of the Company's total sales were made
to U.S. commercial and international customers, 20% of the Company's total sales
were made under United States Government defense contracts and subcontracts, and
15% of the Company's total sales were made under contracts with the National
Aeronautics and Space Administration (NASA) for space activities. As used
herein, the terms the "Company" or "Rockwell" (and in Item 8, the "company")
include subsidiaries and predecessors unless the context indicates otherwise.
For purposes hereof, whenever reference is made in any Item of this Annual
Report on Form 10-K to information under specific captions in Item 7,
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (the MD&A) or in specific notes of the NOTES TO FINANCIAL STATEMENTS
(the NOTES TO FINANCIAL STATEMENTS) included in Item 8, FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA or under specific captions and on specific pages of the Proxy
Statement for the Annual Meeting of Shareowners of the Company to be held on
February 1, 1995 (the 1995 Proxy Statement), such information shall be deemed to
be incorporated therein by such reference.
BUSINESS SEGMENTS
The Company operates in four business segments, which are engaged in
research, development and manufacture of diversified products as follows:
Electronics--industrial automation equipment and systems; avionics
products and systems and related communications technologies primarily used
in commercial and military aircraft; semiconductor-based subsystems
including fax and data modems, global positioning system receiver engines
and gallium arsenide devices; and defense electronics systems and products
for precision guidance and control, for tactical weapons, and for command,
control, communications and intelligence.
Aerospace--manned and unmanned space systems, rocket engines, military
aircraft and modifications, military and commercial aircraft structural
components, advanced space-based surveillance systems and high-energy laser
and other directed-energy programs.
Automotive--components and systems for heavy- and medium-duty trucks,
buses, trailers and heavy-duty off-highway vehicles (Heavy Vehicle
Systems); and components and systems for light trucks and passenger cars
(Light Vehicle Systems).
Graphic Systems--high-speed printing presses and related graphic arts
equipment.
Financial information with respect to the Company's business segments,
including their contributions to sales and operating earnings and their
identifiable assets for the three years ended September 30, 1994 is contained
under the captions RESULTS OF OPERATIONS, Sales and Earnings by Business
Segment, 1994 Compared to 1993 and 1993 Compared to 1992 in the MD&A, on pages
15-17 hereof, and in Note 22 of the NOTES TO FINANCIAL STATEMENTS on pages 31-32
hereof. Information with respect to the Company's total backlog at September 30,
1994 is contained under the caption RESULTS OF OPERATIONS, Backlog in the MD&A
on page 19 hereof. Additional information with respect to the Company's sales
under United States Government contracts is contained in Notes 14 and 22 of the
NOTES TO FINANCIAL STATEMENTS on pages 27 and 31-32, respectively, hereof and
under the caption RESULTS OF OPERATIONS, Government Contracts in the MD&A on
page 19 hereof.
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Electronics
The sales and operating earnings of the businesses that comprise the
Company's Electronics business segment for the three fiscal years ended
September 30, 1994 were as follows:
<TABLE>
<CAPTION>
1994 1993 1992
------- ------- -------
(IN MILLIONS)
<S> <C> <C> <C>
Sales:
Automation....................................... $ 2,085 $ 1,716 $ 1,471
Avionics......................................... 1,233 1,192 1,322
Telecommunications............................... 699 545 449
Defense Electronics.............................. 998 1,213 1,378
------- ------- -------
Total............................................ $ 5,015 $ 4,666 $ 4,620
====== ====== ======
Operating Earnings............................... $ 688.0 $ 598.1 $ 485.4
====== ====== ======
</TABLE>
Automation. The Company's automation products include programmable
controllers, man-machine interface devices, communications networks, programming
and application software, drives and drive systems, sensing and motor control
devices, machine vision, computer numerical control systems, data acquisition
products and global support services. The Company is a leader in plant floor
automation, focusing on helping customers control processes and become more
competitive through increased flexibility, improved productivity and information
flow.
Avionics. Rockwell's Avionics businesses provide flight control, display,
navigation, voice and data communication and other systems for large commercial
aircraft, regional airliners, corporate jets and turboprops and government
applications as well as military Global Positioning System (GPS) user equipment.
In the face of a lethargic market for new large commercial aircraft, the Company
is introducing new products for customer installation in both new and existing
aircraft, expanding market penetration for Rockwell's digital avionics systems
in regional airline and corporate aircraft, expanding into Russia, Eastern
Europe and China, and developing new markets in land transportation and
commercial GPS applications. The sales and operating earnings of the Company's
Avionics businesses for fiscal 1994 were adversely affected by continuing weak
air transport markets and investments in new product development to address the
growing land transport electronics market.
Telecommunications. In telecommunications, the Company is the world leader
in fax and data modems and produces other advanced semiconductor devices to
process, transmit and receive all types of information. Rockwell's leadership
stems from continuous product improvement, new product development and expansion
into related products. Rockwell's switching systems business pioneered systems
for handling large volumes of telephone calls at telephone companies, airlines,
hotels, telemarketing bureaus and similar high call volume businesses.
Defense Electronics. Rockwell provides a wide range of electronics
products for defense markets worldwide. These products include command, control
and communications devices and systems, aircraft upgrades and modifications,
tactical weapons, space defense sensors and electronics, submarine navigation
and guidance systems, naval combat systems, sensors and a growing number of
commercial products. The Company continued in fiscal 1994 as the sole source
producer of the AGM-130, a precision guided standoff weapon system; the prime
contractor for the AGM-114F HELLFIRE anti-armor weapon system; the producer of
the GBU-15 guided weapon; the prime contractor for the Australian New Submarine
Program Combat System and F-111C Aircraft Modernization Program; the world
leader in very low frequency airborne communications; and a leader in the
military satellite communication terminals market for major programs like
MILSTAR and the Army SMART-T contract.
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Aerospace
The sales and operating earnings of the businesses that comprise the
Company's Aerospace business segment for the three fiscal years ended September
30, 1994 were as follows:
<TABLE>
<CAPTION>
1994 1993 1992
------- ------ -------
(IN MILLIONS)
<S> <C> <C> <C>
Sales:
Space Systems.................................... $ 2,044 $2,279 $ 2,372
Aircraft......................................... 583 727 797
------- ------ -------
Total............................................ $ 2,627 $3,006 $ 3,169
====== ====== ======
Operating Earnings............................... $ 372.2 $369.2 $ 327.9
====== ====== ======
</TABLE>
Space Systems. The Company is a world leader in spacecraft and rocket
propulsion systems. Its space systems businesses built and perform support,
maintenance and modification work for the Space Shuttle orbiters, their main
engines and the Shuttle flight program. They also design the power system for
the space station, build propulsion systems for Atlas and Delta expendable
launch vehicles, and develop advanced technologies for national defense and
space programs such as the National Aero-Space Plane (NASP), for which the
Company also manages the program office. The Company is one of NASA's largest
contractors in terms of dollar volume.
Aircraft. The Company's aircraft operations design, build and modify
military aircraft and supply metal and composite military and commercial
aerostructures. Current activities include support and modification of the B-1B
Lancer bomber, advanced technology programs including the NASP and X-31
experimental aircraft, and aerostructures for Boeing 737, 747 and 777 aircraft.
Rockwell is also competing for the Joint Primary Aircraft Training System.
Automotive
The sales and operating earnings of the businesses that comprise the
Company's Automotive business segment for the three years ended September 30,
1994 were as follows:
<TABLE>
<CAPTION>
1994 1993 1992
------- ------- -------
(IN MILLIONS)
<S> <C> <C> <C>
Sales:
Heavy Vehicle Systems............................ $ 1,744 $ 1,455 $ 1,373
Light Vehicle Systems............................ 1,082 1,081 1,060
------- ------- -------
Total............................................ $ 2,826 $ 2,536 $ 2,433
====== ====== ======
Operating Earnings............................... $ 130.8 $ 126.1 $ 96.0
====== ====== ======
</TABLE>
Heavy Vehicle Systems. Automotive's heavy vehicle systems business is
among the world's leading independent producers of components for heavy- and
medium-duty trucks, buses, trailers and heavy-duty off-highway vehicles.
Rockwell is the leading supplier of heavy truck and trailer axles, brakes and
anti-lock braking systems in North America and completes its drivetrain product
offering with clutch and transmission products. The North American heavy-duty
truck market continued the recovery begun in fiscal 1993 after a multi-year
depression. North American factory sales totaled a record 215,000 units,
compared with 180,000 the previous year. Sales of medium-duty trucks, used
primarily for short hauls and local delivery, were 125,000 units, up from
109,300 in fiscal 1993. Trailer sales rose to a record 255,000 units, up from
197,000 in the prior year.
Light Vehicle Systems. The Company's light vehicle systems business is a
leading supplier of sunroof, door, access control, seat adjuster and suspension
components and systems, electronics and wheels to the world's passenger car and
light truck industries. In the face of continuing customer pressure for reduced
cost, the Company is emphasizing product enhancements which provide added value
and concentrating its
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resources on the systems and electronics product lines. For example, Rockwell is
moving from providing just individual components toward more comprehensive
systems with various power and electronic options. In addition, the Company sold
its automotive plastics business during fiscal 1994. The Company also continues
building relationships and joint ventures which respond to customer needs for
suppliers who provide global design, engineering, manufacturing and service
support. North American passenger car sales were up strongly in fiscal 1994 over
the prior year, and those in Europe increased modestly.
Graphic Systems
The sales and operating earnings (adjusted as noted on page 15) of the
Company's Graphic Systems business segment for the three fiscal years ended
September 30, 1994 were as follows:
<TABLE>
<CAPTION>
1994 1993 1992
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(IN MILLIONS)
<S> <C> <C> <C>
Sales............................................ $ 655 $ 632 $ 688
----- ----- -----
----- ----- -----
Operating Earnings............................... $31.2 $14.8 $21.5
----- ----- -----
----- ----- -----
</TABLE>
Graphic Systems is the world's leading supplier of web offset presses for
newspaper and commercial printing. Three out of four U.S. daily newspapers and
many prestigious newspapers in 100 other countries are printed on Rockwell
presses. The Company's commercial presses are used to produce advertising
inserts, catalogs, magazines and books. Over the past several years, when the
markets worldwide for the Company's graphic systems products suffered their
worst recession in 50 years, Graphic Systems substantially lowered its cost
structure and downsized its manufacturing capacity to reflect market realities.
Key research and development programs were sustained through that recession,
however, resulting in new products that positioned Graphic Systems to meet the
changing performance needs of its customers.
COMPETITIVE POSTURE
The Company competes with many manufacturers which, depending on the
product involved, range from large diversified enterprises comparable in scope
and resources to the Company to smaller companies specializing in particular
products. Factors which affect the Company's competitive posture are its
research and development efforts, the quality of its products and services and
its marketing and pricing strategies. For the United States Government's fiscal
year ended September 30, 1993 (the latest year for which data have been
published), the Company was awarded the largest dollar volume of NASA's prime
contracts and the 16th largest dollar volume of prime contracts for the Defense
Department.
The products of the Company's Electronics and Graphic Systems business
segments are sold by their own sales forces and through distributors and agents.
The Company's automotive components primarily are sold directly to original
equipment manufacturers, some of which also are competitors in that they produce
for their own use many of the products manufactured by the Company. Management
believes that the Company is one of the largest independent manufacturers of
automotive components and parts in North America and the world's largest
manufacturer of web offset printing presses.
GOVERNMENT CONTRACTING RISKS
In addition to normal business risks, companies engaged in supplying
military and space equipment to the United States Government are subject to
unusual risks, including dependence on Congressional appropriations and
administrative allotment of funds, changes in governmental procurement
legislation and regulations and other policies which may reflect military and
political developments, significant changes in contract scheduling, complexity
of designs and the rapidity with which they become obsolete, constant necessity
for design improvements, intense competition for available United States
Government business necessitating increases in time and investment for design
and development, difficulty of forecasting costs and schedules when bidding on
developmental and highly sophisticated technical work and other factors
characteristic of the industry. Changes are customary over the life of United
States Government contracts, particularly development contracts, and generally
result in adjustments of contract prices. Additional information on the
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Company's pending claims for termination costs and certain contractual disputes
is contained under the caption RESULTS OF OPERATIONS, Government Contracts in
the MD&A on page 19 hereof.
Moreover, various claims (whether based on United States Government or
Company audits and investigations or otherwise) have been or may be instituted
or asserted against the Company related to its United States Government contract
work, including claims based on business practices and cost classifications.
Although such claims are usually resolved by detailed fact-finding and
negotiation, on those occasions when they are not so resolved, civil or criminal
legal or administrative proceedings may ensue. Depending on the circumstances
and the outcome, such proceedings could result in fines, the cancellation of or
suspension of payments under one or more United States Government contracts,
suspension or debarment proceedings affecting potential further business with
the United States Government, or alteration of the Company's procedures relating
to the performance or obtaining of United States Government contracts.
Management of the Company believes there are no claims, audits or investigations
currently pending which will have a material adverse effect on either the
Company's business or its financial condition.
ACQUISITIONS AND DISPOSITIONS
The Company regularly considers the acquisition or development of new
businesses and reviews the prospects of its existing businesses to determine
whether any of them should be modified, sold or otherwise discontinued. The
Company purchased and sold the assets or stock of several businesses during
fiscal 1994.
In December 1994 the Company acquired approximately 62% of the outstanding
common stock on a fully-diluted basis (constituting approximately 88% of the
outstanding voting common stock) of Reliance Electric Company (Reliance), a
major manufacturer of industrial products and telecommunications equipment with
annual sales of $1.7 billion. Pursuant to a merger agreement between the Company
and Reliance, the Company intends to effect in early 1995 a merger in which
Reliance will become a wholly-owned subsidiary of the Company. The aggregate
purchase price for Reliance will be approximately $1.6 billion. The Company
intends to divest Reliance's telecommunications business, which has annual sales
of approximately $440 million. Certain financial information regarding Reliance
and certain unaudited pro forma financial information in respect of the Company
and Reliance is included in the Company's Current Report on Form 8-K dated and
filed December 21, 1994.
GEOGRAPHIC INFORMATION
The Company conducts operations in the United States and in 35 foreign
countries. Selected financial information by major geographic area for the three
years ended September 30, 1994 is contained in Note 22 of the NOTES TO FINANCIAL
STATEMENTS on page 32 hereof.
The Company's principal markets outside the United States are in Australia,
Brazil, Canada, France, Germany, Italy, Japan, the Netherlands, Spain and the
United Kingdom. In addition to normal business risks, operations outside the
United States are subject to other risks including, among other factors, the
political, economic and social environments, governmental laws and regulations,
and currency revaluations and fluctuations.
RESEARCH AND DEVELOPMENT
Information with respect to research and development efforts of the
Company, which are conducted principally under United States Government
contracts, is contained in Note 16 of the NOTES TO FINANCIAL STATEMENTS on page
28 hereof. The Company's Science Center conducts a basic research program to
support the strategies of the operating businesses.
At September 30, 1994, the Company employed approximately 14,200
professional engineers and scientists and 3,400 supporting technical personnel,
most of whom are engaged in a wide variety of activities on United States
Government contracts and subcontracts.
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EMPLOYEES
At September 30, 1994, the Company had 71,891 employees, of whom 18,913
were employed outside the United States.
RAW MATERIALS AND SUPPLIES
Raw materials essential to the conduct of all the Company's business
segments generally are available at competitive prices. Many items of equipment
and components used in the production of the Company's products in all the
Company's business segments are purchased from others. In addition, the
Company's Aerospace business segment and the Defense Electronics and Avionics
businesses in the Electronics business segment generally subcontract major
portions of systems. Although the Company has a broad base of suppliers and
subcontractors, it is dependent upon the ability of its suppliers and
subcontractors to meet performance and quality specifications and delivery
schedules.
ENVIRONMENTAL PROTECTION REQUIREMENTS
Information with respect to the effect on the Company and its manufacturing
operations of compliance with environmental protection requirements and
resolution of environmental claims is contained under the caption RESULTS OF
OPERATIONS, Environmental Issues in the MD&A, on pages 18-19 hereof. See also
Item 3, LEGAL PROCEEDINGS, on pages 8-9 hereof.
PATENTS, LICENSES AND TRADEMARKS
Numerous patents and patent applications are owned by the Company and
utilized in its activities and manufacturing operations. It also is licensed
under patents owned by others. Various claims of patent infringement have been
made against the Company. Management believes that none of these claims will
have a material adverse effect on the consolidated financial statements of the
Company. While in the aggregate the Company's patents and licenses are
considered important in the operation of its business, management does not
consider them of such importance that loss or termination of any one of them
would materially affect the Company's business.
The Company's name, its registered trademarks "Rockwell" and "Rockwell
International" and its symbol are important to all of its business segments. In
addition, the Company owns a large number of other important trademarks
applicable to only certain of its products, such as "Collins" for navigation and
communication equipment, "Allen-Bradley" and "A-B" for electronic controls and
systems for industrial automation and "Goss" for printing presses.
SEASONALITY
None of the Company's business segments is seasonal.
ITEM 2. PROPERTIES.
At September 30, 1994, the Company operated 168 plants and research and
development facilities throughout the United States and in Europe, Brazil,
Venezuela, Canada, Mexico, Australia and the Far East. It also had approximately
300 sales offices, warehouses and service centers. These facilities had an
aggregate floor space of approximately 43.6 million square feet. Of this floor
space, approximately 71% was owned by the Company and approximately 23% was
leased, with the balance being made available under facilities contracts for use
in the performance of United States Government contracts. At September 30, 1994,
3.1 million square feet of this floor space (including 2.6 million square feet
in Company-owned facilities) were not in use, with 68% of this unused space
being in facilities previously used under United States Government contracts.
There are no major encumbrances (other than financing arrangements which in the
aggregate are not material) on any of the Company's plants or equipment. In the
opinion of management, the Company's properties have
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been well maintained, are in sound operating condition and contain all equipment
and facilities necessary to operate at present levels. A summary of floor space
of these facilities at September 30, 1994 is as follows:
<TABLE>
<CAPTION>
COMPANY- GOVERNMENT-
OWNED LEASED FURNISHED
LOCATION AND SEGMENTS FACILITIES FACILITIES FACILITIES TOTAL
- ---------------------------------------------------- -------- ---------- ----------- -----
(IN MILLIONS OF SQUARE FEET)
<S> <C> <C> <C> <C>
United States:
Electronics....................................... 9.9 3.7 13.6
Aerospace......................................... 6.4 2.7 2.9 12.0
Automotive........................................ 4.3 0.2 4.5
Graphic Systems................................... 1.2 0.3 1.5
Europe:
Electronics....................................... 0.3 1.3 1.6
Automotive........................................ 3.7 0.3 4.0
Graphic Systems................................... 0.9 0.9
South America:
Electronics....................................... 0.1 0.1
Automotive........................................ 2.0 2.0
Canada and other areas:
Electronics....................................... 0.3 0.7 1.0
Automotive........................................ 0.9 0.1 1.0
Graphic Systems................................... 0.1 0.1
Corporate Offices (including centralized computing
and certain research and development
facilities)....................................... 0.8 0.5 1.3
-------- --- --- -----
Total..................................... 30.8 9.9 2.9 43.6
======= ======= ========= ====
</TABLE>
ITEM 3. LEGAL PROCEEDINGS.
Rocky Flats Plant. On January 30, 1990, two civil actions were brought in
the United States District Court for the District of Colorado against the
Company and another former operator of the Rocky Flats Plant (the Plant),
Golden, Colorado, operated from 1975 through December 31, 1989 by the Company
for the Department of Energy (DOE). Both actions allege the improper production,
handling and disposal of radioactive and other hazardous substances,
constituting, among other things, violations of various environmental, health
and safety laws and regulations, and misrepresentation and concealment of the
facts relating thereto. One action, brought by residents and owners of property
near the Plant, on their own behalf and purportedly on behalf of two classes,
seeks compensatory damages of $250 million for diminution in value of real
estate and other economic loss; the creation of a fund of $150 million to
finance medical monitoring and surveillance services; exemplary damages of $300
million; CERCLA response costs in an undetermined amount; attorneys' fees; an
injunction; and other proper relief. On February 13, 1991, the Court granted
certain of the motions of the defendants to dismiss the residents' case. The
plaintiffs subsequently filed a new complaint, and on November 26, 1991, the
Court granted in part a renewed motion to dismiss. The remaining portion of the
residents' case is pending before the Court. On October 8, 1993, the Court
certified separate medical monitoring and property value classes. The case is
currently in discovery, and trial has been set for February 12, 1996.
In the second action, five present or former employees of the Plant and
labor organizations representing a few of the Plant's employees, on their own
behalf and purportedly on behalf of two classes of present and former employees
of the Plant, sought the creation of a fund to finance reasonable medical
monitoring and surveillance services, unspecified compensatory and exemplary
damages and other proper relief. On March 28, 1991, the Court dismissed the
employees' case. On October 26, 1993, the United States Court of Appeals for the
Tenth Circuit affirmed the judgment of the District Court. The Court denied the
plaintiffs' petition for rehearing and suggestion for rehearing en banc on
December 20, 1993, and the plaintiffs did not file a petition
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for certiorari to the United States Supreme Court. Accordingly, the dismissal of
the employees' case is now final.
On November 13, 1990, the Company was served with a summons and complaint
in another civil action, which the Company believes is totally without merit,
brought against the Company in the same Court by James Stone, claiming to act in
the name of the United States, alleging violations of the U.S. False Claims Act
in connection with the Company's operation of the Plant (and seeking treble
damages and forfeitures) as well as a personal cause of action for alleged
wrongful termination of employment, seeking reinstatement with back pay and
other unspecified damages. On August 8, 1991, the Court dismissed the personal
cause of action. On February 2, 1994, the Court denied Rockwell's motion to
dismiss the complaint for lack of subject matter jurisdiction, and discovery is
proceeding.
The Company believes that it is entitled under applicable law and its
contract with the DOE to be indemnified for all costs and any liability
associated with each of these civil actions, and the Company has been reimbursed
for all such costs incurred to date.
Hanford Nuclear Reservation. On August 6, 1990 and August 9, 1990, civil
actions were filed in the United States District Court for the Eastern District
of Washington against the Company and the present and other former operators of
the DOE's Hanford Nuclear Reservation (Hanford), Hanford, Washington. The
Company operated part of Hanford for the DOE from 1977 through June 1987. Both
actions purport to be brought on behalf of various classes of persons and
numerous individual plaintiffs who resided, worked, owned or leased real
property, or operated businesses, at or near Hanford or downwind or downriver
from Hanford, at any time since 1944. The actions allege the improper handling
and disposal of radioactive and other hazardous substances, in violation of
federal and state environmental, health and safety laws and regulations, and
assert various statutory and common law claims, including claims for negligence,
strict liability, trespass, nuisance, infliction of emotional distress, civil
conspiracy and misrepresentation and concealment of the alleged hazards
generated at Hanford. The relief sought includes unspecified compensatory and
punitive damages for personal injuries and for economic losses, including lost
income and diminution in value of businesses and property, orders of abatement,
creation of a fund to finance monitoring services and scientific studies of
adverse health effects, and various injunctive and other equitable relief. These
actions and the follow-on claims described below have been (and any additional
follow-on claims that may be filed are expected to be) consolidated in the
United States District Court for the Eastern District of Washington under the
name In re Hanford Nuclear Reservation Litigation. On or about December 7, 1994
the Consolidated Tribes and Bands of the Yakama Indian Nation filed a motion to
intervene as a party plaintiff in the consolidated litigation, joining in the
allegations and claims made by the other plaintiffs and asserting on behalf of
the approximately 8,500 members of the Yakama Indian Nation claims for damage to
natural foods, impairment of food gathering rights and impairment of access to
ancestral lands.
Other cases asserting similar claims (the follow-on claims) on behalf of
the same and similarly situated individuals and groups have been filed from time
to time since August 1990, and may continue to be filed from time to time in the
future. Because the claims and classes of claimants included in the actions
described in the preceding paragraph are so broadly defined, the follow-on
claims filed as of December 21, 1994 have not altered, and possible future
follow-on claims are not expected to alter, in any material respect the scope of
the litigation.
Effective October 1, 1994, the DOE assumed control of the defense of
certain of the contractor defendants (including the Company) in the In re
Hanford Nuclear Reservation Litigation. Beginning on that date, the costs of the
Company's defense, which had previously been reimbursed to the Company by the
DOE, have been and are being paid directly by the DOE. The Company believes it
is entitled under applicable law and its contracts with the DOE to be
indemnified for all costs and any liability associated with these actions.
Other. Various other lawsuits, claims and proceedings have been or may be
instituted or asserted against the Company relating to the conduct of its
business, including those pertaining to product liability, environmental, safety
and health, employment, and government contract matters. Although the outcome of
litigation cannot be predicted with certainty and some lawsuits, claims or
proceedings may be disposed of
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unfavorably to the Company, management believes the disposition of matters which
are pending or asserted will not have a material adverse effect on the Company's
financial statements.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of security holders during the fourth
quarter of the 1994 fiscal year.
ITEM 4A. EXECUTIVE OFFICERS OF THE COMPANY.
The name, age, positions and offices held with the Company and principal
occupations and employment during the past five years of each of the executive
officers of the Company as of November 30, 1994 are as follows:
<TABLE>
<CAPTION>
NAME, OFFICE AND POSITION, AND PRINCIPAL OCCUPATIONS AND EMPLOYMENT AGE
----------------------------------------------------------------------------- ---
<S> <C>
DONALD R. BEALL--Chairman of the Board and Chief Executive Officer of
Rockwell................................................................... 56
W. MICHAEL BARNES--Senior Vice President, Finance & Planning and Chief
Financial Officer of Rockwell since July 1991; Vice President, Business
Development and Planning of Rockwell prior thereto......................... 52
KENT M. BLACK--Executive Vice President and Chief Operating Officer of
Rockwell................................................................... 55
WILLIAM J. CALISE, JR.--Senior Vice President, General Counsel and Secretary
of Rockwell since November 1994; senior partner of Chadbourne & Parke (law
firm) prior thereto........................................................ 56
ROBERT L. CATTOI--Senior Vice President and Technical Adviser to the Office
of the Chairman of Rockwell since March 1994; Senior Vice President,
Research and Engineering of Rockwell from November 1993 to March 1994 and
prior to June 1991; Senior Vice President, Research, Engineering &
Manufacturing Processes of Rockwell from June 1991 through October 1993.... 68
LEE H. CRAMER--Vice President and Treasurer of Rockwell...................... 49
DON H. DAVIS, JR.--Executive Vice President and Chief Operating Officer of
Rockwell since January 1994; Senior Vice President and President,
Automation of Rockwell from June 1993 to January 1994; President of
Allen-Bradley from July 1989 to January 1994............................... 54
THOMAS L. GUNCKEL, II--Senior Vice President, Research, Engineering and
Operations of Rockwell since June 1994; Senior Vice President, Research and
Engineering of Rockwell from March 1994 to June 1994; Vice President and
General Manager, Autonetics Electronic Systems Division of Rockwell prior
thereto.................................................................... 58
CHARLES H. HARFF--Senior Vice President and Special Counsel of Rockwell since
November 1994; Senior Vice President, General Counsel and Secretary of
Rockwell
prior thereto.............................................................. 65
SAM F. IACOBELLIS--Executive Vice President and Deputy Chairman for Major
Programs of Rockwell since June 1993; Executive Vice President and Chief
Operating Officer of Rockwell prior thereto................................ 65
LAWRENCE J. KOMATZ--Vice President and Controller of Rockwell................ 52
RICHARD R. MAU--Senior Vice President, Communications of Rockwell............ 63
JAMES A. MCDIVITT--Senior Vice President, Government Operations and
International of Rockwell since November 1990; Senior Vice President,
Government Operations of Rockwell prior thereto............................ 65
JOHN A. MCLUCKEY--Senior Vice President and President, Defense Systems of
Rockwell since June 1993; President, Defense Electronics of Rockwell from
March 1990 through June 1993; President, Autonetics Electronic Systems
Division of Rockwell prior thereto......................................... 54
ROBERT H. MURPHY--Senior Vice President, Organization and Human Resources of
Rockwell................................................................... 56
WILLIAM A. SANTE, II--General Auditor of Rockwell............................ 51
</TABLE>
10
<PAGE> 11
<TABLE>
<CAPTION>
NAME, OFFICE AND POSITION, AND PRINCIPAL OCCUPATIONS AND EMPLOYMENT AGE
----------------------------------------------------------------------------- ---
<S> <C>
JOHN R. STOCKER--Vice President--Law of Rockwell since November 1994; Vice
President and Associate General Counsel of Rockwell prior thereto.......... 53
CHARLES C. STOOPS, JR.--General Tax Counsel of Rockwell...................... 61
</TABLE>
There are no family relationships, as defined, between any of the above
executive officers. No officer of the Company was selected pursuant to any
arrangement or understanding between him and any person other than the Company.
All executive officers are elected annually.
PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The principal market on which the Company's Common Stock, par value $1 per
share, is traded is the New York Stock Exchange. The Company's Common Stock, par
value $1 per share, is also traded on the Boston, Chicago, Pacific and
Philadelphia Stock Exchanges as well as certain stock exchanges outside the
United States as set forth on the cover of this Report. There is no trading
market for the Class A Common Stock, par value $1 per share, but a sale may be
effected by selling the Common Stock into which Class A Common Stock is
convertible. On November 30, 1994, there were 74,660 shareowners of record of
the Company's Common Stock and 57,750 shareowners of record of the Company's
Class A Common Stock.
The following table sets forth the high and low trading price of the
Company's Common Stock on the New York Stock Exchange--Composite Transactions
during each quarter of the Company's fiscal years ended September 30, 1994 and
1993:
<TABLE>
<CAPTION>
1994 1993
------------ ------------
FISCAL QUARTERS HIGH LOW HIGH LOW
------------------------------------------ ---- --- ---- ---
<S> <C> <C> <C> <C>
First..................................... 38 1/2 33 29 3/8 25
Second.................................... 44 1/8 35 3/8 31 27 7/8
Third..................................... 41 34 1/2 34 7/8 29 7/8
Fourth.................................... 37 7/8 33 1/2 36 3/4 30 1/2
</TABLE>
During fiscal year 1994 the Company repurchased, through daily open-market
purchases, 4.1 million shares of Common Stock. Shares repurchased under the
program are to be used for employee stock option and other benefit and
compensation plans, conversion of the Company's convertible securities and other
corporate purposes.
The following table sets forth the aggregate quarterly dividends per common
share (comprised of the Common Stock and Class A Common Stock) during each of
the Company's five fiscal years ended September 30, 1994:
<TABLE>
<CAPTION>
DIVIDENDS PER
FISCAL YEAR COMMON SHARE
-------------------------------------------------------------- -------------
<S> <C>
1994.......................................................... $1.02
1993.......................................................... 0.96
1992.......................................................... 0.92
1991.......................................................... 0.86
1990.......................................................... 0.80
</TABLE>
11
<PAGE> 12
ITEM 6. SELECTED FINANCIAL DATA.
Set forth below is selected financial data for the Company for each of
its last five fiscal years:
SELECTED FINANCIAL DATA ROCKWELL INTERNATIONAL CORPORATION
-------------------------------------------------------------------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
Sales of ongoing businesses $11,123 $10,840 $10,910 $11,437 $ 11,760
Cost of sales 8,675 8,539 8,810 9,189 9,354
Selling, general and administrative expenses 1,412 1,374 1,332 1,371 1,428
Operating earnings of ongoing businesses 1,222 1,108 931 1,131 1,229
Net income 634 562 483* 601 624
Earnings per common share
Primary 2.87 2.55 2.16* 2.57 2.56
Fully diluted 2.82 2.51 2.14* 2.54 2.53
Cash dividends 225 211 206 202 196
Per common share 1.02 .96 .92 .86 .80
Average common shares outstanding (in millions) 221 220 224 234 244
- --------------------------------------------------------------------------------------------------------------
FINANCIAL POSITION AT SEPTEMBER 30
Current assets $ 4,928 $ 4,946 $ 4,839 $ 4,823 $ 4,775
Current liabilities 3,020 2,946 3,112 3,322 3,843
Working capital 1,908 2,000 1,727 1,501 932
Ratio of current assets to current liabilities 1.63 1.68 1.55 1.45 1.24
Property - net 2,383 2,326 2,375 2,461 2,668
Total assets 9,861 9,695 9,731 9,376 9,635
Long-term debt 831 1,028 1,035 740 553
Ratio of total debt to shareowners' equity .30 .40 .43 .24 .32
Shareowners' equity 3,356 2,956 2,778 4,224 4,186
Per common share 15.32 13.35 12.58 18.48 17.49
- --------------------------------------------------------------------------------------------------------------
OTHER STATISTICAL DATA
Backlog at September 30 $10,751 $13,135 $14,564 $16,468 $ 15,487
Payrolls and fringe benefits 4,189 4,285 4,470 4,786 4,942
Depreciation expense 436 432 454 498 500
Capital expenditures 568 433 386 484 538
Number of employees at September 30 71,891 77,028 78,685 87,004 101,923
==============================================================================================================
<FN>
* EXCLUDES THE ONE-TIME CHARGE RELATED TO THE CHANGE IN ACCOUNTING FOR RETIREMENT MEDICAL BENEFITS (SEE NOTE 1 TO FINANCIAL
STATEMENTS). INCLUDING THE EFFECT OF THIS ACCOUNTING CHANGE THE COMPANY HAD A NET LOSS FOR 1992 OF $1,036 MILLION, OR $4.62 PER
SHARE.
</TABLE>
12
<PAGE> 13
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
OVERVIEW
Rockwell again achieved solid earnings growth in 1994 and met or exceeded
the financial goals the Company's management has set as a key part of its
long-term strategy to continuously enhance shareowner value.
The strength of Rockwell's financial condition provides the Company the
liquidity for profitable growth, such as the recent acquisition of Reliance
Electric Company, a major manufacturer of industrial products and
telecommunications equipment, which will cost $1.6 billion. Management believes
the combination of the Company's Allen-Bradley Automation business with Reliance
Electric will expand a formidable worldwide industrial automation franchise that
will significantly increase shareowner value. The acquisition will increase the
Company's total annual sales by $1.2 billion and is expected to have a positive
earnings impact in the first full year after the acquisition.
The Company's 1994 earnings per share increased 13 percent from 1993, the
second consecutive year Rockwell has achieved double-digit earnings per share
growth. The Company's long-term goal is for average annual earnings per share
growth, from the 1992 base, in the low double-digit range.
In 1994 the Company reached a return on shareowners' equity of 20 percent,
which puts it near the top of U.S. businesses. Management's long-term goal is to
continue generating return on shareowners' equity in the 18 to 20 percent range.
Total 1994 year-end debt was $1 billion, down from $1.2 billion a year ago.
During the year the Company redeemed its $200 million 7 1/2% notes, which had
been payable in 1997. The Company's debt to total capital ratio, debt as a
percent of shareowners' equity plus debt, decreased from 29 percent in 1993 to
23 percent in 1994. Management's goal is to maintain a conservative 25 to 35
percent debt to total capital ratio which will provide flexibility to increase
debt when opportunities for attractive acquisitions or investments arise.
With the acquisition of Reliance Electric, the Company's debt to total
capital ratio will temporarily increase to about 47 percent. With the strong
annual cash flow of Rockwell's businesses and management's intention to sell
Reliance's telecommunications segment, management expects the debt to total
capital ratio will return to the 25 to 35 percent goal within a short period of
time.
The Company's "free cash flow" before acquisitions of businesses and
financing activities was $456 million in 1994 and has totaled $983 million over
the past two years. Management's goal is to generate free cash flow of at least
$400 million a year.
Looking ahead to 1995, assuming continued moderate growth in the U.S. and
world economies, management believes the Company will again achieve its earnings
per share, return on equity, and cash generation goals.
FINANCIAL CONDITION
The Company's financial condition remained very strong in 1994. Its
businesses have consistently generated the cash necessary to fund substantial
investments in innovative new products, advanced technologies and manufacturing
processes and aggressive global marketing initiatives necessary to meet the
Company's long-term growth objectives and to sustain its favorable competitive
positions.
Rockwell is among the top ranked companies in research and development. It
invested $595 million in Company funded research and development in 1994. In
addition, the Company spent $1 billion in research and development under
contracts sponsored primarily by the U.S. Government. Company funded research
and development in 1994 was 5.3 percent of sales, but was nearly 7 percent in
the high-growth and very profitable Automation and Telecommunications
businesses.
Capital expenditures rose to $568 million in 1994 compared to $433 million
in 1993. Substantially all of 1994's capital expenditures were for new
facilities and equipment to support growth initiatives, to lower product cost
and to improve product quality. Approximately 50 percent of the Company's 1994
capital
13
<PAGE> 14
expenditures were spent by the Automation and Telecommunications businesses. In
1995, capital spending is planned to approximate the same level as 1994.
Another important use of the Company's cash is payment of dividends and
stock repurchases. In 1994 cash dividend payments totaled a record $225 million,
or 36 percent of net income. The Company also resumed its common stock
repurchase program in the first quarter of 1994 after being out of the market in
most of 1993. Since the Company started this program in 1984, it has purchased a
total of 110 million shares of common stock at an average price of $22.57 per
share.
To provide financing for the acquisition of Reliance Electric as well as
normal working capital requirements, the Company in November 1994 replaced its
existing $.6 billion lines of credit with two new credit agreements with various
banks. The credit facilities total $1.5 billion and $1 billion with terms of
five years and one year, respectively, and may be used to support commercial
paper borrowings as well as for bank borrowings. The Company has obtained
approximately $975 million of the funds required for the acquisition of Reliance
Electric from private placements of the Company's commercial paper notes with
financial institutions.
At September 30, 1994 the Company's long-term debt was rated AA/Aa3 by the
rating agencies and its commercial paper had the highest possible rating.
Following the Company's execution of its merger agreement with Reliance
Electric, Standard & Poor's changed the Company's long-term debt rating from AA
to AA- while Moody's and Duff & Phelps reaffirmed their ratings of Aa3 and AA,
respectively.
14
<PAGE> 15
RESULTS OF OPERATIONS
Sales and Earnings by Business Segment
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30,
---------------------------------------------------
1994 1993 1992 1991 1990
------- ------- ------- ------- -------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
SALES
Electronics
Automation............................. $ 2,085 $ 1,716 $ 1,471 $ 1,387 $ 1,418
Avionics............................... 1,233 1,192 1,322 1,368 1,363
Telecommunications..................... 699 545 449 413 384
Defense Electronics.................... 998 1,213 1,378 1,477 1,342
------- ------- ------- ------- -------
Total................................ 5,015 4,666 4,620 4,645 4,507
------- ------- ------- ------- -------
Aerospace
Space Systems.......................... 2,044 2,279 2,372 2,644 2,895
Aircraft............................... 583 727 797 891 886
------- ------- ------- ------- -------
Total................................ 2,627 3,006 3,169 3,535 3,781
------- ------- ------- ------- -------
Automotive
Heavy Vehicle Systems.................. 1,744 1,455 1,373 1,363 1,547
Light Vehicle Systems.................. 1,082 1,081 1,060 932.... 958
------- ------- ------- ------- -------
Total................................ 2,826 2,536 2,433 2,295 2,505
------- ------- ------- ------- -------
Graphic Systems........................... 655 632 688 962 967
------- ------- ------- ------- -------
Sale of ongoing businesses.................. 11,123 10,840 10,910 11,437 11,760
Divested businesses......................... 490 619
------- ------- ------- ------- -------
Total................................ $11,123 $10,840 $10,910 $11,927 $12,379
======= ======= ======= ======= =======
OPERATING EARNINGS
Electronics............................... $ 688.0 $ 598.1 $ 485.4 $ 547.7 $ 534.1
Aerospace................................. 372.2 369.2 327.9 408.9 446.9
Automotive................................ 130.8 126.1 96.0 53.0 129.7
Graphic Systems........................... 31.2 14.8 21.5 121.0 118.6
------- ------- ------- ------- -------
Operating Earnings of ongoing businesses.... 1,222.2 1,108.2 930.8 1,130.6 1,229.3
Divested businesses......................... 30.0 384.7 53.7
Restructuring of businesses................. (271.5)
General corporate--net...................... (104.3) (100.0) (75.0) (85.2) (86.7)
Interest expense............................ (96.6) (104.1) (107.4) (135.1) (144.3)
Provision for income taxes.................. (387.2) (342.2) (295.4) (423.0) (427.7)
------- ------- ------- ------- -------
Total................................ $ 634.1 $ 561.9 $ 483.0 $ 600.5 $ 624.3
======= ======= ======= ======= =======
<FN>
- ---------
Earnings of the Graphic Systems segment have been adjusted to include interest
income related to customer financing receivables as follows (in millions): 1994,
$11; 1993, $18.5; 1992, $16.8; 1991, $15.8; and 1990, $19.1. Total earnings for
1992 exclude the one-time charge related to the change in accounting for
retirement medical benefits (see Note 1 to Financial Statements). Divested
businesses include the sales, operating earnings and gains on sales of
significant businesses and product lines sold by the company (see Note 22 to
Financial Statements). Restructuring of businesses relates to the business
segments as follows (in millions): Automotive, $194.5; Graphic Systems, $49.6;
Electronics, $17.9; and General corporate--net, $9.5.
</TABLE>
1994 Compared to 1993
Sales in 1994 increased three percent from 1993, even though 1994 sales by
the Aerospace and Defense Electronics businesses declined 14 percent from a year
ago due to the continuing reduction in government spending in defense and space
programs.
15
<PAGE> 16
All of the Company's commercial businesses achieved higher sales in 1994
led by significant increases in Automation, Telecommunications and Heavy Vehicle
Systems. Automation sales increased 22 percent and Telecommunications sales
increased 28 percent due to strong markets and new product driven increased
market shares. Sales of Heavy Vehicle Systems increased 20 percent reflecting
the strong North American truck markets.
In 1994 sales to U.S. commercial and international customers were 65
percent of the Company's total sales, up from 61 percent in 1993. Sales to the
U.S. Department of Defense declined to 20 percent of total sales from 23 percent
in 1993, while sales to NASA were 15 percent compared to 16 percent in 1993.
Rockwell's 1994 international sales totaled $3.5 billion, the highest in the
Company's history.
Net income for 1994 increased 13 percent over 1993. Earnings increases were
recorded by all four of the Company's business segments and, within the
segments, seven of the nine business units. Only Avionics and Aircraft had lower
earnings.
Electronics. 1994 earnings increased 15 percent from 1993 due to the
record sales and earnings performance of the Automation and Telecommunications
businesses, as well as higher earnings by Defense Electronics resulting from
excellent performance and cost containment programs. Although the general
aviation and government avionics product lines had increased sales and earnings
in 1994, total Avionics earnings were below 1993 due to weak air transport
markets and investments in new product development to address the growing land
transportation electronics market.
Automation had an outstanding year with strong demand for Allen-Bradley
products in all of its primary markets worldwide. For the year, Automation's
incoming orders averaged $8.8 million per day, up 21 percent from 1993 and
international sales surpassed 30 percent of total sales for the first time.
During the year, Telecommunications experienced strong demand for its data
modems, principally in the fast growing personal computer market. The business
shipped over 15 million data modems in 1994 compared to approximately 9 million
in 1993, and shipped 8 million facsimile machine modems compared to 6 million in
1993. In September the business launched its next generation very high-speed
data modems which will be ramped up to full production by the end of the first
half of fiscal 1995.
Aerospace. 1994 earnings were slightly ahead of last year even though
sales declined due to the continuing reduction in government spending on defense
and space programs. Higher earnings of the Space Systems business, primarily due
to favorable contract performance and continuing cost reduction programs, more
than offset lower volume-related earnings by the Aircraft business.
Automotive. Both the Heavy Vehicle Systems and Light Vehicle Systems
businesses had small earnings increases in 1994 as compared to 1993. Significant
1994 gains in Heavy Vehicle Systems earnings attributable to the strong North
American truck markets were largely offset by higher product warranty
provisions. The product warranty provisions include higher than anticipated
costs related to the business' extended warranty program as well as a charge to
recognize the cost of inspections and potential field modifications of certain
transmission products.
In Light Vehicle Systems, higher 1994 earnings from increased North
American sales and a gain on the sale of its plastics business more than offset
the effect of weak international markets and investments in automotive
electronics.
Graphic Systems. Earnings in 1994 more than doubled from 1993 due to
improved profitability in all its product lines. Over the past several years
this business has substantially lowered its cost structure and downsized its
manufacturing capacity to reflect market realities.
1993 Compared to 1992
Sales for 1993 were slightly below 1992. Sales of Aerospace and Defense
Electronics were down due to the decline in government spending on defense and
space programs. Graphic Systems and Avionics sales were also down due to
depressed markets for printing presses and commercial aircraft, respectively.
16
<PAGE> 17
Sales increases in 1993 were recorded by Automation and Telecommunications
due to strengthening markets and increased market shares, and by Automotive, due
to strong North American truck markets.
In 1993 three of the Company's four business segments--Electronics,
Aerospace and Automotive--recorded double-digit earnings increases over 1992.
Electronics. Earnings in 1993 were up 23 percent from 1992, reflecting
substantial earnings improvements by Automation and Telecommunications due to
increased sales. Defense Electronics earnings were also up slightly for the year
while Avionics earnings were down modestly, both excellent performances
considering sales for these businesses were down due to adverse market
conditions. In Avionics, lower earnings resulting from the depressed commercial
airline market were offset to a large extent by improved performance in the
general aviation and government avionics product lines.
Aerospace. 1993 earnings were up 13 percent, even though lower government
spending reduced sales. Both the Space Systems and Aircraft businesses reported
higher earnings primarily due to cost containment initiatives, including
significantly lowered health care costs. Earnings of Aircraft also were up due
to improved performance.
Automotive. 1993 earnings increased 31 percent due to strengthening North
American truck markets, the benefits of restructuring actions and cost
containment programs.
Graphic Systems. 1993 earnings were down substantially from 1992 primarily
due to a 26 percent decrease in newspaper printing press sales.
Income Taxes
The Company's consolidated effective income tax rate in 1994 was 37.9%
compared to 37.8% in 1993. In 1993 the tax rate was reduced by a one-time
adjustment of the Company's deferred income tax asset accounts to reflect the
increase in the 1993 U.S. statutory income tax rate. In 1994 the Company's tax
rate was reduced by lower foreign income taxes, primarily due to tax strategy
initiatives, including the consolidation of certain foreign subsidiaries.
Management expects that the Company's 1995 tax rate will continue to benefit
from these initiatives and will approximate the 1994 rate.
At September 30, 1994, the Company had unrecognized tax benefits from
foreign net operating loss and foreign tax credit carryforwards of approximately
$90 million. These benefits are available, over the next several years, to
reduce future income taxes.
In 1993 the Company filed a research and experimentation tax credit refund
claim for the years 1981 through 1991. In 1994 a small portion of the claim was
favorably resolved and the remaining portion, approximately $90 million
including interest, related to fixed-price government contracts was disallowed.
The Company has appealed this decision to the Internal Revenue Service Appeals
Office.
Pensions
In 1994, the Company merged its 33 qualified defined benefit pension plans
in the United States into one pension plan. Combining these pension plans did
not change the pension benefits of the Company's employees or retirees, but it
does strengthen the overall funding status of the plans and reduces
administrative costs. At September 30, 1994, the Company's pension plans are
overfunded by more than $1 billion based on actual benefits earned to date and
by $614 million after considering the effect of projected compensation increases
on benefits earned.
The Company has reported net pension income since adopting the pension
accounting standard in 1987, primarily due to the requirement to recognize the
initial net asset (pension assets in excess of pension liabilities at date of
adoption) over the average remaining service life of active employees. The
Company is recognizing its initial net asset of $1.7 billion over a 13 year
amortization period (see Note 18 to Financial Statements). The yearly
amortization benefit of this initial net asset is largely related to the
Company's Aerospace and Defense Electronics businesses.
17
<PAGE> 18
Health Care
In response to escalating medical costs, Rockwell has made amendments
during the past three years to its medical benefit plans that are designed to
limit the growth in the Company's future cost, while still providing access to
quality care for employees and retirees. The Company's medical payments for
active and retired employees totaled $455 million in 1992, but have decreased to
$433 million in 1994. This decrease reflects the effect of plan amendments as
well as lower active employee headcounts. On a per capita basis the Company's
total medical payments have remained constant over the past three years, clearly
indicating the Company is containing the growth in health care costs.
The initial retirement medical benefit liability of $2.5 billion recorded
by the Company in 1992, upon adoption of the accounting standard on retirement
medical benefits, has been reduced by over $400 million as a result of plan
amendments. This reduction is being amortized into income over 3 to 12 years in
accordance with the standard's requirements and has resulted in reduced
retirement medical expense (see Note 17 to Financial Statements). The yearly
amortization of the retirement medical benefit liability reduction is largely
related to the Company's Aerospace and Defense Electronics businesses.
Environmental Issues
Federal, state and local requirements relating to the discharge of
substances into the environment, the disposal of hazardous wastes and other
activities affecting the environment have had and will continue to have an
impact on the manufacturing operations of the Company. Thus far, compliance with
environmental requirements and resolution of environmental claims have been
accomplished without material effect on the Company's liquidity and capital
resources, competitive position or financial statements.
It is difficult to estimate the timing and ultimate amount of environmental
costs to be incurred in the future due to uncertainties about the status of the
law, regulations, technology and information related to individual sites.
Nevertheless, to assess the materiality for financial statement disclosure
purposes, management estimates the total reasonably possible remediation costs
that could be incurred by the Company. In the determination of such estimates
consideration is given to the professional judgment of the Company's
environmental engineers, in consultation with outside environmental specialists
when necessary, and counsel, as well as assessments as to the likelihood that
other companies which have been designated potentially responsible parties
(PRPs) have the financial resources and commitment to fulfill their obligations
at Superfund sites where they and the Company may be jointly and severally
liable. For certain sites only a range of reasonably possible costs can be
estimated. In these cases, the top end of the range is included in management's
estimate of total reasonably possible costs; however, in the determination of
accruals the low end of the range is accrued as prescribed by generally accepted
accounting principles.
The Company records accruals for environmental issues in the accounting
period in which the Company's responsibility is established and the cost can be
reasonably estimated. The Company records receivables for expected recoveries
from third parties only when it is probable that such parties will fulfill their
obligation to pay and have the financial resources to do so.
The Company has been designated as a PRP at 35 Superfund sites, excluding
sites as to which the Company's records disclose no involvement or as to which
the Company's potential liability has been finally determined. Management
estimates the total reasonably possible costs the Company could incur for the
remediation of Superfund sites at September 30, 1994 to be about $55 million, of
which $31 million has been accrued.
Various other lawsuits, claims and proceedings have been asserted against
the Company alleging violations of federal, state or local environmental
protection requirements or seeking remediation of alleged environmental
impairments. For these matters management has estimated the total reasonably
possible costs the Company could incur at September 30, 1994 to be about $75
million, of which $48 million has been accrued.
Based on its assessment, management believes that the Company's
expenditures for environmental capital investment and remediation necessary to
comply with present regulations governing environmental
18
<PAGE> 19
protection and other expenditures for the resolution of environmental claims
will not have a material adverse effect on the Company's liquidity and capital
resources, competitive position or financial statements. Management cannot
assess the possible effect of compliance with future requirements.
Government Contracts
The Company's government contract operations are subject to U.S. Government
investigations of business practices and audits of contract performance and cost
classification from which claims have been or may be asserted against the
Company. Although such claims are usually resolved through fact-finding and
negotiation, civil, criminal or administrative proceedings may result and a
contractor can be fined, as well as be suspended or debarred from government
contracts. Management believes there are no claims, audits or investigations
currently pending against the Company which will have a material adverse effect
on either the Company's business or its financial condition.
As a result of contract funding constraints and reprioritization of defense
programs, the U.S. Government has terminated for its convenience several of the
Company's contracts. The Company has filed claims for termination costs it
believes are reimbursable under the contract terms. At September 30, 1994, such
outstanding termination claims aggregated approximately $150 million, net of $53
million collected through progress payments. In addition, the Company has
submitted claims aggregating $224 million, which will be increased in 1995 when
it files an amended claim, with respect to contractual disputes on its AC-130U
Gunship full-scale development and production contracts.
The Company's financial statements have been prepared on the basis of
reasonable estimates, supported by the opinion of outside legal counsel, of the
revenue expected to be recovered from these claims. At September 30, 1994,
receivables include $201 million relating to these claims, a major portion of
which relates to the AC-130U Gunship claim. While management cannot reasonably
estimate the length of time that will be required to resolve its claims or
whether they will be resolved through negotiation or litigation, it believes
their resolution will not have a material adverse effect on the Company's
financial statements.
Other Matters
The January 1994 Southern California earthquake caused more than $70
million in damage to the Company's facilities, principally at Rocketdyne. Almost
all these costs are being reimbursed through insurance or as allowable costs on
government contracts. The Company's world headquarters, a major research and
development center and a number of the administrative and manufacturing
facilities of the Aerospace, Defense Electronics and Telecommunications
businesses are located near major earthquake faults in Southern California.
While there is a risk of significant losses in the event of future major
earthquakes, management believes it is unlikely such events, considering
insurance and entitlement to cost recovery under government contracts, would
have a material effect on the Company's financial condition.
Backlog
The Company's 1994 year-end backlog was $10.8 billion compared to last
year's $13.1 billion. The decline in 1994 backlog is attributable to the
reduction in government spending in defense and space programs. This year's
backlog includes $4 billion of commercial orders, $2 billion of funded
government orders and $4.8 billion of unfunded government orders.
Funded government orders include amounts that have been appropriated by
Congress and allotted under contracts by the procuring government agency.
Typically only a portion of the price of a large government contract is funded
at the time work commences. For the unfunded portion of government orders, there
is no assurance that congressional appropriations or agency allotments requisite
for funding will be forthcoming. All government contracts, whether funded or
unfunded, can be curtailed or terminated at the convenience of the government.
19
<PAGE> 20
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
STATEMENT OF CONSOLIDATED INCOME ROCKWELL INTERNATIONAL CORPORATION
------------------------------------------------------------------
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30 1994 1993 1992
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES Sales $11,123.3 $10,840.0 $10,909.7
Other income 81.4 80.9 117.4
-------------------------------------------------------------------------------------
Total revenues 11,204.7 10,920.9 11,027.1
- ---------------------------------------------------------------------------------------------------------
COSTS AND Cost of sales 8,675.2 8,538.5 8,809.5
EXPENSES Selling, general and administrative 1,411.6 1,374.2 1,331.8
Interest 96.6 104.1 107.4
-------------------------------------------------------------------------------------
Total costs and expenses 10,183.4 10,016.8 10,248.7
-------------------------------------------------------------------------------------
Income before income taxes 1,021.3 904.1 778.4
Provision for income taxes 387.2 342.2 295.4
- ---------------------------------------------------------------------------------------------------------
INCOME BEFORE CHANGE
IN ACCOUNTING 634.1 561.9 483.0
- ---------------------------------------------------------------------------------------------------------
Cumulative effect of change in accounting for
retirement medical benefits (1,519.0)
- ---------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) $ 634.1 $ 561.9 $(1,036.0)
=========================================================================================================
EARNING PER Primary:
COMMON SHARE Before change in accounting $2.87 $2.55 $ 2.16
Cumulative effect of change in accounting
for retirement medical benefits (6.78)
-------------------------------------------------------------------------------------
Net income (loss) $2.87 $2.55 $(4.62)
=====================================================================================
Fully diluted:
Before change in accounting $2.82 $2.51 $ 2.14
Cumulative effect of change in accounting
for retirement medical benefits (6.70)
-------------------------------------------------------------------------------------
Net income (loss) $2.82 $2.51 $(4.56)
=========================================================================================================
AVERAGE COMMON Primary 220.5 219.8 223.6
SHARES OUTSTANDING Fully diluted 224.5 224.3 226.1
=========================================================================================================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
20
<PAGE> 21
CONSOLIDATED BALANCE SHEET ROCKWELL INTERNATIONAL CORPORATION
---------------------------------------------------------------------
(IN MILLIONS)
<TABLE>
<CAPTION>
SEPTEMBER 30 1994 1993
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS CURRENT ASSETS
Cash (includes time deposits and certificates of deposit:
1994, $486.8 million; 1993, $588.9 million) $ 628.3 $ 772.8
Receivables 2,267.2 2,209.1
Inventories 1,532.8 1,430.8
Other current assets 499.5 533.7
-------------------------------------------------------------------- ---------------------
Total current assets 4,927.8 4,946.4
------------------------------------------------------------------------------------------
PROPERTY
Land 116.6 104.3
Land and leasehold improvements 155.3 161.0
Buildings 1,378.9 1,383.9
Machinery and equipment 2,949.7 2,844.8
Office and data processing equipment 1,224.5 1,265.8
Construction in progress 335.4 258.3
------------------------------------------------------------------------------------------
Total 6,160.4 6,018.1
Less accumulated depreciation 3,777.0 3,692.3
------------------------------------------------------------------------------------------
Net property 2,383.4 2,325.8
------------------------------------------------------------------------------------------
INTANGIBLE ASSETS 777.0 777.1
------------------------------------------------------------------------------------------
OTHER ASSETS 1,772.6 1,645.5
------------------------------------------------------------------------------------------
TOTAL $9,860.8 $9,694.8
==========================================================================================
- ---------------------------------------------------------------------------------------------------------------
LIABILITIES AND CURRENT LIABILITIES
SHAREOWNERS' Short-term debt $ 160.2 $ 166.4
EQUITY Accounts payable - trade 976.9 859.8
Accrued compensation and benefits 668.8 710.1
Advance payments from customers 294.6 362.7
Accrued income taxes 137.6 94.1
Other current liabilities 781.7 752.8
------------------------------------------------------------------------------------------
Total current liabilities 3,019.8 2,945.9
------------------------------------------------------------------------------------------
LONG-TERM DEBT 831.0 1,028.2
------------------------------------------------------------------------------------------
ACCRUED RETIREMENT BENEFITS 2,414.8 2,541.0
------------------------------------------------------------------------------------------
OTHER LIABILITIES 239.6 223.7
------------------------------------------------------------------------------------------
SHAREOWNERS' EQUITY
Preferred stock (liquidation value - $5.9 million) 1.4 1.5
Common Stock (shares issued - 209.5 million) 209.5 209.5
Class A Common Stock (shares issued: 1994, 36.9 million; 1993,
41.6 million) 36.9 41.6
Additional paid-in capital 174.0 164.3
Retained earnings 3,762.3 3,471.9
Currency translation and pension adjustments (97.1) (196.8)
Common Stock in treasury, at cost
(shares held: 1994, 27.8 million; 1993, 30.1 million) (731.4) (736.0)
------------------------------------------------------------------------------------------
Total shareowners' equity 3,355.6 2,956.0
------------------------------------------------------------------------------------------
TOTAL $9,860.8 $9,694.8
===============================================================================================================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
21
<PAGE> 22
STATEMENT OF CONSOLIDATED CASH FLOWS ROCKWELL INTERNATIONAL CORPORATION
--------------------------------------------------------------------
(IN MILLIONS)
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30 1994 1993 1992
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATING Net income (loss) $ 634.1 $ 561.9 $(1,036.0)
ACTIVITIES Adjustments to net income (loss) to arrive at cash
provided by operating activities:
Depreciation 436.3 432.1 454.0
Amortization of intangible assets 57.6 58.8 104.1
Deferred income taxes 43.6 (1.2) (10.7)
Net pension income and contributions (123.1) (120.9) (149.1)
Cumulative effect of change in accounting 1,519.0
Changes in assets and liabilities, excluding effects
of acquisitions, divestitures and foreign
currency adjustments:
Receivables (28.6) 97.6 243.1
Inventories (88.3) 12.4 (24.4)
Accounts payable - trade 98.9 (4.3) (82.7)
Accrued compensation and benefits (43.1) 32.1 (22.5)
Advance payments from customers (80.9) (48.5) (31.7)
Income taxes 68.0 12.2 (242.4)
Other assets and liabilities (53.9) (102.0) (18.8)
------------------------------------------------------------------------------------------
CASH PROVIDED BY OPERATING ACTIVITIES 920.6 930.2 701.9
- ---------------------------------------------------------------------------------------------------------------
INVESTING Property additions (567.7) (433.2) (386.4)
ACTIVITIES Acquisition of businesses (19.7) (117.7) (23.1)
Proceeds from the disposition of:
Businesses 73.0 67.7
Property 30.5 29.8 27.4
------------------------------------------------------------------------------------------
CASH USED FOR INVESTING ACTIVITIES (483.9) (521.1) (314.4)
- ---------------------------------------------------------------------------------------------------------------
FINANCING Decrease in short-term borrowings (28.7) (15.0) (149.6)
ACTIVITIES Payments of long-term debt (232.5) (13.1) (35.8)
Long-term borrowings 22.1 2.3 314.3
------------------------------------------------------------------------------------------
Net (decrease) increase in debt (239.1) (25.8) 128.9
Purchase of treasury stock (154.9) (64.9) (230.4)
Dividends (225.2) (211.4) (206.1)
Reissuance of common stock 38.0 63.2 18.9
------------------------------------------------------------------------------------------
CASH USED FOR FINANCING ACTIVITIES (581.2) (238.9) (288.7)
------------------------------------------------------------------------------------------
(DECREASE) INCREASE IN CASH (144.5) 170.2 98.8
CASH AT BEGINNING OF YEAR 772.8 602.6 503.8
------------------------------------------------------------------------------------------
CASH AT END OF YEAR $ 628.3 $ 772.8 $ 602.6
===============================================================================================================
- ---------------------------------------------------------------------------------------------------------------
FREE CASH FLOW An internal performance measurement utilized by the company
is "free cash flow" which we define to include the
following:
Cash provided by operating activities $ 920.6 $ 930.2 $ 701.9
Property additions (567.7) (433.2) (386.4)
Proceeds from the disposition of businesses and property 103.5 29.8 95.1
-----------------------------------------------------------------------------------------
FREE CASH FLOW $ 456.4 $ 526.8 $ 410.6
===============================================================================================================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
22
<PAGE> 23
STATEMENT OF CONSOLIDATED SHAREOWNERS' ROCKWELL INTERNATIONAL CORPORATION
EQUITY
--------------------------------------------------------------------
(IN MILLIONS)
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30 1994 1993 1992
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PREFERRED STOCK Beginning balance $ 1.5 $ 1.7 $ 1.7
Conversions into common stock (0.1) (0.2)
------------------------------------------------------------------------------------------
Ending balance 1.4 1.5 1.7
- ----------------------------------------------------------------------------------------------------------------
COMMON STOCK (No shares issued during periods) 209.5 209.5 209.5
- ----------------------------------------------------------------------------------------------------------------
CLASS A Beginning balance 41.6 46.7 54.4
COMMON STOCK Conversions into Common Stock (4.9) (5.8) (8.0)
Other 0.2 0.7 0.3
------------------------------------------------------------------------------------------
Ending balance 36.9 41.6 46.7
- ----------------------------------------------------------------------------------------------------------------
ADDITIONAL Beginning balance 164.3 145.2 137.6
PAID-IN CAPITAL Exercise of stock options and stock appreciation rights 9.7 19.1 7.6
------------------------------------------------------------------------------------------
Ending balance 174.0 164.3 145.2
- ----------------------------------------------------------------------------------------------------------------
RETAINED Beginning balance 3,471.9 3,261.0 4,692.1
EARNINGS Net income (loss) 634.1 561.9 (1,036.0)
Cash dividends:
Common (per share: 1994, $1.02; 1993, $.96; 1992, $.92) (224.9) (211.1) (205.8)
Preferred (per share: Series A - $4.75, Series B - $1.35) (0.3) (0.3) (0.3)
Treasury stock reissuances (118.5) (139.6) (189.0)
------------------------------------------------------------------------------------------
Ending balance 3,762.3 3,471.9 3,261.0
- ----------------------------------------------------------------------------------------------------------------
CURRENCY Beginning balance (196.8) (17.0) (21.5)
TRANSLATION AND Currency translation 20.2 (114.0) (4.7)
PENSION ADJUSTMENTS Pension adjustment 79.5 (65.8) 9.2
------------------------------------------------------------------------------------------
Ending balance (97.1) (196.8) (17.0)
- ----------------------------------------------------------------------------------------------------------------
TREASURY STOCK Beginning balance (736.0) (869.1) (850.1)
Purchases (154.9) (64.9) (230.4)
Reissuances, principally Class A Common Stock conversions 159.5 198.0 211.4
------------------------------------------------------------------------------------------
Ending balance (731.4) (736.0) (869.1)
------------------------------------------------------------------------------------------
TOTAL SHAREOWNERS' EQUITY $3,355.6 $2,956.0 $ 2,778.0
================================================================================================================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
23
<PAGE> 24
NOTES TO FINANCIAL STATEMENTS ROCKWELL INTERNATIONAL CORPORATION
1. FINANCIAL STATEMENT PRESENTATION
Significant accounting policies are SET FORTH IN CAPITAL LETTERS as an integral
part of the notes to financial statements to which the policies relate.
Certain prior year amounts have been reclassified to conform with current year
presentation.
In 1992, the company adopted Financial Accounting Standards Board
Statement No. 106, "Employers' Accounting for Postretirement Benefits Other
Than Pensions," resulting in a one-time charge to earnings of $1,519 million,
or $6.78 per share, after a deferred tax benefit of $931 million. The company
also adopted Statement No. 109, "Accounting for Income Taxes," which did not
have a material effect on 1992 income before change in accounting.
2. ACQUISITION OF RELIANCE ELECTRIC COMPANY
On November 21, 1994, the company announced it had entered into a definitive
agreement to acquire all shares of common stock of Reliance Electric Company
(Reliance), a major manufacturer of industrial products and telecommunications
equipment with annual sales of $1.7 billion, at a price of $31 per share of
Class A and Class B common stock and an equivalent price ($83.95) for Class C
common stock. The offer has a total transaction value of approximately $1.6
billion and is expected to be completed in early 1995. The company will finance
this acquisition utilizing its credit agreements (see Note 8). The company has
announced its intention to divest Reliance's telecommunications business which
has annual sales of approximately $440 million.
3. RECEIVABLES
Receivables are summarized as follows (in millions):
<TABLE>
<CAPTION>
- --------------------------------------------------------
SEPTEMBER 30 1994 1993
- --------------------------------------------------------
<S> <C> <C>
Accounts and notes receivable:
Commercial, less allowance for
doubtful accounts (1994, $68.0;
1993, $47.3) $1,364.2 $1,258.2
United States Government 128.1 149.0
Unbilled costs and accrued profits,
less related progress payments
(1994, $387.4; 1993, $550.5) 774.9 801.9
- --------------------------------------------------------
Receivables $2,267.2 $2,209.1
========================================================
</TABLE>
Unbilled costs and accrued profits consist principally of revenues
recognized on United States Government contracts under the
percentage-of-completion (cost-to-cost) method of accounting (see Note 14).
Unbilled costs and accrued profits, less related progress payments, are billed
in accordance with applicable contract terms. Unbilled costs and accrued
profits include $201 million relating to claims subject to negotiation or
settlement with customers. These claims include amounts which are not expected
to be received within one year.
4. INVENTORIES
Inventories are summarized as follows (in millions):
<TABLE>
<CAPTION>
- --------------------------------------------------------
SEPTEMBER 30 1994 1993
- --------------------------------------------------------
<S> <C> <C>
Finished goods $ 355.5 $ 330.3
Long-term contracts in process 300.0 338.2
Work in process 619.5 508.7
Raw materials, parts and supplies 472.6 492.4
- --------------------------------------------------------
Total 1,747.6 1,669.6
Less allowance to adjust the
carrying value of certain
inventories (1994, $556.6; 1993,
$509.0) to a LIFO basis 67.8 67.2
- --------------------------------------------------------
Remainder 1,679.8 1,602.4
Less related progress payments 147.0 171.6
- --------------------------------------------------------
Inventories $1,532.8 $1,430.8
========================================================
</TABLE>
INVENTORIES ARE STATED AT THE LOWER OF COST (USING LIFO, FIFO OR
AVERAGE METHODS) OR MARKET (DETERMINED ON THE BASIS OF ESTIMATED REALIZABLE
VALUES), LESS RELATED PROGRESS PAYMENTS RECEIVED. Pursuant to contract
provisions the United States Government has title to, or a security interest
in, certain inventories as a result of progress payments.
Long-term contracts in process consist of inventoried costs principally
relating to fixed-price-type contracts with the United States Government. SUCH
INVENTORIED COSTS INCLUDE DIRECT COSTS OF MANUFACTURING, ENGINEERING AND
TOOLING, AND ALLOCABLE OVERHEAD COSTS INCLUDING GENERAL AND ADMINISTRATIVE
EXPENSES ALLOWABLE IN ACCORDANCE WITH UNITED STATES GOVERNMENT CONTRACT COST
PRINCIPLES. IN ACCORDANCE WITH INDUSTRY PRACTICE, SUCH INVENTORIED COSTS
INCLUDE AMOUNTS WHICH ARE NOT EXPECTED TO BE REALIZED WITHIN ONE YEAR.
24
<PAGE> 25
General and administrative expenses related to United States Government
contracts incurred and charged to inventoried costs were $478.5 million, $520.1
million and $530.7 million in 1994, 1993 and 1992, respectively. General and
administrative expenses remaining in inventoried costs before consideration of
progress payments were estimated at $76 million and $68 million at September
30, 1994 and 1993, respectively.
Inventories do not include any material amounts of unamortized tooling,
learning curve and other deferred costs, or claims or other similar items
subject to uncertainty concerning their realization.
5. PROPERTY AND DEPRECIATION
PROPERTY IS STATED AT COST. DEPRECIATION OF PROPERTY IS PROVIDED BASED
ON ESTIMATED USEFUL LIVES GENERALLY USING ACCELERATED AND STRAIGHT-LINE
METHODS. SIGNIFICANT RENEWALS AND BETTERMENTS ARE CAPITALIZED AND
REPLACED UNITS ARE WRITTEN OFF. MAINTENANCE AND REPAIRS, AS WELL AS
RENEWALS OF MINOR AMOUNT, ARE CHARGED TO EXPENSE. Maintenance and
repairs were $229.3 million in 1994, $219.1 million in 1993
and $240.2 million in 1992.
6. INTANGIBLE ASSETS
Intangible assets are summarized as follows (in millions):
<TABLE>
<CAPTION>
- --------------------------------------------------------
SEPTEMBER 30 1994 1993
- --------------------------------------------------------
<S> <C> <C>
Goodwill, less accumulated
amortization (1994, $174.0;
1993, $149.2) $589.3 $581.5
Patents, product technology and other
intangibles, less accumulated
amortization (1994, $348.7;
1993, $321.2) 187.7 195.6
- --------------------------------------------------------
Intangible assets $777.0 $777.1
========================================================
</TABLE>
GOODWILL REPRESENTS THE EXCESS OF THE COST OF PURCHASED BUSINESSES OVER
THE FAIR VALUE OF THEIR NET ASSETS AT DATE OF ACQUISITION AND GENERALLY IS
BEING AMORTIZED BY THE STRAIGHT-LINE METHOD OVER PERIODS RANGING FROM 10 TO 40
YEARS.
PATENTS, PRODUCT TECHNOLOGY AND OTHER INTANGIBLES RELATE PRINCIPALLY
TO ALLEN-BRADLEY AND ARE BEING AMORTIZED ON A STRAIGHT-LINE BASIS OVER THEIR
ESTIMATED USEFUL LIVES, GENERALLY RANGING FROM 5 TO 20 YEARS.
Management periodically reviews the realizability of goodwill and other
intangible assets based on an evaluation of remaining useful lives, cash flows
and profitability projections. Historically, acquired businesses have generated
sufficient returns to recover the cost of intangible assets.
7. OTHER ASSETS
Other assets are summarized as follows (in millions):
<TABLE>
<CAPTION>
- --------------------------------------------------------------
SEPTEMBER 30 1994 1993
- --------------------------------------------------------------
<S> <C> <C>
Prepaid pension costs (see Note 18) $1,214.6 $1,079.9
Net deferred income taxes (see Note 19) 299.7 324.0
Customer finance receivables 137.3 150.5
Investments and other assets 121.0 91.1
- --------------------------------------------------------------
Other assets $1,772.6 $1,645.5
==============================================================
</TABLE>
Customer finance receivables are collateralized installment notes
held by the company's finance subsidiary.
8. SHORT-TERM DEBT
Short-term debt consisted of the following (in millions):
<TABLE>
<CAPTION>
- --------------------------------------------------------
SEPTEMBER 30 1994 1993
- --------------------------------------------------------
<S> <C> <C>
Short-term bank borrowings,
principally foreign $145.2 $159.0
Current portion of long-term debt 15.0 7.4
- --------------------------------------------------------
Short-term debt $160.2 $166.4
========================================================
</TABLE>
At September 30, 1994 the company had $630 million of unsecured lines
of credit with various banks. There were no significant commitment fees or
compensating balance requirements under the lines of credit which were typically
established or renewed for one-year periods. There were no borrowings under the
lines of credit at September 30, 1994.
In November 1994 the company entered into two credit agreements with
various banks to provide financing for the acquisition of Reliance Electric
Company and to replace the existing lines of credit described above. The
facilities total $1.5 billion and $1 billion with terms of five years and one
year, respectively. There were no significant commitment fees under these
facilities.
Short-term credit facilities available to foreign subsidiaries amounted
to $483 million at September 30, 1994 and consisted of arrangements for which
there are no significant commitment fees.
25
<PAGE> 26
NOTES TO FINANCIAL STATEMENTS ROCKWELL INTERNATIONAL CORPORATION
9. OTHER CURRENT LIABILITIES
Other current liabilities are summarized as follows
(in millions):
<TABLE>
<CAPTION>
- --------------------------------------------------------------
SEPTEMBER 30 1994 1993
- --------------------------------------------------------------
<S> <C> <C>
Accounts payable - other $227.0 $191.8
Accrued product warranties 217.4 165.6
Accrued taxes other than income taxes 81.8 80.7
Other 255.5 314.7
- --------------------------------------------------------------
Other current liabilities $781.7 $752.8
==============================================================
</TABLE>
10. LONG-TERM DEBT
Long-term debt consisted of the following (in millions):
<TABLE>
<CAPTION>
- --------------------------------------------------------------
SEPTEMBER 30 1994 1993
- --------------------------------------------------------------
<S> <C> <C>
7 1/2% notes, redeemed in March 1994 $ 200.0
8 7/8% notes, payable in 1999 $300.0 300.0
8 3/8% notes, payable in 2001 200.0 200.0
6 3/4% notes, payable in 2002 300.0 300.0
Other obligations, principally foreign 46.0 35.6
- --------------------------------------------------------------
Total 846.0 1,035.6
Less current portion 15.0 7.4
- --------------------------------------------------------------
Long-term debt $831.0 $1,028.2
==============================================================
</TABLE>
Interest payments on short- and long-term borrowings were $97.9 million
in 1994, $110 million in 1993 and $101.5 million in 1992. At September 30, 1994
aggregate maturities of long-term debt during the five years ending September
30, 1999 were as follows (in millions): 1995, $15; 1996, $13.9; 1997, $5.9;
1998, $4; and 1999, $303.6.
11. FINANCIAL INSTRUMENTS
The company's financial instruments include cash, notes receivable,
short- and long-term debt and foreign currency forward exchange contracts. At
September 30, 1994, the carrying values of the company's financial instruments
approximate their fair values based on current market prices and rates.
It is the policy of the company not to enter into derivative
financial instruments for speculative purposes. The company does enter into
foreign currency forward exchange contracts to protect itself from adverse
currency rate fluctuations on firm and identifiable foreign currency com-
mitments entered into in the ordinary course of business. These foreign
currency forward exchange contracts are executed with creditworthy banks for
terms of generally less than six months and are denominated in currencies of
major industrial countries. Outstanding foreign currency forward exchange
contracts amounted to $256 million at September 30, 1994. The company does not
anticipate any material adverse effect on its results of operations or finan-
cial position relating to these foreign currency forward exchange contracts.
12. CAPITAL STOCK
The authorized stock of the company consists of 600 million shares of
Common Stock and 200 million shares of Class A Common Stock, each with a $1 par
value, and 12 million shares of preferred stock without par value. The Class A
Common Stock is substantially identical to the Common Stock except that each
share of Class A Common Stock entitles the holder to ten votes on all matters
on which holders of Common Stock are entitled to vote, is not transferable
except in certain limited circumstances and is convertible at any time into
Common Stock on a share-for-share basis. The aggregate liquidation value of
all shares of preferred stock that may be issued in series from time to time
cannot at any time exceed $650 million.
At September 30, 1994, 13.9 million shares of common stock were
reserved for various employee incentive plans and conversions of preferred
stock.
Each share of Series A Preferred Stock is convertible (subject to
adjustment under certain conditions) into 9.8985 shares each of Common Stock
and Class A Common Stock. Each share of Series B Preferred Stock is convertible
(subject to adjustment under certain conditions) into 3.6 shares each of
Common Stock and Class A Common Stock. The Series A and B preferred stocks are
stated in the accompanying financial statements at the aggregate par value of
the number of shares of common stock into which such preferred stocks are
convertible. The company may redeem Series A and Series B preferred stocks at
$100 and $36 per share, respectively.
Changes in outstanding common shares are summarized as follows (in
millions):
<TABLE>
<CAPTION>
- ------------------------------------------------------------------
1994 1993 1992
- ------------------------------------------------------------------
<S> <C> <C> <C>
Beginning balance 221.0 220.3 228.2
Treasury stock purchases (4.1) (2.3) (8.9)
Other, principally stock
option exercises 1.7 3.0 1.0
- ------------------------------------------------------------------
Ending balance 218.6 221.0 220.3
==================================================================
</TABLE>
26
<PAGE> 27
Outstanding common stock at September 30,1994 consisted of 181.7
million shares of Common Stock and 36.9 million shares of Class A Common Stock.
There were also outstanding at September 30, 1994, 28,640 shares of Series A
Preferred Stock and 85,059 shares of Series B Preferred Stock.
13. EMPLOYEE STOCK OPTIONS
Options to purchase common stock of the company have been granted under
various incentive plans to officers and other key employees at prices equal to
or above the fair market value of such stock on the dates the options were
granted. The plans provide that the option price for certain options granted
under the plans may be paid in cash, the company's common stock or a
combination thereof.
Information relative to employee stock options is as follows (in
thousands):
<TABLE>
<CAPTION>
- ------------------------------------------------------------------
1994 1993 1992
- ------------------------------------------------------------------
<S> <C> <C> <C>
Number of shares under option:
Outstanding at beginning
of year 9,676 9,659 7,374
Granted 2,157 2,781 3,315
Exercised (1,401) (2,647) (868)
Expired (96) (99) (152)
Surrendered upon exercise of
stock appreciation rights (18) (10)
- ------------------------------------------------------------------
Outstanding at end of year 10,336 9,676 9,659
==================================================================
Exercisable at end of year 8,222 6,915 6,357
==================================================================
</TABLE>
The ranges of exercise prices per share for options outstanding are
as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------
SEPTEMBER 30 1994 1993 1992
- ------------------------------------------------------------------
<S> <C> <C> <C>
High $41.88 $31.50 $31.50
Low $16.75 $13.13 $12.59
==================================================================
</TABLE>
Options outstanding and exercisable at September 30, 1994 included
597,456 related to Class A Common shares.
Shares available for future grant or payment under various incentive
plans were 2.1 million and 4.3 million at September 30, 1994 and 1993,
respectively.
Certain of the options granted have related stock appreciation rights
which permit an optionee to surrender all or a portion of an exercisable stock
option and exercise the related stock appreciation right. An optionee
exercising a stock appreciation right receives, at the company's option, cash
or shares of common stock, or a combination thereof, of a value equal to the
excess of the fair market value of the company's common stock on the date of
exercise over the option price.
Outstanding options expire at various dates from July 10, 1995 to July
6, 2004. None of the incentive plans presently permit options to be granted
after September 30, 1997. Stock appreciation rights outstanding at September
30, 1994 are related to options for 119,820 common shares having option prices
ranging from $17.50 to $22.75 per share.
14. CONTRACT SALES
SALES UNDER FIXED-PRICE CONTRACTS ARE GENERALLY RECORDED UPON DELIVERY.
SALES UNDER ALL COST-TYPE AND CERTAIN FIXED-PRICE-TYPE CONTRACTS REQUIRING
PERFORMANCE OVER SEVERAL PERIODS ARE ACCOUNTED FOR UNDER THE PERCENTAGE-
OF-COMPLETION (COST-TO-COST) METHOD OF ACCOUNTING.
EXPECTED PROFITS OR LOSSES ON CONTRACTS ARE BASED ON THE COMPANY'S
ESTIMATES OF TOTAL SALES VALUES AND COSTS AT COMPLETION. THESE ESTIMATES ARE
REVIEWED AND REVISED PERIODICALLY THROUGHOUT THE LIVES OF THE CONTRACTS, AND
ADJUSTMENTS RESULTING FROM SUCH REVISIONS ARE RECORDED IN THE PERIODS IN WHICH
THE REVISIONS ARE MADE. IN CERTAIN CASES THE ESTIMATED SALES VALUES INCLUDE
AMOUNTS EXPECTED TO BE REALIZED FROM CONTRACT ADJUSTMENTS OR CLAIMS SUBJECT TO
NEGOTIATIONS OR LEGAL PROCEEDINGS. LOSSES ON CONTRACTS ARE RECORDED IN FULL AS
THEY ARE IDENTIFIED.
Sales under United States Government contracts accounted for 35 percent
of total sales in 1994, 39 percent in 1993 and 43 percent in 1992. United
States Government sales by contract type were as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------
1994 1993 1992
- ------------------------------------------------------------------
<S> <C> <C> <C>
Cost 68% 65% 59%
Firm-fixed-price 25 27 31
Fixed-price-incentive 7 8 10
- ------------------------------------------------------------------
Total 100% 100% 100%
==================================================================
</TABLE>
The major portion of work performed for the United States Government is
under contracts that contain cost or performance incentives or both. These
incentives provide for increases in fees or profits for surpassing stated
targets or other criteria, or for decreases in fees or profits for failure to
achieve such targets or other criteria. PERFORMANCE INCENTIVES, FOR WHICH A
REASONABLE PREDICTION OF ACCOMPLISHMENT CANNOT BE MADE IN ADVANCE, ARE INCLUDED
IN SALES AT THE TIME THERE IS SUFFICIENT INFORMATION TO RELATE ACTUAL
PERFORMANCE TO TARGETS OR OTHER CRITERIA.
27
<PAGE> 28
NOTES TO FINANCIAL STATEMENTS ROCKWELL INTERNATIONAL CORPORATION
15. RENTAL AND LEASE INFORMATION
The company leases certain facilities and equipment under operating
leases, many of which contain renewal options and escalation clauses. Total
rental expense on operating leases (net of immaterial income from sublease
rentals) was $119.7 million, $117.6 million and $131.9 million in 1994, 1993
and 1992, respectively. Contingent rentals under operating leases were not
significant.
Minimum future rental commitments under operating leases having
noncancelable lease terms in excess of one year aggregated $286.4 million as of
September 30,1994 and are payable as follows (in millions): 1995, $64.8; 1996,
$48.7; 1997, $38.1; 1998, $28.2; 1999, $15.4; and after 1999, $91.2.
16. RESEARCH AND DEVELOPMENT COSTS
The company performs research and development under both company-initiated
programs and contracts with others, primarily the United States Government.
Company-initiated programs include research and development for commercial
products and independent research and development and bid and proposal work
related to government products or services. A large portion of the cost
incurred for independent research and development and bid and proposal work is
recoverable through overhead cost allowances on government contracts.
Research and development costs incurred by the company aggregated
approximately $1.6 billion in 1994, $1.6 billion in 1993 and $1.5 billion in
1992. A significant portion of these expenditures was incurred under research
and development contracts for Space Shuttle, Space Station, aircraft and
missile systems, ballistic missile defense projects, and defense electronics.
The portion of research and development costs representing company-initiated
programs was $595.3 million in 1994, $587.3 million in 1993 and $498.7
million in 1992.
17. RETIREMENT MEDICAL PLANS
The company has retirement medical plans which cover most of its United
States employees and provide for the payment of medical costs of eligible
employees and dependents upon retirement.
The components of retirement medical expense are as follows (in
millions):
<TABLE>
<CAPTION>
- ---------------------------------------------------------------
1994 1993 1992
- ---------------------------------------------------------------
<S> <C> <C> <C>
Service cost - benefits
attributed to service
during the period $ 18.2 $ 20.5 $ 33.3
Interest accrued on accumulated
retirement medical obligation 160.0 186.5 210.7
Amortization of plan
amendments and net
actuarial gains (55.7) (28.9)
- ---------------------------------------------------------------
Retirement medical expense $122.5 $178.1 $244.0
===============================================================
</TABLE>
Retirement medical expense decreased in 1994 and 1993 primarily due to
cost reductions resulting from amendments to company sponsored medical plans
and lower than anticipated health care cost trend rates.
The company's retirement medical obligation consisted of the following
(in millions):
<TABLE>
<CAPTION>
- ---------------------------------------------------------------
SEPTEMBER 30 1994 1993
- ---------------------------------------------------------------
<S> <C> <C>
Accumulated retirement medical obligation:
Retirees $1,656.2 $1,647.6
Employees eligible to retire 150.6 182.4
Employees not eligible to retire 243.5 316.6
- ---------------------------------------------------------------
Total 2,050.3 2,146.6
Unamortized amounts:
Plan amendments 358.8 391.4
Net actuarial gains 97.9 41.2
- ---------------------------------------------------------------
Recorded liability $2,507.0 $2,579.2
- ---------------------------------------------------------------
Assumptions used (June 30 measurement date):
Discount rate 8.25% 7.75%
Health care cost trend rates 8.5%* 10.0%*
===============================================================
<FN>
* DECREASING TO 5.5% AFTER 2015.
