SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1996
Commission file number 1-1035
Rockwell International Corporation
(Exact name of registrant as specified in its charter)
Delaware 95-1054708
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
2201 Seal Beach Boulevard, Seal Beach, California 90740-8250
(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code (412) 565-4090
(Office of the Corporate Secretary)
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 and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
186,948,124 shares of registrant's Common Stock, $1.00 par value, and
30,449,271 shares of registrant's Class A Common Stock, $1.00 par value, were
outstanding on April 30, 1996.
<PAGE>
ROCKWELL INTERNATIONAL CORPORATION
INDEX
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements:
Page
No.
Condensed Consolidated Balance Sheet--
March 31, 1996 and September 30, 1995.......... 2
Statement of Consolidated Income--Three Months
and Six Months Ended March 31, 1996 and 1995.. 3
Statement of Consolidated Cash Flows--
Six Months Ended March 31, 1996 and 1995...... 4
Notes to Financial Statements.................. 5
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations.................................. 9
Other Financial Information.................... 13
Exhibit 11 - Computation of Earnings Per Share........... 14
PART II. OTHER INFORMATION:
Item 1. Legal Proceedings.............................. 15
Item 4. Submission of Matters to a Vote of Security
Holders........................................ 15
Item 5. Other Information.............................. 17
Item 6. Exhibits and Reports on Form 8-K............... 17
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ROCKWELL INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
March 31 September 30
1996 1995
ASSETS (In millions)
Current assets:
Cash........................................... $ 583 $ 655
Receivables.................................... 2,398 2,346
Inventories.................................... 2,006 1,847
Other current assets........................... 539 546
Net assets of discontinued operations.......... 562 569
Total current assets................... 6,088 5,963
Net property...................................... 2,944 2,847
Intangible assets................................. 1,824 1,868
Other assets...................................... 1,494 1,436
TOTAL.................... $12,350 $12,114
LIABILITIES AND SHAREOWNERS' EQUITY
Current liabilities:
Short-term debt................................ $ 765 $ 654
Accounts payable - trade....................... 941 1,057
Accrued compensation and benefits.............. 717 729
Advance payments from customers................ 230 246
Accrued income taxes........................... 53 113
Other current liabilities...................... 998 918
Total current liabilities.............. 3,704 3,717
Long-term debt.................................... 1,764 1,775
Accrued retirement benefits....................... 2,511 2,536
Other liabilities................................. 321 304
Total liabilities............. 8,300 8,332
Shareowners' equity:
Preferred stock ............................... 1 1
Common Stock (shares issued - 209.5 million)... 210 210
Class A Common Stock (shares issued:
March 31, 1996, 30.9 million;
September 30, 1995, 32.9 million)........... 31 33
Additional paid-in capital..................... 195 186
Retained earnings.............................. 4,381 4,158
Currency translation........................... (111) (99)
Common Stock in treasury, at cost (shares held:
March 31, 1996, 23.0 million;
September 30, 1995, 25.4 million)........... (657) (707)
Total shareowners' equity..... 4,050 3,782
TOTAL.................... $12,350 $12,114
See Notes to Financial Statements.
<PAGE>
ROCKWELL INTERNATIONAL CORPORATION
STATEMENT OF CONSOLIDATED INCOME
(Unaudited)
Three Months Ended Six Months Ended
March 31 March 31
1996 1995 1996 1995
(In millions)
Revenues:
Sales........................... $ 3,422 $ 3,157 $ 6,484 $ 5,616
Other income.................... 42 13 74 33
Total revenues................ 3,464 3,170 6,558 5,649
Costs and expenses:
Cost of sales................... 2,591 2,403 4,911 4,301
Selling, general, and
administrative................ 473 426 884 728
Interest........................ 50 44 97 66
Total costs and expenses...... 3,114 2,873 5,892 5,095
Income before income taxes........ 350 297 666 554
Provision for income taxes........ 138 118 261 220
Income from continuing
operations...................... 212 179 405 334
Income from discontinued
operations, net of tax.......... 2 12 1 22
Net income ....................... $ 214 $ 191 $ 406 $ 356
(In dollars)
Earnings per common share:
Primary........................
From continuing operations... $ .97 $ .82 $ 1.87 $ 1.54
From discontinued
operations................. .01 .06 - .10
Net income per common share.. $ .98 $ .88 $ 1.87 $ 1.64
Fully diluted..................
From continuing operations... $ .96 $ .81 $ 1.84 $ 1.51
From discontinued
operations................. .01 .06 - .10
Net income per common share.. $ .97 $ .87 $ 1.84 $ 1.61
Cash dividends per common share.. $ .29 $ .27 $ .58 $ .54
(In millions)
Average common shares outstanding:
Primary....................... 217.3 217.0 217.2 217.5
Fully diluted................. 221.4 221.1 221.0 221.7
See Notes to Financial Statements.
<PAGE> ROCKWELL INTERNATIONAL CORPORATION
STATEMENT OF CONSOLIDATED CASH FLOWS
(Unaudited)
Six Months Ended
March 31
1996 1995
(In millions)
OPERATING ACTIVITIES:
Net income........................................... $ 406 $ 356
Adjustments to net income to arrive at
cash provided by operating activities:
Depreciation..................................... 242 218
Amortization of intangible assets................ 50 40
Deferred income taxes............................ 45 55
Net pension income and contributions............. (18) (40)
Changes in assets and liabilities, excluding
effects of acquisitions and foreign currency
adjustments:
Receivables.................................. (60) (71)
Inventories.................................. (179) (171)
Net assets of discontinued businesses....... 7 (24)
Accounts payable - trade..................... (76) (78)
Accrued compensation and benefits............ (10) 11
Advance payments from customers.............. (17) (18)
Income taxes................................. (45) (37)
Other assets and liabilities................. (82) (16)
Cash provided by operating activities..... 263 225
INVESTING ACTIVITIES:
Property additions................................... (364) (266)
Acquisition of businesses............................ (3) (1,577)
Proceeds from disposition of property and businesses. 64 17
Cash used for investing activities........ (303) (1,826)
FINANCING ACTIVITIES:
Debt activity:
Increase in short-term borrowings................ 119 1,316
Increase in long-term debt....................... - 543
Payments of long-term debt....................... (16) (37)
Net increase in debt........................... 103 1,822
Purchase of treasury stock.......................... (40) (93)
Dividends........................................... (126) (118)
Reissuance of common stock.......................... 31 11
Cash (used for) provided by
financing activities.................. (32) 1,622
(DECREASE) INCREASE IN CASH.......................... (72) 21
CASH AT BEGINNING OF PERIOD.......................... 655 612
CASH AT END OF PERIOD................................ $ 583 $ 633
Income tax payments were $277 million and $172 million in the six months ended
March 31, 1996 and 1995, respectively.
See Notes to Financial Statements.
<PAGE>
ROCKWELL INTERNATIONAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. In the opinion of the company the unaudited financial statements contain
all adjustments, consisting solely of adjustments of a normal recurring
nature, necessary to present fairly the financial position, results of
operations, and cash flows for the periods presented. These statements
should be read in conjunction with the company's Annual Report for the
fiscal year ended September 30, 1995. The results of operations for the
three- and six-month periods ended March 31, 1996 are not necessarily
indicative of the results for the full year.
It is the company's practice at the end of each interim reporting period
to make an estimate of the effective tax rate expected to be applicable
for the full fiscal year. The rate so determined is used in providing
for income taxes on a year-to-date basis.
2. In April 1996, the company reached an agreement to sell its Graphic
Systems business segment for approximately $600 million. The sale is
expected to close in the summer of 1996. The net proceeds from the sale
will exceed the net assets of the business. After giving consideration
to the tax basis of assets sold and accrued costs directly associated
with disposing of the business, the company expects the transaction to
have a minimal effect on its results of operations. The net assets of
the Graphic Systems business at March 31, 1996 and September 30, 1995
and its net income for the three- and six-month periods ended
March 31, 1996 and 1995 have been presented as discontinued operations.
The revenues of the Graphic Systems business were $237 million and
$208 million for the three months ended March 31, 1996 and 1995,
respectively, and $352 million and $375 million for the six months ended
March 31, 1996 and 1995, respectively.
3. In fiscal 1995, the company's acquisition of Reliance Electric Company
(Reliance) was accounted for as a purchase as of December 31, 1994 and
the results of operations of Reliance, exclusive of the divested
telecommunications business, were included in the company's statement of
consolidated income commencing January 1, 1995.
The following unaudited pro forma information has been prepared assuming
Reliance had been acquired at the beginning of fiscal 1995. The
pro forma information is presented for informational purposes and is not
necessarily indicative of what would have occurred if the acquisition
had been made as of that date. The pro forma information is not
intended to be a projection of future results.