</TABLE>
28
<PAGE> 29
The unamortized amounts for plan amendments and net actuarial gains
represent the unrecognized accumulated cost reductions resulting primarily from
plan amendments and lower than anticipated health care cost trend rates,
respectively. The accumulated cost reductions pertaining to plan amendments
will be recognized over the next 3 to 12 years and, accordingly, reduce
retirement medical expense. The unamortized amount for net actuarial gains will
be considered in the determination of retirement medical expense in the future.
Changing the health care cost trend rates by one percentage point
would change the accumulated retirement medical obligation at September 30,
1994 by approximately $145 million and would change retirement medical expense
by approximately $15 million.
18. RETIREMENT PENSION PLANS
The company has pension plans which cover most of its employees and provide for
monthly pension payments to eligible employees upon retirement. Pension
benefits for salaried employees generally are based on years of credited
service and average earnings. Pension benefits for hourly employees generally
are based on specified benefit amounts and years of service. The company's
policy is to fund its pension plans generally in amounts computed actuarially
using the entry-age normal method.
Net pension income consisted of the following (in millions):
<TABLE>
<CAPTION>
- ---------------------------------------------------------------
1994 1993 1992
- ---------------------------------------------------------------
<S> <C> <C> <C>
Service cost - benefits
earned during the year $(128.1) $(112.5) $(117.5)
Interest accrued on projected
benefit obligation (557.4) (552.7) (534.6)
Assumed return on plan assets 669.1 637.9 621.2
Initial net asset amortization 137.0 137.2 137.9
Prior service cost amortization (25.0) (35.1) (36.3)
Net actuarial loss amortization (69.8) (18.8) (15.9)
- ---------------------------------------------------------------
Net pension income $ 25.8 $ 56.0 $ 54.8
===============================================================
</TABLE>
Upon adoption of the current pension accounting standard in 1987 the
fair value of pension plan assets exceeded projected pension benefit
liabilities by $1.7 billion. This initial net asset is being amortized as
pension income over 13 years through 1999.
Pension plan assets are primarily United States Government obligations,
other fixed income investments and equity securities whose values are subject
to fluctuations of the securities market. The actual return on plan assets
was $128 million, $935 million and $909 million in 1994, 1993 and 1992,
respectively. Differences between these actual returns and the related assumed
returns on plan assets are deferred and considered in the determination of net
pension income or expense in future periods.
In 1994, the company merged its 33 qualified defined benefit pension
plans in the United States into one pension plan. While the merger did not
change the pension benefits of our employees or retirees, it does strengthen
the overall funding status of our plans and reduces administrative costs. The
following table reconciles the funded status of the company's overfunded
pension plans to amounts included in the accompanying balance sheet with 1993
amounts reclassified to reflect the pension plan merger (in millions):
<TABLE>
<CAPTION>
- ----------------------------------------------------------------
1994 1993
- ----------------------------------------------------------------
<S> <C> <C>
Accumulated benefit obligation,
principally vested $6,720.6 $6,843.1
Effects of projected compensation
increases 460.3 530.6
- ----------------------------------------------------------------
Projected benefit obligation 7,180.9 7,373.7
Fair value of plan assets 7,795.0 8,146.9
- ----------------------------------------------------------------
Plan assets in excess of projected
benefit obligation 614.1 773.2
Items not yet recognized
in the balance sheet:
Net actuarial losses (gains):
Asset return 473.6 (58.5)
Discount rate 384.7 822.7
Demographics 304.0 233.8
Prior service cost 95.9 102.8
Remaining initial net asset (657.7) (794.1)
- ----------------------------------------------------------------
Prepaid pension costs
at September 30 $1,214.6 $1,079.9
- ----------------------------------------------------------------
Assumptions used (June 30 measurement date):
Discount rate 8.25% 7.75%
Compensation increase rate 4.5% 4.5%
Long-term rate of return on plan assets 9.0% 9.0%
================================================================
</TABLE>
Although the company has no intention of doing so, should it terminate
its qualified defined benefit pension plan, the United States Government is
entitled to an equitable share of any assets remaining after providing for plan
obligations.
The company also sponsors certain defined contribution savings plans
for eligible employees. Expense related to these plans was $88 million, $89
million and $92 million for 1994, 1993 and 1992, respectively.
29
<PAGE> 30
NOTES TO FINANCIAL STATEMENTS ROCKWELL INTERNATIONAL CORPORATION
19. INCOME TAXES
The components of the provision for income taxes are as follows (in millions):
<TABLE>
<CAPTION>
- ---------------------------------------------------------------
1994 1993 1992
- ---------------------------------------------------------------
<S> <C> <C> <C>
Current:
United States $218.6 $240.2 $198.6
Foreign 76.5 53.8 65.6
State and local 48.5 49.4 41.9
- ---------------------------------------------------------------
Total current 343.6 343.4 306.1
- ---------------------------------------------------------------
Deferred:
United States 45.9 (18.6) (9.2)
Foreign (7.4) 13.3 3.2
State and local 5.1 4.1 (4.7)
- ---------------------------------------------------------------
Total deferred 43.6 (1.2) (10.7)
- ---------------------------------------------------------------
Provision for income taxes $387.2 $342.2 $295.4
===============================================================
</TABLE>
Deferred income tax assets (future tax benefits) and liabilities
(future tax costs) are determined based on differences between financial
statement and tax bases of assets and liabilities using current statutory tax
rates.
At September 30, 1994 and 1993 the company had net deferred income tax
assets included in current and long-term assets. Management believes it is
more likely than not that these tax benefits will be realized through the
reduction of future taxable income. Significant factors considered by
management in its determination of the probability of the realization of the
deferred tax assets included: (a) the historical operating results of the
company ($2.2 billion of United States income before income taxes over the past
three years), (b) expectations of future earnings and (c) the extended period
of time over which the retirement medical liability will be paid.
Net deferred income tax benefits included in Other Current Assets in
the accompanying balance sheet consist of the tax effects of temporary
differences related to the following (in millions):
<TABLE>
<CAPTION>
- ---------------------------------------------------------------
SEPTEMBER 30 1994 1993
- ---------------------------------------------------------------
<S> <C> <C>
Accrued compensation and benefits $145.8 $155.5
Accrued product warranties 84.6 64.6
Other - net 58.6 73.2
- ---------------------------------------------------------------
Current deferred income taxes $289.0 $293.3
===============================================================
</TABLE>
Net deferred income tax benefits included in long-term Other Assets in
the accompanying balance sheet consist of the tax effects of temporary
differences related to the following (in millions):
<TABLE>
<CAPTION>
- ---------------------------------------------------------------
SEPTEMBER 30 1994 1993
- ---------------------------------------------------------------
<S> <C> <C>
Accrued retirement medical costs $ 901.3 $ 928.8
Pension costs (470.1) (424.7)
Property (159.1) (188.1)
Loss carryforwards 44.0 42.9
Foreign tax credit carryforwards 52.7 51.1
Other - net 23.3 4.2
- ---------------------------------------------------------------
Subtotal 392.1 414.2
- ---------------------------------------------------------------
Valuation allowance (92.4) (90.2)
- ---------------------------------------------------------------
Long-term deferred income taxes
(see Note 7) $ 299.7 $ 324.0
===============================================================
</TABLE>
The valuation allowance represents the amount of tax benefits related
to net operating loss and foreign tax credit carryforwards that has not yet
been recognized. The carryforward periods for net operating losses and
foreign tax credits generally expire over the next five years.
The consolidated effective tax rate was different from the United
States statutory rate for the reasons set forth below:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------
1994 1993 1992
- ---------------------------------------------------------------
<S> <C> <C> <C>
Statutory tax rate 35.0% 35.0% 34.0%
State and local income taxes 3.4 3.9 3.2
Foreign income taxes 2.0 3.1 3.0
Utilization of foreign
loss carryforwards (1.1) (1.3)
Research tax credits (1.9) (1.9) (0.4)
Deferred income tax rate changes (1.9) (2.1)
Other 0.5 0.9 0.2
- ---------------------------------------------------------------
Effective tax rate 37.9% 37.8% 37.9%
===============================================================
</TABLE>
The income tax provisions were calculated based upon the following
components of income before income taxes (in millions):
<TABLE>
<CAPTION>
- ---------------------------------------------------------------
1994 1993 1992
- ---------------------------------------------------------------
<S> <C> <C> <C>
United States income $ 811.0 $742.2 $647.4
Foreign income 210.3 161.9 131.0
- ---------------------------------------------------------------
Total $1,021.3 $904.1 $778.4
===============================================================
</TABLE>
30
<PAGE> 31
No provision has been made for United States, state or additional
foreign income taxes related to approximately $600 million of undistributed
earnings of foreign subsidiaries which have been or are intended to be
permanently reinvested.
Income tax payments were $298.6 million in 1994, $339.6 million in 1993
and $558.2 million in 1992. In 1994, the company settled its United States
income tax returns for the years 1986 through 1988 within previously
established reserves. The company's United States income tax returns for the
years 1989 through 1991 are currently under examination. Management believes
that adequate provision for income taxes has been made for all years through
1994.
2O. EARNINGS PER COMMON SHARE
Primary earnings per share of common stock, after recognition of the Series A
and B preferred stock dividend requirements, are based on the weighted average
number of common shares outstanding during each year. The computation does not
include a negligible dilutive effect of stock options and stock appreciation
rights.
Fully diluted earnings per share of common stock are based on the
assumption that all preferred stocks were converted at the beginning of the
year and all dilutive stock options were exercised at the beginning of the year
or at date of grant, if later. The computation assumes the elimination of
preferred dividends.
21. CONTINGENT LIABILITIES
Various lawsuits, claims and proceedings have been or may be instituted
or asserted against the company relating to the conduct of its business,
including those pertaining to product liability, environmental, safety and
health, employment, and government contract matters. Although the outcome of
litigation cannot be predicted with certainty and some lawsuits, claims or
proceedings may be disposed of unfavorably to the company, management
believes the disposition of matters which are pending or asserted will not have
a material adverse effect on the company's financial statements.
22. BUSINESS SEGMENT INFORMATION
The company's business segments are engaged in research, development and
manufacture of diversified products as follows:
ELECTRONICS - industrial automation equipment and systems; avionics
products and systems and related communications technologies primarily used in
commercial and military aircraft; semiconductor-based subsystems including fax
and data modems, global positioning system receiver engines and gallium
arsenide devices; and defense electronics systems and products for precision
guidance and control, for tactical weapons, and for command, control,
communications and intelligence.
AEROSPACE - manned and unmanned space systems, rocket engines, military
aircraft and modifications, military and commercial aircraft structural
components, advanced space-based surveillance systems and high-energy laser
and other directed-energy programs.
AUTOMOTIVE - components and systems for heavy- and medium-duty trucks,
buses, trailers and heavy-duty off-highway vehicles (Heavy Vehicles); and
components and systems for light trucks and passenger cars (Light Vehicles).
GRAPHIC SYSTEMS - high-speed printing presses and related graphic
arts equipment.
Divested businesses include the sales, operating earnings and gains
on sales of significant businesses and product lines sold by the company.
Businesses and product lines sold include the Flame Safeguard Controls product
line in October 1991, the Network Transmission Systems business and Steel
Castings product line in 1991 and the Sheet Fed Offset Printing Press product
line in 1990. Sales and operating earnings by business segment are included in
the table on page 23. The following tables provide additional segment
information (in millions).
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
ASSET INFORMATION BY SEGMENT
- -----------------------------------------------------------------------------------------------------------------------
PROVISION FOR DEPRECIATION
IDENTIFIABLE ASSETS AND AMORTIZATION CAPITAL EXPENDITURES
-------------------------- -------------------------- --------------------------
Business Segment 1994 1993 1992 1994 1993 1992 1994 1993 1992
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Electronics $3,831 $3,548 $3,457 $246.4 $239.5 $281.6 $342.9 $220.7 $152.7
Aerospace 2,042 1,975 2,002 82.1 84.9 92.0 65.9 81.1 78.8
Automotive 1,378 1,342 1,571 100.0 100.0 106.6 111.6 107.2 110.3
Graphic Systems 898 937 953 29.9 30.5 36.8 11.7 12.5 21.2
- -----------------------------------------------------------------------------------------------------------------------
Business segment totals 8,149 7,802 7,983 458.4 454.9 517.0 532.1 421.5 363.0
Corporate 1,712 1,893 1,748 35.5 36.0 41.1 35.6 11.7 23.4
- ------------------------------------------------------------------------------------------------------------------------
Total $9,861 $9,695 $9,731 $493.9 $490.9 $558.1 $567.7 $433.2 $386.4
========================================================================================================================
</TABLE>
CORPORATE IDENTIFIABLE ASSETS INCLUDE CASH AND NET DEFERRED INCOME TAX ASSETS.
31
<PAGE> 32
NOTES TO FINANCIAL STATEMENTS ROCKWELL INTERNATIONAL CORPORATION
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
22. BUSINESS SEGMENT INFORMATION (CONTINUED)
- -------------------------------------------------------------------------------------------------------------------------------
SALES, EARNINGS AND ASSETS BY GEOGRAPHIC AREA
- -------------------------------------------------------------------------------------------------------------------------------
IDENTIFIABLE ASSETS
------------------------------------------------
SALES EARNINGS SEGMENTS CORPORATE
---------------------- -------------------------- ---------------------- ----------------------
Geographic Area 1994 1993 1992 1994 1993 1992 1994 1993 1992 1994 1993 1992
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
United States $ 8,918 $ 8,824 $ 8,869 $1,012.0 $ 925.6 $788.0 $6,220 $5,999 $6,158 $1,078 $1,325 $1,214
Canada 455 369 353 84.4 54.3 38.7 210 175 205 380 322 306
Europe 1,649 1,513 1,500 91.7 65.8 76.9 1,213 1,194 1,204 154 127 119
Asia-Pacific 455 467 471 9.2 24.5 17.0 294 243 244 96 103 105
Latin America 352 285 204 24.9 38.0 10.2 212 191 172 4 16 4
Eliminations (706) (618) (487)
- -------------------------------------------------------------------------------------------------------------------------------
Total $11,123 $10,840 $10,910 $1,222.2 $1,108.2 $930.8 $8,149 $7,802 $7,983 $1,712 $1,893 $1,748
===============================================================================================================================
</TABLE>
UNITED STATES SALES INCLUDE EXPORT SALES TO CUSTOMERS AND INTERNATIONAL
SUBSIDIARIES OF $1,280 MILLION IN 1994, $1,171 MILLION IN 1993 AND $1,011
MILLION IN 1992.
The only customer which accounted for 10% or more of consolidated sales
is the United States Government and its agencies. Such sales by business segment
are as follows (in millions):
<TABLE>
<CAPTION>
- ---------------------------------------------------------------
SALES TO UNITED STATES GOVERNMENT
- ---------------------------------------------------------------
1994 1993 1992
- ---------------------------------------------------------------
<S> <C> <C> <C>
Aerospace $2,439 $2,734 $2,931
Electronics 1,329 1,414 1,606
Other business segments 143 117 171
- ---------------------------------------------------------------
Total $3,911 $4,265 $4,708
===============================================================
</TABLE>
Included in sales to the United States Government are the following
major programs (in millions):
<TABLE>
<CAPTION>
- ---------------------------------------------------------------
1994 1993 1992
- ---------------------------------------------------------------
<S> <C> <C> <C>
Space Shuttle $1,295 $1,380 $1,477
Space Station 329 372 300
B-1B 268 269 324
- ---------------------------------------------------------------
Total $1,892 $2,021 $2,101
===============================================================
</TABLE>
<TABLE>
<CAPTION>
23. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
- -------------------------------------------------------------------------------------------------------------------------------
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
- -------------------------------------------------------------------------------------------------------------------------------
1994 FISCAL QUARTERS 1993 FISCAL QUARTERS
------------------------------------- -------------------------------------
First Second Third Fourth 1994 First Second Third Fourth 1993
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Sales $2,600.9 $2,761.5 $2,872.3 $2,888.6 $11,123.3 $2,488.6 $2,694.1 $2,813.4 $2,843.9 $10,840.0
Cost of sales 2,028.2 2,157.9 2,217.6 2,271.5 8,675.2 1,977.6 2,132.5 2,212.4 2,216.0 8,538.5
Net income 149.5 154.7 164.9 165.0 634.1 127.8 136.9 147.2 150.0 561.9
Per share:
Primary .68 .70 .74 .75 2.87 .58 .63 .66 .68 2.55
Fully diluted .66 .69 .73 .74 2.82 .57 .62 .65 .67 2.51
===============================================================================================================================
</TABLE>
32
<PAGE> 33
REPORTS OF MANAGEMENT AND INDEPENDENT ACCOUNTANTS
MANAGEMENT'S RESPONSIBILITY FOR
FINANCIAL REPORTING
The consolidated financial statements of Rockwell International Corporation
have been prepared by management which is responsible for their integrity and
objectivity. These statements have been prepared in conformity with generally
accepted accounting principles and, where appropriate, reflect estimates based
on judgments of management.
The company's system of internal controls is designed to provide
reasonable assurance that company assets are safeguarded from loss or
unauthorized use or disposition, and that transactions are executed in
accordance with management's authorization and properly recorded to permit the
preparation of financial statements in accordance with generally accepted
accounting principles. This system is augmented by careful selection and
training of qualified personnel, proper division of responsibilities, the
dissemination of written policies and procedures and an internal audit program
to monitor its effectiveness.
The financial statements have been audited by Deloitte & Touche LLP,
independent certified public accountants, whose report appears on this page.
The board of directors, through its audit committee consisting of six
outside directors, oversees management's financial reporting responsibilities
and programs for ethical business conduct. As part of these responsibilities,
the audit committee meets regularly with representatives of management, the
independent accountants and the company's general auditor. The independent
accountants and the company's general auditor have full and free access to the
audit committee and meet with the committee both with and without the presence
of management.
/s/ DONALD R. BEALL
DONALD R. BEALL
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
/s/ W. MICHAEL BARNES
W. MICHAEL BARNES
SENIOR VICE PRESIDENT
FINANCE & PLANNING AND
CHIEF FINANCIAL OFFICER
REPORT OF INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS
To the Directors and Shareowners of
Rockwell International Corporation:
We have audited the accompanying consolidated balance sheet of Rockwell
International Corporation and subsidiaries as of September 30, 1994 and 1993,
and the related consolidated statements of income, shareowners' equity and cash
flows for each of the three years in the period ended September 30, 1994. These
financial statements are the responsibility of the company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Rockwell International
Corporation and subsidiaries at September 30, 1994 and 1993, and the results of
their operations and their cash flows for each of the three years in the period
ended September 30, 1994 in conformity with generally accepted accounting
principles.
As discussed in Note 1 to Financial Statements, in 1992 the company
changed its method of accounting for retirement medical costs to conform with
Statement of Financial Accounting Standards No. 106 and its method of
accounting for income taxes to conform with Statement of Financial Accounting
Standards No. 109.
/s/ DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
PITTSBURGH, PENNSYLVANIA
NOVEMBER 1, 1994, EXCEPT NOTE 2 TO FINANCIAL
STATEMENTS, AS TO WHICH THE DATE IS NOVEMBER 21, 1994
See also the table under the caption RESULTS OF OPERATIONS, Sales and
Earnings by Business Segment in the MD&A on page 15 hereof.
33
<PAGE> 34
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY.
See the information under the captions NOMINEES FOR ELECTION AS DIRECTORS
and INFORMATION AS TO NOMINEES FOR DIRECTORS on pages 3-7 of the 1995 Proxy
Statement. No nominee for director was selected pursuant to any arrangement or
understanding between the nominee and any person other than the Company pursuant
to which such person is or was to be selected as a director or nominee. See also
the information with respect to executive officers of the Company under Item 4a
of Part I hereof.
ITEM 11. EXECUTIVE COMPENSATION.
See the information under the captions EXECUTIVE COMPENSATION, OPTION
GRANTS, AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END VALUES and RETIREMENT
PLANS on pages 10-12 and 18, respectively, of the 1995 Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
See the information under VOTING SECURITIES and OWNERSHIP BY MANAGEMENT OF
EQUITY SECURITIES on pages 3 and 9-10, respectively, of the 1995 Proxy
Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
See the information under the caption CERTAIN TRANSACTIONS AND OTHER
RELATIONSHIPS on page 8 of the 1995 Proxy Statement.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) Financial Statements, Financial Statement Schedules and Exhibits.
(1) Financial Statements (all financial statements listed below are
those of the Company and its consolidated subsidiaries and are
included in Item 8 hereof).
Statement of Consolidated Income, years ended September 30, 1994,
1993 and 1992.
Consolidated Balance Sheet, September 30, 1994 and 1993.
Statement of Consolidated Cash Flows, years ended September 30, 1994,
1993 and 1992.
Statement of Consolidated Shareowners' Equity, years ended September
30, 1994, 1993 and 1992.
Notes to Financial Statements.
Report of Independent Certified Public Accountants.
Sales and Earnings by Business Segment, years ended September 30,
1990 through 1994.
(2) Financial Statement Schedules for the years ended September 30,
1994, 1993 and 1992.
34
<PAGE> 35
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Certified Public Accountants............................... S-1
V-- Property, Plant and Equipment............................................. S-2
VI-- Accumulated Depreciation of Property, Plant and Equipment................. S-3
VIII-- Valuation and Qualifying Accounts......................................... S-4
IX-- Short-Term Borrowings..................................................... S-5
</TABLE>
Schedules not filed herewith are omitted because of the absence of
conditions under which they are required or because the information
called for is shown in the financial statements or notes thereto.
(3) Exhibits.
<TABLE>
<S> <C>
3-a-1 Copy of Restated Certificate of Incorporation of the Company, as
amended.
3-b-1 Copy of By-Laws of the Company.
4-a-1 Indenture dated as of October 1, 1982 between the Company and Chemical
Bank, as successor by merger to Manufacturers Hanover Trust Company,
as Trustee, pursuant to which the 8 7/8% Notes due September 15, 1999,
the 8 3/8% Notes due February 15, 2001 and the 6 3/4% Notes due
September 15, 2002 have been issued, filed as Exhibit 4-a to
Registration Statement No. 33-39510, is hereby incorporated by
reference.
4-a-2 First Supplemental Indenture, dated as of February 27, 1987 to the
Indenture listed as Exhibit 4-a-1 above, filed as Exhibit 4-a to the
Company's Current Report on Form 8-K dated March 11, 1987, is hereby
incorporated by reference.
4-a-3 Form of the 8 7/8% Notes due September 15, 1999, filed as Exhibit 4-a
to the Company's Current Report on Form 8-K dated September 19, 1989,
is hereby incorporated by reference.
4-a-4 Form of the 8 3/8% Notes due February 15, 2001, filed as Exhibit 4-a
to the Company's Current Report on Form 8-K dated February 28, 1991,
is hereby incorporated by reference.
4-a-5 Form of the 6 3/4% Notes due September 15, 2002, filed as Exhibit 4-a
to the Company's Current Report on Form 8-K dated September 22, 1992,
is hereby incorporated by reference.
*10-a-1 Copy of the Company's 1981 Incentive Stock Option Plan for Key
Employees, as amended, filed as Exhibit 4-c-1 to Registration
Statement No. 33-11946, is hereby incorporated by reference.
*10-a-2 Form of Stock Option Agreement under the Company's 1981 Incentive
Stock Option Plan for Key Employees, as amended, for options granted
prior to January 1, 1986.
*10-a-3 Forms of Stock Option and Stock Appreciation Rights Agreements under
the Company's 1981 Incentive Stock Option Plan for Key Employees, as
amended, for options and stock appreciation rights granted after
December 31, 1985 and prior to February 24, 1987, filed as Exhibit
4-c-5 to Registration Statement No. 33-11946, is hereby incorporated
by reference.
*10-b-1 Copy of the Company's 1979 Stock Plan for Key Employees, as amended,
filed as Exhibit 4-d-1 to Registration Statement No. 33-11946, is
hereby incorporated by reference.
*10-b-2 Form of Stock Option Agreement under the Company's 1979 Stock Plan for
Key Employees, as amended, for options granted prior to January 1,
1986.
<FN>
---------
* Management contract or compensatory plan or arrangement.
</TABLE>
35
<PAGE> 36
<TABLE>
<S> <C>
*10-b-3 Form of Stock Option and Stock Appreciation Rights Agreement under the
Company's 1979 Stock Plan for Key Employees, as amended, for options
and stock appreciation rights granted prior to January 1, 1986.
*10-b-4 Form of Stock Appreciation Rights Agreement under the Company's 1979
Stock Plan for Key Employees, as amended.
*10-b-5 Forms of Stock Option and Stock Appreciation Rights Agreements under
the Company's 1979 Stock Plan for Key Employees, as amended, for
options and stock appreciation rights granted after December 31, 1985
and prior to February 24, 1987, filed as Exhibit 4-d-5 to Registration
Statement No. 33-11946, is hereby incorporated by reference.
*10-b-6 Forms of Stock Option and Stock Appreciation Rights Agreements under
the Company's 1979 Stock Plan for Key Employees, as amended, for
options and stock appreciation rights granted after February 23, 1987
and prior to December 2, 1987, filed as Exhibit 4-d-6 to Registration
Statement No. 33-11946, is hereby incorporated by reference.
*10-b-7 Forms of Stock Option and Stock Appreciation Rights Agreements under
the Company's 1979 Stock Plan for Key Employees, as amended, for
options and stock appreciation rights granted after December 1, 1987,
filed as Exhibit 10-b-7 to the Company's Annual Report on Form 10-K
for the year ended September 30, 1987, is hereby incorporated by
reference.
*10-c-1 Copy of resolution of the Board of Directors of the Company, adopted
May 7, 1980, adjusting the number of shares subject to outstanding
options and stock appreciation rights under the Company's 1979 Stock
Option Plan for Key Employees (now the 1979 Stock Plan for Key
Employees, as amended) and the number of shares transferable under the
Company's Incentive Compensation Plan, filed as Exhibit 10-d-2 to the
Company's Annual Report on Form 10-K for the year ended September 30,
1987, is hereby incorporated by reference.
*10-c-2 Copy of resolution of the Board of Directors of the Company, adopted
May 4, 1983, adjusting the number of shares subject to outstanding
options and stock appreciation rights under the Company's 1981
Incentive Stock Option Plan for Key Employees, as amended, and 1979
Stock Plan for Key Employees, as amended, filed as Exhibit 4-e-5 to
Registration Statement No. 33-11946, is hereby incorporated by
reference.
*10-c-3 Copy of resolution of the Board of Directors of the Company, adopted
February 11, 1987, adjusting the number of shares subject to
outstanding options and stock appreciation rights under the Company's
1981 Incentive Stock Option Plan for Key Employees, as amended, and
1979 Stock Plan for Key Employees, as amended, filed as Exhibit 4-e-6
to Registration Statement No. 33-11946, is hereby incorporated by
reference.
*10-d-1 Copy of the Company's 1988 Long-Term Incentives Plan, as amended
through November 30, 1994.
*10-d-2 Forms of Stock Option Agreement under the Company's 1988 Long-Term
Incentives Plan for options granted prior to May 1, 1992, filed as
Exhibit 10-d-2 to the Company's Annual Report on Form 10-K for the
year ended September 30, 1988, are hereby incorporated by reference.
<FN>
---------
* Management contract or compensatory plan or arrangement.
</TABLE>
36
<PAGE> 37
<TABLE>
<S> <C>
*10-d-3 Forms of Stock Option and Stock Appreciation Rights Agreements under
the Company's 1988 Long-Term Incentives Plan for options and stock
appreciation rights granted prior to May 1, 1992, filed as Exhibit
10-d-3 to the Company's Annual Report on Form 10-K for the year ended
September 30, 1988, are hereby incorporated by reference.
*10-d-4 Form of Stock Option Agreement under the Company's 1988 Long-Term
Incentives Plan for options granted after May 1, 1992 and prior to
March 1, 1993, filed as Exhibit 28-a-1 to the Company's Form 10-Q for
the quarter ended June 30, 1992, is hereby incorporated by reference.
*10-d-5 Forms of Stock Option Agreement under the Company's 1988 Long-Term
Incentives Plan for options granted after March 1, 1993 and prior to
November 1, 1993, filed as Exhibit 28-a to the Company's Form 10-Q for
the quarter ended March 31, 1993, is hereby incorporated by reference.
*10-d-6 Forms of Stock Option Agreement under the Company's 1988 Long-Term
Incentives Plan for options granted after November 1, 1993 and before
December 1, 1994, filed as Exhibit 10-d-6 to the Company's Annual
Report on Form 10-K for the year ended September 30, 1993, is hereby
incorporated by reference.
*10-d-7 Forms of Stock Option Agreement under the Company's 1988 Long-Term
Incentives Plan for options granted after December 1, 1994.
*10-e-1 Copy of the Company's 1995 Long-Term Incentives Plan.
*10-e-2 Forms of Stock Option Agreement under the Company's 1995 Long-Term
Incentives Plan.
*10-f-1 Copy of the Company's Incentive Compensation Plan, as amended through
February 23, 1987, filed as Exhibit 10-e-1 to the Company's Annual
Report on Form 10-K for the year ended September 30, 1991, is hereby
incorporated by reference.
10-g-1 Copy of the Company's Deferred Compensation Plan, as amended effective
as of October 1, 1992, filed as Exhibit 10-g-1 to the Company's Annual
Report on Form 10-K for the year ended September 30, 1993, is hereby
incorporated by reference.
*10-h-1 Copy of resolutions adopted by the Board of Directors of the Company
on November 3, 1993 providing for the Company's Deferred Compensation
Policy for Non-Employee Directors.
*10-h-2 Copy of resolutions adopted by the Compensation Committee of the Board
of Directors of the Company on July 5, 1994 modifying the Company's
Deferred Compensation Policy for Non-Employee Directors.
*10-i-1 Copy of the Company's Directors Stock Plan.
*10-j-1 Copy of resolutions adopted by the Board of Directors of the Company
on November 2, 1994 providing for the Company's Retirement Policy for
Non-Employee Directors.
11 Computation of Earnings Per Share for the Five Years Ended September
30, 1994.
21 List of Subsidiaries of the Company.
23 Consent of independent certified public accountants.
24 Powers of Attorney authorizing certain persons to sign this Annual
Report on Form 10-K on behalf of certain directors and officers of the
Company.
<FN>
---------
* Management contract or compensatory plan or arrangement.
</TABLE>
37
<PAGE> 38
<TABLE>
<S> <C>
27 Financial Data Schedule for September 30, 1994 Form 10-K
99-a-1 Copy of the Company's Savings Plan, as amended and restated as of
September 30, 1994.
99-b-1 Approval dated February 25, 1994, Amending the Company's Savings Plan
for Certain Represented Hourly Employees.
</TABLE>
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the last quarter of the period
covered by this Report.
38
<PAGE> 39
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
ROCKWELL INTERNATIONAL CORPORATION
By /s/ WILLIAM J. CALISE, JR.
---------------------------------------
WILLIAM J. CALISE, JR.
SENIOR VICE PRESIDENT, GENERAL COUNSEL
AND SECRETARY
Dated: December 21, 1994
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW ON THE 21ST DAY OF DECEMBER 1994 BY THE FOLLOWING
PERSONS ON BEHALF OF THE REGISTRANT AND IN THE CAPACITIES INDICATED.
<TABLE>
<S> <C>
DONALD R. BEALL*
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
(PRINCIPAL EXECUTIVE OFFICER) AND DIRECTOR
LEW ALLEN, JR.*
DIRECTOR
RICHARD M. BRESSLER*
DIRECTOR
JOHN J. CREEDON*
DIRECTOR
ROBIN CHANDLER DUKE*
DIRECTOR
JUDITH L. ESTRIN*
DIRECTOR
WILLIAM H. GRAY, III*
DIRECTOR
JAMES CLAYBURN LA FORCE, JR.*
DIRECTOR
WILLIAM T. MCCORMICK*
DIRECTOR
JOHN D. NICHOLS*
DIRECTOR
BRUCE M. ROCKWELL*
DIRECTOR
ROSS D. SIRAGUSA, JR.*
DIRECTOR
WILLIAM S. SNEATH*
DIRECTOR
JOSEPH F. TOOT, JR.*
DIRECTOR
W. MICHAEL BARNES*
SENIOR VICE PRESIDENT, FINANCE & PLANNING AND
CHIEF FINANCIAL OFFICER (PRINCIPAL FINANCIAL
OFFICER)
LAWRENCE J. KOMATZ*
VICE PRESIDENT AND CONTROLLER (PRINCIPAL ACCOUNTING
OFFICER)
</TABLE>
*By /s/ WILLIAM J. CALISE, JR.
-----------------------------
WILLIAM J. CALISE, JR.,
ATTORNEY-IN-FACT**
** BY AUTHORITY OF POWERS OF ATTORNEY FILED HEREWITH.
39
<PAGE> 40
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
ROCKWELL INTERNATIONAL CORPORATION:
We have audited the consolidated balance sheet of Rockwell International
Corporation and subsidiaries as of September 30, 1994 and 1993 and the related
consolidated statements of income, shareowners' equity and cash flows for each
of the three years in the period ended September 30, 1994, and have issued our
report thereon dated November 1, 1994 except as to Note 2 to Financial
Statements as to which the date is November 21, 1994; such financial statements
and report are included in Items 8 and 14(a)(1) hereof. Our audits also included
the financial statement schedules of Rockwell International Corporation and
subsidiaries, listed in Item 14(a)(2). These financial statement schedules are
the responsibility of the Company's management. Our responsibility is to express
an opinion based on our audits. In our opinion, such financial statement
schedules, when considered in relation to the basic financial statements taken
as a whole, present fairly in all material respects the information set forth
therein.
DELOITTE & TOUCHE LLP
Pittsburgh, Pennsylvania
November 1, 1994, except as to Note 2 to Financial
Statements as to which the date is November 21, 1994
S-1
<PAGE> 41
SCHEDULE V
ROCKWELL INTERNATIONAL CORPORATION
AND CONSOLIDATED SUBSIDIARIES
PROPERTY, PLANT AND EQUIPMENT
FOR THE YEARS ENDED SEPTEMBER 30, 1994, 1993 AND 1992
<TABLE>
<CAPTION>
BALANCE RECLASSIFICATIONS BALANCE
BEGINNING RETIREMENTS AND TRANSFERS -- END OF
DESCRIPTION OF YEAR ADDITIONS AND SALES ADD (DEDUCT) OTHER YEAR
----------- --------- --------- ----------- ------------------ ----- --------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Year ended September 30, 1994
Land.............................. $ 104.3 $ 13.2 $ 3.3 $ 2.4 $ 116.6
Land and leasehold improvements... 161.0 9.7 11.8 $(1.8) (1.8) 155.3
Buildings......................... 1,383.9 58.6 60.1 4.2 (7.7) 1,378.9
Machinery and equipment........... 2,844.8 304.4 161.1 (2.5) (35.9) 2,949.7
Office and data processing
equipment....................... 1,265.8 99.1 136.8 (3.1) (0.5) 1,224.5
Construction in progress.......... 258.3 82.7 (0.4) (5.2) 335.4
-------- ------ ------ ----- ------ --------
Total...................... $6,018.1 $567.7 $373.1 $(3.6)(a) $(48.7)(b) $6,160.4
======== ====== ====== ===== ====== ========
Year ended September 30, 1993
Land.............................. $ 97.4 $ 0.3 $ 2.0 $ 8.6 $ 104.3
Land and leasehold improvements... 164.0 6.8 9.5 $ 0.7 (1.0) 161.0
Buildings......................... 1,373.9 47.3 32.4 2.6 (7.5) 1,383.9
Machinery and equipment........... 2,833.2 235.8 179.7 (7.9) (36.6) 2,844.8
Office and data processing
equipment....................... 1,291.5 111.4 125.9 1.5 (12.7) 1,265.8
Construction in progress.......... 228.7 31.6 (2.0) 258.3
-------- ------ ------ ----- ------ --------
Total...................... $5,988.7 $433.2 $349.5 $(3.1)(a) $(51.2)(b) $6,018.1
======== ====== ====== ===== ====== ========
Year ended September 30, 1992
Land.............................. $ 97.9 $ 1.1 $ 3.3 $(1.1) $ 2.8 $ 97.4
Land and leasehold improvements... 163.7 8.2 8.6 0.7 164.0
Buildings......................... 1,338.4 59.4 36.5 5.0 7.6 1,373.9
Machinery and equipment........... 2,769.7 229.3 187.1 (3.4) 24.7 2,833.2
Office and data processing
equipment....................... 1,277.1 102.9 92.3 (1.0) 4.8 1,291.5
Construction in progress.......... 240.9 (14.5) (0.5) 2.8 228.7
-------- ------ ------ ----- ------ --------
Total...................... $5,887.7 $386.4 $327.8 $(1.0)(a) $ 43.4(b) $5,988.7
======== ====== ====== ===== ====== ========
<FN>
- ---------------
(a) Represents accumulated depreciation on intercompany transfers of assets at net book value.
(b) Represents cost of properties of or related to:
</TABLE>
<TABLE>
<CAPTION>
1994 1993 1992
------- ------- ------
(IN MILLIONS)
<S> <C> <C> <C>
Businesses sold...................................... $(103.9) $ -- $(14.8)
Businesses acquired.................................. 17.3 56.5 22.8
------- ------- ------
Net................................................ (86.6) 56.5 8.0
Foreign currency translation adjustments............. 37.9 (107.7) 35.4
------- ------- ------
Total.......................................... $ (48.7) $ (51.2) $ 43.4
======= ======= ======
</TABLE>
The ranges of estimated useful lives used in computing depreciation were
generally as follows:
<TABLE>
<CAPTION>
YEARS
-----
<S> <C>
Land and leasehold improvements.................................. 3-50
Buildings........................................................ 10-50
Machinery and equipment.......................................... 3-18
Office and data processing equipment............................. 5-15
</TABLE>
S-2
<PAGE> 42
SCHEDULE VI
ROCKWELL INTERNATIONAL CORPORATION
AND CONSOLIDATED SUBSIDIARIES
ACCUMULATED DEPRECIATION OF PROPERTY, PLANT AND EQUIPMENT
FOR THE YEARS ENDED SEPTEMBER 30, 1994, 1993 AND 1992
<TABLE>
<CAPTION>
BALANCE RECLASSIFICATIONS BALANCE
BEGINNING RETIREMENTS AND TRANSFERS -- END OF
DESCRIPTION OF YEAR PROVISION AND SALES ADD (DEDUCT) OTHER YEAR
----------- --------- --------- ----------- ------------------ ------ --------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Year ended September 30, 1994
Land and leasehold
improvements.................. $ 112.4 $ 10.5 $ 8.7 $(1.8) $ (1.1) $ 111.3
Buildings........................ 618.6 55.7 36.4 1.0 (5.3) 633.6
Machinery and equipment.......... 1,975.2 244.0 138.1 (1.1) (26.3) 2,053.7
Office and data processing
equipment..................... 986.1 126.1 132.1 (1.7) 978.4
-------- ------ ------ ----- ------ --------
Total.................... $3,692.3 $436.3 $315.3 $(3.6)(a) $(32.7)(b) $3,777.0
======== ====== ====== ===== ====== ========
Year ended September 30, 1993
Land and leasehold
improvements.................. $ 108.7 $ 11.0 $ 6.9 $ 0.3 $ (0.7) $ 112.4
Buildings........................ 592.0 54.5 18.1 (0.1) (9.7) 618.6
Machinery and equipment.......... 1,937.5 228.7 144.5 (4.7) (41.8) 1,975.2
Office and data processing
equipment..................... 975.7 137.9 120.3 1.4 (8.6) 986.1
-------- ------ ------ ----- ------ --------
Total.................... $3,613.9 $432.1 $289.8 $(3.1)(a) $(60.8)(b) $3,692.3
======== ====== ====== ===== ====== ========
Year ended September 30, 1992
Land and leasehold
improvements.................. $ 105.0 $ 11.6 $ 7.3 $(0.5) $ (0.1) $ 108.7
Buildings........................ 553.8 58.3 22.2 0.6 1.5 592.0
Machinery and equipment.......... 1,853.1 235.8 156.1 (0.1) 4.8 1,937.5
Office and data processing
equipment..................... 914.6 148.3 86.9 (1.0) 0.7 975.7
-------- ------ ------ ----- ------ --------
Total.................... $3,426.5 $454.0 $272.5 $(1.0)(a) $ 6.9(b) $3,613.9
======== ====== ====== ===== ====== ========
<FN>
- ---------------
(a) Represents accumulated depreciation on intercompany transfers of assets at net book value.
(b) Represents accumulated depreciation of properties of or related to:
</TABLE>
<TABLE>
<CAPTION>
1994 1993 1992
------ ------ ------
(IN MILLIONS)
<S> <C> <C> <C>
Businesses sold.............................. $(52.4) $ -- $ (7.4)
Foreign currency translation adjustments..... 19.7 (60.8) 14.3
------ ------ ------
Total.............................. $(32.7) $(60.8) $ 6.9
====== ====== ======
</TABLE>
S-3
<PAGE> 43
SCHEDULE VIII
ROCKWELL INTERNATIONAL CORPORATION
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED SEPTEMBER 30, 1994, 1993 AND 1992
<TABLE>
<CAPTION>
BALANCE AT CHARGED TO CHARGED BALANCE AT
BEGINNING COSTS AND TO OTHER END OF
DESCRIPTION OF YEAR(A) EXPENSES ACCOUNTS(B) DEDUCTIONS YEAR(A)
----------- ---------- ---------- ----------- ---------- ----------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Year ended September 30, 1994:
Allowance for doubtful accounts...... $56.9 $29.2 $1.1 $ 9.5(c) $78.3
(0.6)(d)
Year ended September 30, 1993:
Allowance for doubtful accounts...... 46.5 25.5 1.3 13.3(c) $56.9
3.1(d)
Year ended September 30, 1992:
Allowance for doubtful accounts...... 51.0 9.7 0.3 17.1(c) 46.5
(2.6)(d)
<FN>
- ---------------
(a) Includes allowances for commercial, customer finance and other long-term
receivables.
(b) Collection of accounts previously written off.
(c) Uncollectible accounts written off.
(d) Consists principally of amounts relating to businesses acquired, businesses
sold and foreign currency translation adjustments.
</TABLE>
S-4
<PAGE> 44
SCHEDULE IX
ROCKWELL INTERNATIONAL CORPORATION
SHORT-TERM BORROWINGS
FOR THE YEARS ENDED SEPTEMBER 30, 1994, 1993 AND 1992
<TABLE>
<CAPTION>
MAXIMUM AVERAGE WEIGHTED
WEIGHTED AMOUNT AMOUNT AVERAGE
AVERAGE OUTSTANDING OUTSTANDING INTEREST
BALANCE AT INTEREST DURING DURING RATE DURING
DESCRIPTION END OF YEAR RATE THE YEAR(A) THE YEAR(B) THE YEAR(C)
----------- ----------- -------- ----------- ----------- -----------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Year ended September 30, 1994:
Commercial Paper..................... $ 40.0 4.9% $100.0 $ 62.6 4.2%
Bank Borrowings (principally
foreign)........................... 105.2 4.9 207.5 158.7 7.2
Year ended September 30, 1993:
Commercial Paper..................... 50.0 4.5 3.1
Bank Borrowings (principally
foreign)........................... 158.9 6.5 224.8 173.1 10.5
Year ended September 30, 1992:
Commercial Paper..................... 170.0 82.1 4.1
Bank Borrowings (principally
foreign)........................... 150.6 9.1 351.1 288.8 10.8
<FN>
- ---------------
(a) Based upon the maximum amount outstanding at any month end during the year.
(b) Average amount outstanding is computed based on daily averages for
commercial paper borrowings and monthly averages for bank borrowings.
(c) The weighted average interest rate during the year is computed by dividing
interest expense applicable to the debt by average borrowings outstanding.
</TABLE>
S-5
<PAGE> 1
EXHIBIT 3-a-1
RESTATED CERTIFICATE OF INCORPORATION
OF
ROCKWELL INTERNATIONAL CORPORATION
(AS AMENDED FEBRUARY 11, 1987)
-------------
FIRST: The name of the Corporation is
ROCKWELL INTERNATIONAL CORPORATION
SECOND: The Corporation's principal office in the State of Delaware is
located at 100 West 10th Street, in the City of Wilmington, County of
New Castle. The name and address of its resident agent is The Corporation
Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington,
Delaware 19801.
THIRD: The nature of the business, or objects or purposes to be transacted,
promoted or carried on, are:
(1) To engage, directly and indirectly, in research, design,
development, manufacture, acquisition, disposition, distribution and all
other dealings in the fields of aircraft, launch and space vehicles, rocket
propulsion, electronics and electromechanical equipment, atomic energy,
missiles, components for vehicles, industrial products and equipment, farm
equipment, machine parts, textile machinery, plastics and plastic products,
and in all other related and unrelated fields.
(2) To develop, obtain, purchase, hold, own, use, take, assign or
grant licenses in respect of, and to sell, mortgage, or otherwise dispose
of, letters patent of the United States or any other jurisdiction, and all
rights connected therewith, patent rights, licenses and privileges,
inventions, devices, processes and any improvements and modifications
thereof, and copyrights, trademarks, trade names, trade symbols and other
indications of origin or ownership, granted by, recognized by, or
otherwise existing under the laws of the United States or any other
jurisdiction.
(3) To acquire the whole or any part of the property, assets,
business, goodwill and rights of, and to undertake or assume the whole or
any part of the bonds, mortgages, franchises, leases, contracts,
indebtedness, guaranties, liabilities and obligations of, any person,
firm, association, corporation, trust or organization, and to pay for the
same or any part or combination thereof in cash, shares of the capital
stock, bonds, debentures, notes, or other obligations of the Corporation
or otherwise, or by undertaking and assuming the whole or any part of the
liabilities or obligations of the transferor; and to hold or in any manner
dispose of the whole or any part of the property and assets so acquired,
and to conduct in any lawful manner the whole or any part of the business
so acquired and to exercise all the powers necessary or convenient for the
conduct of such business.
(4) To borrow money and to issue bonds, debentures, notes, or other
obligations of the Corporation of any nature or in any manner from time to
time, and to secure the same by mortgage, pledge or other lien upon any or
all of the property of every kind and designation, of the Corporation.
(5) To acquire, hold, dispose of and deal in shares of its own capital
stock, bonds, or other obligations from time to time to such an extent and
in such manner and upon such terms as its Board of Directors shall
determine; provided the Corporation shall not use its funds or property
for the purchase of its own shares of capital stock when such use would
cause any impairment of its capital; and provided further that shares of
its own capital stock belonging to the Corporation shall not be voted
directly or indirectly.
1
<PAGE> 2
(6) To acquire, hold, dispose of and deal in all forms of
securities, including, but not by way of limitation, shares, stocks,
bonds, debentures, notes, scrip, mortgages, evidences of indebtedness,
certificates of indebtedness and certificates of interest wherever
issued or created by corporations, associations, partnerships, firms,
trusts, syndicates, individuals, governments, states, municipalities
or other political or governmental divisions or subdivisions, or by
any combinations, organizations or entities whatsoever, or issued or
created by others, irrespective of their form or the name by which
they may be described, and all trust, participation and other
certificates of, and receipts evidencing, interest in any such
securities, and to issue in exchange therefor or in payment thereof,
in any manner permitted by law, its own stock, bonds, debentures or
its other obligations or securities, subject to the provisions of
this certificate, or to make payment therefor by any other lawful
means of payment whatsoever; to exercise any and all rights, powers,
and privileges of individual ownership or interest of any and all
such securities or evidences of interest therein, including the right
to vote thereon and to consent and otherwise act with respect
thereto; to do any and all acts and things for the preservation,
protection, improvement and enhancement in value of any and all such
securities or evidences of interest therein, and to aid by loan,
subsidy, guaranty or otherwise those issuing, creating, or
responsible for any such securities or evidences of interest therein;
to acquire or become interested in any such securities or evidences of
interest therein, as aforesaid, by original subscription,
underwriting, loan participation in syndicates or otherwise and
irrespective of whether or not such securities or evidences of
interest therein be fully paid or subject to further payments; to make
payments thereon as called for or in advance of calls or otherwise,
and to underwrite or subscribe for the same conditionally or otherwise
and either with a view to investment or for resale or for any other
lawful purpose.
(7) To endorse or guarantee the payment of principal, interest
or dividends upon, and to guarantee the performance of sinking fund or
other obligations, of any stocks, bonds, obligations or other
securities or evidences of indebtedness, and to guarantee in any way
permitted by law the performance of any of the contracts or other
undertakings in which the Corporation may otherwise be or become
interested, of any corporation, association, partnership, firm,
trust, syndicate, individual, government, state, municipality or
other political or governmental division or subdivision, domestic or
foreign, insofar as may be permitted by law.
(8) To organize or cause to be organized under the laws of the
State of Delaware or any other jurisdiction a corporation or
corporations for the purpose of accomplishing any or all of the
objects and purposes for which the Corporation is organized, to
promote, manage, control, and maintain any such corporation or
corporations, and to dissolve, wind up, liquidate, reorganize, merge
or consolidate any such corporation or corporations.
(9) To have one or more offices within or without the State of
Delaware at which meetings of stockholders and directors may be held,
and all or any part of the Corporation's business may be conducted, to
carry on all or any of its operations and business, and, without
restriction or limit as to amount, to purchase, lease or otherwise
acquire, hold, own, develop, explore, exploit, improve, operate,
enjoy, control, manage or otherwise turn to account, mortgage, sell,
grant, exchange, convey or otherwise dispose of real and personal
property of every kind and description, within and without the United
States, subject to applicable laws.
(10) In general, to carry on any other business whether or not
related to the foregoing and to have and exercise all the powers
conferred by the laws of Delaware upon corporations formed under the
General Corporation Law of the State of Delaware, and to do any or all
of the things hereinbefore set forth to the same extent as natural
persons could do.
The foregoing clauses shall be construed as powers as well as
objects and purposes, and the objects, purposes and powers specified
in the foregoing clauses shall not, except where otherwise expressed,
be limited or restricted by reference to, or inference from, the terms
of any other clause in this Certificate of Incorporation, but each
object, purpose or power stated in the foregoing clauses of this
Article shall be regarded as an independent object, purpose or power.
2
<PAGE> 3
FOURTH: The total number of shares of all classes of stock which the
Corporation shall have the authority to issue is 812,000,000, of which
12,000,000 shares without par value are to be of a class designated Preferred
Stock, 600,000,000 shares of the par value of $1 each are to be of a class
designated Common Stock, and 200,000,000 shares of the par value of $1 each are
to be of a class designated Class A Common Stock, subject, however, to the
provisions of paragraph 3.4 below.
Shares of stock of any class now or hereafter authorized may be issued
by the Corporation from time to time for such consideration not less than the
par value thereof as shall be fixed from time to time by the Board of Directors
of the Corporation. Any and all shares of stock so issued for which the
consideration so fixed has been paid or delivered to the Corporation shall be
declared and taken to be fully paid stock and shall not be liable to any
further call or assessments thereon, and the holders of such shares shall not
be liable for any further payments in respect of such shares. Subscriptions to,
or the purchase price of, shares of stock of the Corporation may be paid for,
wholly or partly, by cash, by labor done, by personal property, or by real
property or leases thereof. In the absence of actual fraud in the transaction,
the judgment of the Directors as to the value of such labor, property, real
estate or leases thereof shall be conclusive.
Subject only to the provisions of this Article Fourth by which the
initial series of Preferred Stock is created, authority is hereby vested in the
Board of Directors to issue the Preferred Stock from time to time in one or
more subsequent series, with such voting powers or without voting powers, and
with designations, preferences and relative, participating, optional or other
special rights, and qualifications, limitations or restrictions thereof, and
with such dividend rights, rights on dissolution or distribution of assets, and
conversion or exchange rights, and subject to redemption at such time or times
and price or prices, as shall be stated and expressed in the resolution or
resolutions providing for the issue of such stock adopted by the Board of
Directors; provided, however, that the aggregate liquidation value of all
shares of Preferred Stock outstanding at any one time shall not exceed
$650,000,000.
In this Article Fourth, any reference to a section or paragraph,
without further attribution, within a provision relating to a particular class
of stock is intended to refer solely to the specified section or paragraph of
the other provisions relating to the same class of stock.
COMMON STOCK AND CLASS A COMMON STOCK
The Common Stock and Class A Common Stock shall have the following
voting powers, designations, preferences and relative, participating,
optional and other special rights, and qualifications, limitations or
restrictions thereof:
1. Dividends.
1.1. Whenever the full dividends upon any outstanding Preferred Stock
for all past dividend periods shall have been paid and the full dividends
thereon for the then current respective dividend periods shall have been
paid, or declared and a sum sufficient for the respective payments thereof set
apart, the holders of shares of the Common Stock and Class A Common Stock shall
be entitled to receive such dividends and distributions, payable in cash or
otherwise, as may be declared thereon by the Board of Directors from time to
time out of assets or funds of the Corporation legally available therefor,
provided that all such dividends or distributions shall be paid or made in
equal amounts, share for share, to the holders of the Common Stock and Class A
Common Stock as if a single class, except that (a) in the event that any
dividend, other than the initial distribution (the "Distribution") of shares of
Class A Common Stock to the holders of shares of Common Stock, shall be
declared in shares of Common Stock or Class A Common Stock, such dividend shall
be declared at the same rate per share on Common Stock and Class A Common
Stock, but the dividend payable on shares of Common Stock shall be payable in
shares of Common Stock, and the dividend payable on shares of Class A Common
Stock shall be payable in shares of Class A Common Stock; and (b) any dividend
described in paragraph 1.2 below may be paid as therein described. If the
Corporation shall in any manner split, subdivide or combine the outstanding
shares of Common Stock or Class A Common Stock, the outstanding shares of the
other such class of stock shall be split, subdivided or combined
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<PAGE> 4
in the same manner proportionately and on the same basis per share.
Following the Distribution to holders of Common Stock on the record date fixed
for determining the holders thereof entitled to receive the Distribution (such
record date being herein referred to as the "Distribution Record Date" and each
such holder being herein referred to as a "Distribution Record Date Holder"),
the Corporation shall not issue any shares of Class A Common Stock except (w)
pursuant to this paragraph 1.1; (x) upon conversion of Series A Stock and
Series B Stock (as hereinafter defined) in accordance with this Article Fourth
and of the Corporation's 4 1/4% Convertible Subordinated Debentures due
February 15, 1991 ("Convertible Subordinated Debentures"); (y) upon exercise of
employee stock options (whether or not outstanding or exercisable on the
Distribution Record Date); and (z) in connection with any contribution made by
the Corporation to any employee benefit or stock ownership plan of the
Corporation.
1.2. In the event the Corporation shall distribute to the holders of
the shares of Common Stock and Class A Common Stock the common stock or
substantially equivalent equity securities of any subsidiary of the
Corporation, the Board of Directors shall have power, but shall not be
obligated, to capitalize or recapitalize such subsidiary with classes of common
equity having the powers, designations, preferences, and relative,
participating, optional, or other special rights and qualifications,
limitations, and restrictions thereof, corresponding, respectively, insofar as
practicable, to those of the Common Stock and the Class A Common Stock, and the
Board of Directors of the Corporation shall have power, but shall not be
obligated, to distribute to the holders of shares of the Common Stock, the
shares of the subsidiary with rights corresponding to those of the Common
Stock, and to distribute to the holders of shares of the Class A Common Stock,
the shares of the subsidiary with rights corresponding to those of the Class A
Common Stock; provided, that holders of shares of Common Stock and holders of
shares of Class A Common Stock shall respectively receive the same number of
shares of such subsidiary per share of Common Stock and per share of Class A
Common Stock held.
2. Rights on Liquidation. In the event of any liquidation, dissolution
or winding-up of the Corporation, whether voluntary or involuntary, after the
payment or setting apart for payment to the holders of any outstanding
Preferred Stock of the full preferential amounts to which such holders are
entitled as herein provided or referred to, all of the remaining assets of the
Corporation shall belong to and be distributable in equal amounts per share to
the holders of the Common Stock and the holders of Class A Common Stock, as if
such classes constituted a single class. For purposes of this paragraph 2, a
consolidation or merger of the Corporation with any other corporation, or the
sale, transfer or lease of all or substantially all its assets shall not
constitute or be deemed a liquidation, dissolution or winding-up of the
Corporation.
3. Conversion of Class A Common Stock.
3.1. The holders of Class A Common Stock shall have the right, at their
option, to convert any or all such shares into shares of Common Stock of the
Corporation on the following terms and conditions:
(i) Each share of Class A Common Stock shall be convertible, at any
time, at the office of any transfer agent for shares of Common Stock of the
Corporation, and at such other place or places, if any, as the Board of
Directors may determine, into one fully paid and nonassessable share of
Common Stock of the Corporation upon surrender at such office or other
place of the certificate or certificates representing the shares of Class A
Common Stock so to be converted. In no event, upon conversion of any shares
of Class A Common Stock into shares of Common Stock, shall any allowance or
adjustment be made in respect of dividends on the Class A Common Stock or
the Common Stock.
(ii) Shares of Class A Common Stock shall be deemed to have been
converted and the person converting the same shall become a holder of
shares of Common Stock for the purpose of receiving dividends and for all
other purposes whatsoever as of the date when the certificate or
certificates for the shares of Class A Common Stock to be converted are
surrendered to the Corporation as provided in paragraph 3.1(v).
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<PAGE> 5
(iii) A number of shares of Common Stock sufficient to provide, upon
the basis hereinbefore set forth, for the conversion of all shares of the
Class A Common Stock outstanding shall at all times be reserved by the
Corporation for the exercise of the conversion rights of the holders of
shares of the Class A Common Stock.
(iv) If the Corporation shall, at any time, be consolidated or merged
with, or shall sell its property as an entirety or substantially as an
entirety to, any other corporation or corporations, or in the event of any
recapitalization or reclassification of its shares, proper provisions shall
be made as a part of the terms of each such consolidation, merger, sale,
recapitalization or reclassification so that the holder of any shares of
the Class A Common Stock outstanding immediately prior to such
consolidation, merger, sale, recapitalization or reclassification shall
thereafter be entitled to and only entitled to conversion rights upon the
terms and with respect to such securities of the consolidated, merged or
purchasing corporation, or with respect to such securities issued upon such
recapitalization or reclassification, as such holder would have been
entitled to receive upon such consolidation, merger, sale, recapitalization
or reclassification if such holder had exercised the conversion privilege
immediately prior thereto. The provisions of this paragraph 3.1(iv) shall
similarly apply to successive consolidations, mergers, sales,
recapitalizations or reclassifications.
(v) Before any holder of Class A Common Stock shall be entitled to
convert the same into Common Stock, he shall surrender his certificate or
certificates for such Class A Common Stock to the Corporation at the office
of a transfer agent for the Common Stock, or at such other place or places,
if any, as the Board of Directors may determine, duly endorsed or
accompanied if appropriate by duly executed instruments of transfer and
shall give written notice to the Corporation at said office or place that
he elects so to convert the shares of Class A Common Stock represented by
the certificate or certificates so surrendered. Unless the Common Stock is
to be issued in the name of the registered owner of the certificates
surrendered, the holder shall state in writing the name or names in which
he wishes the certificate or certificates for Common Stock to be issued,
and shall furnish all requisite stock transfer and stock issuance tax
stamps, or funds therefor. The Corporation shall as soon as practicable
after such deposit of certificates for Class A Common Stock, accompanied by
the written notice above prescribed, issue and deliver, at the office or
place at which such certificates were deposited, to the person for whose
account Class A Common Stock was so surrendered, or to his nominee or
nominees, certificates for the number of full shares of Common Stock to
which he shall be entitled as aforesaid.
3.2. All outstanding shares of Class A Common Stock shall
automatically, without any act or deed on the part of the Corporation or any
other person, be converted into shares of Common Stock on a share-for-share
basis (i) at any time after the Distribution when the total number of shares of
Class A Common Stock outstanding and reserved for issuance upon conversion of
Preferred Stock and Convertible Subordinated Debentures and upon exercise of
employee stock options is less than 10,000,000; (ii) on the tenth anniversary
of the Distribution Record Date unless prior thereto the Board of Directors
shall have extended the date for such conversion on one or more occasions but
in no event to a date later than the fifteenth anniversary of the Distribution
Record Date; (iii) if at any time the Board of Directors, in its sole
discretion, determines that there has been a material adverse change in the
liquidity, marketability, or market value of the outstanding Common Stock due
to a delisting of the Common Stock from a national securities exchange or a
national over-the-counter listing or due to requirements under applicable state
securities laws in any such case attributable to the existence of the Class A
Common Stock; or (iv) if the Board of Directors, in its sole discretion, elects
to effect a conversion in connection with its approval of any sale or lease of
all or substantially all of the Corporation's assets or any merger,
consolidation, liquidation or dissolution of the Corporation. In the event of
any such automatic conversion, each stock certificate theretofore representing
Class A Common Stock will thereafter represent the same number of shares of
Common Stock.
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<PAGE> 6
3.3. The provisions of this paragraph 3 shall be in addition to the
provisions of paragraphs 5.1(i)(A)(3), 5.1(ii) and 5.1(iv), which require
automatic conversion of Class A Common Stock in the circumstances provided
therein.
3.4. Shares of the Class A Common Stock converted into Common Stock as
provided in paragraph 3.1 or paragraph 5 shall resume the status of authorized
but unissued shares of Class A Common Stock. Upon any automatic conversion of
Class A Common Stock into Common Stock pursuant to paragraph 3.2, the Class A
Common Stock shall no longer be authorized for issuance.
4. Voting.
4.1. Except as otherwise provided by the laws of the State of
Delaware or by this Article Fourth, each share of Common Stock shall entitle
the holder thereof to one vote.
4.2. Except as otherwise provided by the laws of the State of Delaware
or by this Article Fourth, each share of Class A Common Stock shall entitle
the holder thereof to ten votes. Except as otherwise provided herein or
required by law, holders of Common Stock and Class A Common Stock shall at all
times vote on all matters (including the election of directors) together as one
class and together with the holders of any other series or class of stock of
the Corporation accorded such class voting right.
4.3. The affirmative vote of the holders of a majority of the
outstanding shares of Common Stock and of Class A Common Stock, each voting
separately as a class, shall be required to:
(i) authorize additional shares of Class A Common Stock;
(ii) modify or eliminate the last sentence of paragraph 1.1,
above; or
(iii) adopt any other amendment hereof that alters or changes
the designations or powers or the preferences, qualifications,
limitations, restrictions or the relative or special rights of
either the Common Stock or the Class A Common Stock so as to affect
holders of shares of such class adversely.
5. Limitations on Transfer and Issuance of Class A Common Stock.
5.1. (i) No person holding any share of Class A Common Stock may
transfer, and the Corporation shall not register the transfer of such share of
Class A Common Stock or any interest therein, whether by sale, assignment,
gift, bequest, appointment or otherwise, except to a "Permitted Transferee" of
such person. The term "Permitted Transferee" shall mean only,
(A) In the case of a holder of Class A Common Stock (a "Holder") who is
a natural person and the holder of record and beneficial owner of shares
subject to a proposed transfer, "Permitted Transferree" means:
(1) The Holder, the spouse of such Holder, any lineal
descendant of a grandparent of such Holder, or any spouse of such
lineal descendant (herein collectively referred to as "such Holder's
Family Members");
(2) The trustee of a trust solely for the benefit of such
Holder or such Holder's Family Members, provided that such trust may
also grant a general or special power of appointment to one or more of
such Holder's Family Members and may permit trust assets to be used to
pay taxes, legacies and other obligations of the trust or of the
estates of one or more of such Holder's Family Members payable by
reason of the death of any of such Family Members;
(3) A corporation if all of the outstanding capital stock of
such corporation is beneficially owned by, or a partnership if all of
the partners are and all of the partnership interests are beneficially
owned by, the Holder and his Permitted Transferees determined under
this paragraph 5.1(i)(A), provided that if by reason of any change in
the ownership of such stock or partners or partnership interests, such
corporation or partnership would no longer qualify as a Permitted
Transferree of such Holder or his Permitted Transferrees, all shares
of Class A Common Stock then held by such
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<PAGE> 7
corporation or partnership shall immediately and
automatically, without further act or deed on the part of the
Corporation or any other person, be converted into shares of Common
Stock on a share-for-share basis, and stock certificates formerly
representing such shares of Class A Common Stock shall thereupon and
thereafter be deemed to represent the like number of shares of Common
Stock;
(4) An organization established by the Holder or such Holder's
Family Members, contributions to which are deductible for federal
income, estate or gift tax purposes; or
(5) The executor, administrator or personal representative of
the estate of such Holder or the guardian or conservator of such
Holder adjudged disabled by a court of competent jurisdiction, acting
in his capacity as such.
(B) In the case of a Holder holding the shares subject to a proposed
transfer as trustee pursuant to a trust (other than a trust described in
paragraph 5.1(i)(C) below), "Permitted Transferee" means (1) the person who
established such trust and (2) any Permitted Transferree of such person
determined pursuant to paragraph 5.1(i)(A) above.
(C) In the case of a Holder holding shares subject to a proposed
transfer as trustee pursuant to a trust which was irrevocable on the
Distribution Record Date, "Permitted Transferee" means (1) any person to
whom or for whose benefit principal may be distributed either during or at
the end of the term of such trust whether by power of appointment or
otherwise (excluding beneficiaries of any employee benefit plan) and (2)
any Permitted Transferree of any such person determined pursuant to
paragraph 5.1(i) (A) above.
(D) In the case of a Holder which is a partnership or corporation, with
respect to shares of Class A Common Stock beneficial ownership of which was
acquired pursuant to the Distribution or thereafter pursuant to a dividend
paid in shares of Class A Common Stock or a split, subdivision or
combination of shares of Class A Common Stock, or with respect to shares of
Class A Common Stock beneficial ownership of which was acquired upon
conversion of Convertible Subordinated Debentures or Preferred Stock or
thereafter pursuant to such a dividend, split, subdivision or combination
in respect of shares acquired by such conversion, "Permitted Transferee"
means (1) in the case of such shares acquired pursuant to the Distribution
and such shares issued in respect thereof, any partner of such partnership,
or stockholder of such corporation, receiving such shares pro rata to his
interest in such partnership or stock ownership in such corporation on the
Distribution Record Date pursuant to a liquidating distribution or a
dividend, (2) in the case of such shares acquired upon conversion and
shares issued in respect thereof, any partner of such partnership, or
stockholder of such corporation, receiving such shares pro rata to his
interest in such partnership or stock ownership in such corporation on the
date of such conversion pursuant to a liquidating distribution or a
dividend or (3) in either case any Permitted Transferee of any partner or
stockholder to the extent that he is a Permitted Transferee pursuant to the
foregoing clauses (1) or (2), as the case may be, determined under
paragraph 5.1(i)(A) above.
(E) In the case of a Holder which is a corporation or partnership, with
respect to shares of Class A Common Stock other than as described in
paragraph 5.1(i)(D), "Permitted Transferee" means (1) any person who
transferred to such corporation or partnership the shares that are the
subject of the proposed transfer and (2) any Permitted Transferree of any
such person determined under paragraph 5.1(i)(A) above.
(F) In the case of a Holder which is an employee benefit or stock
ownership plan for the benefit of employees of the Corporation or any of
its subsidiaries, "Permitted Transferee" shall include any beneficiary of
such plan to whom shares of stock of the Corporation may be distributed,
but only as to shares so distributable.
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<PAGE> 8
(G) In the case of a Holder who is the executor, administrator or
personal representative of the estate of a deceased Holder, guardian or
conservator of the estate of a disabled Holder or who is a trustee of the
estate of a bankrupt or insolvent Holder, and provided such deceased,
disabled, bankrupt or insolvent Holder, as the case may be, was the record
and beneficial owner of the shares subject to a proposed transfer,
"Permitted Transferee" means a Permitted Transferee of such deceased,
disabled, bankrupt or insolvent Holder as determined pursuant to paragraph
5.1(i)(A), (D) or (E) above, as the case may be.
(ii) Notwithstanding anything to the contrary set forth herein,
any holder of Class A Common Stock may pledge his shares of Class A
Common Stock to a pledgee pursuant to a bona fide pledge of such
shares as collateral security for indebtedness due to the pledgee,
provided that such shares may not be transferred to or registered in
the name of the pledgee unless such pledgee is a Permitted Transferee.
In the event of foreclosure or other similar action by the pledgee,
such pledged shares of Class A Common Stock shall automatically,
without any act or deed on the part of the Corporation or any other
person, be converted into shares of Common Stock on a share-for-share
basis, unless within five business days after such foreclosure or
similar event such pledged shares are returned to the pledgor or
transferred to a Permitted Transferee of the pledgor.
(iii) For purposes of this paragraph 5.1:
(A) The relationship of any person that is derived by or
through legal adoption shall be considered a natural one.
(B) Each joint owner of shares of Class A Common Stock shall
be considered a Holder of such shares.
(C) A minor for whom shares of Class A Common Stock are held
pursuant to a Uniform Gifts to Minors Act or similar law shall
be considered a Holder of such shares.
(D) Unless otherwise specified, the term "person" means
both natural persons and legal entities.
(iv) Any purported transfer of Class A Common Stock other than
to a Permitted Transferee shall automatically, without any further
act or deed on the part of the Corporation or any other person,
result in the conversion of such shares into shares of Common Stock
on a share-for-share basis, effective on the date of such purported
transfer. The Corporation may, as a condition to transfer or
registration of transfer of shares of Class A Common Stock to a
purported Permitted Transferee, require that the record holder
establish to the satisfaction of the Corporation, by filing with the
transfer agent an appropriate affidavit or certificate or such other
proof as the Corporation shall deem necessary, that such transferee
is a Permitted Transferee.
5.2 Anything in this Article Fourth to the contrary notwithstanding,
no share of Class A Common Stock may be held of record but not beneficially by
a broker or dealer in securities, a bank or voting trustee or a nominee of any
such, or otherwise held of record but not beneficially by a nominee of the
beneficial owner of such share other than by an employee benefit or stock
ownership plan of the Corporation (any such form of holding being referred to
herein as holding in "street" or nominee name) and the Corporation shall issue
a share of Common Stock for each share of Class A Common Stock which would
otherwise be issuable to such nominee in any instance in which the Corporation
reasonably believes that the proposed record holder intends to hold any
such share in "street" or nominee name for the beneficial owner thereof;
provided, however, that if any person establishes to the satisfaction of the
Corporation in accordance with this paragraph 5.2 that he is the beneficial
owner of any such share of Class A Common Stock, the Corporation shall issue
such share in the name of such beneficial owner. Any such beneficial owner who
desires to have shares of Class A Common
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<PAGE> 9
Stock issued in his name and the circumstances described in this
paragraph 5.2 shall file an affidavit or certificate with the Secretary of the
Corporation setting forth the name and address of such beneficial owner and
certifying that he is the beneficial owner of the Common Stock, Convertible
Subordinated Debenture or Preferred Stock held in "street" or nominee name in
respect of which the shares of Class A Common Stock are to be issued. Any such
affidavit or certificate shall be deemed filed only if it is satisfactory in
form to the Corporation and received in the case of Class A Common Stock to be
issued (i) in the Distribution, within 30 days after the Distribution Record
Date or (ii) upon conversion of any Convertible Subordinated Debenture or
Preferred Stock, at the time such security is tendered for conversion in
accordance with its terms. If such affidavit or certificate shall not establish
to the satisfaction of the Corporation the facts stated therein, then the
Corporation shall issue Common Stock as provided in this paragraph 5.2.
5.3. The Corporation shall note on the certificates representing the
shares of Class A Common Stock that there are restrictions on transfer and
registration of transfer imposed by paragraphs 5.1 and 5.2.
5.4. (i) For purposes of this paragraph 5, "beneficial ownership" shall
mean possession of the power to vote or to direct the vote and to dispose
of or to direct the disposition of the share of Class A Common Stock in
question, and a "beneficial owner" of a share of Class A Common Stock shall
be the person having beneficial ownership thereof.
(ii) The Board of Directors may, from time to time, establish practices
and procedures and promulgate rules and regulations, in addition to those
set forth in this Article Fourth, and amend or revoke any such, regarding
the evidence necessary to establish entitlement of any transferee or
purported transferee of Class A Common Stock to be registered as such.
Should the transferee or purported transferee of any share wish to contest
any decision of the Corporation on the question whether the transferee or
purported transferee has established entitlement to be registered as a
transferee of Class A Common Stock, then the Board of Directors shall in
its sole discretion make the final determination.
6. Other Matters.
6.1. In case the Corporation shall at any time issue to the holders of
its shares of Common Stock as such options or rights to subscribe for shares of
Common Stock (including shares held in the Corporation's treasury) or any other
security (whether of the Corporation or otherwise), the Corporation shall issue
such options or rights to the holders of the Class A Common Stock and of any
outstanding convertible Preferred Stock and outstanding Convertible
Subordinated Debentures in the respective amounts equal to the amounts that
such holders would have been entitled to receive had their respective
Convertible Subordinated Debentures or shares of Class A Common Stock and
convertible Preferred Stock been converted into Common Stock on the day prior
to the date for the determination of the holders of Common Stock entitled to
receive such options or rights.
6.2. If any Convertible Subordinated Debenture or any share of
Preferred Stock shall be converted after the Distribution Record Date but
before the date of the Distribution (the "Payment Date"), certificates
representing shares of Common Stock or Class A Common Stock to which the holder
of such Convertible Subordinated Debenture or such share shall be entitled on
account of such conversion shall be delivered to such holder on the Payment
Date or as soon thereafter as practicable.
6.3. In no event, upon conversion of any share of Preferred Stock into
shares of Common Stock or Class A Common Stock, shall any allowance or
adjustment be made in respect of dividends on the Preferred Stock, Common Stock
or Class A Common Stock.
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<PAGE> 10
INITIAL SERIES OF $4.75 CONVERTIBLE PREFERRED STOCK
There is hereby created an initial series of the Preferred Stock
consisting of 1,549,467 shares, with the following voting powers, designation,
preferences and relative, participating, optional or other special rights, and
qualifications, limitations or restrictions thereof:
1. Designation. The designation of said initial series shall be $4.75
Convertible Preferred Stock, Series A (hereinafter called Series A Stock).
2. Dividends. The holders of Series A Stock shall be entitled to
cumulative dividends at the rate of $4.75 per share per annum when and as
declared by the Board of Directors, payable quarterly on the first day of
January, April, July, and October in each year (each such day being hereinafter
called a dividend payment date). Dividends shall be cumulative on each share
of Series A Stock from July 1, 1967 or from the dividend payment date next
preceding the date of issuance of such share, whichever is later, except that
dividends shall be cumulative from the date of issuance of any share issued on
a dividend payment date and from the dividend payment date next following the
date of issuance of any share issued between the record date for the
determination of holders of Series A Stock entitled to receive a quarterly
dividend and the dividend payment date for such quarterly dividend. Dividends
at the above rate shall be cumulative whether or not the Corporation shall have
had net profits or assets legally available for such dividends in any dividend
period. Holders of Series A Stock shall not be entitled to any dividends
other than full cumulative dividends in cash at the above rate, and shall be
entitled to no interest on unpaid cumulative dividends.
Unless the full amount of cumulative dividends on the Series A Stock up
to and including the next following dividend payment date shall have been paid
or declared and a sum sufficient for the payment thereof set apart, neither the
Corporation nor any subsidiary of the Corporation shall at any time (a) set
aside or apply any sum for the purchase or redemption of any outstanding
capital stock of the Corporation of any class or series (whether by purchase or
by redemption pursuant to any sinking fund provisions, optional redemption
provisions, or otherwise), or (b) declare any dividend (other than a dividend
payable in Common Stock) or set aside or apply any sum for the payment of any
dividend or other distribution, on the Common Stock or any other class of stock
of the Corporation except Preferred Stock.
The Corporation shall not issue Preferred Stock of any series having
dividend payment dates different from those of the Series A Stock and
shall not issue any Preferred Stock, other than Series A Stock, unless full
cumulative dividends on all outstanding shares of the Series A Stock up to and
including the dividend payment date next following the date of such issue shall
have been paid or declared and a sum sufficient for the payment thereof set
apart; and neither the Corporation nor any subsidiary of the Corporation shall
declare any dividend or set aside or apply any sum for the payment of dividends
on any series of Preferred Stock other than Series A, if after giving effect to
such dividend and to all dividends on the Series A Stock paid or declared and
covered by a sum set aside for the payment thereof, the ratio between the
unpaid cumulative dividends and the annual dividend rate on the Series A Stock
would be greater than the same ratio in the case of such other series of
Preferred Stock.
For the purposes of the foregoing provisions a corporation is a
subsidiary of another corporation (the parent) if a majority of the
subsidiary's outstanding stock ordinarily entitled to vote in the election of
directors (excluding stock which is entitled to vote in the election of
directors only upon the happening of some contingency such as failure to pay
dividends) is owned by the parent and/or one or more of its subsidiaries. A
corporation is also the subsidiary of another corporation if its parent is a
subsidiary of such other corporation.
3. Optional Redemption. Shares of Series A Stock may be redeemed, in
whole or in part, at any time after the fifth anniversary of the date on which
any shares of Series A Stock are first issued, at the option of the Company
expressed by resolution of the Board of Directors, at a redemption price in
accordance with the following table, plus, in each case, an amount equal to
unpaid cumulative dividends accrued to the date of redemption.
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<TABLE>
<CAPTION>
IF THE DATE OF REDEMPTION IS IN
THE YEAR INDICATED AFTER SHARES THE REDEMPTION PRICE
OF SERIES A STOCK ARE FIRST ISSUED: SHALL BE:
----------------------------------- ---------
<S> <C>
Sixth Year ................................. $104.75
Seventh Year ............................... 104.25
Eighth Year ................................ 103.75
Ninth Year ................................. 103.25
Tenth Year ................................. 102.75
Eleventh Year .............................. 102.25
Twelfth Year ............................... 101.75
Thirteenth Year ............................ 101.25
Fourteenth Year ............................ 100.75
Fifteenth Year ............................. 100.25
Sixteenth and Following Years .............. 100.00
</TABLE>
If less than all the outstanding shares of Series A Stock are to be
redeemed, the shares to be redeemed shall be selected either by lot or pro rata
in such manner as may be prescribed by resolution of the Board of Directors.
Notice to the holders of shares of Series A Stock to be redeemed shall be given
by mailing to such holders a notice of such redemption, first class, postage
prepaid, not later than the thirtieth day, and not earlier than the sixtieth
day, before the date fixed for redemption, at their last addresses as they
shall appear upon the books of the Corporation. Any notice which is mailed in
the manner herein provided shall be conclusively presumed to have been duly
given, whether or not the stockholder receives such notice; and failure duly to
give such notice by mail, or any defect in such notice, to any stockholder
designated for redemption shall not affect the validity of the proceedings for
the redemption of any other shares of Series A Stock.
The notice of redemption to each stockholder whose shares of Series A
Stock are to be redeemed shall specify the number of shares of Series A Stock
of such stockholder to be redeemed, the date fixed for redemption and the
redemption price at which shares of Series A Stock are to be redeemed, and
shall specify where payment of the redemption price is to be made upon
surrender of such shares, shall state the conversion price then in effect, and
shall state that accrued dividends to the date fixed for redemption will be
paid as specified in said notice, that from and after said date dividends
thereon will cease to accrue, and that conversion rights of such shares shall
cease and terminate at the close of business on the date fixed for redemption.
In the case of each share of Series A Stock called for redemption as
above provided, the Corporation shall be obligated (unless such share shall be
converted on or prior to the redemption date) to pay to the holder thereof the
redemption price plus accrued dividends, if any, to the redemption date, upon
surrender of the certificate for such share at the office of any transfer agent
for the Series A Stock, on or after the redemption date. Unless the Corporation
shall default in the payment of the redemption price plus accrued dividends, if
any, dividends on each share of Series A Stock so called for redemption shall
cease to accrue from and after the redemption date.
4. Rights on Liquidation. In the event of any liquidation, dissolution
or winding up of the Corporation, whether voluntary or involuntary, the
holders of shares of Series A Stock then outstanding shall be entitled to be
paid out of the assets of the Corporation available for distribution to its
stockholders an amount equal to $100 per share, plus an amount equal to unpaid
cumulative dividends, (and no more) before any payment shall be made to the
holders of Common Stock or any other class of stock of the Company other than
Preferred Stock. If the assets of the Company available for distribution to its
stockholders shall be insufficient to pay in full all amounts to which the
holders of Preferred Stock of all series are entitled, the amount available for
distribution to stockholders shall be shared by the holders of all series of
Preferred Stock pro rata according to the amounts to which the
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<PAGE> 12
shares of each series are entitled. For the purposes of this Section 4, a
consolidation or merger of the Corporation with any other corporation, or the
sale, transfer or lease of all or substantially all its assets shall not
constitute or be deemed a liquidation, dissolution or winding up of the
Corporation.
5. Conversion. The shares of the Series A Stock shall be convertible at
the option of the respective holders thereof at an assigned value of $100
per share, at any time at the office of the transfer agent for the Series A
Stock located in the Borough of Manhattan, the City and State of New York, and
at such other offices or agencies of the Company, if any, as the Board of
Directors may determine, into fully paid and nonassessable whole shares of
Common Stock of the Corporation at the conversion price, determined as
hereinafter provided, in effect at the time of conversion; provided, however,
such right of conversion shall cease and terminate, as to shares called for
redemption, at the close of business on the date fixed for redemption, unless
default shall be made in the payment of the redemption price.
5.1. The initial price per share at which shares of Common Stock shall
be delivered upon conversion (the "initial conversion price") shall be $40.41.
The initial conversion price and any adjusted conversion price shall be subject
to adjustment from time to time in certain instances as hereinafter provided.
Upon conversion the Corporation shall make no payment or adjustment on account
of dividends accrued or in arrears on (a) the shares of the Series A Stock
surrendered for conversion or (b) the shares of Common Stock issued on
conversion of such shares of Series A Stock, provided that a holder of Series A
Stock of record on a record date for the payment of a dividend thereon shall be
entitled to such dividend notwithstanding his conversion of such Series A Stock
before the dividend is paid.
Whenever reference is made in this Section 5 to the issue or sale of
shares of Common Stock the term Common Stock shall mean stock of the
Corporation of any class, whether now or hereafter authorized, which by its
terms has the right to participate in the distribution of either the assets or
earnings of the Corporation without limit as to amount or percentage. The
Common Stock initially issuable upon conversion of shares of Series A Stock
shall, however, be Capital Stock, $1 par value per share, of the Corporation as
constituted on May 26, 1967.
Before any holder of shares of Series A Stock shall be entitled to
convert the same into Common Stock, he shall surrender the certificate or
certificates for such shares of Series A Stock at one of the offices
specified as provided in this Section 5, which certificate or certificates, if
the Corporation shall so request, shall be duly endorsed to the Corporation or
in blank or accompanied by proper instruments of transfer to the Corporation
or in blank, and accompanied by funds in the amount of any tax or taxes payable
or which may be payable in respect of any transfer involved in the issue and
delivery of certificates for shares of Common Stock in a name other than that
of the record holder of shares of Series A Stock in respect of which such
shares of Common Stock are issued, and shall give written notice to the
Corporation at said office that he elects so to convert said shares of Series A
Stock, and shall state in writing therein the name or names in which he wishes
the certificate or certificates for Common Stock to be issued.
The Corporation will as soon as practicable after such deposit of
certificates for shares of Series A Stock accompanied by the written notice and
the statement above prescribed, issue and deliver at the office at which such
certificates for shares of Series A Stock shall have been deposited to the
person for whose account such shares of Series A Stock were so surrendered, or
to his nominee or nominees, certificates for the number of whole shares of
Common Stock to which he shall be entitled as aforesaid, together with an
adjustment of any fraction of a share as hereinafter provided, if not evenly
convertible. Such conversion shall be deemed to have been made as of the date
of such surrender of the shares of Series A Stock to be converted; and the
person or persons entitled to receive the shares of Common Stock issuable upon
the conversion of such shares of Series A Stock shall be treated for all
purposes as the record holder or holders of such Common Stock on such date.
However, the Corporation shall not be required to convert, and no surrender of
shares of Series A Stock shall be effective for that purpose, while the stock
transfer books of the Corporation are closed for any purpose; but the surrender
of shares of Series A Stock for conversion during any period while such books
are so closed shall become effective for conversion immediately upon the
reopening of such books, at the conversion price in effect at the date of
such surrender.
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<PAGE> 13
5.2. The conversion prices, initial or adjusted, referred to herein
shall be subject to adjustment from time to time as follows:
5.2.1. In case the Corporation shall at any time (a) issue or
sell any shares of Common Stock without consideration, or for a
consideration per share less than the conversion price, initial or
adjusted, in effect immediately prior to the issuance or sale of such
additional shares or (b) pay or make an extraordinary dividend or
distribution on Common Stock (as defined in Subsection 5.2.2(v)),
then, and thereafter successively upon each such issuance, sale,
dividend or distribution, the initial or adjusted conversion price in
effect immediately prior thereto (herein called the "current
conversion price") shall simultaneously with such issuance, sale,
dividend or distribution be reduced to a price (calculated to the
nearest cent) determined by dividing
(i) an amount equal to (A) the total number of shares of Common
Stock outstanding when the current conversion price became
effective multiplied by the current conversion price, plus (B)
the aggregate of the amounts of all consideration, if any,
received by the Corporation for the issuance or sale of shares of
Common Stock since the current conversion price became effective,
minus (C) the aggregate amount of all extraordinary dividends or
distributions on Common Stock, paid by the Corporation since
the current conversion price became effective, by
(ii) the total number of shares of Common Stock outstanding
immediately after such issuance, sale, dividend, or other
distribution.