Six Months Ended
March 31, 1995
(In millions, except
per share amounts)
Revenues $5,978
Net income 356
Earnings per common share:
Primary 1.64
Fully diluted 1.61
<PAGE>
ROCKWELL INTERNATIONAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
4. Receivables are summarized as follows (in millions):
March 31 September 30
1996 1995
Accounts and notes receivable:
Commercial, less allowance for doubtful
accounts (March 31, 1996, $81;
September 30, 1995, $59)............... $ 1,683 $ 1,521
United States Government................. 119 142
Unbilled costs and accrued profits,
less related progress payments
(March 31, 1996, $246;
September 30, 1995, $235)................ 596 683
Receivables.............................. $ 2,398 $ 2,346
5. Inventories are summarized as follows (in millions):
March 31 September 30
1996 1995
Finished goods............................. $ 467 $ 454
Long-term contracts in process............. 330 289
Work in process............................ 846 765
Raw materials, parts, and supplies......... 502 488
Total.................................... 2,145 1,996
Less allowance to adjust the carrying value
of certain inventories to a last-in,
first-out (LIFO) basis................... 62 54
Remainder.................................. 2,083 1,942
Less related progress payments............. 77 95
Inventories.............................. $ 2,006 $ 1,847
6. Intangible assets are summarized as follows (in millions):
March 31 September 30
1996 1995
Goodwill.................................. $ 1,297 $ 1,328
Trademarks, patents, product technology,
and other intangibles................... 527 540
Intangible assets....................... $ 1,824 $ 1,868
<PAGE> ROCKWELL INTERNATIONAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
7. Other assets are summarized as follows (in millions):
March 31 September 30
1996 1995
Prepaid pension costs..................... $ 1,354 $ 1,321
Investments and other assets.............. 140 115
Other assets............................ $ 1,494 $ 1,436
8. Short-term debt consisted of the following (in millions):
March 31 September 30
1996 1995
Commercial paper......................... $ 625 $ 535
Short-term bank borrowings,
principally foreign.................... 125 101
Current portion of long-term debt........ 15 18
Short-term debt......................... $ 765 $ 654
9. Other current liabilities are summarized as follows (in millions):
March 31 September 30
1996 1995
Accounts payable - other................... $ 322 $ 297
Accrued product warranties................. 206 196
Accrued taxes other than income taxes...... 94 82
Other...................................... 376 343
Other current liabilities................ $ 998 $ 918
10. Long-term debt consisted of the following (in millions):
March 31 September 30
1996 1995
7-5/8% notes, payable in 1998............. $ 300 $ 300
8-7/8% notes, payable in 1999............. 300 300
8-3/8% notes, payable in 2001............. 200 200
6-3/4% notes, payable in 2002............. 300 300
6.8% notes, payable in 2003............... 139 138
7-7/8% notes, payable in 2005............. 200 200
6-5/8% notes, payable in 2005............. 300 300
Other obligations, principally foreign.... 40 55
Total................................... 1,779 1,793
Less current portion..................... 15 18
Long-term debt......................... $ 1,764 $ 1,775
<PAGE>
ROCKWELL INTERNATIONAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
11. The company's financial instruments include cash, short- and long-term
debt, and foreign currency forward exchange contracts. At March 31,
1996, the carrying values of the company's financial instruments
approximated their fair values based on current market 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 foreign currency commitments
entered into in the ordinary course of business. These commitments are
generally for terms of less than one year. The foreign currency forward
exchange contracts are executed with creditworthy banks and are
denominated in currencies of major industrial countries. The notional
amount of outstanding foreign currency forward exchange contracts
aggregated $703 million at March 31, 1996 and $681 million at
September 30, 1995. The company does not anticipate any material
adverse effect on its results of operations or financial position
relating to these foreign currency forward exchange contracts.
12. Accrued retirement benefits consisted of the following (in millions):
March 31 September 30
1996 1995
Accrued retirement medical costs......... $2,496 $2,539
Accrued pension costs.................... 214 196
Total.................................. 2,710 2,735
Amount classified as current liability... 199 199
Accrued retirement benefits............ $2,511 $2,536
13. In the quarter ended March 31, 1996, the company purchased .3 million
shares of Common Stock for $22 million. Since the company's Common
Stock repurchase program began in 1984, the company has purchased
114.7 million shares of Common Stock for $2.7 billion.
14. 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.
15. On May 1, 1996, the company announced that it will redeem all of its
outstanding $4.75 Convertible Preferred Stock, Series A and $1.35
Convertible Preferred Stock, Series B on July 1, 1996 at redemption
prices of $100.00 per share for the Series A stock and $36.00 per share
for the Series B stock. The company anticipates that the majority of
preferred shareholders will elect to convert their preferred stock into
common stock prior to redemption.
<PAGE>
ROCKWELL INTERNATIONAL CORPORATION
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
RESULTS OF OPERATIONS
1996 Second Quarter Compared to 1995 Second Quarter
The contributions to sales and earnings by business segment of the company for
the second quarter of fiscal 1996 and 1995 are presented below (in millions).
Three Months Ended
March 31
1996 1995
Sales
Electronics
Automation $ 1,011 $ 974
Avionics 343 342
Semiconductor Systems 407 184
Defense Electronics 226 207
Total Electronics 1,987 1,707
Aerospace
Space Systems 469 482
Aircraft 129 150
Total Aerospace 598 632
Automotive
Heavy Vehicle Systems 494 513
Light Vehicle Systems 343 302
Total Automotive 837 815
Sales of ongoing businesses 3,422 3,154
Divested business 3
Total $ 3,422 $ 3,157
Operating Earnings
Electronics
Automation $ 123 $ 138
Avionics 23 39
Semiconductor Systems 81 18
Defense Electronics 32 40
Total Electronics 259 235
Aerospace 100 86
Automotive 69 61
Operating earnings of ongoing businesses 428 382
Divested business (3)
General corporate - net (28) (38)
Interest expense (50) (44)
Provision for income taxes (138) (118)
Income from continuing operations 212 179
Income from discontinued operations, net of tax 2 12
Net income $ 214 $ 191
<PAGE>
ROCKWELL INTERNATIONAL CORPORATION
RESULTS OF OPERATIONS (CONTINUED)
Sales for the 1996 second quarter were 8 percent higher than 1995's second
quarter sales. Sales by the Semiconductor Systems business more than doubled
last year's second quarter due to continued demand for its very high-speed
personal computer and fax modem products, despite the fact that the rate of
growth in other segments of the semiconductor industry has recently slowed.
Current year second quarter sales increases were also achieved by the
Automation, Avionics, Defense Electronics, and Light Vehicle Systems
businesses; while lower sales were recorded in the Aerospace and Heavy Vehicle
Systems businesses. In the quarter, commercial and international sales were
up 14 percent from last year's second quarter, and now comprise 75 percent of
total sales compared to 71 percent in the second quarter of 1995.
Income from continuing operations for 1996's second quarter increased
18 percent from 1995's second quarter primarily due to the Semiconductor
Systems business earnings being four times higher than a year ago. Higher
earnings were also recorded by the Aerospace and Automotive businesses.
Electronics:
The company's Electronics businesses accounted for 58 percent of total sales
and 60 percent of total operating earnings in the second quarter of 1996.
Semiconductor Systems earnings were substantially higher than a year ago due
to the above noted sales increase. The business is currently adding major
feature and functionality enhancements to its industry-leading V.34 modem,
which is today's Internet access method of choice. Notwithstanding these
important new product investments, the business achieved a very strong 20
percent return on sales in the quarter.
Automation sales continued to increase; however, substantial
investments in international marketing, new product launches, and
manufacturing and distribution facilities to improve customer service resulted
in an 11 percent earnings decrease from 1995's second quarter. Although
growth in Automation's served markets is continuing, the rate of growth in
this industry has slowed from last year's record levels. Despite these market
dynamics, we are confident that Automation will achieve higher earnings and
improved profit margins in fiscal 1996.
Avionics second quarter earnings were down 41 percent from 1995's second
quarter principally due to a charge resulting from the bankruptcy of
Fokker N.V. Defense Electronics second quarter earnings were down 20 percent
from 1995 due to contract adjustments.
Aerospace:
Aerospace earnings were up 16 percent over last year's second quarter as a
result of improved performance by the Rocketdyne Division and favorable
contract adjustments in the Aircraft business.
Automotive:
Automotive's earnings were 13 percent higher than last year's second quarter
due to improved cost performance by Heavy Vehicle Systems in North America,
increased volume by Light Vehicle Systems, and a gain on the sale of a plant.
However, Automotive's earnings continue to be adversely affected by the
depressed economic conditions in Brazil and Mexico.
<PAGE>
ROCKWELL INTERNATIONAL CORPORATION
RESULTS OF OPERATIONS (CONTINUED)
Six Months Ended March 31, 1996 Compared to Six Months Ended March 31, 1995
The contributions to sales and earnings by business segment of the company for
the six months ended March 31, 1996 and 1995 are presented below (in
millions).
Six Months Ended
March 31
1996 1995
Sales
Electronics
Automation $ 1,991 $ 1,546
Avionics 665 630
Semiconductor Systems 693 316
Defense Electronics 425 392
Total Electronics 3,774 2,884
Aerospace
Space Systems 879 923
Aircraft 239 264
Total Aerospace 1,118 1,187
Automotive
Heavy Vehicle Systems 925 963
Light Vehicle Systems 667 576
Total Automotive 1,592 1,539
Sales of ongoing businesses 6,484 5,610
Divested business 6
Total $ 6,484 $ 5,616
Operating Earnings
Electronics
Automation $ 234 $ 229
Avionics 60 61
Semiconductor Systems 163 32
Defense Electronics 62 77
Total Electronics 519 399
Aerospace 184 172
Automotive 107 110
Operating earnings of ongoing businesses 810 681
Divested business (5)
General corporate - net (47) (56)
Interest expense (97) (66)
Provision for income taxes (261) (220)
Income from continuing operations 405 334
Income from discontinued operations, net of tax 1 22
Net income $ 406 $ 356
<PAGE>
ROCKWELL INTERNATIONAL CORPORATION
RESULTS OF OPERATIONS (CONTINUED)
Sales for the first six months of 1996 increased $868 million, or 15 percent,
over the same period a year ago, principally due to the inclusion of
$338 million of first quarter sales of Reliance and the continued rapid
growth of the Semiconductor Systems business. The company's earnings from
continuing operations increased 21 percent over 1995's comparable earnings.
Electronics earnings for the first six months of fiscal 1996 were up
30 percent from the same period a year ago due to substantial earnings
increases in the Semiconductor Systems business. Semiconductor Systems
performance reflects continued strong demand for its very high-speed personal
computer and fax modem products. Automation's earnings, impacted by
significant investments in international marketing, new product launches, and
manufacturing and distribution facilities to improve customer service, were up
slightly. Avionics earnings continued to be strong due to higher sales in its
commercial aircraft businesses but were slightly below last year's due to a
charge resulting from the bankruptcy of Fokker N.V. Defense Electronics
earnings were below those of last year's first half due to unfavorable
contract adjustments.
Aerospace's improved performance by the Rocketdyne Division and favorable
contract adjustments in the Aircraft business offset lower volume, resulting
in an earnings increase of seven percent for the first six months of 1996 over
last year's first six months.
Automotive's earnings for the first six months of 1996 were slightly below
those of the comparable 1995 period as a result of depressed economic
conditions in Brazil and Mexico, which offset improved cost performance in
Heavy Vehicle Systems, volume improvements in Light Vehicle Systems, and a
gain on the sale of a plant.
Interest expense for the first six months of 1996 increased due to borrowings
related to the Reliance acquisition.
FINANCIAL CONDITION
The company is in the process of evaluating the effect of the adoption of
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of."
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
Environmental Issues in Item 7, Management's Discussion and Analysis of
Financial Condition and Results of Operations, on pages 17-18 of the company's
Annual Report on Form 10-K for the fiscal year ended September 30, 1995.
Management believes that at March 31, 1996 there has been no material change
to this information.
<PAGE>
ROCKWELL INTERNATIONAL CORPORATION
Other Financial Information
(a) The company's backlog on March 31, 1996 was $11.5 billion compared to
$10.8 billion on March 31, 1995. The backlog includes $5.9 billion of
commercial orders, $2.3 billion of funded government orders, and
$3.3 billion of unfunded government orders. The increase in 1996's
backlog is principally due to orders of the Semiconductor Systems
business which may reflect, in part, multiple ordering by customers due
to industry capacity constraints. Backlog by major businesses is as
follows (in millions):
March 31 September 30 March 31
1996 1995 1995
Electronics
Automation $ 686 $ 589 $ 647
Avionics 1,358 1,135 1,164
Semiconductor Systems 1,194 1,037 405
Defense Electronics 1,808 1,502 1,281
5,046 4,263 3,497
Aerospace
Space Systems 3,328 3,839 4,575
Aircraft 2,568 2,610 2,158
5,896 6,449 6,733
Automotive 510 563 592
Total Backlog $11,452 $11,275 $10,822
(b) The composition of the company's sales by customer is as follows (in
millions):
Three Months Ended Six Months Ended
March 31 March 31
1996 1995 1996 1995
U.S. Commercial $1,285 $1,223 $2,548 $2,036
International 1,279 1,020 2,321 1,858
U.S. Government:
DOD 468 549 883 1,010
NASA 390 365 732 712
Total $3,422 $3,157 $6,484 $5,616
<PAGE>
EXHIBIT 11
ROCKWELL INTERNATIONAL CORPORATION
COMPUTATION OF EARNINGS PER SHARE
Three Months Ended Six Months Ended
March 31 March 31
1996 1995 1996 1995
(In millions, except per share amounts)
Primary earnings per share:
Income from continuing operations... $212.2 $179.2 $405.8 $334.3
Deduct dividend requirements
on preferred stock................ - - 0.1 0.1
Total primary earnings from
continuing operations............. $212.2 $179.2 $405.7 $334.2
Average number of common shares
outstanding during the period..... 217.3 217.0 217.2 217.5
Primary earnings per share from
continuing operations............. $ .97 $ .82 $ 1.87 $ 1.54
Primary earnings per share from
discontinued operations........... .01 .06 - .10
Net primary earnings per share ..... $ .98 $ .88 $ 1.87 $ 1.64
Fully diluted earnings per share:
Income from continuing operations... $212.2 $179.2 $405.8 $334.3
Average number of common shares
outstanding during the period
assuming full dilution:
Common stock................... 217.3 217.0 217.2 217.5
Assumed issuance of stock under
award plans and conversion of
preferred stock.............. 4.1 4.1 3.8 4.2
Total fully diluted shares.......... 221.4 221.1 221.0 221.7
Fully diluted earnings from
continuing operations............. $ .96 $ .81 $ 1.84 $ 1.51
Fully diluted earnings per share
from discontinued operations...... .01 .06 - .10
Net fully diluted earnings
per share......................... $ .97 $ .87 $ 1.84 $ 1.61
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
In July 1995, a federal grand jury impaneled by the United States
District Court for the Central District of California began an
investigation into a July 1994 explosion at the Santa Susana Field
Laboratory operated by the company's Rocketdyne Division in which two
scientists were killed and a technician was injured. On
April 11, 1996, pursuant to an agreement between the company and the
United States Attorney for the Central District of California, the
company entered a plea of guilty to two counts of unpermitted
disposal of hazardous waste and one count of unpermitted storage of
hazardous waste, all of which are felony violations of the Resource
Conservation and Recovery Act, and paid a fine of $6,500,000 to
settle potential federal criminal claims arising out of the
government's investigation. While this disposition of the matter
provides a basis for the Department of Defense to determine that the
company is not a responsible contractor and suspend the company or
the Rocketdyne Division from bidding on government contracts, the
company believes it is a responsible contractor and is discussing an
Administrative Agreement with the Air Force under which neither
Rocketdyne nor the company would be suspended or debarred.
On February 27, 1996, two shareowners, purporting to act derivatively
on behalf of the company, commenced an action in the Superior Court
of the State of California for the County of Los Angeles against all
of the company's present directors, one former director, and the
company as a nominal defendant, alleging principally breaches of
fiduciary duties in failing properly to manage the business of the
company in a manner to prevent certain alleged violations of
applicable federal and state laws, including environmental laws, by
certain named and unnamed employees or agents of the company. The
action seeks a declaratory judgment, damages suffered by the company
as a result of the alleged conduct, plaintiffs' costs and expenses
and other proper relief. This suit is largely duplicative of the
shareowner derivative suit filed in the Superior Court of the State
of California for the County of Orange disclosed in the company's
quarterly report on Form 10-Q for the quarterly period ended
December 31, 1995.
Item 4. Submission of Matters to a Vote of Security Holders
(a) The regular annual meeting of shareowners of the registrant was
held February 7, 1996.
(c) At the annual meeting, the shareowners:
(i) voted to elect 13 directors of the company. Each nominee
for director was elected by a vote of the shareowners as
follows:
<PAGE>
PART II. OTHER INFORMATION (CONTINUED)
Item 4. Submission of Matters to a Vote of Security Holders (Continued)
Affirmative Votes
Votes Withheld
Lew Allen, Jr. 405,404,696 6,370,023
Donald R. Beall 406,168,782 5,605,937
Richard M. Bressler 405,798,959 5,975,760
John J. Creedon 405,013,438 6,761,281
Don H. Davis, Jr. 406,364,573 5,410,146
Judith L. Estrin 405,456,742 6,317,977
William H. Gray, III 404,602,129 7,172,590
J. Clayburn La Force, Jr. 405,795,109 5,979,610
William T. McCormick, Jr. 406,462,056 5,312,663
John D. Nichols 406,128,126 5,646,593
Bruce M. Rockwell 406,255,188 5,519,531
William S. Sneath 405,583,200 6,191,519
Joseph F. Toot, Jr. 406,121,027 5,653,692
(ii) voted upon a proposal to approve the selection by the
Board of Directors of the firm of Deloitte & Touche LLP as
auditors of the company. The proposal was approved by a
vote of the shareowners as follows:
Affirmative votes 403,720,633
Negative votes 3,707,140
Abstentions 4,346,946
(iii) voted upon a proposal to approve the adoption by the Board
of Directors of the Annual Incentive Compensation Plan for
Senior Executive Officers. The proposal was approved by a
vote of the shareowners as follows:
Affirmative votes 363,904,278
Negative votes 33,414,245
Abstentions 14,456,196
(iv) voted upon a proposal to approve the adoption by the Board
of Directors of an amendment to the Directors Stock Plan.
The proposal was approved by a vote of the shareowners as
follows:
Affirmative votes 361,967,344
Negative Votes 34,656,103
Abstentions 15,151,272
<PAGE>
PART II. OTHER INFORMATION (CONTINUED)
Item 5. Other Information
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.
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 the company's
claims against the U.S. Government arising out of the government's
termination of contracts for its convenience and certain contractual
disputes. 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.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit 10-a - Copy of Restricted Stock Agreement dated
February 7, 1996 between the company and
William H. Gray, III
Exhibit 10-b - Copy of Restricted Stock Agreement dated
February 7, 1996 between the company and
J. Clayburn La Force, Jr.
Exhibit 10-c - Copy of Restricted Stock Agreement dated
February 7, 1996 between the company and
William T. McCormick, Jr.
Exhibit 10-d - Form of Stock Option Agreement under the
company's Directors Stock Plan
<PAGE>
PART II. OTHER INFORMATION (CONTINUED)
Item 6. Exhibits and Reports on Form 8-K (Continued)
Exhibit 11 - Computation of Earnings Per Share
Exhibit 12 - Computation of Ratio of Earnings to Fixed
Charges for the six months ended March 31,
1996.
Exhibit 27 - Financial Data Schedule
Exhibit 99-a - Succession Agreement dated March 25, 1996
among Allen-Bradley Company Inc.,
Kenneth W. Krueger and NBD Bank, as Successor
Trustee of the trust funds under the
Allen-Bradley Savings and Investment Plans
Exhibit 99-b - Master Defined Contribution Trust Agreement
effective January 1, 1996 between The Employee
Benefit Committee of Rockwell International
Corporation and First Interstate Bank of
California
(b) Reports on Form 8-K:
There were no reports on Form 8-K filed during the quarter ended
March 31, 1996.
<PAGE>
SIGNATURES
Pursuant to the requirements 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
(Registrant)
Date May 9, 1996 By L. J. Komatz
L. J. Komatz
Vice President and Controller
(Principal Accounting Officer)
Date May 9, 1996 By W. J. Calise, Jr.
W. J. Calise, Jr.
Senior Vice President,
General Counsel and Secretary
<PAGE>
ROCKWELL INTERNATIONAL CORPORATION
INDEX OF EXHIBITS TO FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996
Page
Exhibit 10-a Copy of Restricted Stock Agreement dated 21
February 7, 1996 between the company and
William H. Gray, III
Exhibit 10-b Copy of Restricted Stock Agreement dated 25
February 7, 1996 between the company and
J. Clayburn La Force, Jr.
Exhibit 10-c Copy of Restricted Stock Agreement dated 29
February 7, 1996 between the company and
William T. McCormick, Jr.