For all purposes of this Section 5 there shall be deemed to have been
outstanding when the initial conversion price became effective (a) all
shares of Common Stock then issued and outstanding and (b) all shares
of Common Stock thereafter issued by the Corporation in the special
distribution of shares made to holders of record of the Capital Stock
of the Corporation on the date immediately preceding the effective
date of the merger of Rockwell-Standard Corporation into the
Corporation.
5.2.2. Calculations pursuant to Subsection 5.2.1 shall be made
in accordance with the following provisions:
(i) Except to the extent provided in paragraphs (viii) and (ix)
of this Subsection 5.2.2, in case of the issuance or sale of
additional shares of Common Stock for cash, the consideration
received by the Corporation therefor shall be deemed to be the
amount of cash received by the Corporation for such shares (or,
if such shares are offered by the Corporation for subscription,
the subscription price, or, if such shares are sold to
underwriters or dealers for public offering without a
subscription offering, the initial public offering price),
without deducting therefrom any compensation or discount paid or
allowed to underwriters or dealers or others performing similar
services or for any expenses incurred in connection therewith.
(ii) Except to the extent provided in paragraphs (viii) and
(ix) of this Subsection 5.2.2, in case of the issuance (otherwise
than upon conversion or exchange of securities convertible into
Common Stock, hereinafter called "convertible securities") or
sale of additional shares of Common Stock for a consideration
other than cash or a consideration a part of which shall be other
than cash, the amount of the consideration other than cash
received by the Corporation for such shares shall be deemed to be
the fair value of such consideration as determined by the Board
of Directors, irrespective of the accounting treatment thereof.
(iii) Except to the extent provided in paragraphs (viii) and
(ix) of this Subsection 5.2.2, in case at any time the
Corporation shall in any manner (whether as a dividend or
distribution on Common Stock, or otherwise) issue or grant any
rights to subscribe for or to purchase, or any options for the
purchase of, (A) Common Stock or (B) any convertible securities,
or shall issue or sell convertible securities, and the price per
share for which Common Stock is issuable upon the exercise of
such rights or options or upon conversion or exchange of such
convertible securities at the time such convertible securities
first become convertible or exchangeable
(determined by dividing
(A) in the case of an issue or grant of any such rights or
options, the total amount, if any, received or receivable by the
Corporation as consideration for the issue or grant of such
rights or options, plus the minimum aggregate amount of
additional consideration payable
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<PAGE> 14
to the Corporation upon the exercise of such rights or options,
plus, in the case of such convertible securities, the minimum
aggregate amount of additional consideration, if any, payable to the
Corporation upon the conversion or exchange of such convertible
securities at the time such convertible securities first become
convertible or exchangeable, or
(B) in the case of an issue or sale of convertible securities
other than where the same are issuable upon the exercise of any such
rights or options, the total amount, if any, received or receivable by
the Corporation as consideration for the issue or sale of such
convertible securities, plus the minimum aggregate amount of
additional consideration, if any, payable to the Corporation upon the
conversion or exchange of such convertible securities at the time such
convertible securities first become convertible or exchangeable, by,
in either such case,
(C) the total maximum number of shares of Common Stock issuable
upon the exercise of such rights or options or upon the conversion or
exchange of such convertible securities at the time such convertible
securities first become convertible or exchangeable)
shall be less than the current conversion price, then the total maximum
number of shares of Common Stock issuable upon the exercise of such rights
or options or upon conversion or exchange of the total maximum amount of
such convertible securities at the time such convertible securities first
become convertible or exchangeable shall (as of the date of issue or grant
of such rights or options or, in the case of the issue or sale of
convertible securities other than where the same are issuable upon the
exercise of rights or options, as of the date of such issue or sale) be
deemed to be issued and to be outstanding for the purpose of Subsection
5.2.1 and to have been issued for said price per share; provided that,
subject to the provisions of Subsection 5.2.3 below, no further adjustment
of the conversion price shall be made upon the actual issue of any such
Common Stock or convertible securities or upon the conversion or exchange
of any such convertible securities.
(iv) In the case of the issuance of additional shares of Common Stock
as a dividend or as a distribution on Common Stock, the aggregate number of
shares of Common Stock issued in payment of such dividend or distribution
shall be deemed to have been issued on the record date for such dividend or
distribution and shall be deemed to have been issued without consideration.
(v) A dividend or distribution on Common Stock shall be deemed an
extraordinary dividend or distribution if paid in cash otherwise than out
of earned surplus or in property or securities (excluding Common Stock,
convertible securities other than convertible debt securities and rights or
options to subscribe for or purchase Common Stock or such convertible
securities). An extraordinary dividend or distribution shall be deemed to
have been paid or made on the record date therefor and the amount thereof,
if payable in property, shall be deemed to be the fair value of such
property on such record date, as determined by the Board of Directors.
(vi) The reclassification of securities other than Common Stock into
securities including Common Stock shall be deemed to involve the issuance
for a consideration other than cash of such Common Stock at the close of
business on the date fixed for the determination of stockholders entitled
to receive such Common Stock.
(vii) In the event that there shall be no record date for the
determination of stockholders entitled to any dividend or distribution
declared by the Corporation, the first business day during which the stock
transfer books of the Corporation shall be closed for the purpose of such
determination shall be deemed to be the record date for the determination
of stockholders entitled to such dividend or distribution.
(viii) In case the Corporation shall issue any shares of Common Stock
pursuant to and to the extent permitted on May 26, 1967 under any employee
stock option plans or employee stock purchase plans of the Corporation
(including Rockwell-Standard Corporation) which are then in effect
(including any additional shares that may become issuable pursuant to the
adjustment provisions of any such plan in respect of shares so permitted to
be issued), or in case the Corporation shall issue any Common Stock
pursuant to the conversion of any of its outstanding 4 1/4% Convertible
Subordinated Debentures due February 15, 1991, the Corporation
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<PAGE> 15
shall be deemed to have received as consideration for each share of Common
Stock so issued the conversion price in effect under the provisions of
the Series A Stock at the time such share shall have been so issued. No
account shall be taken of any options or rights to purchase any shares of
Common Stock under any such plans (including any such options or rights
issued after the above date), or the right to convert such debentures into
shares of Common Stock, or the consideration payable for Common Stock upon
the exercise of such rights or options or the conversion of such
Debentures, until such shares of Common Stock are so issued.
(ix) The provisions of Subsection 5.2.1 shall not be applicable in any
case in which the Corporation shall (A) issue, in consideration of the
acquisition by the Corporation or any subsidiary of all or substantially
all of the stock of another company or all or substantially all of the
assets of another company (whether by merger, acquisition of assets or
otherwise), any Common Stock or convertible securities or rights or options
to subscribe for or purchase Common Stock or convertible securities, or (B)
issue any Common Stock pursuant to any such rights or options or upon
conversion or exchange of such convertible securities. Shares of Common
Stock, convertible securities, rights or options issued in any such case
shall not be considered outstanding, and none of the consideration received
by the Corporation for such Common Stock, or for such convertible
securities, rights or options, or upon the exercise thereof, shall be taken
into account, in determining the conversion price pursuant to Subsection
5.2.1.
(x) The number of shares of Common Stock at any time outstanding shall
include all shares of Common Stock then owned or held by or for the
account of the Corporation (except for any such shares so owned or held on
the date shares of Series A Stock are first issued, and any shares
resulting from any reclassification or reclassifications of such shares
effected while such shares were so owned or held, in each case so long as
continuously owned or held by or for the account of the Corporation), and
such shares (except as aforesaid) shall not, for the purpose of Subsection
5.2.1, thereafter be deemed to be again issued or sold upon their delivery.
(xi) The adjustment provided for in Subsection 5.2.1 shall be made
only if it results in a reduction of the current conversion price, and
the Corporation shall not be required to make any reduction of the current
conversion price if the amount of such reduction would be less than fifty
cents ($.50), Such sum of fifty cents ($.50), or such sum as theretofore
adjusted, shall be proportionately decreased upon any subdivision of the
Common Stock of the Corporation, or shall be proportionately increased upon
any combination of the Common Stock of the Corporation (in each case, to
the nearest cent).
5.2.3. In the event of an adjustment in the purchase price per share of
Common Stock provided for in any options or rights referred to in paragraph
(iii) of Subsection 5.2.2 or in the consideration to be received by the
Corporation upon the conversion or exchange of any convertible securities
referred to in said paragraph (iii), the current conversion price shall
forthwith be readjusted to such amount as would have been obtained had the
adjustment in such purchase price or consideration been initially reflected
upon the issuance of such options, rights or convertible securities, but such
readjustment shall be made only to the extent that such options or rights which
remain outstanding or unexercised and such convertible securities remain
outstanding and unconverted and unexchanged, provided, however, that in no
event shall any such readjustment increase the current conversion price to an
amount in excess of the initial conversion price as adjusted only in
accordance with the provisions of Subsection 5.2.4 below. Upon the expiration
of any such options or rights or the termination of the right to convert or
exchange any such convertible securities, the current conversion price shall
forthwith be readjusted to such amount as would have obtained had the
adjustment made upon the issuance of such options, rights or convertible
securities been made upon the basis of the issuance of only the number of
shares of Common Stock actually delivered upon the exercise of such options
or rights or the conversion or exchange of such convertible securities and
the number of shares of Common Stock issuable upon the exercise of outstanding
options or rights which have not expired or upon the conversion or exchange
of any outstanding convertible securities as to which the right to convert or
exchange has not terminated, provided, however, that in no event shall any such
readjustment increase the current
15
<PAGE> 16
conversion price to an amount in excess of the initial conversion price as
adjusted only in accordance with the provisions of Subsection 5.2.4 below.
Upon any readjustment of the current conversion price pursuant to the
provisions of this Subsection 5.2.3, such readjustment shall thereafter, for
all purposes hereof, be deemed to have become effective at the time of the next
preceding adjustment of the conversion price otherwise than pursuant to the
provisions of this Subsection 5.2.3.
5.2.4. In case outstanding shares of Common Stock shall be subdivided
into a greater number of shares of Common Stock, the current conversion
price shall, simultaneously with the effectiveness of such subdivision, be
proportionately reduced, and conversely, in case outstanding shares of
Common Stock shall be combined into a smaller number of shares of Common
Stock, the current conversion price shall, simultaneously with the
effectiveness of such combination, be proportionately increased.
5.2.5. For the purposes of this Section 5.2, a distribution of shares
of Common Stock to holders of shares of Common Stock in which the number of
shares distributed is 25% or more of the number of shares of Common Stock
on which the distribution is to be made shall be deemed to be a subdivision
of shares of Common Stock, and a distribution of a lesser number of shares
of Common Stock shall be deemed to be a stock dividend.
5.2.6. The above provisions of this Section 5.2 shall similarly apply
to successive issues, sales, dividends or other distributions, subdivisions
and combinations of or on shares of Common Stock.
5.2.7. In case the Common Stock of the Corporation issuable upon
conversion of the shares of Series A Stock shall be changed into another
kind of capital stock (otherwise than through a subdivision or combination
of shares) or shall represent the right to receive some other security or
property, as a result of any capital reorganization, reclassification, or
merger or consolidation with another corporation in which the Corporation
is the surviving corporation, or sale of all or substantially all the
assets of the Corporation to another corporation otherwise than for capital
stock of the other corporation, each share of Series A Stock shall (subject
to further adjustments in conversion price as herein provided) thereafter
entitle the holder to acquire upon conversion thereof the kind and number
of shares of stock or other securities or property to which such holder
would have been entitled if he had held the Common Stock issuable upon the
conversion of his Series A Stock immediately prior to such capital
reorganization, reclassification, merger, consolidation or sale of assets.
5.3. In case:
(i) the Corporation shall declare a dividend (or any other
distribution) on its Common Stock payable otherwise than in cash out of
its earned surplus; or
(ii) the Corporation shall authorize the granting to the holders of its
Common Stock of rights to subscribe for or purchase any shares of capital
stock of any class or of any other rights; or
(iii) of any reclassification of the Common Stock of the Corporation
(other than a subdivision or combination of its outstanding shares of
Common Stock), or of any consolidation or merger to which the Company is a
party and for which approval of any stockholders of the Corporation is
required, or of the sale or transfer of all or substantially all of the
assets of the Corporation; or
(iv) of the voluntary or involuntary dissolution, liquidation or
winding up of the Corporation;
then the Corporation shall cause to be filed at the office of the transfer
agent of the Series A Stock and shall cause to be mailed to the holders of the
Series A Stock at their addresses as they shall appear upon the record of such
transfer agent at least ten days prior to the record date specified in (A)
below or twenty days before the date specified in (B) below, a notice stating
16
<PAGE> 17
(A) the record date for such dividend, distribution or rights, or, if
a record is not to be taken, the date as of which the holders of Common
Stock of record to be entitled to such dividend, distribution or rights
are to be determined, or
(B) the date on which such reclassification, consolidation, merger,
sale, transfer, dissolution, liquidation or winding up is expected to become
effective, and the date as of which it is expected that holders of Common
Stock of record shall be entitled to exchange their shares of Common Stock
for securities or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding
up.
5.4. Whenever the conversion price shall be adjusted as provided in Section
5.2, the Corporation shall forthwith file at each office designated for the
conversion of shares of Series A Stock, a statement, signed by the Chairman of
the Board, the President, any Vice President or the Treasurer of the
Corporation, showing in reasonable detail the facts requiring such adjustment
and the conversion price that will be effective after such adjustment. The
Corporation shall also cause a notice setting forth any such adjustments to be
sent by mail, first class, postage prepaid, to each record holder of shares of
Series A Stock at his address appearing on the stock register. Where
appropriate, such notice may be given in advance and may be included as part of
a notice required to be mailed and published under the provisions of Section
5.3.
5.5. The Corporation shall not be required to issue fractional shares of
Common Stock or scrip upon conversion of shares of Series A Stock. As to any
final fraction of a share of Common Stock which the same record holder of one
or more shares of Series A Stock would otherwise be entitled to upon conversion
of shares of Series A Stock in the same transaction, the Corporation shall pay
a cash adjustment in respect of such final fraction in an amount equal to the
same fraction of the last sales price (or bid price if there were no sales) per
share on the New York Stock Exchange on the business day which next precedes
the date of conversion or, if such Common Stock is not listed on the New York
Stock Exchange, of the market price per share (as determined in a manner
prescribed by the Board of Directors of the Corporation) at the close of
business on the business day which next precedes the date of conversion.
5.6. The Corporation will pay any documentary stamp taxes attributable to
the initial issuance of shares of Common Stock upon conversion of any shares of
Series A Stock pursuant hereto, provided, however, that the Corporation shall
not be required to pay any tax or taxes which may be payable in respect of any
transfer involved in the issue or delivery of any certificates for shares of
Common Stock in a name other than that of the registered holder of shares of
Series A Stock in respect of which such shares of Common Stock are issued.
5.7. The Corporation shall at all times reserve and keep available, out of
its treasury stock or authorized and unissued stock, or both, solely for the
purpose of effecting the conversion of the shares of Series A Stock, such
number of shares of Common Stock as shall from time to time be sufficient to
effect the conversion of all shares of Series A Stock from time to time
outstanding.
Before taking any action which would cause an adjustment reducing the
conversion price below the then par value of the shares of Common Stock
issuable upon conversion of the Series A Stock, the Corporation will take any
corporate action which may, in the opinion of its counsel, be necessary in
order that the Corporation may validly and legally issue fully paid and
nonassessable shares of such Common Stock at such adjusted conversion price.
6. Voting.
6.1. Subject to the provisions of any applicable law, or of the By-laws of
the Corporation as from time to time amended, with respect to the closing of
the transfer books or the fixing of a record date for the determination of
stockholders entitled to vote, at each meeting of stockholders of the Corpora-
tion each holder of record of shares of Series A Stock shall be entitled to
cast one vote for each share of
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<PAGE> 18
Series A Stock standing in such holder's name on the record books of the
Corporation (with the same rights of cumulative voting, if any, as the Common
Stock) on each matter on which the holders of record of the Common Stock of the
Corporation shall be entitled to vote, voting together with the holders of
record of the Common Stock and other series of Preferred Stock of the
Corporation entitled to vote with the Common Stock of the Corporation, and not
by classes or by series. Each such record holder of shares of Series A Stock
shall be entitled to notice of any such meeting of stockholders. In addition,
so long as any shares of Series A Stock are outstanding, if at the time of any
annual meeting of stockholders for the election of directors a default in
preferred dividends, as hereinafter defined, shall exist, the holders of shares
of the Preferred Stock of the Corporation voting separately as a class without
regard to series (with each share of Preferred Stock being entitled to one vote
on a noncumulative basis) shall have the right to elect two members of the
Board of Directors of the Corporation, and the holders of the Common Stock,
the Series A Stock and any other series of Preferred Stock of the Corporation
entitled to vote with the Common Stock, voting separately as another class,
shall be entitled to elect the remaining members of the Board of Directors of
the Corporation. Any director elected by the holders of the Preferred Stock,
voting as a class as aforesaid, shall continue to serve as such director for
the full term for which he shall have been elected notwithstanding that prior
to the end of such term a default in preferred dividends shall cease to exist.
If, prior to the end of the term of any director elected by the holders of the
Preferred Stock, voting as a class as aforesaid, a vacancy in the office of
such director shall occur by reason of death, resignation, removal or
disability, or for any other cause, the remaining director so elected by the
holders of shares of the Preferred Stock shall be entitled to nominate for
election by the Board of Directors a successor director to hold office for the
unexpired term of the director whose position has become vacant. If the vacancy
is not filled by the election of such nominee or if there is then in office no
director who has been elected by the holders of shares of the Preferred Stock,
the Corporation shall, as soon as reasonably may be done, call (on at least 20
days' notice) a special meeting of the holders of shares of the Preferred Stock
for the purpose of filling such vacancy or vacancies in the Board of Directors.
If the Corporation fails to call such a meeting within 30 days after a written
request by any three or more holders of shares of the Preferred Stock, then
such three or more holders of shares of the Preferred Stock may call (on at
least 20 days' notice) a special meeting of the holders of shares of the
Preferred Stock for such purpose and, if the vacancy or vacancies are not
theretofore filled as hereinabove provided, it or they may be filled at such
meeting by the holders of shares of the Preferred Stock, voting separately as a
class regardless of series. For the purposes of this Section 6, a default in
preferred dividends shall be deemed to have occurred whenever the amount of
unpaid cumulative dividends upon any series of Preferred Stock shall be
equivalent to six full quarter-yearly dividends or more and, having so
occurred, such default in preferred dividends shall be deemed to exist
thereafter until, but only until, all accrued dividends on all shares of
Preferred Stock then outstanding, shall have been paid to the end of the last
preceding quarterly dividend period.
6.2. Without the written consent or affirmative vote of the holders of at
least two-thirds of the aggregate number of shares of Preferred Stock of the
Corporation at the time outstanding given in writing or by vote at a meeting,
consenting or voting (as the case may be) separately as a class, without regard
to series, the Corporation shall not amend, alter or repeal the preferences,
special rights or other powers of the Preferred Stock as set forth in the
Certificate of Incorporation or in any certificate providing for the
authorization of Preferred Stock of any series so as to affect the Preferred
Stock adversely (and the authorization or issuance of any class of stock with
preference or priority over the Preferred Stock as to the right to receive
either dividends or amounts distributable upon liquidation, dissolution or
winding up, shall be deemed so to affect the Preferred Stock adversely).
6.3. Without the written consent or affirmative vote of the holders of at
least a majority of the aggregate number of shares of Preferred Stock of the
Corporation at the time outstanding given in writing or by vote at a meeting,
consenting or voting (as the case may be) separately as a class, without regard
to series, the Corporation will not increase the authorized amount of Preferred
Stock. The term "Preferred Stock", for all purposes of this initial series of
$4.75 Convertible Preferred Stock, Series A, shall mean and include any class
of stock the holders of which shall be entitled to the receipt
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<PAGE> 19
of dividends or of amounts distributable upon liquidation, dissolution or
winding up, as the case may be, in proportion to their respective dividend
rates or liquidation prices, equal in preference or priority with the holders
of the Series A Stock.
7. Reacquired Shares. Shares of Series A Stock which have been issued and
reacquired through redemption or purchase or have been converted into shares of
any other class or classes of the stock of the Corporation shall, upon
compliance with any applicable provision of the General Corporation Law of the
State of Delaware, have the status of authorized and unissued shares of
Preferred Stock and may be reissued as part of the Series A Stock or as part of
a new series of Preferred Stock to be created by resolution or resolutions of
the Board of Directors.
$1.35 CONVERTIBLE PREFERRED STOCK, SERIES B
There is hereby created and authorized for issuance a series of Preferred
Stock of the Corporation consisting of 4,131,401 shares, with the following
voting powers, designation, preferences and relative, participating, optional
or other special rights, and qualifications, limitations or restrictions
thereof:
1. Designation. The designation of said series shall be $1.35 Convertible
Preferred Stock, Series B (hereinafter called Series B Stock).
2. Dividends. The holders of Series B Stock shall be entitled to cumulative
dividends at the rate of $1.35 per share per annum when and as declared by the
Board of Directors, payable quarterly on the first day of January, April, July,
and October in each year (each such day occurring on or after July 1, 1969
being hereinafter called a dividend payment date). Dividends shall be
cumulative on each share of Series B Stock from July 1, 1969 or from the
dividend payment date next preceding the date of issuance of such share,
whichever is later, except that dividends shall be cumulative from the date of
issuance of any share issued on a dividend payment date and from the dividend
payment date next following the date of issuance of any share issued between
the record date for the determination of holders of Series B Stock entitled to
receive a quarterly dividend and the dividend payment date for such quarterly
dividend. Dividends at the above rate shall be cumulative whether or not the
Corporation shall have had net profits or assets legally available for such
dividends in any dividend period. Holders of Series B Stock shall not be
entitled to any dividends other than full cumulative dividends in cash at the
above rate, and shall be entitled to no interest on unpaid cumulative
dividends.
Unless the full amount of cumulative dividends on the Series B Stock up to
and including the next following dividend payment date shall have been paid or
declared and a sum sufficient for the payment thereof set apart, neither the
Corporation nor any subsidiary of the Corporation shall at any time (a) set
aside or apply any sum for the purchase or redemption of any outstanding
capital stock of the Corporation of any class or series (whether by purchase or
by redemption pursuant to any sinking fund provisions, optional redemption
provisions, or otherwise), (b) declare any dividend (other than a dividend
payable in Common Stock) or set aside or apply any sum for the payment of any
dividend or other distribution, on the Common Stock or any other class of stock
of the Corporation except Preferred Stock, or (c) declare or pay any dividend
on the Series A Stock if, after giving effect thereto and all such dividends
declared or paid on the Series B Stock, the ratio between the unpaid cumulative
dividends and the annual dividend rate on the Series A Stock would not be the
same as the same ratio for the Series B Stock.
The Corporation shall not issue Preferred Stock of any series having
dividend payment dates different from those of the Series B Stock and shall not
issue any Preferred Stock, other than Series A or Series B Stock, unless full
cumulative dividends on all outstanding shares of the Series A and Series B
Stock up to and including the dividend payment date next following the date of
such issue shall have been paid or declared and a sum sufficient for the
payment thereof set apart; and neither the Corporation nor any subsidiary of
the Corporation shall declare any dividend or set aside or apply any sum for
the payment of dividends on any series of Preferred Stock other than Series A
and Series B, if after giving effect to such dividend and to all dividends on
the Series A and Series B Stock paid or declared and covered by a sum set aside
for the payment thereof, the ratio between the unpaid cumulative
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<PAGE> 20
dividends and the annual dividend rate on the Series A and Series B Stock would
be greater than the same ratio in the case of such other series of Preferred
Stock.
For the purposes of the foregoing provisions a corporation is a subsidiary
of another corporation (the parent) if a majority of the subsidiary's
outstanding stock ordinarily entitled to vote in the election of directors
(excluding stock which is entitled to vote in the election of directors only
upon the happening of some contingency such as failure to pay dividends) is
owned by the parent and/or one or more of its subsidiaries. A corporation is
also the subsidiary of another corporation if its parent is a subsidiary of
such other corporation.
3. Optional Redemption. Shares of Series B Stock may be redeemed, in whole
or in part, at any time after June 30, 1976, at the option of the Corporation
expressed by resolution of the Board of Directors, at a redemption price in
accordance with the following table, plus, in each case, an amount equal to
unpaid cumulative dividends accrued to the date of redemption.
<TABLE>
<CAPTION>
The redemption
If the date of redemption is in price
the Period indicated: shall be:
--------------------- ---------
<S> <C>
July 1, 1976 through June 30, 1977 ................ $38.00
July 1, 1977 through June 30, 1978 ................ 37.60
July 1, 1978 through June 30, 1979 ................ 37.20
July 1, 1979 through June 30, 1980 ................ 36.80
July 1, 1980 through June 30, 1981 ................ 36.40
July 1, 1981 and thereafter ....................... 36.00
</TABLE>
If less than all the outstanding shares of Series B Stock are to be
redeemed, the shares to be redeemed shall be selected either by lot or pro rata
in such manner as may be prescribed by resolution of the Board of Directors.
Notice to the holders of shares of Series B Stock to be redeemed shall be given
by mailing to such holders a notice of such redemption, first class, postage
prepaid, not later than the thirtieth day, and not earlier than the sixtieth
day, before the date fixed for redemption, at their last addresses as they
shall appear upon the books of the Corporation. Any notice which is mailed in
the manner herein provided shall be conclusively presumed to have been duly
given, whether or not the stockholder receives such notice; and failure duly to
give such notice by mail, or any defect in such notice, to any stockholder
designated for redemption shall not affect the validity of the proceedings for
the redemption of any other shares of Series B Stock.
The notice of redemption to each stockholder whose shares of Series B Stock
are to be redeemed shall specify the number of shares of Series B Stock of such
stockholder to be redeemed, the date fixed for redemption and the redemption
price at which shares of Series B Stock are to be redeemed, and shall specify
where payment of the redemption price is to be made upon surrender of such
shares, shall state the conversion price then in effect, and shall state that
accrued dividends to the date fixed for redemption will be paid as specified in
said notice, that from and after said date dividends thereon will cease to
accrue, and that conversion rights of such shares shall cease and terminate at
the close of business on the date fixed for redemption.
In the case of each share of Series B Stock called for redemption as above
provided, the Corporation shall be obligated (unless such share shall be
converted on or prior to the redemption date) to pay to the holder thereof the
redemption price plus accrued dividends, if any, to the redemption date, upon
surrender of the certificate for such share at the office of any transfer agent
for the Series B Stock, on or after the redemption date. Unless the Corporation
shall default in the payment of the redemption price plus accrued dividends,
if any, dividends on each share of Series B Stock so called for redemption
shall cease to accrue from and after the redemption date.
4. Rights on Liquidation. In the event of any liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary, the holders
of shares of Series B Stock then outstanding
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<PAGE> 21
shall be entitled to be paid out of the assets of the Corporation available for
distribution to its stockholders an amount equal to $36.00 per share, plus an
amount equal to unpaid cumulative dividends (and no more) before any payment
shall be made to the holders of Common Stock or any other class of stock of the
Corporation other than Preferred Stock. If the assets of the Corporation
available for distribution to its stockholders shall be insufficient to pay in
full all amounts to which the holders of Preferred Stock of all series are
entitled, the amount available for distribution to stockholders shall be shared
by the holders of all series of Preferred Stock pro rata according to the
amounts to which the shares of each series are entitled. For the purposes of
this Section 4, a consolidation or merger of the Corporation with any other
corporation, or the sale, transfer or lease of all or substantially all its
assets shall not constitute or be deemed a liquidation, dissolution or winding
up of the Corporation.
5. Conversion. The shares of the Series B Stock shall be convertible at
the option of the respective holders thereof at the office of the
transfer agent for the Series B Stock located in the Borough of Manhattan,
the City and State of New York, and at such other offices or agencies of
the Corporation, if any, as the Board of Directors may determine, into
fully paid and nonassessable whole shares of Common Stock of the
Corporation
(a) at any time at an assigned value of $36.00 per share, or
(b) until June 30, 1979, upon payment to the Corporation of $10.125,
at an assigned value of $45.00 per share,
at the conversion price, determined as hereinafter provided, in effect at the
time of conversion; provided, however, such right of conversion shall cease
and terminate, as to shares called for redemption, at the close of business
on the date fixed for redemption, unless default shall be made in the payment
of the redemption price.
5.1. The initial price per share at which shares of Common Stock shall
be delivered upon conversion (the "initial conversion price") shall be
$40.00. The initial conversion price and any adjusted conversion price
shall be subject to adjustment from time to time in certain instances as
hereinafter provided. Upon conversion the Corporation shall make no payment
or adjustment on account of dividends accrued or in arrears on (a) the
shares of the Series B Stock surrendered for conversion or (b) the shares
of Common Stock issued on conversion of such shares of Series B Stock,
provided that a holder of Series B Stock of record on a record date for the
payment of a dividend thereon shall be entitled to such dividend
notwithstanding his conversion of such Series B Stock before the dividend
is paid.
Whenever reference is made in this Section 5 to the issue or sale of
shares of Common Stock the term Common Stock shall mean stock of the
Corporation of any class, whether now or hereafter authorized, which by its
terms has the right to participate in the distribution of either the assets
or earnings of the Corporation without limit as to amount or percentage.
The Common Stock initially issuable upon conversion of shares of Series B
Stock shall, however, be Common Stock, $1 par value per share, of the
Corporation as constituted on December 31, 1968.
Before any holder of shares of Series B Stock shall be entitled to
convert the same into Common Stock, he shall surrender the certificate or
certificates for such shares of Series B Stock at one of the offices
specified as provided in this Section 5, which certificate or certificates,
if the Corporation shall so request, shall be duly endorsed to the
Corporation or in blank or accompanied by proper instruments of transfer
to the Corporation or in blank, and accompanied by funds in the amount of
any tax or taxes payable or which may be payable in respect of any transfer
involved in the issue and delivery of certificates for shares of Common
Stock in a name other than that of the record holder of shares of Series B
Stock in respect of which such shares of Common Stock are issued, and which
are payable if conversion is made in accordance with Subparagraph (b) of
Section 5 above, and shall give written notice to the Corporation at said
office that he elects so to convert said shares of Series B Stock, and
shall state in writing therein the name or names in which he wishes the
certificate or certificates for Common Stock to be issued.
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<PAGE> 22
The Corporation will as soon as practicable after such deposit of
certificates for shares of Series B Stock accompanied by the written notice
and the statement above prescribed, issue and deliver at the office at
which such certificates for shares of Series B Stock shall have been
deposited to the person for whose account such shares of Series B Stock
were so surrendered, or to his nominee or nominees, certificates for the
number of whole shares of Common Stock to which he shall be entitled as
aforesaid, together with an adjustment of any fraction of a share as
hereinafter provided, if not evenly convertible. Such conversion shall be
deemed to have been made as of the date of such surrender of the shares of
Series B Stock to be converted; and the person or persons entitled to
receive the shares of Common Stock issuable upon the conversion of such
shares of Series B Stock shall be treated for all purposes as the record
holder or holders of such Common Stock on such date. However, the
Corporation shall not be required to convert, and no surrender of shares of
Series B Stock shall be effective for that purpose, while the stock
transfer books of the Corporation are closed for any purpose; but the
surrender of shares of Series B Stock for conversion during any period
while such books are so closed shall become effective for conversion
immediately upon the reopening of such books, at the conversion price in
effect at the date of such surrender notwithstanding the occurrence of
the date fixed for redemption during such period.
5.2. The conversion prices, initial or adjusted, referred to herein
shall be subject to adjustment from time to time as follows:
5.2.1. In case the Corporation shall at any time (a) issue or
sell any shares of Common Stock without consideration, or for a
consideration per share less than the conversion price, initial or
adjusted, in effect immediately prior to the issuance or sale of such
additional shares or (b) pay or make an extraordinary dividend or
distribution on Common Stock (as defined in Subsection 5.2.2(v)),
then, and thereafter successively upon each such issuance, sale,
dividend or distribution, the initial or adjusted conversion price
in effect immediately prior thereto (herein called the ("current
conversion price") shall simultaneously with such issuance, sale,
dividend or distribution be reduced to a price (calculated to the
nearest cent) determined by dividing
(i) an amount equal to (A) the total number of shares
of Common Stock outstanding when the current conversion price
became effective multiplied by the current conversion price,
plus (B) the aggregate of the amounts of all consideration, if
any, received by the Corporation for the issuance or sale of
shares of Common Stock since the current conversion price
became effective, minus (C) the aggregate amount of all
extraordinary dividends or distributions on Common Stock, paid
by the Corporation since the current conversion price became
effective, by
(ii) the total number of shares of Common Stock
outstanding immediately after such issuance, sale, dividend,
or other distribution.
5.2.2. Calculations pursuant to Subsection 5.2.1 shall be made
in accordance with the following provisions:
(i) Except to the extent provided in paragraphs (viii)
and (ix) of this Subsection 5.2.2, in case of the issuance or
sale of additional shares of Common Stock for cash, the
consideration received by the Corporation therefor shall be
deemed to be the amount of cash received by the Corporation for
such shares (or, if such shares are offered by the Corporation
for subscription, the subscription price, or, if such shares
are sold to underwriters or dealers for public offering without
a subscription offering, the initial public offering price),
without deducting therefrom any compensation or discount paid
or allowed to underwriters or dealers or others performing
similar services or for any expenses incurred in connection
therewith.
(ii) Except to the extent provided in paragraphs (viii)
and (ix) of this Subsection 5.2.2, in case of the issuance
(otherwise than upon conversion or exchange of securities
convertible in to Common Stock, hereinafter called
"convertible securities") or sale of additional shares of
22
<PAGE> 23
Common Stock for a consideration other than cash or a consideration a
part of which shall be other than cash, the amount of the consideration
other than cash received by the Corporation for such shares shall be deemed
to be the fair value of such consideration as determined by the Board of
Directors, irrespective of the accounting treatment thereof.
(iii) Except to the extent provided in paragraphs (viii) and (ix) of
this Subsection 5.2.2, in case at any time the Corporation shall in any
manner (whether as a dividend or distribution on Common Stock, or
otherwise) issue or grant any rights to subscribe for or to purchase, or
any options for the purchase of, (A) Common Stock or (B) any convertible
securities, or shall issue or sell convertible securities, and the price
per share for which Common Stock is issuable upon the exercise of such
rights or options or upon conversion or exchange of such convertible
securities at the time such convertible securities first become convertible
or exchangeable
(determined by dividing
(A) in the case of an issue or grant of any such rights or
options, the total amount, if any, received or receivable by the
Corporation as consideration for the issue or grant of such rights or
options, plus the minimum aggregate amount of additional consideration
payable to the Corporation upon the exercise of such rights or
options, plus, in the case of such convertible securities, the minimum
aggregate amount of additional consideration, if any, payable to the
Corporation upon the conversion or exchange of such convertible
securities at the time such convertible securities first become
convertible or exchangeable, or
(B) in the case of an issue or sale of convertible securities
other than where the same are issuable upon the exercise of any such
rights or options, the total amount, if any, received or receivable by
the Corporation as consideration for the issue or sale of such
convertible securities, plus the minimum aggregate amount of
additional consideration, if any, payable to the Corporation upon
the conversion or exchange of such convertible securities at the
time such convertible securities first become convertible or
exchangeable, by, in either such case,
(C) the total maximum number of shares of Common Stock issuable
upon the exercise of such rights or options or upon the conversion
or exchange of such convertible securities at the time such
convertible securities first become convertible or exchangeable)
shall be less than the current conversion price, then the total maximum
number of shares of Common Stock issuable upon the exercise of such rights
or options or upon conversion or exchange of the total maximum amount of
such convertible securities at the time such convertible securities first
become convertible or exchangeable shall (as of the date of issue or grant
of such rights or options or, in the case of the issue or sale of
convertible securities other than where the same are issuable upon the
exercise of rights or options, as of the date of such issue or sale) be
deemed to be issued and to be outstanding for the purpose of Subsection
5.2.1 and to have been issued for said price per share; provided that,
subject to the provisions of Subsection 5.2.3 below, no further
adjustment of the conversion price shall be made upon the actual issue of
any such Common Stock or convertible securities or upon the conversion or
exchange of any such convertible securities.
(iv) In the case of the issuance of additional shares of Common stock
as a dividend or as a distribution on Common Stock, the aggregate number of
shares of Common Stock issued in payment of such dividend or distribution
shall be deemed to have been issued on the record date for such dividend or
distribution and shall be deemed to have been issued without consideration.
(v) A dividend or distribution on Common Stock shall be deemed an
extraordinary dividend or distribution if paid in cash otherwise than out
of earned surplus or in property or securities (excluding Common Stock,
convertible securities other than convertible debt
23
<PAGE> 24
securities and rights or options to subscribe for or purchase Common
Stock or such convertible securities). An extraordinary dividend or
distribution shall be deemed to have been paid or made on the record date
therefor and the amount thereof, if payable in property, shall be deemed to
be the fair value of such property on such record date, as determined by
the Board of Directors.
(vi) The reclassification of securities other than Common Stock into
securities including Common Stock shall be deemed to involve the issuance
for a consideration other than cash of such Common Stock at the close of
business on the date fixed for the determination of stockholders entitled
to receive such Common Stock.
(vii) In the event that there shall be no record date for the
determination of stockholders entitled to any dividend or distribution
declared by the Corporation, the first business day during which the stock
transfer books of the Corporation shall be closed for the purpose of such
determination shall be deemed to be the record date for the determination
of stockholders entitled to such dividend or distribution.
(viii) In case the Corporation shall issue any shares of Common Stock
pursuant to any employee stock option plans, employee stock purchase plans
or bonus, savings or other similar employee plans (including any additional
shares that may become issuable pursuant to the adjustment provisions of
any such plan in respect of shares so permitted to be issued), or in case
the Corporation shall issue any Common Stock pursuant to the conversion of
any a) of its outstanding 4 1/4% Convertible Subordinated Debentures due
February 15, 1991 and b) any of its $4.75 Convertible Preferred Stock,
Series A, the Corporation shall be deemed to have received as consideration
for each share of Common Stock so issued the conversion price in effect
under the provisions of the Series B Stock at the time such share shall
have been so issued. No account shall be taken of any options or rights to
purchase any shares of Common Stock under any such plans, or the right to
convert such Debentures or Preferred Stock into shares of Common Stock, or
the consideration payable for Common Stock upon the exercise of such rights
or options or the conversion of such Debentures or Preferred Stock until
such shares of Common Stock are so issued.
(ix) The provisions of Subsection 5.2.1 shall not be applicable in any
case in which the Corporation shall (A) issue, in consideration of the
acquisition by the Corporation or any subsidiary of all or substantially
all of the stock of another company or all or substantially all of the
assets of another company (whether by merger, acquisition of assets or
otherwise), any Common Stock or convertible securities or rights or options
to subscribe for or purchase Common Stock or convertible securities, or (B)
issue any Common Stock pursuant to any such rights or options or upon
conversion or exchange of such convertible securities. Shares of Common
Stock, convertible securities, rights or options issued in any such case
shall not be considered outstanding, and none of the consideration received
by the Corporation for such Common Stock, or for such convertible
securities, rights or options, or upon the exercise thereof, shall be taken
into account, in determining the conversion price pursuant to Subsection
5.2.1.
(x) The number of shares of Common Stock at any time outstanding shall
include all shares of Common Stock then owned or held by or for the account
of the Corporation (except for any such shares so owned or held on the date
shares of Series B Stock are first issued, and any shares resulting from
any reclassification or reclassifications of such shares effected while
such shares were so owned or held, in each case so long as continuously
owned or held by or for the account of the Corporation), and such shares
(except as aforesaid) shall not, for the purposes of Subsection 5.2.1,
thereafter be deemed to be again issued or sold upon their delivery.
(xi) The adjustment provided for in Subsection 5.2.1 shall be made only
if it results in a reduction of the current conversion price, and the
Corporation shall not be required to make any reduction of the current
conversion price if the amount of such reduction would be less than fifty
cents ($.50). Such sum of fifty cents ($.50), or such sum as theretofore
adjusted,
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<PAGE> 25
shall be proportionately decreased upon any subdivision of the
Common Stock of the Corporation, or shall be proportionately increased
upon any combination of the Common Stock of the Corporation (in each
case, to the nearest cent).
5.2.3. In the event of an adjustment in the purchase price per share of
Common Stock provided for in any options or rights referred to in
paragraph (iii) of Subsection 5.2.2 or in the consideration to be
received by the Corporation upon the conversion or exchange of any
convertible securities referred to in said paragraph (iii), the current
conversion price shall forthwith be readjusted to such amount as would
have been obtained had the adjustment in such purchase price or
consideration been initially reflected upon the issuance of such options,
rights or convertible securities, but such readjustment shall be made only
to the extent that such options or rights which remain outstanding or
unexercised and such convertible securities remain outstanding and
unconverted and unexchanged, provided, however, that in no event shall any
such readjustment increase the current conversion price to an amount in
excess of the initial conversion price as adjusted only in accordance
with the provisions of Subsection 5.2.4 below. Upon the expiration of any
such options or rights or the termination of the right to convert or
exchange any such convertible securities, the current conversion price
shall forthwith be readjusted to such amount as would have obtained had the
adjustment made upon the issuance of such options, rights or convertible
securities been made upon the basis of the issuance of only the number of
shares of Common Stock actually delivered upon the exercise of such options
or rights or the conversion or exchange of such convertible securities and
the number of shares of Common Stock issuable upon the exercise of
outstanding options or rights which have not expired or upon the conversion
or exchange of any outstanding convertible securities as to which the right
to convert or exchange has not terminated, provided, however, that in no
event shall any such readjustment increase the current conversion price to
an amount in excess of the initial conversion price as adjusted only in
accordance with the provisions of Subsection 5.2.4 below. Upon any
readjustment of the current conversion price pursuant to the provisions of
this Subsection 5.2.3, such readjustment shall thereafter, for all purposes
hereof, be deemed to have become effective at the time of the next
preceding adjustment of the conversion price otherwise than pursuant to the
provisions of this Subsection 5.2.3.
5.2.4. In case outstanding shares of Common Stock shall be subdivided
into a greater number of shares of Common Stock, the current conversion
price shall, simultaneously with the effectiveness of such subdivision, be
proportionately reduced, and conversely, in case outstanding shares of
Common Stock shall be combined into a smaller number of shares of Common
Stock, the current conversion price shall, simultaneously with the
effectiveness of such combination, be proportionately increased.
5.2.5. For the purposes of this Subsection 5.2, a distribution of
shares of Common Stock to holders of shares of Common Stock in which the
number of shares distributed is 25% or more of the number of shares of
Common Stock on which the distribution is to be made shall be deemed to be
a subdivision of shares of Common Stock, and a distribution of a lesser
number of shares of Common Stock shall be deemed to be a stock dividend.
5.2.6. The above provisions of this Subsection 5.2 shall similarly
apply to successive issues, sales, dividends or other distributions,
subdivisions and combinations of or on shares of Common Stock.
5.2.7. In case the Common Stock of the Corporation issuable upon
conversion of the shares of Series B Stock shall be changed into another
kind of capital stock (otherwise than through a subdivision or combination
of shares) or shall represent the right to receive some other security or
property, as a result of any capital reorganization, reclassification, or
merger or consolidation with another corporation in which the Corporation
is the surviving corporation, or sale of all or substantially all the
assets of the Corporation to another corporation otherwise than for capital
25
<PAGE> 26
stock of the other corporation, each share of Series B Stock shall
(subject to further adjustments in conversion price as herein provided)
thereafter entitle the holder to acquire upon conversion thereof the kind
and number of shares of stock or other securities or property to which such
holder would have been entitled if he had held the Common Stock issuable
upon the conversion of his Series B Stock immediately prior to such capital
reorganization, reclassification, merger, consolidation or sale of assets.
5.3. In case:
(i) the Corporation shall declare a dividend (or any other
distribution) on its Common Stock payable otherwise than in cash out of its
earned surplus; or
(ii) the Corporation shall authorize the granting to the holders of its
Common Stock of rights to subscribe for or purchase any shares of capital
stock of any class or of any other rights; or
(iii) of any reclassification of the Common Stock of the Corporation
(other than a subdivision or combination of its outstanding shares of
Common Stock), or of any consolidation or merger to which the Corporation
is a party and for which approval of any stockholders of the Corporation
is required, or of the sale or transfer of all or substantially all of the
assets of the Corporation; or
(iv) of the voluntary or involuntary dissolution, liquidation or
winding up of the Corporation
then the Corporation shall cause to be filed at the office of the
transfer agent of the Series B Stock and shall cause to be mailed to the
holders of the Series B Stock at their addresses as they shall appear upon the
record of such transfer agent at least ten days prior to the record date
specified in (A) below or twenty days before the date specified in (B) below, a
notice stating
(A) the record date for such dividend, distribution or rights, or, if a
record is not to be taken, the date as of which the holders of Common Stock
of record to be entitled to such dividend, distribution or rights are to be
determined, or
(B) the date on which such reclassification, consolidation, merger,
sale, transfer, dissolution, liquidation or winding up is expected to
become effective, and the date as of which it is expected that holders of
Common Stock of record shall be entitled to exchange their shares of Common
Stock for securities or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up.
5.4. Whenever the conversion price shall he adjusted as provided in
Subsection 5.2, the Corporation shall forthwith file at each office
designated for the conversion of shares of Series B Stock, a statement,
signed by thc Chairman of the Board, the President, any Vice President or
the Treasurer of Corporation, showing in reasonable detail the facts
requiring such adjustment and the conversion price that will be effective
after such adjustment. The Corporation shall also cause a notice setting
forth any such adjustments to be sent by mail, first class, postage
prepaid, to each record holder of shares of Series B Stock at his address
appearing on the stock register. Where appropriate, such notice may be
given in advance and may included as part of a notice required to he mailed
and published under the provisions of Section 5.3.
5.5. The Corporation shall not be required to issue fractional shares
of Common Stock or scrip upon conversion of shares of Series B Stock. As to
any final fraction of a share of Common Stock which the same record holder
of one or more shares of Series B Stock would otherwise be entitled to upon
conversion of shares of Series B Stock in the same transaction, the
Corporation shall pay a cash adjustment in respect of such final fraction
in an amount equal to the same fraction of the last sales price (or bid
price if there were no sales) per share on the New York Stock Exchange on
the business day which next precedes the date of conversion or, if such
Common Stock is not listed on the New York Stock Exchange, of the market
price per share (as determined in a manner prescribed by the Board of
Directors of the Corporation) at the close of business on the business day
which next precedes the date of conversion.
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<PAGE> 27
5.6. The Corporation will pay any documentary stamp taxes attributable to
the initial issuance of shares of Common Stock upon conversion of any shares of
Series B Stock pursuant hereto, provided, however, that the Corporation shall
not be required to pay any tax or taxes which may be payable in respect of any
transfer involved in the issue or delivery of any certificates for shares of
Common Stock in a name other than that of the registered holder of shares of
Series B Stock in respect of which such shares of Common Stock are issued.
5.7. The Corporation shall at all times reserve and keep available, out of
its treasury stock or authorized and unissued stock, or both, solely for the
purpose of effecting the conversion of the shares of Series B Stock, such
number of shares of Common Stock as shall from time to time be sufficient to
effect the conversion of all shares of Series B Stock from time to time
outstanding.
Before taking any action which would cause an adjustment reducing the
conversion price below the then par value of the shares of Common Stock
issuable upon conversion of the Series B Stock, the Corporation will take any
corporate action which may, in the opinion of its counsel, be necessary in
order that the Corporation may validly and legally issue fully paid and
nonassessable shares of such Common Stock at such adjusted conversion price.
6. Voting.
6.1. Subject to the provisions of any applicable law, or of the By-laws of
the Corporation as from time to time amended, with respect to the closing of
the transfer books or the fixing of a record date for the determination of
stockholders entitled to vote, at each meeting of stockholders of the Corpora-
tion each holder of record of shares of Series B Stock shall be entitled to
cast one vote for each share of Series B Stock standing in such holder's name
on the record books of the Corporation (with the same rights of cumulative
voting, if any, as the Common Stock) on each matter on which the holders of
record of the Common Stock of the Corporation shall be entitled to vote, voting
together with the holders of record of the Common Stock and other series of
Preferred Stock of the Corporation entitled to vote with the Common Stock of
the Corporation, and not by classes or by series. Each such record holder of
shares of Series B Stock shall be entitled to notice of any such meeting of
stockholders. In addition, so long as any shares of Series B Stock are
outstanding, if at the time of any annual meeting of stockholders for the
election of directors a default in preferred dividends, as hereinafter defined,
shall exist, the holders of shares of the Preferred Stock of the Corporation
voting separately as a class without regard to series (with each share of
Preferred Stock being entitled to one vote on a noncumulative basis) shall have
the right to elect two members of the Board of Directors of the Corporation,
and the holders of the Common Stock, the Series B Stock and any other series of
Preferred Stock of the Corporation entitled to vote with the Common Stock,
voting separately as another class, shall be entitled to elect the remaining
members of the Board of Directors of the Corporation. Any director elected by
the holders of the Preferred Stock, voting as a class as aforesaid, shall
continue to serve as such director for the full term for which he shall have
been elected notwithstanding that prior to the end of such term a default in
preferred dividends shall cease to exist. If, prior to the end of the term of
any director elected by the holders of the Preferred Stock, voting as a class
as aforesaid, a vacancy in the office of such director shall occur by reason of
death, resignation, removal or disability, or for any other cause, the
remaining director so elected by the holders of shares of the Preferred Stock
shall be entitled to nominate for election by the Board of Directors a
successor director to hold office for the unexpired term of the director whose
position has become vacant. If the vacancy is not filled by the election of
such nominee or if there is then in office no director who has been elected by
the holders of shares of the Preferred Stock, the Corporation shall, as soon as
reasonably may be done, call (on at least 30 days' notice) a special meeting of
the holders of shares of the Preferred Stock for the purpose of filling such
vacancy or vacancies in the Board of Directors. If the Corporation fails to
call such a meeting within 30 days after a written request by any three or more
holders of shares of the Preferred Stock, then such three or more holders of
shares of the Preferred Stock may call (on at least 30 days' notice) a special
meeting of the holders of shares of the Preferred Stock for such purpose and,
if the vacancy or vacancies are not theretofore filled as hereinabove provided,
it or they may be filled at such
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meeting by the holders of shares of the Preferred Stock, voting separately as a
class regardless of series. For the purposes of this Section 6, a default in
preferred dividends shall be deemed to have occurred whenever the amount of
unpaid cumulative dividends upon any series of Preferred Stock shall be
equivalent to six full quarter-yearly dividends or more and, having so
occurred, such default in preferred dividends shall be deemed to exist
thereafter until, but only until, all accrued dividends on all shares of
Preferred Stock then outstanding, shall have been paid to the end of the last
preceding quarterly dividend period.
6.2. Without the written consent or affirmative vote of the holders of at
least two-thirds of the aggregate number of shares of Preferred Stock of the
Corporation at the time outstanding given in writing or by vote at a meeting,
consenting or voting (as the case may be) separately as a class, without regard
to series, the Corporation shall not amend, alter or repeal the preferences,
special rights or other powers of the Preferred Stock as set forth in the
Certificate of Incorporation or in any certificate providing for the
authorization of Preferred Stock of any series so as to affect the Preferred
Stock adversely (and the authorization or issuance of any class of stock with
preference or priority over the Preferred Stock as to the right to receive
either dividends or amounts distributable upon liquidation, dissolution or
winding up, shall be deemed so to affect the Preferred Stock adversely).
6.3. Without the written consent or affirmative vote of the holders of at
least a majority of the aggregate number of shares of Preferred Stock of the
Corporation at the time outstanding given in writing or by vote at a meeting,
consenting or voting (as the case may be) separately as a class, without regard
to series, the Corporation will not increase the authorized amount of Preferred
Stock. The term "Preferred Stock", for all purposes of this series of $1.35
Convertible Preferred Stock, Series B, shall mean and include any class of
stock the holders of which shall be entitled to the receipt of dividends or of
amounts distributable upon liquidation, dissolution or winding up, as the case
may be, in proportion to their respective dividend rates or liquidation prices,
equal in preference or priority with the holders of the Series B Stock.
7. Reacquired Shares. Shares of Series B Stock which have been issued and
reacquired through redemption or purchase or have been converted into shares of
any other class or classes of the stock of the Corporation shall, upon
compliance with any applicable provision of the General Corporation Law of the
State of Delaware, have the status of authorized and unissued shares of
Preferred Stock and may be reissued as part of the Series A or Series B Stock
or as part of a new series of Preferred Stock to be created by resolution or
resolutions of the Board of Directors.
FIFTH: The names and places of residence of each of the original
subscribers to the capital stock of the Corporation and the number of shares
subscribed for by each at twelve dollars and fifty cents ($12.50) per share are
as follows:
<TABLE>
<CAPTION>
NUMBER
NAMES PLACES OF RESIDENCE OF SHARES
----- ------------------- ---------
<S> <C> <C>
A. L. Miller ....... Wilmington, Del. 33
A. V. Lane ......... Wilmington, Del. 33
C. S. Peabbles ..... Wilmington, Del. 34
</TABLE>
SIXTH: The Corporation is to have perpetual existence.
SEVENTH: The private property of the stockholders of the Corporation shall
not be subject to the payment of corporate debts to any extent whatever.
EIGHTH: The number of directors of the Corporation shall be fixed by its
By-laws and may be changed from time to time as provided in the By-laws. In the
case of any increase in the number of
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directors of the Corporation, the additional directorships created may be
filled in the first instance in the same manner as a vacancy in the Board of
Directors. A director need not be a stockholder. The election of directors of
the Corporation need not be by ballot unless the By-laws so require.
The Board of Directors may, by resolution or resolutions, passed by a
majority of the whole board, designate one or more committees, each committee
to consist of two or more of the directors of the Corporation, which to the
extent provided in said resolution or resolutions or in the By-laws of the
Corporation, shall have and may exercise the powers of the Board of Directors
in the management of the business and affairs of the Corporation, and may have
the power to authorize the seal of the Corporation to be affixed to all papers
which may require it. Such committee or committees shall have such name or
names as may be stated in the By-laws of the Corporation or as may be
determined from time to time by resolution adopted by the Board of Directors.
No director of the Corporation shall be liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to
the Corporation or its stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(iii) under Section 174 of the Delaware General Corporation Law, or (iv) for
any transaction from which the director derived an improper personal benefit.
This paragraph shall not eliminate or limit the liability of a director for any
act or omission occurring prior to the effective date of its adoption. No
repeal or modification of this paragraph, directly or by adoption of an
inconsistent provision of this Certificate of Incorporation, by the
stockholders of the Corporation shall be effective with respect to any cause of
action, suit, claim or other matter that, but for this paragraph, would accrue
or arise prior to such repeal or modification.
NINTH: In furtherance and not in limitation of the powers conferred by the
laws of the State of Delaware, the Board of Directors is expressly authorized:
(a) To make, alter, amend and repeal the By-laws of the Corporation,
in any manner not inconsistent with the laws of the State of Delaware
or of the Certificate of Incorporation of the Corporation, subject to the
power of the holders of the capital stock to alter or repeal the By-laws
made by the Board of Directors;
(b) To determine from time to time whether and to what extent and at
what times and places and under what conditions and regulations the
accounts and books of the Corporation, or any of them, shall be open to the
inspection of the stockholders; and no stockholder shall have any right to
inspect any account or book or document of the Corporation except as
conferred by the laws of the State of Delaware unless and until authorized
so to do by resolution of the Board of Directors, or of the stockholders of
the Corporation;
(c) Without the assent or vote of the stockholders, to authorize and
issue obligations of the Corporation, secured or unsecured, to include
therein such provisions as to redeemability, convertibility or otherwise,
as such Board of Directors, in its discretion, may determine, and to
authorize the mortgaging or pledging, as security therefor, of any property
of the Corporation, real or personal, including after-acquired property;
(d) To determine whether any, and if any, what part, of the annual net
profits of the Corporation or of its net assets in excess of its
capital shall be declared in dividends and paid to the stockholders, and to
direct and determine the use and disposition of any such annual net profits
or net assets in excess of capital;
(e) To fix from time to time the amount of the profits of the
Corporation to be reserved as working capital or for any other lawful
purpose.
In addition to the powers and authorities hereinbefore or by statute
expressly conferred upon them, the Board of Directors may exercise all such
powers and do all such acts and things as may be exercised or done by the
Corporation, subject, nevertheless, to the provisions of the laws of the State
of Delaware, the Certificate of Incorporation and the By-laws of the
Corporation.
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<PAGE> 30
TENTH: At any time and from time to time when authorized by resolution of
the Board of Directors and without any action by its stockholders (except as
provided in any series of the Preferred Stock), the Corporation may issue or
sell any shares of its capital stock of any class, whether out of the unissued
shares thereof authorized by the Certificate of Incorporation of the
Corporation as originally filed or by any amendment thereof or out of shares of
its stock acquired by it after the issue thereof, and whether or not the shares
thereof so issued or sold shall confer upon the holders thereof the right to
exchange such shares for other shares of stock of the Corporation of any class
or classes. In each case the consideration to be received by the Corporation
for any such shares so issued or sold shall be fixed from time to time by
resolution of the Board of Directors. Each share of the capital stock of the
Corporation issued or sold pursuant to the foregoing provisions of this Article
Tenth and the full consideration for which in each case as so fixed by the
Directors shall have been paid or delivered to the Corporation, shall be
conclusively deemed to be fully paid stock and shall not be liable to any fur-
ther call or assessments thereon, and the holder thereof shall not be liable
for any further payments in respect thereof. The Corporation may receive in
payment, in whole or in part, for any shares of its stock issued or sold by it,
cash, labor done, personal property or real property or leases thereof, and in
the absence of actual fraud in the transaction, the judgment of the directors
of the Corporation as to the value of the labor, property, real estate or
leases thereof so received, shall be conclusive.
ELEVENTH: Unless otherwise determined by the Board of Directors, no holder
of stock of the Corporation shall, as such holder, have any right to purchase
or subscribe for any stock of any class which the Corporation may issue or
sell, whether or not exchangeable for any stock of the Corporation of any class
or classes and whether out of unissued shares authorized by the Certificate of
Incorporation of the Corporation as originally filed or by any amendment
thereof or out of shares of stock of the Corporation acquired by it after the
issue thereof; nor, unless otherwise determined by the Board of Directors,
shall any holder of any shares of the capital stock of the Corporation, as such
holder, have any right to purchase or subscribe for any obligation which the
Corporation may issue or sell that shall be convertible into, or exchangeable
for, any shares of the stock of the Corporation of any class or classes, or to
which shall be attached or appurtenant any warrant or warrants or other
instrument or instruments that shall confer upon the holder or holders of such
obligation the right to subscribe for or purchase from the Corporation any
shares of its capital stock of any class or classes.
TWELFTH: Any director or any officer elected or appointed by the
stockholders or by the Board of Directors may be removed at any time in such
manner as shall be provided in the By-laws of the Corporation.
No act of this Corporation, and no contract or other transaction between
this Corporation and any corporation, firm, joint venture, association or other
entity or organization, shall be affected or invalidated (in the absence of
fraud) by the fact that any director or officer of the Corporation is a
beneficiary of such act, or a party to such contract or other transaction, or
pecuniarily or otherwise interested therein, or connected with (whether as
director, officer, creditor or otherwise) or pecuniarily or otherwise
interested in such entity or organization. Any such director of this
Corporation may be counted in determining the existence of a quorum at any
meeting of the Board of Directors of this Corporation or any committee thereof
which shall authorize or ratify any such act, contract or other transaction,
and may vote to authorize or ratify any such act, contract or other
transaction, with full force and effect.
Any contract, transaction or act of the Corporation or of the directors or
of any committee, which shall be ratified by a majority of a quorum of the
stockholders of the Corporation at any annual meeting, or at any special
meeting called for such purpose, shall, insofar as permitted by law or by the
Certificate of Incorporation of the Corporation, be as valid and as binding as
though ratified by every stockholder of the Corporation.
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<PAGE> 31
THIRTEENTH: Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof, or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers
appointed for this Corporation under the provisions of section 279 of Title 8
of the Delaware Code order a meeting of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of this Corporation, as the
case may be, to be summoned in such manner as the said court directs. If a
majority in number representing three-fourths in value of the creditors or
class of creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this Corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this Corporation, as the case may be,
and also on this Corporation.
FOURTEENTH: From time to time any of the provisions of the Certificate of
Incorporation may be amended, altered or repealed, and other provisions
authorized by the statutes of the State of Delaware at the time in force may be
added or inserted in the manner at the time prescribed by said statutes, and
all rights at any time conferred upon the stockholders of the Corporation by
its Certificate of Incorporation are granted subject to the provisions of
this Article Fourteenth.
FIFTEENTH: The stockholder vote required to approve Business Combinations
(as hereinafter defined) shall be as set forth in this Article Fifteenth.
1. Higher Vote for Business Combinations. In addition to any
affirmative vote required by law, this Certificate of Incorporation or the
By-Laws of the Corporation, and except as otherwise expressly provided in
Section 2 of this Article Fifteenth, a Business Combination shall not be
consummated without the affirmative vote of the holders of at least 80% of the
combined voting power of the then outstanding shares of all capital stock of
the Corporation (the "Capital Stock") entitled to vote generally in the
election of directors (such Capital Stock hereinafter called the "Voting
Stock"), voting together as a single class. Such affirmative vote shall be
required notwithstanding the fact that no vote may be required, or that a
lesser percentage or separate class vote may be specified, by law or in any
agreement with any national securities exchange or otherwise.
2. When Higher Vote Is Not Required. The provisions of Section 1 of this
Article Fifteenth shall not be applicable to a Business Combination if the
conditions specified in either of the following paragraphs A or B are met.
A. Approval by Continuing Directors. The Business Combination shall
have been approved by at least two-thirds of the Continuing Directors
(as hereinafter defined), whether such approval is made prior to or
subsequent to the date on which the Interested Stockholder (as hereinafter
defined) became an Interested Stockholder (the "Determination Date").
B. Price and Procedure Requirements. Each of the seven conditions
specified in the following subparagraphs (i) through (vii) shall have been
met:
(i) The aggregate amount of the cash and the Fair Market Value
(as hereinafter defined) as of the date of the consummation of
the Business Combination (the "Consummation Date") of any
consideration other than cash to be received per share by holders of
Common Stock in such Business Combination shall be an amount at least
equal to the higher amount determined under clauses (a) and (b) below
(the requirements of this paragraph B (i) shall be applicable with
respect to all shares of Common Stock outstanding, whether or not the
Interested Stockholder has previously acquired any shares of the
Common Stock):
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<PAGE> 32
(a) the highest per share price (including any brokerage commissions,
transfer taxes and soliciting dealers' fees) paid by or on behalf of
the Interested Stockholder for any shares of Common Stock acquired
beneficially by it (1) within the two-year period immediately prior to the
first public announcement of the proposal of the Business Combination (the
"Announcement Date") or (2) in the transaction in which it became an
Interested Stockholder, whichever is higher, plus interest compounded
annually from the Determination Date through the Consummation Date at the
prime rate of interest of Morgan Guaranty Trust Company of New York (or
other major bank headquartered in New York City selected by at least
two-thirds of the Continuing Directors) from time to time in effect in New
York City, less the aggregate amount of any cash dividends paid, and the
Fair Market Value of any dividends paid in other than cash, per share of
Common Stock from the Determination Date through the Consummation Date in
an amount up to but not exceeding the amount of such interest payable per
share of Common Stock; and
(b) the Fair Market Value per share of Common Stock on the
Announcement Date or on the Determination Date, whichever is higher.
(ii) The aggregate amount of the cash and the Fair Market Value as of the
Consummation Date of any consideration other than cash to be received per share
by holders of shares of any class or series of outstanding Capital Stock, other
than the Common Stock, in such Business Combination shall be an amount at least
equal to the highest amount determined under clauses (a), (b) and (c) below
(the requirements of this paragraph B(ii) shall be applicable with respect to
all shares of every class or series of outstanding Capital Stock, other than
the Common Stock, whether or not the Interested Stockholder has previously
acquired any shares of a particular class or series of Capital Stock):
(a) the highest per share price (including any brokerage commissions,
transfer taxes and soliciting dealers' fees) paid by or on behalf of
the Interested Stockholder for any shares of such class or series of
Capital Stock acquired beneficially by it (1) within the two-year period
immediately prior to the Announcement Date or (2) in the transaction in
which it became an Interested Stockholder, whichever is higher, plus
interest compounded annually from the Determination Date through the
Consummation Date at the prime rate of interest of Morgan Guaranty Trust
Company of New York (or other major bank headquartered in New York City
selected by at least two-thirds of the Continuing Directors) from time to
time in effect in New York City, less the aggregate amount of any cash
dividends paid, and the Fair Market Value of any dividends paid in other
than cash, per share of such class or series of Capital Stock from the
Determination Date through the Consummation Date in an amount up to but not
exceeding the amount of such interest payable per share of such class or
series of Capital Stock; and
(b) the Fair Market Value per share of such class or series of Capital
Stock on the Announcement Date or on the Determination Date, whichever is
higher; and
(c) the highest preferential amount per share to which the holders of
shares of such class or series of Capital Stock would be entitled in
the event of any voluntary or involuntary liquidation, dissolution or
winding up of the affairs of the Corporation, regardless of whether the
Business Combination to be consummated constitutes such an event.
(iii) The consideration to be received by holders of a particular class or
series of outstanding Capital Stock (including Common Stock) shall be in cash
or in the same form as previously has been paid by or on behalf of the
Interested Stockholder in its direct or indirect acquisition of beneficial
ownership of shares of such class or series of Capital Stock. If the
consideration so paid for shares of any class or series of Capital Stock varied
as to form, the form of consideration for such class or series of Capital Stock
shall be either cash or the form used to acquire beneficial ownership of the
largest number of shares of such class or series of Capital Stock previously
acquired by the Interested Stockholder.
(iv) After such Interested Stockholder has become an Interested Stockholder
and prior to the consummation of such Business Combination, such Interested
Stockholder shall not have become the beneficial owner of any additional shares
of Capital Stock except as part of the transaction that results in such
Interested Stockholder becoming an Interested Stockholder and except in a
transaction that,
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<PAGE> 33
after giving effect thereto, would not result in any increase in the
Interested Stockholder's percentage beneficial ownership of any class or
series of Capital Stock; and, except as approved by at least two-thirds of
the Continuing Directors: (a) there shall have been no failure to declare
and pay at the regular date therefor any full quarterly dividends (whether
or not cumulative) payable in accordance with the terms of any outstanding
Capital Stock; (b) there shall have been no reduction in the annual rate of
dividends paid on the Common Stock (except as necessary to reflect any
stock split, stock dividend or subdivision of the Common Stock); and (c)
there shall have been an increase in the annual rate of dividends paid on
the Common Stock as necessary to reflect any reclassification (including
any reverse stock split), recapitalization, reorganization or any similar
transaction which has the effect of reducing the number of outstanding
shares of Common Stock.
(v) After such Interested Stockholder has become an Interested
Stockholder, such Interested Stockholder shall not have received the
benefit, directly or indirectly (except proportionately as a stockholder of
the Corporation), of any loans, advances, guarantees, pledges or other
financial assistance or any tax credits or other tax advantages provided
by the Corporation, whether in anticipation of or in connection with such
Business Combination or otherwise.
(vi) A proxy or information statement describing the proposed Business
Combination and complying with the requirements of the Securities
Exchange Act of 1934 and the rules and regulations thereunder (or any
subsequent provisions replacing such Act, rules or regulations) shall be
mailed to all stockholders of the Corporation at least 30 days prior to the
consummation of such Business Combination (whether or not such proxy or
information statement is required to be mailed pursuant to such Act or
subsequent provisions). The proxy or information statement shall contain on
the first page thereof, in a prominent place, any statement as to the
advisability of the Business Combination that the Continuing Directors, or
any of them, may choose to make and, if deemed advisable by at least
two-thirds of the Continuing Directors, the opinion of an investment
banking firm selected for and on behalf of the Corporation by at least
two-thirds of the Continuing Directors as to the fairness of the terms of
the Business Combination from a financial point of view to the holders of
the outstanding shares of Capital Stock other than the Interested
Stockholder and its Affiliates or Associates (as hereinafter defined).
(vii) Such Interested Stockholder shall not have made any material
change in the Corporation's business or equity capital structure without
the approval of at least two-thirds of the Continuing Directors.
Any Business Combination to which Section I of this Article Fifteenth
shall not apply by reason of this Section 2 shall require only such
affirmative vote as is required by law, any other provision of this
Certificate of Incorporation, the By-Laws of the Corporation or any agreement
with any national securities exchange.
3. Certain Definitions. For the purposes of this Article Fifteenth:
A. A "Business Combination" shall mean:
(i) any merger or consolidation of the Corporation or any Subsidiary
(as hereinafter defined) with (i) any Interested Stockholder or (ii) any
other corporation (whether or not itself an Interested Stockholder) which
is, or after such merger or consolidation would be, an Affiliate or
Associate of an Interested Stockholder; or
(ii) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of transactions) to or with any
Interested Stockholder or any Affiliate or Associate of any Interested
Stockholder involving any assets or securities of the Corporation, any
Subsidiary or any Interested Stockholder or any Affiliate or Associate of
any Interested Stockholder having an aggregate Fair Market Value of
$25,000,000 or more; or
(iii) the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation proposed by or on behalf of an Interested
Stockholder or any Affiliate or Associate of any Interested Stockholder; or
(iv) any reclassification of securities (including any reverse stock
split), or recapitalization of the Corporation, or any merger or
consolidation of the Corporation with any of its Subsidiaries or any
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<PAGE> 34
other transaction (whether or not with or into or otherwise involving
an Interested Stockholder) that has the effect, directly or indirectly, of
increasing the proportionate share of any class or series of Capital Stock,
or any securities convertible into Capital Stock or into equity securities
of any Subsidiary, that is beneficially owned by any Interested
Stockholder or any Affiliate or Associate of any Interested Stockholder; or
(v) any agreement, contract, arrangement or other understanding
providing for any one or more of the actions specified in clauses (i)
through (iv) above.
B. A "person" shall mean any individual, firm, corporation or other
entity and shall include any group composed of any person and any other person
with whom such person or any Affiliate or Associate of such person has any
agreement, arrangement or understanding, directly or indirectly, for the
purpose of acquiring, holding, voting or disposing of Capital Stock.
C. "Interested Stockholder" shall mean any person (other than the
Corporation or any Subsidiary and other than any profit-sharing, employee stock
ownership or other employee benefit plan of the Corporation or any Subsidiary
or any trustee of or fiduciary with respect to any such plan when acting in
such capacity) who or which:
(i) is the beneficial owner of Voting Stock having 10% or more of the
votes entitled to be cast by the holders of all then outstanding shares of
Voting Stock; or
(ii) is an Affiliate or Associate of the Corporation and at any time
within the two-year period immediately prior to the date in question was
the beneficial owner of Voting Stock having 10% or more of the votes
entitled to be cast by the holders of all then outstanding shares of Voting
Stock; or
(iii) is an assignee of or has otherwise succeeded to any shares of
Voting Stock which were at any time within the two-year period immediately
prior to the date in question beneficially owned by any Interested
Stockholder, if such assignment or succession shall have occurred in the
course of a transaction or series of transactions not involving a public
offering within the meaning of the Securities Act of 1933.
D. A person shall be a "beneficial owner" of any Capital Stock:
(i) which such person or any Affiliate or Associate of such person
beneficially owns, directly or indirectly; or
(ii) which such person or any Affiliate or Associate of such person
has, directly or indirectly, (a) the right to acquire (whether such right
is exercisable immediately or only after the passage of time), pursuant to
any agreement, arrangement or understanding or upon the exercise of
conversion rights, exchange rights, warrants or options, or otherwise, or
(b) the right to vote pursuant to any agreement, arrangement or
understanding; or
(iii) which are beneficially owned, directly or indirectly, by any
other person with which such person or any Affiliate or Associate of such
person has any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of any shares of Capital Stock.
E. For the purposes of determining whether a person is an Interested
Stockholder pursuant to paragraph C of this Section 3, the number of shares
of Capital Stock deemed to be outstanding shall include shares deemed owned by
the Interested Stockholder through application of paragraph D of this Section 3
but shall not include any other shares of Capital Stock that may be issuable
pursuant to any agreement, arrangement or understanding, or upon exercise of
conversion rights, warrants or options, or otherwise.
F. "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as in effect on October 1, 1984 (the term
"registrant" in such Rule 12b-2 meaning in this case the Corporation).
G. "Subsidiary" means any corporation of which a majority of any class
of equity security is beneficially owned by the Corporation; provided,
however, that for the purposes of the definition of Interested Stockholder set
forth in paragraph C of this Section 3, the term "Subsidiary" shall mean only a
corporation of which a majority of each class of equity security is
beneficially owned by the Corporation.
34
<PAGE> 35
H. "Continuing Director" means any member of the Board of Directors of
the Corporation (the "Board") who is not an Affiliate or Associate or
representative of the Interested Stockholder and was a member of the Board
prior to the time that the Interested Stockholder became an Interested
Stockholder, and any successor of a Continuing Director who is not an
Affiliate or Associate or representative of the Interested Stockholder and
is recommended or elected to succeed a Continuing Director by at least two-
thirds of Continuing Directors then members of the Board.
I. "Fair Market Value" means: (i) in the case of cash, the amount of
such cash; (ii) in the case of stock, the highest closing sale price during
the 30-day period immediately preceding the date in question of a share of
such stock on the Composite Tape for New York Stock Exchange-Listed Stocks,
or, if such stock is not quoted on the Composite Tape, on the New York
Stock Exchange, or, if such stock is not listed on such Exchange, on the
principal United States securities exchange registered under the Securities
Exchange Act of 1934 on which such stock is listed, or, if such stock is
not listed on any such exchange, the highest closing bid quotation with
respect to a share of such stock during the 30-day period immediately
preceding the date in question on the National Association of Securities
Dealers, Inc., Automated Quotations System or any system then in use, or if
no such quotations are available, the fair market value on the date in
question of a share of such stock as determined in good faith by at least
two-thirds of the Continuing Directors; and (iii) in the case of property
other than cash or stock, the fair market value of such property on the
date in question as determined in good faith by at least two-thirds of the
Continuing Directors.
J. In the event of any Business Combination in which the Corporation
survives, the phrase "consideration other than cash to be received" as
used in paragraphs B(i) and (ii) of Section 2 of this Article Fifteenth
shall include the shares of Common Stock and/or the shares of any other
class or series of Capital Stock retained by the holders of such shares.
4. Powers of Continuing Directors. Any determination as to compliance
with this Article Fifteenth, including without limitation (A) whether a person
is an Interested Stockholder, (B) the number of shares of Capital Stock or
other securities beneficially owned by any person, (C) whether a person is an
Affiliate or Associate of another, (D) whether the requirements of paragraph B
of Section 2 have been met with respect to any Business Combination, and (E)
whether the assets that are the subject of any Business Combination have, or
the consideration to be received for the issuance or transfer of securities by
the Corporation or any Subsidiary in any Business Combination has, an aggregate
Fair Market Value of $25,000,000 or more shall be made only upon action by not
less than two-thirds of the Continuing Directors of the Corporation; and the
good faith determination of at least two-thirds of the Continuing Directors on
such matters shall be conclusive and binding for all the purposes of this
Article Fifteenth.
5. No Effect on Fiduciary Obligations. Nothing contained in this
Article Fifteenth shall be construed to relieve the Board of Directors or any
Interested Stockholder from any fiduciary obligation imposed by law.
6. Amendment, Repeal, etc. Notwithstanding any other provisions of this
Certificate of Incorporation or the By-Laws of the Corporation (and
notwithstanding the fact that a lesser percentage or separate class vote may be
specified by law, this Certificate of Incorporation or the By-Laws of the
Corporation), the affirmative vote of the holders of at least 80% of the
voting power of the then outstanding shares of Voting Stock, voting together as
a single class, shall be required to amend or repeal, or adopt any provisions
inconsistent with, this Article Fifteenth; provided, however, that the
preceding provisions of this Section 6 shall not apply to any amendment to this
Article Fifteenth, and such amendment shall require only such affirmative vote
as is required by law and any other provisions of this Certificate of
Incorporation or the By-Laws of the Corporation, if such amendment shall have
been approved by at least two-thirds of the members of the Board who are
persons who would be eligible to serve as Continuing Directors.
SIXTEENTH: No action shall be taken by stockholders of the Corporation
except at an annual or special meeting of stockholders of the Corporation.
35
<PAGE> 1
EXHIBIT 3-b-1
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BY-LAWS
of Rockwell International Corporation
- ------------------------------------------------------
As Amended Effective February 1, 1995
- ------------------------------------------------------
<PAGE> 2
BY-LAWS
OF
ROCKWELL INTERNATIONAL CORPORATION
ARTICLE I.
OFFICES
SECTION 1. Registered Office in Delaware; Resident Agent. The
address of the Corporation's registered office in the State of Delaware and the
name and address of its resident agent in charge thereof are as filed with the
Secretary of State of the State of Delaware.
SECTION 2. Other Offices. The Corporation may also have an office or
offices at such other place or places either within or without the State of
Delaware as the Board of Directors may from time to time determine or the
business of the Corporation requires.
ARTICLE II.
MEETINGS OF STOCKHOLDERS
SECTION 1. Place of Meetings. All meetings of the stockholders of
the Corporation shall be held in the City of Los Angeles, State of California,
or at such other place, within or without the State of Delaware, as may from
time to time be designated by resolution passed by the Board of Directors.
SECTION 2. Annual Meeting. An annual meeting of the stockholders for
the election of directors and for the transaction of such other proper
business, notice of which was given in the notice of meeting, shall be held on
a date and at a time as may from time to time be designated by resolution
passed by the Board of Directors.
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SECTION 3. Special Meetings. A special meeting of the stockholders
for any purpose or purposes, unless otherwise prescribed by law, may be called
at any time by the Chairman of the Board, by order of the Board of Directors or
by a stockholder or stockholders holding of record at least twenty percent of
the outstanding stock of the Corporation entitled to vote at such meeting.
SECTION 4. Notice of Meetings. Except as otherwise provided by law,
written notice of each meeting of the stockholders, whether annual or special,
shall be mailed, postage prepaid, not less than ten nor more than sixty days
before the date of the meeting, to each stockholder entitled to vote at such
meeting, at his address as it appears on the records of the Corporation. Every
such notice shall state the place, date and hour of the meeting and, in the
case of a special meeting, the purpose or purposes for which the meeting is
called. Notice of any adjourned meeting of the stockholders shall not be
required to be given, except when expressly required by law.
SECTION 5. List of Stockholders. The Secretary shall, from
information obtained from the transfer agent, prepare and make, at least ten
days before every meeting of stockholders, a complete list of the stockholders
entitled to vote at the meeting, arranged in alphabetical order, and showing
the address of each stockholder and the number of shares registered in the name
of each stockholder. Such list shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary business
hours, for a period of at least ten days prior to the meeting, either at a
place within the city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or if not so specified, at the place
where the meeting is to be held. The list shall also be produced and kept at
the time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder who is present. The stock ledger shall be the
only evidence as to who are the stockholders entitled to examine the stock
ledger, the list referred to in this section or the books of the Corporation,
or to vote in person or by proxy at any meeting of stockholders.
SECTION 6. Quorum. At each meeting of the stockholders, the holders
of a majority of the issued and outstanding stock of the Corporation present
either in person or by proxy shall constitute a quorum for the transaction of
business except where otherwise provided by law for a specified action or by
the Certificate of Incorporation or by these by-laws. At each meeting at which
the holders of the Preferred Stock are entitled to elect a director or
directors, the holders of a majority of the issued and outstanding Preferred
Stock, present either in person or by proxy, shall constitute a quorum for the
election of said director or directors. Except as otherwise provided by law,
in the absence of a quorum, a majority in interest of the stockholders of the
Corporation present in person or
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by proxy and entitled to vote shall have the power to adjourn the meeting from
time to time, without notice other than announcement at the meeting, until
stockholders holding the requisite amount of stock shall be present or
represented. At any such adjourned meeting at which a quorum may be present,
any business may be transacted which might have been transacted at a meeting as
originally called. The absence from any meeting of the number required by law
or by the Certificate of Incorporation or by these by-laws for action upon any
given matter shall not prevent action at such meeting upon any other matter or
matters which may properly come before the meeting, if the number of
stockholders required in respect of such other matter or matters shall be
present.
SECTION 7. Organization. At every meeting of the stockholders the
Chairman of the Board, or, in his absence, an Executive Vice President or
director designated by the Board shall act as Chairman. The Secretary, or, in
his absence, an Assistant Secretary, shall act as Secretary at all meetings of
the stockholders. In the absence from any such meeting of the Secretary and
the Assistant Secretaries, the Chairman may appoint any person to act as
Secretary of the meeting.
SECTION 8. Business and Order of Business. At each meeting of the
stockholders such business may be transacted as may properly be brought before
such meeting, except as otherwise provided by law or in these by-laws. The
order of business at all meetings of the stockholders shall be as determined by
the Chairman, unless otherwise determined by a majority in interest of the
stockholders present in person or by proxy at such meeting and entitled to vote
thereat.
SECTION 9. Voting. Except as otherwise provided by law, the
Certificate of Incorporation or these by-laws, each stockholder shall at every
meeting of the stockholders be entitled to one vote for each share of stock
held by such stockholder. Any vote on stock may be given by the stockholder
entitled thereto in person or by his proxy appointed by an instrument in
writing, subscribed (or transmitted by electronic means and authenticated as
provided by law) by such stockholder or by his attorney thereunto authorized,
and delivered to the Secretary; provided, however, that no proxy shall be voted
on after three years from its date unless the proxy provides for a longer
period. Except as otherwise provided by law, the Certificate of Incorporation
or these by-laws, at all meetings of the stockholders, all matters shall be
decided by the vote (which need not be by ballot) of a majority in interest of
the stockholders present in person or by proxy and entitled to vote thereat, a
quorum being present.
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<PAGE> 5
ARTICLE III.
BOARD OF DIRECTORS
SECTION 1. General Powers. The property, affairs and business of the
Corporation shall be managed by or under the direction of its Board of
Directors.
SECTION 2. Number, Qualifications, and Term of Office. The
number of directors shall be thirteen,* but the number may be
increased, or may be reduced to not less than three, by amendment of these
by-laws or by resolution passed by a majority of the whole Board. Directors
need not be stockholders. Except as otherwise provided in these by-laws, the
directors shall be elected annually, and each director shall hold office until
the annual meeting held next after his election and until his successor shall
have been elected and shall qualify, or until his death or until he shall
resign or shall have been removed in the manner hereinafter provided.
SECTION 3. Election of Directors. At each meeting of the
stockholders for the election of directors, at which a quorum is present, the
directors shall be the persons receiving the greatest number of votes cast by
the holders of stock entitled to vote for such directors.
SECTION 4. Quorum and Manner of Acting. A majority of the members of
the Board of Directors shall constitute a quorum for the transaction of
business at any meeting, and the act of a majority of the directors present at
any meeting at which a quorum is present shall be the act of the Board of
Directors unless otherwise provided by law, the Certificate of Incorporation or
these by-laws. In the absence of a quorum, a majority of the directors
present may adjourn any meeting from time to time until a quorum shall be
obtained. Notice of any adjourned meeting need not be given. The directors
shall act only as a board and the individual directors shall have no power as
such.
SECTION 5. Place of Meetings. The Board of Directors may hold its
meetings at such place or places within or without the State of Delaware as the
Board may from time to time determine or as shall be specified or fixed in the
respective notices or waivers of notice thereof.
SECTION 6. First Meeting. Promptly after each annual election of
directors, the Board of Directors shall meet for the purpose of organization,
the election of officers and the transaction of other business, at the same
place as that at which the annual meeting of stockholders was held or as
otherwise determined
*Effective immediately prior to Annual Meeting of Shareowners to be
held February 1, 1995, prior to which the number of directors
is fourteen.
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<PAGE> 6
by the Board. Notice of such meeting need not be given. Such meeting may be
held at any other time or place which shall be specified in a notice given as
hereinafter provided for special meetings of the Board of Directors.
SECTION 7. Regular Meetings. Regular meetings of the Board of
Directors shall be held at such places and at such times as the Board shall
from time to time determine. If any day fixed for a regular meeting shall be a
legal holiday at the place where the meeting is to be held, then the meeting
which would otherwise be held on that day shall be held at the same hour on the
next succeeding business day not a legal holiday. Notice of regular meetings
need not be given.
SECTION 8. Special Meetings; Notice. Special meetings of the Board
of Directors shall be held whenever called by the Chairman of the Board and
shall be called by him or the Secretary at the written request of three
directors. Notice of each such meeting stating the time and place of the
meeting shall be given to each director by mail, telephone or personally. If
by mail, such notice shall be given not less than five days before the meeting;
and if by telephone or personally, not less than two days before the meeting.
A notice mailed at least two weeks before the meeting need not state the
purpose thereof except as otherwise provided in these by-laws. In all other
cases the notice shall state the principal purpose or purposes of the meeting.
Notice of any meeting of the Board need not be given to a director, however, if
waived by him in writing before or after such meeting or if he shall be present
at the meeting.
SECTION 9. Organization. At each meeting of the Board of Directors,
the Chairman of the Board, or, in his absence, an Executive Vice President or
director designated by the Board shall act as Chairman. The Secretary, or, in
his absence, an Assistant Secretary, or in the absence of both the Secretary
and the Assistant Secretaries, any person appointed by the Chairman, shall act
as Secretary of the meeting.
SECTION 10. Order of Business. At all meetings of the Board of
Directors, business shall be transacted in the order determined by the Board.
SECTION 11. Resignations. Any director of the Corporation may resign
at any time by giving written notice to the Chairman of the Board or to the
Secretary of the Corporation. The resignation of any director shall take
effect at the time specified therein, and unless otherwise specified therein,
the acceptance of such resignation shall not be necessary to make it effective.
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SECTION 12. Removal of Directors. Any director may be removed,
either with or without cause, at any time, by the affirmative vote of a
majority in interest of the holders of record of the stock having voting power
at a special meeting of the stockholders called for the purpose; and the
vacancy in the Board of Directors caused by any such removal may be filled by
the stockholders at such meeting; provided, that a director elected by the
holders of the Preferred Stock, voting as a class, may be so removed only by
the affirmative vote of a majority in interest of the holders of record of such
Preferred Stock, and the vacancy in the Board of Directors caused by such
removal may be filled as provided in the Certificate of Incorporation.
SECTION 13. Vacancies. Any vacancy in the Board of Directors caused
by death, resignation, removal, disability, disqualification, an increase in
the number of directors, or any other cause (except a vacancy in the office of
a director elected by the holders of the Preferred Stock, voting as a class)
may be filled by the majority vote of the remaining directors, though less than
a quorum, or by the stockholders of the Corporation at the next annual meeting
or any special meeting called for the purpose, and each director so elected
shall hold office for a term to expire at the next annual election of
directors, and until his successor shall be duly elected and qualified, or
until his death or until he shall resign or shall have been removed in the
manner herein provided. A vacancy in the office of a director elected by the
holders of the Preferred Stock, voting as a class, may be filled as provided in
the Certificate of Incorporation. In case all the directors shall die or
resign or be removed or disqualified, any stockholder having voting powers may
call a special meeting of the stockholders, upon notice given as herein
provided for meetings of the stockholders, at which directors for the unexpired
terms may be elected.
SECTION 14. Compensation. Each director shall be paid such
compensation, if any, as shall be fixed by the Board of Directors.
SECTION 15. Indemnification of Directors and Officers. (A) The
Corporation shall indemnify any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other
than an action by or in the right of the Corporation) by reason of the fact
that he is or was a director, officer, employee or agent of the Corporation or
is or was serving at the request of the Corporation as a director, officer,
employee or agent (except in each of the foregoing situations to the extent any
agreement, arrangement or understanding of agency contains provisions that
supersede or abrogate indemnification under this section) of another
corporation or of any partnership, joint venture, trust, employee benefit plan
or other enterprise, against expenses
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(including attorney's fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
the person did not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the Corporation, and,
with respect to any criminal action or proceeding, had reasonable cause to
believe that his conduct was unlawful.
(B) The Corporation shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the Corporation to procure a judgment in
its favor by reason of the fact that he is or was a director, officer, employee
or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent (except in each of the
foregoing situations to the extent any agreement, arrangement or understanding
of agency contains provisions that supersede or abrogate indemnification under
this section) of another corporation or of any partnership, joint venture,
trust, employee benefit plan or other enterprise against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection with the
defense or settlement of such action or suit if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the Corporation and except that no indemnification shall be made in respect of
any claim, issue or matter as to which such person shall have been adjudged to
be liable to the Corporation unless and only to the extent that the Court of
Chancery of Delaware or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability
but in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Court of Chancery
of Delaware or such other court shall deem proper.
(C) To the extent that a director, officer, employee or agent of the
Corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (A) and (B), or in
defense of any claim, issue or matter therein, he shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by him or
on his behalf in connection therewith. If any such person is not wholly
successful in any such action, suit or proceeding but is successful, on the
merits or otherwise, as to one or more but less than all claims, issues or
matters therein, the Corporation shall indemnify him against all expenses
(including attorneys' fees) actually and
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reasonably incurred by him or on his behalf in connection with each claim,
issue or matter that is successfully resolved. For purposes of this subsection
and without limitation, the termination of any claim, issue or matter by
dismissal, with or without prejudice, shall be deemed to be a successful result
as to such claim, issue or matter.
(D) Notwithstanding any other provision of this section, to the
extent any person is a witness in, but not a party to, any action, suit or
proceeding, whether civil, criminal, administrative or investigative, by reason
of the fact that he is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent (except in each of the foregoing
situations to the extent any agreement, arrangement or understanding of agency
contains provisions that supersede or abrogate indemnification under this
section) of another corporation or of any partnership, joint venture, trust,
employee benefit plan or other enterprise, he shall be indemnified against all
expenses (including attorneys' fees) actually and reasonably incurred by him or
on his behalf in connection therewith.
(E) Indemnification under subsections (A) and (B) (unless ordered
by a court) shall be made only as authorized in the specific case upon a
determination that indemnification of the director, officer, employee or agent
is proper in the circumstances because he has met the applicable standard of
conduct set forth in subsections (A) and (B). Such determination shall be made
(1) if a Change of Control (as hereinafter defined) shall not have occurred,
(a) by the Board of Directors by a majority vote of a quorum consisting of
Disinterested Directors (as hereinafter defined) or (b) if a quorum of the
Board of Directors consisting of Disinterested Directors is not obtainable or,
even if obtainable, a majority of such quorum so directs, by (i) Independent
Counsel (as hereinafter defined) in a written opinion to the Board of
Directors, a copy of which shall be delivered to the claimant, or (ii) the
stockholders of the Corporation; or (2) if a Change of Control shall have
occurred, by Independent Counsel selected by the claimant in a written opinion
to the Board of Directors, a copy of which shall be delivered to the claimant,
unless the claimant shall request that such determination be made by or at the
direction of the Board of Directors, in which case it shall be made in
accordance with clause (1) of this sentence. Any claimant shall be entitled to
be indemnified against the expenses (including attorneys' fees) actually and
reasonably incurred by him in cooperating with the person or entity making the
determination of his entitlement to indemnification (irrespective of the
determination as to the claimant's entitlement to indemnification) and, to the
extent successful, in connection with any litigation or arbitration with
respect to such claim or the enforcement thereof.
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(F) If a Change of Control shall not have occurred, or if a Change of
Control shall have occurred and a director, officer, employee or agent requests
pursuant to clause (2) of the second sentence in subsection (E) that the
determination whether the claimant is entitled to indemnification be made by or
at the direction of the Board of Directors, the claimant shall be conclusively
presumed to have been determined pursuant to subsection (E) to be entitled to
indemnification if (1)(a) within fifteen days after the next regularly
scheduled meeting of the Board of Directors following receipt by the
Corporation of the request therefor, the Board of Directors shall not have
resolved by majority vote of a quorum consisting of Disinterested Directors to
submit such determination to (i) Independent Counsel for its determination or
(ii) the stockholders for their determination at the next annual meeting, or
any special meeting that may be held earlier, after such receipt, and (b)
within sixty days after receipt by the Corporation of the request therefor (or
within ninety days after such receipt if the Board of Directors in good faith
determines that additional time is required by it for the determination and,
prior to expiration of such sixty-day period, notifies the claimant thereof),
the Board of Directors shall not have made the determination by a majority vote
of a quorum consisting of Disinterested Directors, or (2) after a resolution of
the Board of Directors, timely made pursuant to clause (1)(a)(ii) above, to
submit the determination to the stockholders, the stockholders meeting at which
the determination is to be made shall not have been held on or before the date
prescribed (or on or before a later date, not to exceed sixty days beyond the
original date, to which such meeting may have been postponed or adjourned on
good cause by the Board of Directors acting in good faith); provided, however,
that this sentence shall not apply if the claimant has misstated or failed to
state a material fact in connection with his request for indemnification. Such
presumed determination that a claimant is entitled to indemnification shall be
deemed to have been made (I) at the end of the sixty-day or ninety-day period
(as the case may be) referred to in clause (1)(b) of the immediately preceding
sentence or (II) if the Board of Directors has resolved on a timely basis to
submit the determination to the stockholders, on the last date within the
period prescribed by law for holding such stockholders meeting (or a
postponement or adjournment thereof as permitted above).
(G) Expenses (including attorneys' fees) incurred in defending a
civil, criminal, administrative or investigative action, suit or proceeding
shall be paid by the Corporation in advance of the final disposition of such
action, suit or proceeding to a director or officer, promptly after receipt of
a request therefor stating in reasonable detail the expenses incurred, and to
an employee or agent as authorized by the Board of Directors; provided that in
each case the Corporation shall have received an undertaking by or on behalf of
the director, officer, employee or agent to repay such amount if it shall
ultimately be determined that
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he is not entitled to be indemnified by the Corporation as authorized in this
section.
(H) The Board of Directors shall establish reasonable procedures for
the submission of claims for indemnification pursuant to this section,
determination of the entitlement of any person thereto and review of any such
determination. Such procedures shall be set forth in an appendix to these
by-laws and shall be deemed for all purposes to be a part hereof.
(I) For purposes of this section,
(1) "Change of Control" means a change of control of the
Corporation of a nature that would be required to be reported in response to
Item 5(f) of Schedule 14A of Regulation 14A (or in response to any similar item
on any similar schedule or form) promulgated under the Securities Exchange Act
of 1934 (the "Act"), whether or not the Corporation is then subject to such
reporting requirement; provided, however, that, without limitation, a Change of
Control shall be deemed to have occurred if (i) any "person" (as such term is
used in Sections 13(d) and 14(d) of the Act) is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Act), directly or indirectly, of
securities of the Corporation representing 20% or more of the combined voting
power of the Corporation's then outstanding securities without the prior
approval of at least two-thirds of the members of the Board of Directors in
office immediately prior to such person attaining such percentage interest;
(ii) the Corporation is a party to a merger, consolidation, sale of assets or
other reorganization, or a proxy contest, as a consequence of which members of
the Board of Directors in office immediately prior to such transaction or event
constitute less than a majority of the Board of Directors immediately
thereafter; or (iii) during any period of two consecutive years, individuals
who at the beginning of such period constituted the Board of Directors
(including for this purpose any new director whose election or nomination for
election by the Corporation's stockholders was approved by a vote of at least
two-thirds of the directors then still in office who were directors at the
beginning of such period) cease for any reason to constitute at least a
majority of the Board of Directors.
(2) "Disinterested Director" means a director of the
Corporation who is not and was not a party to an action, suit or proceeding in
respect of which indemnification is sought by a director, officer, employee or
agent.
(3) "Independent Counsel" means a law firm, or a member of a
law firm, that (i) is experienced in matters of corporation law; (ii) neither
presently is, nor in the past five years has been, retained to represent the
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Corporation, the director, officer, employee or agent claiming indemnification
or any other party to the action, suit, or proceeding giving rise to a claim
for indemnification under this section, in any matter material to the
Corporation, the claimant or any such other party, and (iii) would not, under
applicable standards of professional conduct then prevailing, have a conflict
of interest in representing either the Corporation or such director, officer,
employee or agent in an action to determine the Corporation's or such person's
rights under this section.
(J) The Indemnification and advancement of expenses herein provided,
or granted pursuant hereto, shall not be deemed exclusive of any other rights
to which any of those indemnified or eligible for advancement of expenses may
be entitled under any agreement, vote of stockholders or Disinterested
Directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office, and shall continue as to
a person who has ceased to be a director, officer, employee or agent and shall
inure to the benefit of the heirs, executors and administrators of such person.
Notwithstanding any amendment, alteration or repeal of this section or any of
its provisions, or of any of the procedures established by the Board of
Directors pursuant to subsection (H) hereof, any person who is or was a
director, officer, employee or agent of the Corporation or is or was serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation or of any partnership, joint venture, employee benefit plan
or other enterprise shall be entitled to indemnification in accordance with the
provisions hereof and thereof with respect to any action taken or omitted prior
to such amendment, alteration or repeal except to the extent otherwise required
by law.
(K) No indemnification shall be payable pursuant to this section with
respect to any action against the Corporation commenced by an officer,
director, employee or agent unless the Board of Directors shall have authorized
the commencement thereof or unless and to the extent that this section or the
procedures established pursuant to subsection (H) shall specifically provide
for indemnification of expenses relating to the enforcement of rights under
this section and such procedures.
ARTICLE IV.
COMMITTEES
SECTION 1. Appointment and Powers. The Board of Directors may, by
resolution passed by a majority of the whole Board, designate one or more
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committees, each committee to consist of two or more of the directors of the
Corporation, which, to the extent provided in said resolution or in these
by-laws, shall have and may exercise the powers of the Board of Directors in
the management of the business and affairs of the Corporation, and may
authorize the seal of the Corporation to be affixed to all papers which may
require it. Such committee or committees shall have such name or names as may
be stated in these by-laws or as may be determined from time to time by
resolution adopted by the Board of Directors.
SECTION 2. Term of Office and Vacancies. Each member of a committee
shall continue in office until a director to succeed him shall have been
elected and shall have qualified, or until he ceases to be a director or until
he shall have resigned or shall have been removed in the manner hereinafter
provided. Any vacancy in a committee shall be filled by the vote of a majority
of the whole Board of Directors at any regular or special meeting thereof.
SECTION 3. Alternates. The Board of Directors may, by resolution
passed by a majority of the whole Board, designate one or more directors as
alternate members of any committee, who may replace any absent or disqualified
member at any meeting of the committee.
SECTION 4. Organization. Unless otherwise provided by the Board of
Directors or these by-laws, each committee shall appoint a chairman. Each
committee shall keep a record of its acts and proceedings and report the same
from time to time to the Board of Directors.
SECTION 5. Resignations. Any regular or alternate member of a
committee may resign at any time by giving written notice to the Chairman of
the Board or to the Secretary of the Corporation. Such resignation shall take
effect at the time of the receipt of such notice or at any later time specified
therein, and, unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
SECTION 6. Removal. Any regular or alternate member of a committee
may be removed with or without cause at any time by resolution passed by a
majority of the whole Board of Directors at any regular or special meeting for
which notice of the purpose was given.
SECTION 7. Meetings. Regular meetings of each committee, of which no
notice shall be necessary, shall be held on such days and at such places as the
chairman of the committee shall determine or as shall be fixed by a resolution
passed by a majority of all the members of such committee. Special meetings of
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each committee will be called by the Secretary at the request of any two
members of such committee, or in such other manner as may be determined by the
committee. Notice of each special meeting of a committee shall be mailed to
each member thereof at least two days before the meeting or shall be
telegraphed to him or given personally or by telephone at least one day before
the meeting. Every such notice shall state the time and place, but need not
state the purposes of the meeting. No notice of any meeting of a committee
shall be required to be given to any alternate.
SECTION 8. Quorum and Manner of Acting. Unless otherwise provided by
resolution of the Board of Directors, a majority of a committee (including
alternates when acting in lieu of regular members of such committee) shall
constitute a quorum for the transaction of business and the act of a majority
of those present at a meeting at which a quorum is present shall be the act of
such committee. The members of each committee shall act only as a committee
and the individual members shall have no power as such.
SECTION 9. Compensation. Each regular or alternate member of a
committee shall be paid such compensation, if any, as shall be fixed by the
Board of Directors.
ARTICLE V.
OFFICERS
SECTION 1. Officers. The officers of the Corporation shall be a
Chairman and a Vice Chairman of the Board of Directors, each of whom shall be
chosen from the members of the Board of Directors, one or more Executive Vice
Presidents, one or more Vice Presidents (one or more of whom may be Senior Vice
Presidents or otherwise as may be designated by the Board), a Secretary and a
Treasurer, all of whom shall be elected by the Board of Directors. Any two or
more offices may be held by the same person. The Board of Directors may also
from time to time elect such other officers as it deems necessary.
SECTION 2. Term of Office. Each officer shall hold office until his
successor shall have been duly elected and qualified in his stead, or until his
death or until he shall have resigned or shall have been removed in the manner
hereinafter provided.
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SECTION 3. Additional Officers; Agents. The Chairman of the Board
may from time to time appoint and remove such additional officers and agents as
may be deemed necessary. They shall hold office for such period, have such
authority, and perform such duties as in these by-laws provided or as the
Chairman of the Board or an Executive Vice President may from time to time
prescribe. The Board of Directors or the Chairman of the Board may from time
to time authorize any officer to appoint and remove agents and employees and to
prescribe their powers and duties.
SECTION 4. Salaries. Unless otherwise provided by resolution passed
by a majority of the whole Board, the salaries of all officers elected by the
Board of Directors shall be fixed by the Board of Directors.
SECTION 5. Removal. Except where otherwise expressly provided in a
contract authorized by the Board of Directors, any officer may be removed,
either with or without cause, by the vote of a majority of the Board at any
regular or special meeting or, except in the case of an officer elected by the
Board, by any superior officer upon whom the power of removal may be conferred
by the Board or by these by-laws.
SECTION 6. Resignations. Any officer elected by the Board of
Directors may resign at any time by giving written notice to the Board or to
the Chairman of the Board or to the Secretary. Any other officer may resign at
any time by giving written notice to the Chairman of the Board or to an
Executive Vice President. Any such resignation shall take effect at the date
of receipt of such notice or at any later time specified therein, and unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective.
SECTION 7. Vacancies. A vacancy in any office because of death,
resignation, removal, or otherwise, shall be filled for the unexpired portion
of the term in the manner provided in these by-laws for regular election or
appointment to such office.
SECTION 8. Chairman of the Board of Directors. The Chairman of the
Board of Directors shall be chief executive officer of the Corporation and,
subject to the control of the Board of Directors, shall have general and
overall charge of the business and affairs of the Corporation and of its
officers. He shall keep the Board of Directors appropriately informed on the
business and affairs of the Corporation. He shall preside at all meetings of
the stockholders and of the Board of Directors and shall enforce the observance
of the rules of order for the meetings of the Board and the stockholders and
the by-laws of the Corporation.
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In the case of his absence or disability, the person who may be designated by
the Board of Directors shall perform all his duties and functions and exercise
all his powers and be subject to all the restrictions as are applicable to him.
SECTION 9. Executive Vice Presidents. One or more Executive Vice
Presidents shall be chief operating officers of components of the Corporation
designated by the Chairman of the Board and, subject to the control of the
Chairman of the Board, shall direct and be responsible for the operation of the
business and affairs of such designated components of the Corporation. Each
Executive Vice President shall keep the Chairman of the Board and, as he or it
may request, the Board of Directors, appropriately informed on the business and
affairs of the designated components of the Corporation.
SECTION 10. Vice Chairman of the Board of Directors. The Vice
Chairman of the Board of Directors shall be senior advisor to the chief
executive and chief operating officers of the Corporation and, subject to the
control of the Chairman of the Board, shall perform such duties as may from
time to time be assigned by the Chairman of the Board or the Executive Vice
Presidents.
SECTION 11. Vice Presidents. The Vice Presidents shall perform such
duties as may from time to time be assigned to them or any of them by the
Chairman of the Board, an Executive Vice President or the Board of Directors.
SECTION 12. Secretary. The Secretary shall keep or cause to be kept
in books provided for the purpose the minutes of the meetings of the
stockholders, of the Board of Directors and of any committee constituted
pursuant to Article IV of these by-laws. He shall be custodian of the
corporate seal and see that it is affixed to all documents as required and
attest the same. He shall perform all duties incident to the office of
Secretary and such other duties as from time to time may be assigned to him.
SECTION 13. Assistant Secretaries. At the request of the Secretary,
or in his absence or disability, the Assistant Secretary designated by him
shall perform all the duties of the Secretary and, when so acting, shall have
all the powers of, and be subject to all the restrictions upon, the Secretary.
The Assistant Secretaries shall perform such other duties as from time to time
may be assigned to them.
SECTION 14. Treasurer. The Treasurer shall have charge of and be
responsible for the receipt, disbursement and safekeeping of all funds and
securities of the Corporation. He shall deposit all such funds in the name of
the Corporation in such banks, trust companies or other depositories as shall
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be selected in accordance with the provisions of these by-laws. From time to
time and whenever requested to do so, he shall render statements of the
condition of the finances of the Corporation to the Board of Directors.
He shall perform all the duties incident to the office of Treasurer and such
other duties as from time to time may be assigned to him.
SECTION 15. Assistant Treasurers. At the request of the Treasurer,
or in his absence or disability, the Assistant Treasurer designated by him
shall perform all the duties of the Treasurer and, when so acting, shall have
all the powers of, and be subject to all the restrictions upon, the Treasurer.
The Assistant Treasurers shall perform such other duties as from time to time
may be assigned to them.
SECTION 16. Certain Agreements. The Board of Directors shall have
power to authorize or direct the proper officers of the Corporation, on behalf
of the Corporation, to enter into valid and binding agreements in respect of
employment, incentive or deferred compensation, stock options, and similar or
related matters, notwithstanding the fact that a person with whom the
Corporation so contracts may be a member of its Board of Directors. Any such
agreement may validly and lawfully bind the Corporation for a term of more than
one year, in accordance with its terms, notwithstanding the fact that one of
the elements of any such agreement may involve the employment by the
Corporation of an officer, as such, for such term.
ARTICLE VI.
AUTHORIZATIONS
SECTION 1. Contracts. The Board of Directors, except as in
these by-laws otherwise provided, may authorize any officer, employee or agent
of the Corporation to enter into any contract or execute and deliver any
instrument in the name of and on behalf of the Corporation, and such authority
may be general or confined to specific instances.
SECTION 2. Loans. No loan shall be contracted on behalf of the
Corporation and no negotiable paper shall be issued in its name, unless
authorized by the Board of Directors.
SECTION 3. Checks, Drafts, Etc. All checks, drafts or other orders
for the payment of money, notes or other evidences of indebtedness issued in
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the name of the Corporation shall be signed by such officer or officers,
employee or employees, of the Corporation as shall from time to time be
determined in accordance with authorization of the Board of Directors.
SECTION 4. Deposits. All funds of the Corporation shall be deposited
from time to time to the credit of the Corporation in such banks, trust
companies or other depositories as the Board of Directors may from time to time
designate, or as may be designated by any officer or officers of the
Corporation to whom such power may be delegated by the Board, and for the
purpose of such deposit the officers and employees who have been authorized to
do so in accordance with the determinations of the Board may endorse, assign
and deliver checks, drafts, and other orders for the payment of money which are
payable to the order of the Corporation.
SECTION 5. Proxies. Except as otherwise provided in these by-laws or
in the Certificate of Incorporation, and unless otherwise provided by
resolution of the Board of Directors, the Chairman of the Board, or any other
officer may from time to time appoint an attorney or attorneys or agent or
agents of the Corporation, in the name and on behalf of the Corporation to cast
the votes which the Corporation may be entitled to cast as a stockholder or
otherwise in any other corporation any of whose stock or other securities may
be held by the Corporation, at meetings of the holders of the stock or other
securities of such other corporations, or to consent in writing to any action
by such other corporation, and may instruct the person or persons so appointed
as to the manner of casting such vote or giving such consent, and may execute
or cause to be executed in the name and on behalf of the Corporation and under
its corporate seal, or otherwise, all such written proxies or other instruments
as he may deem necessary or proper in the premises.
ARTICLE VII.
SHARES AND THEIR TRANSFER
SECTION 1. Certificates of Stock. Certificates for shares of the
stock of the Corporation shall be in such form as shall be approved by the
Board of Directors. They shall be numbered in the order of their issue, by
class and series, and shall be signed by the Chairman of the Board, an
Executive Vice President or a Vice President, and the Treasurer or an Assistant
Treasurer, or the Secretary or an Assistant Secretary, of the Corporation. If
such certificate is countersigned (1) by a transfer agent other than the
Corporation or its employee, or, (2) by a
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registrar other than the Corporation or its employee, any other signature on
the certificate may be a facsimile. In case any officer, transfer agent, or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent, or registrar
before such certificate is issued, it may be issued by the Corporation with the
same effect as if he were such officer, transfer agent, or registrar at the
date of issue.
SECTION 2. Record Ownership. A record of the name and address of the
holder of each certificate, the number of shares represented thereby and the
date of issuance thereof shall be made on the Corporation's books. The
Corporation shall be entitled to treat the holder of record of any share of
stock as the holder in fact thereof and accordingly shall not be bound to
recognize any equitable or other claim to or interest in such share on the part
of any other person, whether or not it shall have express or other notice
thereof, except as required by law.
SECTION 3. Transfer of Stock. Shares of stock shall be transferable
on the books of the Corporation by the person named in the certificate for such
stock in person or by his attorney or other duly constituted representative
upon surrender of such certificate with an assignment endorsed thereon or
attached thereto duly executed and with such guarantee of signature as the
Corporation may reasonably require.
SECTION 4. Lost, Destroyed and Mutilated Certificates. The
Corporation may issue a new certificate of stock in the place of any
certificate theretofore issued by it, alleged to have been lost, stolen or
destroyed, and the Corporation may require the owner of the lost, stolen or
destroyed certificate, or his legal representative, to give the Corporation a
bond sufficient to indemnify it against any claim that may be made against it
on account of the alleged loss, theft or destruction of any such certificate or
the issuance of such new certificate.
SECTION 5. Transfer Agent and Registrar; Regulations. The
Corporation shall, if and whenever the Board of Directors shall so determine,
maintain one or more transfer offices or agencies, each in charge of a transfer
agent designated by the Board of Directors, where the shares of the stock of
the Corporation shall be directly transferable, and also one or more registry
offices, each in charge of a registrar designated by the Board of Directors,
where such shares of stock shall be registered, and no certificate for shares
of the stock of the Corporation, in respect of which a registrar and transfer
agent shall have been designated, shall be valid unless countersigned by such
transfer agent and registered by such registrar. The Board of Directors may
also make such
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additional rules and regulations as it may deem expedient concerning the issue,
transfer and registration of certificates for shares of stock of the
Corporation.
SECTION 6. Fixing Record Date. For the purpose of determining the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of
any other lawful action, the Board of Directors may fix, in advance, a record
date, which shall not be more than sixty nor less than ten days before the date
of such meeting, nor more than sixty days prior to any other action. If no
record date is fixed (1) the record date for determining stockholders entitled
to notice of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding the day on
which the meeting is held and (2) the record date for determining stockholders
for any other purpose shall be at the close of business on the day on which the
Board of Directors adopts the resolution relating thereto. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned
meeting.
SECTION 7. Examination of Books by Stockholders. The Board of
Directors shall, subject to the laws of the State of Delaware, have power to
determine from time to time, whether and to what extent and under what
conditions and regulations the accounts and books of the Corporation, or any of
them, shall be open to the inspection of the stockholders; and no stockholder
shall have any right to inspect any book or document of the Corporation, except
as conferred by the laws of the State of Delaware, unless and until authorized
so to do by resolution of the Board of Directors or of the stockholders of the
Corporation.
ARTICLE VIII.
NOTICE
SECTION 1. Manner of Giving Written Notice. Any notice in writing
required by law or by these by-laws to be given to any person may be delivered
personally or may be given by depositing the same in the post office or letter
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box in a postpaid envelope addressed to such person at such address as appears
on the books of the Corporation. Notice by mail shall be deemed to be given at
the time when the same shall be mailed.
SECTION 2. Waiver of Notice. Whenever any notice is required to be
given to any person, a waiver thereof by such person in writing or by telegraph
or cable, whether before or after the time stated therein, shall be deemed
equivalent thereto.
ARTICLE IX.
SEAL
The corporate seal shall have inscribed thereon the name of the
Corporation, the year of its organization and the words "Corporate Seal" and
"Delaware."
ARTICLE X.
FISCAL YEAR
The fiscal year of the Corporation shall begin on the first day of
October in each year.
ARTICLE XI.
AMENDMENTS
All by-laws of the Corporation shall be subject to alteration,
amendment or repeal, and new by-laws not inconsistent with any provision of the
Certificate of Incorporation or any provision of law may be made, either by the
affirmative vote of the holders of record of a majority of the outstanding
stock of the Corporation entitled to vote in respect thereof, given at an
annual meeting or at any special meeting, provided that notice of the proposed
alteration, amendment or repeal or of the proposed new by-laws be included in
the notice of such meeting, or by the Board of Directors at any regular or
special meeting. By-laws
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made, altered or amended by the Board of Directors shall be subject to
alteration, amendment or repeal by the stockholders or by the Board.
APPENDIX
PROCEDURES FOR SUBMISSION AND DETERMINATION OF CLAIMS FOR INDEMNIFICATION
PURSUANT TO ARTICLE III, SECTION 15 OF THE BY-LAWS.
SECTION 1. Purpose. Effective as of November 5, 1986, the Board of
Directors of Rockwell International Corporation, a Delaware corporation (the
"Corporation"), has adopted these Procedures for Submission and Determination
of Claims for Indemnification Pursuant to Article III, Section 15 of the
by-laws (the "Procedures") to implement the provisions of Article III, Section
15 of the by-laws of the Corporation (the "by-laws") in compliance with the
requirement of subsection (H) thereof.
SECTION 2. Definitions. For purposes of these Procedures:
(A) All terms that are defined in Article III, Section 15 of the
by-laws shall have the meanings ascribed to them therein when used in these
Procedures unless otherwise defined herein.
(B) "Expenses" include all reasonable attorneys' fees, court costs,
transcript costs, fees of experts, witness fees, travel expenses, duplicating
costs, printing and binding costs, telephone charges, postage, delivery service
fees, and all other disbursements or expenses of the types customarily incurred
in connection with prosecuting, defending, preparing to prosecute or defend,
investigating, or being or preparing to be a witness in, a Proceeding; and
shall also include such retainers as counsel may reasonably require in advance
of undertaking the representation of an indemnitee in a Proceeding.
(C) "Indemnitee" includes any person who was or is, or is threatened
to be made, a witness in or a party to any Proceeding by reason of the fact
that he is or was a director, officer, employee or agent of the Corporation or
is or was serving at the request of the Corporation as a director, officer,
employee or agent (except in each of the foregoing situations to the extent any
agreement, arrangement or understanding of agency contains provisions that
supersede or abrogate indemnification under Article III, Section 15 of the
by-laws) of another
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corporation or of any partnership, joint venture, trust, employee benefit plan
or other enterprise.
(D) "Proceeding" includes any action, suit, arbitration, alternative
dispute resolution mechanism, investigation, administrative hearing or any
other proceeding, whether civil, criminal, administrative or investigative,
except one initiated by an Indemnitee unless the Board of Directors shall have
authorized the commencement thereof.
SECTION 3. Submission and Determination of Claims.
(A) To obtain indemnification or advancement of Expenses under
Article III, Section 15 of the by-laws, an Indemnitee shall submit to the
Secretary of the Corporation a written request therefor, including therein or
therewith such documentation and information as is reasonably available to the
Indemnitee and is reasonably necessary to permit a determination as to whether
and what extent the Indemnitee is entitled to indemnification or advancement of
Expenses, as the case may be. The Secretary shall, promptly upon receipt of a
request for indemnification, advise the Board of Directors thereof in writing
if a determination in accordance with Article III, Section 15(E) of the by-laws
is required.
(B) Upon written request by an Indemnitee for indemnification
pursuant to Section 3(A) hereof, a determination with respect to the
Indemnitee's entitlement thereto in the specific case, if required by the
by-laws, shall be made in accordance with Article III, Section 15(E) of the
by-laws, and, if it is so determined that the Indemnitee is entitled to
indemnification, payment to the Indemnitee shall be made within ten days after
such determination. The Indemnitee shall cooperate with the person, persons or
entity making such determination, with respect to the Indemnitee's entitlement
to indemnification, including providing to such person, persons or entity upon
reasonable advance request any documentation or information which is not
privileged or otherwise protected from disclosure and which is reasonably
available to the Indemnitee and reasonably necessary to such determination.
(C) If entitlement to indemnification is to be made by Independent
Counsel pursuant to Article III, Section 15(E) of the by-laws, the Independent
Counsel shall be selected as provided in this Section 3(C). If a Change of
Control shall not have occurred, the Independent Counsel shall be selected by
the Board of Directors, and the Corporation shall give written notice to the
Indemnitee advising him of the identity of the Independent Counsel so selected.
If a Change of Control shall have occurred, the Independent Counsel shall be
selected by the Indemnitee (unless the Indemnitee shall request that such
selection be made by the
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Board of Directors, in which event the immediately preceding sentence shall
apply), and the Indemnitee shall give written notice to the Corporation
advising it of the identity of the Independent Counsel so selected. In either
event, the Indemnitee or the Corporation, as the case may be, may, within seven
days after such written notice of selection shall have been given, deliver to
the Corporation or to the Indemnitee, as the case may be, a written objection
to such selection. Such objection may be asserted only on the ground that the
Independent Counsel so selected does not meet the requirements of "Independent
Counsel" as defined in Article III, Section 15 of the by-laws, and the
objection shall set forth with particularity the factual basis of such
assertion. If such written objection is made, the Independent Counsel so
selected may not serve as Independent Counsel unless and until a court has
determined that such objection is without merit. If, within twenty days after
the next regularly scheduled Board of Directors meeting following submission by
the Indemnitee of a written request for indemnification pursuant to Section
3(A) hereof, no Independent Counsel shall have been selected and not objected
to, either the Corporation or the Indemnitee may petition the Court of Chancery
of the State of Delaware or other court of competent jurisdiction for
resolution of any objection which shall have been made by the Corporation or
the Indemnitee to the other's selection of Independent Counsel and/or for the
appointment as Independent Counsel of a person selected by the Court or by such
other person as the Court shall designate, and the person with respect to whom
an objection is favorably resolved or the person so appointed shall act as
Independent Counsel under Article III, Section 15(E) of the by-laws. The
Corporation shall pay any and all reasonable fees and expenses (including
without limitation any advance retainers reasonably required by counsel) of
Independent Counsel incurred by such Independent Counsel in connection with
acting pursuant to Article III, Section 15(E) of the by-laws, and the
Corporation shall pay all reasonable fees and expenses (including without
limitation any advance retainers reasonably required by counsel) incident to
the procedures of Article III, Section 15(E) of the by-laws and this Section
3(C), regardless of the manner in which Independent Counsel was selected or
appointed. Upon the delivery of its opinion pursuant to Article III, Section
15 of the by-laws or, if earlier, the due commencement of any judicial
proceeding or arbitration pursuant to Section 4(A)(3) of these Procedures,
Independent Counsel shall be discharged and relieved of any further
responsibility in such capacity (subject to the applicable standards of
professional conduct then prevailing).
(D) If a Change of Control shall have occurred, in making a
determination with respect to entitlement to indemnification under the by-laws,
the person, persons or entity making such determination shall presume that an
Indemnitee is entitled to indemnification under the by-laws if the Indemnitee
has submitted a request for indemnification in accordance with Section 3(A)
hereof, and the
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Corporation shall have the burden of proof to overcome that presumption in
connection with the making by any person, persons or entity of any
determination contrary to that presumption.
SECTION 4. Review and Enforcement of Determination.
(A) In the event that (1) advancement of Expenses is not timely made
pursuant to Article III, Section 15(G) of the by-laws, (2) payment of
indemnification is not made pursuant to Article III, Section 15(C) or (D) of
the by-laws within ten days after receipt by the Corporation of written request
therefor, (3) a determination is made pursuant to Article III, Section 15(E) of
the by-laws that an Indemnitee is not entitled to indemnification under the
by-laws, (4) the determination of entitlement to indemnification is to be made
by Independent Counsel pursuant to Article III, Section 15(E) of the by-laws
and such determination shall not have been made and delivered in a written
opinion within ninety days after receipt by the Corporation of the written
request for indemnification, or (5) payment of indemnification is not made
within ten days after a determination has been made pursuant to Article III,
Section 15(E) of the by-laws that an Indemnitee is entitled to indemnification
or within ten days after such determination is deemed to have been made
pursuant to Article III, Section 15(F) of the by-laws, the Indemnitee shall be
entitled to an adjudication in an appropriate court of the State of Delaware,
or in any other court of competent jurisdiction, of his entitlement to such
indemnification or advancement of Expenses. Alternatively, the Indemnitee, at
his option, may seek an award in arbitration to be conducted by a single
arbitrator pursuant to the rules of the American Arbitration Association. The
Indemnitee shall commence such proceeding seeking an adjudication or an award
in arbitration within one year following the date on which the Indemnitee first
has the right to commence such proceeding pursuant to this Section 4(A). The
Corporation shall not oppose the Indemnitee's right to seek any such
adjudication or award in arbitration.
(B) In the event that a determination shall have been made pursuant
to Article III, Section 15(E) of the by-laws that an Indemnitee is not entitled
to indemnification, any judicial proceeding or arbitration commenced pursuant
to this Section 4 shall be conducted in all respects as a de novo trial, or
arbitration, on the merits and the Indemnitee shall not be prejudiced by reason
of that adverse determination. If a Change of Control shall have occurred, the
Corporation shall have the burden of proving in any judicial proceeding or
arbitration commenced pursuant to this Section 4 that the Indemnitee is not
entitled to indemnification or advancement of Expenses, as the case may be.
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(C) If a determination shall have been made or deemed to have been
made pursuant to Article III, Section 15 (E) or (F) of the by-laws that an
Indemnitee is entitled to indemnification, the Corporation shall be bound by
such determination in any judicial proceeding or arbitration commenced pursuant
to this Section 4, absent (1) a misstatement or omission of a material fact in
connection with the Indemnitee's request for indemnification, or (2) a
prohibition of such indemnification under applicable law.
(D) The Corporation shall be precluded from asserting in any judicial
proceeding or arbitration commenced pursuant to this Section 4 that the
procedures and presumptions of these Procedures are not valid, binding and
enforceable, and shall stipulate in any such judicial proceeding or arbitration
that the Corporation is bound by all the provisions of these Procedures.
(E) In the event that an Indemnitee, pursuant to this Section 4,
seeks to enforce his rights under, or to recover damages for breach of, Article
III, Section 15 of the by-laws or these Procedures in a judicial proceeding or
arbitration, the Indemnitee shall be entitled to recover from the Corporation,
and shall be indemnified by the Corporation against, any and all expenses (of
the types described in the definition of Expenses in Section 2 of these
Procedures) actually and reasonably incurred by him in such judicial proceeding
or arbitration, but only if he prevails therein. If it shall be determined in
such judicial proceeding or arbitration that the Indemnitee is entitled to
receive part but not all of the indemnification or advancement of Expenses
sought, the expenses incurred by the Indemnitee in connection with such
judicial proceeding or arbitration shall be appropriately prorated.
SECTION 5. Amendments. These Procedures may be amended at any time
and from time to time in the same manner as any by-law of the Corporation in
accordance with Article XI of the by-laws; provided, however, that
notwithstanding any amendment, alteration or repeal of these Procedures or any
provision hereof, any Indemnitee shall be entitled to utilize these Procedures
with respect to any claim for indemnification arising out of any action taken
or omitted prior to such amendment, alteration or repeal except to the extent
otherwise required by law.
- 25 -
<PAGE> 1
EXHIBIT-10-a-2
ROCKWELL INTERNATIONAL CORPORATION
1981 INCENTIVE STOCK OPTION PLAN FOR KEY EMPLOYEES
STOCK OPTION AGREEMENT
To:
We are pleased to notify you that, in accordance with a
determination of the Stock Option Committee established under the
1981 Incentive Stock Option Plan for Key Employees (the "Plan"),
an incentive stock option to purchase shares of common
stock of the Corporation at the price of per share has
this day been granted to you. A copy of the Plan is enclosed.
This option has been granted, and may be exercised, upon the
terms and conditions set forth below.
1. Acceptance by Employee
----------------------
Please sign the enclosed copy of this
agreement at the place indicated and
return it to the Secretary of the
Corporation. This option will be null
and void if (a) such signed copy is not
received by the Secretary by March 1,
1982, unless the Corporation (in its sole
discretion) elects in writing to extend
such period or (b) the Plan and certain
related actions are not approved by the
stockholders at the Corporation's 1982
Annual Meeting of Stockholders.
2. Exercise of Option
------------------
Subject to the provisions of the Plan,
this option may be exercised by you in
whole or in part (or, in the event of
your death, by your estate or by any
person who acquires this option by
bequest or inheritance or by reason of
your death) from time to time during the
term beginning one year from the date
hereof, and ending ten years from the
date hereof, provided that: (a) this
stock option shall not be exercisable in
whole or in part while there is
outstanding, within the meaning of
Section 422A of the Internal Revenue
Code, any other incentive stock option
which was earlier granted to you, and
which earlier incentive stock option is
for the purchase of capital stock of the
Corporation or of a corporation which at
<PAGE> 2
the time of granting of such
incentive stock option was a parent or
subsidiary of the Corporation or a
predecessor of any of them, and (b) in
the event of your death or termination
of employment, the option may be
exercised only in accordance with the
provisions of the Plan applying to the
exercise of an option in the event of
death or termination of employment
(Section 7).
3. Notice of Exercise of Stock
Option and Payment
---------------------------
The exercise in whole or in part of this
stock option shall be effective only
upon receipt by the Secretary of written
notice of exercise specifying the number
of shares to be purchased. The purchase
price of the shares covered by the
exercise may be paid entirely in cash by
forwarding to the Secretary, along with
a written notice of exercise in the form
of Attachment 1, your check in the full
amount of the purchase price.
Alternatively, the purchase price may be
paid in shares of the common stock of
the Corporation which you already own,
valued in accordance with Section 4(f)
of the Plan (other than any shares
acquired upon a partial exercise of this
option within the preceding six months),
or in a combination of cash and such
shares. If you choose to use
already-owned shares in connection with
an exercise of this option, you should
forward to the Secretary a written
notice of exercise in the form of
Attachment 2. The Corporation will
advise you of the number of shares and
any cash required to pay the purchase
price in full, and the shares and any
cash required in payment must be
delivered to the Secretary no later than
five (5) business days following the
Secretary's receipt of your written
notice of exercise. Certificates
representing the number of shares
purchased will be issued as soon
thereafter as practicable.
4. Transferability
---------------
This option is not transferable by you
otherwise than by will or by the laws of
<PAGE> 3
descent and distribution, and is
exercisable, during your lifetime, only
by you.
5. Subject to Stock Option Plan
----------------------------
This option shall be subject in all
respects to all the provisions of the
Plan, as it may be amended.
6. Applicable Laws and Regulations
-------------------------------
This agreement and the Corporation's
obligation to issue shares hereunder are
subject to applicable laws and
regulations.
This option is an incentive stock option under the provisions
of the Federal income tax laws. The federal income tax
consequences under current provisions of the Internal Revenue Code
applicable to exercises of incentive stock options are described
in Attachment 3.
Attached are the following:
Attachment 1 - Option Exercise Form - Cash Only
Attachment 2 - Option Exercise Form - Stock or
Stock and Cash
Attachment 3 - Description of Federal Income Tax
Consequences
ROCKWELL INTERNATIONAL CORPORATION
By _______________________________
Dated:
Agreed to this __________ day
of _____________ , 198_
____________________________
Employee Signature
<PAGE> 4
ATTACHMENT 1
OPTION EXERCISE FORM-
CASH ONLY
-----------------------
Rockwell International Corporation
600 Grant Street
Pittsburgh, PA 15219
Attention: Mr. William F. Swanson, Jr.
Secretary
Reference: Incentive Stock Option Exercise
Gentlemen:
Subject to the terms and conditions of the applicable stock option plan
and agreement thereunder, I hereby exercise, to the extent hereinafter
specified, the incentive stock option granted to me on ________________, 19___.
This exercise covers ___________ of the shares covered by such option
at the price of $_________ per share.
Enclosed is a check in the amount of $____________ payable to Rockwell
International Corporation, covering the price of said shares.
Please have the stock registered as follows:
Social Security Number: __________________________________
Name: ________________________________________________
________________________________________________
Address: ________________________________________________
________________________________________________
(Zip Code)
Date: _____________________, 19___
Very truly yours,
___________________________
<PAGE> 5
ATTACHMENT 2
OPTION EXERCISE FORM-
CASH ONLY
-----------------------
Rockwell International Corporation
600 Grant Street
Pittsburgh, PA 15219
Attention: Mr. William F. Swanson, Jr.
Secretary
Reference: Incentive Stock Option Exercise
Gentlemen:
Subject to the terms and conditions of the applicable stock option plan
and agreement thereunder, I hereby exercise, to the extent hereinafter
specified, the incentive stock option granted to me on ________________, 19___.
This exercise covers ___________ of the shares covered by such option
at the price of $_________ per share.
I wish to use shares of Rockwell International common stock that I
currently own in connection with my exercise of the above reference stock
option. I hereby represent that none of such shares were acquired upon a
partial exercise of this option within the preceding six months. I understand
that you will advise me of the number of shares and any cash that I should
deliver to Rockwell to pay the full purchase price of the shares covered by
this exercise, and that certificates representing the number of shares
purchased will be issued only after I deliver to the Corporation the number of
shares required or a combination of shares and cash in full payment of the
exercise price.
I hereby agree to deliver to the Corporation no later than five (5)
business days following the date of this exercise the number of shares required
or a combination of shares and cash in full payment of the exercise price, and
an executed stock transfer power covering the shares delivered.
It is my understanding that following my payment of the exercise price,
I will receive from the Corporation a stock certificate representing the same
number of shares I delivered to the Corporation and a second stock certificate
representing the additional shares due as a result of this exercise. The first
certificate will be issued in the same name or names in which the shares I
delivered to the Corporation were registered. Please register the shares
represented by the second certificate as follows:
Social Security Number: __________________________________
Name: ________________________________________________
________________________________________________
Address: ________________________________________________
________________________________________________
(Zip Code)
Date: _____________________, 19___
Very truly yours,
___________________________
<PAGE> 6
STOCK POWER SEPARATE FROM CERTIFICATE
-------------------------------------
FOR VALUE RECEIVED, (I) (We), _____________________________________
(insert name(s))
hereby sell, assign and transfer unto Rockwell International Corporation the
___________________ shares of the common stock of Rockwell International
(insert number)
Corporation standing in the name(s) of _____________________________________ on
(Name(s) on certificate(s))
the books of said Rockwell International Corporation represented by
Certificate(s) No(s). ________________ herewith and do hereby irrevocably
constitute and appoint Mellon Bank N.A. attorney to transfer the said stock on
the books of Rockwell International with full power of substitution in the
premises.
Dated: _________________
_____________________________
(Signature)
WITNESS
______________________________ _____________________________
(Signature)
<PAGE> 7
ATTACHMENT 3
DESCRIPTION OF FEDERAL INCOME TAX CONSEQUENCES
----------------------------------------------
The Corporation has been advised by Counsel as follows:
An optionee will not realize taxable income upon the exercise of an
incentive stock option, and the Corporation will not be entitled to any
deduction. If the optionee does not dispose of the stock acquired within one
year after its receipt (and two years after the option was granted), gain or
loss realized on the subsequent disposition of the stock will be treated as
long term capital gain or loss. If the stock is disposed of prior to either of
those times, the optionee will realize ordinary income in an amount equal to
the lesser of (i) the excess of the fair market value of the stock on the date
of exercise over the option price; or (ii) if the disposition is a taxable sale
or exchange, the amount of gain realized. Upon such disposition, the
Corporation will be entitled to a deduction in the same amount and at the same
time as the optionee realizes such ordinary income.
Due to the complexity of the federal income tax laws and the differing
personal circumstances of each optionee, the Corporation urges each optionee to
seek assistance from his personal tax advisor.
<PAGE> 8
ROCKWELL INTERNATIONAL CORPORATION
1981 INCENTIVE STOCK OPTION PLAN FOR KEY EMPLOYEES
1. PURPOSE
The purpose of the Plan is to provide an incentive, in the form of a
proprietary interest in the Corporation, to officers and other key employees
who are in a position to contribute materially to the successful operation
of the business of the Corporation, to increase their interest in the
Corporation's welfare, and to provide a means through which the Corporation
can attract and retain employees of outstanding abilities.
2. DEFINITIONS
As used in the Plan, "Corporation" means Rockwell International
Corporation, and those of its subsidiary corporations designated by the Board
of Directors to participate in the Plan; "Board of Directors" means the Board
of Directors of Rockwell International Corporation; "employee" includes
officers and other key employees of the Corporation, but excludes directors who
are not also employees of the Corporation; and "fair market value" means the
closing price of the common stock of Rockwell International Corporation as
reported in the New York Stock Exchange - Composite Transactions on the date of
a determination (or on the next preceding day such stock was traded if it was
not traded on the date of a determination). "Incentive stock option" means an
option which is an incentive stock option as defined in Section 422A of the
Internal Revenue Code. "Unused limit carryover" means, with respect to any
calendar year, the aggregate for each of the three next preceding calendar
years (but only after 1980) of one-half of the excess, if any, of $100,000 over
the aggregate fair market value, determined as of the time an incentive stock
option was granted, of the shares for which an employee was granted incentive
stock options under all plans of the Corporation and any parent or subsidiary
of the Corporation in any such preceding calendar year: provided, however, the
amount of incentive stock options granted during any calendar year shall be
treated as first using up the $100,000 limitation of Section 3 and shall then be
treated as using up amounts of unused limit carryovers for incentive stock
options not granted in any calendar year in the order of the calendar years in
which such carryovers arose.
3. STOCK OPTION COMMITTEE
(a) The Stock Option Committee (the "Committee") shall consist of three
or more of those members of the Board of Directors who are not eligible to
receive incentive stock options under the Plan. The members of the
Committee shall be designated by the Board of Directors. A majority of the
members of the Committee shall constitute a quorum. The vote of a majority
of a quorum shall constitute action by the Committee.
(b) The Committee shall determine the employees to whom incentive stock
options may be granted and the number of shares to be subject to each
option. Not more than 10% of the total number of shares available under the
Plan shall be subject to option to any one employee. The aggregate fair
market value (determined as of the date the option is granted) of the
shares for which any employee may be granted incentive stock options in any
calendar year under all plans of the Corporation and any parent or
subsidiary of the Corporation shall not exceed $100,000 plus any unused
limit carryover to such year.
(c) As and to the extent authorized by the Board of Directors, the
Committee may exercise the powers and authority vested in the Board of
Directors under the Plan.
4. TERMS OF INCENTIVE STOCK OPTIONS
The terms of each incentive stock option granted under the Plan shall
be determined by the Board of Directors, consistent with the provisions of the
Plan, including the following:
(a) The purchase price of the stock subject to option shall not be less
than the fair market value of the stock on the date the option is granted.
(b) Each incentive stock option may be exercised in whole or in part
from time to time during such period as the option shall specify, provided
that no option shall be exercisable prior to one year nor after ten years
from the date of the grant thereof, and provided further that incentive
stock options granted in substitution for existing options under prior
stock option plans of the Corporation shall be deemed
<PAGE> 9
for the purpose of exercise only to have been granted on the date of
the grant under the prior plan.
(c) An incentive stock option shall not be exercisable while there is
outstanding, within the meaning of Section 422A of the Internal Revenue
Code, any other incentive stock option which was earlier granted to the
employee, and which earlier incentive stock option is for the purchase of
capital stock of Rockwell International Corporation or of a corporation
which at the time of granting of such other incentive stock option was a
parent or subsidiary of Rockwell International Corporation or a predecessor
of any of them.
(d) Each incentive stock option may provide for related stock appreciation
rights.
(e) Each incentive stock option may provide that the optionee shall
represent at the time of each exercise of option or stock appreciation
right that the shares purchased are being acquired for investment and not
with a view to distribution thereof.
(f) The purchase price of the shares with respect to which an incentive
stock option is exercised shall be payable in full in cash or, to the
extent authorized by the Board of Directors at the time such an option is
granted under the Plan, (i) in shares of common stock of Rockwell
International Corporation or (ii) in a combination of cash and such shares.
The value of any share delivered in payment of the purchase price shall be
its fair market value on the date the option is exercised. No fractional
shares shall be issued.
(g) An incentive stock option or stock appreciation right shall not be
assignable or transferable by the employee to whom granted otherwise than
by will or by the laws of descent and distribution, and shall be
exercisable, during his lifetime, only by him.
(h) No person shall have the rights of a stockholder wiht respect to
shares subject to an option, but shall have such rights only with respect
to shares acquired on exercise of an option or stock appreciation right.
5. GRANTING OF INCENTIVE STOCK OPTIONS
(a) The Board of Directors may grant, from time to time, in accordance
with determinations of the Committee, incentive stock options to employees
to purchase shares of common stock of Rockwell International Corporation,
under the Plan. The total number of shares of stock which may be purchased
pursuant to incentive stock options granted under the Plan shall not exceed
2,000,000, except as provided in Paragraph 8. They may consist in whole or
in part of unissued or reacquired shares, if for any reason (other than
surrender of incentive stock option rights upon exercise of stock
appreciation rights as provided in Paragraph 6) shares as to which an
incentive stock option has been granted cease to be subject to purchase
thereunder, then such shares shall again be available for option under the
Plan.
(b) No incentive stock option shall be granted under the Plan after
December 15, 1991, but incentive stock options theretofore granted may
extend beyond that date; provided, however, that stock appreciation rights
may be granted after December 15, 1991 with respect to then outstanding
incentive stock options.
6. STOCK APPRECIATION RIGHTS
As the Board of Directors may determine, stock appreciation rights may
be granted in conjunction with all or any part of any incentive stock option
granted under the Plan, either at the time of the incentive stock option grant
or at any time thereafter during the term of the incentive stock option. Stock
appreciation rights shall entitle the optionee, upon exercise of such rights,
to surrender the related incentive stock option, or any part thereof, and to
receive a payment equal to the excess of the fair market value, on the date of
such exercise, of the shares covered by such incentive stock option, or part
thereof, over the option price of such shares. Upon exercise of a stock
appreciation right and surrender of the related incentive stock option or part
thereof, such incentive stock option, to the extent surrendered, shall not
thereafter be exercisable.
The payment contemplated by this Paragraph may be made in shares of
common stock of Rockwell International Corporation valued at fair market value,
on the date of exercise, or in cash or partly in cash and partly in shares of
common stock, as the Board of Directors may determine. The shares of common
stock covered by the incentive stock option, or part thereof, so surrendered
shall not again be available for option under
2
<PAGE> 10
the Plan. Any shares of common stock delivered as payment upon any such
surrender may consist in whole or in part of unissued or reacquired shares and
shall not be charged against the number of shares of common stock available for
option under the Plan.
7. DEATH OR TERMINATION OF EMPLOYMENT
(a) if an optionee dies his incentive stock option may be exercised
only within one year from the date of death. If an optionee's employment by
the Corporation is terminated for cause, his incentive stock option shall
expire forthwith. If an optionee's employment by the Corporation is
terminated other than by death or for cause, his incenitve stock option may
be exercised only within three months from the date of termination of
employment.
(b) Notwithstanding any other provision hereof, an incenitve stock
option may be exercised pursuant to this Paragraph 7 only to the extent the
optionee was entitled to exercise the incentive stock option at the time
of termination of employment or death and, in any event, may not be
exercised after the expiration of ten years from the date of the grant
thereof.
8. ADJUSTMENTS UPON CHANGES IN STOCK
If there shall be any change in or affecting the stock subject to the
Plan, or to any incentive stock option granted thereunder, through merger,
consolidation, reorganization, recapitalization, stock dividend, stock split or
combination, the Board of Directors may make appropriate adjustments in the
aggregate number of shares subject to the Plan and the number of shares and
the price per share subject to outstanding incentive stock options and may
assume old incentive stock options or substitute new incentive stock options
for old incentive stock options, regardless of whether the option price of any
such incentive stock option is less than the then fair market value of the
subject shares.
9. MISCELLANEOUS
(a) For the purpose of the Plan, an employee on leave of absence will
be considered as still in the employ of the Corporation unless otherwise
provided in an agreement between the employee and the Corporation.
(b) The Corporation shall have the right, in connection with the
exercise of any stock appreciation right, to deduct from any payment to be
made by the Corporation under the Plan an amount equal to the taxes
required to be withheld by law with respect to such exercise or to require
the employee or other person effecting such exercise to pay to it an amount
sufficient to provide for any such taxes so required to be withheld.
10. FINALITY OF DETERMINATIONS
The Board of Directors shall have the power to interpret the Plan. All
interpretations, determinations and actions by the Board of Directors or by the
Committee shall be final, conclusive and binding upon all parties.
11. AMENDMENT AND TERMINATION
The Board of Directors shall have the power in its discretion, to
amend, suspend or terminate the Plan or incentive stock options or stock
appreciation rights granted under the Plan at any time. It shall not, however,
have power to change the class of employees eligible to receive incentive stock
options under the Plan, or (except as otherwise provided in the Plan) (i)
increase the number of shares subject to the Plan, or (ii) reduce the option
price below the fair market value of the stock on the date the incentive stock
option was granted. No amendment, suspension or termination of the Plan or
incentive stock options granted under the Plan shall, except with the consent
of the optionee, adversely affect rights under an incentive stock option
previously granted; provided, however, that any suspension or termination by
the Board of Directors of a stock appreciation right previously granted shall
not be deemed to affect adversely rights under an incentive stock option
previously granted.
12. EFFECTIVE DATE OF PLAN
The Plan has been adopted by the Board of Directors of the Corporation
on December 16, 1981, subject to approval by the stockholders of the
Corporation.
3
<PAGE> 1
EXHIBIT 10-b-2
--------------
ROCKWELL INTERNATIONAL CORPORATION
1979 STOCK PLAN FOR KEY EMPLOYEES
STOCK OPTION AGREEMENT
To:
We are pleased to notify you that, in accordance with a determination of
the Compensation Committee established under the 1979 Stock Plan for Key
Employees (the "Plan"), an option to purchase shares of common stock
of the Corporation at the price of per share has this day been
granted to you. A copy of the Plan is enclosed.
This option has been granted, and may be exercised, upon the terms and
conditions set forth below.
1. Acceptance by Employee
----------------------
Please sign the enclosed copy of this agreement at the place indicated
and return it to the Senior Assistant Secretary of the Corporation at
Room 5009, 600 Grant Street, Pittsburgh, PA 15219. If the enclosed copy
is not received by the Senior Assistant Secretary within FORTY-FIVE
DAYS of the date hereof, the option will terminate and be of no effect,
unless the Corporation (in its sole discretion) elects in writing to
extend such period.
2. Exercise of Option
------------------
Subject to the provisions of the Plan, this option may be exercised by
you in whole or in part (or, in the event of your death, by your estate
or by any person who acquires this option by bequest or inheritance or
by reason of your death) from time to time during the term beginning
one year from the date of grant, and ending ten years from the date of
grant, provided that in the event of your death or termination of
employment, the option may be exercised only in accordance with the
following provisions as applicable: (i) if you should die, the option
may be exercised only within three years from your date of death; (ii)
if your employment by the Corporation is terminated for cause, the
option shall expire forthwith, and (iii) if your employment with the
Corporation is terminated other than by death or for cause, the option
may be exercised only within three months from the date of your
termination of employment, except that if your employment by the
<PAGE> 2
Corporation terminates by reason of your retirement under a retirement
plan of the Corporation or a subsidiary or affiliate of the Corporation
the option may be exercised only within three years from the date of
your retirement.
3. Notice of Exercise of Stock
Option and Payment
---------------------------
The exercise in whole or in part of this stock option shall be
effective only upon receipt by the Secretary of the Corporation of
written notice of exercise specifying the number of shares to be
purchased. The purchase price of the shares covered by the exercise may
be paid entirely in cash by forwarding to the Secretary, along with a
written notice of exercise in the form of Attachment 1, your check in
the full amount of the purchase price. Alternatively, the purchase
price may be paid in shares of the common stock of the Corporation
which you already own, valued in accordance with Section 4(e) of the
Plan, or in a combination of cash and such shares. If you choose to use
already-owned shares in connection with an exercise of this option, you
should forward to the Secretary a written notice of exercise in the
form of Attachment 2. The Corporation will advise you of the number of
shares and any cash required to pay the purchase price in full, and the
shares and any cash required in payment must be delivered to the
Secretary no later than five (5) business days following the
Secretary's receipt of your written notice of exercise. Certificates
representing the number of shares purchased will be issued as soon
thereafter as practicable.
4. Transferability
---------------
This option is not transferable by you otherwise than by will or by the
laws of descent and distribution, and is exercisable, during your
lifetime, only by you.
5. Subject to Stock Option Plan
----------------------------
This option shall be subject in all respects to all the provisions of
the Plan, as it may be amended.
6. Withholding
-----------
The Corporation shall have the right, in connection with the exercise
of the option in whole or in part, to deduct from any payment to be
made by the Corporation under the Plan an amount equal to the taxes
required
-2-
<PAGE> 3
to be withheld by law with respect to such exercise or to require the
employee or other person effecting such exercise to pay to it an amount
sufficient to provide for any such taxes so required to be withheld.
7. Applicable Laws and Regulations
-------------------------------
This agreement and the Corporation's obligation to issue shares
hereunder are subject to applicable laws and regulations.
This option is a nonqualified stock option under the provisions of the
Federal income tax laws. The federal income tax consequences under current
provisions of the Internal Revenue Code applicable to exercises of nonqualified
stock options are described in Attachment 3.
ROCKWELL INTERNATIONAL CORPORATION
By _______________________________
Senior Assistant Secretary
Room 5009
600 Grant Street
Pittsburgh, PA 15219
Attachment 1 - Option Exercise Form - Cash Only
Attachment 2 - Option Exercise Form - Stock or
Stock and Cash
Attachment 3 - Description of Federal Income Tax
Consequences
Dated: May 2, 1984
Agreed to this _________ day
of ___________________, 1984
________________________________
Employee Signature
________________________________
Address
________________________________
________________________________
Social Security #
-3-
<PAGE> 1
EXHIBIT 10-b-3
--------------
ROCKWELL INTERNATIONAL CORPORATION
1979 STOCK OPTION PLAN FOR KEY EMPLOYEES
STOCK OPTION AND STOCK APPRECIATION RIGHTS AGREEMENT
To:
We are pleased to notify you that, in accordance with a determination of
the Stock Option Committee established under the 1979 Stock Option Plan for Key
Employees (the "Plan"), an option to purchase shares of common stock of the
Corporation at the price of per share has this day been granted to you
together with stock appreciation rights covering of the shares subject
to the option. A copy of the Plan is enclosed.
This option and the related stock appreciation rights have been granted,
and may be exercised, upon the terms and conditions set forth below.
1. Acceptance by Employee
----------------------
Please sign the enclosed copy of this agreement at the place
indicated and return it to the Secretary of the Corporation. This
option and the related stock appreciation rights will terminate
and be of no effect if such copy is not received by the Secretary
within THIRTY DAYS OF THE DATE HEREOF, unless the Corporation (in
its sole discretion) elects in writing to extend such period.
2. Exercise of Option and Related Stock Appreciation Rights
--------------------------------------------------------
Subject to the provisions of the Plan, this option and the
related stock appreciation rights may be exercised by you in
whole or in part (or, in the event of your death, by your estate
or by any person who acquires this option by bequest or
inheritance or by reason of your death) from time to time during
the term beginning one year from the date hereof, and ending ten
years from the date hereof, provided that: (a) in the event of
your death or
<PAGE> 2
termination of employment, the option and the related stock
appreciation rights may be exercised only in accordance with the
provisions of the Plan applying to the exercise of an option in
the event of death or termination of employment (Section 7), and
(b) the stock appreciation rights may be exercised by you only
during the period beginning on the third business day following
the dates of public release of the Corporation's quarterly or
annual statements of sales and earnings. If stock appreciation
rights are exercised in whole or in part, the related option or
part thereof shall be surrendered and thereafter shall not be
exercisable.
3. Notice of Exercise of Stock Option and Payment
----------------------------------------------
The exercise in whole or in part of this stock option shall be
effective only upon receipt by the Secretary of written notice
specifying the number of shares to be purchased, accompanied by
payment to the Corporation of the full purchase price of the
shares which are the subject of the exercise. Certificates
representing the number of shares purchased will be issued as
soon thereafter as practicable.
4. Notice of Exercise of Stock Appreciation Rights
-----------------------------------------------
The exercise in whole or in part of stock appreciation rights
under this agreement shall be effective only upon receipt by the
Secretary of written notice specifying the number of rights being
exercised, which notice shall also serve as a surrender of the
related option or part thereof. As soon as practicable following
the Secretary's receipt of the written notice, you will receive
payment equal to the excess of the fair market value (as defined
in the Plan), on the date of such exercise, of the shares covered
by the related option or part thereof
-2-
<PAGE> 3
over the option price of such shares. One half of the amount of
such payment shall be in cash, and one half of the amount of such
payment shall consist of shares of the Corporation's common stock
valued at fair market value on the date of exercise, provided
however that cash shall be paid with respect to any
fractional interest in a share.
5. Transferability
---------------
This option and the related stock appreciation rights are not
transferable by you otherwise than by will or by the laws of
descent and distribution, and are exercisable, during
your lifetime, only by you.
6. Subject to Stock Option Plan
----------------------------
This option and the related stock appreciation rights shall be
subject in all respects to all the provisions of the Plan, as it
may be amended.
7. Withholding
-----------
The Corporation shall have the right, in connection with the
exercise of the option or stock appreciation rights in whole or
in part, to deduct from any payment to be made by the Corporation
under the Plan an amount equal to the taxes required to be
withheld by law with respect to such exercise or to require the
employee or other person affecting such exercise to pay to it
an amount sufficient to provide for any such taxes so required to
be withheld.
8. Applicable Laws and Regulations
-------------------------------
This agreement and the Corporation's obligation to issue shares
and pay cash hereunder are subject to applicable laws and
regulations.
The Corporation has been advised by Counsel as follows. This option is a
nonqualified stock option under the provisions of the Federal income tax laws.
Upon its exercise you will receive ordinary income measured by the difference
between the option price and the fair market value of the shares
-3-
<PAGE> 4
at the time of exercise. Such ordinary income is regarded for Federal income
tax purposes as personal service income, subject to withholding and other
employment tax considerations, and eligible for a special "50% maximum rate."
In the event of a later sale of the stock, acquired through the exercise of
this option, any difference between the fair market value at the time of
exercise and the price at which you sell the shares, will be treated as a
capital gain or loss, either short-term or long-term, depending upon the period
of time you have held the shares. If the sale results in a long-term capital
gain, the normally untaxed 60% portion of any such long-term capital gain may
be subject to the Alternative Minimum Tax of 10 to 25%, imposed in lieu of the
regular income tax under the Revenue Act of 1978.
Upon the exercise of a stock appreciation right, you will receive a
payment from the Corporation in cash and shares of common stock. The total
amount of this payment, i.e., the amount of cash and the fair market value of
the common stock received, is also regarded as personal service income, subject
to withholding and other employment tax considerations, and eligible for the
special "50% maximum rate."
Due to the complexity of the Federal income tax laws, and the differing
personal circumstances of each optionee, the Corporation urges you to seek
assistance from your personal tax advisor.
ROCKWELL INTERNATIONAL CORPORATION
By ________________________________
Dated:
Agreed to this ________ day
of _________________, 198__
___________________________
Employee Signature
-4-
<PAGE> 1
EXHIBIT 10-b-4
--------------
ROCKWELL INTERNATIONAL CORPORATION
1979 STOCK OPTION PLAN FOR KEY EMPLOYEES
STOCK APPRECIATION RIGHTS AGREEMENT
To:
On April 4, 1979, you were granted an option to purchase _____ shares of
common stock of the Corporation at the price of _______ per share under the 1979
Stock Option Plan for Key Employees (the "Plan"). You thereafter executed a
Stock Option Agreement respecting such option.
We are pleased to notify you that, in accordance with a determination
of the Stock Option Committee, stock appreciation rights covering all of the
shares subject to such option have this day been granted to you.
The stock appreciation rights have been granted, and may be exercised,
upon the terms and conditions set forth below.
1. Acceptance by Employee
----------------------
Please sign the enclosed copy of this Stock Appreciation Rights
Agreement (the "Agreement") at the place indicated and return
it to the Secretary of the Corporation. This Agreement will be
of no effect if such copy is not received by the Secretary
WITHIN THIRTY DAYS OF THE DATE HEREOF, unless the Corporation
(in its sole discretion) elects in writing to extend such
period.
2. Exercise of Stock Appreciation Rights
-------------------------------------
Subject to the provisions of the Plan, the stock appreciation
rights may be exercised by you in whole or in part (or, in the
event of your death, by your estate or by any person who
acquires the related option by bequest or inheritance or by
reason of your death) during the term beginning on the earlier
of six months from the date hereof or the date of your death or
disability, but in no event prior to April 4, 1980, and ending
nine years from April 4, 1980, provided that: (a) in the event
of your death or termination of employment, the stock
appreciation
<PAGE> 2
rights may be exercised only in accordance with the provisions
of the Plan applying to the exercise of an option in the event
of death or termination of employment (Section 7), and in no
event may be exercised after the expiration of nine years from
April 4, 1980, and (b) the stock appreciation rights may be
exercised by you only during the periods beginning on the
third business day and ending on the twelfth business day
following the dates of public release of the Corporation's
quarterly or annual statements of sales and earnings. If stock
appreciation rights are exercised in whole or in part, the
related option or part thereof shall be surrendered and
thereafter shall not be exercisable.
3. Notice of Exercise of Stock
Appreciation Rights
---------------------------
The exercise in whole or in part of stock appreciation rights
under this Agreement shall be effective only upon receipt by
the Secretary of written notice specifying the number of rights
being exercised, which notice shall also serve as a surrender
of the related option or part thereof. As soon as practicable
following the Secretary's receipt of the written notice, you
will receive payment equal to the excess of the fair market
value (as defined in the Plan), on the date of such exercise,
of the shares covered by the related option or part thereof
over the option price of such shares. One half of the amount
of such payment shall be in cash, and one half of the amount
of such payment shall consist of shares of the Corporation's
common stock valued at fair market value on the date of
exercise, provided however that cash shall be paid with respect
to any fractional interest in a share.
4. Transferability
---------------
The stock appreciation rights are not transferable by you
otherwise than by will or by the laws of descent and
distribution, and are exercisable, during your lifetime,
only by you.
- 2 -
<PAGE> 3
5. Subject to Stock Option Plan
----------------------------
The stock appreciation rights shall be subject in all respects
to the provisions of the Plan as it may be amended.
6. Withholding
-----------
The Corporation shall have the right, in connection with the
exercise of the stock appreciation rights in whole or in part,
to deduct from any payment to be made by the Corporation under
the Plan an amount equal to the taxes required to be withheld
by law with respect to such exercise or to require the
employee or other person effecting such exercise to pay to it
an amount sufficient to provide for any such taxes so required
to be withheld.
7. Applicable Laws and Regulations
-------------------------------
This Stock Appreciation Rights Agreement and the Corporation's
obligation to issue shares and pay cash hereunder are subject
to applicable laws and regulations.
Upon the exercise of a stock appreciation right, you will receive a
payment from the Corporation in cash and shares of common stock. The
Corporation has been advised by counsel that the total amount of this payment,
i.e., the amount of cash and the fair market value of the common stock
received, is regarded as personal service income, subject to withholding and
other employment tax considerations, and eligible for the special "50% maximum
rate."
Due to the complexity of the Federal income tax laws, and the differing
personal circumstances of each optionee, the Corporation urges you to seek
assistance from your personal tax advisor.
ROCKWELL INTERNATIONAL CORPORATION
By ___________________________________
Dated:
Agreed to this ______ day
of ________________, 198_
_________________________
Employee Signature
-3-
<PAGE> 1
EXHIBIT 10-d-1
ROCKWELL INTERNATIONAL CORPORATION
1988 LONG-TERM INCENTIVES PLAN
(AS AMENDED EFFECTIVE NOVEMBER 30, 1994)*
1. PURPOSE
The purpose of the 1988 Long-Term Incentives Plan is to foster and
enhance the long-term profitability of Rockwell for the benefit of its
stockholders by offering the incentives of long-term monetary rewards and
proprietary interests in Rockwell to officers and other key employees of the
Corporation, thus providing means by which persons of outstanding abilities can
be attracted and retained in these capacities.
2. DEFINITIONS
For the purpose of the Plan, the following terms shall have the
meanings set forth below:
(a) Board of Directors. The Board of Directors of Rockwell.
(b) Committee. The Compensation Committee designated by the Board
of Directors from among its members who are not eligible to receive a Grant
under the Plan.
(c) Corporation. Rockwell and those of its subsidiary
corporations or affiliates designated by the Board of Directors to participate
in the Plan.
(d) Employees. Officers and other key employees of the
Corporation, but not directors who are not also employees of the Corporation.
(e) Fair Market Value. The closing price of the Common Stock of
Rockwell as reported in the New York Stock Exchange - Composite Transactions on
the date of a determination (or on the next preceding day such stock was traded
if it was not traded on the date of a determination).
(f) Grant. A grant made under the Plan by the Board of Directors
to an Employee in the form of Performance Units, Options, Stock Appreciation
Rights or Restricted Stock.
(g) Option. A grant made by the Board of Directors in the form of
an option to purchase Shares.
(h) Participant. Any Employee to whom a Grant is made.
(i) Payment Value. An amount assigned to a Performance Unit equal
to the average of the Fair Market Value on each of the 45 trading days
immediately preceding the end of a Performance Period, provided that in no
event shall a Performance Unit have a Payment Value greater than 300% of the
average of the Fair Market Value on each of the 45 trading days immediately
preceding the start of a Performance Period.
(j) Performance Measure. Criteria designated by the Board of
Directors to serve as a measure of performance during a Performance Period.
- ----------
*See notes to Section 4(a)(i) and Section 10(c) setting forth further changes
that become effective upon approval of the 1995 Long-Term Incentive Plan
by shareowners at the 1995 Annual Meeting on February 1, 1995.
<PAGE> 2
(k) Performance Objectives. Levels of achievement, related to the
Performance Measure, which the Board of Directors establishes as goals for a
Performance Period to be used in determining whether and to what extent
Performance Units therefor shall be deemed to be earned.
(l) Performance Period. Any period of three or more consecutive
fiscal years of Rockwell as determined by the Board of Directors.
(m) Performance Unit. A unit deemed to be the equivalent of one
Share.
(n) Plan. This 1988 Long-Term Incentives Plan.
(o) Restricted Period. The period not less than three years
specified by the Board of Directors with respect to a grant of Restricted Stock
during which the Shares are subject to forfeiture if the grantee does not
continue as an Employee.
(p) Restricted Stock. Shares subject to conditions prescribed by
the Board of Directors under Section 8 of the Plan.
(q) Rockwell. Rockwell International Corporation.
(r) Shares. Shares of Common Stock or Class A Common Stock, or
both, of Rockwell.
(s) Stock Appreciation Right. A grant made by the Board of
Directors to an Employee of a Right (i) in conjunction with all or any part of
any Option granted under the Plan which entitles the Employee, upon exercise of
such Right, to surrender such Option, or any part thereof, and to receive a
payment equal to the excess of the Fair Market Value, on the date of such
exercise, of the Shares covered by such Option, or part thereof, over the
purchase price of such Shares pursuant to the Option (a Tandem Stock
Appreciation Right) or (ii) separate and apart from any Option, which entitles
the Employee, upon exercise of such Right, to receive a payment measured by the
increase in the Fair Market Value of a number of Shares designated by such
Right from the date of grant of such Right to the date on which the Employee
exercises such Right (a Freestanding Stock Appreciation Right).
3. PLAN ADMINISTRATION
(a) The Board of Directors shall determine the Employees to whom
Grants are made and the number of Performance Units, Shares or Stock
Appreciation Rights to be subject to each Grant. In making its determinations
the Board of Directors may consider recommendations of the Chief Executive
Officer of Rockwell and shall take into account such factors as the Employee's
level of responsibility, performance, performance potential, level and type of
compensation and potential value of Grants.
(b) As and to the extent authorized by the Board of Directors, the
Committee may exercise all responsibilities, powers and authority vested in the
Board of Directors under the Plan.
-2-
<PAGE> 3
4. PERFORMANCE UNITS
(a) Performance Period and Grants of Performance Units.
(i) The Board of Directors may establish Performance Periods, for
each of which it shall establish (not later than six months after the beginning
of a Performance Period) a Performance Measure and Performance Objectives. No
Performance Period shall end later than September 30, 1997, and no more than
one Performance Period shall begin with any one fiscal year.*
(ii) The Board of Directors may select and make grants of
Performance Units to Employees, as it shall determine, at any time during the
first fiscal year of a Performance Period. Grants will be deemed to have been
made as of the first day of such fiscal year.
(iii) Grants made by the Board of Directors shall be subject to the
provisions of the Plan and to such other terms and conditions, not inconsistent
with the Plan, as the Board of Directors may determine.
(iv) The Board of Directors may at any time or from time to time,
during the first half of a Performance Period, adjust (up or down) the
Performance Objectives for such Period if it determines that conditions,
including but not limited to changes in the economy, changes in laws or
government regulations, changes in generally accepted accounting principles, or
acquisitions or dispositions determined by the Board of Directors to be
material, so warrant. The Board of Directors may not, however, change the
Performance Measure established for any Performance Period.
(b) Earned Performance Unit Determination.
After the end of each Performance Period and receipt of any reports
from the independent certified public accountants who audit the Corporation's
accounts that the Board of Directors may deem necessary or appropriate, the
Board of Directors shall determine the extent to which the Performance
Objectives for such Performance Period have been achieved and the extent to
which Performance Units have been earned in accordance therewith by each
Participant with respect to such Performance Period.
(c) Payment.
After the end of each Performance Period, each Participant shall be
entitled to receive, in accordance with determinations of the Board of
Directors, from Rockwell an amount equal to the number of Performance Units
earned by him multiplied by the Payment Value, subject to the provisions of the
Plan, including the following:
(i) As and on such terms as may be determined by the Board of
Directors, payments may be in cash or in Shares or partly in cash and partly in
Shares. Any payment which is made in cash may be made in a lump sum, in
installments or on a deferred basis. Any payment which is made in Shares shall
be valued at Fair Market Value on the last trading day of the week preceding
the day of issuance or transfer of the Shares, or in such other manner, with
- -------
*The last sentence of Section 4(a)(i) has been amended, effective upon approval
of the 1995 Long-Term Incentive Plan by shareowners at the 1995 Annual Meeting
on February 1, 1995, to read as follows: "No Performance Period not theretofore
established shall end later than September 30, 1994, and no more than one
Performance Period shall begin with any one fiscal year."
-3-
<PAGE> 4
respect to a Performance Period, as may be determined by the Board of
Directors not later than six months after the beginning of such Performance
Period.
(ii) No grant of Performance Units or payments shall bear interest
except as may be determined by the Board of Directors in respect of payments
made in installments or on a deferred basis.
5. SUPPLEMENTARY PERFORMANCE PLANS
(a) The Board of Directors may authorize supplementary performance
plans applicable to one or more business components of the Corporation on such
terms and applicable to such Employees or categories of Employees as the Board
of Directors shall determine. Each such supplementary plan shall include
provision for: (i) a Performance Period (ending no later than September 30,
1997) of not less than three consecutive fiscal years and (ii) establishment of
a Performance Measure and Performance Objectives for the affected business
component and may provide for adjustment of the Performance Objectives similar
to Section 4(a)(iv) of the Plan and a Change of Control contingency similar to
Section 13(f) of the Plan.
(b) Payments to participating Employees shall be in accordance
with determinations of the Board of Directors and may be in cash or Shares or a
combination of both. Any payment which is made in Shares shall be valued at
Fair Market Value on the last trading day of the week preceding the day of
issuance or transfer of the Shares, or in such other manner, with respect to a
Performance Period, as may be determined by the Board of Directors not later
than six months after the beginning of such Performance Period. Payments shall
be deemed to be payments in respect of Performance Units in a number determined
by dividing the amount paid for a Performance Period by the average of the Fair
Market Value on each of the 45 trading days immediately preceding the end of
such Performance Period.
6. OPTIONS
The Board of Directors may grant, from time to time to Employees,
Options which may be incentive stock options (as defined in Section 422A of the
Internal Revenue Code), nonqualified stock options, or both, to purchase Shares
on terms determined by the Board of Directors, consistent with the provisions
of the Plan, including the following:
(a) The purchase price of the Shares subject to option shall not
be less than the Fair Market Value on the date the Option is granted.
(b) Each Option may be exercised in whole or in part from time to
time during such period as the Option shall specify, provided that no Option
shall be exercisable prior to one year (except as provided in Section 9(c) or
13(f)) nor after ten years from the date of the grant thereof.
(c) Each Option may provide for related Stock Appreciation Rights.
-4-
<PAGE> 5
(d) The aggregate Fair Market Value (determined as of the date the
Option is granted) of the Shares for which any Employee may be granted
incentive stock options which are exercisable for the first time in any
calendar year under all plans of the Corporation and any parent or subsidiary
of the Corporation shall not exceed $100,000. The Board of Directors shall
grant incentive stock options only to employees of Rockwell or a corporation
which is a subsidiary of Rockwell within the meaning of Section 425(f) of the
Internal Revenue Code.
(e) The purchase price of the Shares with respect to which an
Option or portion thereof is exercised shall be payable in full in cash or in
Shares or in a combination of cash and Shares. The value of any Share
delivered in payment of the purchase price shall be its Fair Market Value on
the date the Option is exercised.
(f) The aggregate number of Shares for which any Employee may be
granted Options in any fiscal year of the Corporation under all plans of the
Corporation and any parent or subsidiary of the Corporation shall in no event
exceed 250,000.
7. STOCK APPRECIATION RIGHTS
(a) The Board of Directors may grant Tandem Stock Appreciation
Rights either at the time of grant of an Option or at any time thereafter
during the term of an Option. A Tandem Stock Appreciation Right shall be
exercisable only when and to the extent that the related Option is exercisable.
(b) The Board of Directors may grant, from time to time to
Employees, Freestanding Stock Appreciation Rights on terms determined by the
Board of Directors, consistent with the provisions of the Plan.
(c) The payment to which the grantee of a Stock Appreciation Right
is entitled upon exercise thereof may be made in Shares valued at Fair Market
Value, on the date of exercise, or in cash or partly in cash and partly in
Shares, as the Board of Directors may determine.
(d) Upon exercise of a Tandem Stock Appreciation Right and
surrender of the related Option or part thereof, such Option, to the extent
surrendered, shall not thereafter be exercisable, and the Shares covered by the
surrendered Option shall not again be available for Grants under the Plan.
(e) Upon exercise of a Freestanding Stock Appreciation Right any
Shares delivered in payment thereof shall not again be available for Grants
under the Plan.
8. RESTRICTED STOCK
The Board of Directors may grant, from time to time to Employees,
Shares of Restricted Stock on terms determined by the Board of Directors,
consistent with the provisions of the Plan, including the following:
-5-
<PAGE> 6
(a) The Board of Directors shall specify a Restricted Period for
each Grant of Restricted Stock, and the Shares of Restricted Stock granted
shall be forfeited if the grantee does not continue as an Employee throughout
the Restricted Period except as otherwise provided in Section 9(a) or 13(f).
(b) Shares of Restricted Stock granted to an Employee shall have
all the attributes of outstanding Shares, except that certificates for such
Shares and any dividends that may be paid in cash or otherwise thereon shall be
delivered to and held by Rockwell. As and to the extent that Shares of
Restricted Stock are no longer subject to forfeiture, certificates therefor and
any dividends related thereto held by Rockwell shall be delivered to the
Employee. There shall also be paid to the Employee at such time interest on
the amount of cash dividends so delivered computed at such rate and in such
manner as the Board of Directors may, in its sole discretion, determine.
9. EFFECT OF DEATH OR TERMINATION OF EMPLOYMENT
(a) If a Participant's employment by the Corporation terminates
prior to the end of a Performance Period or Restricted Period because of death,
the number of Performance Units or Shares of Restricted Stock such Participant
shall be deemed to have earned shall be the number thereof determined as though
such Participant's employment had not terminated multiplied by a fraction, the
numerator of which is the number of months such Participant was employed during
the Performance Period or Restricted Period (including the month during which
employment terminated) and the denominator of which is the total number of
months in the Performance Period or Restricted Period.
(b) If a Participant's employment by the Corporation terminates
prior to the end of a Performance Period or Restricted Period for any reason
other than death, such Participant shall be deemed not to have earned any
Performance Units or Shares of Restricted Stock except as and to the extent the
Board of Directors, taking into account the purpose of the Plan and such other
factors as in its sole discretion it deems appropriate, may determine, provided
that the number of Performance Units or Shares of Restricted Stock which may be
so determined by the Board of Directors to have been earned shall not exceed
the number which would have been earned had the provisions of paragraph (a)
above been applicable.
(c) If the employment by the Corporation of a Participant who (or
whose permitted transferee) holds an outstanding Grant of Options or Stock
Appreciation Rights terminates by reason of the Participant's death, the
Options or Stock Appreciation Rights subject to that Grant and not theretofore
exercised may be exercised from and after the date of the Participant's death
for a period of three years (or until the expiration date specified in the
Grant if earlier) even if any of them was not exercisable at the date of death.
(d) If a Participant who (or whose permitted transferee holds an
outstanding Grant of Options or Stock Appreciation Rights retires under a
retirement plan of the Corporation at any time after a portion thereof has
become exercisable, the Options or Stock Appreciation Rights subject to that
Grant and not theretofore exercised may be exercised from and after the date
upon which they are first exercisable under that Grant for a period of five
years from the date of retirement (or until the expiration date specified in
the Grant if earlier), even if any of them was not exercisable at the date of
retirement, except that any thereof (i) subject to a Grant made within eighteen
months before such retirement or (ii) held by a grantee (or a permitted
transferee thereof) who retires before either attaining age 62 or accumulating
85 points (or fulfilling such other criteria as may be required for an
unreduced early retirement benefit) for purposes of the applicable retirement
plan, may be exercised solely for a period of three years from the date of
retirement (or until the expiration date specified in the Grant if earlier) or
such shorter period as the Committee may determine within 60 days of a
grantee's retirement.