Exhibit 10-d Form of Stock Option Agreement under the 33
company's Directors Stock Plan
Exhibit 12 Computation of Ratio of Earnings to Fixed 47
Charges for the six months ended March 31,
1996
Exhibit 99-a Succession Agreement dated March 25, 1996 49
among Allen-Bradley Company Inc.,
Kenneth W. Krueger and NBD Bank, as Successor
Trustee of the trust funds under the
Allen-Bradley Savings and Investment Plans
Exhibit 99-b Master Defined Contribution Trust Agreement 54
effective January 1, 1996 between The Employee
Benefit Committee of Rockwell International
Corporation and First Interstate Bank of
California
-20-
ROCKWELL INTERNATIONAL CORPORATION
RESTRICTED STOCK AGREEMENT
To: W. H. Gray, III
In accordance with Section 9 of the Directors Stock Plan, as
amended, of Rockwell International Corporation (the Corporation) and
your election pursuant thereto dated December 30, 1995, 44 shares of
Common Stock of the Corporation have been granted to you today as
restricted stock upon approval by shareowners of amendments to the
Directors Stock Plan in lieu of 25% of the retainer fees payable to you
on January 2, 1996 in respect of your service on the Board of Directors
(the Board) of the Corporation and the Board Committees on which you
serve, valued at the closing price on the New York Stock Exchange --
Composite Transactions (Closing Price) on January 2, 1996 and additional
such shares shall be granted to you as restricted stock on April 1,
1996, July 1, 1996, and October 1, 1996, in lieu of 25% of the retainer
fees otherwise payable to you on those respective dates in respect of
your service on the Board and Committees thereof on which you serve,
valued at the Closing Price on those respective dates (such shares
granted today or to be granted on those respective dates being herein
called Restricted Shares).
The Restricted Shares have been or will be granted to you upon the
following terms and conditions:
1. Earning of Restricted Shares
(a) If (i) you shall continue as a director of the
Corporation until you retire from the Board of Directors (the
Board) of the Corporation under the Board's retirement policy; or
(ii) you shall resign from the Board or cease to be a director of
the Corporation by reason of the antitrust laws, compliance with
the Corporation's conflict of interest policies, death or
disability, then you shall be deemed to have fully earned all the
Restricted Shares subject to this agreement.
(b) If you resign from the Board or cease to be a director
of the Corporation for any other reason, you shall be deemed not
to have earned any of the Restricted Shares and shall have no
further rights with respect thereto unless the Board of Directors
shall determine, in its sole discretion, that you have resigned
from the Board or ceased to be a director by reason of
circumstances that the Board determines not to be adverse to the
best interests of the Corporation.
2. Retention of Certificates for Restricted Shares
Certificates for the Restricted Shares and any dividends or
distributions thereon or in respect thereof that may be paid in
additional shares of Common Stock, other securities of the
Corporation or securities of another entity (Stock Dividends)
shall be delivered to and held by the Corporation, or shall be
registered in book entry form subject to the Corporation's
instructions, until you shall have earned the Restricted Shares in
accordance with the provisions of paragraph 1. To facilitate
- - -21-
implementation of the provisions of this agreement, you undertake
to sign and deposit with the Corporation's Office of the Secretary
a Stock Transfer Power in the form of Attachment 1 hereto with
respect to the Restricted Shares and any Stock Dividends thereon.
3. Dividends and Voting Rights
Notwithstanding the retention by the Corporation of certificates
(or the right to give instructions with respect to shares held in
book entry form) for the Restricted Shares and any Stock
Dividends, you shall be entitled to receive any dividends that may
be paid in cash on, and to vote, the Restricted Shares and any
Stock Dividends held by the Corporation (or subject to its
instructions) in accordance with paragraph 2, unless and until
such shares have been forfeited in accordance with paragraph 5.
4. Delivery of Earned Restricted Shares
As promptly as practicable after you shall have been deemed to
have earned the Restricted Shares in accordance with paragraph 1,
the Corporation shall deliver to you (or in the event of your
death, to your estate or any person who acquires your interest in
the Restricted Shares by bequest or inheritance) the Restricted
Shares, together with any Stock Dividends then held by the
Corporation (or subject to its instructions).
5. Forfeiture of Unearned Restricted Shares
Notwithstanding any other provision of this agreement, if at any
time it shall become impossible for you to earn any of the
Restricted Shares in accordance with this agreement, all the
Restricted Shares, together with any Stock Dividends, then being
held by the Corporation (or subject to its instructions) in
accordance with paragraph 2 shall be forfeited, and you shall have
no further rights of any kind or nature with respect thereto.
Upon any such forfeiture, the Restricted Shares, together with any
Stock Dividends, shall be transferred to Rockwell.
6. Transferability
This grant is not transferable by you otherwise than by will or by
the laws of descent and distribution, and the Restricted Shares,
and any Stock Dividends shall be deliverable, during your
lifetime, only to you.
7. Withholding
The Corporation shall have the right, in connection with the delivery of
the Restricted Shares and any Stock Dividends subject to this agreement,
(i) to deduct from any payment otherwise due by the Corporation to you
or any other person receiving delivery of the Restricted Shares and any
Stock Dividends an amount equal to any taxes required to be withheld by
law with respect to such delivery, (ii) to require you or any other
person receiving such delivery to pay to it an amount sufficient to
provide for any such taxes so required to be withheld or (iii) to sell
such number of the Restricted Shares and any Stock Dividends as may be
necessary so that the net proceeds of such sale shall be an amount
sufficient to provide for any such taxes so required to be withheld.
- - -22-
8. Applicable Law
This agreement and the Corporation's obligation to deliver Restricted
Shares and any Stock Dividends hereunder shall be governed by and
construed and enforced in accordance with the laws of Delaware and the
Federal law of the United States.
ROCKWELL INTERNATIONAL CORPORATION
By:_____________________________________________
W. J. Calise, Jr.
Senior Vice President, General Counsel
and Secretary
Attachment 1 - Stock Transfer Power
Dated: February 7, 1996
Agreed to this 7th day of February, 1996
______________________________________
W. H. Gray, III
Address:
2084 Hunters Crest Way
Vienna, VA 22181
Social Security No.: ###-##-####
- - -23-
Attachment 1
STOCK TRANSFER POWER SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED, I, W. H. Gray, III hereby sell, assign and
transfer unto Rockwell International Corporation (i) the 44 shares (the
Granted Shares) of the Common Stock of Rockwell International
Corporation (the Corporation) standing in my name on the books of the
Corporation evidenced by book entry dated February 7, 1996, granted to
me on that date as Restricted Shares pursuant to the Corporation's
Directors Stock Plan, as amended; (ii) the additional shares (together
with the Granted Shares, the Shares) of the Common Stock of the
Corporation to be granted to me on April 1, 1996, July 1, 1996 and
October 1, 1996 as Restricted Shares pursuant to the Corporation's
Directors Stock Plan, as amended, and to be registered in my name on the
books of the Corporation and evidenced by book entries dated those
respective dates; and (iii) any additional shares of the Corporation's
Common Stock, other securities issued by the Corporation or securities
of another entity (Stock Dividends) distributed, paid or payable on or
in respect of the Shares and Stock Dividends during the period the
Shares and Stock Dividends are held by the Corporation pursuant to a
certain Restricted Stock Agreement dated February 7, 1996, with respect
to the Shares; and I do hereby irrevocably constitute and appoint
______________________________, attorney with full power of substitution
in the premises to transfer the Shares on the books of the Corporation.
Dated: February 7, 1996
______________________________
(Signature)
WITNESS:
____________________________
- - -24-
ROCKWELL INTERNATIONAL CORPORATION
RESTRICTED STOCK AGREEMENT
To: J. Clayburn La Force, Jr.
In accordance with Section 6 of the Directors Stock Plan, as
amended, of Rockwell International Corporation (the Corporation) and
your election pursuant thereto dated December 23, 1995, 400 shares
(Restricted Shares) of Common Stock of the Corporation have been granted
to you today as restricted stock upon your reelection as a director of
the Corporation.
These Restricted Shares have been granted to you today upon the
following terms and conditions:
1. Earning of Restricted Shares
(a) If (i) you shall continue as a director of the
Corporation until you retire from the Board of Directors (the
Board) of the Corporation under the Board's retirement policy; or
(ii) you shall resign from the Board or cease to be a director of
the Corporation by reason of the antitrust laws, compliance with
the Corporation's conflict of interest policies, death or
disability, then you shall be deemed to have fully earned all the
Restricted Shares subject to this agreement.
(b) If you resign from the Board or cease to be a director
of the Corporation for any other reason, you shall be deemed not
to have earned any of the Restricted Shares and shall have no
further rights with respect thereto unless the Board of Directors
shall determine, in its sole discretion, that you have resigned
from the Board or ceased to be a director by reason of
circumstances that the Board determines not to be adverse to the
best interests of the Corporation.
2. Retention of Certificates for Restricted Shares
Certificates for the Restricted Shares and any dividends or
distributions thereon or in respect thereof that may be paid in
additional shares of Common Stock, other securities of the
Corporation or securities of another entity (Stock Dividends)
shall be delivered to and held by the Corporation, or shall be
registered in book entry form subject to the Corporation's
instructions, until you shall have earned the Restricted Shares in
accordance with the provisions of paragraph 1. To facilitate
implementation of the provisions of this agreement, you undertake
to sign and deposit with the Corporation's Office of the Secretary
a Stock Transfer Power in the form of Attachment 1 hereto with
respect to the Restricted Shares and any Stock Dividends thereon.
- - -25-
3. Dividends and Voting Rights
Notwithstanding the retention by the Corporation of certificates
(or the right to give instructions with respect to shares held in
book entry form) for the Restricted Shares and any Stock
Dividends, you shall be entitled to receive any dividends that may
be paid in cash on, and to vote, the Restricted Shares and any
Stock Dividends held by the Corporation (or subject to its
instructions) in accordance with paragraph 2, unless and until
such shares have been forfeited in accordance with paragraph 5.
4. Delivery of Earned Restricted Shares
As promptly as practicable after you shall have been deemed to
have earned the Restricted Shares in accordance with paragraph 1,
the Corporation shall deliver to you (or in the event of your
death, to your estate or any person who acquires your interest in
the Restricted Shares by bequest or inheritance) the Restricted
Shares, together with any Stock Dividends then held by the
Corporation (or subject to its instructions).
5. Forfeiture of Unearned Restricted Shares
Notwithstanding any other provision of this agreement, if at any
time it shall become impossible for you to earn any of the
Restricted Shares in accordance with this agreement, all the
Restricted Shares, together with any Stock Dividends, then being
held by the Corporation (or subject to its instructions) in
accordance with paragraph 2 shall be forfeited, and you shall have
no further rights of any kind or nature with respect thereto.
Upon any such forfeiture, the Restricted Shares, together with any
Stock Dividends, shall be transferred to Rockwell.
6. Transferability
This grant is not transferable by you otherwise than by will or by
the laws of descent and distribution, and the Restricted Shares,
and any Stock Dividends shall be deliverable, during your
lifetime, only to you.
7. Withholding
The Corporation shall have the right, in connection with the
delivery of the Restricted Shares and any Stock Dividends subject
to this agreement, (i) to deduct from any payment otherwise due by
the Corporation to you or any other person receiving delivery of
the Restricted Shares and any Stock Dividends an amount equal to
any taxes required to be withheld by law with respect to such
delivery, (ii) to require you or any other person receiving such
delivery to pay to it an amount sufficient to provide for any such
taxes so required to be withheld or (iii) to sell such number of
the Restricted Shares and any Stock Dividends as may be necessary
so that the net proceeds of such sale shall be an amount
sufficient to provide for any such taxes so required to be
withheld
- - -26-
8. Applicable Law
This agreement and the Corporation's obligation to deliver
Restricted Shares and any Stock Dividends hereunder shall be
governed by and construed and enforced in accordance with the laws
of Delaware and the Federal law of the United States.
ROCKWELL INTERNATIONAL CORPORATION
By:_____________________________________________
W. J. Calise, Jr.
Senior Vice President, General
Counsel
and Secretary
Attachment 1 - Stock Transfer Power
Dated: February 7, 1996
Agreed to this 7th day of February, 1996
______________________________________
J. Clayburn La Force, Jr.
Address: P. O. Box 1595
Pauma Valley, CA 92061
Social Security No.: ###-##-####
- - -27-
Attachment 1
STOCK TRANSFER POWER SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED, I, J. Clayburn La Force, Jr., hereby sell,
assign and transfer unto Rockwell International Corporation (i) the 400
shares (the Shares) of the Common Stock of Rockwell International
Corporation (the Corporation) standing in my name on the books of the
Corporation evidenced by book entry dated February 7, 1996, granted to
me on that date as Restricted Shares pursuant to the Corporation's
Directors Stock Plan, as amended, and (ii) any additional shares of the
Corporation's Common Stock, other securities issued by the Corporation
or securities of another entity (Stock Dividends) distributed, paid or
payable on or in respect of the Shares and Stock Dividends during the
period the Shares and Stock Dividends are held by the Corporation
pursuant to a certain Restricted Stock Agreement dated February 7, 1996,
with respect to the Shares; and I do hereby irrevocably constitute and
appoint ______________________________, attorney with full power of
substitution in the premises to transfer the Shares on the books of the
Corporation.
Dated: February 7, 1996
______________________________
(Signature)
WITNESS:
____________________________
- - -28-
ROCKWELL INTERNATIONAL CORPORATION
RESTRICTED STOCK AGREEMENT
To: W. T. McCormick, Jr.
In accordance with Section 6 of the Directors Stock Plan, as
amended, of Rockwell International Corporation (the Corporation) and
your election pursuant thereto dated December, 1995, 400 shares
(Restricted Shares) of Common Stock of the Corporation have been granted
to you today as restricted stock upon your reelection as a director of
the Corporation.
These Restricted Shares have been granted to you today upon the
following terms and conditions:
1. Earning of Restricted Shares
(a) If (i) you shall continue as a director of the
Corporation until you retire from the Board of Directors (the
Board) of the Corporation under the Board's retirement policy; or
(ii) you shall resign from the Board or cease to be a director of
the Corporation by reason of the antitrust laws, compliance with
the Corporation's conflict of interest policies, death or
disability, then you shall be deemed to have fully earned all the
Restricted Shares subject to this agreement.
(b) If you resign from the Board or cease to be a director
of the Corporation for any other reason, you shall be deemed not
to have earned any of the Restricted Shares and shall have no
further rights with respect thereto unless the Board of Directors
shall determine, in its sole discretion, that you have resigned
from the Board or ceased to be a director by reason of
circumstances that the Board determines not to be adverse to the
best interests of the Corporation.
2. Retention of Certificates for Restricted Shares
Certificates for the Restricted Shares and any dividends or
distributions thereon or in respect thereof that may be paid in
additional shares of Common Stock, other securities of the
Corporation or securities of another entity (Stock Dividends)
shall be delivered to and held by the Corporation, or shall be
registered in book entry form subject to the Corporation's
instructions, until you shall have earned the Restricted Shares in
accordance with the provisions of paragraph 1. To facilitate
implementation of the provisions of this agreement, you undertake
to sign and deposit with the Corporation's Office of the Secretary
a Stock Transfer Power in the form of Attachment 1 hereto with
respect to the Restricted Shares and any Stock Dividends thereon.
- - -29-
3. Dividends and Voting Rights
Notwithstanding the retention by the Corporation of certificates
(or the right to give instructions with respect to shares held in
book entry form) for the Restricted Shares and any Stock
Dividends, you shall be entitled to receive any dividends that may
be paid in cash on, and to vote, the Restricted Shares and any
Stock Dividends held by the Corporation (or subject to its
instructions) in accordance with paragraph 2, unless and until
such shares have been forfeited in accordance with paragraph 5.
4. Delivery of Earned Restricted Shares
As promptly as practicable after you shall have been deemed to
have earned the Restricted Shares in accordance with paragraph 1,
the Corporation shall deliver to you (or in the event of your
death, to your estate or any person who acquires your interest in
the Restricted Shares by bequest or inheritance) the Restricted
Shares, together with any Stock Dividends then held by the
Corporation (or subject to its instructions).
5. Forfeiture of Unearned Restricted Shares
Notwithstanding any other provision of this agreement, if at any
time it shall become impossible for you to earn any of the
Restricted Shares in accordance with this agreement, all the
Restricted Shares, together with any Stock Dividends, then being
held by the Corporation (or subject to its instructions) in
accordance with paragraph 2 shall be forfeited, and you shall have
no further rights of any kind or nature with respect thereto.
Upon any such forfeiture, the Restricted Shares, together with any
Stock Dividends, shall be transferred to Rockwell.
6. Transferability
This grant is not transferable by you otherwise than by will or by
the laws of descent and distribution, and the Restricted Shares,
and any Stock Dividends shall be deliverable, during your
lifetime, only to you.
7. Withholding
The Corporation shall have the right, in connection with the
delivery of the Restricted Shares and any Stock Dividends subject
to this agreement, (i) to deduct from any payment otherwise due by
the Corporation to you or any other person receiving delivery of
the Restricted Shares and any Stock Dividends an amount equal to
any taxes required to be withheld by law with respect to such
delivery, (ii) to require you or any other person receiving such
delivery to pay to it an amount sufficient to provide for any such
taxes so required to be withheld or (iii) to sell such number of
the Restricted Shares and any Stock Dividends as may be necessary
so that the net proceeds of such sale shall be an amount
sufficient to provide for any such taxes so required to be
withheld
- - -30-
8. Applicable Law
This agreement and the Corporation's obligation to deliver
Restricted Shares and any Stock Dividends hereunder shall be
governed by and construed and enforced in accordance with the laws
of Delaware and the Federal law of the United States.
ROCKWELL INTERNATIONAL CORPORATION
By:_____________________________________________
W. J. Calise, Jr.
Senior Vice President, General
Counsel
and Secretary
Attachment 1 - Stock Transfer Power
Dated: February 7, 1996
Agreed to this 7th day of February, 1996
______________________________________
W. T. McCormick, Jr.
Address: 205 Lakeshore Drive
Grosse Pointe Farms, MI 48236
Social Security No.: ###-##-####
- - -31-
Attachment 1
STOCK TRANSFER POWER SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED, I, W. T. McCormick, Jr., hereby sell, assign
and transfer unto Rockwell International Corporation (i) the 400 shares
(the Shares) of the Common Stock of Rockwell International Corporation
(the Corporation) standing in my name on the books of the Corporation
evidenced by book entry dated February 7, 1996, granted to me on that
date as Restricted Shares pursuant to the Corporation's Directors Stock
Plan, as amended, and (ii) any additional shares of the Corporation's
Common Stock, other securities issued by the Corporation or securities
of another entity (Stock Dividends) distributed, paid or payable on or
in respect of the Shares and Stock Dividends during the period the
Shares and Stock Dividends are held by the Corporation pursuant to a
certain Restricted Stock Agreement dated February 7, 1996, with respect
to the Shares; and I do hereby irrevocably constitute and appoint
______________________________, attorney with full power of substitution
in the premises to transfer the Shares on the books of the Corporation.
Dated: February 7, 1996
______________________________
(Signature)
WITNESS:
____________________________
- - -32-
ROCKWELL INTERNATIONAL CORPORATION
DIRECTORS STOCK 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) Committee: The Compensation and Management Development Committee
of the Board of Directors of Rockwell.
(c) Director: A member of the Board of Directors of Rockwell.
(d) Options: The stock options listed in the first paragraph of the
letter dated February 7, 1996 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.
(e) Option Shares: The shares of Rockwell Common Stock issuable or
transferable on exercise of the Options.
(f) Plan: Rockwell's Directors Stock Plan, as amended and as such Plan
may be further amended and in effect at the relevant time.
(g) Preliminary Payment: Defined in Section 3(d)(i).
(h) Rockwell: Rockwell International Corporation, a Delaware
corporation.
(i) Shares: Shares of Rockwell Common Stock or Class A Common Stock.
(j) Stock Option Agreement: These Stock Option Terms and Conditions
together with the letter dated February 7, 1996 to which they are
attached.