-6-
<PAGE> 7
(e) If the employment by the Corporation of a Participant who (or
whose permitted transferee) holds an outstanding Grant of Options or Stock
Appreciation Rights is terminated for any reason other than death or retirement
under a retirement plan of the Corporation, the Options or Stock Appreciation
Rights subject to that Grant and not theretofore exercised may be exercised
only within ninety days after termination of such employment (or until the
expiration date specified in the Grant if earlier) and only to the extent the
grantee thereof (or a permitted transferee) was entitled to exercise the
Options or Stock Appreciation Rights at the time of termination of such
employment, unless and except to the extent the Committee may otherwise
determine; provided, however, that the Committee shall not in any event permit
a longer period of exercise than would have been applicable had the provisions
of paragraph (d) above been applicable.
10. UNITS AND SHARES AVAILABLE
(a) The total number of Performance Units as to which payments may
be made under Sections 4 and 5 of the Plan shall not exceed 7 million. There
shall not, however, be any limitation on the number of Performance Units as to
which Grants may be made under the Plan.
(b) The total number of Shares which may be delivered in payment
and upon exercise of Grants and in payments authorized under Section 5 shall
not exceed 16 million, as adjusted from time to time as herein provided.
Shares which may be delivered in payment or upon exercise of Grants or in
payments authorized under Section 5 may consist in whole or in part of unissued
or reacquired Shares; provided, however, that unless otherwise determined by
the Board of Directors, Shares which may be granted as Restricted Stock shall
consist only of reacquired shares. If for any reason Shares as to which an
Option has been granted cease to be subject to purchase thereunder or Shares
granted as Restricted Stock are forfeited to the Corporation, then such Shares
shall again be available under the Plan.
(c) No Option, Freestanding Stock Appreciation Right or Restricted
Stock shall be granted under the Plan after September 30, 1997, but Options or
Stock Appreciation Rights and Restricted Stock granted theretofore may extend
beyond that date, and Tandem Stock Appreciation Rights may be granted after
that date with respect to Options outstanding on that date.*
11. ADJUSTMENTS
If there shall be any change in or affecting Shares on account of any
merger, consolidation, reorganization, recapitalization, reclassification,
stock dividend, stock split or combination, or other distribution to holders of
Shares (other than a cash dividend), there shall be made or taken such
amendments to the Plan and such adjustments and actions thereunder as the Board
of Directors may deem appropriate under the circumstances. Such amendments,
adjustments and actions may include, without limitation, changes in the number
of Performance Units with respect to which payments are made, the Performance
Measure and Performance Objectives for any Performance Period not complete, the
number of Shares which may be issued or transferred pursuant to the Plan, the
limitation set forth in the proviso to Section 2(i), the number of Shares
subject to outstanding Options and Stock Appreciation Rights and the related
price per share.
- --------
*Section 10(c) has been amended, effective upon approval of the 1995 Long-Term
Incentives Plan by shareowners at the 1995 Annual Meeting on February 1, 1995,
to read as follows: "(c) No Option, Freestanding Stock Appreciation Right or
Restricted Stock shall be granted under the Plan after December 31, 1994, but
Options or Stock Appreciation Rights and Restricted Stock granted theretofore
may extend beyond that date, and Tandem Stock Appreciation Rights may be
granted after that date with respect to Options outstanding on that date."
-7-
<PAGE> 8
12. AMENDMENT AND TERMINATION
The Board of Directors shall have the power in its discretion to
amend, suspend or terminate the Plan or Grants thereunder at any time except
that, subject to the provisions of Section 11, (a) without the consent of the
person affected, no such action shall cancel or reduce a Grant theretofore made
other than as provided for or contemplated in the agreement evidencing the
Grant and (b) without the approval of the stockholders of Rockwell, the Board
of Directors may not (i) change the class of persons eligible to receive
incentive stock options, (ii) increase the number of Performance Units provided
in Section 10(a), (iii) increase the number of Shares provided in Section
10(b), (iv) increase the limitation set forth in the proviso to Section 2(i),
(v) reduce the Option exercise price of any Option below the Fair Market Value
on the date such Option was granted or (vi) decrease the forfeiture period for
any Grant below that permitted under the Plan.
13. MISCELLANEOUS
(a) Except as determined by the Board of Directors, no person
shall have any claim to receive a Grant or any payment under a supplementary
performance plan authorized under Section 5, to receive payment in respect of a
Grant or under a supplementary performance plan authorized under Section 5 in
any form other than the Board of Directors shall approve or, in circumstances
where Section 9 is applicable, to be deemed to have earned any Performance
Units or Restricted Stock or to be entitled to exercise Options or Stock
Appreciation Rights for any particular period after termination of employment.
There is no obligation for uniformity of treatment of Employees under the Plan
or any supplementary performance plan authorized under Section 5. No Employee
shall have any right because he is a Participant or a participant under any
supplementary performance plan authorized under Section 5 to continue in the
employ of the Corporation for any period of time or to a continuation of any
particular rate of compensation, and the Corporation expressly reserves the
right to discharge or change the assignment of any Employee at any time.
(b) No Option, Stock Appreciation Right, right related to
Restricted Stock, right to payment in respect of Performance Units granted
under the Plan or right to payment under any supplementary performance plan
authorized by Section 5 may be assigned, pledged or transferred other than by
will or by the laws of descent and distribution and except as provided in the
Plan or as determined by the Board of Directors. Each Option, Stock
Appreciation Right or right related to Restricted Stock shall be exercisable
during the lifetime of the Employee to whom granted only by such Employee. Any
payment in respect of Performance Units or any payment authorized under Section
5 made after the death of a Participant entitled thereto shall be paid to the
legal representative of the estate or to the designated beneficiary of such
Participant.
(c) No person shall have the rights or privileges of a stockholder
with respect to Shares subject to an Option, deliverable as a payment in
respect of Performance Units, upon exercise of a Stock Appreciation Right or
under a supplementary performance plan authorized by Section 5 until exercise
of such Option or Stock Appreciation Right, delivery as a payment
-8-
<PAGE> 9
in respect of Performance Units or under a supplementary performance plan
authorized by Section 5.
(d) No fractional Shares shall be issued under the Plan.
If the portion of any payment under the Plan, or under a supplementary
performance plan authorized by Section 5, to be made in Shares is not
equal to the value of a whole number of Shares, the person entitled thereto
shall be paid an amount equal to the Fair Market Value as of the date of
exercise of any fractional Share deliverable in respect of exercise of a Stock
Appreciation Right and the Fair Market Value as of the date of payment of any
fractional Share deliverable in respect of any other payment.
(e) The Corporation, the Board of Directors, the Committee and the
officers of Rockwell shall be fully protected in relying in good faith on the
computations and reports made pursuant to or in connection with the Plan by the
independent certified public accountants who audit the Corporation's accounts or
others (who may include Employees) whose services are used by the Board of
Directors or Committee in its administration of the Plan.
(f) Notwithstanding any other provision of the Plan, if a Change
of Control (as defined in Article III, Section 15(l)(1) of Rockwell's By-Laws)
shall occur, then unless prior to the occurrence thereof, the Board of
Directors shall have determined otherwise by vote of at least two-thirds of its
members, (i) all Performance Periods (except those under plans established
under Section 5 of the Plan that do not provide for a Change of Control
contingency) not then complete shall be deemed completed forthwith, the
Performance Objectives therefor shall be deemed to have been attained, and all
Performance Units granted with respect thereto shall be deemed to have been
fully earned; (ii) all Options and any Stock Appreciation Rights then
outstanding under the Plan shall forthwith become fully exercisable whether or
not otherwise then exercisable; and (iii) the restrictions on all Shares
granted as Restricted Stock under the Plan shall forthwith lapse.
(g) The Corporation shall have the right in connection with the
delivery of any Shares in payment of a Grant or a payment authorized under
Section 5 or upon exercise of an Option to require as a condition of such
delivery that the recipient represent that such Shares are being acquired for
investment and not with a view to the distribution thereof.
(h) The Corporation shall have the right in connection with any
payment in respect of Performance Units, payment authorized under Section 5,
exercise of any Option or Stock Appreciation Right or termination of the
Restricted Period for any Restricted Stock, to deduct from any such payment or
any other payment by the Corporation, an amount equal to any taxes required by
law to be withheld with respect thereto or to require the Employee or other
person receiving such payment, effecting such exercise or entitled to Shares
and related payments on termination of such Restricted Period, as a condition
of and prior to such payment or exercise or delivery of Shares on such
termination, to pay to the Corporation an amount sufficient to provide for any
such taxes so required to be withheld.
(i) Unless otherwise determined by the Board of Directors or
provided in an agreement between any Employee and the Corporation, for purposes
of the Plan an Employee on authorized leave of absence will be considered as
being in the employ of the Corporation.
-9-
<PAGE> 10
(j) The Corporation shall bear all expenses and costs in
connection with the operation of the Plan, including costs related to the
purchase, issue or transfer of Shares, but excluding taxes imposed on any
person receiving a payment or delivery of Shares under the Plan or a
supplementary performance plan authorized under Section 5.
14. INTERPRETATIONS AND DETERMINATIONS
The Board of Directors shall have the power from time to time to
interpret the Plan, to adopt, amend and rescind rules, regulations and
procedures relating to the Plan, to make, amend and rescind determinations
under the Plan and to take all other actions that the Board of Directors shall
deem necessary or appropriate for the implementation and administration of the
Plan. All interpretations, determinations and other actions by the Board of
Directors or the Committee shall be final, conclusive and binding upon all
parties.
15. EFFECTIVITY
Upon approval by the stockholders of Rockwell, the Plan shall become
effective as of October 1, 1987.
-10-
<PAGE> 1
EXHIBIT 10-d-7
1988 LONG-TERM INCENTIVES PLAN
FORM OF OPTION AGREEMENT (WITHOUT ARBITRATION)
NONTRANSFERRABLE OPTIONS
----------------------------------------------
December 7, 1994
To:
We are pleased to notify you that the Compensation and Management Development
Committee has granted to you today the following stock option(s) under the 1988
Long-Term Incentives Plan (the Plan):
<TABLE>
<CAPTION>
Date of Grant Type of Grant Number of Shares Option Price
- ------------- ------------- ---------------- ------------
<S> <C> <C> <C>
99/99/99 (NQ) 9,999,999 $$$$.9999
</TABLE>
These stock option(s) have been granted, and may be exercised only upon the
terms and conditions of this Stock Option Agreement, subject in all respects to
the provisions of the Plan, as it may be amended. The attached Stock Option
Terms and Conditions are incorporated in and are part of this Stock Option
Agreement.
Copies of the Plan and the current Prospectus covering shares issuable or
transferable under the Plan are enclosed.
Please confirm that you have read and agree to be bound by this Agreement by
signing one copy at the place indicated and returning the signed copy to:
Office of the Secretary
Rockwell International Corporation
625 Liberty Avenue
Pittsburgh, PA 15222-3123
Attention: Stock Option Administration
These stock options will lapse and be of no effect if a copy of this Stock
Option Agreement, properly signed by you, is not received by the Secretary of
Rockwell on or before January 31, 1995, unless Rockwell (in its sole
discretion) elects in writing to extend that date.
Agreed to:
Date: ______________________ ROCKWELL INTERNATIONAL CORPORATION
____________________________ By:__________________________________
Employee Signature Senior Vice President,
XXXXXXXXXXXXXXXXXX General Counsel and Secretary
999-99-9999
<PAGE> 2
1988 LONG-TERM INCENTIVES PLAN
FORM OF OPTION AGREEMENT (WITH ARBITRATION)
NONTRANSFERRABLE OPTIONS
----------------------------------------------
December 7, 1994
To:
We are pleased to notify you that the Compensation and Management Development
Committee has granted to you today the following stock option(s) under the 1988
Long-Term Incentives Plan (the Plan):
<TABLE>
<CAPTION>
Date of Grant Type of Grant Number of Shares Option Price
- ------------- ------------- ---------------- ------------
<S> <C> <C> <C>
99/99/99 (NQ) 9,999,999 $$$$.9999
</TABLE>
These stock option(s) have been granted, and may be exercised only upon the
terms and conditions of this Stock Option Agreement, subject in all respects to
the provisions of the Plan, as it may be amended. The attached Stock Option
Terms and Conditions are incorporated in and are part of this Stock Option
Agreement.
Copies of the Plan and the current Prospectus covering shares issuable or
transferable under the Plan are enclosed.
Please confirm that you have read and agree to be bound by this Agreement and
by the enclosed Mutual Agreement to Arbitrate claims by signing one copy of each
Agreement at the place indicated below and on page 2 of the Mutual Agreement to
Arbitrate Claims, and returning the signed copy to:
Office of the Secretary
Rockwell International Corporation
625 Liberty Avenue
Pittsburgh, PA 15222-3123
Attention: Stock Option Administration
These stock options will lapse and be of no effect if copies of BOTH this Stock
Option Agreement and the Mutual Agreement to Arbitrate Claims, each properly
signed by you, is not received by the Secretary of Rockwell on or before
January 31, 1995, unless Rockwell (in its sole discretion) elects in writing
to extend that date.
Agreed to:
Date: ______________________ ROCKWELL INTERNATIONAL CORPORATION
_______________________________ By:__________________________________
Employee Signature Senior Vice President,
XXXXXXXXXXXXXXXXXX General Counsel and Secretary
999-99-9999
<PAGE> 3
ROCKWELL INTERNATIONAL CORPORATION
1988 LONG-TERM INCENTIVES PLAN
STOCK OPTION AGREEMENT
STOCK OPTION TERMS AND CONDITIONS
1. DEFINITIONS
As used in these Stock Option Terms and Conditions, the following
words and phrases shall have the respective meanings ascribed to them
below unless the context in which any of them is used clearly
indicates a contrary meaning:
(a) APPROVED OPTION EXERCISE FORM: A Cash Only Exercise Form in
the form of Attachment 1 or a "Stock Swap" Exercise Form in
the form of Attachment 2, any other form subsequently adopted
by the Secretary of Rockwell to replace Attachment 1 or 2, or
any other form accepted by the Secretary of Rockwell in his
sole discretion.
(b) OPTIONS: The stock option or stock options listed in the
first paragraph of the letter dated December 7, 1994 to which
these Stock Option Terms and Conditions are attached and which
together with these Stock Option Terms and Conditions
constitutes the Stock Option Agreement.
(c) OPTION SHARES: The shares of Rockwell Common Stock issuable
or transferable on exercise of the Options.
(d) PLAN: Rockwell's 1988 Long-Term Incentives Plan, as amended
and as such Plan may be further amended and in effect at the
relevant time.
(e) PRELIMINARY PAYMENT: Defined in Section 3(d)(i).
(f) ROCKWELL: Rockwell International Corporation, a Delaware
corporation.
(g) SHARES: Shares of Rockwell Common Stock or Class A Common
Stock.
(h) STOCK OPTION AGREEMENT: These Stock Option Terms and
Conditions together with the letter dated December 7, 1994 to
which they are attached.
2. WHEN OPTIONS MAY BE EXERCISED
The Options may be exercised, in whole or in part (but only for a
whole number of shares) and at one time or from time to time, as to
one-third (rounded down to an integral one hundred) of the Option
Shares during the period beginning on
[88NT:12/7/94]
<PAGE> 4
December 7, 1995 and ending on December 7, 2004, as to an additional
one-third (rounded down to an integral one hundred) of the Option
Shares during the period beginning on December 7, 1996 and ending on
December 7, 2004 and as to the balance of the Option Shares during the
period beginning on December 7, 1997 and ending on December 7, 2004,
and only during those periods, provided that:
(a) if you die while an employee of the Corporation (as defined in
the Plan), your estate, or any person who acquires the Options
by bequest or inheritance, may exercise all the Options not
theretofore exercised within (and only within) the period
beginning on your date of death (even if you die before you
have become entitled to exercise all or any part of the
Options) and ending three years thereafter; and
(b) if your employment by the Corporation terminates other than by
death, then:
(i) if your retirement or other termination date
is before December 7, 1995, the Options shall
lapse on your retirement or other termination
and may not be exercised at any time;
(ii) if your employment by the Corporation is
terminated for cause, the Options shall
expire forthwith upon your termination and
may not be exercised thereafter;
(iii) if your employment by the Corporation terminates
after June 7, 1996 by reason of your retirement under
a retirement plan of Rockwell, or a subsidiary or
affiliate of Rockwell, at or after the earlier of age
62 or the date you have accumulated 85 points (or
fulfilled such other criteria as may be required for
an unreduced early retirement benefit) for purposes
of the applicable retirement plan, you (or if you die
after your retirement date, your estate or any person
who acquires the Options by bequest or inheritance)
may thereafter exercise the Options within (and only
within) the period starting on the date you would
otherwise have become entitled to exercise the part
of the Options so exercised and ending five years
after your retirement date;
(iv) if your employment by the Corporation
terminates after June 7, 1996 by reason of
your retirement under a retirement plan of
-2-
[88NT:12/7/94]
<PAGE> 5
Rockwell, or a subsidiary or affiliate of Rockwell, before the earlier
of age 62 or the date you have accumulated 85 points (or fulfilled
such other criteria as may be required for an unreduced early
retirement benefit) for purposes of the applicable retirement plan,
you (or if you die after your retirement date, your estate or any
person who acquires the Options by bequest or inheritance) may
thereafter exercise the Options within (and only within) the period
starting on the date you would otherwise have become entitled to
exercise the part of the Options so exercised and ending on the
earlier of (x) the third anniversary of your retirement date or (y)
such earlier date as the Compensation and Management Development
Committee shall determine by action taken not later than 60 days after
your retirement date;
(v) if your employment by the Corporation
terminates on or after December 7, 1995 but
on or before June 7, 1996 by reason of your
retirement under a retirement plan of
Rockwell, or a subsidiary or affiliate of
Rockwell, you (or if you die after your
retirement date, your estate or any person
who acquires the Options by bequest or
inheritance) may thereafter exercise the
Options within (and only within) the period
starting on the date you would otherwise have
become entitled to exercise the part of the
Options so exercised and ending on the
earlier of (x) the third anniversary of your
retirement date or (y) such earlier date as
the Compensation and Management Development
Committee shall determine by action taken not
later than 60 days after your retirement
date; and
(vi) if your employment by the Corporation
terminates on or after December 7, 1995 for
any reason not specified in subparagraph (a)
or in clauses (ii), (iii), (iv) or (v) of
this subparagraph (b), you (or if you die
after your termination date, your estate or
any person who acquires the Options by
bequest or inheritance) may thereafter
exercise the Options within (and only within)
the period ending three months after your
termination date but only to the extent they
were exercisable on your termination date.
-3-
[88NT:12/7/94]
<PAGE> 6
In no event shall the provisions of the foregoing subparagraphs (a)
and (b) extend to a date after December 7, 2004 the period during
which the Options may be exercised.
3. EXERCISE PROCEDURE
(a) To exercise all or any part of the Options, you (or after your
death, your estate or any person who has acquired the Options
by bequest or inheritance) must deliver to the Secretary of
Rockwell:
(i) a notice of exercise on an Approved Option
Exercise Form properly completed, dated and
signed by you (or after your death, by the
person entitled to exercise the Options);
(ii) full payment of the exercise price for the
Option Shares to be purchased on exercise of
the Options
o entirely in cash; or
o in Shares; or
o in a combination of cash and Shares; and
(iii) in the case of an exercise of the Options by any
person other than you seeking to exercise the
Options, such documents as the Secretary of Rockwell
shall require to establish to his satisfaction that
the person seeking to exercise the Options is
entitled to do so.
(b) An exercise of the whole or any part of the Options shall be
effective:
(i) if you elect (or after your death, the person
entitled to exercise the Options elects) to
pay the exercise price for the Option Shares
entirely in cash, upon (x) receipt by the
Secretary of Rockwell of (I) an Approved
Exercise Form, duly completed, dated and
signed, (II) full payment of the exercise
price for the Option Shares purchased
pursuant to that Approved Exercise Form and
(III) any documents required pursuant to
Section 3(a)(iii), or (y) if later, the date
of such Approved Exercise Form (provided you,
or after your death, the person entitled to
exercise the Options, or any person to whom
you have transferred the Options during your
lifetime as permitted by Section 4 continues
to be
-4-
[88NT:12/7/94]
<PAGE> 7
entitled to exercise the Options on that
date); and
(ii) if you elect (or after your death, the person
entitled to exercise the Option elects) to
pay the exercise price of the Option Shares
in Shares or in a combination of Shares and
cash, upon (x) receipt by the Secretary of
Rockwell of (I) an Approved Exercise Form,
duly completed, dated and signed, (II) the
Preliminary Payment (as defined in Section
3(d)(i)) and (III) any documents required
pursuant to Section 3(a)(iii), or (y) if
later, the date of such Approved Exercise
Form (provided you continue, or after your
death, the person entitled to exercise the
Options continues, to be entitled to exercise
the Options on that date).
(c) If you choose (or after your death, the person entitled to
exercise the Options chooses) to pay the exercise price for
the Option Shares to be purchased on exercise of any of the
Options entirely in cash, payment must be made by
o delivering to the Secretary of Rockwell a check in
the full amount of the exercise price for those
Option Shares; or
o arranging with a stockbroker, bank or other financial
institution to deliver to the Secretary of Rockwell
full payment, by check or (if prior arrangements are
made with the Stock Option Administration staff of
the Secretary's Office) by wire transfer, of the
exercise price of those Option Shares.
In either event, in accordance with Section 3(e), full payment
of the exercise price for the Option Shares purchased must be
made within five business days after the Secretary of Rockwell
has received the Approved Exercise Form, duly completed, dated
and signed, or if later, within five business days after the
date of such Approved Exercise Form.
(d) (i) If you choose (or after your death, the person
entitled to exercise the Options chooses) to use
already-owned Shares to pay all or part of the
exercise price for the Option Shares to be purchased
on exercise of any of the Options, you (or after your
death, the person entitled to exercise the Options)
must deliver to the Secretary
-5-
[88NT:12/7/94]
<PAGE> 8
of Rockwell one or more certificates (and executed
stock powers) representing
o at least the number of Shares whose
value, based on the closing price of
Common Stock of Rockwell on the New
York Stock Exchange -- Composite
Transactions on any day not more
than five business days prior to (x)
the date on which the Secretary of
Rockwell has received the Approved
Exercise Form for such exercise, or
(y) if later, the date of such
Approved Exercise Form, would be
sufficient to pay in full the
exercise price of those Option
Shares; or
o any lesser number of Shares you
desire (or after your death, the
person entitled to exercise the
Options desires) to use to pay the
exercise price for those Option
Shares and a check in the amount of
such exercise price less the value
of the Shares delivered, based on
the closing price of Common Stock of
Rockwell on the New York Stock
Exchange -- Composite Transactions
on any day not more than five
business days prior to (x) the date
on which the Secretary of Rockwell
has received the Approved Exercise
Form for such exercise, or (y) if
later, the date of such Approved
Exercise Form.
The delivery of the Shares or Shares and
cash, as prescribed by this clause (i), is
referred to in this Stock Option Agreement as
the Preliminary Payment.
(ii) The Secretary of Rockwell will advise you (or
any other person who, being entitled to do
so, exercises the Options) of the exact
number of Shares, valued in accordance with
Section 6(e) of the Plan at the closing price
on the New York Stock Exchange -- Composite
Transactions on the effective date of
exercise under Section 3(b)(ii), and any cash
required to pay in full the exercise price
for the Option Shares purchased. In
accordance with Section 3(e), you (or such
other person) must pay, in cash, in Shares or
in a combination of cash and Shares, any
balance required to pay in full the exercise
price of the Option Shares
-6-
[88NT:12/7/94]
<PAGE> 9
purchased within five business days following the
effective date of such exercise of the Options under
Section 3(b)(ii).
(iii) Notwithstanding any other provision of this Stock
Option Agreement, the Secretary of Rockwell may limit
the number, frequency or volume of successive
exercises of any of the Options in which payment is
made, in whole or in part, by delivery of Shares
pursuant to this subparagraph (d) to prevent
unreasonable pyramiding of such exercises.
(e) A notice of exercise on an Approved Exercise Form, when duly
completed, dated and signed by you (or any other person
entitled to exercise the Options) and received by the
Secretary of Rockwell, whether or not full payment of the
exercise price for the Option Shares accompanies the Approved
Option Exercise Form and whether the Approved Exercise Form is
dated on or prior to the date of receipt by the Secretary of
Rockwell or a later date, shall constitute a binding
contractual obligation by you (or the other person entitled to
exercise the Options) to proceed with and complete that
exercise of the Options (but only so long as you continue, or
the other person entitled to exercise the Options continues,
to be entitled to exercise the Options on that date). By your
acceptance of this Stock Option Agreement, you agree (for
yourself and on behalf of any other person who becomes
entitled to exercise the Options) to deliver or cause to be
delivered to Rockwell any balance of the exercise price for
the Option Shares to be purchased upon the exercise pursuant
to the Approved Exercise Form required to pay in full the
exercise price for those Option Shares, that payment being in
cash, in Shares or in a combination of cash and Shares, on or
before the later of the fifth business day after (i) the date
on which the Secretary of Rockwell receives such duly
completed, dated and signed Approved Exercise Form, or (ii) if
later, the date of such Approved Exercise Form (provided you
continue (or the other person entitled to exercise the Options
continues) to be entitled to exercise the Options on that
date), and you (for yourself and on behalf of any other person
who becomes entitled to exercise the Options) authorize the
Corporation forthwith to set off against salary payments or
other amounts due or which may become due you (or the other
person entitled to exercise the Options) any balance of the
exercise price for those Option Shares remaining unpaid
thereafter.
(f) Certificates representing the number of Option Shares
purchased will be issued as soon as practicable (i) after
-7-
[88NT:12/7/94]
<PAGE> 10
Rockwell has received full payment therefor or (ii) at
Rockwell's election in the sole discretion of its Secretary, after
Rockwell has received (x) full payment of the exercise price of
those Option Shares and (y) any reimbursement in respect of
withholding taxes due pursuant to Section 5.
4. TRANSFERABILITY
The Options are not transferable by you otherwise than by will or by
the laws of descent and distribution. During your lifetime, only you
are entitled to exercise the Options.
5. WITHHOLDING
Rockwell shall have the right, in connection with the exercise of the
Options in whole or in part, to deduct from any payment to be made by
Rockwell under the Plan an amount equal to the taxes required to be
withheld by law with respect to such exercise or to require you (or
any other person entitled to exercise the Options) to pay to it an
amount sufficient to provide for any such taxes so required to be
withheld. By your acceptance of this Stock Option Agreement, you
agree (for yourself and on behalf of any other person who becomes
entitled to exercise the Options) that if Rockwell elects to require
you (or such other person) to remit an amount sufficient to pay such
withholding taxes, you (or such other person) must remit that amount
within ten business days after the date of the statement for such
amount rendered by Rockwell, failing which Rockwell shall have the
same right of set-off as provided under Section 3(e) with respect to
payment of the exercise price for Option Shares.
6. HEADINGS
The section headings contained in these Stock Option Terms and
Conditions are solely for the purpose of reference, are not part of
the agreement of the parties and shall in no way affect the meaning or
interpretation of this Stock Option Agreement.
7. REFERENCES
All references in these Stock Option Terms and Conditions to Sections,
paragraphs, subparagraphs or clauses shall be deemed to be references
to Sections, paragraphs, subparagraphs and clauses of these Stock
Option Terms and Conditions unless otherwise specifically provided.
-8-
[88NT:12/7/94]
<PAGE> 11
8. APPLICABLE LAWS AND REGULATIONS
This Stock Option Agreement and Rockwell's obligation to issue Option
Shares hereunder are subject to applicable laws and regulations.
Attachment 1 - Cash Only Option Exercise Form and Instructions
Attachment 2 - "Stock Swap" Option Exercise Form and Instructions
-9-
[88NT:12/7/94]
<PAGE> 12
ATTACHMENT 1
STOCK OPTION EXERCISE FORM - CASH ONLY
ROCKWELL INTERNATIONAL CORPORATION
CASH ONLY STOCK OPTION EXERCISE FORM
Attached is the Stock Option Exercise Form to be used if you exercise a stock
option under any of Rockwell's stock option plans for a cash payment (including
a so-called "cashless" exercise in which your stockbroker, bank or other
financial institution furnishes the cash payment of the exercise price).
BEFORE COMPLETING THIS STOCK OPTION EXERCISE FORM, PLEASE READ CAREFULLY THE
SEPARATE INSTRUCTIONS FOR THE FORM, WHICH ARE REPRODUCED IN APPENDIX I TO THE
BOOKLET, FACTS ABOUT ROCKWELL INTERNATIONAL CORPORATION STOCK OPTIONS AND SARS
(REVISED MARCH 1993).
YOU SHOULD ALSO REFER TO THE PERTINENT PORTIONS OF THE FACTS BOOKLET,
PARTICULARLY THE "HIGHLIGHTS" SECTION (ON PAGES 2-7) FOR FURTHER GUIDANCE IN
COMPLETING THE FORM.
If after reading the separate instructions and the pertinent sections of the
FACTS booklet you have questions on the procedures to be followed in completing
your exercise or on how to complete the Form, please call Stock Option
Administration in the Secretary's Office in Pittsburgh (at Comnet 545-7120 or
(412) 565-7120) for assistance.
[88NT:12/7/94]
<PAGE> 13
CASH ONLY STOCK OPTION EXERCISE FORM
------------------------------------
To: Rockwell International Corporation
625 Liberty Avenue
Pittsburgh, Pennsylvania 15222-3123
Attention: Office of the Secretary,
Stock Option Administration
1. OPTIONS EXERCISED: Subject to the terms and conditions of the
1979 Stock Plan for Key Employees, the 1981 Incentive Stock Option Plan for Key
Employees, the 1988 Long-Term Incentives Plan and/or the 1995 Long-Term
Incentives Plan (collectively, the Plans) of Rockwell International Corporation
(Rockwell), and Agreement(s) thereunder, I hereby exercise the following stock
option(s):
<TABLE>
<CAPTION>
Plan Date o NQ/ Class of Stock Number of Exercise Total
Year Grant ISO Common/Class A Shares Price Purchase Price
- ---- ------- --- -------------- -------- -------- --------------
<S> <C> <C> <C> <C> <C> <C>
$ $
- ---- ------- --- -------------- -------- -------- --------------
$ $
- ---- ------- --- -------------- -------- -------- --------------
$ $
- ---- ------- --- -------------- -------- -------- --------------
</TABLE>
2. CONVERSION: Convert [ ] None [ ] All [ ] _____ shares
of the shares of Class A Common Stock to Common Stock.
3. PAYMENT:
[ ] A check payable to Rockwell International Corporation
in the amount of the Total Purchase Price of the
above-itemized stock option(s) is enclosed.
[ ] The Total Purchase Price of the above-itemized stock
option(s) will be paid by a check payable to Rockwell
International Corporation or (if prior arrangements
are made with the Stock Option Administration staff
of the Secretary's Office) by a wire transfer of
funds to Rockwell
[CONTINUED ON PAGE 2]
<PAGE> 14
Cash Only Stock Option Exercise Form
Page 2
International Corporation to the account specified by
the Secretary's Office (Stock Option Administration),
which will be sent promptly by my stockbroker, bank
or other financial institution,
Representative's Name: _______________________________
Firm Name: ___________________________________________
Address: _____________________________________________
_____________________________________________
Telephone No.: _______________________________________
If full payment of the Total Purchase Price of the stock
option(s) listed in ITEM 1 is not delivered within five (5)
business days after the later of the date of this Form or the
date of its receipt by the Secretary of Rockwell, the
Corporation (as defined in the Plans) is authorized forthwith
to set off the balance due against salary payments or other
amounts due or which may become due me to satisfy my
obligation to pay the Total Purchase Price.
If any of the stock option(s) listed in Item 1 was granted as
a nonqualified stock option (NQ), I understand Rockwell will
issue a statement to me for reimbursement of taxes required to
be withheld and remitted to taxing authorities in respect of
the exercise of those stock option(s) and may withhold
delivery of the certificate(s) for the shares deliverable upon
this exercise until that statement has been paid in full. If
full payment of that statement is not received by Rockwell
within ten (10) business days after the date of that
statement, the Corporation (as defined in the Plans) is
authorized forthwith to set off the balance due against salary
payments or other amounts due or which may become due me to
satisfy any obligation to reimburse Rockwell for those
withholding taxes.
4. REGISTRATION: Please register the stock as follows:
Name: ________________________________________________
Social Security No.: _________________________________
Current Address: _____________________________________
_____________________________________
[CONTINUED AND TO BE SIGNED ON PAGE 3]
<PAGE> 15
Cash Only Stock Option Exercise Form
Page 3
NOTE: THE STOCK MAY BE REGISTERED ONLY IN YOUR NAME OR IN
YOUR NAME JOINTLY WITH YOUR SPOUSE (OR JOINTLY WITH
ANOTHER PERSON). IT MAY NOT BE REGISTERED IN THE
NAME OF YOUR STOCKBROKER, BANK OR OTHER FINANCIAL
INSTITUTION.
5. DELIVERY: Please deliver the stock
_____ to me at the address listed in Item 4.
_____ to the following person and address:
Name of Stockbrokerage Firm or Other Addressee:
_______________________________________________________
Address: _____________________________________________
_____________________________________________
Attention: ___________________________________________
THIS STOCK OPTION EXERCISE MAY NOT BE REVOKED OR CHANGED AFTER DELIVERY OF THIS
FORM, PROPERLY COMPLETED, DATED AND SIGNED, TO THE CORPORATION WHETHER OR NOT
PAYMENT ACCOMPANIES THIS FORM AND WHETHER THIS FORM IS DATED BEFORE, ON OR
AFTER THE DATE OF SUCH RECEIPT.
____________________________________
(Signature)
Print Name:_________________________
Dated: _____________________, 19 ___
<PAGE> 16
ATTACHMENT 2
STOCK OPTION EXERCISE FORM
STOCK OR STOCK AND CASH ("STOCK SWAP")
ROCKWELL INTERNATIONAL CORPORATION
"STOCK SWAP" STOCK OPTION EXERCISE FORM
Attached is the Stock Option Exercise Form to be used if you exercise a stock
option under any of Rockwell's stock option plans and pay part or all of the
exercise price for the Option Shares purchased by delivering shares of Rockwell
Common Stock or Class A Common Stock.
BEFORE COMPLETING THIS STOCK OPTION EXERCISE FORM, PLEASE READ CAREFULLY THE
SEPARATE INSTRUCTIONS FOR THE FORM, WHICH ARE REPRODUCED IN APPENDIX II TO THE
BOOKLET, FACTS ABOUT ROCKWELL INTERNATIONAL CORPORATION STOCK OPTIONS AND SARS
(REVISED MARCH 1993).
YOU SHOULD ALSO REFER TO THE PERTINENT PORTIONS OF THE FACTS BOOKLET,
PARTICULARLY THE "HIGHLIGHTS" SECTION (ON PAGES 2-7) AND THE STOCK-FOR-STOCK
PAYMENT METHOD ("STOCK SWAP") SECTION (ON PAGES 31-36) FOR FURTHER GUIDANCE IN
COMPLETING THE FORM.
If after reading the separate instructions and the pertinent sections of the
FACTS booklet you have questions on the procedures to be followed in completing
your exercise or on how to complete the Form, please call Stock Option
Administration in the Secretary's Office in Pittsburgh (at Comnet 545-7120 or
(412) 565-7120) for assistance.
[88NT: 12/7/94]
<PAGE> 17
"STOCK SWAP" STOCK OPTION EXERCISE FORM
---------------------------------------
To: Rockwell International Corporation
625 Liberty Avenue
Pittsburgh, Pennsylvania 15222-3123
Attention: Office of the Secretary,
Stock Option Administration
1. OPTIONS EXERCISED: Subject to the terms and conditions of the
1979 Stock Plan for Key Employees, the 1981 Incentive Stock Option Plan for Key
Employees, the 1988 Long-Term Incentives Plan and/or the 1995 Long-Term
Incentives Plan (collectively, the Plans) of Rockwell International Corporation
(Rockwell), and Agreement(s) thereunder, I hereby exercise the following stock
option(s):
<TABLE>
<CAPTION>
Plan Date o NQ/ Class of Stock Number of Exercise Total
Year Grant ISO Common/Class A Shares Price Purchase Price
- ---- ------- --- -------------- -------- -------- --------------
<S> <C> <C> <C> <C> <C> <C>
$ $
- ---- ------- --- -------------- -------- -------- --------------
$ $
- ---- ------- --- -------------- -------- -------- --------------
$ $
- ---- ------- --- -------------- -------- -------- --------------
</TABLE>
2. CONVERSION: Convert [ ] None [ ] All [ ] _____ shares
of the shares of Class A Common Stock to Common Stock.
3. PAYMENT: A. Number of shares of Rockwell Common Stock
or Class A Common Stock surrendered to pay the exercise price of the option(s):
______________ shares of Common _______________ shares of Class A Common
B. Amount of enclosed check, if any, payable
to Rockwell International Corporation to pay estimated balance of exercise
price of the option(s):
$_________________________
I am using shares of Common Stock or Class A Common Stock or both of
Rockwell (Shares) that I now own to pay all or part of the exercise price for
the Shares to be purchased on my exercise of the above-referenced stock
option(s). I enclose, or in accordance with prior arrangements I have made
with you, I am arranging for delivery to you of, one or more certificates for
(i) at least the number of Shares estimated, based on the closing
price on the New York Stock Exchange -- Composite Transactions
on a day not more than five business days prior to (x) the
date of receipt of this Exercise Form by the Secretary's
Office (Stock Option Administration), or (y) if later, the
date of this
[CONTINUED ON PAGE 2]
<PAGE> 18
"Stock Swap" Stock Option Exercise Form
Page 2
Exercise Form, to be sufficient to pay in full the Total
Purchase Price of the Shares covered by this exercise, or
(ii) a lesser number of Shares that I desire to apply to such Total
Purchase Price and a check in the amount of such Total
Purchase Price less the value of the Shares delivered, based
on the closing price on the New York Stock Exchange --
Composite Transactions on a day not more than five business
days prior to (x) the date of receipt of this Exercise Form by
the Secretary's Office (Stock Option Administration), or (y)
if later, the date of this Exercise Form,
and in either case, an executed stock transfer power covering the Shares
surrendered or to be surrendered. I understand that you will advise me of the
exact number of Shares, valued in accordance with the Plans at the closing
price on the New York Stock Exchange -- Composite Transactions on the later of
(x) the date you have received (I) this Exercise Form, (II) the estimated
payment in Shares or Shares and cash specified above and, (III) if I am not the
optionee, any additional documents required to evidence my right to exercise
these stock option(s) and (y) the date of this Exercise Form (the later of such
dates, the effective date of this exercise), and any cash required to pay in
full the Total Purchase Price of the Shares to be purchased upon this exercise.
I further understand that certificates representing the number of Shares
purchased will be issued only after I deliver to Rockwell any remaining balance
of the Total Purchase Price in cash or a combination of Shares and cash and the
amount sufficient to reimburse Rockwell for all withholding taxes required to
be withheld and remitted to taxing authorities in respect of this exercise.
I hereby agree to deliver to Rockwell no later than five (5) business
days following the effective date of this exercise cash or any additional
number of Shares or a combination of Shares and cash required to pay in full
the Total Purchase Price of the Shares to be purchased upon this exercise, and
an executed stock transfer power covering any additional Shares delivered. I
hereby further agree to pay Rockwell, no later than ten (10) business days
after the date of Rockwell's statement therefor, the amount sufficient to
reimburse Rockwell for all withholding taxes required to be withheld and
remitted to taxing authorities in respect of this exercise. If I fail to
deliver any remaining balance of the Total Purchase Price of the Shares to be
purchased upon this exercise and an amount sufficient to reimburse Rockwell in
full for all withholding taxes required to be withheld and remitted to taxing
authorities in respect of this exercise in accordance with this paragraph, the
Corporation (as defined in the Plans) is authorized forthwith to set off the
balance due against salary payments or other amounts due or which may become
due to me to satisfy my obligation hereunder.
4. REGISTRATION: It is my understanding that following my
payment in full of the Total Purchase Price and reimbursement of Rockwell for
any applicable withholding taxes as provided in ITEM 3: PAYMENT, I shall
receive from Rockwell one or more stock certificates representing the same
[CONTINUED AND TO BE SIGNED ON PAGE 3]
<PAGE> 19
"Stock Swap" Stock Option Exercise Form
Page 3
number and kind of Shares I surrendered to Rockwell, issued in the same name or
names as the Shares so surrendered. I shall also receive one or more separate
stock certificates representing the additional Shares acquired as a result of
this exercise, which I hereby request be registered as follows:
Name: ____________________________________________________
Social Security No.: _____________________________________
Current Address: _________________________________________
_________________________________________
NOTE: THE STOCK MAY BE REGISTERED ONLY IN YOUR NAME OR IN
YOUR NAME JOINTLY WITH YOUR SPOUSE (OR JOINTLY WITH
ANOTHER PERSON). IT MAY NOT BE REGISTERED IN THE
NAME OF YOUR STOCKBROKER, BANK OR OTHER FINANCIAL
INSTITUTION.
5. DELIVERY: Please deliver the stock
_____ to me at the address listed in Item 4.
_____ to the following person and address:
Name of Stockbrokerage Firm or Other Addressee:
_______________________________________________________
Address: _____________________________________________
_____________________________________________
Attention: ___________________________________________
THIS STOCK OPTION EXERCISE MAY NOT BE REVOKED OR CHANGED AFTER DELIVERY OF THIS
FORM, PROPERLY COMPLETED, DATED AND SIGNED, TO THE CORPORATION WHETHER OR NOT
PAYMENT ACCOMPANIES THIS FORM AND WHETHER THIS FORM IS DATED BEFORE, ON OR
AFTER THE DATE OF SUCH RECEIPT.
____________________________________
(Signature)
Print Name:_________________________
Dated: _____________________, 19 ___
<PAGE> 20
"Stock Swap" Stock Option Exercise Form
Page 4
STOCK TRANSFER POWER SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED, (I) (We), ____________________________
(insert name(s))
hereby sell, assign and transfer unto Rockwell International
Corporation the ________________ shares of the [Common Stock]
(insert number)
[Class A Common Stock] of Rockwell International Corporation
standing in the name(s) of ____________________________ on the
(name(s) on certificate(s))
books of said Rockwell International Corporation represented by
Certificate(s) No(s). ______________ herewith and do hereby
irrevocably constitute and appoint Mellon Bank, N.A., attorney to
transfer the said stock on the books of Rockwell International
with full power of substitution in the premises.
Dated: __________________
_____________________________________________
(Signature)
WITNESS:
_____________________________________________
(Signature)
<PAGE> 21
H:\WPDATA\ETM\OPTAGMT2.T&C
1988 LONG-TERM INCENTIVES PLAN
FORM OF OPTION AGREEMENT (WITHOUT ARBITRATION)
TRANSFERRABLE NONQUALIFIED OPTIONS
----------------------------------------------
December 7, 1994
To:
We are pleased to notify you that the Compensation and Management Development
Committee has granted to you today the following stock option(s) under the 1988
Long-Term Incentives Plan (the Plan):
<TABLE>
<CAPTION>
Date of Grant Type of Grant Number of Shares Option Price
- ------------- ------------- ---------------- ------------
<S> <C> <C> <C>
99/99/99 (NQ) 9,999,999 $$$$.9999
</TABLE>
These stock option(s) have been granted, and may be exercised only upon the
terms and conditions of this Stock Option Agreement, subject in all respects to
the provisions of the Plan, as it may be amended. The attached Stock Option
Terms and Conditions are incorporated in and are part of this Stock Option
Agreement.
Copies of the Plan and the current Prospectus covering shares issuable or
transferable under the Plan are enclosed.
Please confirm that you have read and agree to be bound by this Agreement by
signing one copy at the place indicated and returning the signed copy to:
Office of the Secretary
Rockwell International Corporation
625 Liberty Avenue
Pittsburgh, PA 15222-3123
Attention: Stock Option Administration
These stock options will lapse and be of no effect if a copy of this Stock
Option Agreement, properly signed by you, is not received by the Secretary of
Rockwell on or before January 31, 1995, unless Rockwell (in its sole
discretion) elects in writing to extend that date.
Agreed to:
Date: ______________________ ROCKWELL INTERNATIONAL CORPORATION
____________________________ By: _______________________________
Employee Signature Senior Vice President, General
XXXXXXXXXXXXXXXXXXX Counsel and Secretary
999-99-9999
<PAGE> 22
H:\WPDATA\ETM\OPTAGMT2.T&C
ROCKWELL INTERNATIONAL CORPORATION
1988 LONG TERM INCENTIVES PLAN
STOCK OPTION AGREEMENT
STOCK OPTION TERMS AND CONDITIONS
1. Definitions
As used in these Stock Option Terms and Conditions, the following
words and phrases shall have the respective meanings ascribed to them
below unless the context in which any of them is used clearly
indicates a contrary meaning:
(a) APPROVED OPTION EXERCISE FORM: A Cash Only Exercise Form in
the form of Attachment 1 or a "Stock Swap" Exercise Form in
the form of Attachment 2, any other form subsequently adopted
by the Secretary of Rockwell to replace Attachment 1 or 2, or
any other form accepted by the Secretary of Rockwell in his
sole discretion.
(b) OPTIONS: The stock option or stock options listed in the
first paragraph of the letter dated December 7, 1994 to which
these Stock Option Terms and Conditions are attached and which
together with these Stock Option Terms and Conditions
constitutes the Stock Option Agreement.
(c) OPTION SHARES: The shares of Rockwell Common Stock issuable
or transferable on exercise of the Options.
(d) PLAN: Rockwell's 1988 Long-Term Incentives Plan, as amended
and as such Plan may be further amended and in effect at the
relevant time.
(e) PRELIMINARY PAYMENT: Defined in Section 3(d)(i).
(f) ROCKWELL: Rockwell International Corporation, a Delaware
corporation.
(g) SHARES: Shares of Rockwell Common Stock or Class A Common
Stock.
(h) STOCK OPTION AGREEMENT: These Stock Option Terms and
Conditions together with the letter dated December 7, 1994 to
which they are attached.
2. When Options May be Exercised
-----------------------------
The Options may be exercised, in whole or in part (but only for a
whole number of shares) and at one time or from time to time, as to
one-third (rounded down to an integral one hundred) of the Option
Shares during the period beginning on
[88T:12/7/94]
<PAGE> 23
December 7, 1995 and ending on December 7, 2004, as to an additional
one-third (rounded down to an integral one hundred) of the Option
Shares during the period beginning on December 7, 1996 and ending on
December 7, 2004 and as to the balance of the Option Shares during the
period beginning on December 7, 1997 and ending on December 7, 2004,
and only during those periods, provided that:
(a) if you die while an employee of the Corporation (as defined in
the Plan), your estate, any person who acquires the Options by
bequest or inheritance, or any person to whom you have
transferred the Options during your lifetime as permitted by
Section 4 may exercise all the Options not theretofore
exercised within (and only within) the period beginning on
your date of death (even if you die before you have become
entitled to exercise all or any part of the Options) and
ending three years thereafter; and
(b) if your employment by the Corporation terminates other than by
death, then:
(i) if your retirement or other termination date is
before December 7, 1995, the Options shall lapse on
your retirement or other termination and may not be
exercised at any time;
(ii) if your employment by the Corporation is terminated
for cause, the Options shall expire forthwith upon
your termination and may not be exercised thereafter;
(iii) if your employment by the Corporation terminates
after June 7, 1996 by reason of your retirement under
a retirement plan of Rockwell, or a subsidiary or
affiliate of Rockwell, at or after the earlier of age
62 or the date you have accumulated 85 points (or
fulfilled such other criteria as may be required for
an unreduced early retirement benefit) for purposes
of the applicable retirement plan, you (or if you die
after your retirement date, your estate or any person
who acquires the Options by bequest or inheritance)
or any person to whom you have transferred the
Options during your lifetime as permitted by Section
4 may thereafter exercise the Options within (and
only within) the period starting on the date you
would otherwise have become entitled to exercise the
part of the Options so exercised and ending five
years after your retirement date;
-2-
[88T:12/7/94]
<PAGE> 24
(iv) if your employment by the Corporation
terminates after June 7, 1996 by reason of
your retirement under a retirement plan of
Rockwell, or a subsidiary or affiliate of
Rockwell, before the earlier of age 62 or the
date you have accumulated 85 points (or
fulfilled such other criteria as may be
required for an unreduced early retirement
benefit) for purposes of the applicable
retirement plan, you (or if you die after
your retirement date, your estate or any
person who acquires the Options by bequest or
inheritance) or any person to whom you have
transferred the Options during your lifetime
as permitted by Section 4 may thereafter
exercise the Options within (and only within)
the period starting on the date you would
otherwise have become entitled to exercise
the part of the Options so exercised and
ending on the earlier of (x) the third
anniversary of your retirement date or (y)
such earlier date as the Compensation and
Management Development Committee shall
determine by action taken not later than 60
days after your retirement date;
(v) if your employment by the Corporation
terminates on or after December 7, 1995 but
on or before June 7, 1996 by reason of your
retirement under a retirement plan of
Rockwell, or a subsidiary or affiliate of
Rockwell, you (or if you die after your
retirement date, your estate or any person
who acquires the Options by bequest or
inheritance) or any person to whom you have
transferred the Options during your lifetime
as permitted by Section 4 may thereafter
exercise the Options within (and only within)
the period starting on the date you would
otherwise have become entitled to exercise
the part of the Options so exercised and
ending on the earlier of (x) the third
anniversary of your retirement date or (y)
such earlier date as the Compensation and
Management Development Committee shall
determine by action taken not later than 60
days after your retirement date; and
(vi) if your employment by the Corporation
terminates on or after December 7, 1995 for
any reason not specified in subparagraph (a)
or in clauses (ii), (iii), (iv) or (v) of
this subparagraph (b), you (or if you die
after
-3-
[88T:12/7/94]
<PAGE> 25
your termination date, your estate or any person who acquires
the Options by bequest or inheritance) or any person to whom
you have transferred the Options during your lifetime as
permitted by Section 4 may thereafter exercise the Options
within (and only within) the period ending three months after
your termination date but only to the extent they were
exercisable on your termination date.
In no event shall the provisions of the foregoing subparagraphs (a)
and (b) extend to a date after December 7, 2004 the period during
which the Options may be exercised.
3. Exercise Procedure
(a) To exercise all or any part of the Options, you (or after your
death, your estate or any person who has acquired the Options
by bequest or inheritance) or any person to whom you have
transferred the Options during your lifetime as permitted by
Section 4 must deliver to the Secretary of Rockwell:
(i) a notice of exercise on an Approved Option
Exercise Form properly completed, dated and
signed by you (or after your death, by the
person entitled to exercise the Options) or
by any person to whom you have transferred
the Options during your lifetime as permitted
by Section 4;
(ii) full payment of the exercise price for the
Option Shares to be purchased on exercise
of the Options
o entirely in cash; or
o in Shares; or
o in a combination of cash and Shares;
and
(iii) in the case of an exercise of the Options by any
person other than you seeking to exercise the
Options, such documents as the Secretary of Rockwell
shall require to establish to his satisfaction that
the person seeking to exercise the Options is
entitled to do so.
(b) An exercise of the whole or any part of the Options shall be
effective:
-4-
[88T:12/7/94]
<PAGE> 26
(i) if you (or after your death, the person
entitled to exercise the Options) or any
person to whom you have transferred the
Options during your lifetime as permitted by
Section 4 elects to pay the exercise price
for the Option Shares entirely in cash, upon
(x) receipt by the Secretary of Rockwell of
(I) an Approved Exercise Form, duly
completed, dated and signed, (II) full
payment of the exercise price for the Option
Shares purchased pursuant to that Approved
Exercise Form and (III) any documents
required pursuant to Section 3(a)(iii), or
(y) if later, the date of such Approved
Exercise Form (provided you, or after your
death, the person entitled to exercise the
Options, or any person to whom you have
transferred the Options during your lifetime
as permitted by Section 4 continues to be
entitled to exercise the Options on that
date); and
(ii) if you (or after your death, the person
entitled to exercise the Option) or any
person to whom you have transferred the
Options during your lifetime as permitted by
Section 4 elects to pay the exercise price of
the Option Shares in Shares or in a
combination of Shares and cash, upon (x)
receipt by the Secretary of Rockwell of (I)
an Approved Exercise Form, duly completed,
dated and signed, (II) the Preliminary
Payment (as defined in Section 3(d)(i)) and
(III) any documents required pursuant to
Section 3(a)(iii), or (y) if later, the date
of such Approved Exercise Form (provided you,
or after your death, the person entitled to
exercise the Options, or any person to whom
you have transferred the Options during your
lifetime as permitted by Section 4 continues
to be entitled to exercise the Options on
that date).
(c) If you (or after your death, the person entitled to exercise
the Options) or any person to whom you have transferred the
Options during your lifetime as permitted by Section 4 chooses
to pay the exercise price for the Option Shares to be
purchased on exercise of any of the Options entirely in cash,
payment must be made by
o delivering to the Secretary of
Rockwell a check in the full amount
of the exercise price for those
Option Shares; or
[88T:12/7/94]
-5-
<PAGE> 27
o arranging with a stockbroker, bank
or other financial institution to
deliver to the Secretary of
Rockwell full payment, by check or
(if prior arrangements are made
with the Stock Option
Administration staff of the
Secretary's Office) by wire
transfer, of the exercise
price of those Option Shares.
In either event, in accordance with Section 3(e), full payment
of the exercise price for the Option Shares purchased must be
made within five business days after the Secretary of Rockwell
has received the Approved Exercise Form, duly completed, dated
and signed, or if later, within five business days after the
date of such Approved Exercise Form.
(d) (i) If you (or after your death, the person entitled to
exercise the Options) or a person to whom you have
transferred the Options during your lifetime chooses
to use already-owned Shares to pay all or part of the
exercise price for the Option Shares to be purchased
on exercise of any of the Options, you (or the other
person then entitled to exercise the Options) must
deliver to the Secretary of Rockwell one or more
certificates (and executed stock powers) representing
o at least the number of Shares whose
value, based on the closing price of
Common Stock of Rockwell on the New
York Stock Exchange -- Composite
Transactions on any day not more
than five business days prior to (x)
the date on which the Secretary of
Rockwell has received the Approved
Exercise Form for such exercise, or
(y) if later, the date of such
Approved Exercise Form, would be
sufficient to pay in full the
exercise price of those Option
Shares; or
o any lesser number of Shares you
desire (or the other person then
entitled to exercise the Options
desires) to use to pay the exercise
price for those Option Shares and a
check in the amount of such exercise
price less the value of the Shares
delivered, based on the closing
price of Common Stock of Rockwell on
the New York Stock Exchange --
Composite Transactions on any day
not more than five business days
prior to (x) the date on which the
Secretary of Rockwell has
[88T:12/7/94]
-6-
<PAGE> 28
received the Approved Exercise Form for such
exercise, or (y) if later, the date of such
Approved Exercise Form.
The delivery of the Shares or Shares and
cash, as prescribed by this clause (i), is
referred to in this Stock Option Agreement as
the Preliminary Payment.
(ii) The Secretary of Rockwell will advise you (or
any other person who, being entitled to do
so, exercises the Options) of the exact
number of Shares, valued in accordance with
Section 6(e) of the Plan at the closing price
on the New York Stock Exchange -- Composite
Transactions on the effective date of
exercise under Section 3(b)(ii), and any cash
required to pay in full the exercise price
for the Option Shares purchased. In
accordance with Section 3(e), you (or such
other person) must pay, in cash, in Shares or
in a combination of cash and Shares, any
balance required to pay in full the exercise
price of the Option Shares purchased within
five business days following the effective
date of such exercise of the Options under
Section 3(b)(ii).
(iii) Notwithstanding any other provision of this
Stock Option Agreement, the Secretary
of Rockwell may limit the number,
frequency or volume of successive
exercises of any of the Options in which
payment is made, in whole or in part, by
delivery of Shares pursuant to this
subparagraph (d) to prevent unreasonable
pyramiding of such exercises.
(e) A notice of exercise on an Approved Exercise Form, when duly
completed, dated and signed by you (or any other person
entitled to exercise the Options) and received by the
Secretary of Rockwell, whether or not full payment of the
exercise price for the Option Shares accompanies the Approved
Option Exercise Form and whether the Approved Exercise Form is
dated on or prior to the date of receipt by the Secretary of
Rockwell or a later date, shall constitute a binding
contractual obligation by you (or the other person entitled to
exercise the Options) to proceed with and complete that
exercise of the Options (but only so long as you continue, or
the other person entitled to exercise the Options continues,
to be entitled to exercise the Options on that date). By your
acceptance of this Stock Option Agreement, you agree (for
yourself and on behalf of any other person who becomes
[88T:12/7/94]
-7-
<PAGE> 29
entitled to exercise the Options) to deliver or cause to be
delivered to Rockwell any balance of the exercise price for
the Option Shares to be purchased upon the exercise pursuant
to the Approved Exercise Form required to pay in full the
exercise price for those Option Shares, that payment being in
cash, in Shares or in a combination of cash and Shares, on or
before the later of the fifth business day after (i) the date
on which the Secretary of Rockwell receives such duly
completed, dated and signed Approved Exercise Form, or (ii) if
later, the date of such Approved Exercise Form (provided you
continue (or the other person entitled to exercise the Options
continues) to be entitled to exercise the Options on that
date), and you (for yourself and on behalf of any other person
who becomes entitled to exercise the Options) authorize the
Corporation forthwith to set off against salary payments or
other amounts due or which may become due you (or the other
person entitled to exercise the Options) any balance of the
exercise price for those Option Shares remaining unpaid
thereafter.
(f) Certificates representing the number of Option Shares
purchased will be issued as soon as practicable (i) after
Rockwell has received full payment therefor or (ii) at
Rockwell's election in the sole discretion of its Secretary,
after Rockwell has received (x) full payment of the exercise
price of those Option Shares and (y) any reimbursement in
respect of withholding taxes due pursuant to Section 5.
4. Transferability
---------------
You are not entitled to transfer the Options except (i) by will or by
the laws of descent and distribution; or (ii) in the case of any
Option not granted as an incentive stock option, by gift to any member
of your immediate family or to a trust for the benefit of one or more
members of your immediate family; PROVIDED, HOWEVER, that no transfer
pursuant to this clause (ii) shall be effective unless you have
notified the Corporation's Office of the Secretary (Attention: Stock
Option Administration) in writing specifying the Option or Options
transferred, the date of the gift and the name and Social Security or
other Taxpayer Identification Number of the transferee. During your
lifetime, only you are entitled to exercise the Options unless you
have transferred any Option in accordance with this paragraph to a
member of your immediate family or a trust for the benefit of one or
more members of your immediate family, in which case only that
transferee (or the legal representative of the estate or the heirs or
legatees of that transferee) shall be entitled to exercise that
Option. For purposes of this paragraph, your "immediate
-8-
[88T:12/7/94]
<PAGE> 30
family" shall mean your spouse and natural, adopted or step-children
and grandchildren.
5. WITHHOLDING
Rockwell shall have the right, in connection with the exercise of the
Options in whole or in part, to deduct from any payment to be made by
Rockwell under the Plan an amount equal to the taxes required to be
withheld by law with respect to such exercise or to require you (or
any other person entitled to exercise the Options) to pay to it an
amount sufficient to provide for any such taxes so required to be
withheld. By your acceptance of this Stock Option Agreement, you
agree (for yourself and on behalf of any other person who becomes
entitled to exercise the Options) that if Rockwell elects to require
you (or such other person) to remit an amount sufficient to pay such
withholding taxes, you (or such other person) must remit that amount
within ten business days after the date of the statement for such
amount rendered by Rockwell, failing which Rockwell shall have the
same right of set-off as provided under Section 3(e) with respect to
payment of the exercise price for Option Shares.
6. HEADINGS
The section headings contained in these Stock Option Terms and
Conditions are solely for the purpose of reference, are not part of
the agreement of the parties and shall in no way affect the meaning or
interpretation of this Stock Option Agreement.
7. REFERENCES
All references in these Stock Option Terms and Conditions to Sections,
paragraphs, subparagraphs or clauses shall be deemed to be references
to Sections, paragraphs, subparagraphs and clauses of these Stock
Option Terms and Conditions unless otherwise specifically provided.
8. APPLICABLE LAWS AND REGULATIONS
This Stock Option Agreement and Rockwell's obligation to issue Option
Shares hereunder are subject to applicable laws and regulations.
Attachment 1 - Cash Only Option Exercise Form and Instructions
Attachment 2 - "Stock Swap" Option Exercise Form and Instructions
-9-
[88T:12/7/94]
<PAGE> 31
ATTACHMENT 1
STOCK OPTION EXERCISE FORM - CASH ONLY
ROCKWELL INTERNATIONAL CORPORATION
CASH ONLY STOCK OPTION EXERCISE FORM
Attached is the Stock Option Exercise Form to be used if you exercise a stock
option under any of Rockwell's stock option plans for a cash payment (including
a so-called "cashless" exercise in which your stockbroker, bank or other
financial institution furnishes the cash payment of the exercise price).
BEFORE COMPLETING THIS STOCK OPTION EXERCISE FORM, PLEASE READ CAREFULLY THE
SEPARATE INSTRUCTIONS FOR THE FORM, WHICH ARE REPRODUCED IN APPENDIX I TO THE
BOOKLET, FACTS ABOUT ROCKWELL INTERNATIONAL CORPORATION STOCK OPTIONS AND SARS
(REVISED MARCH 1993).
YOU SHOULD ALSO REFER TO THE PERTINENT PORTIONS OF THE FACTS BOOKLET,
PARTICULARLY THE "HIGHLIGHTS" SECTION (ON PAGES 2-7) FOR FURTHER GUIDANCE IN
COMPLETING THE FORM.
If after reading the separate instructions and the pertinent sections of the
FACTS booklet you have questions on the procedures to be followed in completing
your exercise or on how to complete the Form, please call Stock Option
Administration in the Secretary's Office in Pittsburgh (at Comnet 545-7120 or
(412) 565-7120) for assistance.
[88T:12/7/94]
<PAGE> 32
CASH ONLY STOCK OPTION EXERCISE FORM
------------------------------------
To: Rockwell International Corporation
625 Liberty Avenue
Pittsburgh, Pennsylvania 15222-3123
Attention: Office of the Secretary,
Stock Option Administration
1. OPTIONS EXERCISED: Subject to the terms and conditions of the
1979 Stock Plan for Key Employees, the 1981 Incentive Stock Option Plan for Key
Employees, the 1988 Long-Term Incentives Plan and/or the 1995 Long-Term
Incentives Plan (collectively, the Plans) of Rockwell International Corporation
(Rockwell), and Agreement(s) thereunder, I hereby exercise the following stock
option(s):
<TABLE>
<CAPTION>
Plan Date o NQ/ Class of Stock Number of Exercise Total
Year Grant ISO Common/Class A Shares Price Purchase Price
- ---- ------- --- -------------- -------- -------- --------------
<S> <C> <C> <C> <C> <C> <C>
$ $
- ---- ------- --- -------------- -------- -------- --------------
$ $
- ---- ------- --- -------------- -------- -------- --------------
$ $
- ---- ------- --- -------------- -------- -------- --------------
</TABLE>
2. CONVERSION: Convert [ ] None [ ] All [ ] _____ shares
of the shares of Class A Common Stock to Common Stock.
3. PAYMENT:
[ ] A check payable to Rockwell International Corporation
in the amount of the Total Purchase Price of the
above-itemized stock option(s) is enclosed.
[ ] The Total Purchase Price of the above-itemized stock
option(s) will be paid by a check payable to Rockwell
International Corporation or (if prior arrangements
are made with the Stock Option Administration staff
of the Secretary's Office) by a wire transfer of
funds to Rockwell
[CONTINUED ON PAGE 2]
<PAGE> 33
Cash Only Stock Option Exercise Form
Page 2
International Corporation to the account specified by
the Secretary's Office (Stock Option Administration),
which will be sent promptly by my stockbroker, bank
or other financial institution,
Representative's Name: _______________________________
Firm Name: ___________________________________________
Address: _____________________________________________
_____________________________________________
Telephone No.: _______________________________________
If full payment of the Total Purchase Price of the stock
option(s) listed in ITEM 1 is not delivered within five (5)
business days after the later of the date of this Form or the
date of its receipt by the Secretary of Rockwell, the
Corporation (as defined in the Plans) is authorized forthwith
to set off the balance due against salary payments or other
amounts due or which may become due me to satisfy my
obligation to pay the Total Purchase Price.
If any of the stock option(s) listed in Item 1 was granted as
a nonqualified stock option (NQ), I understand Rockwell will
issue a statement to me for reimbursement of taxes required to
be withheld and remitted to taxing authorities in respect of
the exercise of those stock option(s) and may withhold
delivery of the certificate(s) for the shares deliverable upon
this exercise until that statement has been paid in full. If
full payment of that statement is not received by Rockwell
within ten (10) business days after the date of that
statement, the Corporation (as defined in the Plans) is
authorized forthwith to set off the balance due against salary
payments or other amounts due or which may become due me to
satisfy any obligation to reimburse Rockwell for those
withholding taxes.
4. REGISTRATION: Please register the stock as follows:
Name: _________________________________________
Social Security No.: __________________________
Current Address: ______________________________
______________________________
[CONTINUED AND TO BE SIGNED ON PAGE 3]
<PAGE> 34
Cash Only Stock Option Exercise Form
Page 3
NOTE: THE STOCK MAY BE REGISTERED ONLY IN YOUR NAME OR IN
YOUR NAME JOINTLY WITH YOUR SPOUSE (OR JOINTLY WITH
ANOTHER PERSON). IT MAY NOT BE REGISTERED IN THE
NAME OF YOUR STOCKBROKER, BANK OR OTHER FINANCIAL
INSTITUTION.
5. DELIVERY: Please deliver the stock
_____ to me at the address listed in Item 4.
_____ to the following person and address:
Name of Stockbrokerage Firm or Other Addressee:
_______________________________________________________
Address: _____________________________________________
_____________________________________________
Attention: ___________________________________________
THIS STOCK OPTION EXERCISE MAY NOT BE REVOKED OR CHANGED AFTER DELIVERY OF THIS
FORM, PROPERLY COMPLETED, DATED AND SIGNED, TO THE CORPORATION WHETHER OR NOT
PAYMENT ACCOMPANIES THIS FORM AND WHETHER THIS FORM IS DATED BEFORE, ON OR
AFTER THE DATE OF SUCH RECEIPT.
____________________________________
(Signature)
Print Name:_________________________
Dated: _____________________, 19 ___
<PAGE> 35
ATTACHMENT 2
STOCK OPTION EXERCISE FORM
STOCK OR STOCK AND CASH ("STOCK SWAP")
ROCKWELL INTERNATIONAL CORPORATION
"STOCK SWAP" STOCK OPTION EXERCISE FORM
Attached is the Stock Option Exercise Form to be used if you exercise a stock
option under any of Rockwell's stock option plans and pay part or all of the
exercise price for the Option Shares purchased by delivering shares of Rockwell
Common Stock or Class A Common Stock.
BEFORE COMPLETING THIS STOCK OPTION EXERCISE FORM, PLEASE READ CAREFULLY THE
SEPARATE INSTRUCTIONS FOR THE FORM, WHICH ARE REPRODUCED IN APPENDIX II TO THE
BOOKLET, FACTS ABOUT ROCKWELL INTERNATIONAL CORPORATION STOCK OPTIONS AND SARS
(REVISED MARCH 1993).
YOU SHOULD ALSO REFER TO THE PERTINENT PORTIONS OF THE FACTS BOOKLET,
PARTICULARLY THE "HIGHLIGHTS" SECTION (ON PAGES 2-7) AND THE STOCK-FOR-STOCK
PAYMENT METHOD ("STOCK SWAP") SECTION (ON PAGES 31-36) FOR FURTHER GUIDANCE IN
COMPLETING THE FORM.
If after reading the separate instructions and the pertinent sections of the
FACTS booklet you have questions on the procedures to be followed in completing
your exercise or on how to complete the Form, please call Stock Option
Administration in the Secretary's Office in Pittsburgh (at Comnet 545-7120 or
(412) 565-7120) for assistance.
[88T:12/7/94]
<PAGE> 36
"STOCK SWAP" STOCK OPTION EXERCISE FORM
---------------------------------------
To: Rockwell International Corporation
625 Liberty Avenue
Pittsburgh, Pennsylvania 15222-3123
Attention: Office of the Secretary,
Stock Option Administration
1. OPTIONS EXERCISED: Subject to the terms and conditions of the
1979 Stock Plan for Key Employees, the 1981 Incentive Stock Option Plan for Key
Employees, the 1988 Long-Term Incentives Plan and/or the 1995 Long-Term
Incentives Plan (collectively, the Plans) of Rockwell International Corporation
(Rockwell), and Agreement(s) thereunder, I hereby exercise the following stock
option(s):
<TABLE>
<CAPTION>
Plan Date of NQ/ Class of Stock Number of Exercise Total
Year Grant ISO Common/Class A Shares Price Purchase Price
- ---- ------- --- -------------- -------- -------- --------------
<S> <C> <C> <C> <C> <C> <C>
$ $
- ---- ------- --- -------------- -------- -------- --------------
$ $
- ---- ------- --- -------------- -------- -------- --------------
$ $
- ---- ------- --- -------------- -------- -------- --------------
</TABLE>
2. CONVERSION: Convert [ ] None [ ] All [ ] _____ shares
of the shares of Class A Common Stock to Common Stock.
3. PAYMENT: A. Number of shares of Rockwell Common Stock
or Class A Common Stock surrendered to pay the exercise price of the option(s):
______________ shares of Common _______________ shares of Class A Common
B. Amount of enclosed check, if any, payable
to Rockwell International Corporation to pay estimated balance of exercise
price of the option(s):
$_________________________
I am using shares of Common Stock or Class A Common Stock or both of
Rockwell (Shares) that I now own to pay all or part of the exercise price for
the Shares to be purchased on my exercise of the above-referenced stock
option(s). I enclose, or in accordance with prior arrangements I have made
with you, I am arranging for delivery to you of, one or more certificates for
(i) at least the number of Shares estimated, based on the closing
price on the New York Stock Exchange -- Composite Transactions
on a day not more than five business days prior to (x) the
date of receipt of this Exercise Form by the Secretary's
Office (Stock Option Administration), or (y) if later, the
date of this
[CONTINUED ON PAGE 2]
<PAGE> 37
"Stock Swap" Stock Option Exercise Form
Page 2
Exercise Form, to be sufficient to pay in full the Total
Purchase Price of the Shares covered by this exercise, or
(ii) a lesser number of Shares that I desire to apply to such Total
Purchase Price and a check in the amount of such Total
Purchase Price less the value of the Shares delivered, based
on the closing price on the New York Stock Exchange --
Composite Transactions on a day not more than five business
days prior to (x) the date of receipt of this Exercise Form by
the Secretary's Office (Stock Option Administration), or (y)
if later, the date of this Exercise Form,
and in either case, an executed stock transfer power covering the Shares
surrendered or to be surrendered. I understand that you will advise me of the
exact number of Shares, valued in accordance with the Plans at the closing
price on the New York Stock Exchange -- Composite Transactions on the later of
(x) the date you have received (I) this Exercise Form, (II) the estimated
payment in Shares or Shares and cash specified above and, (III) if I am not the
optionee, any additional documents required to evidence my right to exercise
these stock option(s) and (y) the date of this Exercise Form (the later of such
dates, the effective date of this exercise), and any cash required to pay in
full the Total Purchase Price of the Shares to be purchased upon this exercise.
I further understand that certificates representing the number of Shares
purchased will be issued only after I deliver to Rockwell any remaining balance
of the Total Purchase Price in cash or a combination of Shares and cash and the
amount sufficient to reimburse Rockwell for all withholding taxes required to
be withheld and remitted to taxing authorities in respect of this exercise.
I hereby agree to deliver to Rockwell no later than five (5) business
days following the effective date of this exercise cash or any additional
number of Shares or a combination of Shares and cash required to pay in full
the Total Purchase Price of the Shares to be purchased upon this exercise, and
an executed stock transfer power covering any additional Shares delivered. I
hereby further agree to pay Rockwell, no later than ten (10) business days
after the date of Rockwell's statement therefor, the amount sufficient to
reimburse Rockwell for all withholding taxes required to be withheld and
remitted to taxing authorities in respect of this exercise. If I fail to
deliver any remaining balance of the Total Purchase Price of the Shares to be
purchased upon this exercise and an amount sufficient to reimburse Rockwell in
full for all withholding taxes required to be withheld and remitted to taxing
authorities in respect of this exercise in accordance with this paragraph, the
Corporation (as defined in the Plans) is authorized forthwith to set off the
balance due against salary payments or other amounts due or which may become
due to me to satisfy my obligation hereunder.
4. REGISTRATION: It is my understanding that following my
payment in full of the Total Purchase Price and reimbursement of Rockwell for
any applicable withholding taxes as provided in ITEM 3: PAYMENT, I shall
receive from Rockwell one or more stock certificates representing the same
[CONTINUED AND TO BE SIGNED ON PAGE 3]
<PAGE> 38
"Stock Swap" Stock Option Exercise Form
Page 3
number and kind of Shares I surrendered to Rockwell, issued in the same name or
names as the Shares so surrendered. I shall also receive one or more separate
stock certificates representing the additional Shares acquired as a result of
this exercise, which I hereby request be registered as follows:
Name: ____________________________________________________
Social Security No.: ______________________________________
Current Address: _________________________________________
_________________________________________
NOTE: THE STOCK MAY BE REGISTERED ONLY IN YOUR NAME OR IN
YOUR NAME JOINTLY WITH YOUR SPOUSE (OR JOINTLY WITH
ANOTHER PERSON). IT MAY NOT BE REGISTERED IN THE
NAME OF YOUR STOCKBROKER, BANK OR OTHER FINANCIAL
INSTITUTION.
5. DELIVERY: Please deliver the stock
_____ to me at the address listed in Item 4.
_____ to the following person and address:
Name of Stockbrokerage Firm or Other Addressee:
_______________________________________________________
Address: _____________________________________________
_____________________________________________
Attention: ___________________________________________
THIS STOCK OPTION EXERCISE MAY NOT BE REVOKED OR CHANGED AFTER DELIVERY OF THIS
FORM, PROPERLY COMPLETED, DATED AND SIGNED, TO THE CORPORATION WHETHER OR NOT
PAYMENT ACCOMPANIES THIS FORM AND WHETHER THIS FORM IS DATED BEFORE, ON OR
AFTER THE DATE OF SUCH RECEIPT.
____________________________________
(Signature)
Print Name:_________________________
Dated: _____________________, 19 ___
<PAGE> 39
"Stock Swap" Stock Option Exercise Form
Page 4
STOCK TRANSFER POWER SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED, (I) (We), ____________________________
(insert name(s))
hereby sell, assign and transfer unto Rockwell International
Corporation the ________________ shares of the [Common Stock]
(insert number)
[Class A Common Stock] of Rockwell International Corporation
standing in the name(s) of ____________________________ on the
(name(s) on certificate(s))
books of said Rockwell International Corporation represented by
Certificate(s) No(s). ______________ herewith and do hereby
irrevocably constitute and appoint Mellon Bank, N.A., attorney to
transfer the said stock on the books of Rockwell International
with full power of substitution in the premises.
Dated: __________________
_____________________________________________
(Signature)
WITNESS:
_____________________________________________
(Signature)
<PAGE> 1
EXHIBIT 10-e-1
ROCKWELL INTERNATIONAL CORPORATION
1995 LONG-TERM INCENTIVES PLAN
1. PURPOSE
The purpose of the 1995 Long-Term Incentives Plan is to foster creation of and
enhance Rockwell shareowner value by linking the compensation of officers and
other key employees of the Corporation to increases in the price of Rockwell
stock or by offering the incentives of long-term monetary rewards to key
employees of Rockwell or its business units directly linked to their
contribution to the creation of Rockwell shareowner value, thus providing means
by which persons of outstanding abilities can be attracted, motivated and
retained.
2. DEFINITIONS
For the purpose of the Plan, the following terms shall have the meanings set
forth below:
(a) Board of Directors. The Board of Directors of Rockwell.
(b) Committee. The Compensation and Management Development Committee
designated by the Board of Directors from among its members who are not eligible
to receive a Grant under the Plan or a grant under a Performance Plan.
(c) Corporation. Rockwell and those of its subsidiary corporations or
affiliates designated by the Committee to participate in the Plan.
(d) Employees. Officers and other key employees of the Corporation, but not
directors who are not also employees of the Corporation.
(e) Executive Officer. An Employee who is an executive officer of Rockwell as
defined in Rule 3b-7 under the Securities Exchange Act of 1934, as amended, or
any successor provision.
(f) Fair Market Value. The closing price of the Common Stock of Rockwell as
reported in the New York Stock Exchange -- Composite Transactions on the date of
a determination (or on the next preceding day such stock was traded if it was
not traded on the date of a determination).
(g) Grant. A grant made pursuant to the Plan by the Grant Committee to an
Employee in the form of Options, Stock Appreciation Rights or Restricted Stock.
(h) Grant Committee. The Committee excluding those members of the Committee
who are not at the time any Grant is made "outside directors" as defined for
purposes of Section 162(m) and regulations thereunder.
(i) Option. An option to purchase Shares granted to an Employee by the Grant
Committee pursuant to Section 5 or 8 of the Plan.
(j) Participant. Any Employee to whom a Grant is made for so long as that
Grant remains outstanding.
(k) Performance Cycle. Any period of three or more consecutive fiscal years of
Rockwell established for Rockwell or a designated business component under a
Performance Plan.
(l) Performance Measure. Criteria established to serve as a measure of
performance of Rockwell or a designated business component during a Performance
Cycle under a Performance Plan.
(m) Performance Objectives. Levels of achievement, related to the Performance
Measure, established as goals for a Performance Cycle to be used in determining
whether and to what extent grants under a Performance Plan shall be deemed to be
earned.
(n) Performance Plan. A performance plan applicable to Rockwell or one or more
business components of the Corporation authorized pursuant to Section 4 of the
Plan.
(o) Plan. This 1995 Long-Term Incentives Plan.
(p) Restricted Period. The period (i) not less than three years or (ii) until
achievement of performance goals specified at the time of Grant by the Grant
Committee with respect to a Grant of Restricted Stock during which the Shares
are subject to forfeiture if the grantee does not continue as an Employee.
A-1
<PAGE> 2
(q) Restricted Stock. Shares subject to conditions prescribed by the Committee
under Section 7 of the Plan.
(r) Rockwell. Rockwell International Corporation.
(s) Section 162(m). Section 162(m) of the Internal Revenue Code, as amended,
or any successor provision.
(t) Shares. Shares of Common Stock of Rockwell.
(u) Stock Appreciation Right. A Right granted to an Employee by the Grant
Committee pursuant to Section 6 or 8 of the Plan (i) in conjunction with all or
any part of any Option, which entitles the Employee, upon exercise of such
Right, to surrender such Option, or any part thereof, and to receive a payment
equal to the excess of the Fair Market Value, on the date of such exercise, of
the Shares covered by such Option, or part thereof, over the purchase price of
such Shares pursuant to the Option (a Tandem Stock Appreciation Right) or (ii)
separate and apart from any Option, which entitles the Employee, upon exercise
of such Right, to receive a payment measured by the increase in the Fair Market
Value of a number of Shares designated by such Right from the date of grant of
such Right to the date on which the Employee exercises such Right (a
Freestanding Stock Appreciation Right).
(v) Supplementary Stock Plan. A supplementary stock plan applicable to
Employees subject to the tax laws of one or more countries other than the United
States authorized pursuant to Section 8 of the Plan.
3. PLAN ADMINISTRATION
(a) The Grant Committee shall determine the Employees to whom Grants are made,
the number of Shares or Stock Appreciation Rights to be subject to each Grant
and the Restricted Period for any Grant of Restricted Stock.
(b) The Committee shall exercise all other responsibilities, powers and
authority relating to the administration of the Plan not reserved to the Board
of Directors.
(c) The Board of Directors reserves the right, in its sole discretion, to
exercise or authorize another committee or person to exercise some of or all the
responsibilities, powers and authority vested in the Committee and the Grant
Committee under the Plan.
(d) In making their determinations with respect to Grants under the Plan or
grants under any Performance Plan, the Grant Committee and the Committee may
consider recommendations of the Chief Executive Officer of Rockwell and shall
take into account such factors as the Employee's level of responsibility,
performance, performance potential, level and type of compensation and potential
value of Grants.
4. PERFORMANCE PLANS
(a) The Committee may authorize Performance Plans applicable to Rockwell or
one or more business components of the Corporation on such terms and conditions,
not inconsistent with the Plan, and applicable to such Employees or categories
of Employees as the Committee shall determine. In connection with its
authorization of any Performance Plan, the Committee may authorize Rockwell's
Chief Executive Officer to approve the definitive terms and conditions of that
Performance Plan, including but not limited to the Employees or categories of
Employees to which that Performance Plan shall apply and the committee or person
who shall be delegated authority to administer that Performance Plan, except
that authorization by the Committee shall be required for participation by any
Executive Officer in any Performance Plan. Each Performance Plan shall include
provision for: (i) establishment of Performance Cycles of not less than three
consecutive fiscal years for each designated business component (and Rockwell if
a Performance Plan applicable to it should be authorized), provided that no
Performance Cycle shall begin later than September 30, 2005 and only one
Performance Cycle for Rockwell or any designated business component shall begin
with any one fiscal year; (ii) establishment of a Performance Measure and
Performance Objectives for each Performance Cycle established for Rockwell and
each designated business component; and (iii) approval by the Committee of any
grants thereunder to any Executive Officer. In addition, a Performance Plan may
but need not provide for (x) grants under such Performance Plan with respect to
a Performance Cycle to be made at any time during the Performance Cycle,
provided that any grant made after the first fiscal year of the
A-2
<PAGE> 3
Performance Cycle shall provide for a pro-rated award; (y) adjustment (up or
down) of the Performance Objectives or modification of the Performance Measure
(or both) for any designated business component for a Performance Cycle if the
Committee (or with the Committee's approval, the committee or person delegated
to administer the Performance Plan except insofar as it relates to any Executive
Officer) determines that conditions, including but not limited to changes in the
economy, changes in laws or government regulations, changes in generally
accepted accounting principles, or acquisitions or dispositions determined by
the Committee to be material, so warrant; and (z) a Change-of-Control
contingency similar to Section 13(f) of the Plan.
(b) Potential awards granted to participating Employees under Performance
Plans shall be expressed as cash amounts (whether in currency or in units having
a currency equivalent) and shall be paid in accordance with determinations of
the Committee. Payments shall be in cash unless the Committee determines to make
payment to one or more named participating Employees in Shares or a combination
of cash and Shares. Any payment which is made in cash may be made in a lump sum,
in installments or on a deferred basis. Any payment which is made in Shares
shall be valued at the Fair Market Value on the last trading day of the week
preceding the day of issuance or transfer of the Shares. No grant under a
Performance Plan shall bear interest except as may be determined by the
Committee in respect of payments made in installments or on a deferred basis.
(c) If and to the extent an award under a Performance Plan for any Performance
Cycle becomes payable to a participating Employee whose compensation is subject
to the limitation on deductibility under Section 162(m) for the applicable year
and the amount of that award when combined with all base, incentive or other
compensation of such Employee for the applicable year which constitutes
"applicable employee remuneration," as defined for purposes of Section 162(m),
would exceed the limitation of Section 162(m)(1), the amount payable pursuant to
the Performance Plan in excess of that limitation, whether payable in cash,
Shares or a combination of both, may in the sole discretion of the Grant
Committee be deferred until and paid on the first business day of the calendar
year following the Corporation's fiscal year in which such Employee's employment
by the Corporation terminates. The certificates for any Shares to which a
participating Employee will become entitled in respect of a payment deferred
pursuant to this paragraph and any dividends that may be paid in cash or
otherwise on those Shares shall be delivered to and held by Rockwell until the
end of the period for which such payment is deferred. At that time, those Shares
and dividends and any cash payment deferred pursuant to this paragraph shall be
delivered to the Employee, together with interest on the amount of cash
dividends and any such cash payment so delivered computed at the same rate and
in the same manner as interest credited from time to time under Rockwell's
Deferred Compensation Plan.
5. OPTIONS
The Grant Committee may grant from time to time to Employees, Options which
may be incentive stock options (as defined in Section 422 of the Internal
Revenue Code), nonqualified stock options, or both, to purchase Shares on terms
and conditions determined by the Committee, consistent with the provisions of
the Plan, including the following:
(a) The purchase price of the Shares subject to any Option shall not be less
than the Fair Market Value on the date the Option is granted.
(b) Each Option may be exercised in whole or in part from time to time during
such period as the Option shall specify; provided, however, that if the
Committee does not establish a different exercise schedule at or before the date
of grant of an Option, the Option shall become exercisable in three
approximately equal installments on each of the first, second and third
anniversaries of the date the Option is granted; and provided, further, that no
Option shall be exercisable prior to one year (except as provided in Section
9(c) or 13(f)) nor after ten years from the date of the grant thereof.
(c) Each Option may provide for related Stock Appreciation Rights.
(d) The aggregate Fair Market Value (determined as of the date the Option is
granted) of the Shares for which any Employee may be granted incentive stock
options which are exercisable for the
A-3
<PAGE> 4
first time in any calendar year under all plans of the Corporation and any
parent or subsidiary of the Corporation shall not exceed $100,000 (or such other
amount as may be fixed as the maximum amount permitted by Section 422(d) of the
Internal Revenue Code, as amended, or any successor provision). The Grant
Committee shall grant incentive stock options only to employees of Rockwell or a
corporation which is a subsidiary of Rockwell within the meaning of Section
425(f) of the Internal Revenue Code.
(e) The purchase price of the Shares with respect to which an Option or
portion thereof is exercised shall be payable in full in cash or in Shares or in
a combination of cash and Shares. The value of any Share delivered in payment of
the purchase price shall be its Fair Market Value on the date the Option is
exercised.
6. STOCK APPRECIATION RIGHTS
(a) The Grant Committee may grant Tandem Stock Appreciation Rights to an
Employee either at the time of grant of an Option or at any time thereafter
during the term of an Option. A Tandem Stock Appreciation Right shall be
exercisable only when and to the extent that the related Option is exercisable.
(b) The Grant Committee may grant from time to time to Employees, Freestanding
Stock Appreciation Rights on terms and conditions determined by the Committee,
consistent with the provisions of the Plan.
(c) The payment to which the grantee of a Stock Appreciation Right is entitled
upon exercise thereof may be made in Shares valued at Fair Market Value on the
date of exercise, or in cash or partly in cash and partly in Shares, as the
Committee may determine.
(d) Upon exercise of a Tandem Stock Appreciation Right and surrender of the
related Option or part thereof, such Option, to the extent surrendered, shall
not thereafter be exercisable, and the Shares covered by the surrendered Option
shall not again be available for Grants pursuant to the Plan, or awards under a
Performance Plan.
(e) Upon exercise of a Freestanding Stock Appreciation Right, any Shares
delivered in payment thereof shall not again be available for Grants pursuant to
the Plan, or awards under a Performance Plan.
7. RESTRICTED STOCK
The Grant Committee may grant from time to time to Employees, Shares of
Restricted Stock on terms determined by the Committee, consistent with the
provisions of the Plan, including the following:
(a) The Grant Committee shall specify a Restricted Period and may specify
performance or other criteria for each Grant of Restricted Stock, and the Shares
of Restricted Stock granted shall be forfeited if the grantee does not continue
as an Employee throughout the Restricted Period, or if and to the extent the
specified performance or other criteria are not met during the Restricted
Period, except as otherwise provided in Section 9(a), 9(b) or 13(f).
(b) Shares of Restricted Stock granted to an Employee shall have all the
attributes of outstanding Shares, except that certificates for such Shares and
any dividends that may be paid in cash or otherwise thereon shall be delivered
to and held by Rockwell. As and to the extent that Shares of Restricted Stock
are no longer subject to forfeiture, certificates therefor and any dividends
related thereto held by Rockwell shall be delivered to the Employee. There shall
also be paid to the Employee at such time interest on the amount of cash
dividends so delivered computed at the same rate and in the same manner as
interest credited from time to time under Rockwell's Deferred Compensation Plan.
8. SUPPLEMENTARY STOCK PLANS
(a) The Committee may authorize Supplementary Stock Plans applicable to
Employees subject to the tax laws of one or more countries other than the United
States and providing for the grant of Options, Stock Appreciation Rights,
Restricted Stock or any combination thereof to such Employees on terms and
conditions, consistent with the Plan, determined by the Committee which may
differ from the terms and conditions of Grants pursuant to Sections 5, 6 and 7
of the Plan for the purpose of complying with the conditions for qualification
of Options, Stock Appreciation Rights or Restricted Stock for favorable
treatment under foreign tax laws.
(b) Notwithstanding any other provision hereof, Options granted under any
Supplementary Stock
A-4
<PAGE> 5
Plan shall include provisions that conform with Sections 5(a), (b), (c) and (e)
and 6(d); Restricted Stock granted under any Supplementary Stock Plan shall
include provisions that conform with Sections 7(a) and (b); and subject to
Section 3(b), only the Grant Committee shall have authority to grant Options,
Stock Appreciation Rights or Restricted Stock under any Supplementary Stock
Plan.
9. EFFECT OF DEATH OR TERMINATION OF EMPLOYMENT
(a) If a participating Employee's employment by the Corporation terminates
prior to the end of a Performance Cycle under a Performance Plan or the
Restricted Period applicable to any Grant of Restricted Stock because of the
Employee's (i) death or (ii) retirement not less than one year after the
beginning of that Performance Cycle or the date of that Grant under a retirement
plan of the Corporation at or after attaining age 62 or accumulating 85 points
(or fulfilling such other criteria as may be required for an unreduced early
retirement benefit) for purposes of the applicable retirement plan, the amount
of the award under the Performance Plan or the number of Shares of Restricted
Stock such Employee shall be deemed to have earned shall be the amount or number
thereof determined as though such Employee's employment had not terminated prior
to the end of the Performance Cycle or Restricted Period.
(b) If a participating Employee's employment by the Corporation terminates
prior to the end of a Performance Cycle under a Performance Plan or the
Restricted Period applicable to any Grant of Restricted Stock, for any reason
other than death or retirement not less than one year after the beginning of
that Performance Cycle or the date of that Grant under a retirement plan of the
Corporation at or after attaining age 62 or accumulating 85 points (or
fulfilling such other criteria as may be required for an unreduced early
retirement benefit) under the applicable retirement plan, such Employee shall be
deemed not to have earned any award under the Performance Plan or Shares of
Restricted Stock except as and to the extent the Committee (or with the
Committee's approval, the committee or person delegated to administer a
Performance Plan except insofar as it relates to any Executive Officer), taking
into account the purpose of the Plan and such other factors as in its sole
discretion it deems appropriate, may determine, provided that the amount of the
award or the number of Shares of Restricted Stock which may be so determined by
the Committee to have been earned shall not exceed the amount or number which
would have been earned had the provisions of paragraph (a) above been
applicable.
(c) If the employment by the Corporation of a Participant who (or whose
permitted transferee) holds an outstanding Grant of Options or Stock
Appreciation Rights terminates by reason of the Participant's death, the Options
or Stock Appreciation Rights subject to that Grant and not theretofore exercised
may be exercised from and after the date of the Participant's death for a period
of three years (or until the expiration date specified in the Grant if earlier)
even if any of them was not exercisable at the date of death.
(d) If a Participant who (or whose permitted transferee) holds an outstanding
Grant of Options or Stock Appreciation Rights retires under a retirement plan of
the Corporation at any time after a portion thereof has become exercisable, the
Options or Stock Appreciation Rights subject to that Grant and not theretofore
exercised may be exercised from and after the date upon which they are first
exercisable under that Grant for a period of five years from the date of
retirement (or until the expiration date specified in the Grant if earlier),
even if any of them was not exercisable at the date of retirement, except that
any thereof (i) subject to a Grant made within eighteen months before such
retirement or (ii) held by a grantee (or a permitted transferee thereof) who
retires before either attaining age 62 or accumulating 85 points (or fulfilling
such other criteria as may be required for an unreduced early retirement
benefit) for purposes of the applicable retirement plan, may be exercised solely
for a period of three years from the date of retirement (or until the expiration
date specified in the Grant if earlier) or such shorter period as the Committee
may determine within 60 days of a grantee's retirement.
(e) If the employment by the Corporation of a Participant who (or whose
permitted transferee) holds an outstanding Grant of Options or Stock
Appreciation Rights is terminated for any reason other than death or retirement
under a retirement
A-5
<PAGE> 6
plan of the Corporation, the Options or Stock Appreciation Rights subject to
that Grant and not theretofore exercised may be exercised only within ninety
days after termination of such employment (or until the expiration date
specified in the Grant if earlier) and only to the extent the grantee thereof
(or a permitted transferee) was entitled to exercise the Options or Stock
Appreciation Rights at the time of termination of such employment, unless and
except to the extent the Committee may otherwise determine; provided, however,
that the Committee shall not in any event permit a longer period of exercise
than would have been applicable had the provisions of paragraph (d) above been
applicable.
10. SHARES AVAILABLE
(a) The total number of Shares which may be delivered in payment and upon
exercise of Grants and in payments of awards under Performance Plans shall not
exceed 16 million, as adjusted from time to time as herein provided, and the
total number of Shares as to which Grants may be made in any one fiscal year of
the Corporation shall not exceed 1 1/2% of the total number of Shares
outstanding and held in Treasury as of the date of determination. Shares which
may be delivered in payment or upon exercise of Grants or in payments of awards
under Performance Plans may consist in whole or in part of unissued or
reacquired Shares; provided, however, that unless otherwise determined by the
Committee, Shares which may be granted as Restricted Stock shall consist only of
reacquired shares. Subject to Sections 6(d) and (e), if for any reason Shares as
to which an Option has been granted cease to be subject to purchase thereunder
or Shares granted as Restricted Stock are forfeited to the Corporation, then
such Shares shall again be available under the Plan.
(b) The total number of Shares subject to Options and Stock Appreciation
Rights granted to any one Employee in any one fiscal year of Rockwell under all
plans of Rockwell and any parent or subsidiary of Rockwell shall in no event
exceed 350,000, as adjusted from time to time as herein provided.
(c) No Option, Freestanding Stock Appreciation Right or Restricted Stock shall
be granted under the Plan or any Supplementary Stock Plan after September 30,
2005, but Options or Stock Appreciation Rights and Restricted Stock granted
theretofore may extend beyond that date, and Tandem Stock Appreciation Rights
may be granted after that date with respect to Options outstanding on that date.
11. ADJUSTMENTS
If there shall be any change in or affecting Shares on account of any merger,
consolidation, reorganization, recapitalization, reclassification, stock
dividend, stock split or combination, or other distribution to holders of Shares
(other than a cash dividend), there shall be made or taken such amendments to
the Plan and such adjustments and actions thereunder as the Board of Directors
may deem appropriate under the circumstances. Such amendments, adjustments and
actions may include, without limitation, changes in the number of Shares which
may be issued or transferred, in the aggregate or to any one Employee, pursuant
to the Plan, the number of Shares subject to outstanding Options and Stock
Appreciation Rights and the related price per share; provided, however, that no
such amendment, adjustment or action may change the limitation prescribed by
Section 10(b) to a number of Shares that is a greater proportion of the total
number of Shares outstanding and held in Treasury as of the effective date of
that amendment, adjustment or action than the proportion of the number of Shares
prescribed by Section 10(b) to the total number of Shares outstanding and held
in Treasury immediately prior thereto.
12. AMENDMENT AND TERMINATION
The Committee shall have the power in its discretion to amend, suspend or
terminate the Plan or Grants thereunder at any time except that, subject to the
provisions of Section 11, (a) without the consent of the person affected, no
such action shall cancel or reduce a Grant theretofore made other than as
provided for or contemplated in the agreement evidencing the Grant and (b)
without the approval of the shareowners of Rockwell, the Committee may not (i)
change the class of persons eligible to receive incentive stock options, (ii)
increase the number of Shares provided in Section 10(a) or 10(b), (iii) reduce
the Option exercise price of any Option below the Fair Market Value on the date
such Option was granted or decrease the
A-6
<PAGE> 7
forfeiture period for any Grant below that permitted under the Plan.
13. MISCELLANEOUS
(a) Except as determined by the Committee, no person shall have any claim to
receive a Grant or any payment under a Performance Plan, to receive payment in
respect of a Grant or under a Performance Plan in any form other than the
Committee shall approve or, in circumstances where Section 9 is applicable, to
be deemed to have earned any award under a Performance Plan or Shares of
Restricted Stock or to be entitled to exercise Options or Stock Appreciation
Rights for any particular period after termination of employment. There is no
obligation for uniformity of treatment of Employees under the Plan or any
Performance Plan. No Employee shall have any right as a Participant or a
participant under any Performance Plan to continue in the employ of the
Corporation for any period of time or to a continuation of any particular rate
of compensation, and the Corporation expressly reserves the right to discharge
or change the assignment of any Employee at any time.
(b) No Option, Stock Appreciation Right or right related to Restricted Stock
granted pursuant to the Plan or right to payment of an award under any
Performance Plan may be assigned, pledged or transferred except (i) by will or
by the laws of descent and distribution; or (ii) in the case of any Grant (other
than an Option granted as an incentive stock option) or any right to payment of
an award under a Performance Plan, by gift to any member of the Employee's
immediate family or to a trust for the benefit of one or more members of the
Employee's immediate family, if permitted in the applicable agreement governing
that Grant or right to payment; or (iii) as otherwise determined by the
Committee. Each Option, Stock Appreciation Right or right related to Restricted
Stock shall be exercisable, and each payment of an award under a Performance
Plan shall be payable, during the lifetime of the Employee to whom granted or
awarded only by or to such Employee, and any payment of an award under a
Performance Plan made after the death of a participating Employee entitled
thereto shall be paid to the legal representative of the estate or to the
designated beneficiary of such Employee, unless in any such case, the Grant or
right to payment has been transferred in accordance with the provisions of the
applicable agreement governing that Grant or right to payment, to a member of
the Employee's immediate family or a trust for the benefit of one or more
members of the Employee's immediate family, in which case it shall be
exercisable or payable only by or to such transferee (or to the legal
representative of the estate or to the heirs or legatees of such transferee).
For purposes of this provision, an Employee's "immediate family" shall mean the
Employee's spouse and natural, adopted or step-children and grandchildren.
(c) No person shall have the rights or privileges of a shareowner with respect
to Shares subject to an Option, deliverable as a payment, upon exercise of a
Stock Appreciation Right or under a Performance Plan until exercise of such
Option or Stock Appreciation Right, or delivery as a payment under the
Performance Plan.
(d) No fractional Shares shall be issued or transferred pursuant to the Plan.
If the portion of any payment pursuant to the Plan or a Performance Plan, to be
made in Shares is not equal to the value of a whole number of Shares, the person
entitled thereto shall be paid an amount equal to the Fair Market Value as of
the date of exercise of any fractional Share deliverable in respect of exercise
of a Stock Appreciation Right and the Fair Market Value as of the date of
payment of any fractional Share deliverable in respect of any payment under a
Performance Plan.
(e) The Corporation, the Board of Directors, the Committee, the Grant
Committee and the officers of Rockwell shall be fully protected in relying in
good faith on the computations and reports made pursuant to or in connection
with the Plan by the independent certified public accountants who audit the
Corporation's accounts or others (who may include Employees) whose services are
used by the Board of Directors, Committee or Grant Committee in its
administration of the Plan.
(f) Notwithstanding any other provision of the Plan, if a Change of Control
(as defined in Article III, Section 15(I)(1) of Rockwell's By-Laws) shall occur,
then unless prior to the occurrence thereof, the Board of Directors shall have
determined otherwise by vote of at least two-thirds of its members, (i) all
Performance Cycles (except those under Perform-
A-7
<PAGE> 8
ance Plans that do not provide for a Change-of-Control contingency) not then
complete shall be deemed completed forthwith, the Performance Objectives
therefor shall be deemed to have been attained, and each participating Employee
shall be deemed to have earned the maximum amount that could have been earned
thereunder; (ii) all Options and any Stock Appreciation Rights then outstanding
pursuant to the Plan shall forthwith become fully exercisable whether or not
otherwise then exercisable; and (iii) the restrictions on all Shares granted as
Restricted Stock under the Plan shall forthwith lapse.
(g) The Corporation shall have the right in connection with the delivery of
any Shares in payment of a Grant or a payment under a Performance Plan or upon
exercise of an Option to require as a condition of such delivery that the
recipient represent that such Shares are being acquired for investment and not
with a view to the distribution thereof.
(h) The Corporation shall have the right in connection with any payment under
a Performance Plan, exercise of any Option or Stock Appreciation Right or
termination of the Restricted Period for any Restricted Stock, to deduct from
any such payment or any other payment by the Corporation, an amount equal to any
taxes required by law to be withheld with respect thereto or to require the
Employee or other person receiving such payment, effecting such exercise or
entitled to Shares and related payments on termination of such Restricted
Period, as a condition of and prior to such payment or exercise or delivery of
Shares on such termination, to pay to the Corporation an amount sufficient to
provide for any such taxes so required to be withheld.
(i) Unless otherwise determined by the Committee or provided in an agreement
between any Employee and the Corporation, for purposes of the Plan an Employee
on authorized leave of absence will be considered as being in the employ of the
Corporation.
(j) The Corporation shall bear all expenses and costs in connection with the
operation of the Plan, including costs related to the purchase, issue or
transfer of Shares, but excluding taxes imposed on any person receiving a
payment or delivery of Shares under the Plan or a Performance Plan.
14. INTERPRETATIONS AND DETERMINATIONS
The Committee shall have the power from time to time to interpret the Plan, to
adopt, amend and rescind rules, regulations and procedures relating to the Plan,
to make, amend and rescind determinations under the Plan and to take all other
actions that the Committee shall deem necessary or appropriate for the
implementation and administration of the Plan. All interpretations,
determinations and other actions by the Committee not revoked or modified by the
Board of Directors shall be final, conclusive and binding upon all parties.
15. EFFECTIVE DATE
Upon approval by the shareowners of Rockwell, the Plan shall become effective
as of October 1, 1994.
A-8
<PAGE> 1
EXHIBIT 10-e-2
H:\WPDATA\ETM\OPTAGMT3.T&C
1995 LONG-TERM INCENTIVES PLAN
FORM OF OPTION AGREEMENT (WITHOUT ARBITRATION AGREEMENT)
NONTRANSFERABLE OPTIONS
--------------------------------------------------------
December 7, 1994
To:
We are pleased to notify you that the Compensation and Management Development
Committee has granted to you today the following stock option(s) under the 1995
Long-Term Incentives Plan (the Plan):
<TABLE>
<CAPTION>
Date of Grant Type of Grant Number of Shares Option Price
- ------------- ------------- ---------------- ------------
<S> <C> <C> <C>
99/99/99 (NQ) 9,999,999 $$$$.9999
</TABLE>
These stock option(s) have been granted, and may be exercised only upon the
terms and conditions of this Stock Option Agreement, subject in all respects to
the provisions of the Plan, as it may be amended. The attached Stock Option
Terms and Conditions are incorporated in and are part of this Stock Option
Agreement.
A copy of the Plan is enclosed.
Please confirm that you have read and agree to be bound by this Agreement by
signing one copy at the place indicated and returning the signed copy to:
Office of the Secretary
Rockwell International Corporation
625 Liberty Avenue
Pittsburgh, PA 15222-3123
Attention: Stock Option Administration
These stock options will lapse and be of no effect (i) if a copy of this Stock
Option Agreement, properly signed by you, is not received by the Secretary of
Rockwell on or before January 31, 1995, unless Rockwell (in its sole
discretion) elects in writing to extend that date; or (ii) if the shareowners
do not approve the Plan at the Annual Meeting to be held February 1, 1995 or
any adjournment thereof.
Agreed to:
Date: ______________________ ROCKWELL INTERNATIONAL CORPORATION
_______________________________ By: _______________________________
Employee Signature Senior Vice President, General
XXXXXXXXXXXXXXXXXXX Counsel and Secretary
999-99-9999
<PAGE> 2
1995 LONG-TERM INCENTIVES PLAN
FORM OF OPTION AGREEMENT (WITH ARBITRATION AGREEMENT)
NONTRANSFERRABLE OPTIONS
----------------------------------------------
December 7, 1994
To:
We are pleased to notify you that the Compensation and Management Development
Committee has granted to you today the following stock option(s) under the 1995
Long-Term Incentives Plan (the Plan):
<TABLE>
<CAPTION>
Date of Grant Type of Grant Number of Shares Option Price
- ------------- ------------- ---------------- ------------
<S> <C> <C> <C>
99/99/99 (NQ) 9,999,999 $$$$.9999
</TABLE>
These stock option(s) have been granted, and may be exercised only upon the
terms and conditions of this Stock Option Agreement, subject in all respects to
the provisions of the Plan, as it may be amended. The attached Stock Option
Terms and Conditions are incorporated in and are part of this Stock Option
Agreement.
A copy of the Plan is enclosed.
Please confirm that you have read and agree to be bound by this Agreement and
by the enclosed Mutual Agreement to Arbitrate claims by signing one copy of each
Agreement at the place indicated below and on page 2 of the Mutual Agreement to
Arbitrate Claims, and returning the signed copy to:
Office of the Secretary
Rockwell International Corporation
625 Liberty Avenue
Pittsburgh, PA 15222-3123
Attention: Stock Option Administration
These stock options will lapse and be of no effect (i) if copies of BOTH this
Stock Option Agreement and the Mutual Agreement to Arbitrate Claims, each
properly signed by you, is not received by the Secretary of Rockwell on or
before January 31, 1995, unless Rockwell (in its sole discretion) elects in
writing to extend that date; or (ii) if the shareowners do not approve the Plan
at the Annual Meeting to be held February 1, 1995 or any adjournment thereof.
Agreed to:
Date: ______________________ ROCKWELL INTERNATIONAL CORPORATION
_______________________________ By:__________________________________
Employee Signature Senior Vice President,
XXXXXXXXXXXXXXXXXX General Counsel and Secretary
999-99-9999
<PAGE> 3
H:\WPDATA\ETM\OPTAGMT3.T&C
ROCKWELL INTERNATIONAL CORPORATION
1995 LONG-TERM INCENTIVES PLAN
STOCK OPTION AGREEMENT
STOCK OPTION TERMS AND CONDITIONS
1. Definitions
-----------
As used in these Stock Option Terms and Conditions, the following
words and phrases shall have the respective meanings ascribed to them
below unless the context in which any of them is used clearly
indicates a contrary meaning:
(a) APPROVED OPTION EXERCISE FORM: A Cash Only Exercise Form in
the form of Attachment 1 or a "Stock Swap" Exercise Form in
the form of Attachment 2, any other form subsequently adopted
by the Secretary of Rockwell to replace Attachment 1 or 2, or
any other form accepted by the Secretary of Rockwell in his
sole discretion.
(b) OPTIONS: The stock option or stock options listed in the
first paragraph of the letter dated December 7, 1994 to which
these Stock Option Terms and Conditions are attached and which
together with these Stock Option Terms and Conditions
constitutes the Stock Option Agreement.
(c) OPTION SHARES: The shares of Rockwell Common Stock issuable
or transferable on exercise of the Options.
(d) PLAN: Rockwell's 1995 Long-Term Incentives Plan, as amended
and as such Plan may be further amended and in effect at the
relevant time.
(e) PRELIMINARY PAYMENT: Defined in Section 3(d)(i).
(f) ROCKWELL: Rockwell International Corporation, a Delaware
corporation.
(g) SHARES: Shares of Rockwell Common Stock or Class A Common
Stock.
(h) STOCK OPTION AGREEMENT: These Stock Option Terms and
Conditions together with the letter dated December 7, 1994 to
which they are attached.
2. When Options May be Exercised
-----------------------------
The Options may be exercised, in whole or in part (but only for a
whole number of shares) and at one time or from time to time, as to
one-third (rounded down to an integral one hundred) of the Option
Shares during the period beginning on
[95NT:12/7/94]
<PAGE> 4
December 7, 1995 and ending on December 7, 2004, as to an additional
one-third (rounded down to an integral one hundred) of the Option
Shares during the period beginning on December 7, 1996 and ending on
December 7, 2004 and as to the balance of the Option Shares during the
period beginning on December 7, 1997 and ending on December 7, 2004,
and only during those periods, provided that:
(a) if you die while an employee of the Corporation (as defined in
the Plan), your estate, or any person who acquires the Options
by bequest or inheritance, may exercise all the Options not
theretofore exercised within (and only within) the period
beginning on your date of death (even if you die before you
have become entitled to exercise all or any part of the
Options) and ending three years thereafter; and
(b) if your employment by the Corporation terminates other than by
death, then:
(i) if your retirement or other termination date
is before December 7, 1995, the Options shall lapse
on your retirement or other termination and may not
be exercised at any time;
(ii) if your employment by the Corporation is
terminated for cause, the Options shall expire
forthwith upon your termination and may not be
exercised thereafter;
(iii) if your employment by the Corporation terminates
after June 7, 1996 by reason of your retirement under
a retirement plan of Rockwell, or a subsidiary or
affiliate of Rockwell, at or after the earlier of age
62 or the date you have accumulated 85 points (or
fulfilled such other criteria as may be required for
an unreduced early retirement benefit) for purposes
of the applicable retirement plan, you (or if you die
after your retirement date, your estate or any person
who acquires the Options by bequest or inheritance)
may thereafter exercise the Options within (and only
within) the period starting on the date you would
otherwise have become entitled to exercise the part
of the Options so exercised and ending five years
after your retirement date;
(iv) if your employment by the Corporation
terminates after June 7, 1996 by reason of
your retirement under a retirement plan of
-2-
[95NT:12/7/94]
<PAGE> 5
Rockwell, or a subsidiary or affiliate of
Rockwell, before the earlier of age 62 or the date
you have accumulated 85 points (or fulfilled such
other criteria as may be required for an unreduced
early retirement benefit) for purposes of the
applicable retirement plan, you (or if you die after
your retirement date, your estate or any person who
acquires the Options by bequest or inheritance) may
thereafter exercise the Options within (and only
within) the period starting on the date you would
otherwise have become entitled to exercise the part
of the Options so exercised and ending on the earlier
of (x) the third anniversary of your retirement date
or (y) such earlier date as the Compensation and
Management Development Committee shall determine by
action taken not later than 60 days after your
retirement date;
(v) if your employment by the Corporation
terminates on or after December 7, 1995 but on
or before June 7, 1996 by reason of your retirement
under a retirement plan of Rockwell, or a subsidiary
or affiliate of Rockwell, you (or if you die after
your retirement date, your estate or any person who
acquires the Options by bequest or inheritance) may
thereafter exercise the Options within (and only
within) the period starting on the date you would
otherwise have become entitled to exercise the part
of the Options so exercised and ending on the earlier
of (x) the third anniversary of your retirement date
or (y) such earlier date as the Compensation and
Management Development Committee shall determine by
action taken not later than 60 days after your
retirement date; and
(vi) if your employment by the Corporation terminates
on or after December 7, 1995 for any reason not
specified in subparagraph (a) or in clauses (ii),
(iii), (iv) or (v) of this subparagraph (b), you (or
if you die after your termination date, your estate
or any person who acquires the Options by bequest or
inheritance) may thereafter exercise the Options
within (and only within) the period ending three
months after your termination date but only to the
extent they were exercisable on your termination
date.
-3-
[95NT:12/7/94]
<PAGE> 6
In no event shall the provisions of the foregoing subparagraphs (a)
and (b) extend to a date after December 7, 2004 the period during
which the Options may be exercised.
3. Exercise Procedure
------------------
(a) To exercise all or any part of the Options, you (or after your
death, your estate or any person who has acquired the Options
by bequest or inheritance) must deliver to the Secretary of
Rockwell:
(i) a notice of exercise on an Approved Option Exercise
Form properly completed, dated and signed by you
(or after your death, by the person entitled to
exercise the Options);
(ii) full payment of the exercise price for the Option
Shares to be purchased on exercise of the Options
o entirely in cash; or
o in Shares; or
o in a combination of cash and Shares; and
(iii) in the case of an exercise of the Options by any
person other than you seeking to exercise the
Options, such documents as the Secretary of Rockwell
shall require to establish to his satisfaction that
the person seeking to exercise the Options is
entitled to do so.
(b) An exercise of the whole or any part of the Options shall be
effective:
(i) if you elect (or after your death, the person
entitled to exercise the Options elects) to pay the
exercise price for the Option Shares entirely in cash,
upon (x) receipt by the Secretary of Rockwell of (I)
an Approved Exercise Form, duly completed, dated and
signed, (II) full payment of the exercise price for
the Option Shares purchased pursuant to that Approved
Exercise Form and (III) any documents required
pursuant to Section 3(a)(iii), or (y) if later, the
date of such Approved Exercise Form (provided you, or
after your death, the person entitled to exercise the
Options, or any person to whom you have transferred
the Options during your lifetime as permitted by
Section 4 continues to be
-4-
[95NT:12/7/94]
<PAGE> 7
entitled to exercise the Options on that date); and
(ii) if you elect (or after your death, the person
entitled to exercise the Option elects) to pay the
exercise price of the Option Shares in Shares or in a
combination of Shares and cash, upon (x) receipt by
the Secretary of Rockwell of (I) an Approved Exercise
Form, duly completed, dated and signed, (II) the
Preliminary Payment (as defined in Section 3(d)(i))
and (III) any documents required pursuant to Section
3(a)(iii), or (y) if later, the date of such Approved
Exercise Form (provided you continue, or after your
death, the person entitled to exercise the Options
continues, to be entitled to exercise the Options on
that date).
(c) If you choose (or after your death, the person entitled to
exercise the Options chooses) to pay the exercise price for
the Option Shares to be purchased on exercise of any of the
Options entirely in cash, payment must be made by
o delivering to the Secretary of Rockwell a check in
the full amount of the exercise price for those
Option Shares; or
o arranging with a stockbroker, bank or other financial
institution to deliver to the Secretary of Rockwell
full payment, by check or (if prior arrangements are
made with the Stock Option Administration staff of
the Secretary's Office) by wire transfer, of the
exercise price of those Option Shares.
In either event, in accordance with Section 3(e), full payment
of the exercise price for the Option Shares purchased must be
made within five business days after the Secretary of Rockwell
has received the Approved Exercise Form, duly completed, dated
and signed, or if later, within five business days after the
date of such Approved Exercise Form.
(d) (i) If you choose (or after your death, the person
entitled to exercise the Options chooses) to use
already-owned Shares to pay all or part of the
exercise price for the Option Shares to be purchased
on exercise of any of the Options, you (or after your
death, the person entitled to exercise the Options)
must deliver to the Secretary
-5-
[95NT:12/7/94]
<PAGE> 8
of Rockwell one or more certificates (and executed
stock powers) representing
o at least the number of Shares whose value,
based on the closing price of Common Stock
of Rockwell on the New York Stock Exchange
-- Composite Transactions on any day not
more than five business days prior to (x)
the date on which the Secretary of Rockwell
has received the Approved Exercise Form for
such exercise, or (y) if later, the date of
such Approved Exercise Form, would be
sufficient to pay in full the exercise price
of those Option Shares; or
o any lesser number of Shares you desire (or
after your death, the person entitled to
exercise the Options desires) to use to pay
the exercise price for those Option Shares
and a check in the amount of such exercise
price less the value of the Shares
delivered, based on the closing price of
Common Stock of Rockwell on the New York
Stock Exchange -- Composite Transactions on
any day not more than five business days
prior to (x) the date on which the Secretary
of Rockwell has received the Approved
Exercise Form for such exercise, or (y) if
later, the date of such Approved Exercise
Form.
The delivery of the Shares or Shares and cash, as
prescribed by this clause (i), is referred to in this
Stock Option Agreement as the Preliminary Payment.
(ii) The Secretary of Rockwell will advise you (or any
other person who, being entitled to do so, exercises
the Options) of the exact number of Shares, valued in
accordance with Section 6(e) of the Plan at the
closing price on the New York Stock Exchange --
Composite Transactions on the effective date of
exercise under Section 3(b)(ii), and any cash
required to pay in full the exercise price for the
Option Shares purchased. In accordance with Section
3(e), you (or such other person) must pay, in cash,
in Shares or in a combination of cash and Shares, any
balance required to pay in full the exercise price of
the Option Shares
-6-
[95NT:12/7/94]
<PAGE> 9
purchased within five business days following the
effective date of such exercise of the Options under
Section 3(b)(ii).
(iii) Notwithstanding any other provision of this Stock
Option Agreement, the Secretary of Rockwell may limit
the number, frequency or volume of successive
exercises of any of the Options in which payment is
made, in whole or in part, by delivery of Shares
pursuant to this subparagraph (d) to prevent
unreasonable pyramiding of such exercises.
(e) A notice of exercise on an Approved Exercise Form, when duly
completed, dated and signed by you (or any other person
entitled to exercise the Options) and received by the
Secretary of Rockwell, whether or not full payment of the
exercise price for the Option Shares accompanies the Approved
Option Exercise Form and whether the Approved Exercise Form is
dated on or prior to the date of receipt by the Secretary of
Rockwell or a later date, shall constitute a binding
contractual obligation by you (or the other person entitled to
exercise the Options) to proceed with and complete that
exercise of the Options (but only so long as you continue, or
the other person entitled to exercise the Options continues,
to be entitled to exercise the Options on that date). By your
acceptance of this Stock Option Agreement, you agree (for
yourself and on behalf of any other person who becomes
entitled to exercise the Options) to deliver or cause to be
delivered to Rockwell any balance of the exercise price for
the Option Shares to be purchased upon the exercise pursuant
to the Approved Exercise Form required to pay in full the
exercise price for those Option Shares, that payment being in
cash, in Shares or in a combination of cash and Shares, on or
before the later of the fifth business day after (i) the date
on which the Secretary of Rockwell receives such duly
completed, dated and signed Approved Exercise Form, or (ii) if
later, the date of such Approved Exercise Form (provided you
continue (or the other person entitled to exercise the Options
continues) to be entitled to exercise the Options on that
date), and you (for yourself and on behalf of any other person
who becomes entitled to exercise the Options) authorize the
Corporation forthwith to set off against salary payments or
other amounts due or which may become due you (or the other
person entitled to exercise the Options) any balance of the
exercise price for those Option Shares remaining unpaid
thereafter.
(f) Certificates representing the number of Option Shares
purchased will be issued as soon as practicable (i) after
-7-
[95NT:12/7/94]
<PAGE> 10
Rockwell has received full payment therefor or (ii) at
Rockwell's election in the sole discretion of its Secretary, after
Rockwell has received (x) full payment of the exercise price of
those Option Shares and (y) any reimbursement in respect of
withholding taxes due pursuant to Section 5.
4. Transferability
---------------
The Options are not transferable by you otherwise than by will or by
the laws of descent and distribution. During your lifetime, only you
are entitled to exercise the Options.
5. Withholding
-----------
Rockwell shall have the right, in connection with the exercise of the
Options in whole or in part, to deduct from any payment to be made by
Rockwell under the Plan an amount equal to the taxes required to be
withheld by law with respect to such exercise or to require you (or
any other person entitled to exercise the Options) to pay to it an
amount sufficient to provide for any such taxes so required to be
withheld. By your acceptance of this Stock Option Agreement, you
agree (for yourself and on behalf of any other person who becomes
entitled to exercise the Options) that if Rockwell elects to require
you (or such other person) to remit an amount sufficient to pay such
withholding taxes, you (or such other person) must remit that amount
within ten business days after the date of the statement for such
amount rendered by Rockwell, failing which Rockwell shall have the
same right of set-off as provided under Section 3(e) with respect to
payment of the exercise price for Option Shares.
6. Headings
--------
The section headings contained in these Stock Option Terms and
Conditions are solely for the purpose of reference, are not part of
the agreement of the parties and shall in no way affect the meaning or
interpretation of this Stock Option Agreement.
7. References
----------
All references in these Stock Option Terms and Conditions to Sections,
paragraphs, subparagraphs or clauses shall be deemed to be references
to Sections, paragraphs, subparagraphs and clauses of these Stock
Option Terms and Conditions unless otherwise specifically provided.
-8-
[95NT:12/7/94]
<PAGE> 11
8. Applicable Laws and Regulations
-------------------------------
This Stock Option Agreement and Rockwell's obligation to issue Option
Shares hereunder are subject to applicable laws and regulations.
Attachment 1 - Cash Only Option Exercise Form and Instructions
Attachment 2 - "Stock Swap" Option Exercise Form and Instructions
-9-
[95NT:12/7/94]
<PAGE> 12
ATTACHMENT 1
STOCK OPTION EXERCISE FORM - CASH ONLY
ROCKWELL INTERNATIONAL CORPORATION
CASH ONLY STOCK OPTION EXERCISE FORM
Attached is the Stock Option Exercise Form to be used if you exercise a stock
option under any of Rockwell's stock option plans for a cash payment (including
a so-called "cashless" exercise in which your stockbroker, bank or other
financial institution furnishes the cash payment of the exercise price).
BEFORE COMPLETING THIS STOCK OPTION EXERCISE FORM, PLEASE READ CAREFULLY THE
SEPARATE INSTRUCTIONS FOR THE FORM, WHICH ARE REPRODUCED IN APPENDIX I TO THE
BOOKLET, FACTS ABOUT ROCKWELL INTERNATIONAL CORPORATION STOCK OPTIONS AND SARS
(REVISED MARCH 1993).
YOU SHOULD ALSO REFER TO THE PERTINENT PORTIONS OF THE FACTS BOOKLET,
PARTICULARLY THE "HIGHLIGHTS" SECTION (ON PAGES 2-7) FOR FURTHER GUIDANCE IN
COMPLETING THE FORM.
If after reading the separate instructions and the pertinent sections of the
FACTS booklet you have questions on the procedures to be followed in completing
your exercise or on how to complete the Form, please call Stock Option
Administration in the Secretary's Office in Pittsburgh (at Comnet 545-7120 or
(412) 565-7120) for assistance.
[95NT:12/7/94]
<PAGE> 13
CASH ONLY STOCK OPTION EXERCISE FORM
------------------------------------
To: Rockwell International Corporation
625 Liberty Avenue
Pittsburgh, Pennsylvania 15222-3123
Attention: Office of the Secretary,
Stock Option Administration
1. OPTIONS EXERCISED: Subject to the terms and conditions of the
1979 Stock Plan for Key Employees, the 1981 Incentive Stock Option Plan for Key
Employees, the 1988 Long-Term Incentives Plan and/or the 1995 Long-Term
Incentives Plan (collectively, the Plans) of Rockwell International Corporation
(Rockwell), and Agreement(s) thereunder, I hereby exercise the following stock
option(s):
<TABLE>
<CAPTION>
Plan Date of NQ/ Class of Stock Number of Exercise Total
Year Grant ISO Common/Class A Shares Price Purchase Price
- ---- ------- --- -------------- --------- -------- --------------
<S> <C> <C> <C> <C> <C> <C>
$ $
- ---- ------- --- -------------- --------- -------- --------------
$ $
- ---- ------- --- -------------- --------- -------- --------------
$ $
- ---- ------- --- -------------- --------- -------- --------------
</TABLE>
2. CONVERSION: Convert [ ] None [ ] All [ ] _____ shares
----------
of the shares of Class A Common Stock to Common Stock.
3. PAYMENT:
-------
[ ] A check payable to Rockwell International Corporation
in the amount of the Total Purchase Price of the
above-itemized stock option(s) is enclosed.
[ ] The Total Purchase Price of the above-itemized stock
option(s) will be paid by a check payable to Rockwell
International Corporation or (if prior arrangements
are made with the Stock Option Administration staff
of the Secretary's Office) by a wire transfer of
funds to Rockwell
[CONTINUED ON PAGE 2]
<PAGE> 14
Cash Only Stock Option Exercise Form
Page 2
International Corporation to the account specified by the
Secretary's Office (Stock Option Administration), which will be
sent promptly by my stockbroker, bank or other financial
institution,
Representative's Name: _______________________________
Firm Name: ___________________________________________
Address: _____________________________________________
_____________________________________________
Telephone No.: _______________________________________
If full payment of the Total Purchase Price of the stock
option(s) listed in Item 1 is not delivered within five (5)
business days after the later of the date of this Form or the
date of its receipt by the Secretary of Rockwell, the
Corporation (as defined in the Plans) is authorized forthwith
to set off the balance due against salary payments or other
amounts due or which may become due me to satisfy my
obligation to pay the Total Purchase Price.
If any of the stock option(s) listed in Item 1 was granted as
a nonqualified stock option (NQ), I understand Rockwell will
issue a statement to me for reimbursement of taxes required to
be withheld and remitted to taxing authorities in respect of
the exercise of those stock option(s) and may withhold
delivery of the certificate(s) for the shares deliverable upon
this exercise until that statement has been paid in full. If
full payment of that statement is not received by Rockwell
within ten (10) business days after the date of that
statement, the Corporation (as defined in the Plans) is
authorized forthwith to set off the balance due against salary
payments or other amounts due or which may become due me to
satisfy any obligation to reimburse Rockwell for those
withholding taxes.
4. REGISTRATION: Please register the stock as follows:
Name: ________________________________________________
Social Security No.: _________________________________
Current Address: _____________________________________
_____________________________________
[CONTINUED AND TO BE SIGNED ON PAGE 3]
<PAGE> 15
Cash Only Stock Option Exercise Form
Page 3
NOTE: THE STOCK MAY BE REGISTERED ONLY IN YOUR NAME OR IN
YOUR NAME JOINTLY WITH YOUR SPOUSE (OR JOINTLY WITH
ANOTHER PERSON). IT MAY NOT BE REGISTERED IN THE
NAME OF YOUR STOCKBROKER, BANK OR OTHER FINANCIAL
INSTITUTION.
5. DELIVERY: Please deliver the stock
_____ to me at the address listed in Item 4.
_____ to the following person and address:
Name of Stockbrokerage Firm or Other Addressee:
_______________________________________________________
Address: _____________________________________________
_____________________________________________
Attention: ___________________________________________
THIS STOCK OPTION EXERCISE MAY NOT BE REVOKED OR CHANGED AFTER DELIVERY OF THIS
FORM, PROPERLY COMPLETED, DATED AND SIGNED, TO THE CORPORATION WHETHER OR NOT
PAYMENT ACCOMPANIES THIS FORM AND WHETHER THIS FORM IS DATED BEFORE, ON OR
AFTER THE DATE OF SUCH RECEIPT.
____________________________________
(Signature)
Print Name:_________________________
Dated: _____________________, 19 ___
<PAGE> 16
ATTACHMENT 2
STOCK OPTION EXERCISE FORM
STOCK OR STOCK AND CASH ("STOCK SWAP")
ROCKWELL INTERNATIONAL CORPORATION
"STOCK SWAP" STOCK OPTION EXERCISE FORM
Attached is the Stock Option Exercise Form to be used if you exercise a stock
option under any of Rockwell's stock option plans and pay part or all of the
exercise price for the Option Shares purchased by delivering shares of Rockwell
Common Stock or Class A Common Stock.
BEFORE COMPLETING THIS STOCK OPTION EXERCISE FORM, PLEASE READ CAREFULLY THE
SEPARATE INSTRUCTIONS FOR THE FORM, WHICH ARE REPRODUCED IN APPENDIX II TO THE
BOOKLET, FACTS ABOUT ROCKWELL INTERNATIONAL CORPORATION STOCK OPTIONS AND SARS
(REVISED MARCH 1993).
YOU SHOULD ALSO REFER TO THE PERTINENT PORTIONS OF THE FACTS BOOKLET,
PARTICULARLY THE "HIGHLIGHTS" SECTION (ON PAGES 2-7) AND THE STOCK-FOR-STOCK
PAYMENT METHOD ("STOCK SWAP") SECTION (ON PAGES 31-36) FOR FURTHER GUIDANCE IN
COMPLETING THE FORM.
If after reading the separate instructions and the pertinent sections of the
FACTS booklet you have questions on the procedures to be followed in completing
your exercise or on how to complete the Form, please call Stock Option
Administration in the Secretary's Office in Pittsburgh (at Comnet 545-7120 or
(412) 565-7120) for assistance.
[95NT: 12/7/94]
<PAGE> 17
"STOCK SWAP" STOCK OPTION EXERCISE FORM
---------------------------------------
To: Rockwell International Corporation
625 Liberty Avenue
Pittsburgh, Pennsylvania 15222-3123
Attention: Office of the Secretary,
Stock Option Administration
1. OPTIONS EXERCISED: Subject to the terms and conditions of the
1979 Stock Plan for Key Employees, the 1981 Incentive Stock Option Plan for Key
Employees, the 1988 Long-Term Incentives Plan and/or the 1995 Long-Term
Incentives Plan (collectively, the Plans) of Rockwell International Corporation
(Rockwell), and Agreement(s) thereunder, I hereby exercise the following stock
option(s):
<TABLE>
<CAPTION>
Plan Date of NQ/ Class of Stock Number of Exercise Total
Year Grant ISO Common/Class A Shares Price Purchase Price
- ---- ------- --- -------------- -------- -------- --------------
<S> <C> <C> <C> <C> <C> <C>
$ $
- ---- ------- --- -------------- -------- -------- --------------
$ $
- ---- ------- --- -------------- -------- -------- --------------
$ $
- ---- ------- --- -------------- -------- -------- --------------
</TABLE>
2. CONVERSION: Convert [ ] None [ ] All [ ] _____ shares
of the shares of Class A Common Stock to Common Stock.
3. PAYMENT: A. Number of shares of Rockwell Common Stock
or Class A Common Stock surrendered to pay the exercise price of the option(s):
______________ shares of Common _______________ shares of Class A Common
B. Amount of enclosed check, if any, payable
to Rockwell International Corporation to pay estimated balance of exercise
price of the option(s):
$_________________________
I am using shares of Common Stock or Class A Common Stock or both of
Rockwell (Shares) that I now own to pay all or part of the exercise price for
the Shares to be purchased on my exercise of the above-referenced stock
option(s). I enclose, or in accordance with prior arrangements I have made
with you, I am arranging for delivery to you of, one or more certificates for
(i) at least the number of Shares estimated, based on the closing
price on the New York Stock Exchange -- Composite Transactions
on a day not more than five business days prior to (x) the
date of receipt of this Exercise Form by the Secretary's
Office (Stock Option Administration), or (y) if later, the
date of this
[CONTINUED ON PAGE 2]
<PAGE> 18
"Stock Swap" Stock Option Exercise Form
Page 2
Exercise Form, to be sufficient to pay in full the Total
Purchase Price of the Shares covered by this exercise, or
(ii) a lesser number of Shares that I desire to apply to such Total
Purchase Price and a check in the amount of such Total
Purchase Price less the value of the Shares delivered, based
on the closing price on the New York Stock Exchange --
Composite Transactions on a day not more than five business
days prior to (x) the date of receipt of this Exercise Form by
the Secretary's Office (Stock Option Administration), or (y)
if later, the date of this Exercise Form,
and in either case, an executed stock transfer power covering the Shares
surrendered or to be surrendered. I understand that you will advise me of the
exact number of Shares, valued in accordance with the Plans at the closing
price on the New York Stock Exchange -- Composite Transactions on the later of
(x) the date you have received (I) this Exercise Form, (II) the estimated
payment in Shares or Shares and cash specified above and, (III) if I am not the
optionee, any additional documents required to evidence my right to exercise
these stock option(s) and (y) the date of this Exercise Form (the later of such
dates, the effective date of this exercise), and any cash required to pay in
full the Total Purchase Price of the Shares to be purchased upon this exercise.
I further understand that certificates representing the number of Shares
purchased will be issued only after I deliver to Rockwell any remaining balance
of the Total Purchase Price in cash or a combination of Shares and cash and the
amount sufficient to reimburse Rockwell for all withholding taxes required to
be withheld and remitted to taxing authorities in respect of this exercise.
I hereby agree to deliver to Rockwell no later than five (5) business
days following the effective date of this exercise cash or any additional
number of Shares or a combination of Shares and cash required to pay in full
the Total Purchase Price of the Shares to be purchased upon this exercise, and
an executed stock transfer power covering any additional Shares delivered. I
hereby further agree to pay Rockwell, no later than ten (10) business days
after the date of Rockwell's statement therefor, the amount sufficient to
reimburse Rockwell for all withholding taxes required to be withheld and
remitted to taxing authorities in respect of this exercise. If I fail to
deliver any remaining balance of the Total Purchase Price of the Shares to be
purchased upon this exercise and an amount sufficient to reimburse Rockwell in
full for all withholding taxes required to be withheld and remitted to taxing
authorities in respect of this exercise in accordance with this paragraph, the
Corporation (as defined in the Plans) is authorized forthwith to set off the
balance due against salary payments or other amounts due or which may become
due to me to satisfy my obligation hereunder.
4. REGISTRATION: It is my understanding that following my
payment in full of the Total Purchase Price and reimbursement of Rockwell for
any applicable withholding taxes as provided in ITEM 3: PAYMENT, I shall
receive from Rockwell one or more stock certificates representing the same
[CONTINUED AND TO BE SIGNED ON PAGE 3]
<PAGE> 19
"Stock Swap" Stock Option Exercise Form
Page 3
number and kind of Shares I surrendered to Rockwell, issued in the same name or
names as the Shares so surrendered. I shall also receive one or more separate
stock certificates representing the additional Shares acquired as a result of
this exercise, which I hereby request be registered as follows:
Name: __________________________________________________
Social Security No.: ___________________________________
Current Address: _______________________________________
_______________________________________
NOTE: THE STOCK MAY BE REGISTERED ONLY IN YOUR NAME OR IN
YOUR NAME JOINTLY WITH YOUR SPOUSE (OR JOINTLY WITH
ANOTHER PERSON). IT MAY NOT BE REGISTERED IN THE
NAME OF YOUR STOCKBROKER, BANK OR OTHER FINANCIAL
INSTITUTION.
5. DELIVERY: Please deliver the stock
_____ to me at the address listed in Item 4.
_____ to the following person and address:
Name of Stockbrokerage Firm or Other Addressee:
_______________________________________________
Address: _____________________________________
_____________________________________
Attention: ___________________________________
THIS STOCK OPTION EXERCISE MAY NOT BE REVOKED OR CHANGED AFTER DELIVERY OF THIS
FORM, PROPERLY COMPLETED, DATED AND SIGNED, TO THE CORPORATION WHETHER OR NOT
PAYMENT ACCOMPANIES THIS FORM AND WHETHER THIS FORM IS DATED BEFORE, ON OR
AFTER THE DATE OF SUCH RECEIPT.
____________________________________
(Signature)
Print Name:_________________________
Dated: _____________________, 19 ___
<PAGE> 20
"Stock Swap" Stock Option Exercise Form
Page 4
STOCK TRANSFER POWER SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED, (I) (We), ____________________________
(insert name(s))
hereby sell, assign and transfer unto Rockwell International
Corporation the ________________ shares of the [Common Stock]
(insert number)
[Class A Common Stock] of Rockwell International Corporation
standing in the name(s) of ____________________________ on the
(name(s) on certificate(s)
books of said Rockwell International Corporation represented by
Certificate(s) No(s). ______________ herewith and do hereby
irrevocably constitute and appoint Mellon Bank, N.A., attorney to
transfer the said stock on the books of Rockwell International
with full power of substitution in the premises.
Dated: __________________
_____________________________________________
(Signature)
WITNESS:
_____________________________________________
(Signature)
<PAGE> 1
EXHIBIT 10-h-1
ROCKWELL INTERNATIONAL CORPORATION
Resolutions adopted by The Board
of Directors on November 3, 1993
providing for Deferred Compensation
Policy for Non-Employee Directors
--------------------------------------
RESOLVED, that any Director of the Corporation who wishes to defer all or
any part of the retainer fees paid in cash which such Director will be entitled
to receive from the Corporation beginning January 1 of the following year, may
do so by delivering a written statement to the Secretary of the Corporation to
that effect, specifying the percentage of such future fees paid in cash to be
deferred and the time when, or period during which, such deferred fees shall be
paid to him or, in the event of his death, to his estate or beneficiary; that
any such Director may terminate such deferral at any time with respect to
future fees by delivering a written notice to that effect to the Secretary of
the Corporation, provided, however, such termination shall not affect fees
already deferred or be effective except as to fees commencing on or after the
January 1 next following the date of receipt by the Secretary of the
Corporation of such Director's written notice of termination; that this Board
of Directors may terminate any such deferral at any time and may change the
period of payment of any deferred amounts or cause any deferred amounts to be
paid in a lump sum regardless of a Director's instructions with respect
thereto; that there shall be credited to the total amount deferred by each
Director at the end of each calendar quarter an additional amount equal to the
amount then deferred multiplied by one-fourth the prime rate quoted by Mellon
Bank, N.A. on the last day of such quarter, such additional amounts to be paid
at the same times and in the same proportion as the payments of the fees so
deferred; and that no deferred fees or additional amounts credited thereon may
be assigned or otherwise transferred; and further
RESOLVED, that the officers of this Corporation be, and each of them hereby
is, authorized and empowered to take or cause to be taken such action or
actions and to execute and deliver or cause to be executed and delivered such
instruments, certificates and other documents as they may deem necessary or
appropriate to carry out the purpose and intent of the immediately foregoing
resolution; and further
RESOLVED, that the resolutions heretofore adopted by the Board of Directors
on November 12, 1980 entitled "Directors Deferred Compensation" be, and they
hereby are, superseded by the two immediately foregoing resolutions,
provided, however, that any deferral election made by a Director and still
effective under those superseded resolutions shall continue in effect under the
two immediately foregoing resolutions until terminated in accordance therewith
by that Director or the Corporation.
<PAGE> 1
EXHIBIT 10-h-2
ROCKWELL INTERNATIONAL CORPORATION
Resolutions Adopted by the
Compensation Committee of
The Board of Directors on
July 5, 1994 Modifying Deferred
Compensation Policy for Non-
Employee Directors
----------------------------------
RESOLVED, that, effective July 1, 1994, there shall be credited to the
total amount deferred pursuant to resolutions adopted by the Board of Directors
on November 12, 1980 and November 3, 1993 entitled "Directors Deferred
Compensation" and "Directors' Compensation", respectively, by each Director in
respect of retainer and meeting attendance fees paid in cash and remaining
owing to such Director at the end of each calendar quarter an additional amount
equal to the amount then deferred and owing multiplied by one-fourth of the
annual rate for quarterly compounding that is 120% of the "applicable Federal
long-term rate" determined by the Secretary of the Treasury pursuant to Section
1274(d) of the Internal Revenue Code, as amended, or any successor provision,
for the last month in such calendar quarter, such additional amount to be paid
at the same time and in the same proportion as the payments of the fees so
deferred; and further
RESOLVED, that the penultimate clause of the sixth resolution under the
heading "Directors' Compensation" heretofore adopted by the Board of Directors
on November 3, 1993 be and it hereby is superseded by the preceding resolution.
<PAGE> 1
EXHIBIT 10-i-1
DIRECTORS STOCK PLAN OF
ROCKWELL INTERNATIONAL CORPORATION
1. PURPOSE OF THE PLAN
The purpose of the Directors Stock Plan (the Plan) is to link a portion of the
compensation of non-employee directors of Rockwell directly with the interests
of the shareowners.
2. PARTICIPANTS
Participants in the Plan shall consist of directors of Rockwell who are not
employees of Rockwell or any of its subsidiaries (Non-Employee Director). The
term "subsidiary" as used in the Plan means a corporation more than 50% of the
voting stock of which, or an unincorporated business entity more than 50% of the
equity interest in which, shall at the time be owned directly or indirectly by
Rockwell.
3. SHARES RESERVED UNDER THE PLAN
Subject to the provisions of Section 8 of the Plan, there shall be reserved
for delivery under the Plan an aggregate of 75,000 shares of Common Stock of
Rockwell (Shares). Shares to be delivered under the Plan may be authorized and
unissued Shares, Shares held in treasury or any combination thereof.
4. ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Compensation and Management Development
Committee of the Board of Directors of Rockwell (the Committee). The Committee
shall have authority to interpret the Plan, and to prescribe, amend and rescind
rules and regulations relating to the administration of the Plan, and all such
interpretations, rules and regulations shall be conclusive and binding on all
persons.
5. EFFECTIVE DATE OF THE PLAN
The Plan shall be submitted to the shareowners of Rockwell for approval at the
Annual Meeting of Shareowners to be held on February 1, 1995, or any adjournment
thereof, and, if approved by the shareowners, shall become effective on the date
and at the time of such approval.
6. AWARD OF SHARES
Each Non-Employee Director who is elected a director at any Annual Meeting of
Shareowners of Rockwell shall receive an award of 400 Shares effective
immediately after that Annual Meeting. Each Non-Employee Director who is elected
a director at any meeting of the Board shall receive effective immediately after
that meeting an award of 400 Shares if elected after the annual meeting and
prior to May 1; an award of 300 Shares if elected between May 1 and July 31; an
award of 200 Shares if elected between August 1 and October 31; and an award of
100 Shares if elected between November 1 and the next annual meeting. A
participant shall not be required to make any payment for any Shares delivered
under the Plan. Upon the delivery of Shares under the Plan, the recipient shall
have the entire beneficial ownership interest in, and all rights and privileges
of a shareowner as to those Shares, including the rights to vote those Shares
and to receive dividends thereon.
7. RESTRICTION ON TRANSFER OF SHARES
No Shares received by a participant under the Plan may be sold, assigned,
transferred, pledged or otherwise encumbered or disposed of for a period of six
months after receipt of those Shares, except in the case of the participant's
death or disability during that six-month period.
8. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
If there shall be any change in or affecting Shares on account of any merger,
consolidation, reorganization, recapitalization, reclassification, stock
dividend, stock split or combination, or other distribution to holders of Shares
(other than a cash dividend), there shall be made or taken such amendments to
the Plan and such adjustments and actions thereunder as the Board may deem
appropriate under the circumstances.
B-1
<PAGE> 2
9. GOVERNMENT AND OTHER REGULATIONS
The obligations of Rockwell to deliver Shares under the Plan shall be subject
to (i) all applicable laws, rules and regulations and such approvals by any
governmental agencies as may be required, including, without limitation,
compliance with the Securities Act of 1933, as amended, and (ii) the condition
that such shares shall have been duly listed on the New York Stock Exchange.
10. AMENDMENT AND TERMINATION OF THE PLAN
The Plan may be amended by the Board in any respect, provided that, without
shareowner approval, no amendment shall (i) materially increase the maximum
number of shares of Common Stock available for delivery under the Plan (other
than adjustments pursuant to Section 8 hereof), (ii) materially increase the
benefits accruing to participants under the Plan, or (iii) materially modify the
requirements as to eligibility for participation in the Plan, and provided,
further, that Section 6 of the Plan may not be amended more than once every six
months except to comport with changes in the Internal Revenue Code of 1986, as
amended, the Employee Retirement Income Securities Act, as amended, or the
regulations under either thereof. The Plan may also be terminated at any time by
the Board.
11. MISCELLANEOUS
(a) Nothing contained in this Plan shall be deemed to confer upon any person
any right to continue as a director of or to be associated in any other way with
Rockwell.
(b) To the extent that Federal laws do not otherwise control, the Plan and all
determinations made and actions taken pursuant hereto shall be governed by the
law of the State of Delaware.
B-2
<PAGE> 1
EXHIBIT 10-j-1
ROCKWELL INTERNATIONAL CORPORATION
RESOLUTIONS ADOPTED BY THE BOARD OF DIRECTORS
ON NOVEMBER 2, 1994 PROVIDING FOR
RETIREMENT POLICY FOR NON-EMPLOYEE DIRECTORS
RESOLVED, that it is the policy of the Corporation, and the officers of the
Corporation be, and each of them hereby is, authorized for and on behalf of the
Corporation, to enter into a consulting agreement with each Director upon his
retirement from Board service, at an annual fee equal to the cash retainer fee
for Board service in effect from time to time and providing for his continued
availability for advice and consultation after retirement, provided that such
Director had at least five years of Board service and had not been an employee
of the Corporation during any part of the ten years immediately prior to his
retirement from Board service; and provided, further, that the term of each
agreement would be for the lesser of life or ten years if the Director's
retirement is at age 72, and for the least of life, ten years or the number of
years of Board service if the Director's retirement from Board service occurs
before he attains age 72; and further
RESOLVED, that the resolution heretofore adopted by the Board of Directors on
February 11, 1987 entitled "Retired Directors" be, and it hereby is, superseded
by the foregoing resolution.
<PAGE> 1
EXHIBIT 11
ROCKWELL INTERNATIONAL CORPORATION
COMPUTATION OF EARNINGS PER SHARE
FOR THE FIVE YEARS ENDED SEPTEMBER 30, 1994
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30
--------------------------------------------------
1994 1993 1992 1991 1990
------ ------ ------ ------ ------
(IN MILLIONS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
PRIMARY EARNINGS PER SHARE:
Income before change in accounting................. $634.1 $561.9 $483.0 $600.5 $624.3
Deduct dividend requirements on preferred stock.... 0.3 0.3 0.3 0.3 0.4
------ ------ ------ ------ ------
Total primary earnings before change
in accounting............................ $633.8 $561.6 $482.7 $600.2 $623.9
====== ====== ====== ====== ======
Average number of common shares outstanding during
the year......................................... 220.5 219.8 223.6 233.7 244.1
====== ====== ====== ====== ======
Primary earnings per share before change in
accounting....................................... $ 2.87 $ 2.55 $ 2.16 $ 2.57 $ 2.56
Cumulative effect of change in accounting for
retirement medical benefits...................... (6.78)*
------ ------ ------ ------ ------
Net primary earnings per share..................... $ 2.87 $ 2.55 $(4.62) $ 2.57 $ 2.56
====== ====== ====== ====== ======
FULLY DILUTED EARNINGS PER SHARE:
Income before change in accounting................. $634.1 $561.9 $483.0 $600.5 $624.3
Average number of common shares outstanding during
the year:
Common stock..................................... 220.5 219.8 223.6 233.7 244.1
Assumed issuance of stock under award plans and
conversion of preferred stock and convertible
debentures.................................... 4.0 4.5 2.5 3.1 3.1
------ ------ ------ ------ ------
Total shares, assuming full dilution........ 224.5 224.3 226.1 236.8 247.2
====== ====== ====== ====== ======
Fully diluted earnings per share before change
in accounting.................................... $ 2.82 $ 2.51 $ 2.14 $ 2.54 $ 2.53
Cumulative effect of change in accounting for
retirement medical benefits...................... (6.70)*
------ ------ ------ ------ ------
Net fully diluted earnings per share............... $ 2.82 $ 2.51 $(4.56) $ 2.54 $ 2.53
====== ====== ====== ====== ======
<FN>
- ---------------
* The per share amounts pertaining to the cumulative effect of change in
accounting in 1992 were computed using average outstanding shares for the
second quarter, which approximate full year 1992 average outstanding shares.
</TABLE>
<PAGE> 1
EXHIBIT 21
ROCKWELL INTERNATIONAL CORPORATION
LIST OF SUBSIDIARIES OF THE COMPANY
AS OF NOVEMBER 30, 1994
<TABLE>
<CAPTION>
PERCENTAGE OF VOTING
SECURITIES OWNED BY
-------------------------
NAME AND JURISDICTION REGISTRANT SUBSIDIARY
- ----------------------------------------------------------------------- ---------- ----------
<S> <C> <C>
Allen-Bradley Company, Inc. (Wisconsin)................................ 100%
Rockwell-Collins International, Inc. (Texas)........................... 100%
Rockwell Graphic Systems, Inc. (Delaware).............................. 100%
Rockwell International Finance Corporation (Delaware).................. 100%
Rockwell Body and Chassis Systems--France, a societe anonyme
(France).......................................................... 100%
Rockwell Participacoes Ltda. (Brazil)................................ 100%
Rockwell International GmbH (Germany)................................ 100%
Rockwell International of Canada Ltd. (Canada)....................... 100%
Rockwell Limited (Delaware).......................................... 100%
Sprecher + Schuh A.G. (Switzerland).................................. 100%
</TABLE>
Listed above are certain consolidated subsidiaries included in the
consolidated financial statements of the Company. Unlisted subsidiaries,
considered in the aggregate, do not constitute a significant subsidiary.
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in Registration Statement No.
33-49699 on Form S-3 and Registration Statement Nos. 2-99494 (as amended through
Post-Effective Amendment No. 4 thereto), 33-27122 and 33-32662, all on Form S-8,
of our reports dated November 1, 1994 (except as to Note 2 to Financial
Statements as to which the date is November 21, 1994) appearing in the Annual
Report on Form 10-K of Rockwell International Corporation for the year ended
September 30, 1994.
DELOITTE & TOUCHE LLP
Pittsburgh, Pennsylvania
December 21, 1994
<PAGE> 1
EXHIBIT 24
POWER OF ATTORNEY
I, the undersigned Director and/or Officer of Rockwell International
Corporation, a Delaware corporation (the Company), hereby constitute CHARLES H.
HARFF, WILLIAM J. CALISE, JR. and EDWARD T. MOEN, II, and each of them singly,
my true and lawful attorneys with full power to them and each of them to sign
for me, and in my name and in the capacity or capacities indicated below, (1)
the Company's Annual Report on Form 10-K for the fiscal year ended September
30, 1994; (2) Registration Statements and any and all amendments thereto
(including supplements and post-effective amendments) for the purpose of
registering under the Securities Act of 1933, as amended, (a) additional debt
securities of the Company in an aggregate principal amount of up to
$200,000,000; (b) additional securities to be sold pursuant to (i) the
Company's Savings Plan, as amended; and (ii) the Company's Savings Plan for
Certain Represented Hourly Employees, as amended; and (c) securities to be sold
pursuant to (i) the Company's 1995 Long-Term Incentives Plan; and (ii) the
Company's Directors Stock Plan; and (3) any and all amendments (including
supplements and and post-effective amendments) to (a) the Registration Statment
on Form S-3 (Registration Statement No. 33-49699) registering additional debt
securities of the Company in an aggregate principal amount of up to
$300,000,000; (b) the Registration Statement on Form S-8 (Registration
Statement No. 33-27122) registering securities to be sold under the Company's
1988 Long-Term Incentives Plan, 1981 Incentive Stock Option Plan for Key
Employees, as amended, and 1979 Stock Plan for Key Employees, as amended; (c)
the Registration Statement on Form S-8 (Registration Statement No. 33-32662)
registering securities to be sold pursuant to the Company's Savings Plan, as
amended; and (d) the Registration Statement on Form S-8 (Registration
Statement No. 2-99494) registering securities to be sold pursuant to the
Company's Savings Plan for Certain Represented Hourly Employees, as amended.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
DONALD R. BEALL Chairman of the Board and December 7, 1994
- ---------------------------- Chief Executive Officer
(Donald R. Beall) (principal executive
officer) and Director
LEW ALLEN, JR. Director December 7, 1994
- ----------------------------
(Lew Allen, Jr.)
Director December 7, 1994
- ----------------------------
(Richard M. Bressler)
JOHN J. CREEDON Director December 7, 1994
- ----------------------------
(John J. Creedon)
ROBIN CHANDLER DUKE Director December 7, 1994
- ----------------------------
(Robin Chandler Duke)
</TABLE>
<PAGE> 2
<TABLE>
<S> <C> <C>
JUDITH L. ESTRIN Director December 7, 1994
- ------------------------------
(Judith L. Estrin)
WILLIAM H. GRAY, III Director December 7, 1994
- ------------------------------
(William H. Gray, III)
JAMES CLAYBURN LA FORCE, JR. Director December 7, 1994
- ------------------------------
(James Clayburn La Force, Jr.
WILLIAM T. McCORMICK, JR. Director December 7, 1994
- ------------------------------
(William T. McCormick, Jr.)
JOHN D. NICHOLS Director December 7, 1994
- ------------------------------
(John D. Nichols)
BRUCE M. ROCKWELL Director December 7, 1994
- ------------------------------
(Bruce M. Rockwell)
ROSS D. SIRAGUSA, JR. Director December 7, 1994
- ------------------------------
(Ross D. Siragusa, Jr.)
WILLIAM S. SNEATH Director December 7, 1994
- ------------------------------
(William S. Sneath)
JOSEPH F. TOOT, JR. Director December 7, 1994
- ------------------------------
(Joseph F. Toot, Jr.)
W. M. BARNES Senior Vice President, December 7, 1994
- ------------------------------ Finance & Planning and
(W. M. Barnes) Chief Financial Officer
(principal financial
officer)
LAWRENCE J. KOMATZ Vice President and December 7, 1994
- ------------------------------ Controller (principal
(Lawrence J. Komatz) accounting officer)
</TABLE>
2
<PAGE> 3
POWER OF ATTORNEY
I, the undersigned Director and/or Officer of Rockwell International
Corporation, a Delaware corporation (the Company), hereby constitute CHARLES H.
HARFF, WILLIAM J. CALISE, JR. and EDWARD T. MOEN, II, and each of them singly,
my true and lawful attorneys with full power to them and each of them to sign
for me, and in my name and in the capacity or capacities indicated below, (1)
the Company's Annual Report on Form 10-K for the fiscal year ended September
30, 1994; (2) Registration Statements and any and all amendments thereto
(including supplements and post-effective amendments) for the purpose of
registering under the Securities Act of 1933, as amended, (a) additional debt
securities of the Company in an aggregate principal amount of up to
$200,000,000; (b) additional securities to be sold pursuant to (i) the
Company's Savings Plan, as amended; and (ii) the Company's Savings Plan for
Certain Represented Hourly Employees, as amended; and (c) securities to be sold
pursuant to (i) the Company's 1995 Long-Term Incentives Plan; and (ii) the
Company's Directors Stock Plan; and (3) any and all amendments (including
supplements and and post-effective amendments) to (a) the Registration Statment
on Form S-3 (Registration Statement No. 33-49699) registering additional debt
securities of the Company in an aggregate principal amount of up to
$300,000,000; (b) the Registration Statement on Form S-8 (Registration
Statement No. 33-27122) registering securities to be sold under the Company's
1988 Long-Term Incentives Plan, 1981 Incentive Stock Option Plan for Key
Employees, as amended, and 1979 Stock Plan for Key Employees, as amended; (c)
the Registration Statement on Form S-8 (Registration Statement No. 33-32662)
registering securities to be sold pursuant to the Company's Savings Plan, as
amended; and (d) the Registration Statement on Form S-8 (Registration
Statement No. 2-99494) registering securities to be sold pursuant to the
Company's Savings Plan for Certain Represented Hourly Employees, as amended.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
Chairman of the Board and December 7, 1994
- ---------------------------- Chief Executive Officer
(Donald R. Beall) (principal executive
officer) and Director
Director December 7, 1994
- ----------------------------
(Lew Allen, Jr.)
RICHARD M. BRESSLER Director December 18, 1994
- ----------------------------
(Richard M. Bressler)
Director December 7, 1994
- ----------------------------
(John J. Creedon)
Director December 7, 1994
- ----------------------------
(Robin Chandler Duke)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
SEPTEMBER 30, 1994 CONSOLIDATED BALANCE SHEET, STATEMENT OF CONSOLIDATED INCOME
FOR THE YEAR ENDED SEPTEMBER 30, 1994 AND NOTES TO FINANCIAL STATEMENTS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1994
<PERIOD-END> SEP-30-1994
<CASH> 628
<SECURITIES> 0
<RECEIVABLES> 2,267
<ALLOWANCES> 68
<INVENTORY> 1,533
<CURRENT-ASSETS> 4,928
<PP&E> 6,160
<DEPRECIATION> 3,777
<TOTAL-ASSETS> 9,861
<CURRENT-LIABILITIES> 3,020
<BONDS> 831
<COMMON> 246
0
1
<OTHER-SE> 3,109
<TOTAL-LIABILITY-AND-EQUITY> 9,861
<SALES> 11,123
<TOTAL-REVENUES> 11,205
<CGS> 8,675
<TOTAL-COSTS> 10,087
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 97
<INCOME-PRETAX> 1,021
<INCOME-TAX> 387
<INCOME-CONTINUING> 634
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 634
<EPS-PRIMARY> 2.87
<EPS-DILUTED> 2.82
</TABLE>
<PAGE> 1
EXHIBIT 99-a-1
PN004
EIN 95-105-4708
Effective Date 10/1/94
ROCKWELL INTERNATIONAL CORPORATION
SAVINGS PLAN
(Amended and Restated as of
September 30, 1994)
<PAGE> 2
<TABLE>
<S> <C>
APPENDIX A
RETIREMENT PLANS GOVERNING CREDITING OF CONTINUOUS EMPLOYMENT . . . 85
APPENDIX B
PROCEDURES FOR DISTRIBUTIONS TO PARTICIPANTS AGE 70-1/2 . . . . . . 86
APPENDIX C
PROCEDURES, TERMS AND CONDITIONS OF LOANS . . . . . . . . . . . . . 87
</TABLE>
<PAGE> 3
ROCKWELL INTERNATIONAL CORPORATION
SAVINGS PLAN
AS AMENDED THROUGH SEPTEMBER 30, 1994
PREAMBLE
The Plan and Effective Date.
- ---------------------------
The Plan hereinafter described constitutes a savings plan for certain employees
on the salary and weekly payrolls of the Company. The Effective Date of the
Plan is March 1, 1966. The Plan as restated herein is effective September 30,
1994. The provisions of the Plan as in effect from time to time prior to
September 30, 1994, apply to the related periods prior to such date for all
purposes, except as specifically provided in the Plan.
<PAGE> 4
ARTICLE I DEFINITIONS
1.010 "ACCOUNTS" means the Participant's Company Contributions
Account, Compensation Deferral Account, Compensation Deduction Account,
Supplemental Deferral Account and Supplemental Deduction Account, as
applicable.
1.020 "ADMINISTRATIVE COMMITTEE" means the committee appointed
by the Plan Committee and assigned power and authority under Sections 2.030 and
6.030.
1.030 "AFFILIATED COMPANY" means Rockwell International
Corporation and:
(a) any corporation incorporated under the laws of one of the
United States of America of which Rockwell International
Corporation, a Delaware corporation, owns, directly or
indirectly, eighty percent (80%) or more of the combined
voting power of all classes of stock or eighty percent
(80%) or more of the total value of the shares of all
classes of stock (all within the meaning of section 1563
of the Code.);
(b) any partnership or other business entity organized under
such laws, of which Rockwell International Corporation
owns, directly or indirectly, eighty percent (80%) or more
of the voting power or eighty percent (80%) or more of the
total value (all within the meaning of section 414(c) of
the Code); and
(c) any other company deemed to be an Affiliated Company by
the Board of Directors of Rockwell International
Corporation.
1.040 "BASE COMPENSATION" means the Participant's compensation
not in excess of One Hundred Thousand Dollars ($150,000), or such larger sum as
may be established pursuant to section 401(a)(17) of the Code, in any calendar
year, as payable, including any amount which would be paid to the Participant
absent an election under Section 2.020(a), or an election to make elective
employer contributions pursuant to a qualified cash or deferred arrangement
under a cafeteria plan meeting the requirements of section 125 of the Code, but
excluding compensation for overtime, extended workweek compensation, night work
or other premium pay, bonuses, any form of extra, contingent or supplementary
compensation (including, but not limited to, lump sum payments for unused
vacation) or compensation on the hourly payroll.
1.050 "BENEFICIARY" means the one or more persons or trusts
designated by a Participant pursuant to Article IX of the Plan; provided,
however, that notwithstanding the foregoing and any provision to the contrary
in Article IX, effective August 23, 1984, in the case of a Participant who has
been married for a one (1) year period within the meaning of section 417(d) of
the Code who dies prior to complete distribution of his Accounts pursuant to
Article V or VI of the Plan, the Beneficiary shall be deemed to be the
Participant's spouse regardless of any contrary designation, unless the
Participant has filed with the Plan Administrator a written designation of a
-2-
<PAGE> 5
person or persons other than such spouse as a Beneficiary or Beneficiaries with
respect to all or any part of the Participant's Accounts and such written
designation is accompanied by the consent of the Participant's spouse or it is
established to the satisfaction of the Plan Administrator that such consent
cannot be obtained because there is no spouse or the spouse cannot be located
or because of other circumstances permitted under section 417(a)(2) of the
Code. Such consent shall be in writing on a form furnished to the Participant
by the Plan Administrator and shall acknowledge the effect of such consent.
The spouse's signature must be witnessed by a notary public not an Employee of
the Company. Such consent shall apply only to the signatory spouse. In the
event the Participant has a new spouse to whom he has been married for a one
(1) year period within the meaning of section 417(d) of the Code, the written
designation shall be void, and such new spouse shall be deemed to be the
Participant's Beneficiary until such time as the Participant makes a written
designation of a person or persons other than such spouse in accordance with
the provisions of this Section 1.050.
1.060 "BOARD OF DIRECTORS" means the Board of Directors of
Rockwell International Corporation; provided that any action of the Board of
Directors contemplated by Section 1.030, 1.080, 1.018, 2.020, 3.020 or 5.030
may be taken by the Board of Directors or by any officer or officers of
Rockwell International Corporation authorized by the Board of Directors to take
such action.
1.070 "CLASS A STOCK" means the Class A Common Stock of Rockwell
International Corporation.
1.075 "CODE" means the Internal Revenue Code of 1986, as it may
be amended from time to time. References to sections of the Code are to such
sections as of January 1, 1987, and shall include any subsequent modifications
or successor sections thereto.
1.080 "COMMON STOCK" means the common stock of Rockwell
International Corporation other than the Class A Stock.
1.090 "COMPANY" means Rockwell International Corporation and any
other entity to which the Board of Directors has extended the benefits of this
Plan.
1.100 "COMPANY CONTRIBUTIONS" under Article III, including
forfeitures treated as Company Contributions under that Article.
1.110 "COMPANY CONTRIBUTIONS ACCOUNT" means the Account, with
respect to a Participant, that is comprised of Company Contributions, adjusted
by gains or losses related to the investment of such contributions.
1.120 "COMPENSATION DEDUCTION CONTRIBUTIONS" means the amounts
contributed by Participants to the Plan through payroll deductions pursuant to
Section 2.020(a)(ii).
-3-
<PAGE> 6
1.130 "COMPENSATION DEDUCTION ACCOUNT" means the Account with
respect to a Participant that is comprised of Compensation Deduction
Contributions adjusted by gains or losses related to the investment of such
contributions.
1.140 "COMPENSATION DEFERRAL CONTRIBUTIONS" means the amounts
contributed to the Plan on behalf of Participants on and after April 1, 1984,
pursuant to Participants' elections under Section 2.020(a)(i).
1.150 "COMPENSATION DEFERRAL ACCOUNT" means the account with
respect to a Participant that is comprised of Compensation Deferral
Contributions adjusted by gains or losses related to the investment of such
contributions.
1.155 "CONTINUOUS EMPLOYMENT" means a Participant's "Vesting
Service" under the retirement plan listed in Appendix A hereto in which he
participates at the time his Continuous Employment for purposes of this Plan is
determined. If at the time of such determination he is not a participant in
any of the retirement plans listed in Appendix A his Continuous Employment
shall mean the Vesting Service he would have had under the Rockwell
International Corporation Retirement Income Plan for Certain Salaried Employees
had he been a participant in said plan from his original date of hire as an
Employee.
1.160 "DIVERSIFIED FUND" means the fund established by the
Trustee pursuant to Section 10.020(a)(i).
1.170 "DIVESTED COMPONENT" means a component of the Company or
of an Affiliated Company which ceases to be a component of the Company or of an
Affiliated Company, by reason of its divestiture, or any action taken incident
thereto.
1.180 "EFFECTIVE DATE" means March 1, 1966.
1.190 "ELIGIBLE EMPLOYEE" means any Employee (including any
officer) employed on a salary or weekly payroll of an Affiliated Company, or
on the salary or weekly payroll of a division, plant, office or location of an
Affiliated Company, to which the benefits of the Plan have been extended by the
Board of Directors. Eligible Employee shall not include any director of the
Company not otherwise so employed, nor any person not otherwise so employed who
is compensated by special fees or pursuant to a special contract or
arrangement, or on a commission basis, nor any person covered by a collective
bargaining agreement which does not provide for participation in the Plan.
1.195 "ELIGIBLE RETIREMENT PLAN" means:
(a) an individual retirement account described in section
408(a) of the Code,
(b) an individual retirement annuity described in section
408(b) of the Code,
(c) an annuity plan described in section 403(a) of the Code, or
(d) a qualified plan (which is a defined contribution plan)
described in section 401(a) of the Code;
-4-
<PAGE> 7
which accepts an individual's eligible rollover distributions;
provided, however, that in the case of an eligible rollover
distribution to a Participant's surviving Spouse, only an individual
retirement account or individual retirement annuity described in (a)
and (b) above shall be deemed to be an Eligible Retirement Plan.
1.200 "EMPLOYEE" means any person who is employed by the Company
or by an Affiliated Company, including an Eligible Employee. Employee shall to
the extent permitted by section 406 of the Code, be deemed to include any
United States citizen regularly employed by a foreign subsidiary or affiliate
of the Company.
1.210 "ERISA" means the Employee Retirement Income Security Act
of 1974, as it may be amended from time to time.
1.220 "FIXED INCOME FUND" means the fund established by the
Trustee pursuant to Section 10.020(a)(ii).
1.230 "GUARANTEED RETURN FUND" means the fund established by the
Trustee pursuant to Section 10.020(a)(iii).
1.240 "INVESTMENT MANAGER" means the one or more investment
managers within the meaning of ERISA section 3(38) appointed pursuant to
Section 10.020(b)(i).
1.250 "INVESTMENT MANAGER ACCOUNT" means the one or more
investment manager accounts established pursuant to Section 10.020(b)(i) of the
Plan.
1.260 "LAYOFF" means an involuntary severance of employment,
other than a discharge for cause.
1.270 "MATERNITY OR PATERNITY LEAVE" means any period of absence
by reason of the pregnancy of the Participant, the birth of a child of the
Participant, the placement of a child with the Participant in connection with
the adoption of such child by the Participant, or the caring for such child for
a period beginning immediately following such birth or placement; provided that
the Participant shall have complied with the Company's request to furnish the
Plan Administrator such timely information as may be reasonably required to
establish that the absence is for such reason and the number of days for which
there was such an absence.
1.280 "NAMED FIDUCIARY" means the Plan Committee, the Plan
Administrator, the Administrative Committee, the Trustee(s) and Investment
Manager(s).
1.290 "PARTICIPANT" means a person who has elected to
participate in the Plan in accordance with Article II; provided, however, that
such term shall include a person who no longer has an effective election under
Article II only so long as he retains, under the provisions of the Plan, a
nonforfeited interest in an Account under the Plan.
-5-
<PAGE> 8
1.300 "PLAN" means the Rockwell International Corporation
Savings Plan as it may be amended from time to time.
1.310 "PLAN ADMINISTRATOR" means the person so designated by
name or corporate office by the Board of Directors.
1.320 "PLAN COMMITTEE" means the Rockwell International
Corporation Employee Benefit Plan Committee.
1.330 "PLAN YEAR" means each twelve-month period ending on the
last day of September.
1.340 "RETIRE" OR "RETIREMENT" means retirement of a Participant
pursuant to a retirement plan of the Company or any Affiliated Company.
1.350 "STOCK FUND A" means the fund established by the Trustee
pursuant to Section 10.020(a)(iv).
1.360 "STOCK FUND B" means the fund established by the Trustee
pursuant to Section 10.020(a)(v).
1.364 "SUPPLEMENTAL DEDUCTION CONTRIBUTIONS" means the amounts
contributed by Participants to the Plan through payroll deductions pursuant to
Section 2.020(b)(ii).
1.365 "SUPPLEMENTAL DEDUCTION ACCOUNT" means the Account with
respect to a Participant, comprised of Supplemental Deduction Contributions and
adjusted by gains or losses related to the investment of such contributions,
established pursuant to the provisions of Section 4.010.
1.366 "SUPPLEMENTAL DEFERRAL CONTRIBUTIONS" means the amounts
contributed by Participants to the Plan on behalf of Participants pursuant to
Participants' elections under Section 2.020(b)(i).
1.367 "SUPPLEMENTAL DEFERRAL ACCOUNT" means the Account with
respect to a Participant, comprised of Supplemental Deferral Contributions and
adjusted by gains or losses related to the investment of such contributions,
established pursuant to the provisions of Section 4.010.
1.368 "TRANSFER CONTRIBUTIONS" means the amounts described in
Section 2.020(c) which are transferred to a Participant's Account in the manner
provided in said Section 2.020(c).
1.370 "TRUST AGREEMENT" means the trust agreement established
pursuant to Section 10.010 of this Plan.
1.380 "TRUST FUND" means the fund, including the earnings
thereon, held by the Trustee into which all contributions of the Participant
and the Company are deposited pursuant to the Plan. The Trust Fund shall be
divided into a Diversified Fund, Fixed Income Fund, Guaranteed Return Fund,
Stock Fund A, and Stock Fund B.
-6-
<PAGE> 9
1.390 "TRUSTEE" means the trustee or trustees of the trust to be
established pursuant to Article X of the Plan.
1.400 "UNIT" means the unit of measurement of a Participant's
interest in the Trust Fund. "Common Unit" means a Unit of the Stock Fund A or
the Stock Fund B attributable to Common Stock. "Class A Unit" means a Unit of
the Stock Fund A or the Stock Fund B attributable to Class A Stock. Where
appropriate, "Units" includes Common Units and Class A Units.
1.410 "VALUATION DATE" means the last day of each month or such
other days as the Plan Committee may determine.
-7-
<PAGE> 10
ARTICLE II PARTICIPATION
2.010 EFFECTIVE DATES.
(a) An election by an Eligible Employee to contribute to the
Plan which was in effect on April 1, 1984, or which has
subsequently become effective under Section 2.010(b)(i),
shall remain in effect except as provided in Section
2.010(c).
(b) With respect to contributions to be made under the Plan on
and after October 1, 1987, except as provided in Section
2.010(c),
(i) an Eligible Employee who has first become an
Employee prior to October 1, 1987, may elect to
participate in the Plan if he has completed at
least twenty-six (26) weeks of employment with an
Affiliated Company.
(ii) an Eligible Employee who has first become an
Employee on or after October 1, 1987, may elect
to participate in the Plan if he has completed at
least fifty-two (52) weeks of employment with an
Affiliated Company.
(iii) an election to participate shall be made on
fifteen (15) days notice to the Company and shall
become effective on the first payroll payment
date following the expiration of such fifteen
(15) day notice period.
(c) No contributions shall be made by, or with respect to, any
Participant after any of the following events until such
Participant again makes an election that is effective
under subsection (b):
(i) The Participant ceases to be an Employee;
(ii) The Participant receives a distribution under
Section 5.020, 5.030, 5.040, or 6.010.
(iii) The Participant voluntarily elects to have
contributions suspended under Section 8.010.
(d) No contributions shall be made by, or with respect to, any
Participant during any period of suspension of
contributions described in Section 8.010 or Section 8.020.
(e) Any Employee who receives a distribution from the Plan
under Section 6.010 may not have contributions resumed
during the twenty-six (26) week period beginning on the
date of such distribution.