- - -33-
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 to the nearest whole number) of the Option Shares during the
period beginning on February 7, 1997 and ending on February 7, 2006, as
to an additional one-third (rounded to the nearest whole number) of the
Option Shares during the period beginning on February 7, 1998 and ending
on February 7, 2006 and as to the balance of the Option Shares during the
period beginning on February 7, 1999 and ending on February 7, 2006, and
only during those periods, provided that:
(a) if you die while a Director, 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 or on
February 7, 2006 if earlier;
(b) if you retire as a Director at or after age 72 or at an earlier age
but after completing at least 10 years of service as a Director,
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 not theretofore exercised within (and only within) the
period beginning on your retirement date (even if you retire before
you have become entitled to exercise all or any part of the
Options) and ending five years thereafter or on February 7, 2006 if
earlier;
(c) if your service as a Director terminates as a result of your
disability or as a result of your resignation for reasons of the
antitrust laws, compliance with Rockwell's conflict of interest
policies or other circumstances that the Committee may determine as
serving the best interests of Rockwell, you (or if you die after
termination of your service as a Director, 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 not theretofore exercised that are exercisable on the date
your service as a Director terminates within (and only within) such
period, if any, after your termination date as the Committee may
determine by action taken not more than 60 days after your
termination date, which period shall in no event end more than five
years after your termination date or on February 7, 2006 if
earlier;
(d) if your service as a Director terminates for any other reason, the
Options shall terminate forthwith on the date of termination of
your service as a Director and shall not be exercised thereafter;
- - -34-
and provvided, further, that notwithstanding any other provision of the
Stock Option Agreement, 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 of Rockwell shall
have determined otherwise by a vote of at least two-thirds of its
members, all the remaining Options shall become fully exercisable whether
or not otherwise then exercisable and shall be and remain exercisable for
the applicable period hereinabove in this Section 2 provided.
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
entirely in cash; or
in Shares; or
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 (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
Option Exercise Form, duly completed, dated and signed,
(II) full payment of the exercise price for the Option
Shares purchased pursuant to that Approved Option
Exercise Form and (III) any documents required pursuant
to Section 3(a)(iii), or (y) if later, the date of such
Approved Option Exercise Form (provided you, or after
your death, the person entitled to exercise the
Options, or any person to whom you have transferred the
- - -35-
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 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
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 Option 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 Option 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 delivering
to the Secretary of Rockwell a check in the full
amount of the exercise price for those Option Shares; or
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 Option Exercise Form, duly completed, dated
and signed, or if later, within five business days after the date
of such Approved Option 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
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
- - -36-
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
Option Exercise Form for such exercise, or (y)
if later, the date of such Approved Option
Exercise Form, would be sufficient to pay in
full the exercise price of those Option Shares;
or
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 received the Approved Option Exercise Form
for such exercise, or (y) if later, the date of
such Approved Option 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 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 Option 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 Option Exercise Form is dated on or prior to the date
- - -37-
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 Option
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 Option
Exercise Form, or (ii) if later, the date of such Approved Option
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 any 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) 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 family" shall mean your spouse and natural,
adopted or step- children and grandchildren.
5. Withholding
- - -38-
Rockwell shall have the right, in connection with the exercise of the
Options in whole or in part, to require you (or any other person entitled
to exercise the Options) to pay to it an amount sufficient to provide for
any taxes required to be withheld by law with respect to such exercise.
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. Federal Securities Law Compliance
Rockwell shall have the right, in connection with the exercise of the
Options in whole or in part, to require that you (or any other person
entitled to exercise the Options), as a condition to any exercise of the
Options, deliver a written representation that the shares to be delivered
upon such exercise are being acquired for investment and not with a view
to their resale in a distribution within the meaning of the Securities
Act of 1933, as amended, if the shares to be delivered have not been
registered under that Act.
7. 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.
8. 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.
9. 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
- - -39-
ATTACHMENT 1
CASH ONLY STOCK OPTION EXERCISE FORM
DIRECTORS STOCK PLAN
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 Directors
Stock Plan (the Plan) of Rockwell International Corporation (Rockwell), and
Agreement(s) thereunder, I hereby exercise the following stock option(s):
Date of Grant Number Of Shares Exercise Price Total Purchase
Price
$ $
$ $
$ $
2. 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
International Corporation to the account specified by the Secretary's
Office
[Continued on page 2]
- - -40-
Cash Only Stock Option Exercise
Form
Page 2
(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 any amounts due or which may become due me to satisfy my
obligation to pay the Total Purchase Price.
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 any withholding taxes required to be withheld and
remitted to taxing authorities in respect of this exercise.
4. REGISTRATION: Please register the stock 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.
[Continued and to be signed on page 3]
- - -41-
Cash Only Stock Option Exercise Form
Page 3
5. DELIVERY: Please deliver the stock to
me at the address listed in Item 4.
to the following person and address:
Name of 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
- - -42-
ATTACHMENT 2
"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 Directors
Stock Plan of Rockwell International Corporation (Rockwell), and Agreement(s)
thereunder, I hereby exercise the following stock option(s):
Date of Grant Number Of Shares Exercise Price Total Purchase
Price
$ $
$ $
$ $
2. 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
[Continued on page 2]
- - -43-
"Stock Swap" Stock Option Exercise Form
Page 2
(y) if later, the date of this 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 any 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 any withholding taxes required to be withheld and remitted to
taxing authorities in respect of this exercise in accordance with this
paragraph, Rockwell 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]
- - -44-
"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 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
- - -45-
"Stock Swap" Stock Option Exercise
Form
Page 4
STOCK TRANSFER POWER SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED, (I) (WE), _______________________________ hereby
(insert name(s))
sell, assign and transfer unto Rockwell International Corporation the
__________________________ shares of the [Common Stock] [Class A Common Stock]
(insert number) of Rockwell International Corporation standing in the
name(s) of _________________________________ on the books of said Rockwell
(name on certificate(s)) 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)
- - -46-
Exhibit 12
ROCKWELL INTERNATIONAL CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
SIX MONTHS ENDED MARCH 31, 1996
(In millions, except ratio)
EARNINGS AVAILABLE FOR FIXED CHARGES:
Income from continuing operations before income taxes..... $ 666.0
Adjustments:
Undistributed income of affiliates..................... (4.3)
Minority interest in loss of subsidiaries.............. 4.8
666.5
Add fixed charges included in earnings:
Interest expense....................................... 97.0
Interest element of rentals............................ 34.5
131.5
Total earnings available for fixed charges................ $ 798.0
FIXED CHARGES:
Fixed charges included in earnings........................ $ 131.5
Capitalized interest...................................... 1.6
Total fixed charges.................................... $ 133.1
RATIO OF EARNINGS TO FIXED CHARGES (1)....................... 6.0
(1) In computing the ratio of earnings to fixed charges, earnings are
defined as income from continuing operations before income taxes
adjusted for minority interest in income or loss of subsidiaries,
undistributed earnings of affiliates, and fixed charges exclusive
of capitalized interest. Fixed charges consist of interest on
borrowings and that portion of rentals deemed representative of
the interest factor.
- - -47-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE MARCH
31, 1996 CONSOLIDATED BALANCE SHEET, STATEMENT OF CONSOLIDATED INCOME FOR THE
SIX MONTHS ENDED MARCH 31, 1996 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> 6-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> MAR-31-1996
<CASH> 583
<SECURITIES> 0
<RECEIVABLES> 2398
<ALLOWANCES> 81
<INVENTORY> 2006
<CURRENT-ASSETS> 6088
<PP&E> 2944
<DEPRECIATION> 0
<TOTAL-ASSETS> 12350
<CURRENT-LIABILITIES> 3704
<BONDS> 1764
0
1
<COMMON> 241
<OTHER-SE> 3808
<TOTAL-LIABILITY-AND-EQUITY> 12350
<SALES> 6484
<TOTAL-REVENUES> 6558
<CGS> 4911
<TOTAL-COSTS> 5892
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 97
<INCOME-PRETAX> 666
<INCOME-TAX> 261
<INCOME-CONTINUING> 405
<DISCONTINUED> 1
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 406
<EPS-PRIMARY> 1.87
<EPS-DILUTED> 1.84
</TABLE>
SUCCESSION AGREEMENT
The parties to this Agreement are Allen-Bradley Company, Inc. a
Wisconsin corporation ("Employer"), Kenneth W. Krueger ("Prior
Trustee"), and NBD Bank, a State of Michigan banking corporation
("Successor Trustee"),
WHEREAS, the Employer and the Prior Trustee previously entered
into a trust agreement dated December 1, 1981 ("the Trust Agreement")
pursuant to which the Employer designated the Prior Trustee as trustee
of the trust fund under the Allen-Bradley Savings and Investment Plan
for Salaried Employees and the Allen-Bradley Savings and Investment Plan
for Hourly Employees (together called "the Plan"),
WHEREAS, the Employer has determined to remove the Prior Trustee
as trustee of a portion of the trust (such portion to be called the NBD
Trust) under the Plan and to appoint the Successor Trustee as trustee.
The parties are desirous of providing for such succession by the terms
of this Agreement, to be effective October 1, 1995 ("Succession Date"),
NOW, THEREFORE, the Employer, the Prior Trustee, and the Successor
Trustee agree as follows:
1. Succession of Trustee.
As of the Succession Date, the Successor Trustee shall be deemed
to have succeeded the Prior Trustee as trustee of a certain portion of
the Plan under the Plan and the Prior Trustee shall thereafter function
only as contemplated by this Agreement and as may reasonably determine
to be necessary or advisable in order that the trustee succession may be
accomplished in an orderly and expeditious manner. To the extent
applicable and necessary, the Successor Trustee shall act in the manner
consistent with the provisions of the Trust Agreement, which is
incorporated herein by reference.
- - -49-
2. Transfer of Assets.
The prior trustee held no assets which are subject to the terms of
this Agreement.
3. Transfer of Subsequent Receipts
The parties recognize that after the Succession Date, the Prior
Trustee may continue to receive for an indeterminate period, income or
other proceeds of the trust fund, or that portion which the Prior
Trustee previously shall have transferred to the Successor Trustee, and
it is contemplated that the Prior Trustee shall effect transfer of such
additional receipts to the Successor Trustee at such time or times, not
exceeding 30 days after receipts, as the Prior Trustee shall determine
to be reasonable.
4. Reports of Prior Trustee
Since the Prior Trustee held no assets that were subject to the
terms of this Agreement, the Prior Trustee shall not be required to
provide any reports to the Successor Trustee concerning its prior trust
administration.
5. Responsibility of Successor Trustee
The Successor Trustee shall become responsible for the trust fund
under the Plan only when the same shall have been received by it, and
shall not be required or obliged to proceed against the Prior Trustee or
any other person to acquire assets of the plan or be under any duty to
inquire into the administration of the trust by the Prior Trustee. The
Successor Trustee shall not be responsible, and is hereby relieved and
absolved from responsibility and liability, for any act or omission of
the Prior Trustee in his administration of the trust fund prior to the
Succession Date. The Successor Trustee shall invest the principal and
income of the NBD Trust , without direction and without distinction
between principal and income of said NBD Trust, which has not been
segregated in an Investment Manager Account or accounts, 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 men of
- - -50-
prudence, acting in a like capacity and familiar with such matters would
use in the conduct of an enterprise of a like character and with like
aims, as the Successor Trustee shall in its discretion determine,
provided that the Successor Trustee shall not invest such principal and
income in any security issued by Rockwell International Corporation.
Notwithstanding any other provision of this Agreement, up to 10% of the
contributions made to the NBD Trust may, to the extent permitted by the
Employer, be invested by the Successor Trustee in any special investment
fund maintained by the Successor Trustee designed to offer unusual
possibilities for growth and capital investment, and specifically within
the contemplation hereof, and notwithstanding any other provision of
this instrument, the persons, natural or legal, who control the
investment of this Trust, may cause any part or all of the assets of
this Trust to be invested collectively with the money and other assets
of trusts created by others by causing such money and other assets to be
invested as part of any common, collective or commingled trust fund, as
the same may have heretofore been or may hereafter be established by the
Successor Trustee, which is qualified under the provisions of Section
401(a) and exempt under the provisions of Section 501(a) of the Internal
Revenue Code of 1986, as the same may be amended. The money and other
assets of this Trust so added to any such common, collective or
commingled trust fund maintained by the Successor Trustee shall be
subject to all of the provisions of the Declaration of Trust, as the
same may be amended, under which any such common, collective or
commingled trust fund shall be maintained, and for the period of any
such collective investment of assets of this Trust such declaration of
Trust, as the same may be amended, shall constitute a part of this
instrument. The Successor Trustee shall have the sole responsibility
with respect to selecting, making and retaining investments. The
provisions of this paragraph 5 shall have the same force and effect as
though set forth in the Trust Agreement between the Employer and the
Prior Trustee.
6. Advice of Counsel; Indemnification.
The Trustee may consult with counsel (who may be counsel for the
Employer or for the Trustee in its corporate capacity), and the trustee
- - -51-
shall not be deemed imprudent by reason of its taking or refraining from
taking any action in accordance with the opinion of counsel. The
Employer agrees, to the extent permitted by law, to fully and forever
indemnify and hold the Trustee harmless from and against any claims,
damages, losses, costs and expenses, including reasonable attorneys
fees, that the Trustee may incur in the administration of the trust
fund, unless arising from the Trustee's own negligent or willful breach
of the provisions of this Agreement. Such indemnity shall survive the
removal or resignation of the Trustee and the termination of this
Agreement. The Trustee shall not be required to give any bond or any
other security for the faithful performance of its duties under this
Agreement, except such as may be required by any law which prohibits the
waiver thereof.
7. Trustee Not a Party to the Plan; Conflicting Terms.
The Trustee is not a party to the Plan and shall not have any
obligations or liabilities thereunder. The terms of the Agreement shall
prevail over any conflicting provisions of any Plan.
8. Michigan Law.
The Agreement and the trust created with the Successor Trustee
shall be construed, regulated and administered under the laws of the
State of Michigan, and the Successor Trustee shall be liable to account
only in the courts of such State.
9. Further Instruments and Acts.
The parties agree to execute and deliver any and all further
instruments, and to perform any and all further acts, which may be
necessary or desirable for the accomplishment of the purposes of this
Agreement.
10. Acceptance of Trust.
By execution of this Agreement, the Successor Trustee signifies
its acceptance, as Successor Trustee, of the terms and conditions of the
trust and of the Plan as it pertains to the trust, and the Employer
designates the Successor Trustee as Successor Trustee under the Plan.
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IN WITNESS WHEREOF, this Agreement has been signed by or on behalf
of the respective parties on ______________________, 1996.
ALLEN-BRADLEY COMPANY, INC.
____________________________ By: _____________________________
Witness Kenneth W. Krueger
Vice President
PRIOR TRUSTEE
____________________________ ______________________________
Witness Kenneth W. Krueger
NBD BANK
SUCCESSOR TRUSTEE
- - ---------------------------- By ______________________________
Witness
- - -53-
MASTER DEFINED CONTRIBUTION TRUST AGREEMENT
by and between
THE EMPLOYEE BENEFIT COMMITTEE
of
ROCKWELL INTERNATIONAL CORPORATION
and
FIRST INTERSTATE BANK OF CALIFORNIA
- - -54-
MASTER DEFINED CONTRIBUTION TRUST AGREEMENT
THIS MASTER TRUST AGREEMENT made and entered into on this 12th day
of January, 1996, effective as of January 1, 1996, by and between the Employee
Benefit Committee of Rockwell International Corporation (hereinafter referred
to as the "Benefit Committee"), and First Interstate Bank of California, a
California corporation having its principal place of business at Los Angeles,
California (hereinafter referred to as the "Master Trustee"),
WITNESSETH:
WHEREAS, the Benefit Committee has the power to appoint trustees,
select Investment Managers, adopt and establish an investment method or
policy, and approve, execute, amend and terminate trust agreements with
respect to all defined contribution plans of the Controlled Group; and
WHEREAS, the Benefit Committee desires to establish a master trust
which will serve as a funding medium for eligible employee benefit plans of
the Corporation; and
WHEREAS, the Master Trustee is willing to act as Master Trustee of
such trust upon all of the terms and conditions hereinafter set forth; and
WHEREAS, the Benefit Committee and the Master Trustee wish to
amend those trust agreements referred to in Appendix A hereto (the "Prior
Agreements") so that this Agreement shall be deemed to supersede all such
Prior Agreements and so that all the separate trusts established by the Prior
Agreements shall be deemed consolidated into the master trust established
hereby;
- - -55-
NOW, THEREFORE, the Benefit Committee and the Master Trustee
declare and agree that the Master Trustee will receive, hold and administer
all sums of money and such other property acceptable to Master Trustee as
shall from time to time be contributed, paid or delivered to it hereunder, IN
TRUST, upon all of the following terms and conditions.
SECTION 1
General
1.1 Definitions. Where used in this Agreement, unless the context
otherwise requires or unless otherwise expressly provided:
(a) "Account Party" shall mean a delegate of the Benefit Committee
designated to represent the Benefit Committee for this purpose, the Plan
Administrator and any Person to whom the Master Trustee shall be instructed by
the Benefit Committee to deliver its annual account under Section 12.2.
(b) "Accounting Period" shall mean either the twelve consecutive month
period coincident with the calendar year or, if different, the fiscal year of
the Plans or the shorter period in any year in which the Master Trustee
accepts appointment as Master Trustee hereunder or ceases to act as Master
Trustee for any reason.
(d) "Agreement" shall mean all of the provisions of this instrument and of
all other instruments amendatory hereof.
(e) "Asset Manager" shall mean the Master Trustee, Benefit Committee or
other Named Fiduciary or Investment Manager, individually or collectively as
the context shall require, with respect to those assets held in an Investment
Account over which it exercises, or to the extent it is authorized to
exercise, discretionary investment authority or control.
(f) "Bank business day" shall mean a day on which the Master Trustee is
open for business.
(g) "Board of Directors" shall mean the Board of Directors of the
Corporation.
(h) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and Regulations issued thereunder.
(i) "Controlled Group Member" shall mean the Corporation and any
subsidiaries or affiliates which are members of a controlled group of
corporations, a group of trades or businesses under common control, or an
affiliated service group (as defined in Code sections 414(b), (c), and (m),
- - -56-
respectively), or the Corporation and any entity with which it must be
aggregated pursuant to Code section 414(o) and the regulations thereunder.
(j) "Corporation" shall mean Rockwell International Corporation, a
Delaware corporation.
(k) "Directed Fund" shall mean any Investment Account, or part thereof,
subject to the discretionary management and control of the Benefit Committee
or any other Named Fiduciary or any Investment Manager.
(l) "Discretionary Fund" shall mean any Investment Account, or part
thereof, subject to the discretionary management and control of the Master
Trustee.
(m) "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and Regulations issued thereunder.
(n) "Fund" shall mean all cash and property contributed, paid or delivered
to the Master Trustee hereunder, all investments made therewith and proceeds
thereof and all earnings and profits thereon, less payments, transfers or
other distributions which, at the time of reference, shall have been made by
the Master Trustee, as authorized herein. The Fund shall include all
evidences of ownership, interest or participation in an Investment Vehicle,
but shall not, solely by reason of the Fund's investment therein, be deemed to
include any assets of such Investment Vehicle.
(o) "Insurance Contract" shall mean any contract or policy of any kind
issued by an insurance company, whether or not providing for the allocation of
amounts received by the insurance company thereunder solely to the general
account or solely to one or more separate accounts (including separate
accounts maintained for the collective investment of qualified retirement
plans), or a combination thereof, and whether or not any such allocation may
be made in the discretion of the insurance company or the Benefit Committee.
(p) "Investment Account" shall mean each pool of assets in the Master
Trust in which one or more Plans has an interest during an Accounting period.
(q) "Investment Manager" shall mean a bank, insurance company or
investment adviser satisfying the requirements of ERISA section 3(38) which
has provided the Master Trustee with written acknowledgment of compliance with
ERISA.