2.020 CONTRIBUTION ELECTION OR AUTHORIZATION.
(a) An Eligible Employee who has notified the Company of his
election to become a Participant shall also:
-8-
<PAGE> 11
(i) elect to defer receipt of an amount equal to 1%,
2%, 3%, 4%, 5%, 6%, 7% or 8% of Base
Compensation, which amount shall be contributed
as a Compensation Deferral Contribution to the
Participant's Compensation Deferral Account; or
(ii) authorize to be deducted from his Base
Compensation, as paid, an amount equal to 1%, 2%,
3%, 4%, 5%, 6%, 7% or 8% of his Base
Compensation, which amount shall be contributed
as a Compensation Deduction Contribution to the
Participant's Compensation Deduction Account.
(b) Commencing on April 1, 1993, in addition to the elections
and authorizations described in (a) above, the
Participant may:
(i) if he has elected to defer receipt of 8% of his
Base Compensation pursuant to subsection (a)(i)
of this Section, elect to defer receipt of an
amount equal to an additional 1%, 2% or 3% of his
Base Compensation as a Supplemental Deferral
Contribution to a Supplemental Deferral Account;
or
(ii) if he has authorized deduction of 8% of his Base
Compensation pursuant to subsection (a)(ii) of
this Section, authorize the further deduction of
an amount equal to an additional 1%, 2% or 3% of
his Base Compensation as a Supplemental Deduction
Contribution to a Supplemental Deduction Account.
Notwithstanding the foregoing provisions of this
subsection (b), a Participant who is a Highly Compensated
Eligible Employee as defined in Section 2.030(b)(i), may
authorize only a further deferral or deduction of 1% or 2%
of his Base Compensation as a Supplemental Deferral or
Supplemental Deduction Contribution to a Supplemental
Deferral or Supplemental Deduction Account, as
appropriate.
(c) (i) With the consent of the Plan Administrator, which
consent
(1) shall be given only in connection with
the termination of a qualified individual
account plan and related trust of a
business organization the stock, assets
or business of which has been acquired by
the Company, and the extension of the
Plan to such business organization
pursuant to Section 1.190, and
(2) when given, shall extend to all
participants in said individual account
plan,
an Eligible Employee may, in accordance with and
subject to applicable provisions of the Code,
cause to be
-9-
<PAGE> 12
transferred to the Plan and Trust Fund any portion of the balance
credited to him in such individual account plan and related trust if
any portion of such balance would have been payable to him as a
rollover amount under section 402(a)(5) of the Code but for such
transfer. Such balance shall be transferred to the Plan entirely in
cash and shall constitute a Transfer Contribution. Transfer
Contributions shall not constitute Deferral or Deduction Contributions
under this Section 2.020, and no Company Contributions will be made
under Article III with respect to Transfer Contributions.
(ii) Transfer Contributions shall be credited to the Eligible Employee's
Account as follows:
(1) that portion of such balance attributable
to employer contributions made pursuant
to deferral elections under section
401(k) of the Code, which contributions
remain subject to the provisions of said
section 401(k) following transfer to the
Plan, shall be credited to the Eligible
Employee's Compensation Deferral Account
and shall be designated as such in a
manner determined by the Plan
Administrator in order to ensure
compliance with the requirements of said
section 401(k);
(2) that portion of such balance attributable
to employer contributions made pursuant
to deferral elections under section
401(k) of the Code, which contributions
have been distributed under circumstances
so as to be no longer subject to the
provisions of said section 401(k)
following transfer to the Plan, shall be
credited to the Eligible Employee's
Compensation Deduction Account, but the
Eligible Employee's tax basis under the
Code in such contributions shall be the
same as his tax basis under the
individual account plan from which such
contributions are transferred or
distributed;
(3) that portion of such balance attributable
to employer contributions other than
those described in paragraph (2) above
shall be credited to the Eligible
Employee's Compensation Deduction
Account, but the Eligible Employee's tax
basis under the Code in such
contributions shall be the same as his
tax basis under the individual account
plan from which such contributions are
transferred or distributed; and
(4) that portion of such balance attributable
to employee contributions made on an
after-tax basis, shall be credited to the
Eligible Employee's Compensation
Deduction Account.
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<PAGE> 13
(d) In addition to the elections and authorization set forth
in (a), (b) and (c), the Participant shall elect, as
provided in Section 2.060, whether the amount of any such
Compensation Deferral Contributions, Compensation
Deduction Contributions or Transfer Contributions shall be
contributed under one of the following investment options:
(i) entirely to the Diversified Fund; (ii) entirely to the
Fixed Income Fund; (iii) entirely to the Stock Fund B;
(iv) entirely to the Guaranteed Return Fund; (v) one-half
to the Diversified Fund and one-half to the Fixed Income
Fund; (vi) one-half to the Diversified Fund and one-half
to Stock Fund B; (vii) one-half to the Diversified Fund
and one-half to the Guaranteed Return Fund; (viii)
one-half to the Fixed Income Fund and one-half to the
Stock Fund B; (ix) one-half to the Fixed Income Fund and
one-half to the Guaranteed Return Fund; or (x) one-half to
the Stock Fund B and one-half to the Guaranteed Return
Fund; provided, however, that the amount of any
Supplemental Deferral Contributions of the Participant
shall be contributed under the same investment option as
are the Participant's Compensation Deferral Contributions
and that any Supplemental Deduction Contributions of the
Participant shall be contributed under the same investment
option as are the Participant's Compensation Deduction
Contributions.
(e) The Board of Directors, in extending the benefits of the
Plan to a component of an Affiliated Company may place
such limitations as the Company deems appropriate on the
amount of Compensation Deferral Contributions,
Supplemental Deferral Contributions, Compensation
Deduction Contributions, and/or Supplemental Deduction
Contributions which may be made with respect to or by a
Participant employed by such component. Compensation
Deduction Contributions and Supplemental Deduction
Contributions under this Section shall be made only by
payroll deductions unless, under exceptional
circumstances, another method of contributions is approved
by the Plan Committee.
2.030 LIMITATIONS ON COMPENSATION DEFERRAL, SUPPLEMENTAL
DEFERRAL, COMPENSATION DEDUCTION AND SUPPLEMENTAL DEDUCTION CONTRIBUTIONS.
(a) Commencing January 1, 1993, with the respect to any
Participant, the aggregate amount in any calendar year of:
(i) Compensation Deferral and Supplemental Deferral
Contributions to the Plan,
(ii) all elective deferrals under any other cash or
deferred arrangement as defined in section 402(g)
of the Code which are maintained by an Affiliated
Company, and
(iii) all elective employer contributions to any
simplified employee pension as defined in and
pursuant to sections 408(k)(1) and (6),
respectively, of the Code which are maintained by
an Affiliated Company,
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<PAGE> 14
may not exceed Seven Thousand Dollars ($7,000.00) or such
larger sum as may be established pursuant to section
402(g)(5) of the Code.
(b) For purposes of this Section 2.030:
(i) the term "Highly Compensated Eligible Employees"
means those Eligible Employees who are "highly
compensated employees" within the meaning of
section 414(q) of the Code. The Plan
Administrator may determine those Employees who
are "highly compensated employees" for purposes
of this Section 2.030 in any manner permitted by
said section 414(q).
(ii) the term "Average Deferral Percentage" for each
group of Eligible Employees with deferral
elections under Sections 2.020(a)(i) and (b)(i)
shall be the average of the percentages,
calculated separately for each Eligible Employee
in such group, of each such Eligible Employee's
compensation (as such term is defined in section
414(s) of the Code) that he has elected to defer
pursuant to Sections 2.020(a)(i) and (b)(i) for
the Plan Year. Eligible Employees who do not
elect to make Compensation Deferral Contributions
and are thus precluded from making Supplemental
Deferral Contributions shall be included at zero
percent (0%) in the Average Deferral Percentage
of each group.
(iii) the term "Average Contribution Percentage" for
each group of Eligible Employees with
contribution elections under Sections
2.020(a)(ii) and (b)(ii), shall in each case be
the average of the percentages, calculated
separately for each Eligible Employee in such
group, which the sum of:
(1) the amounts each such Eligible Employee
has elected to contribute pursuant to
Sections 2.020(a)(ii) and (b)(ii) for the
Plan Year, and
(2) the amounts of Company Contributions
payable to his Company Contributions
Account in respect of his elections under
Section 2.020(a),
bears to his compensation (as such term is
defined in section 414(s) of the Code) for that
Plan Year. Eligible Employees who do not elect
to make either Compensation Deferral or
Compensation Deduction Contributions and are thus
precluded from making either Supplemental
Deferral or Supplemental Deduction Contributions
shall be included at zero percent (0%) in the
Average Contribution Percentage of each group.
To the extent and in any manner permitted under
proposed or final regulations promulgated
pursuant to section 401(m) of the Code, the
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<PAGE> 15
Administrative Committee may include elective
deferrals and qualified nonelective contributions
as defined in sections 401(m)(4)(B) and (C) of
the Code in the determination of the Average
Contribution Percentage.
(iv) the term "Limitation Deferral Percentage" shall
mean the maximum deferral percentage in each Plan
Year for the group of Highly Compensated Eligible
Employees and shall be that percentage amount
which does not exceed the greater of:
(1) the Average Deferral Percentage for all
Eligible Employees other than Highly
Compensated Eligible Employees multiplied
by one and twenty-five hundredths (1.25);
or
(2) the lesser of
(A) an amount which does not exceed
the Average Deferral Percentage
for all Eligible Employees other
than Highly Compensated Eligible
Employees by more than two (2)
percentage points, or
(B) the Average Deferral Percentage
for all Eligible Employees other
than Highly Compensated Eligible
Employees multiplied by two (2).
If any Highly Compensated Eligible Employee is a
participant in any other cash or deferred
arrangement within the meaning of section 401(k)
of the Code established or maintained by an
Affiliated Company, for the purpose of
determining the Limitation Deferral Percentage
with respect to such Highly Compensated Eligible
Employee such other cash or deferred arrangement
shall be deemed to be a part of this Plan.
(v) the term "Limitation Contribution Percentage"
shall mean the maximum contribution percentage in
each Plan Year for the group of Highly
Compensated Eligible Employees and shall be that
percentage amount which does not exceed the
greater of:
(1) the Average Contribution Percentage for
all Eligible Employees other than Highly
Compensated Eligible Employees multiplied
by one and twenty-five hundredths (1.25);
or
(2) the lesser of
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<PAGE> 16
(A) an amount which does not exceed
the Average Contribution
Percentage for all Eligible
Employees other than Highly
Compensated Eligible Employees
by more than two (2) percentage
points, or
(B) the Average Contribution
Percentage for all Eligible
Employees other than Highly
Compensated Eligible Employees
multiplied by two (2).
If any Highly Compensated Eligible Employee is a
participant in any other plan established or
maintained by an Affiliated Company pursuant to
which elective deferrals pursuant to a cash or
deferred arrangement or matching contributions,
both as defined in section 401(m)(4) of the Code,
or employee contributions, are made, for the
purpose of determining the Limitation
Contribution Percentage with respect to such
Highly Compensated Eligible Employee such other
plan shall be deemed to be a part of this Plan.
(c) Prior to the beginning of, and periodically during, each
Plan Year the Administrative Committee shall test deferral
elections under Sections 2.020(a)(i) and (b)(i) in order
to determine whether the Average Deferral Percentage for
Highly Compensated Eligible Employees exceeds the
Limitation Deferral Percentage, and shall also test
contribution elections under Sections 2.020(a)(ii) and
(b)(ii) in order to determine whether the Average
Contribution Percentage for Highly Compensated Eligible
Employees exceeds the Limitation Contribution Percentage.
(d) In the event that the Administrative Committee should
determine that Compensation and Supplemental Deferral
Contributions made for any Plan Year on behalf of the
Highly Compensated Eligible Employees would (if not
reduced) cause the Average Deferral Percentage of such
Employees to exceed the Limitation Deferral Percentage,
the Administrative Committee shall report such
determination to the Plan Administrator, who shall refer
such determination to the Plan Committee. In such event,
the Plan Committee shall reduce the Supplemental Deferral
Contributions, if any, and then the Compensation Deferral
Contributions elected by the Highly Compensated Eligible
Employees so that the Limitation Deferral Percentage is
not exceeded for any Plan Year. Such reduction shall be
effective as of the first payroll payment date in the
month following such determination and shall be made as
set forth in subsection (d)(i) below, and if necessary,
subsection (d)(ii):
(i) Highly Compensated Eligible Employees electing
Supplemental Deferral Contributions
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<PAGE> 17
(1) in an amount equal to 2% of Base
Compensation under Section 2.020(b)(i)
shall have their elections reduced by 1%;
(2) in an amount equal to 1% (including any
Highly Compensated Employees whose
elections were reduced under subsection
(i)(1)) shall have their elections
reduced by 1% to 0%;
(ii) Highly Compensated Eligible Employees electing
Compensation Deferral Contributions
(1) in an amount equal to 8% of Base
Compensation under Section 2.020(a)(i)
shall have their elections reduced by 1%;
(2) in an amount equal to 7% of Base
Compensation (including any Highly
Compensated Employees whose elections
were reduced under subsection (ii)(1))
shall have their elections reduced by 1%.
This process shall continue until the Average Deferral
Percentage for the Highly Compensated Eligible Employees
does not exceed the Limitation Percentage.
(e) In the event that the Administrative Committee should
determine that Compensation and Supplemental Deduction
Contributions made for any Plan Year by the Highly
Compensated Eligible Employees would (if not reduced)
cause the Average Contribution Percentage of such
Employees to exceed the Limitation Contribution
Percentage, the Administrative Committee shall report such
determination to the Plan Administrator, who shall refer
such determination to the Plan Committee. In such event,
the Plan Committee shall reduce the Supplemental Deduction
Contributions, if any, and then the Compensation Deduction
Contributions elected by the Highly Compensated Eligible
Employees so that the Limitation Contribution Percentage
is not exceeded for any Plan Year. Such reduction shall
be effective as of the first payroll payment date in the
month following such determination and shall be made as
set forth in subsection (e)(i) below, and if necessary,
subsection (e)(ii):
(i) Highly Compensated Eligible Employees electing
Supplemental Deduction Contributions
(1) in an amount equal to 2% of Base
Compensation under Section 2.020(b)(ii)
shall have their elections reduced by 1%;
(2) in an amount equal to 1% (including any
Highly Compensated Employees whose
elections were reduced under subsection
(i)(1)) shall have their elections
reduced by 1% to 0%;
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<PAGE> 18
(ii) Highly Compensated Eligible Employees electing
Compensation Deduction Contributions
(1) in an amount equal to 8% of Base
Compensation under Section 2.020(a)(ii)
shall have their elections reduced by l%;
(2) in an amount equal to 7% of Base
Compensation (including any Highly
Compensated Employees whose elections
were reduced under subsection (ii)(1))
shall have their elections reduced by 1%.
This process shall continue until the Average Contribution
Percentage for the Highly Compensated Eligible Employees
does not exceed the Limitation Percentage.
(f) The reduced election of a Participant under Section
2.030(d)(i) or (ii) or (e)(i) or (ii), as applicable,
shall be substituted for the actual election of the
Participant under Section 2.020(a) or (b), as appropriate,
and shall represent the percentage of Base Compensation
that shall be paid into the Plan on his behalf as
Compensation Deferral, Supplemental Deferral, Compensation
Deduction or Supplemental Deduction Contributions, as the
case may be.
(g) To the extent permitted under subsection (e), the amount
representing the additional amount of Base Compensation
that would have been contributed as Supplemental Deferral
or Compensation Deferral Contributions on behalf of the
Participant absent the limitations set forth in this
Section 2.030 shall be contributed to the Plan by the
Participant as Supplemental Deduction or Compensation
Deduction Contributions, as appropriate.
(h) Reductions in Supplemental Deferral, Compensation
Deferral, Supplemental Deduction and Compensation
Deduction Contributions made under subsections (d) and/or
(e) shall remain in effect for the remainder of the Plan
Year unless the Administrative Committee determines that
changed circumstances permit an increase in any or all
such Contributions. If the Administrative Committee makes
such a determination, the Plan Committee shall determine
the amount by which such Contributions shall be increased
for the balance of the Plan Year.
(i) To the extent permitted by proposed or final regulations
promulgated pursuant to Code section 401(k) or such other
standards as may be established from time to time by the
Secretary of the Treasury or his delegate, and by
subsection (e), the Plan Committee may during or following
a Plan Year cause Supplemental Deferral and Compensation
Deferral Contributions made on behalf of Highly
Compensated Eligible
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<PAGE> 19
Employees to be recharacterized as Supplemental Deduction
or Compensation Deduction Contributions, as appropriate,
as and to the extent necessary so that the Average
Deferral Percentage for the Highly Compensated Eligible
Employees for any Plan Year does not exceed the Limitation
Deferral Percentage. Any such recharacterizations will
be done in a uniform and non-discriminatory manner.
(j) If it shall be determined as a result of tests of
contribution elections pursuant to subsection (c) that
there shall be "excess aggregate contributions" (as
defined in and determined pursuant to section 401(m)(6) of
the Code) in any Plan Year, such excess aggregate
contributions and all income allocable thereto shall be
distributed, or, if forfeitable, forfeited, in the manner
and within the time required by the said section
401(m)(6).
(k) The Plan shall comply with the limitation on multiple use
of the alternative limitation as described in Treasury
Regulation 1.401(m)-(2)(b).
(l) If multiple use of the alternative limitation does occur,
it will be corrected by requiring reduction in actual
contribution ratios of Highly Compensated Eligible
Employees who are eligible to participate in both
arrangements, in accordance with subsections (d) through
(j) of this Section 2.030.
2.040 CHANGES IN RATE OF COMPENSATION DEDUCTION, SUPPLEMENTAL
DEDUCTION, COMPENSATION DEFERRAL AND SUPPLEMENTAL DEFERRAL CONTRIBUTIONS. Upon
fifteen (15) days' notice a Participant may from time to time change his rate
of Compensation Deduction Contribution, Supplemental Deduction Contribution,
Compensation Deferral Contribution or Supplemental Deferral Contribution. Such
change shall be effective on the first payroll payment date following the
expiration of the fifteen (15) days' notice period.
2.050 CHANGES BETWEEN COMPENSATION AND SUPPLEMENTAL DEDUCTION
AND COMPENSATION AND SUPPLEMENTAL DEFERRAL CONTRIBUTIONS.
(a) Upon fifteen (15) days' notice a Participant who has an
authorization in effect under Section 2.020(a)(ii) to make
Compensation Deduction Contributions may revoke such
authorization and at the same time elect under Section
2.020(a)(i) to commence Compensation Deferral
Contributions. Such revocation and election shall also
constitute a similar revocation and election with respect
to any Supplemental Deduction Contributions previously
authorized by the Participant. Such revocation and
election shall be effective on the first payroll payment
date following the expiration of the fifteen (15) days'
notice period.
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<PAGE> 20
(b) A Participant who has an election in effect under Section
2.020(a)(i) to have Compensation Deferral Contributions
made on his behalf may revoke such election and at the
same time authorize Compensation Deduction Contributions
to commence under Section 2.020(a)(ii) effective with the
first payroll payment date: (1) in April of any year by
giving the Company notice of such revocation and
authorization during the month of February of that year,
and (2) in October of any year by giving the Company
notice of such revocation and authorization during the
month of August of that year. Such revocation and
election shall also constitute a similar revocation and
election with respect to any Supplemental Deferral
Contributions previously authorized by the Participant.
2.060 CHANGES IN INVESTMENT ELECTIONS. A Participant may make
an election pursuant to Section 2.020(c) above or change such election
effective with the first payroll payment date in April of any year by giving
the Company notice thereof during the month of February of that year, and
effective with the first payroll payment date in October of any year by giving
the Company notice thereof during the month of August of that year.
2.070 CHANGE IN INVESTMENTS.
(a) A Participant may elect once in any calendar year, by
giving the Company notice of such election, to have the
total value of all Units resulting from Compensation and
Supplemental Deferral, Compensation and Supplemental
Deduction, and/or Transfer Contributions made to his
Account or Accounts prior to the effective date of such
election:
(i) in the Diversified Fund converted to Units in the
Fixed Income Fund; or
(ii) in the Fixed Income Fund converted to Units in
the Diversified Fund.
(b) In addition to the annual elections available under
subsection (a),
(i) a Participant who has not attained age fifty-five
(55) may elect once in any calendar year, by
giving the Company notice of such election, to
have ten percent (10%) of the total value of all
Units in the Stock Fund B resulting from
Compensation and Supplemental Deferral,
Compensation and Supplemental Deduction, and/or
Transfer Contributions made to his Account or
Accounts prior to the effective date of such
election, or 100% of such total value if such
total value is $25.00 or less, converted to Units
in the Fixed Income Fund;
(ii) a Participant who has attained age fifty-five
(55), but not age sixty-five (65), may elect
once in any calendar
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<PAGE> 21
year, by giving the Company notice of such
election, to have fifty percent (50%) of the
total value of all Units in the Stock Fund B
resulting from Compensation and Supplemental
Deferral, Compensation and Supplemental
Deduction, and/or Transfer Contributions made to
his Account or Accounts prior to the effective
date of such election, or 100% of such total
value if such total value is $25.00 or less,
converted to Units in the Fixed Income Fund;
provided, that if the Participant has made a
prior election under subsection (i) above in
the calendar year in which he attained age
fifty-five (55), he may not make an election
under this subsection (ii) during that same
calendar year; and
(iii) a Participant, upon attainment of age sixty-five
(65), shall have an election, which may be
exercised by him only once during all periods of
his participation in the Plan thereafter, to
have:
(1) the total value of all Units in Stock
Fund A resulting from Company
Contributions made to his Company
Contributions Account prior to the
effective date of such election, or
(2) the total value of all Units in the Stock
Fund A resulting from Company
Contributions to his Company
Contributions Account and all Units in
the Stock Fund B resulting from
Compensation and Supplemental Deferral,
Compensation and Supplemental Deduction,
and/or Transfer Contributions made to his
Account or Accounts, prior to the
effective date of such election,
converted to Units in the Fixed Income Fund.
(c) The effective date of an election under this Section 2.070
shall be, and the value of all Units elected to be
converted pursuant thereto will be determined as of, the
first Valuation Date following the date on which such
election shall have been received by the Company. Such
conversion shall be effected by the conversion of such
Units into cash and the transfer of such cash to the
designated fund, and such transfer shall be effected by
the Trustee on or before the Valuation Date in the second
month succeeding the month in which the election was
received.
(d) All elections are irrevocable. The exercise of an
election under subsection (a) or (b) shall not affect the
right to exercise any other election provided by the Plan.
(e) Upon making an election under subsection (a) or (b)(i),
(ii) or (iii)(2), the Participant shall also either
confirm or
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<PAGE> 22
change his election under Section 2.020(d) with respect to
future Compensation and Supplemental Deferral or
Compensation and Supplemental Deduction Contributions,
effective as of the effective date of the election to
convert.
(f) All Company Contributions made to a Participant's Company
Contributions Account after the effective date of an
election under subsection (b)(iii)(1) shall be invested in
the Fixed Income Fund.
(g) A Participant with Units in the Guaranteed Return Fund may
elect, by providing written notice on a form provided by
the Company, at least thirty (30) days prior to the
Valuation Date upon which any contract under the
Guaranteed Return Fund, or any interest guarantee period
under any such contract, expires, to convert his interest
under such contract, whether held under a Compensation or
Supplemental Deferral Account or a Compensation or
Supplemental Deduction Account, solely to Units in the
Diversified Fund or solely to Units in the Fixed Income
Fund. Such conversion shall be based on the value of
Units in such respective funds as of the date of such
expiration or the Valuation Date immediately preceding the
transfer of funds, whichever is later. The transfer of
funds pursuant to this subsection (g) shall be made by the
Trustee within a reasonable period after such expiration
or receipt of the funds. An election under this
subsection (g) shall be irrevocable. A Participant making
an election under this subsection (g) shall also indicate
his election under Section 2.020(c) regarding investment
of contributions made subsequent to the conversion
described in this subsection (g). The interest under a
Guaranteed Return Fund contract of a Participant who does
not make an election under this subsection (g) shall
continue to be invested in the Guaranteed Return Fund.
2.080 INSUFFICIENT EARNINGS. Compensation Deduction and
Supplemental Deduction Contributions shall be made only if the Participant has
earnings available therefor after all withholdings and deductions required by
law or the Company have been made.
2.090 DEPOSITS IN TRUST FUND. Contributions made hereunder
shall be deposited in the Trust Fund and credited to the Participant's
Compensation Deferral Account, Supplemental Deferral Account, Compensation
Deduction Account or Supplemental Deduction Account, as appropriate, as soon as
practicable.
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<PAGE> 23
ARTICLE III COMPANY CONTRIBUTIONS
3.010 MATCHING AMOUNTS.
(a) The Company shall contribute to the Trust Fund an amount
equal to fifty percent (50%) of the contributions by
Participants until March 1, 1969. During the period
commencing on March 1, 1969, and ending on March 31, 1984
the Company shall contribute to the Trust Fund an amount
equal to seventy-five percent (75%) of the contributions
of the Participants. Commencing on April 1, 1984, the
Company shall contribute to the Trust Fund as Company
Contributions an amount equal to seventy-five percent
(75%) of Compensation Deferral Contributions and
Compensation Deduction Contributions. No Company
Contributions shall be made with respect to Supplemental
Deduction, Supplemental Deferral or Transfer
Contributions. Except as provided in Section 3.020,
contributions by the Company under this Section shall be
in cash and shall be deposited in the Trust Fund and
credited to the Company Contributions Account of the
affected Participants as soon as practicable.
(b) Adjustments may be made by the Company at any time because
of errors in calculating previous Company or Participant's
contributions or because of data not known at the time of
the previous calculation but such adjustments need not be
made retroactively.
3.020 CONTRIBUTIONS IN STOCK. Except as provided in Section
2.070(e), contributions by the Company pursuant to Section 3.010 may, at the
option of the Board of Directors, be in the form of shares of Common Stock,
which may be unissued or reacquired, unissued shares of Class A Stock or any
combination of Common Stock, Class A Stock or cash. Notwithstanding the
foregoing, if the form of contributions to be made in any month shall be
changed from the form of the contributions made during the immediately
preceding month, the Company shall notify the Plan Administrator of such change
no later than fifteen (15) days prior to the end of such immediately preceding
month. If the Board of Directors elects to make the Company's contributions
wholly or partially in Common Stock or Class A Stock, such stock shall be
valued at the closing price of Common Stock as reflected on the New York Stock
Exchange--Composite Transactions listing on the last trading day preceding the
date on which the contribution is made.
3.030 FORFEITURES. The amount of Company contributions required
by this Article shall be reduced by the amount of any forfeitures provided for
elsewhere in the Plan, as provided in Article VII.
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<PAGE> 24
ARTICLE IV MAINTENANCE AND VALUATION OF ACCOUNTS
4.010 PARTICIPANT'S ACCOUNTS. A separate account representing
each Participant's interest in the Diversified Fund, the Fixed Income Fund,
each contract under the Guaranteed Return Fund, the Stock Fund A and the Stock
Fund B under the Participant's Company Contributions Account, Compensation
Deferral Account and Compensation Deduction Account, as applicable, shall be
maintained by the Trustee (or by such other person or persons as the Plan
Committee shall designate). In addition to the above separate accounts,
commencing on April 1, 1993, separate Supplemental Deduction and Supplemental
Deferral Accounts shall be established and maintained by the Trustee (or by
such other person or persons as the Plan Committee shall designate) to
represent all amounts (if any), adjusted for gains or losses thereon, which
have been contributed by or on behalf of a Participant as Supplemental
Deduction Contributions and Supplemental Deferral Contributions. Such separate
accounts shall contain sufficient information to permit, with respect to the
Diversified Fund, the Fixed Income Fund, each contract under the Guaranteed
Return Fund, the Stock Fund A and the Stock Fund B, a determination of the
dollar balance of such Participant's Accounts at any time, in accordance with
the Unit valuation procedures described in Section 4.020 through 4.040 of this
Article. Such separate accounts shall also contain sufficient information to
permit, with respect to the Stock Fund A and the Stock Fund B, a determination
of the number of Common Units and Class A Units, respectively, in such
Participant's account. The accounts shall contain sufficient information to
permit such other determinations as may be required to carry out the provisions
of the Plan.
4.020 CREDITING OF UNITS TO ACCOUNTS.
(a) The interest of each Participant in the Diversified Fund,
the Fixed Income Fund, each contract under the Guaranteed
Return Fund, the Stock Fund A and the Stock Fund B,
including that part of the Diversified Fund or the Fixed
Income Fund resulting from Company Contributions, shall be
represented by Units allocated to his Accounts. The value
of each Unit shall be One Dollar ($l.00) for the
contributions deposited on behalf of each Participant
prior to the first Valuation Date following the Effective
Date of the Plan in the case of the Diversified Fund, the
first Valuation Date following March 1, 1969, in the case
of the Stock Fund A; the first Valuation Date following
March 1, 1971, in the case of the Fixed Income Fund; the
first Valuation Date following the effective date of each
contract under the Guaranteed Return Fund; and the first
Valuation Date following October 1, 1988, in the case of
the Stock Fund B.
(b) Effective as of February 23, 1987, the Plan Administrator
shall cause to be determined the number of Units allocated
to each Participant's account in the Stock Fund A on such
date. Effective as of the date distribution shall be made
to the Trustee of Class A Stock in payment of the stock
dividend to holders of Common Stock of record on February
23, 1987, all existing Units of the Stock Fund A shall be
reclassified as
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<PAGE> 25
Common Units, and there shall be allocated to each
Participant's account in the Stock Fund A the number of
new Class A Units equal to the number of Common Units
previously determined to have been allocated to such
account as of February 23, 1987. Such Class A Units shall
be valued in the manner provided in Section 4.030 except
that, for the purposes of Articles V and VI, they shall
be initially valued as if such dividend of Class A Stock
had been distributed and allocated to each Participant's
account in the Stock Fund A on the Valuation Date
described in the applicable Section of Article V or VI.
(c) Effective as of October 1, 1988, the Plan Administrator
shall cause to be determined the number of shares of
Common Stock and the number of shares of Class A Stock
allocated to each Participant's account in the Stock Fund
B on such date and the closing price of Common Stock as
reflected on the New York Stock Exchange--Composite
Transactions listing on September 30, 1988. The dollar
value of the shares of Common Stock and Class A Stock
allocated to each Participant's Account shall be converted
into Common Units and Class A Units, respectively.
(d) Each contribution on behalf of a Participant to the
Diversified Fund or payment made to a Participant from the
Diversified Fund prior to the first Valuation Date
following the Effective Date of the Plan, each
contribution on behalf of a Participant to the Stock Fund
A or payment made to a Participant from the Stock Fund A
prior to the first Valuation Date following March 1, 1969;
each contribution on behalf of a Participant to the Fixed
Income Fund or payment made to a Participant from the
Fixed Income Fund prior to the first Valuation Date
following March 1, 1971; each contribution on behalf of a
Participant with respect to a contract under the
Guaranteed Return Fund or payment made to a Participant
under a Guaranteed Return Fund contract prior to the first
Valuation Date following the effective date of such
contract; and each contribution on behalf of a Participant
to the Stock Fund B or payment made to a Participant from
the Stock Fund B following October 1, 1988, shall result
in a credit or charge to the account representing his
interest in the fund or contract under his Company
Contributions Account, Compensation Deferral Account,
Supplemental Deferral Account, Compensation Deduction
Account and Supplemental Deduction Account, as applicable,
equal to the number of Units contributed or paid as the
case may be. Effective May 1, 1987, dividends on Common
Stock and Class A Stock held in the Stock Fund A, and
effective November 1, 1988, dividends on Common Stock and
Class A Stock held in the Stock Fund B, shall result in
the crediting of Common Units as provided in Section
4.030.
4.030 UNIT VALUATIONS. Except as otherwise provided in Section
4.020, as of the Valuation Date next following the first deposit into
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the fund concerned (or under the contract concerned, in the case of the
Guaranteed Return Fund) and as of each succeeding Valuation Date, an amount
equal to the fair market value of all property in such fund (other than
dividends received that are attributable to whole shares of Common Stock or
Class A Stock that were or are to be transferred to Participants subsequent to
the record date for such dividend) or under such contract, in the case of the
Guaranteed Return Fund, shall be determined by the Trustee in such manner and
on such basis as it shall deem appropriate, except that Class A Stock shall be
deemed to have the same value per share as Common Stock. Such amount shall be
divided by the total number of Units credited to all the Participants in the
fund or under the contract concerned on the particular Valuation Date, thereby
establishing a new Unit value. With respect to each fund, each contribution or
other payment thereto or payment therefrom (and in the case of the Stock Fund A
each dividend paid after May 1, 1987, and in the case of the Stock Fund B each
dividend paid after November 1, 1988, on Common Stock and Class A Stock held in
such fund) after such Valuation Date and prior to or on the next Valuation Date
shall be converted to Units (in the cases of the Stock Fund A and the Stock
Fund B, to Common Units and/or Class A Units to the extent appropriate) by
dividing such new Unit value into the amount of such contribution or payment,
and the individual account of each affected Participant representing his
interest in the fund or contract under his Company Contributions Account,
Compensation Deferral Account, Supplemental Deferral Account, Compensation
Deduction Account and Supplemental Deduction Account, as applicable, shall be
credited or charged, as the case may be, with the portion of the number of
Units so computed properly attributable to such Participant. The value of each
contract under the Guaranteed Return Fund shall be equal to the principal
amount held in such Fund plus accrued interest.
4.040 BALANCE OF PARTICIPANT'S ACCOUNTS. As of any specified
date, the dollar balance of the individual account or accounts of each
Participant representing the interest of each Participant in each fund or
contract under his Company Contributions Account, Compensation Deferral
Account, Supplemental Deferral Account, Compensation Deduction Account and
Supplemental Deduction Account, as applicable, shall be determined by
multiplying the number of Units in his current balance by the Unit value as of
the last preceding Valuation Date in accordance with the foregoing and adding
to the resulting dollar balance the amount of contributions made with respect
to such account since the last valuation date for which Units have not yet been
credited. Only those contributions actually received by the Trustee will be
considered in making valuations and determining account balances.
4.050 STATEMENTS OF PARTICIPANTS. After the end of each
calendar year or more frequently as the Plan Administrator shall determine, the
Plan Administrator (or if the Plan Administrator shall so determine, the
Trustee) shall forward by mail to each Participant a statement, in such form as
the Plan Administrator shall determine, setting forth pertinent information
relative to each Participant's Accounts. Such statement shall, for all
purposes, be deemed to have been accepted as correct unless the Plan
Administrator (or the Trustee, as the case may be) is notified to the contrary
by mail within sixty (60) days of the mailing thereof to the Participant.
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ARTICLE V BENEFITS PAYABLE UPON TERMINATING EMPLOYMENT
5.010 VESTING.
(a) Each Participant shall at all times be fully vested in his
Compensation Deferral Account, Supplemental Deferral
Account, Compensation Deduction Account and Supplemental
Deduction Account, as applicable. Each Participant who is
an Employee and:
(i) who at any time on or after October 1, 1988, has
at least five (5) years of Continuous Employment
shall be fully vested in his Company
Contributions Account. For the purposes of the
preceding sentence, any Participant who has
forfeited Units in his Company Contributions
Account under Articles V or VI prior to October
1, 1988, or prior to completing five (5) years of
Continuous Employment (which Units shall have
been applied to reduce Company Contributions
pursuant to Article VII), shall not have a vested
right to such forfeited Units until such
forfeited Units shall have been restored pursuant
to the applicable provisions of Sections
5.040(b), 6.010(b), 6.020(d) or 6.030(g).
(ii) who has less than five (5) years of Continuous
Employment as of October 1, 1988, shall be fully
vested in the Units in his Company Contributions
Account resulting from Company Contributions made
for all months prior to October, 1988, but,
except as otherwise provided in the Plan, shall
not become vested in any Units in his Company
Contributions Account resulting from Company
Contributions for any month after September,
1988, until he shall have accumulated five (5)
years of Continuous Employment.
(iii) For the purposes of paragraphs (i) and (ii), an
Employee who
(A) terminates employment with all Affiliated
Companies at any time after October 1,
1985,
(B) does not receive a distribution under
Article V and retains a vested interest
in his Company Contributions Account, and
(C) is subsequently reemployed by an
Affiliated Company at any time following
his termination of employment
shall be credited with his period of Continuous
Employment with all Affiliated Companies prior to
such termination of employment, but only for the
purpose of determining whether he has a vested
right under
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Section 5.010(a)(i) to that portion of his
Company Contributions Account attributable to
Company Contributions made during his period of
reemployment.
(b) No Units in a Participant's Company Contributions Account
shall vest subsequent to the Participant's termination of
employment (described in Section 5.040), except as
provided in Section 5.040(b) (dealing with reemployment).
(c) If a Participant who is an Employee attains age sixty-five
(65), all of the Units in his Accounts which are
attributable to Company Contributions shall be fully
vested.
5.020 RETIREMENT, DEATH, LAYOFF, ETC.
(a) (i) Subject to Section 5.050 and, in the case of
Retirement, to the provisions of subsection (b),
upon a Participant's
(1) Retirement,
(2) death,
(3) Layoff,
(4) termination of employment because of
inability to meet Company medical
standards,
(5) termination of employment in order to
enter the Armed Forces of the United
States or to accept employment with the
Government of the United States,
(6) disability which has continued for a
period of at least six (6) months,
the Participant shall become fully vested in all
Units in his Company Contributions Account, and
as soon as practicable after (but in no event
later than sixty (60) days after the end of the
Plan Year in which such event shall have
occurred) he (or his Beneficiary in the case of
his death) shall receive all amounts described in
paragraph (ii) of this subsection (a).
(ii) The amounts that the Participant (or his
Beneficiary in the case of death) shall receive
under paragraph (i) shall be as follows:
(1) With respect to the Diversified Fund, the
Fixed Income Fund, and Guaranteed Return
Fund, the Participant shall receive the
full dollar balance of his Account or
Accounts in such funds. Such balance
shall be determined in the manner
provided by Section 4.040, by reference
to the Units in such Participant's
Account or Accounts
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<PAGE> 29
(A) on the date of such Retirement,
Layoff or termination, or,
(B) in the case of the Participant's
death or disability, on the date
all documentation determined by
the Plan Administrator to be
necessary to effect distribution
from the Plan shall have been
received by the Plan
Administrator,
and the value of each Unit on the
Valuation Date coinciding with or
immediately preceding such date.
(2) With respect to the Stock Fund A and the
Stock Fund B, the dollar balance or
balances in such Participant's account or
accounts in such funds as of the
Valuation Date coinciding with or
immediately preceding
(A) such Retirement, Layoff, or
termination, or
(B) in the case of the Participant's
death or disability, the date
all documentation determined by
the Plan Administrator to be
necessary to effect distribution
from the Plan shall have been
received by the Plan
Administrator,
(such balance or balances to be
determined in the manner provided by
Section 4.040 separately by reference to
the Common Units and any Class A Units in
the Participant's Account on such
Valuation Date and the respective Unit
values on such Valuation Date) shall be
applied to Common Stock to the extent
attributable to Common Units and Class A
Stock to the extent attributable to Class
A Units. The Participant shall receive
shares of Common Stock equal in number to
the maximum number of whole shares of
Common Stock which could be purchased at
the closing price of Common Stock as
reflected on the New York Stock Exchange
-- Composite Transactions listing on such
Valuation Date (or, in the event such
Valuation Date falls on a date on which
for any reason there are no trades of
such stock reflected on such listing, the
last trading day preceding such Valuation
Date) with the portion of such dollar
balance attributable to the Common Units
in his Account, and shares of Class A
Stock equal in number to the maximum
number of whole shares of Common Stock
which could be purchased at such closing
price with the portion, if any, of such
dollar balance attributable to
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<PAGE> 30
Class A Units, in his Account. The Participant
shall be paid in cash the dollar amounts
remaining in his account or accounts in the Stock
Fund A and the Stock Fund B after reduction of
each such account by the value, based on such
closing price, of the whole shares previously
described. In addition, the Participant shall be
paid in cash the amount of any cash dividends
received since such Valuation Date attributable
to the number of whole shares of Common Stock and
Class A Stock distributed to him as described in
this paragraph (ii) and the dollar value of any
contributions to the Stock Fund A and Stock Fund B
in respect of such Participant between such
Valuation Date and the date of such Retirement,
death, Layoff or termination.
(b) A Participant who, upon Retirement, would otherwise
receive a distribution pursuant to subsection (a) above,
notwithstanding any prior consent to such distribution
which he may have given pursuant to Section 5.050, may
make an irrevocable election at any time during the thirty
(30) day period ending on the day immediately prior to the
effective date of his Retirement to remain in the Plan
without any further contributions until January 1 of the
calendar year following the effective date of his
Retirement. As soon as practicable after such January 1,
a Participant who has made such an irrevocable election
shall receive all amounts provided in subsection (a)
above, valued as of the Valuation Date immediately prior
to such January 1.
(c) Notwithstanding the provisions of Sections 5.020(a) and
(b), if an Employee attains age 70-1/2 on or after January
1, 1988, distribution of the amounts described in
paragraph (a)(ii) of this Section 5.020 to such Employee
shall be made not later than April 1 of the calendar year
following the calendar year in which the Employee shall
have attained age 70-1/2. If such a Participant shall so
request in writing, the Plan Administrator shall cause all
or a portion of the amounts and shares of Common and Class
A Stock with respect to which the Participant would be
taxable under section 402 of the Code (other than amounts
and/or shares required to be distributed at that time
pursuant to the provisions of section 401(a)(9)(A) of the
Code) to be transferred from the Trustee directly to the
custodian of an Eligible Retirement Plan specified by the
Participant. Such request shall be made by such date as
the Plan Administrator shall determine, but in no event
later than the said April 1 date. Prior to effecting such
transfer the Plan Administrator shall require evidence
reasonably satisfactory to him that the entity to which
such transfer is to be made is in fact an Eligible
Retirement Plan and that such Eligible Retirement Plan may
receive the distribution in the forms required under this
Section.
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<PAGE> 31
5.030 EMPLOYEES OF DIVESTED COMPONENTS.
(a) Subject to the provisions of Section 5.050, any
Participant who is employed by a Divested Component
immediately prior to its divestiture and who does not
continue employment with the Divested Component and whose
employment is terminated in the course of such divestiture
shall have his Accounts distributed to him by the Trustee
in the manner provided in Section 5.020.
(b) Any Participant who immediately prior to its divestiture
is employed by a Divested Component or by an Affiliated
Company in any component, subsidiary or affiliate other
than the Divested Component and who continues employment
with the Divested Component or, with the Company's consent
and in connection with such divestiture, accepts
employment with the Divested Component after its
divestiture shall become fully vested in all Units in his
Company Contributions Account. Subject to the provisions
of Section 5.050, the Accounts of such Participant shall
be distributable in the manner provided in Section 5.020;
or, to the extent authorized by the Plan Administrator and
subject to the provisions of Section 13.030, all or a
portion of such Accounts shall be transferred by the
Trustee in accordance with the provisions of section
401(a) of the Code to the trustee or other funding agent
of any appropriate plan established or otherwise
maintained by the acquiror of said Divested Component in
such a manner as to ensure that no portion of the Accounts
of any Participant transferred hereunder shall be subject
to forfeiture, but that in all other respects such
Accounts shall be subject to the provisions of the
successor plan.
5.040 TERMINATION OF EMPLOYMENT FOR OTHER REASONS.
(a) If the Participant's employment is terminated after
October 1, 1988, for any reason other than those set forth
in Sections 5.020, 5.030, or 8.020(a)(v), subject to the
provisions of Section 5.050 the Participant shall receive
the following as soon as practicable:
(i) With respect to the Diversified Fund, the Fixed
Income Fund and the Guaranteed Return Fund, the
Participant shall receive the full dollar balance
of his Account or Accounts in such funds. Such
balance shall be determined, in the manner
provided in Section 4.040, by reference to the
Units in such Participant's Account or Accounts
on the date of such termination and the value of
each Unit on the Valuation Date coinciding with
or immediately preceding such date.
(ii) With respect to the Stock Fund B the dollar
balance or balances in such Participant's account
or accounts in such Fund, and with respect to the
Stock Fund A the
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<PAGE> 32
vested portion of the dollar balance or balances in
such Participant's account or accounts in such Fund, both as
of the Valuation Date immediately preceding such termination
(such balance or balances to be determined in the manner
provided by Section 4.040 separately by reference to the
Common Units and any Class A Units in such Participant's
Account on such Valuation Date and the value of each such Unit
on such Valuation Date) shall each be applied to Common Stock
to the extent attributable to Common Units and Class A Stock
to the extent attributable to Class A Units. With respect to
each such fund, the Participant shall receive shares of Common
Stock equal in number to the maximum number of whole shares of
Common Stock which could be purchased at the closing price of
Common Stock as reflected on the New York Stock Exchange --
Composite Transactions listing on such Valuation Date (or, in
the event such Valuation Date falls on a date on which for any
reason there are no trades of such stock reflected on such
listing, the last trading day preceding such Valuation Date)
with such dollar balance (in the case of the Stock Fund A, the
vested portion of such dollar balance) attributable to the
Common Units in his account in such fund, and shares of Class
A Stock equal in number to the maximum number of whole shares
of Common Stock which could be purchased at such closing price
with the portion, if any, of such dollar balance (in the case
of the Stock Fund A, the vested portion, if any, of such
dollar balance) attributable to Class A Units in his account
in such fund. The Participant shall be paid in cash the
dollar amount remaining in his account in the Stock Fund B and
in the vested portion of his account in the Stock Fund A after
reduction by the value, based on such closing price, of the
whole shares previously described. In addition, the
Participant shall be paid in cash the amount of any cash
dividends received since such Valuation Date attributable to
the number of whole shares of Common Stock and Class A Stock
distributed to him as described in this paragraph (ii).
(b) If a Participant receives a distribution pursuant to
subsection (a) or becomes eligible to receive a
distribution under subsection (a) but fails to provide
written consent to such distribution as required by
Section 5.050, the non-vested portions of the
Participant's Company Contributions Account shall be
forfeited at the time such distribution is made or, but
for the Participant's failure to provide such written
consent, would have been made as determined by the Plan
Administrator. In either case, if the Participant is
reemployed as an Employee prior to the end of five (5)
years after the date on which his termination of
employment shall have occurred, there shall be restored to
the Participant's
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Company Contributions Account a dollar amount equal to the
non-vested portion of the dollar balance of his Company
Contributions Account in Stock Fund A as of the Valuation
Date last preceding his termination of employment
(determined, in the manner set forth in Section 4.040, by
reference to the Units in such Account and the value of
each such Unit on such Valuation Date); provided, however,
that if the Participant shall have received a distribution
under subsection (a), such amount shall be restored only
if the Participant shall have made a cash repayment to the
Plan following such reemployment as an Employee and on or
prior to the end of the sixtieth (60th) month after the
date on which he shall have been reemployed as an
Employee. The amount of such repayment shall equal the
sum of all the amounts distributed to such Participant
pursuant to subsection (a) from his Company Contributions
Account, his Compensation Deduction Account and his
Compensation Deferral Account and as a result of all
other, prior distributions and withdrawals with respect to
which he would be permitted to make a repayment under
Article VI, shall be credited to his Compensation
Deduction Account and shall be allocated to the funds and
any accounts under the Guaranteed Return Fund in such
Account in the same proportion that the total of his
Compensation Deduction and Compensation Deferral Accounts
were allocated immediately prior to the distribution,
except that any amounts allocated to the Guaranteed Return
Fund shall be allocated to the contract under such Fund to
which contributions under the Plan are then being made.
Such amount shall not be increased to reflect interest.
The non-vested portion of the Participant's Company
Contributions Account restored pursuant to this subsection
(b) shall vest as provided in Section 5.010. For the
purposes of this subsection (b), in the case of an
Employee who is absent from work by reason of a Maternity
or Paternity Leave, the five (5) year period following
termination of employment described above shall not be
deemed to have commenced until the earlier of the date on
which he terminates employment by reason of his
retirement, death, voluntary quit or discharge or the
second annual anniversary date of the commencement of
his Maternity or Paternity Leave.
(c) Notwithstanding the provisions of Section 5.040(b), if an
Employee terminated employment with all Affiliated
Companies on or after October 1, 1985, and was reemployed
by an Affiliated Company prior to October 1, 1986, any
Units of his Company Contributions Account forfeited under
Section 5.040 of the Plan as then in effect shall be
restored in the manner provided in Section 5.040(b)
regardless of whether the Employee shall have made the
cash repayment required by said Section.
5.050 PARTICIPANT'S CONSENT TO DISTRIBUTION OF BENEFITS.
Notwithstanding any other provisions of the Plan, if the aggregate value of the
vested portions of a Participant's Accounts is in excess of Three Thousand
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<PAGE> 34
Five Hundred Dollars ($3,500) and the Participant shall not have attained age
sixty-five (65) at the time distribution of benefits under the Plan would
otherwise be made, no distribution of benefits under the Plan shall be made
unless the Plan Administrator shall first have obtained the Participant's
written consent thereto. In the event such written consent shall not have been
so obtained by the time such distribution would otherwise have been made, the
vested portion of the Participant's Accounts, determined as of his termination
of employment and valued as provided in Sections 5.020(a)(2) or 5.040(a), as
applicable, shall be retained by the Plan and shall be maintained and valued in
accordance with Article IV. Distribution of the Participant's Accounts
pursuant to Article V (subject, however, to the provisions of Section 5.020(b))
shall be made following the date on which the Participant's written consent to
such distribution is obtained by the Plan Administrator or, if earlier, the
date on which the Participant attains age sixty-five (65) or dies, in the same
manner as if the Participant had terminated employment on such date; provided,
however, that if the Participant is reemployed as an Employee prior to the date
on which such written consent shall have been received by the Plan
Administrator such Participant shall not have any further right to receive a
distribution of benefits under this Section 5.050 as a result of his prior
termination of employment. Until such distribution is made, the provisions of
Sections 2.070, 5.010(b) and 5.040(b) and Articles IX, XII and XVII shall be
applicable to such Participant. Under no circumstances other than those set
forth in Section 5.020(b) shall such Participant have any right to withdraw any
portion of the balance of his Accounts under Article VI prior to the date
distribution of the balance of his Accounts shall be made under Section 5.020
or 5.040 and this Section 5.050.
5.055 TRANSFER OF DISTRIBUTION DIRECTLY TO ELIGIBLE RETIREMENT
PLAN. If a Participant, a Participant's spouse entitled to distribution
pursuant to Article IX in the case of a Participant's death, or former spouse
entitled to distribution pursuant to Section 11.150(b) shall so request in
writing, the Plan Administrator shall cause all or a portion of the amounts and
shares of Common and Class A Stock with respect to which the Participant would
be taxable under section 402 of the Code to be transferred from the Trustee
directly to the custodian of an Eligible Retirement Plan specified by the
Participant. Such request shall be made, in the case of a Participant, at the
time his consent to such distribution shall be given to the Plan Administrator
pursuant to Section 5.050, or at such later date as the Plan Administrator
shall permit, or, in the case of the Participant's spouse or former spouse, at
such time as the Plan Administrator shall determine. Prior to effecting such
transfer the Plan Administrator shall require evidence reasonably satisfactory
to him that the entity to which such transfer is to be made is in fact an
Eligible Retirement Plan and that such Eligible Retirement Plan may receive the
distribution in the forms required under this Article V.
5.060 RESUMPTION OF PARTICIPATION. An Employee who has received
a distribution under this Article shall be eligible to resume participation in
the Plan only as provided in Section 2.010.
5.070 VALUATION DATES FOR WITHDRAWALS AND DISTRIBUTIONS PURSUANT
TO DOMESTIC RELATIONS ORDERS. Notwithstanding any other provision of this
Article V or Article VI, in the event that the Plan Administrator shall
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<PAGE> 35
determine that a distribution of a Participant's Account pursuant to this
Article V or Article VI or a withdrawal from a Participant's Account pursuant
to Article VI has been delayed as a result of a pending or threatened domestic
relations order, the Valuation Date immediately preceding the date on which
such withdrawal or distribution is approved by the Plan Administrator pursuant
to such order shall be substituted for the Valuation Date which would otherwise
be applicable to such withdrawal or distribution pursuant to this Article V or
Article VI.
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<PAGE> 36
ARTICLE VI DISTRIBUTIONS AND WITHDRAWALS WHILE EMPLOYED; LOANS
6.010 DISTRIBUTION OF COMPENSATION DEDUCTION ACCOUNT AND
SUPPLEMENTAL DEDUCTION ACCOUNT AND PARTIAL DISTRIBUTION OF COMPANY
CONTRIBUTIONS ACCOUNTS.
(a) Subject to such restrictions as the Plan Committee may
establish pursuant to Section 6.040, an Employee who has a
Compensation Deduction Account under the Plan may elect to
receive a distribution of his entire Compensation
Deduction Account together with the vested portion of his
Company Contributions Account relating to his Compensation
Deduction Account, and his entire Supplemental Deduction
Account. As soon as practicable after the Company's
receipt of such an election, there shall be paid or
transferred to such Employee cash and stock determined in
the same manner as under Section 5.040(a) except that the
date of receipt of the election shall be used for such
determination in lieu of the date of termination, and
except that the Employee's Compensation Deferral Account,
the related portion of his Company Contribution Account,
if any, and the Employee's Supplemental Deferral Account
shall not be distributable under this Section 6.010(a).
The non-vested portion of the Employee's Company
Contributions Account relating to his Compensation
Deduction Account, if any, shall be forfeited at the time
of such distribution.
(b) An Employee who has received a distribution from the Plan
as provided in subsection (a) and thereby suffered a
forfeiture may elect to restore his interest in the Plan
by making a cash repayment to the Plan in the amount
described in subsection (c). Any repayment under this
Section 6.010 must be made while an Employee and within
sixty (60) months after such distribution; provided, that
no such repayment may be made prior to the expiration of
twelve (12) months following the date of such distribution
unless the Participant terminates employment within the
twelve (12) month period following such distribution, in
which case repayment may be made at any time following the
date written notice of termination is given to him by an
Affiliated Company or by him to an Affiliated Company and
prior to his date of termination; and provided further,
that if the Employee terminates employment on or after
October 1, 1985, for any reason no such repayment may be
made after such termination unless he shall have been
reemployed as an Employee prior to the end of five (5)
years after the date on which such distribution shall have
been made.
(c) The amount of the repayment described in subsection (b)
shall equal the sum of (i) the amount distributed to such
Employee from his Company Contributions Account plus (ii)
the total amounts distributed to the Employee from his
Compensation Deduction Account as a result of his election
under subsection (a) and as a result of all prior
withdrawals with
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<PAGE> 37
respect to which he would be permitted to make a
repayment under Section 6.020(d). For purposes of this
subsection (c), the amount distributed to an Employee
means the sum of the cash distributed to such Employee
plus the dollar value of the Common Stock and any Class A
Stock distributed to such Employee, determined at the
closing price for Common Stock as reflected on the New
York Stock Exchange -- Composite Transactions listing on
the Valuation Date applicable to the distribution or
withdrawal (or if such Valuation Date falls on a date on
which, for any reason, there are no trades of such stock
reflected on such listing, the last trading day preceding
such Valuation Date). Such amount shall not be increased
to reflect interest.
(d) As soon as practicable after an Employee makes a repayment
described in subsection (b), there shall be credited to
the Employee's Company Contributions Account a dollar
amount equal to the balance that was in such Account at
the time of the distribution plus the dollar amount of all
balances forfeited as a result of withdrawals under
Section 6.020(a) made prior to such distribution as to
which repayment is required under Section 6.020(d). At
the same time, the Employee's Compensation Deduction
Account shall be credited with a dollar amount equal to
the amount repaid by the Participant to such Account.
This amount shall be allocated to the funds and any
accounts under the Guaranteed Return Fund in the manner
that the Employee's Compensation Deduction Account was
allocated prior to the distribution, except that any
amounts allocated to the Guaranteed Return Fund shall be
allocated to the contract under such Fund to which
contributions are then currently being made. The amount
credited under this subsection (d) shall vest as provided
in Section 5.010. For purposes of this Section 6.010, the
balance of the Participant's Company Contributions Account
shall be determined, in the manner provided in Section
4.040, by reference to the Units in such Account on the
date of the Participant's distribution (or, where
applicable, withdrawal) and the value of each Unit on the
Valuation Date preceding such date.
(e) An Employee who has received a distribution under this
Section 6.010 shall be eligible to have contributions
resumed under the Plan only as provided in Section 2.010.
6.020 WITHDRAWALS FROM EMPLOYEE'S COMPENSATION DEDUCTION
ACCOUNT AND SUPPLEMENTAL DEDUCTION ACCOUNT.
(a) Subject to such restrictions as the Plan Committee may
establish pursuant to Section 6.040, an Employee may from
time to time elect to withdraw some or all of his
Compensation Deduction Account and some or all of his
Supplemental Deduction Account; but in no event may the
Employee's total withdrawals from either Account under
this Section 6.020 exceed the total amount actually
contributed by him to such Account.
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(b) A withdrawal under this Section 6.020 shall be taken first
from the Employee's Supplemental Deduction Account, if
any. Thereafter, if at the time of such withdrawal the
Employee is not fully vested in that portion of his
Company Contributions Account which is attributable to
Compensation Deduction Contributions:
(i) Such withdrawal shall be taken first from that
portion, if any, of the Employee's Compensation
Deduction Account resulting from Compensation
Deduction Contributions made for periods prior to
October 1, 1988.
(ii) When that portion, if any, of the Employee's
Compensation Deduction Account resulting from
Compensation Deduction Contributions made for
periods prior to October 1, 1988, has been
exhausted, such withdrawal shall then be taken
from the portion of such Account resulting from
Compensation Deduction Contributions made for
periods commencing on or after October 1, 1988.
If, immediately prior to such withdrawal, the
dollar balance of the portion of the Employee's
Company Contributions Account attributable to
Company Contributions made for periods prior to
October 1, 1988, shall be less than fifty percent
(50%) of the total dollar balance of his Company
Contributions Account, such withdrawal shall
result in a forfeiture of those Units of his
Company Contributions Account which are
attributable to the Compensation Deduction
Contributions withdrawn; and for this purpose the
amount of any such withdrawal which shall be
allocated to Compensation Deduction Contributions
shall be determined in accordance with the
provisions of section 72(e) of the Code.
For the purposes of paragraph (ii) of this subsection (b),
the Units of his Company Contributions Account which are
attributable to the Compensation Deduction Contributions
withdrawn shall be determined by multiplying the dollar
amount of that portion of the Employee's withdrawal
described in paragraph (ii) by a fraction, the numerator
of which is the total dollar value of that portion of the
Employee's Company Contributions Account which is
attributable to Compensation Deduction Contributions made
for periods commencing on or after October 1, 1988, and
the denominator of which is the total dollar value of that
portion of the Employee's Compensation Deduction Account
which is attributable to Compensation Deduction
Contributions made for periods commencing on or after
October 1, 1988 (both such dollar values to be determined
as of the last Valuation Date preceding the date of
withdrawal), and dividing the result by the Unit value of
the Common Units in the Employee's Company Contributions
Account (determined as of the last Valuation Date
preceding the date of withdrawal). If the resulting
number of Common Units exceeds the number of
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Common Units in that portion of the Employee's Company
Contributions Account which is attributable to
Compensation Deduction Contributions made for periods
commencing on or after October 1, 1988, all Common Units
in such portion of such Account shall be forfeited, the
aggregate value of such Common Units shall be deducted
from the total dollar value of Units to be forfeited, and
the remaining balance shall be divided by the Unit value
of the Class A Units in his Company Contributions Account
(determined as of the Valuation Date next preceding the
date of withdrawal) to determine the number of
Class A Units to be forfeited.
(c) (i) Subject to the provisions of subsection (b), an
Employee may elect to have any withdrawal
pursuant to subsection (a) taken from his account
in the Diversified Fund, his account in the Fixed
Income Fund, his account or accounts under the
Guaranteed Return Fund, or his account in the
Stock Fund B, or to have a specified portion or
portions taken from his account or accounts in
the Diversified Fund, the Fixed Income Fund, the
Guaranteed Return Fund, and/or the Stock Fund B.
In the absence of such election, such withdrawal
shall be made from his accounts in such funds in
the following order: first, from his account, if
any, in the Fixed Income Fund; next, from his
account, if any, in the Diversified Fund; next,
from his account or accounts, if any, in the
Guaranteed Return Fund, and finally, from his
account, if any, in the Stock Fund B, first from
his Common Units and then, when his Common Units
have been exhausted, from his Class A Units in
such Fund. Notwithstanding the foregoing
provisions of this paragraph (i), and subject
only to the provisions of subsection (b), any
withdrawal from his account or accounts in the
Guaranteed Return Fund shall be taken in reverse
sequence by first exhausting his accounts in the
most recent contracts under such Fund.
(ii) As soon as practicable after a withdrawal
election is made, there shall be paid or
transferred to the Employee cash and stock
determined in the same manner as under Section
5.040(a) above (except that the date of
withdrawal shall be used for such determination
in lieu of the date of termination, and except
that the withdrawal election shall apply only to
the Employee's Compensation and Supplemental
Deduction Accounts).
(d) No repayment may be made by any Employee except under the
following circumstances. An Employee who has made one or
more withdrawals from the Plan which, as provided in
subsection (b), resulted in forfeitures of all or part of
his Company Contributions Account may elect to restore the
interest he had in the Plan preceding such withdrawals by
making a cash
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repayment to the Plan. The amount of the repayment
shall equal the amount distributed to the Employee due to
such withdrawals by the Employee (as such amount is
defined in Section 6.010(c), but using for such
determination the date of the withdrawal or withdrawals in
lieu of the date of distribution). However, repayment
shall be limited by the following conditions:
(i) No repayment may be made nor interest restored
with respect to a withdrawal less than twelve
(12) months after the withdrawal (unless the
Employee terminates employment within such twelve
(12) month period in which case repayment may be
made at any time following the date written
notice of termination is given to him by an
Affiliated Company or by him to an Affiliated
Company and prior to his date of termination) nor
more than sixty (60) months after the withdrawal.
(ii) No repayment may be made nor interest restored
with respect to a withdrawal if the Employee has
terminated employment for any reason on or after
October 1, 1985, and subsequent to the
withdrawal, unless he has been reemployed as an
Employee prior to the end of five (5) years after
the date on which such withdrawal shall have been
made.
(iii) An Employee may only make a repayment with
respect to a withdrawal if such withdrawal
resulted in forfeiture of some portion of his
Company Contributions Account.
(iv) Any Employee making repayment under this Section
6.020 with respect to any withdrawal must repay
the total amounts distributed with respect to all
prior withdrawals for which the Employee is
permitted to make repayment under this subsection
(d).
As soon as practicable after an Employee makes a repayment
described in this subsection (d), there shall be credited
to the Employee's Company Contributions Account a dollar
amount equal to the dollar balances that were forfeited as
a result of the withdrawals in respect of which such
repayment is made. At the same time, the Employee's
Compensation Deduction Account shall be credited with a
dollar amount equal to the amount repaid by the Employee
to such Account. The amounts credited under the preceding
sentences shall be used to purchase Units at the Unit
value established on the last preceding Valuation Date
prior to such repayment. The dollar amount recredited
shall be allocated to the funds and any accounts under the
Guaranteed Return Fund in the manner that the Employee's
Compensation Deduction Account was allocated prior to the
Employee's withdrawal or withdrawals, except that any
amounts allocated to the Guaranteed Return Fund shall be
allocated to the contract under such Fund to which
contributions are then currently being made. The amount
credited under this subsection (d) shall vest as provided
in Section 5.010.
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(e) Withdrawals shall be in a minimum amount of $100 with
respect to the Diversified Fund, the Fixed Income Fund or
Guaranteed Return Fund, and in the number of whole shares
of Common Stock or Class A Stock with a dollar value in a
minimum amount of $100 based on the closing price of
Common Stock reflected on the New York Stock Exchange --
Composite Transactions listing on the immediately
preceding Valuation Date (or, in the event such Valuation
Date falls on a date on which, for any reason, there are
no trades of such stock reflected on such listing, the
last trading day preceding such Valuation Date) with
respect to the Stock Fund B. An Employee may not make a
request for partial withdrawal within twenty-six (26)
weeks of any prior request for partial withdrawal;
provided, however, that this limitation upon the ability
of an Employee to make a partial withdrawal within
twenty-six (26) weeks of any prior request for a partial
withdrawal shall be waived by the Plan Administrator for
the six-month period immediately following any due
declaration by the President of the United States under
applicable federal law that a particular occurrence or
situation constitutes a national disaster condition, if
such partial withdrawal is requested for a reason
associated with financial need of the Employee resulting
from the effects of the said condition. Payment of
partial withdrawal requests shall be made to the Employee
as soon as practicable.
6.030 WITHDRAWALS FROM EMPLOYEE'S COMPENSATION DEFERRAL AND
SUPPLEMENTAL DEFERRAL ACCOUNTS.
(a) Subject to such restrictions as the Plan Committee may
establish pursuant to Section 6.040, an Employee may
withdraw all or a portion of the balance of his
Compensation Deferral Account or Supplemental Deferral
Account if he has attained age fifty-nine and one-half
(59-1/2).
(b) Subject to such restrictions as the Plan Committee may
establish pursuant to Section 6.040, an Employee who has
not attained age fifty-nine and one-half (59-1/2) may
request approval of the Administrative Committee to
withdraw some or all of the Units of his Compensation
Deferral Account attributable solely to his Compensation
Deferral Contributions and/or Transfer Contributions,
excluding those Units thereof which are attributable to
earnings under the individual account plan from which such
Transfer Contributions were transferred or distributed,
and some or all of the Units of his Supplemental Deferral
Account attributable solely to his Supplemental Deferral
Contributions.
(c) In no event, however, may any Units attributable to income
allocated to his Compensation Deferral Account or his
Supplemental Deferral Account be withdrawn pursuant to
subsections (b) and (d) of this Section 6.030; nor may a
withdrawal of any Units from his Compensation Deferral
Account be made until all Units which may be withdrawn
under this Section 6.030 from his Supplemental Deferral
Account shall have been withdrawn.
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(d) The Trustee shall, upon the direction of the
Administrative Committee, distribute all or a portion of
the Compensation Deferral Account and/or Supplemental
Deferral Account of an Employee requesting a withdrawal
under subsection (b) prior to the time such Account is
distributable in accordance with Article V hereof;
provided, however, that any such withdrawal shall be made
only if, and the amount of such withdrawal shall be
limited to the extent that, the Employee demonstrates that
the withdrawal is required as a result of a hardship and
to pay any federal, state or local income taxes and
penalties reasonably anticipated to result from such
withdrawal. For the purposes of this subsection (d) the
term "hardship" shall mean an immediate and heavy
financial need of the Employee for which the amount
required is not reasonably available to the Employee from
other sources and which arises for one of the following
reasons:
(i) the purchase (excluding mortgage payments) or
construction of a principal residence for the
Employee, or to prevent eviction from, or
foreclosure on the mortgage on, the Employee's
principal residence;
(ii) the incurring of obligations for
(1) tuition and related educational fees for
post-secondary education for the
Employee, his spouse or one or more of
his children or other dependents (as
defined in section 152 of the Code) to be
incurred during the twelve (12) month
period immediately following the date of
his request for distribution; or
(2) expenses not covered by insurance which
either have been previously incurred by
the Employee for, or are necessary in
order for the Employee to obtain, medical
care (as described in section 213(d) of
the Code) for himself, his spouse or one
or more his dependents (as defined in
section 152 of the Code); or
(iii) any other reason permitted under section
401(k)(2)(B)(i)(IV) of the Code and approved by
the Administrative Committee.
Any determination of the existence of hardship, the
reasonable availability to the Employee of funds from
other sources and the amount to be withdrawn on account of
such hardship shall be made by the Administrative
Committee on the basis of all relevant facts and
circumstances and in accordance with the foregoing rules,
as applied in a uniform and nondiscriminatory manner. In
making such determination, the Administrative Committee
may, if it is reasonable to do so in the light of all
relevant and known facts and circumstances, rely on the
Employee's representation that the hardship cannot be
relieved
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<PAGE> 43
(1) through reimbursement or compensation by
insurance or otherwise;
(2) by reasonable liquidation of the Employee's
assets, to the extent that such liquidation would
not itself cause an immediate and heavy financial
need;
(3) by suspension of Compensation Deferral or
Compensation Deduction Contributions; or
(4) by other distributions (other than hardship
distributions) or loans (which meet the
requirements of section 72(p) of the Code) from
the Plan and any other plan maintained by an
Affiliated Company or by any former employer or
by borrowing from commercial sources at
reasonable commercial rates.
(e) If at the time of a withdrawal under this Section 6.030
the Employee is not fully vested in that portion of his
Company Contributions Account which is attributable to
Compensation Deferral Contributions:
(i) Such withdrawal shall be taken first from that
portion, if any, of the Employee's Compensation
Deferral Account resulting from Compensation
Deferral Contributions made for periods prior to
October 1, 1988.
(ii) When that portion, if any, of the Employee's
Compensation Deferral Account resulting from
Compensation Deferral Contributions made for
periods prior to October 1, 1988, has been
exhausted, such withdrawal shall then be taken
from the portion of such Account resulting from
Compensation Deferral Contributions made for
periods commencing on or after October 1, 1988.
If, immediately prior to such withdrawal, the
dollar balance of the portion of the Employee's
Company Contributions Account attributable to
Company Contributions made for periods prior to
October 1, 1988, shall be less than fifty percent
(50%) of the total dollar balance of his Company
Contributions Account, such withdrawal shall
result in a forfeiture of those Units of his
Company Contributions Account which are
attributable to the Compensation Deferral
Contributions withdrawn.
For the purposes of paragraph (ii) of this subsection (e),
the Units of his Company Contributions Account which are
attributable to the Compensation Deferral Contributions
withdrawn shall be determined by multiplying that portion
of the Employee's withdrawal described in paragraph (ii)
by a fraction, the numerator of which is the total dollar
value of that portion of the Employee's Company
Contributions Account which is attributable to
Compensation Deferral Contributions
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<PAGE> 44
made for periods commencing on or after October 1,
1988, and the denominator of which is the total dollar
value of that portion of the Employee's Compensation
Deferral Account which is attributable to Compensation
Deferral Contributions made for periods commencing on or
after October 1, 1988 (both such dollar values to be
determined as of the last Valuation Date preceding the
date of withdrawal), and dividing the result by the Unit
value of the Common Units in the Employee's Company
Contributions Account (determined as of the last Valuation
Date preceding the date of withdrawal). If the resulting
number of Common Units exceeds the number of Common Units
in that portion of the Employee's Company Contributions
Account which is attributable to Compensation Deferral
Contributions made for periods commencing on or after
October 1, 1988, all Common Units in such portion of such
Account shall be forfeited, the aggregate value of such
Common Units shall be deducted from the total dollar value
of Units to be forfeited and the remaining balance shall
be divided by the Unit value of the Class A Units in his
Company Contributions Account (determined as of the
Valuation Date next preceding the date of withdrawal) to
determine the number of Class A Units to be forfeited.
(f) (i) Subject to the provisions of subsection (e), an
Employee may elect to have any withdrawal
pursuant to subsections (a) or (b) taken from his
account in the Diversified Fund, his account in
the Fixed Income Fund, his account or accounts
under the Guaranteed Return Fund, or his account
in the Stock Fund B, or to have a specified
portion or portions taken from his account or
accounts in the Diversified Fund, the Fixed
Income Fund, the Guaranteed Return Fund, and/or
the Stock Fund B. In the absence of such
election, such withdrawal shall be made from his
accounts in such funds in the following order:
first, from his account, if any, in the Fixed
Income Fund; next, from his account, if any, in
the Diversified Fund; next, from his account or
accounts, if any, in the Guaranteed Return Fund,
and finally, from his account, if any, in the
Stock Fund B, first from his Common Units and
then, when his Common Units have been exhausted,
from his Class A Units in such Fund.
Notwithstanding the foregoing provisions of this
paragraph (i), and subject only to the provisions
of subsection (e), any withdrawal from his
account or accounts in the Guaranteed Return Fund
shall be taken in reverse sequence by first
exhausting his accounts in the most recent
contracts under such Fund.
(ii) As soon as practicable after a withdrawal
election is made, there shall be paid or
transferred to the Employee cash and stock
determined in the same manner as under Section
5.040(a) (except that the date of withdrawal
shall be used for such determination in lieu of
the date
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<PAGE> 45
of termination, Units withdrawn from Stock Fund
B shall be paid in an amount of cash determined
as provided in Section 5.040(a)(i), and the
withdrawal election shall apply only to the
Employee's Compensation Deferral and Supplemental
Deferral Accounts).
(g) No repayment may be made by any Employee except under the
following circumstances. An Employee who has made one or
more withdrawals from the Plan which, as provided in
subsection (e), resulted in forfeitures of all or part of
his Company Contributions Account may elect to restore the
interest he had in the Plan preceding such withdrawals by
making a cash repayment to the Plan. The amount of the
repayment shall equal the amount distributed to the
Employee due to such withdrawals under this Section 6.030
by the Employee. The amount of the repayment shall be
credited to a compensation Deduction Account of the
Employee. However, repayment shall be limited by the
following conditions:
(i) No repayment may be made nor interest restored
with respect to a withdrawal less than twelve
(12) months after the withdrawal (unless the
Employee terminates employment within such twelve
(12) month period in which case repayment may be
made at any time following the date written
notice of termination is given to him by an
Affiliated Company or by him to an Affiliated
Company and prior to his date of termination) nor
more than sixty (60) months after the withdrawal.
(ii) No repayment may be made nor interest restored
with respect to a withdrawal if the Employee has
terminated employment for any reason on or after
October 1, 1985, and subsequent to the
withdrawal, unless he has been reemployed as an
Employee prior to the end of five (5) years after
the date on which such withdrawal shall have been
made.
(iii) An Employee may only make a repayment with
respect to a withdrawal if such withdrawal
resulted in forfeiture of some portion of his
Company Contributions Account.
(iv) Any Employee making repayment under this Section
6.030 with respect to any withdrawal must repay
the total amounts distributed with respect to all
prior withdrawals for which the Employee is
permitted to make repayment under this subsection
(g).
As soon as practicable after an Employee makes a repayment
described in this subsection (g), there shall be credited
to the Employee's Company Contributions Account a dollar
amount equal to the dollar balances that were forfeited as
a result of the withdrawals in respect of which such
repayment is made. At
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<PAGE> 46
the same time, the Employee's Compensation Deduction
Account shall be credited with a dollar amount equal to
the amount repaid by the Employee to such Account. The
amounts credited under the preceding sentences shall be
used to purchase Units at the Unit value established on
the last preceding Valuation Date prior to such repayment.
The dollar amount recredited shall be allocated to the
Funds and any accounts under the Guaranteed Return Fund in
the manner that the Employee's Compensation Deferral
Account was allocated prior to the Employee's withdrawal
or withdrawals, except that any amounts allocated to the
Guaranteed Return Fund shall be allocated to the contract
under such Fund to which contributions are then currently
being made. The amount credited under this subsection (g)
shall vest as provided in Section 5.010.
(h) Withdrawals shall be in a minimum amount of $100 with
respect to the Diversified Fund, the Fixed Income Fund or
Guaranteed Return Fund, and in the number of whole shares
of Common Stock or Class A Stock with a dollar value in a
minimum amount of $100 based on the closing price of
Common Stock reflected on the New York Stock Exchange --
Composite Transactions listing on the immediately
preceding Valuation Date (or, in the event such Valuation
Date falls on a date on which, for any reason, there are
no trades of such stock reflected on such listing, the
last trading day preceding such Valuation Date) with
respect to the Stock Fund B. An Employee may not make a
request for partial withdrawal within twenty-six (26)
weeks of any prior request for partial withdrawal;
provided, however, that this limitation upon the ability
of an Employee to make a partial withdrawal (including
hardship withdrawals pursuant to the provisions of
subsection (d) of this Section) within twenty-six (26)
weeks of any prior request for a partial withdrawal shall
be waived by the Plan Administrator for the six-month
period immediately following any due declaration by the
President of the United States under applicable federal
law that a particular occurrence or situation constitutes
a national disaster condition, if such partial withdrawal
is requested for a reason associated with financial need
of the Employee resulting from the effects of the said
condition. Payment of partial withdrawal requests shall
be made to the Employee as soon as practicable.
6.035 TRANSFER OF DISTRIBUTION OR WITHDRAWAL DIRECTLY TO
ELIGIBLE RETIREMENT PLAN. If a Participant entitled to a distribution or
withdrawal under this Article VI, shall so request in writing at the time his
election to receive such distribution or withdrawal is made or at such later
date as the Plan Administrator may permit, the Plan Administrator shall cause
all or a portion of the amounts and shares of Common and Class A Stock with
respect to which the Participant would be taxable under section 402 of the Code
to be transferred from the Trustee directly to the custodian of an Eligible
Retirement Plan specified by the Participant. Prior to effecting such transfer
the Plan Administrator shall require evidence reasonably satisfactory
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<PAGE> 47
to him that the entity to which such transfer is to be made is in fact an
Eligible Retirement Plan and that such Eligible Retirement Plan may receive the
distribution in the forms required under this Article VI.
6.040 LOANS. Effective October 1, 1990, or such later date as
the Plan Committee may determine, the Plan Committee, if so recommended by the
Plan Administrator, may establish procedures pursuant to which any Employee or
other party in interest (as the term "party in interest" is defined in ERISA
section 3(14)) may apply for and receive from the Plan loans in accordance with
such terms and conditions as the Plan Committee may prescribe consistent with
the provisions of the Plan and applicable provisions of the Code and ERISA.
Such procedures, terms and conditions shall require, in addition to such other
procedures, terms and conditions as may be established by the Plan Committee,
that no Employee or other party in interest shall be permitted to obtain a loan
from the Plan of less than One Thousand Dollars ($1,000) or in an amount
exceeding the least of (a), (b), (c) or (d):
(a) the aggregate of the balances in his Compensation
Deferral, Supplemental Deferral, Compensation Deduction
and Supplemental Deduction Accounts;
(b) an amount which, when combined with all outstanding loans
to such Employee from all other plans of all Affiliated
Companies, equals Fifty Thousand Dollars ($50,000),
reduced by the excess, if any, of
(i) his highest outstanding and unpaid balances of
all prior loans to such Employee or other party
in interest from the Plan and such other plans
during the twelve (12) month period immediately
preceding the date on which such loan is made,
over
(ii) the outstanding balance of any loan to the
Employee or other party in interest from the Plan
or such other plans on the date on which the loan
is made;
(c) one-half (1/2) of the aggregate of the balances of his
Accounts; or
(d) such amount, not exceeding the amounts described in (a)
through (c) above, as the Plan Committee shall determine.
In addition to the above and to such other procedures, terms and
conditions as may be established by the Plan Committee, no such
Employee or other party in interest shall be permitted to have more
than a single loan from the Plan and all other "qualified employer
plans" (as such term is defined in Code section 72(p)(4)) of the
Company outstanding at any one time.
Such procedures, upon establishment, and in the form approved, by the
Plan Committee, shall be attached hereto as Appendix C. Prior to
implementation of such procedures the Plan Administrator shall
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<PAGE> 48
cause an announcement thereof to be disseminated to all eligible
Employees and other parties in interest. Until the Plan Committee
shall have established such procedures, no Employee or other party in
interest shall have any right to obtain a loan from the Plan. Once
available to eligible Employees and other parties in interest,
however, all such loans shall be made available to all eligible
Employees and other parties in interest on a reasonably equivalent and
non-discriminatory basis.
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<PAGE> 49
ARTICLE VII APPLICATION OF FORFEITED UNITS
Units which have been forfeited in accordance with the provisions of Sections
5.040, 6.010, 6.020 or 6.030 or under any other provision of this Plan, shall
be applied to reduce subsequent Company Contributions required under the Plan,
or, if the Plan should be terminated, any amount not previously so applied
shall be credited ratably to the accounts of all Participants in proportion to
the amounts of Company Contributions credited to their respective accounts
during the most recent Plan Year.
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<PAGE> 50
ARTICLE VIII SUSPENSION OF SAVINGS AND CONTRIBUTIONS
8.010 VOLUNTARY SUSPENSION.
(a) A Participant may at any time, upon fifteen (15) days'
notice elect to have contributions suspended until further
notice. Suspension shall become effective not later than
the first payroll payment date following the expiration of
the fifteen (15) days' notice period.
(b) Subject to Section 2.010 and Section 2.020, a Participant
who has elected to have contributions suspended, may elect
to have contributions resumed upon fifteen (15) days'
written notice to the Company, effective the first payroll
payment date following the expiration of the fifteen (15)
days' notice period.
8.020 INVOLUNTARY SUSPENSION.
(a) A Participant's Compensation Deferral and Supplemental
Deferral Contributions or Compensation Deduction and
Supplemental Deduction Contributions for purposes of the
Plan shall be suspended whenever:
(i) No payment of Base Compensation is made by the
Company to the Participant or, in the case of a
Compensation Deduction and Supplemental Deduction
Contribution, the amount payable after all
applicable withholdings and deductions required
by law or the Company is less than the full
Compensation Deduction or Supplemental Deduction
Contribution for the purposes of the Plan.
(ii) Payroll deduction for Compensation Deduction and
Supplemental Deduction Contributions under the
Plan would be contrary to law.
(iii) The Participant, although an Employee, is not an
Eligible Employee.
(iv) The Participant is transferred to a component of
the Company to which the benefits of the Plan
have not been extended.
(v) The Participant's employment is terminated in
order to accept employment with any subsidiary or
affiliate of the Company to which the benefits of
the Plan have not been extended.
(b) Unless a Participant who has incurred a suspension under
this Section 8.020 gives at least fifteen (15) days'
contrary written notice to the Company, such Participant's
previously elected Compensation Deferral and Supplemental
Deferral Contributions or previously authorized
Compensation Deduction
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<PAGE> 51
and Supplemental Deduction Contributions shall resume
automatically effective the first payroll date following
the date when the cause of suspension is terminated.
8.030 GENERAL PROVISIONS APPLICABLE TO SUSPENSIONS.
(a) Suspensions of a Participant's Compensation Deferral and
Supplemental Deferral Contributions or Compensation
Deduction and Supplemental Deduction Contributions,
whether voluntary or involuntary, shall not affect his
benefit and withdrawal rights, which shall be determined
in accordance with the provisions of Article V and VI of
the Plan.
(b) During the period of a Participant's suspension, the
Company's contributions on his behalf shall be similarly
suspended, but the Trustee shall continue to adjust the
Participant's Accounts as of each Valuation Date during
such period in accordance with the provisions of Article
IV of the Plan.
(c) A Participant may not make up suspended Compensation
Deferral and Supplemental Deferral Contributions or
Compensation Deduction and Supplemental Deduction
Contributions.
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ARTICLE IX DESIGNATION OF AND PAYMENT TO A BENEFICIARY
9.010 DESIGNATION OF A BENEFICIARY. Subject to the provisions
of Section 1.050,
(a) if a Participant dies, payment of the benefits provided
under this Plan shall be made to such person or persons as
he has designated as his Beneficiary to receive such
benefits in the event of his death.
(b) a Participant may change his designation of Beneficiary at
any time by filing with the Plan Administrator (or such
other person as is designated by the Plan Administrator) a
request for such change. Such change shall become
effective only upon receipt of the request by the Plan
Administrator (or such other person as is designated by
the Plan Administrator) but upon such receipt the change
shall relate back to and take effect as of the date the
Participant signed such request; provided, however, that
neither the Company, the Trustee, the Plan Committee, the
Plan Administrator, any other named or unnamed fiduciary,
nor the Trust Fund shall be liable by reason of any
payment made to the Beneficiary theretofore designated
before receipt of such request.
(c) if no designation is effective pursuant to this Article or
if the Plan Administrator or Trustee shall have any doubt
as to the right of any Beneficiary or if the Beneficiary
shall predecease the Participant, the amount of such
benefits may be paid to the estate of the Participant, in
which event neither the Company, the Trustee, the Plan
Committee, the Plan Administrator, any other named or
unnamed fiduciary, nor the Trust Fund shall be liable to
anyone with respect to such payment.
9.020 PAYMENT TO A BENEFICIARY. Upon receipt by the Plan
Administrator (or another person designated by him) of evidence satisfactory to
such person of the death of a Participant and of the identity and existence at
the time of such death of the Beneficiary, the Plan Administrator shall direct
the Trustee to pay the Participant's Accounts to such Beneficiary.
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ARTICLE X TRUST AGREEMENT
10.010 ESTABLISHMENT OF TRUST FUND. The property resulting from
contributions made on behalf of all Participants, including contributions made
by the Company, shall be held as a Trust Fund by a corporate Trustee or
Trustees selected by the Plan Committee pursuant to a Trust Agreement entered
into between such Trustee and the Plan Committee. References in the Plan to
Trustee shall be deemed to be applicable with equal force to co-Trustees or
successor Trustees who may be so designated.
10.020 INVESTMENTS.
(a) The Trustee shall establish:
(i) A Diversified Fund consisting of all
contributions made by Participants under the Plan
prior to March 1, 1971, all contributions made by
or on behalf of Participants under the Plan and
designated as contributions to the Diversified
Fund, and all contributions made by the Company
to match contributions deducted from the
Participant's compensation prior to March 1,
1969, all property purchased therewith and the
proceeds and income of such contributions and
property, and
(ii) A Fixed Income Fund consisting of all
contributions made by or on behalf of
Participants under the Plan subsequent to March
1, 1971, and designated as contributions to the
Fixed Income Fund, or resulting from elections
pursuant to Section 2.070(b), all property
purchased therewith and proceeds and income of
such contributions and property, and
(iii) A Guaranteed Return Fund consisting of the Trust
Fund's interest in a contract or contracts
between the Trustee and one or more insurance
companies, approved by the Plan Committee,
whereby such one or more insurance companies
agree to: (1) guarantee the principal, a defined
rate or rates of earnings or interest on
principal amounts for a specified period of time
held pursuant to such contract or contracts, (2)
accrue such guaranteed interest or earnings
monthly, and (3) repay to the Trustee such
principal amount with accrued earnings or
interest thereon in accordance with the
provisions of the Plan and in accordance with the
provisions of the contract or contracts, and
(iv) A Stock Fund A consisting of all cash, Common
Stock and Class A Stock contributed by the
Company to match contributions made by or on
behalf of Participants on or after March 1, 1969,
and the proceeds and income therefrom, and
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(v) A Stock Fund B consisting of all contributions
made by or on behalf of Participants under the
Plan and designated as contributions to the Stock
Fund B, all Common Stock purchased therewith and
proceeds and income therefrom.
The Trustee shall keep records so as to segregate with respect to each
Participant, benefits derived from contributions by such Participant
and benefits derived from contributions by the Company on his behalf
and with respect to each Participant's account in the Stock Fund A,
the portions thereof attributable to Common Units and Class A Units,
respectively.
(b) The Trust Agreement will provide that:
(i) The Plan Committee from time to time may direct
the segregation of all or a portion of the
Diversified Fund and the Fixed Income Fund
(except that part of the Diversified Fund which
the Trustee is authorized under the terms of
subparagraph (ii) below to invest in any special
investment fund maintained by the Trustee) in an
Investment Manager Account (or Accounts), and if
it does so, shall also appoint an Investment
Manager (or Investment Managers), with respect to
the portion of the Diversified Fund or Fixed
Income Fund so segregated. Any Investment
Manager appointed pursuant to this subparagraph
(i) shall have full discretion (subject to the
criteria set forth in the first sentence of
subparagraph (ii) or (iii) below, as applicable),
to direct the Trustee with respect to the
acquisition, retention, management and
disposition of the assets from time to time
comprising the Investment Manager Account of such
Investment Manager; and
(ii) The Trustee shall invest and reinvest the
principal and income of that portion of the
Diversified Fund which has not been segregated in
an Investment Manager Account (or Accounts),
without direction and without distinction between
principal and income, in every kind of property
(real, personal or mixed), and every kind of
investment (specifically including, but not by
way of limitation, corporate obligations of every
kind and stocks preferred or common) which a
prudent man, acting in a like capacity and
familiar with such matters would use in the
conduct of a similar enterprise, but the Trustee
shall not invest such principal and income in any
security issued by the Company. Notwithstanding
the foregoing, up to 10% of the contributions
made after March 1, 1969 to the Diversified Fund,
including for this purpose contributions
segregated in an Investment Manager Account (or
Accounts), may be invested by the Trustee in any
special investment fund maintained by the Trustee
designated to offer unusual possibilities for
growth and capital investment. The
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Trustee shall have the sole responsibility with
respect to selecting, making and retaining
investments except for the portion of the
Diversified Fund segregated in an Investment
Manager Account (or Accounts); and
(iii) The Trustee and any Investment Manager shall
invest and reinvest the principal and income of
the Fixed Income Fund without direction and
without distinction between principal and income
of said Fixed Income Fund, only in the following
kinds of instruments of debt with maturity of not
more than three years: treasury bills, treasury
notes, treasury bonds, federal agency
obligations, other instruments of federal, state
and local government debt, bankers acceptances
and bank certificates of deposit, and cash
equivalents, including short-term fixed income
commingled and collective investment funds of
banks, but the Trustee shall not invest such
principal and income in any instrument of debt
issued by the Company or any subsidiary or
affiliate thereof.) The Trustee shall have the
sole responsibility with respect to selecting,
making and retaining investments except for that
portion of the Fixed Income Fund segregated in an
Investment Manager Account (or Accounts); and
(iv) The Trustee shall pay all cash in the Guaranteed
Return Fund to the one or more insurance
companies described in paragraph (iii) of
subsection 10.020(a) subject to the terms of the
contract, or contracts described in such
paragraph.
(v) The Trustee shall use all cash in the Stock Fund
A and the Stock Fund B only to purchase Common
Stock. Purchases may be made from or through any
source (other than the Company) including a
Participant. Any Class A Stock received by the
Trustee as a Company contribution or as a stock
dividend or other distribution on shares of
Common Stock or Class A Stock in the Stock Fund A
or the Stock Fund B shall be retained as such
except to the extent necessary to make cash
payments from such fund as provided in the Plan.
Rights, options, or warrants offered to purchase
Common Stock or Class A Stock shall be exercised
by the Trustee in his discretion but only to the
extent that there is cash available in the Stock
Fund A and the Stock Fund B for investment. To
the extent they are not exercised, the same shall
be sold on the open market. Rights, options, or
warrants to purchase securities of Rockwell
International Corporation or its subsidiaries or
affiliates other than Common Stock or Class A
Stock shall be sold by the Trustee on the open
market.
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(c) In making all investments pursuant to this Plan, the
Trustee and the Investment Manager shall: (A) not be
bound by any law or any court doctrine of any state or
jurisdiction limiting trust investments except as
otherwise provided by ERISA; (B) give consideration to the
cash requirements of the Plan; (C) not cause the Plan to
engage in any transaction constituting a prohibited
transaction within the meaning of ERISA sections 406
through 408 or Code section 4975.
10.030 DUTY OF TRUSTEE AS TO COMMON STOCK AND CLASS A STOCK IN
THE STOCK FUND A AND THE STOCK FUND B.
(a) Except as otherwise provided in this Section 10.030, the
Trust Agreement shall provide that the duty with respect
to the voting, retention, and tendering of Common Stock
and Class A Stock held in the Stock Fund A or the Stock
Fund B shall be solely that of the Trustee, to be
exercised solely in the Trustee's discretion.
(b) The Trust Agreement shall provide that, with respect to
any matter as to which a vote of the outstanding shares of
Common Stock or Class A Stock is solicited by proxies,
consents or authorizations:
(i) Each Participant shall be entitled to direct the
Trustee, and the Trustee shall solicit the
direction in writing of each Participant, as to
the manner in which voting rights of shares of
Common Stock or Class A Stock held in the Stock
Fund A or the Stock Fund B which either represent
the vested or non-vested interest of such
Participant in the Stock Fund A as of the record
date fixed for determining the holders of Common
Stock or Class A Stock entitled to vote on such
matter or have been credited as of such record
date to the Stock Fund B account of such
Participant are to be exercised with respect to
such matter, and the Trustee shall exercise the
voting rights of such shares with respect to such
matter in accordance with the last-dated timely
written direction, if any, of such Participant.
In connection with the solicitation of written
directions from Participants, the Company will
cause to be furnished to each Participant and the
Trustee notice of each occasion for the exercise
of such voting rights, an appropriate form on
which such written direction may be given, and a
statement containing the information that the
Company distributes to stockholders generally
regarding the exercise of such voting rights; and
(ii) The duty with respect to the exercise of voting
rights of shares of Common Stock or Class A Stock
held in the Stock Fund A or the Stock Fund B as
to which no timely direction in writing has been
received pursuant to paragraph (i) of this
subsection (b) shall be solely that of the
Trustee, to be exercised solely in the Trustee's
discretion.
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(c) The Trust Agreement shall provide that, in the event of
any Tender Offer (as defined in Section 17.010):
(i) Each Participant shall be entitled to direct the
Trustee, and the Trustee shall solicit the
direction in writing of each Participant, as to
the tendering or depositing of any shares of
Common Stock or Class A Stock held, and any
shares of Common Stock issuable on conversion of
Class A Stock held, in the Stock Fund A or the
Stock Fund B which either represent the vested or
non-vested interest of such Participant in the
Stock Fund A as of the Tender Date (as defined
herein) with respect to such Participant or have
been credited as of such Tender Date to the
account or accounts in the Stock Fund B of such
Participant, and, except as limited by paragraph
(iii) hereof, the Trustee shall tender or deposit
such shares pursuant to any such Tender Offer in
accordance with the last dated timely written
direction, if any, of such Participant;
(ii) Except as limited by Paragraph (iii) hereof, the
duty with respect to the retention, tendering or
depositing of shares of Common Stock or Class A
Stock held, and any shares of Common Stock
issuable on conversion of Class A Stock held, in
the Stock Fund A or the Stock Fund B as to which
no timely direction in writing has been received
pursuant to paragraph (i) hereof shall be solely
that of the Trustee to be exercised solely in the
Trustee's discretion; and
(iii) Shares of Common Stock or Class A Stock held, and
any shares of Common Stock issuable on conversion
of Class A Stock held, in the Stock Fund A or the
Stock Fund B shall not be tendered or deposited
by the Trustee pursuant to any such Tender Offer
until the earlier of (A) immediately preceding
the scheduled expiration of the Tender Offer
pursuant to which such shares are to be tendered
or deposited or (B) immediately preceding the
expiration of the period during which such shares
of Common Stock (including shares of Common Stock
issuable on conversion of Class A Stock) or Class
A Stock will be taken up and paid for on a pro
rata basis pursuant to such Tender Offer or (C)
the expiration of 30 days from the date of the
Trustee's solicitation of Participants' written
direction pursuant to paragraph (i) hereof; and
(iv) The duty with respect to the withdrawing of, or
other exercise of any right to withdraw, shares
of Common Stock held, and any shares of Common
Stock issuable on conversion of Class A Stock
held, in the Stock Fund A or the Stock Fund B
which have been tendered or deposited pursuant to
any such Tender Offer shall be solely that of
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the Trustee, provided that the Trustee may
solicit the direction in writing of each
Participant with respect to whom any such shares
of Common Stock (including shares of Common Stock
issued on conversion of Class A Stock) or Class A
Stock have been tendered or deposited pursuant to
any such Tender Offer as to the withdrawing of,
or other exercise of any right to withdraw, such
shares of Common Stock (including shares of
Common Stock issued on conversion of Class A
Stock) or Class A Stock, and if such solicitation
is made, the Trustee shall act in accordance with
the last dated timely written direction, if any,
of each such Participant.
As used in this subsection (c) with respect to a
Participant, the term 'Tender Date' means the date on
which the Trustee tenders or deposits any shares of the
Common Stock (including shares of Common Stock issued on
conversion of Class A Stock) or Class A Stock either
representing the vested or non-vested interest of such
Participant in the Stock Fund A or credited to the account
or accounts in the Stock Fund B of such Participant in
accordance with this subsection (c).
10.040 FORM OF TRUST AGREEMENT. The Trust Agreement shall be in
such form and contain such provisions as the Plan Committee may deem
appropriate (consistent with the provisions of Section 10.020, Section 10.030
and Section 17.030), including, but not limited to, provisions with respect to
the powers and authority of the Trustee, the authority of the Plan Committee to
amend the Trust Agreement and to terminate the trust, and a provision that at
no time shall any part of the Trust Fund revert to or be recoverable by the
Company (within the taxable year or thereafter) or be used for or diverted to
purposes other than for the exclusive benefit of Participants or their
Beneficiaries. The Trust Agreement shall be deemed to form a part of this
Plan, and all rights and benefits that may accrue to any person under this Plan
shall be subject to all the terms and provisions of the Trust Agreement. The
Trust Agreement may authorize the Trustee to invest all or part of the assets
held by him in a collective trust for investment purposes. The Trustee may
deposit amounts held in any of the funds comprising the Trust Fund in an
interest bearing account or accounts including short-term fixed income
commingled and collective investment funds in a bank or similar financial
institution including without limitation the commercial banking department of
the Trustee on a temporary basis pending either: (1) investment of such amounts
or (2) distribution of funds to Plan Participants.
10.050 RIGHTS IN THE TRUST FUND. Nothing in the Plan or in the
Trust Agreement shall be deemed to confer any legal or equitable right or
interest in the Trust Fund in favor of any Participant, Beneficiary or other
person, except to the extent expressly provided in the Plan.
10.060 TRUST FUND VALUES. Neither the Company, the Board of
Directors, the Plan Committee, the Plan Administrator, the Trustee, nor any
Investment Manager or investment advisor warrants or represents in any way that
the value of Participants' Accounts shall increase or not decrease, each
Participant assuming this risk as to his own Accounts.
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10.070 TAXES, FEES AND EXPENSES OF THE TRUSTEE. Effective as of
October 1, 1993:
(a) The reasonable fees and expenses of the Trustee (including
the reasonable expenses of the Trustee's counsel), any
Investment Manager and any investment advisor shall be
paid from the Trust Fund and shall constitute a charge on
the Trust Fund until so paid; provided, however, that in
no event shall the Trust Fund nor the Company (unless the
Company is specifically so directed by resolution of the
Company's Board of Directors) pay any such Trustee,
Investment Manager or investment advisors fees or
expenses:
(1) for preparation or prosecution of any action
against the Company, the Plan, any member of the
Plan Committee or the Plan Administrator, or
(2) for the defense or settlement of, or the
satisfaction of a judgment related to, any
proceeding arising either out of any alleged
misfeasance or nonfeasance in any person's
performance of duties with respect to the Plan or
out of any alleged wrongful act against the Plan.
Neither the Plan Administrator nor the members of the Plan
Committee shall be compensated from the Plan but may be
compensated by the Company for services rendered on behalf
of the Plan.
(b) Brokerage fees, commissions, stock transfer taxes and
other charges and expenses incurred in connection with
transactions relating to the acquisition or disposition of
property for or of the Trust Fund, or distributions
therefrom, shall be paid from the Trust Fund. Taxes, if
any, payable by the Trustee on the assets at any time held
in the Trust Fund or on the income thereof shall be paid
from the Trust Fund.
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ARTICLE XI ADMINISTRATION
11.010 GENERAL ADMINISTRATION. Authority to control and manage
the operation and administration of the Plan shall be vested in the Plan
Committee except to the extent that:
(1) the Plan Administrator or the Administrative
Committee is allocated any such authority under
the Plan; or
(2) any Trustee appointed pursuant to Section 10.020
and any Investment Manager appointed pursuant to
Section 10.020(b)(i) may, pursuant to Article X,
be granted exclusive authority and discretion to
manage and control all or any portion of the
assets of the Plan. The Plan Committee, the Plan
Administrator, the Administrative Committee, the
Trustee(s) and the Investment Manager(s) shall
constitute the Named Fiduciaries of the Plan for
purposes of ERISA.
11.020 PLAN COMMITTEE. The Board of Directors shall, from time
to time, determine the size of the Plan Committee and appoint its individual
members. The Plan Committee shall act, with or without a meeting, in a manner
consistent with the rules and regulations adopted pursuant to Section
11.060(d).
11.030 PLAN COMMITTEE RECORDS. The Plan Committee shall keep
such records and data as it shall deem appropriate and it shall from time to
time file with the Board of Directors such reports as the latter may request.
It shall be a function of the Plan Committee to keep records of the assets of
the Trust Fund, based upon reports furnished by the Trustee, and the
evaluations placed thereon by the Committee shall be final and conclusive. The
records of the Plan shall be kept on the basis of a Plan Year beginning October
1.
11.040 FUNDING POLICY. The Plan Committee shall be responsible
for determining a funding policy of the Plan consistent with the objectives for
the Diversified Fund, Fixed Income Fund, Guaranteed Return Fund and the Stock
Fund A and the Stock Fund B and shall from time to time advise the Trustee and
the Investment Manager of such policy.
11.050 ALLOCATION AND DELEGATION OF DUTIES UNDER PLAN. The Plan
Committee, the Plan Administrator and the Administrative Committee shall each
have the following powers and authorities:
(a) To designate agents to carry out responsibilities relating
to the Plan, other than fiduciary responsibilities.
(b) To employ such legal, consultant, medical, accounting,
clerical and other assistance as it may deem appropriate
in carrying out the provisions of this Plan including one
or more persons to render advice with regard to any
responsibility any Named Fiduciary or any other fiduciary
may have under the Plan.
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11.060 PLAN COMMITTEE POWERS. In addition to any powers and
authority conferred on the Plan Committee elsewhere in the Plan or by law, the
Plan Committee shall have the following powers and authority:
(a) To allocate fiduciary responsibilities (other than trustee
responsibilities) to one or more members of the Plan
Committee or to the Plan Administrator and to designate
one or more persons (other than the Trustee, or the
Investment Manager) to carry out fiduciary
responsibilities (other than trustee responsibilities).
The term "trustee responsibilities" as used herein shall
mean responsibilities provided in the Trust Agreement to
manage or control the assets of the Plan.
(b) To appoint one or more Investment Managers within the
meaning of ERISA section 3(38), as provided in section
10.020(b)(i) and to appoint one or more investment
advisors who need not be Investment Managers as defined in
ERISA and who shall not have authority to manage, acquire,
or dispose of any asset of the Plan.
(c) To determine the manner in which the assets of this Plan,
or any part thereof, shall be disbursed by the Trustee,
but, except as limited by the Trust Agreement in
accordance with Section 10.030, the duty with respect to
the making and retention of investments shall be solely
that of the Trustee, or of the one or more Investment
Managers which may be appointed pursuant to subsection (b)
above.
(d) To establish rules and regulations from time to time for
the conduct of the Plan Committee's business and for the
administration and effectuation of its responsibilities
under the Plan.
11.070 PLAN ADMINISTRATOR. In addition to any powers and
authority conferred on the Plan Administrator elsewhere in the Plan or by law,
the Plan Administrator shall have the following powers and authority:
(a) To administer, interpret, construe and apply this Plan and
to decide all questions which may arise or which may be
raised by any Employee, Participant, Beneficiary, or other
person whatsoever, and the actions or decisions of the
Plan Administrator in regard thereto, or in regard to
anything or matter otherwise within his discretion, shall
be conclusive and binding on all Employees, Participants,
Beneficiaries, and other persons whatsoever.
(b) To designate one or more persons (other than the Trustee
or the Investment Manager) to carry out fiduciary
responsibilities (other than trustee responsibilities).
The term "trustee responsibilities" as used herein shall
mean responsibilities provided in the Trust Agreement to
manage or control the assets of the Plan.
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(c) To establish rules and regulations from time to time for
the administration and effectuation of his
responsibilities under the Plan including but not limited
to, adoption of forms under Section 11.170.
(d) The Plan Administrator shall have such other
responsibility as is designated by ERISA as the
responsibility of the administrator of the Plan and shall
have such other power and authority as is necessary to
fulfill his responsibilities under ERISA or under the
Plan.
11.080 RELIANCE UPON DOCUMENTS AND OPINIONS. The members of the
Plan Committee and the Administrative Committee, the Plan Administrator, the
Board of Directors and the Company shall be entitled to rely upon any tables,
valuations, computations, estimates, certificates and reports furnished by any
consultant or firm or corporation which employs one or more consultants, upon
any opinions furnished by legal counsel, upon any computation, estimates, and
reports furnished by any consultants or consulting firms, and upon any reports
furnished by the Trustee, and the members of the Plan Committee, the Plan
Administrator, the Board of Directors and the Company shall be fully protected
and shall not be liable in any manner whatsoever except as otherwise
specifically provided by law for anything done or action taken or suffered in
reliance upon any such consultant or firm or corporation which employs one or
more consultants, Trustee, or counsel, and any and all such things done or such
actions taken or suffered by the Plan Committee, the Plan Administrator, the
Board of Directors and the Company shall be conclusive and binding on all
Employees, Participants, Beneficiaries, and other persons whatsoever except as
otherwise specifically provided by law. The Plan Committee and the Plan
Administrator may, but are not required to, rely upon all records of the
Company with respect to any matter or thing whatsoever, and to the extent they
rely thereon, such records shall be conclusive with respect to all Employees,
Participants, and Beneficiaries, except as otherwise provided by law. For
purposes of this Section, "consultant" shall include, but shall not be limited
to, any Investment Manager and investment advisor.
11.090 REQUIREMENT OF PROOF. The Plan Committee, the Plan
Administrator, the Administrative Committee, the Board of Directors or the
Company may require satisfactory proof of any matter under this Plan from or
with respect to any Employee, Participant, or Beneficiary, and no such person
shall acquire any rights or be entitled to receive any benefits under this Plan
until such proof shall be furnished as so required.
11.100 LIMITATION ON LIABILITY.
(a) Except as provided in Part 4 of Title 1 of ERISA, no
person shall be subject to any liability with respect to
his duties under the Plan, unless he acts fraudulently or
in bad faith.
(b) No person shall be liable for any breach of fiduciary
responsibility resulting from the act or omission of any
other fiduciary or any person to whom fiduciary
responsibilities have been allocated or delegated, except
as provided in ERISA
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section 405(a) and 405(c)(2)(A) or (B). No action or
responsibility shall be deemed to be a fiduciary action or
responsibility except to the extent required by ERISA.
11.110 INDEMNIFICATION. To the extent permitted by law, the
Company shall indemnify the Board of Directors, the Plan Administrator, each
member of the Plan Committee, each member of the Administrative Committee and
any other employee of the Company with duties under the Plan against expenses
(including any amount paid in settlement) reasonably incurred by him in
connection with any claims against him by reason of his conduct in the
performance of his duties under the Plan. Except in relation to matters as to
which he has been guilty of willful misconduct in the performance of such
duties, the foregoing right of indemnification shall be in addition to any
other right to which any such Plan Committee member, Plan Administrator,
Administrative Committee member, or other person may be entitled as a matter of
law or otherwise.
11.120 MULTIPLE FIDUCIARY CAPACITY. Any person or group of
persons may serve in more than one fiduciary capacity with respect to the Plan.
11.130 EXPENSES. Effective October 1, 1993, and subject to any
limitations set forth in Section 10.070 of this Plan, all costs and expenses
reasonably incurred by the Plan Committee, the Administrative Committee and the
Plan Administrator in the administration of the Plan, including the reasonable
fees of and expenses incurred by any third party administrator retained by the
Plan Committee or the Plan Administrator to perform ministerial functions
associated with administration of the Plan, shall be paid from the Trust Fund
and shall constitute a charge on the Trust Fund until so paid.
11.140 MAILING AND LAPSE OF PAYMENTS. All payments under the
Plan shall be delivered in person or mailed to the last address of the
Participant (or, in the case of the death of the Participant, to that of any
other person entitled to such payments under the terms of the Plan) furnished
pursuant to Section 11.160 below. If the Plan Administrator cannot, by making
a reasonably diligent attempt by mail, locate either the Participant or his
Beneficiary, as the case may be, for a period of seven years, such Participant
or Beneficiary shall be presumed dead. If payment cannot be made alternately
to the estate of either and no surviving spouse, child, grandchild, parent,
brother or sister of the Participant or his Beneficiary are known to the Plan
Administrator or the Trustee or, if known, cannot with reasonable diligence be
located, the amount payable shall be treated as a forfeiture and shall be a
credit against (and to that extent reduce) future Company contributions.
11.150 NON-ALIENATION.
(a) Except as provided in subsection (b), no right or benefit
provided for in the Plan shall be subject in any manner to
anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance or charge, and any attempt to
anticipate, alienate, sell, transfer, assign, pledge,
encumber or charge the same shall be void. Except as may
otherwise be required or permitted by the Internal Revenue
Service, no such right or
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benefit shall be in any manner liable for or subject to
the debts, contracts, liabilities, engagements or torts of
any person entitled to such right or benefit, or shall be
subject to garnishment, attachment, execution or levy of
any kind. If any Participant or Beneficiary shall become
bankrupt or shall attempt to anticipate, alienate, sell,
transfer, assign, pledge, encumber or charge such right or
benefit, or if the right or benefit to which such person
may be entitled should be held by any court to be subject
to garnishment, attachment, execution or levy of any kind,
then in the discretion of the Plan Administrator such
right or benefit shall cease and determine and the same
shall be held or applied, in whole or in part, to or for
the benefit of such Participant or Beneficiary or his
spouse, children or other dependents, or any of them, in
such manner and in such proportion as the Plan
Administrator shall deem proper. Any payment of any such
right or benefit so made or applied shall be conclusively
deemed to have been made for the benefit of such
Participant or Beneficiary as the case may be.
(b) (1) The non-alienation rule of subsection (a) shall
apply to the creation, assignment, or recognition
of a right to any benefit payable with respect to
a Participant pursuant to a domestic relations
order, (as defined in section 414(p)(1)(B) of the
Code) except that subsection (a) shall not apply
if the Plan Administrator determines that such
order is a qualified domestic relations order
under section 414(p) of the Code.
(2) Upon receipt of a domestic relations order, the
Plan Administrator shall promptly notify the
Participant and any other alternative payee of
the receipt of such order and the Plan's
procedures for determining the qualified status
of domestic relations orders.
(3) Within a reasonable period after the receipt of a
domestic relations order, the Plan Administrator
shall determine the qualified status of such
order, and thereafter notify the Participant and
each alternate payee of such determination.
During any period in which the issue of whether a
domestic relations order is a qualified domestic
relations order is being determined by the Plan
Administrator, the Plan Administrator shall
segregate in a separate account in the Plan or in
an escrow account the amounts which would have
been payable to the alternate payee during such
period if the order had been determined to be a
qualified domestic relations order.
(4) If within 18 months after issuance of the order,
the order is determined to be a qualified
domestic relations order, the Plan Administrator
shall pay the segregated
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amounts (plus interest thereon, if any) to the
person or persons entitled thereto. If within 18
months (A) it is determined that the order is not
a qualified domestic relations order, or (B) the
issue as to whether such order is a qualified
domestic relations order is not resolved, the
Plan Administrator shall pay the segregated
amounts (plus interest thereon, if any) to the
person or persons who would have been entitled to
such amounts if there had been no order. Any
determination that an order is a qualified
domestic relations order which is made after the
close of the 18 month period shall be applied
prospectively only from the date of such
determination.
(5) In the case of a domestic relations order entered
before January 1, 1985, the Plan Administrator
(A) shall treat such order as a qualified
domestic relations order if the Plan is paying
benefits pursuant to such order on such date, and
(B) may treat any other such order entered before
such date as a qualified domestic relations order
even if such order does not meet the requirements
set forth in section 414(p) of the Code.
11.160 ADDRESSES. Each Participant shall be responsible for
furnishing the Plan Administrator with his current address and the correct
current name and address of his Beneficiary.
11.170 NOTICES AND COMMUNICATIONS.
(a) All applications, notices, designations, elections, and
other communications from Participants shall be in
writing, on forms prescribed by the Plan Administrator and
shall be mailed or delivered to such office as may be
designated by the Plan Administrator, and shall be deemed
to have been given to the Company when received by such
office.
(b) Each notice, report, remittance, statement and other
communication directed to a Participant or Beneficiary
shall be in writing and may be delivered in person or by
mail, in which latter event it shall be deemed to have
been delivered and received by him when so deposited in
the United States Mail with postage prepaid addressed to
the Participant or Beneficiary at his last address of
record with the office designated by the Plan
Administrator.
11.180 COMPANY RIGHTS. The Company's rights to discipline or
discharge Employees or to exercise its rights as to incidents and tenure of
employment shall not be affected in any manner by reason of the existence of
the Trust Agreement or the Plan, or any action taken under them.
11.190 PAYMENTS ON BEHALF OF INCOMPETENT PARTICIPANTS OR
BENEFICIARIES. In the event that the Plan Administrator or his designee shall
find that any Participant or Beneficiary to whom a benefit is payable under
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the terms of this Plan is unable to care for his affairs because of illness or
accident, is otherwise mentally or physically incompetent, or unable to give a
valid receipt, the Plan Administrator may cause the payment becoming due to
such Participant or Beneficiary to be paid to another person for his benefit
without responsibility on the part of the Plan Administrator, the Plan
Committee, the Administrative Committee, the Company, or the Trustee, to follow
the application of such payment. Any such payment shall be a payment for the
account of the Participant or Beneficiary and shall operate as a complete
discharge of all liability therefor under this Plan of the Trustee, the
Company, the Plan Administrator, the Administrative Committee, and the Plan
Committee.
11.200 WITHHOLDING OF TAXES. Any payment out of the Trust Fund
may be subject to withholding for taxes as required by law.
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ARTICLE XII PARTICIPANT'S CLAIMS
12.010 REQUIREMENT TO FILE CLAIM.
(a) A Participant wishing a distribution from the Plan under
Section 6.010, or to make a withdrawal from the Plan under
Section 6.020 or Section 6.030, must file a written claim
with the person designated by the Plan Administrator. A
claimant who fails to reduce a claim to writing shall be
deemed not to have made such claim.
(b) Except as otherwise provided by the Plan Administrator, a
claimant will not be required to file a claim to be
entitled to a distribution under this Plan for any reason
other than those identified in subsection (a). However, a
person who fails to receive a benefit to which he claims
to be entitled under this Plan may file a claim in the
manner described in subsection (a).
(c) The person designated by the Plan Administrator shall
approve or deny in writing within thirty (30) days any
claim which has been filed with it.
12.020 APPEAL OF DENIED CLAIM.
(a) A Participant whose claim has been denied as set forth in
Section 12.010(c) may appeal the denial to the Plan
Administrator by filing a written appeal within sixty (60)
days of the date of the denial.
(b) The Participant or his representative shall, for the
purpose of preparation of such appeal, have the right to
inspect any document relied upon by the person designated
by the Plan Administrator in denying the claim.
(c) The Plan Administrator or his delegate shall make a final,
full and fair review of any such decision which is
appealed to him. A decision which is not appealed within
the time herein provided shall be final and conclusive as
to any matter which was presented to the person making
such decision.
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ARTICLE XIII MODIFICATION, SUSPENSION, MERGER AND TERMINATION
13.010 AMENDMENT. The Board of Directors may, at any time and
from time to time, amend this Plan in whole or in part. However, except as
provided in Section 16.030 below, no amendment shall be made the effect of
which would be:
(a) To cause any contributions paid to the Trustee to be used
for or diverted to purposes other than providing benefits
to the Participants and their Beneficiaries, and defraying
reasonable expenses of administering the Plan, prior to
satisfaction of all liabilities with respect to
Participants and their Beneficiaries;
(b) To have any retroactive effect so as to deprive any
Participant or Beneficiary of any benefit to which he
would be entitled under this Plan if his employment were
terminated immediately before such amendment; or
(c) To increase the responsibilities or liabilities of any
Trustee or Investment Manager without its written consent.
13.020 TRANSFER OF ASSETS AND LIABILITIES. The Plan Committee at
any time may in its sole discretion without the consent of the Participant or
his representative cause the Trustee to segregate part of the assets of the
Trust Fund into one or more separate trust funds and designate a group of
Participants whose benefits shall be provided solely from each such segregated
fund. The Board of Directors may, in its sole discretion without the consent
of any Participant or his representative, establish a separate plan to cover
any such group of Participants. The initial terms and conditions of any such
plan shall be identical to the extent such terms and conditions affect the
rights of Participants under the Plan. Amendment to the Plan shall not be
necessary to carry out the provisions of this Section 13.020. Any such
transfer of assets and liabilities to another plan shall be expressly
conditioned on the qualification of such plan and trust under section 401(a)
and section 501(a) of the Code.
13.030 MERGER RESTRICTION. Notwithstanding any other provision
in this Plan, the Plan shall not in whole or in part merge or consolidate with,
or transfer its assets or liabilities to any other plan unless each affected
Participant in this Plan would (if the Plan then terminated) receive a benefit
immediately after the merger, consolidation, or transfer which is equal to or
greater than the benefit he would have been entitled to receive immediately
before the merger, consolidation, or transfer (if the Plan had then
terminated).
13.040 SUSPENSION OF CONTRIBUTIONS. The Company may, without
amendment of the Plan and without the consent of any Participant or
representative of any Participant, suspend contributions to the Plan as to all
or certain Participants by action of the Board of Directors. In any event, the
Company will suspend contributions at any time when the amount of any
contribution by it would be in excess of the earnings, including retained
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earnings, of the Company. Upon a suspension, the Plan Committee may, in its
sole discretion permit the Trust Fund to continue to be held by the Trustee, or
may segregate one or more parts of the Trust Fund, as provided in Section
13.020.
13.050 DISCONTINUANCE OF CONTRIBUTIONS. The Company may, by
action of the Board of Directors, without amendment of the Plan and without the
consent of any Participant or representative of any Participant, discontinue
such contributions to the Plan as to all or certain Participants. Upon such
discontinuance the Plan Committee may in its sole discretion segregate one or
more parts of the Trust Fund, as provided in Section 13.020.
13.060 TERMINATION. The Plan Committee may terminate or
partially terminate the Plan at any time. Upon such termination or partial
termination of the Plan, or upon a complete discontinuance of contributions
pursuant to Section 13.050 the Accounts of each affected Participant shall
become nonforfeitable, and for this purpose the Company shall contribute to the
Company Contributions Accounts of all Employees who:
(a) have forfeited Units in such Accounts under Articles V and
VI within five (5) years prior to such termination, and,
(b) but for such forfeitures, would have been vested in such
forfeited Units under Section 5.010 on the date of
termination of the Plan,
amounts sufficient to restore such forfeitures in the same manner as
such forfeitures could have been restored by such persons under
applicable provisions of said Articles V and VI. In the event of
termination or partial termination the Plan Committee may, without the
consent of any Participant or other person, (i) permit the Trustee to
retain all or part of the Trust Fund or (ii) distribute all or part of
the Trust Fund to the Participants or their spouses or Beneficiaries.
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ARTICLE XIV STATUTORY LIMITATIONS
14.010 ANNUAL LIMITS OF PARTICIPANTS' ACCOUNT INCREASES.
(a) This Article XIV is intended to conform the Plan to the
requirements of section 415 of the Code, and the
regulations issued thereunder; and shall be administered
and interpreted in accordance with such requirements and
regulations; and notwithstanding any provision of this
Plan to the contrary, no amount shall be credited to any
Participant's Account which is in excess of the limitation
imposed by said section 415, as from time to time amended
or replaced.
(b) The amount allocated in each calendar year to any
Participant under the combination of defined contribution
plans of all Affiliated Companies cannot exceed the lesser
of $30,000.00 (or such larger amount as may be established
under section 415(d)(1)(B) of the Code to reflect an
increase in the cost of living) or 25% of the
Participant's total compensation. For purposes of this
limitation, the amount allocated shall be deemed to be
comprised of:
(i) Company Contributions, Compensation Deferral
Contributions and Supplemental Deferral
Contributions with respect to the Participant;
and
(ii) forfeitures; and
(iii) for all calendar years ending on or prior to
December 31, 1986, the lesser of:
(1) one half of the Participant's
Compensation Deduction Contributions; or
(2) the Participant's Compensation Deduction
Contributions in excess of 6% of his
total compensation from the Company or an
Affiliated Company; and
(iv) for each calendar year commencing on or after
January 1, 1987, the Participant's Compensation
Deduction Contributions; and
(v) for each calendar year commencing on or after
January 1, 1993, the Participant's Compensation
Deduction and Supplemental Deduction
Contributions.
14.020 LIMITS AS TO COMBINED PLANS. In the case of a Participant
who also is a participant in a defined benefit pension plan which is or was
maintained by the Company or an Affiliated Company and to which section 415 of
the Code applies, the limitation set forth herein shall be further adjusted in
compliance with section 415(e) of the Code. In making such adjustment, the
maximum benefit allowable shall be paid hereunder before applying the
limitations on the defined benefit plan.
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14.030 COMBINING SIMILAR PLANS. For purposes of this Article,
all defined contribution plans which are required to be aggregated under
section 414(b) of the Code shall be so aggregated and the limitation set forth
herein shall be applied to the total amounts allocated under all such plans.
14.040 ADJUSTMENT TO COMPENSATION DEFERRAL AND SUPPLEMENTAL
DEFERRAL CONTRIBUTIONS. To the extent the Compensation Deferral and
Supplemental Deferral Contributions elected by a Participant under Sections
2.020(a)(ii) and (b)(ii) would, if made, cause the total amount allocated to a
Participant in any calendar year to exceed the limitations set forth in this
Article, such amount shall be paid as compensation to the Participant and shall
be contributed to the Plan by the Participant as Compensation Deduction and
Supplemental Deduction Contributions to the full extent permitted under this
Article and Section 2.030.
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ARTICLE XV MISCELLANEOUS
15.010 BENEFITS PAYABLE ONLY FROM TRUST FUND. All benefits
payable hereunder shall be provided solely from the trust, and the Company
assumes no responsibility for the acts of the Trustee, except as provided in
the Trust Agreement.
15.020 REQUIREMENT FOR RELEASE. Any payment to any Participant
or his Beneficiary in accordance with the provisions of this Plan shall, to the
extent thereof, be in full satisfaction of all claims against the Trustee and
the Company, and the Trustee may require such Participant or Beneficiary, as a
condition precedent to such payment to execute a receipt and release to such
effect. If in the opinion of the Plan Administrator any present, former or
future spouse of a Participant shall by reason of the law of any jurisdiction
appear to have paid interest in the benefits that might, but for any election
made by such Participant pursuant to the Plan, be or become payable to such
Participant or his Beneficiary, the Plan Administrator may, as a condition
precedent to the making of such an election or revocation of such an election
or as a condition of the continued effectiveness of any such election or
revocation of such election, require such written release or releases, or such
other proof in lieu thereof, as in his discretion he shall determine to be
necessary, desirable or appropriate either to protect the rights of any such
present, former or future spouse or to prevent or avoid any conflict or
multiplicity of claims with respect to the payment of any benefits under this
Plan.
15.030 TRANSFERS OF STOCK. Transfers of Common Stock and Class A
Stock from the Trustee pursuant to Article V or VI shall be made as soon as
practicable, but neither the Company, any Named Fiduciary nor the Trustee shall
have any responsibility for any decrease in the value of such stock between the
Valuation Date used for determination of the number of shares to which the
Participant is entitled and the date of transfer by the transfer agent, nor,
except as provided in Articles V and VI, shall the Participant receive any
dividends, rights, options or warrants on such stock other than those payable
to stockholders of record as of a date on or after the date of transfer.
15.040 INTERPRETATION. The masculine gender shall include the
feminine and the singular shall include the plural unless the context clearly
indicates otherwise.
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ARTICLE XVI APPROVAL OF THE COMMISSIONER OF INTERNAL REVENUE
16.010 QUALIFICATION OF THE PLAN. The Company intends to
preserve the qualification with and approval by the Internal Revenue Service of
the Plan as a plan, Company Contributions to which are deductible by the
Company for federal income tax purposes. Should any amendment to the Plan
cause the Plan as amended to fail so to qualify and obtain such approval, then
in such event, the amendment to the Plan shall be deemed revoked and, as soon
as practicable thereafter, the Plan shall be amended to the extent necessary to
preserve such qualification and approval. The dollar value of each
Participant's Account resulting from Company Contributions, if any, made by the
Company solely by virtue of such amendment shall be returned to the Company.
The Participants shall have no interest in the amounts so returnable to the
Company.
16.020 CONTINUATION OF THE PLAN. Continuation of the Plan is
contingent upon and subject to retaining such approval of the Commissioner of
Internal Revenue as the Company may find necessary to establish the continued
deductibility for income tax purposes of the Company Contributions under the
Plan.
16.030 MODIFICATION OF THE PLAN. Any modification or amendment
of the Plan or the Trust Agreement may be made retroactively by the Company, if
necessary or appropriate, to qualify or maintain the Plan as a plan and trust,
meeting the requirements of applicable sections of the Code and of other
federal and state laws, as now in effect or hereafter amended or enacted.
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ARTICLE XVII PLAN ADMINISTRATION IN THE EVENT OF THIRD-PARTY TENDER
OFFERS
17.010 APPLICABILITY. The provisions of this Article XVII shall
take effect only as of the date of the first tender or deposit by the Trustee
of any share of Common Stock (including any share of Common Stock issued on
conversion of Class A Stock) or Class A Stock pursuant to any Tender Offer (as
herein defined) in accordance with the Trust Agreement as provided in Section
10.030(c) and shall remain in effect thereafter unless and until (a) each share
of Common Stock (including any share of Common Stock issued on conversion of
Class A Stock) and Class A Stock held in the Stock Fund A or the Stock Fund B
which has been tendered or deposited in accordance with the Trust Agreement as
provided in Section 10.030(c) pursuant to such Tender Offer or any subsequent
Tender Offer commenced while the provisions of this Article XVII are in effect
has been effectively withdrawn by or otherwise returned to the Trustee and (b)
the certificate representing each share is in the possession of the Trustee.
As used in this Article XVII, the term "Tender Offer" means any tender offer
for, or request or invitation for tenders of, the Common Stock and/or Class A
Stock subject to section 14(d)(1) of the Securities Exchange Act of 1934, as
amended, or any regulation thereunder, except for any such tender offer or
request or invitation for tenders made by the Company or any Affiliated
Company.
17.020 ADDITIONAL DEFINITIONS. While the provisions of this
Article XVII are in effect:
(a) The term "Sub Fund A" shall mean the fund established by
the Trustee pursuant to Section 17.030(a)(i).
(b) The term "Sub Fund B" shall mean the fund established by
the Trustee pursuant to Section 17.030(a)(ii).
(c) In lieu of the definition set forth in Section 1.110, the
term "Company Contributions Account" shall mean the
account, with respect to a Participant, that is comprised
of or attributable to Company Contributions, adjusted by
gains or losses related to the investment of such
contributions.
(d) In lieu of the definition set forth in Section 1.130, the
term "Compensation Deduction Account" shall mean the
account, with respect to a Participant, that is comprised
of or attributable to contributions made by the
Participant under Article II, adjusted by gains or losses
related to the investment of such contributions, and shall
also include the term "Supplemental Deduction Account" as
defined in Section 1.365.
(e) In lieu of the definition set forth in Section 1.150, the
term "Compensation Deferral Account" means the account,
with respect to a Participant, that is comprised of or
attributable to contributions made on behalf of or with
respect to the Participant under Article II, including,
but not limited to, Transfer Contributions as defined in
Section 1.368, adjusted by gains or losses related to the
investment of such contributions, and shall also include
the term "Supplemental Deferral Account" as defined in
Section 1.367.
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(f) In lieu of the definition set forth in Section 1.380, the
term "Trust Fund" shall mean the fund, including the
earnings thereon, held by the Trustee into which all
contributions of or attributable to the Participant and
the Company are deposited pursuant to the Plan. The Trust
Fund shall be divided into a Diversified Fund, Fixed
Income Fund, Guaranteed Return Fund, Stock Fund A, Stock
Fund B, Sub Fund A and Sub Fund B.
17.030 ESTABLISHMENT AND INVESTMENT OF THE SUB FUND A AND THE SUB
FUND B. While the provisions of this Article XVII are in effect:
(a) The Trustee shall establish:
(i) A Sub Fund A consisting of any cash, securities
or other consideration received by the Trustee as
payment for shares of Common Stock (including any
shares of Common Stock issued on conversion of
Class A Stock) or Class A Stock previously held
in the Stock Fund A which were tendered or
deposited in accordance with the Trust Agreement
as provided in Section 10.030(c), all property
purchased therewith and the proceeds and income
therefrom; and
(ii) A Sub Fund B consisting of any cash, securities
or other consideration received by the Trustee as
payment for shares of Common Stock (including any
shares of Common Stock issued on conversion of
Class A Stock) or Class A Stock previously held
in the Stock Fund B which were tendered or
deposited in accordance with the Trust Agreement
as provided in Section 10.030(c), all property
purchased therewith and the proceeds and income
therefrom.
(b) The Trustee shall use all cash in the Sub Fund A and the
Sub Fund B only to purchase the kinds of instruments of
debt with maturity of not more than three years in which
the Trustee and any Investment Manager may invest and
reinvest the principal and income of the Fixed Income Fund
pursuant to Section 10.020(b)(iii) and shall so invest and
reinvest the principal thereof and income thereon.
Dividends, income and other distributions received on, and
proceeds from the sale or other disposition of, any
securities or other consideration held by the Trustee for
Participants in the Sub Fund A or the Sub Fund B pursuant
to a tender or deposit of shares of Common Stock
(including any shares of Common Stock issued on conversion
of Class A Stock) or Class A Stock in accordance with the
Trust Agreement as provided in Section 10.030(c) shall be
similarly invested and reinvested.
(c) The funding policy of the Plan determined by the Plan
Committee pursuant to Section 11.040 shall be consistent
with the objectives for the Sub Fund A and the Sub Fund B.
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17.040 MAINTENANCE AND VALUATION OF SUB FUND A AND SUB FUND B;
CORRESPONDING REDUCTIONS OF STOCK FUND A AND STOCK FUND B. While the
provisions of this Article XVII are in effect:
(a) A separate account representing each Participant's
interest in the Sub Fund A and the Sub Fund B under the
Participant's Company Contributions Account, Compensation
Deferral Account and Compensation Deduction Account, as
applicable, shall be maintained. Such separate accounts
shall contain sufficient information to permit with
respect to the Sub Fund A and the Sub Fund B a
determination of the dollar balance of such Participant's
Accounts at any time in accordance with the Unit valuation
described in subsections (b), (c) and (d) hereof. Such
separate accounts shall contain sufficient information to
permit such other determinations as may be required to
carry out the provisions of this Plan.
(b) The interest of each Participant in the Sub Fund A and the
Sub Fund B shall be represented by Units allocated to his
Accounts. The initial value of each Unit to be allocated
to his Accounts in respect of amounts held by the Trustee
in the Sub Fund A or the Sub Fund B shall be One Dollar
($1.00), and Units shall be credited to each Participant
on such basis for amounts received by the Trustee on his
behalf prior to the first Valuation Date following the
first receipt by the Trustee of cash, securities or other
consideration for shares of Common Stock (including any
shares of Common Stock issued on conversion of Class A
Stock) or Class A Stock previously representing his
interest in the Stock Fund A which were tendered or
deposited in accordance with the Trust Agreement as
provided in Section 10.030(c) in the case of Sub Fund A,
and the first Valuation Date following the first receipt
by the Trustee of cash, securities or other consideration
for shares of Common Stock (including any shares of Common
Stock issued on conversion of Class A Stock) or Class A
Stock previously held in his account or accounts in the
Stock Fund B which were tendered or deposited in
accordance with the Trust Agreement as provided in Section
10.030(c) in the case of the Sub Fund B. Each receipt on
behalf of a Participant of cash, securities or other
consideration for shares of Common Stock (including any
shares of Common Stock issued on conversion of Class A
Stock) or Class A Stock previously representing his
interest in the Stock Fund A which were tendered or
deposited in accordance with the Trust Agreement as
provided in Section 10.030(c) or each payment to a
Participant from the Sub Fund A, and each receipt on
behalf of a Participant by the Trustee of cash, securities
or other consideration for shares of Common Stock
(including any shares of Common Stock issued on conversion
of Class A Stock) or Class A Stock previously held in his
account or accounts in the Stock Fund B which were
tendered or deposited in accordance with the Trust
Agreement as provided in Section 10.030(a) or each payment
to a Participant from the
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Sub Fund B, shall result in a credit or charge to the
affected Account of the Participant equal to the number of
Units received or paid as the case may be.
(c) As of the Valuation Date immediately following the first
deposit into the Sub Fund A or the Sub Fund B, as the case
may be, and as of each succeeding Valuation Date, an
amount equal to the fair market value of all property in
each such fund shall be determined by the Trustee in such
manner and on such basis as it shall deem appropriate.
Such amount shall be divided by the total number of Units
credited to all Participants in each such fund, thereby
establishing a new Unit Value. With respect to each such
fund, each receipt therein or payment therefrom after such
Valuation Date shall be converted to Units by dividing
such new Unit value into the amount of such receipt or
payment and the affected Account of the Participant shall
be credited or charged, as the case may be, with the
portion of the number of Units so computed properly
attributable to such Participant.
(d) As of any specified date, the dollar balance of the
individual account or accounts of each Participant in the
Sub Fund A and the Sub Fund B shall be determined in the
same manner as under Section 4.040 (but using for such
determination amounts received by the Trustee in respect
of the Sub Fund A and the Sub Fund B in lieu of
contributions).
(e) The Participant's account in the Stock Fund A shall be
reduced as of each date on which the Trustee receives
cash, securities or other consideration for shares of
Common Stock (including any shares of Common Stock issued
on conversion of Class A Stock) or Class A Stock
previously representing some or all of his interest in the
Stock Fund A which were tendered or deposited in
accordance with the Trust Agreement as provided in Section
10.030(c) by the number of Units which bears the same
relation to the number of Units credited to such account
immediately prior to the tender or deposit of such shares
as the portion of his interest in the Stock Fund A in
respect of which such shares were tendered bore to his
entire interest in the Stock Fund A immediately prior to
the tender or deposit of such shares.
(f) The Participant's account or accounts in the Stock Fund B
shall be reduced as of each date on which the Trustee
receives cash, securities or other consideration for
shares of Common Stock (including any shares of Common
Stock issued on conversion of Class A Stock) or Class A
Stock previously held in such account or accounts which
were tendered and deposited in accordance with the Trust
Agreement as provided in Section 10.030(c) by the number
of such shares which were so tendered or deposited.
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17.050 BENEFITS PAYABLE FROM THE SUB FUND A AND THE SUB FUND B
UPON TERMINATING EMPLOYMENT. While the provisions of this Article XVII are in
effect:
(a) For purposes of Section 5.010, each Unit representing a
Participant's interest in the Sub Fund A that results from
the crediting to the Participant's account in Sub Fund A
of cash, securities or other consideration received by the
Trustee pursuant to the tender or deposit in accordance
with the Trust Agreement as provided in Section 10.030(c)
of shares of Common Stock (including any shares of Common
Stock issued on conversion of Class A Stock) or Class A
Stock previously representing his interest in the Stock
Fund A shall be deemed attributable to Company
Contributions made on the Participant's behalf which
resulted in the credit to his account in the Stock Fund A
of a Unit in respect of such interest.
(b) For purposes of Section 5.020(a):
(1) The full dollar balance of the Participant's
accounts in the Sub Fund A and the Sub Fund B
shall be deemed to be described in paragraph (2)
thereof, and such balance shall be deemed to be
an amount that the Participant (or his
Beneficiary in the case of death) shall receive
under paragraph (1) thereof. Such balance shall
be determined, in the manner provided by Section
17.040(d), by reference to the Units in each such
account on the date of the Participant's
termination of employment for any reason set
forth in Section 5.020(a), and the value of each
Unit on the Valuation Date coinciding with or
immediately preceding such date.
(2) The amounts set forth in subparagraphs (ii) and
(iii) of paragraph (2) of Section 5.020(a) shall
be amounts that the Participant (or his
Beneficiary in the case of death, shall receive
under paragraph (1) thereof; provided, however,
that no share of Common Stock (including any
share of Common Stock issued on conversion of
Class A Stock) or Class A Stock representing a
Participant's interest in the Stock Fund A or
held in such Participant's account or accounts in
the Stock Fund B which, as of the date of such
Participant's termination of employment for any
reason set forth in Section 5.020(a), has been
tendered or deposited in accordance with the
Trust Agreement as provided in Section 10.030(c)
shall be transferred to such Participant (or his
Beneficiary in the case of death) pursuant to
paragraph (1) of Section 5.020(a) unless and
until such share has been effectively withdrawn
by or otherwise returned to the Trustee and the
certificate representing such share is in the
possession of the Trustee; and provided, further,
however, that there shall be paid or transferred
to such Participant (or his
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Beneficiary in the case of death) any and all cash,
securities or other consideration received by the Trustee
for whole shares of Common Stock (including any shares of
Common Stock issued on conversion of Class A Stock) or
Class A Stock previously representing such Participant's
interest in the Stock Fund A or held in such Participant's
account or accounts in the Stock Fund B as of the
Valuation Date immediately preceding the date of such
termination and which were tendered or deposited in
accordance with the Trust Agreement as provided in Section
10.030(c) as soon as practicable after the receipt of such
cash, securities or other consideration by the Trustee.
(c) If the Participant's employment is terminated for any
reason other than those reasons set forth in Sections
5.020, 5.030, or 8.020(a)(v), the Participant shall
receive as soon as practicable:
(1) The vested portion of the dollar balance of his
account in the Sub Fund A and the full dollar
balance of his account or accounts in the Sub
Fund B. Such balances shall be determined, in
the manner provided in Section 17.040(d), by
reference to the Units in each such account on
the date of such termination and the value of
each Unit on the Valuation Date coinciding with
or immediately preceding such date.
(2) The amounts set forth in subsections (i) through
(iii) of Section 5.040(a); provided, however,
that no share of Common Stock (including any
share of Common Stock issued on conversion of
Class A Stock) or Class A Stock representing such
Participant's vested interest in the Stock Fund A
or held in such Participant's account or accounts
in the Stock Fund B which, as of the date of such
termination, has been tendered or deposited in
accordance with the Trust Agreement as provided
in Section 10.030(c) shall be transferred to such
Participant after the date of such termination
unless and until such share has been effectively
withdrawn by or otherwise returned to the Trustee
and the certificate representing such share is in
the possession of the Trustee; and provided
further, however, that there shall be paid or
transferred to such Participant any and all cash,
securities or other consideration received by the
Trustee for whole shares of Common Stock
(including any shares of Common Stock issued on
conversion of Class A Stock) or Class A Stock
previously representing such Participant's vested
interest in the Stock Fund A or held in such
Participant's account or accounts in the Stock
Fund B as of the Valuation Date immediately
preceding the date of such termination and which
were tendered or deposited in accordance with the
Trust Agreement as
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provided in Section 10.030(c) as soon as
practicable after the receipt of such cash,
securities or other consideration by the Trustee.
17.060 DISTRIBUTIONS FROM THE PLAN UNDER SECTION 6.010. While
the provisions of this Article XVII are in effect:
(a) The amount paid or transferred to a Participant who elects
a distribution in accordance with Section 6.010 shall be
determined in the same manner as under Section 17.050(c)
(except that the date of receipt of the election shall be
used for such determination in lieu of the date of
termination and except that the Participant's Compensation
Deferral Account and the related portion of his Company
Contribution Account, if any, shall not be distributable).
(b) As soon as practicable after an Employee makes a repayment
described in Section 6.010(b), there shall be credited to
the Employee's Company Contributions Account a dollar
amount as set forth in the first sentence of Section
6.010(d). To the extent that the dollar amount to be
credited to his Company Contributions Account relates to
shares of Common Stock (including any shares of Common
Stock issued on conversion of Class A Stock) or Class A
Stock previously representing his interest in the Stock
Fund A for which the Trustee received cash, securities or
other consideration pursuant to the tender or deposit
thereof in accordance with the Trust Agreement as provided
in Section 10.030(c), such dollar amount shall be
allocated to the Sub Fund A. At the same time, the
Employee's Compensation Deduction Account shall be
credited with a dollar amount, and such amount shall be
allocated to the funds and any accounts under the
Guaranteed Return Fund, as set forth in the second and
third sentences of Section 6.010(d); provided, however,
that, if the Participant makes a repayment in respect of
shares of Common Stock (including any shares of Common
Stock issued on conversion of Class A Stock) or Class A
Stock previously held in his Compensation Deduction
Account in the Stock Fund B for which the Trustee received
cash, securities or other consideration pursuant to the
tender or deposit thereof in accordance with the Trust
Agreement as provided in Section 10.030(c), a dollar
amount equal to the amount of such repayment shall be
allocated to the Participant's Compensation Deduction
Account in the Sub Fund B. The amounts credited under
this subsection (b) shall vest, and, for purposes of this
subsection (b), the balance of the Participant's Company
Contributions Account shall be determined, as set forth in
the penultimate and last sentences of Section 6.010(d).
17.070 WITHDRAWALS FROM A PARTICIPANT'S COMPENSATION DEDUCTION
ACCOUNT UNDER SECTION 6.020. While the provisions of this Article XVII are in
effect:
(a) For purposes of Section 6.020(c), a Participant may elect
to have any withdrawal from his Compensation Deduction
Account
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taken from any of the funds as set forth in Section
6.020(c) or from his Compensation Deduction Account in the
Sub Fund B, or to have a specified portion taken from any
of such funds as set forth in Section 6.020(c) or a
specified portion taken from any two or more of such
funds. In the absence of such election, such withdrawal
shall be made from his accounts in such funds in the
following order: first, from his account, if any, in the
Fixed Income Fund; next, from his account, if any, in the
Diversified Fund; next, from his account or accounts, if
any, in the Guaranteed Return Fund; and finally, from his
account, if any, in the Sub Fund B, first from his Units
attributable to Common Stock and then, if such Units have
been fully withdrawn, from his Units attributable in Class
A Stock in such Fund. Notwithstanding the foregoing
provisions of this subsection (a), and subject only to the
provisions of Section 6.020(b), any withdrawal from his
account or accounts in the Guaranteed Return Fund shall be
taken in reverse sequence by first exhausting his
accounts in the most recent contracts under such Fund.
The amount paid or transferred to a Participant who has
made a withdrawal election in accordance with Section
6.020 shall be determined in the same manner as under
Section 17.050(c) (except that the date of withdrawal
shall be used for such determination in lieu of the date
of termination, and except that the withdrawal election
shall apply only to the Participant's Compensation
Deduction Account).
(b) For purposes of subsection (d) of Section 6.020, as soon
as practicable after a Participant makes a repayment
described in such subsection, there shall be credited to
the Participant's Company Contributions Account a dollar
amount as set forth in the first sentence of such
subsection immediately following paragraph (iv) thereof.
To the extent that the dollar amount to be credited to his
Company Contributions Account relates to shares of Common
Stock (including any shares of Common Stock issued on
conversion of Class A Stock) or Class A Stock previously
representing his interest in the Stock Fund A for which
the Trustee received cash, securities or other
consideration pursuant to the tender or deposit thereof in
accordance with the Trust Agreement as provided in Section
10.030(c), such dollar amount shall be allocated to the
Sub Fund A. At the same time, the Participant's
Compensation Deduction Account shall be credited with a
dollar amount equal to the amount repaid by the
Participant to such Account, and such amount shall be used
to purchase Units and shall be allocated to the funds and
any accounts under the Guaranteed Return Fund, as set
forth in the third and fourth sentences of such subsection
(d) following paragraph (iv) thereof; provided, however,
that, if the Participant makes a repayment in respect of
shares of Common Stock or Class A Stock previously held in
his Compensation Deduction Account in the Stock Fund B as
to which a withdrawal election was made and for which the
Trustee
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received cash, securities or other consideration
pursuant to the tender or deposit thereof in accordance
with the Trust Agreement as provided in Section 10.030(c),
a dollar amount equal to the amount of such repayment
shall be allocated to the Participant's Compensation
Deduction Account in the Sub Fund B. The amounts credited
under this subsection (b) shall vest as set forth in the
last sentence of Section 6.020(d).
(c) Partial withdrawals pursuant to Section 6.020(f) shall be
in a minimum amount of $100 with respect to the Sub Fund B.
17.080 WITHDRAWALS FROM A PARTICIPANT'S COMPENSATION DEFERRAL
ACCOUNT UNDER SECTION 6.030. While the provisions of this Article XVII are in
effect:
(a) For purposes of Section 6.030(f), a Participant may elect
to have any withdrawal of the portion of his Compensation
Deferral Account taken from any of the funds as set forth
in Section 6.030(f) or from his Compensation Deferral
Account in the Sub Fund B, or to have a specified portion
taken from any of such funds as set forth in Section
6.030(f) and a specified portion taken from any two or
more of such funds. In the absence of such election, such
withdrawal shall be made from his accounts in such funds
in the following order: first, from his account, if any,
in the Fixed Income Fund; next, from his account, if any,
in the Diversified Fund; next, from his account or
accounts, if any, in the Guaranteed Return Fund; and
finally, from his account, if any, in the Sub Fund B,
first from his Units attributable to Common Stock and
then, if such Units have been fully withdrawn, from his
Units attributable in Class A Stock in such Fund.
Notwithstanding the foregoing provisions of this
subsection (a), and subject only to the provisions of
Section 6.030(e), any withdrawal from his account or
accounts in the Guaranteed Return Fund shall be taken in
reverse sequence by first exhausting his accounts in the
most recent contracts under such Fund. The amount paid or
transferred to a Participant who has made a withdrawal
election in accordance with Section 6.030 shall be
determined in the same manner as under Section 17.050(c)
(except that the date of withdrawal shall be used for such
determination in lieu of the date of termination, and
except that the withdrawal election shall apply only to
the Participant's Compensation Deferral Account).
(b) For purposes of subsection (g) of Section 6.030, as soon
as practicable after a Participant makes a repayment
described in such subsection, there shall be credited to
the Participant's Company Contributions Account a dollar
amount as set forth in the first sentence of such
subsection immediately following paragraph (iv) thereof.
To the extent that the dollar amount to be credited to his
Company Contributions Account relates to shares of Common
Stock (including any shares of Common Stock issued on
conversion of Class A Stock) or Class A Stock
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previously representing his interest in the Stock Fund A
for which the Trustee received cash, securities or other
consideration pursuant to the tender or deposit thereof in
accordance with the Trust Agreement as provided in Section
10.030(c), such dollar amount shall be allocated to the
Sub Fund A. At the same time, the Participant's
Compensation Deduction Account shall be credited with a
dollar amount equal to the amount repaid by the
Participant to such Account, and such amount shall be used
to purchase Units and shall be allocated to the funds and
any accounts under the Guaranteed Return Fund, as set
forth in the third and fourth sentences of such subsection
(g) following paragraph (iv) thereof; provided, however,
that, if the Participant makes a repayment in respect of
shares of Common Stock (including any shares of Common
Stock issued on conversion of Class A Stock) or Class A
Stock previously held in his Compensation Deferral Account
in the Stock Fund B as to which a withdrawal election was
made and for which the Trustee received cash, securities
or other consideration pursuant to the tender or deposit
thereof in accordance with the Trust Agreement as
provided in Section 10.030(c), a dollar amount equal to
the amount of such repayment shall be allocated to the
Participant's Compensation Deduction Account in the Sub
Fund B. The amounts credited under this subsection (b)
shall vest as set forth in the last sentence of the last
paragraph of Section 6.030(g).
(c) Partial withdrawals pursuant to Section 6.030(h) shall be
in a minimum amount of $100 with respect to the Sub Fund B.
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ARTICLE XVIII TOP HEAVY PROVISIONS
The purpose of this Article XVIII is to conform the Plan to the requirements of
section 416 of the Code and any regulations issued thereunder, and this Article
XVIII shall be interpreted in accordance with such requirements and
regulations.
18.010 DEFINITIONS. For purposes of this Article, the following
special definitions shall apply:
(a) "TOP HEAVY PLAN" shall mean a qualified retirement plan,
including this Plan if applicable, which is included in,
or which constitutes, an Aggregation Group under which, as
of the Determination Date, the sum of the present values
of accrued benefits for all Key Employees under all
defined benefit plans in the Aggregation Group and the
aggregate of all accounts of Key Employees under all
defined contribution plans in the Aggregation Group
exceeds sixty percent (60%) of the sum of the present
values of accrued benefits under all such defined benefit
plans and of all accounts under all such defined
contribution plans for all participants under such plans.
(b) "KEY EMPLOYEE" shall mean each Employee or former Employee
who has, at any time during the five (5) year period
ending on the Determination Date, performed services for
an Affiliated Company and who is, at any time during the
plan year ending on the Determination Date, or was, during
any one of the four plan years preceding the plan year
ending on the Determination Date, any one or more of the
following.
(1) An officer of the Company having annual
compensation greater than fifty percent (50%) of
the amount in effect under Code section
415(b)(1)(A) for any plan year;
(2) One of the ten (10) persons having annual
compensation from all Affiliated Companies
greater than the limitation in effect under Code
section 415(c)(1)(A) and owning (or considered as
owning within the meaning of Code section 318, as
modified by Code section 416(i)(B)(iii)), the
largest interests in the Company;
(3) Any person owning (or considered as owning within
the meaning of Code section 318, as modified by
Code section 416(i)(B)(iii)), more than five
percent (5%) of the outstanding stock of the
Company (or stock having more than five percent
(5%) of the total combined voting power of all
stock of the Company) (a "5 Percent Owner"); or
(4) Any person who has annual compensation of more
than one hundred fifty thousand dollars
($150,000) and would be described in subsection
(3) above, if "one percent (1%)" was substituted
for "five percent (5%)".
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For purposes of determining whether a person is an officer
in subsection (1) above, in no event will more than fifty
(50) Employees or, if less than fifty (50) Employees, the
greater of three (3) Employees or ten percent (10%) of all
Employees, be considered Key Employees solely by reason of
officer status. In addition, persons who are merely
nominal officers will not be treated as officers solely by
reason of their titles.
(c) "DETERMINATION DATE" shall mean the last day of the
immediately preceding plan year or, in the case of the
first plan year of any plan, the last day of such plan
year.
(d) "EMPLOYEE" shall mean not only an Employee as defined in
Article I, but shall also include any beneficiary of such
Employee.
(e) "AGGREGATION GROUP" shall mean a group of plans (including
this Plan) maintained by one or more Affiliated Companies
in which a Key Employee is a participant or which is
combined with this Plan in order to meet the coverage and
nondiscrimination requirements of Code sections 410 and
401(a)(4). The Aggregation Group shall also include those
plans other than this Plan which need not be aggregated
with this Plan to meet Code Requirements, but which are
selected by the Company to be part of a selective
Aggregation Group which shall include this Plan if the
Aggregation Group would continue to meet the requirements
of Code sections 401(a)(4) and 410 with such plans being
taken into account.
(f) "NON-KEY EMPLOYEE" shall mean any employee who is not a
Key Employee. Non-Key Employee shall also mean an
employee who is a former Key Employee.
18.020 APPLICATION OF THIS ARTICLE. In the event that this Plan
is or becomes a Top Heavy Plan, the following special provisions shall become
applicable to this Plan and shall supersede the comparable provisions contained
elsewhere in this Plan.
(a) MINIMUM CONTRIBUTION. The Plan, where aggregated with
each other defined contribution plan in the Aggregation
Group in which a Key Employee is a participant, shall
provide a minimum allocation to the account of each
Participant who is not a Key Employee for each plan year
to which these rules apply equal to the lesser of:
(1) four percent (4%) of such Participant's
compensation (subject to the provisions of
Section 18.030), or
(2) the highest percentage of contribution made for
the plan year to a Participant who is a Key
Employee for such plan year.
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(b) VESTING. A Participant's nonforfeitable right to his
Company Contributions Account shall be not less than the
amount determined pursuant to the following schedule:
Years of Service Vested Interest
-------------------------- ---------------
Less than two 0%
Two but less than three 20%
Three but less than four 40%
Four but less than five 60%
Five but less than six 80%
Six or more 100%
If the Plan ceases to be a Top Heavy Plan the vesting
schedule set forth in Section 5.010(a) shall again become
applicable; provided that a Participant's nonforfeitable
right to his Company Contributions Account shall not be
less than his nonforfeitable right to the balance of his
Company Contributions Account immediately before the Plan
ceased to be a Top Heavy Plan; and provided further that
any Participant who at the time the Plan ceased to be a
Top Heavy Plan had been an Employee on the last day of at
least five (5) plan years following his becoming an
Employee shall be permitted irrevocably to elect to remain
under the vesting schedule set forth in this subsection
(b) in lieu of the vesting schedule set forth in Section
5.010(a).
(c) MAXIMUM COMPENSATION. For any plan year in which the Plan
is a Top Heavy Plan, only the first two hundred thousand
dollars ($200,000) of each Participant's annual
compensation will be taken into account for purposes of
determining benefits under the Plan, provided that such
dollar amount shall be automatically adjusted as
prescribed by the Secretary of the Treasury.
18.030 ADJUSTMENT OF LIMITATION ON ANNUAL BENEFIT. If for any
plan year the Plan becomes "super top heavy" (i.e., by substituting "90%" for
"60%" in Section 18.010(a)), the percentage described in Section 18.020(a)(1)
shall be changed to three percent (3%), and Section 14.020 shall be applied in
accordance with the requirements of Code section 416(h)(1) (i.e., by
substituting "90%" for "60%" in Section 18.010(a)).
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APPENDIX A
RETIREMENT PLANS GOVERNING CREDITING OF CONTINUOUS EMPLOYMENT
1. Rockwell International Corporation Retirement Income Plan for Certain
Salaried Employees.
2. Rockwell International Corporation Retirement Income Plan For Salaried
Employees in Certain Units of the General Industries Operations.
3. Rockwell International Corporation Retirement Income Plan for Certain
Salaried Employees of the General Industries Operations.
4. Rockwell International Corporation Salaried Employees' Retirement Plan
- Electronics Operations.
5. Rockwell International Corporation Retirement Plan for Eligible
Employees on the Salary and Weekly Payrolls of Electronics Operations,
North American Aircraft Operations and North American Space
Operations.
6. Maine Electronics Inc. Salary Payroll Retirement Plan.
7. Rockwell Telecommunications, Inc. (formerly Wescom) Retirement Plan
for Exempt Salaried Employees.
8. Retirement Plan for Hourly-Rated Employees of the Sulphur Springs,
Texas Plant.
9. Asheville Employees Retirement Savings Plan, Truck Axle Division.
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APPENDIX B
PROCEDURES FOR DISTRIBUTIONS TO PARTICIPANTS AGE 70-1/2
Pursuant to the general powers of administration conferred on the Plan
Administrator by Section 11.070 of the Plan, the Plan Administrator hereby
adopts the following procedures which shall govern the manner in which
distributions required under Section 5.020(c) to Participants who have become
age 70-1/2 on or after January 1, 1988, shall be made:
1. Commencing no later than January 31, 1990, each such
Participant shall receive a complete distribution of his or her Account in the
Plan in accordance with Section 5.020 of the Plan valued as of December 31,
1989. No later than January 31 of each year thereafter, each Participant who,
as of December 31 of that year has attained age 70-1/2 will also receive a
complete distribution of his or her Account in the Plan valued as of the
immediately preceding December 31.
2. Applicable waivers for federal and state income tax
purposes must be completed and returned to the Company's Administrative
Services Center by no later than ten (10) days prior to January 31 of each year
in order to prevent federal and, if applicable, state income taxes from being
withheld from distributions.
3. Distributions pursuant to Paragraph 1 shall not affect any
existing elections by such Participants to continue making contributions to the
Plan nor the Company's obligation to continue to make matching Company
Contributions pursuant to Article III of the Plan, all of which shall be
invested in accordance with the provisions of Article II. Compensation
Deduction, Compensation Deferral and Company Contributions made to the Plan
during each calendar year by such Participants, together with earnings thereon,
will be distributed the following year in accordance with Paragraph 1.
Approved and adopted 12/5 , 1990:
----------------- --
/S/ L. A. FELIX, JR.
- ---------------------------------
L. A. Felix, Jr.
Plan Administrator
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APPENDIX C
PROCEDURES, TERMS AND CONDITIONS OF LOANS
Pursuant to Section 6.040 of the Plan and the recommendation of the Plan
Administrator, the Employee Benefit Plan Committee of Rockwell International
Corporation hereby adopts the following procedures, terms and conditions for
the granting and administration of loans from the Plan:
ELIGIBILITY FOR LOAN: To be eligible to obtain a loan from the Plan, an
Employee must have an Account balance with the Plan and be employed on an
active payroll of an Affiliated Company at the time he applies for a loan. A
"party in interest" (as defined in ERISA section 3(14)) who has an Account
balance with the Plan, but who is not an Employee, shall be eligible to obtain
a loan only if he can provide an agreement by his current employer to deduct
and remit to Savings Plan Loan Administration the required loan repayments.
However, following a default on another loan from the Plan or any other Company
sponsored savings plan, an Employee or other party in interest may not obtain a
loan from the Plan prior to the expiration of the greater of: (a) one (1) year,
or (b) a period of time equal to the original term of the defaulted loan.
NUMBER OF LOANS PERMITTED FROM PLAN AT ANY ONE TIME; MINIMUM AMOUNT OF LOAN:
Only a single loan is permitted to be outstanding from all Company sponsored
savings plans at any one time. Any Employee or other party in interest who has
an outstanding loan with the Plan will be required to repay the loan in full
before applying for another loan. Each loan must be in the minimum amount of
$1,000.
MAXIMUM AMOUNT OF LOAN: The amount which any Employee or other party in
interest shall be permitted to borrow from the Plan shall be based on the
aggregate of the value of his Account determined in accordance with Section
4.030 of the Plan and may not exceed the lesser of an amount which, when
combined with all outstanding loans to such Employee or other party in interest
from all other plans of all Affiliated Companies, equals Fifty Thousand Dollars
($50,000), reduced by the highest outstanding and unpaid balances during the
twelve (12) month period immediately preceding the date on which such loan is
made of all prior loans to such Employee or other party in interest from the
Plan and such other plans; or one-half (1/2) the aggregate of the balances of
his Account.
The maximum amount of any loan will be further limited to an amount which, at
the applicable rate of interest, will result in periodic repayments of
installments not in excess of net earnings in any applicable pay period, after
all statutory withholdings, deductions for employee benefits and pre-tax
contributions to the Plan, but before other deductions for credit union,
savings bond and other savings and charitable deductions, of the Employee or
other party in interest for the week in which the loan repayment is to be
deducted.
LOAN APPLICATIONS: Initial loan application forms will consist of an
application form and a repayment worksheet, both in form approved by the Plan
Administrator, and may be obtained from any Benefits Representative or Payroll
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Department. The loan application form must be completed and signed by the
Employee or other party in interest and returned to the applicable Benefits
Representative or Payroll Department, which will review the forms to determine
eligibility and, if approved, forward them to Savings Plan Loan Administration,
Administrative Services Center, Rockwell International Corporation, 7391
Lincoln Way, Garden Grove, California 92641 for processing. If the loan is
approved by the Savings Plan Loan Administrator, a promissory note, payroll
deduction authorization and Truth In Lending statement, together with a letter
notifying the applicant of the approval of the loan, all in form approved by
the Plan Administrator, will be prepared and forwarded to the applicant for
execution. These forms must be executed by the applicant and returned to
Savings Plan Loan Administration within thirty (30) days after the date of the
letter approving the loan or the application will be deemed withdrawn.
SOURCE OF LOAN FUNDS: Each loan will be funded by withdrawing the required
amounts from the Plan account(s) of the Employee or other party in interest
specified in his loan application form. Each such account will be credited
with a receivable equal to the amount withdrawn, the aggregate of which
receivables will be evidenced by the promissory note of the Employee or other
party in interest for the amount of the loan. To the extent a loan is made
against a Participant's Stock Fund B account, the Participant will receive cash
in lieu of shares of Common and/or Class A Stock. The Trustee shall not be
permitted to sell shares of Common or Class A Stock in order to provide the
cash with which to finance loan applications, but shall utilize funds received
from Participants and the Company for credit to Stock Funds A or B for such
purpose and shall process such applications on a first-come first-service
basis. If at any time the Trustee shall not have sufficient cash on hand to
finance all outstanding loan applications, the Trustee shall defer processing
of each application for which sufficient cash is not available until sufficient
cash becomes available to enable the Trustee to process such loans on a
first-come first-service basis.
DETERMINATION OF INTEREST RATE TO BE CHARGED FOR LOANS: The interest rate to
be charged for loans will be the rate determined by the Plan Administrator as
equivalent to the rate of interest charged by First Interstate Bank for secured
loans comparable to loans from the Plan at the time the loan from the Plan is
approved. The Plan Administrator has determined that First Interstate's prime
rate of interest plus 1% represents an appropriate rate of interest under this
standard.
TERM OF LOAN: Loans will be permitted for terms of 12, 24, 36, 48 or 60 months
for loans other than those for the purpose of purchasing a primary residence.
Loans for the purpose of purchasing a primary residence will be permitted for a
term of 120 months.
REPAYMENTS: Loan repayments by Employees will be deducted from the Employee's
paycheck each pay period. If a paycheck is insufficient to cover the full
amount of the loan repayment, no deduction will be made, and the repayment will
be deducted from the Employee's next paycheck. Loan repayment schedules for
parties in interest who are not Employees will be developed on an individual
basis, but parallelling as closely as possible the loan repayment schedules for
Employees.
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PREPAYMENTS: Subject to the limitations described in this paragraph, a
Participant may prepay at any time the full unpaid balance of his loan.
Partial prepayments in excess of scheduled payroll deductions will not be
accepted. No prepayments will be accepted within twelve (12) months after the
date of the loan unless the borrower is an Employee and terminates employment
within such twelve (12) month period, in which case prepayment is permitted
within the periods specified in Section 6.020(d)(i).
MISSED PAYMENTS: If any payment is not made, interest will continue to accrue
on such missed payment and subsequent payments will be applied first to accrued
and unpaid interest and then to principal. A notice will be mailed to the last
known address of the Participant on each occasion of a missed payment, or, in
the case of payments made more frequently than monthly, the number of payments
equivalent to a monthly payment, have been missed. These notices will continue
until three (3) consecutive monthly payments, or, in the case of payments made
more frequently than monthly, a number of payments equivalent thereto, have
been missed. The notice will state the amount of the missed payment(s), that
the missed payment(s) will be deducted from his next paycheck(s), that if three
(3) consecutive monthly payments, or, in the case of payments made more
frequently than monthly, a number of payments equivalent thereto, are missed
the loan will be considered in default, and that, upon default, the unpaid
balance of the loan and all accrued and unpaid interest will be considered as
taxable income.
TERMINATION OF EMPLOYMENT: If an Employee or other party in interest
terminates employment so that payroll deductions may no longer be made to
effect loan repayments, such person may continue to make loan repayments by
personal check to Savings Plan Loan Administration, Rockwell International
Corporation, Administrative Services Center, Department LA 21089S, Pasadena,
California 91185. In the event that three (3) consecutive monthly payments (or
a number of payments equivalent thereto) are missed, the loan will be
considered in default.
DEFAULT: A loan will be considered in default after three (3) consecutive
monthly payments (or a number of payments equivalent thereto) have been missed
during the term of the loan or when a Participant effectively revokes a payroll
deduction authorization. When a loan is in default, all accrued and unpaid
interest will be capitalized, and a taxable distribution for the purposes of
Code section 72(p) only will be deemed to have occurred, and a notice will be
sent to the Participant advising him of the default and the tax implications
thereof. If an event permitting distribution of the Account of the Participant
has occurred (whether or not distribution of the Account will actually be made
concurrently therewith or has been deferred pursuant to applicable provisions
of the Plan, the unpaid balance of the loan, including capitalized interest,
will be charged off against such person's Account. If no distributable event
has occurred, the unpaid balance of the loan, including capitalized interest,
will be retained in the Account and will continue to bear interest until such
time as distribution is permitted under Code section 401(k), at which time the
unpaid balance of the loan, including all accrued and unpaid interest, will be
charged off, and the Participant's promissory note will be marked "Charged in
Full Against Account" and returned to the Participant. A W2-P reflecting the
Participant's taxable income (in the year of default, the unpaid balance of the
loan plus capitalized interest
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and interest accrued and unpaid thereafter; in each subsequent year, interest
accrued and unpaid on the loan) will be issued to the Participant as soon as
practicable after the end of each calendar year during any part of which a
defaulted loan is retained in a Participant's Account.
FORFEITURE OF NON-VESTED COMPANY MATCHING CONTRIBUTIONS ON DEFAULTED LOANS: In
the event that, at the time a defaulted loan is charged against the
Participant's Account, the loan consisted of non-matured Compensation Deferral
or Compensation Deduction Contributions, that portion of the Participant's
Company Contributions Account attributable to such non-matured Contributions
will, to the extent such forfeiture is permitted under Article V or VI, be
forfeited.
PROCEDURE UPON PAYMENT IN FULL OR CHARGE-OFF OF LOAN: Upon receipt of the
final, scheduled repayment paying the loan in full, the Participant's
promissory note will be marked "Paid In Full" and returned to the Participant.
If, as a result of missed payments, the loan has not been paid in full at such
time, the Participant will be billed for the remaining balance. If payment of
the remaining balance and all accrued and unpaid interest is not received
within three (3) months thereafter, the loan will be considered to be in
default.
Approved, OCTOBER 1, , 1990:
------------------------- --
THE EMPLOYEE BENEFIT PLAN COMMITTEE OF ROCKWELL INTERNATIONAL CORPORATION
By /S/ R. A. DEPALMA
----------------------------------------
R. A. dePalma, Chairman, duly authorized
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EXHIBIT 99-b-1
APPROVAL OF THE
MEMORANDUM OF PROPOSED AMENDMENTS
TO THE
ROCKWELL INTERNATIONAL CORPORATION
SAVINGS PLAN
FOR CERTAIN REPRESENTED HOURLY EMPLOYEES
I, Robert H. Murphy, Senior Vice President, Organization & Human Resources,
Rockwell International Corporation, pursuant to authority of the Board of
Directors of Rockwell International Corporation by resolution dated November 1,
1989, for and on behalf of said Corporation, do hereby approve the adoption by
Rockwell International Corporation, effective as of February 1, 1994, the
Memorandum of Proposed Amendments to the Rockwell International Corporation
Savings Plan for Certain Represented Hourly Employees ("the Plan") in the form
attached hereto which provides for increased availability of Plan assets,
through Plan withdrawals, hardship distributions and loans, in situations in
which a national disaster or emergency has been declared under applicable
federal law by the President of the United States, which disaster has placed
one or more Plan Participants in particular need of access to such Plan assets
by means of such withdrawal, hardship distribution or loan if such withdrawal,
hardship distribution or loan is requested for a reason associated with
financial need of the Participant resulting from the effects of the said
condition.
Dated this 25th day of February, 1994.
/s/ Robert H. Murphy
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Robert H. Murphy, Senior Vice President
Organization & Human Resources
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MEMORANDUM OF PROPOSED AMENDMENTS
TO THE
ROCKWELL INTERNATIONAL CORPORATION
SAVINGS PLAN
FOR CERTAIN REPRESENTED HOURLY EMPLOYEES
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Amend the Rockwell International Corporation Savings Plan for Certain
Represented Hourly Employees (the "Plan"), effective February 1, 1994, in order
to provide for increased availability of Plan assets, through Plan withdrawals,
hardship distributions and loans, in situations in which a national disaster or
emergency has been declared under applicable federal law by the President of
the United States, which disaster has placed one or more Plan Participants in
particular need of access to such Plan assets by means of such withdrawal,
hardship distribution or loan if such withdrawal, hardship distribution or loan
is requested for a reason associated with financial need of the Participant
resulting from the effects of the said condition.
1. Amend subparagraph (C) of subsection (d)(i) of Section 5.010 of the Plan in
its entirety to read as follows:
"(C) any other reason permitted under section 401(k)(2)(B)(i)(IV) of
the Code and approved by the Administrative Committee."
2. Amend subsection (f) of Section 5.010 of the Plan in its entirety to read as
follows:
"(f) Withdrawals shall be in a minimum amount of $100 with respect to
the Equity Fund, the Money Market Fund, the Rockwell Stock Fund
or Guaranteed Investment Fund. A Participant may not make a
request for withdrawal within twenty-six (26) weeks of any prior
request for withdrawal; provided, however, that this limitation
upon the ability of a Participant to make a withdrawal (including
hardship withdrawals pursuant to the provision of subsection (d)
of this Section) within twenty-six (26) weeks of any prior
request for a withdrawal shall be waived by the Plan
Administrator for the six-month period immediately following any
due declaration by the President of the United States under
applicable federal law that a particular occurrence or situation
constitutes a national disaster condition, if such withdrawal is
requested for a reason associated with financial need of the
Participant resulting from the effects of the said condition.
Payment of withdrawal requests shall be made to the Participant
as soon as practicable."
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3. Amend Section 5.020 of the Plan in its entirety to read as follows:
"5.020 Loans. As soon as practicable after January 1, 1990, the Plan
Administrator shall establish written procedures pursuant to
which any Employee or other "party in interest" (as defined
in ERISA Section 3(14)) may apply for and receive from the
Plan loans in accordance with such terms and conditions as the
Plan Administrator may prescribe in writing consistent with
the provisions of the Plan and applicable provisions of the
Code and ERISA. Such procedures, terms and conditions shall
require, in addition to such other written procedures, terms
and conditions as may be established by the Plan Administrator
not inconsistent herewith, that
(a) the amount which any Employee or other party in interest shall
be permitted to borrow from the Plan shall be based on the
aggregate of the value of his Account determined in accordance
with Section 3.030;
(b) no Employee or other party in interest shall be permitted to
obtain a loan from the Plan of less than One Thousand Dollars
($1,000) or in an amount exceeding the least of (i), (ii), or
(iii):
(i) an amount which, when combined with all outstanding loans
to such Employee or other party in interest from all
other plans of all Affiliated Companies, equals Fifty
Thousand Dollars ($50,000), reduced by the excess, if
any, of the highest outstanding and unpaid balances of
all prior loans to such Employee or other party in
interest from the Plan and such other plans during the
twelve (12) month period immediately preceding the date
on which such loan is made, over the outstanding balance
of any loan to the Employee or other party in interest
from the Plan or such other plans on the date on which
the loan is made;
(ii) one-half (1/2) the aggregate of the balances of his
Account; or
(iii) such amount, not exceeding the amounts described in (i)
and (ii) above, as the Plan Administrator shall determine.
In addition to the above and to such other procedures, terms
and conditions as may be established by the Plan Committee, no
such Employee or other party in interest shall be permitted to
have more than a single loan from the Plan and all other
"qualified employer plans" (as such term is defined in section
72(p)(4) of the Code) of the Company outstanding at any one
time.
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At such time as the Plan Administrator shall have
established such written procedures, terms and conditions the
Plan Administrator shall cause (1) an announcement thereof to
be disseminated to all eligible Employees and other parties in
interest, and (2) a copy of such written procedures, terms and
conditions to be attached to and made a part of this Plan as
Appendix C. Until the Plan Administrator shall have established
such procedures, terms and conditions no Employee or other
party in interest shall have any right to obtain a loan from
the Plan. Once available to eligible Employees, however, all
such loans shall be made available to all eligible Employees
and other parties in interest on a reasonably equivalent and
non-discriminatory basis."
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