(r) "Investment Vehicle" shall mean any common, collective or commingled
trust, investment company, corporation functioning as an investment
intermediary, insurance contract, partnership, joint venture or other entity
or arrangement to which, or pursuant to which, assets of the Master Trust may
be transferred or in which the Master Trust has an interest, beneficial or
otherwise (whether or not the underlying assets thereof are deemed to
constitute "plan assets" for any purpose under ERISA).
(s) "Master Trust" shall mean the trust created hereby.
(t) "Named Fiduciary" shall mean the Benefit Committee and such other
fiduciaries with respect to the Plans within the meaning of ERISA section
- - -57-
402(a)(2), 402(c)(3) or 403(a)(1) who has the authority to perform the
separate functions allocated to the "Named Fiduciary" under this Agreement.
(u) "Participating Employer" shall mean the Corporation and any Controlled
Group Member which has adopted this Master Trust with consent of the Board of
Directors.
(v) "Plan" or "Plans" shall mean any employee benefit plan of a
Participating Employer which meets the requirements for eligibility specified
in Section 1.3 and as of the date of this Agreement includes those plans
listed in Appendix B.
(w) "Plan Administrator" shall mean the Person designated by the
Corporation in accordance with the terms of the Plans who is responsible for
benefit administration under the Plans.
(x) "Person" shall mean a natural person, trust, estate, corporation of
any kind or purpose, mutual company, joint-stock company, unincorporated
organization, association, partnership, joint venture, employee organization,
committee, board, participant, beneficiary, Master Trustee, partner, or
venturer acting in an individual, fiduciary or representative capacity, as the
context may require.
(y) "Qualifying Employer Security" shall mean the employer securities as
defined in ERISA section 407(d).
(z) "Valuation Date" shall mean the last day of the Accounting Period,
calendar quarter or any more frequent reporting date agreed to by the Master
Trustee.
The plural of any term shall have a meaning corresponding to the singular
thereof as so defined and any neuter pronoun used herein shall include the
masculine or feminine, as the context shall require.
1.2 Compliance With Law. The Trust hereinafter established is intended to
comply with ERISA and to be tax exempt under Code section 501(a).
1.3 Eligibility. Any employee benefit plan established or maintained by a
Participating Employer may be funded, in whole or in part, through the Master
Trust if (i) the plan is qualified under Code section 401(a), (ii) the Master
Trust is exempt from taxation under Code section 501(a), and (iii) this
Agreement has been duly adopted by the board of directors of the Participating
Employer with the consent of the Corporation.
SECTION 2
Establishment of Trust
2.1 Establishment of Trust. The Benefit Committee hereby establishes with
the Master Trustee the Master Trust consisting of such sums of money and such
property acceptable to the Master Trustee as shall from time to time be paid
or delivered to the Master Trustee.
- - -58-
2.2 Contributions to the Trust. The Master Trustee shall have no duty to
determine or collect contributions under any Plan and shall be solely
accountable for moneys or properties actually received by it. The Benefit
Committee shall have the sole duty and responsibility for the determination of
the accuracy or sufficiency of the contributions to be made under any of the
Plans of a Participating Employer, the transmittal of the contributions to the
Master Trustee and compliance with any statute, regulation or rule applicable
to contributions.
2.3 Prior Administration. The Master Trustee shall not have any duty to
inquire into the administration of the Plans or actions taken under any of the
Plans by any prior trustee.
2.4 Fund to be Held in Trust. The Fund shall be held by the Master
Trustee in trust and dealt with in accordance with the provisions of this
Agreement and ERISA.
2.5 Fund to be Held for Benefit of Plan Participants. Except as may be
provided by law for the purpose of returning any of a Participating Employer's
contributions or in case any Plan of which this Master Trust forms a part
provides for the return of a Participating Employer's contributions in the
event such Plan fails to initially qualify under the applicable provisions of
the Code, at no time prior to the satisfaction of all liabilities for benefits
of any plans under the Master Trust shall any part of the Fund be used for or
diverted to purposes other than for the exclusive benefit of participants,
retired participants, or their beneficiaries under the Plans and for, the
payment of the reasonable expenses of the Plans.
2.6 Commingling. The Master Trustee may commingle the assets attributable
to the Plans for which contributions are made under this Agreement if this
Agreement is applicable to more than one Plan and may commingle the Fund with
funds of other trusts of similar nature created by the Corporation or the
Benefit Committee for the exclusive benefit of participants, retired
participants or their beneficiaries. Where commingling is effected with other
trusts maintained by the Corporation or the Benefit Committee, the combined
trust, to the extent that assets are attributable to contributions made under
this Agreement, shall be the Fund referred to herein. The Master Trustee
shall maintain such records as are necessary in order to maintain a separation
of the Fund from the funds of the other trusts maintained by the Corporation
or the Benefit Committee and to separate the assets attributable to each of
the Plans for which contributions are made under this Agreement. The
Corporation shall be responsible for causing sufficient records to be
maintained to insure that benefits and liabilities payable with respect to
each Plan shall be paid from the assets allocable to each such Plan. Should
separation be required, either of the Fund from other trusts maintained by the
Corporation, or the Benefit Committee, or of any Plan for which contributions
are made under this Agreement from the Fund, the Master Trustee shall make
such separation in accordance with generally accepted accounting principles
and, where applicable, upon the certification of an actuary.
SECTION 3
Administration of the Plan
- - -59-
3.1 Plan Administrator. The Plans shall be administered by the Plan
Administrator who shall have the sole fiduciary duty as to plan administration
and the Master Trustee shall not be responsible in any respect for such
administration.
SECTION 4
Disbursement from the Fund
4.1 Disbursements by Master Trustee. The Master Trustee shall make such
payments out of the Fund as the Plan Administrator or its delegate(s) may from
time to time in writing direct. In the discretion of the Plan Administrator,
such payments may be made directly to the person specified by the Plan
Administrator or deposited in a checking account maintained by the Plan
Administrator for the purpose of making payments to the person, or persons
entitled to such payments under the Plans, or to an account maintained by some
other entity which the Plan Administrator may designate to make payments.
4.2 Direction to the Master Trustee. Any direction given to the Master
Trustee in accordance with this Section need not specify the specific
application of the payment to be made, but shall specify that the payment is
for the purposes of the Plans or the payment of Plans' expenses.
SECTION 5
Allocation of Investment Responsibilities
5.1 Asset Managers. (a) The Benefit Committee will from time to time, in
its sole discretion, appoint one or more Asset Managers to manage specified
portions of the Fund. Upon the appointment of each Asset Manager, the Benefit
Committee shall so notify the Master Trustee and instruct the Master Trustee
in writing to separate into a separate account those assets as to which each
Asset Manager has discretion and control. The Asset Manager shall designate
in writing the person or persons who are to represent any such Asset Manager
in dealings with the Master Trustee. Upon the separation of the assets in
accordance with the instructions of the Benefit Committee, the Master Trustee
shall thereupon be relieved and released of all investment duties,
responsibilities and liabilities normally and statutorily incident to a Master
Trustee as to such Directed Funds, and, as to such Directed Funds, the Master
Trustee shall act as custodian. Except as otherwise provided by the Benefit
Committee in writing from time to time, the Master Trustee shall take no
action as to such Directed Funds with respect to the duties or powers
allocated to an Asset Manager in Section 6 or Section 7 without receipt of
written directions of the Asset Manager. Unless specifically prohibited in
writing, the Master Trustee, as custodian, may hold the assets of such
Directed Funds in the name of a nominee or nominees.
(b) Should an Asset Manager at any time elect to place security
transactions directly with a broker or dealer, the Master Trustee shall not
recognize such transaction unless and until it has received instructions or
confirmation of such fact from the Asset Manager. Should the Asset Manager
direct the Master Trustee to utilize the services of any person with regard to
the assets under its management or control, such instructions shall be in
- - -60-
writing and shall specifically set forth the actions to be taken by the Master
Trustee as to such services.
(c) In the event that an Asset Manager places security transactions
directly or directs the utilization of a service, the Asset Manager shall be
solely responsible for the acts of such persons. The sole duty of the Master
Trustee as to such transactions shall be incident to its duties as custodian.
5.2 Transfer of Assets to Asset Managers. (a) Upon receipt of written
directions by the Benefit Committee, the Master Trustee shall (i) transfer and
deliver such part of the assets of the Fund as may be specified in such
writing to any Asset Manager so appointed, and (ii) accept the transfer back
to it of any such assets at any time held by an Asset Manager, provided that
the Benefit Committee may only direct such transfers as are in conformity with
the provisions of the Plans, this Agreement, and ERISA, and Code sections
401(a) and 501(a). Any such written direction shall constitute a
certification to the Master Trustee by the Benefit Committee that the transfer
so directed is one which the Benefit Committee is authorized to direct and is
in conformity with the aforesaid provisions.
(b) If any assets are so transferred to the custody of an Asset Manager,
such Asset Manager shall undertake and be responsible for all the custodial
duties therefor, and such assets shall remain for all purposes a part of the
Fund and the Master Trust, and as such, subject to all the terms and
provisions of this Agreement. Any Asset Manager receiving such assets may
invest any part or all of such assets in units of any collective, common or
pooled trust fund operated or maintained by a bank or trust company, including
the Investment Manager or any affiliate of the Investment Manager, exclusively
for the commingling and collective investment of moneys or other assets held
under or as part of a plan which is established in conformity with and
qualifies under Code section 401(a). Notwithstanding the provisions of this
Agreement which place restrictions upon the actions of the trustee, or the
Asset Manager, to the extent moneys or other assets are utilized to acquire
units of any collective trust, the terms of the collective trust indenture
shall solely govern the investment duties, responsibilities and powers of the
Master Trustee of such collective trust, and to the extent required by law,
such terms, responsibilities and powers shall be incorporated herein by
reference and shall be part of this Agreement. For the purposes of valuation
of any interest under the Plans of which this Master Trust forms a part, the
value of the interest maintained by the Fund in such collective trust shall be
the fair market value of the collective fund units held determined in
accordance with generally recognized valuation procedures.
(c) The Master Trustee shall have no duty or responsibility as to the
safekeeping of such assets or as to the investment and reinvestment of the
same, except that the Master Trustee shall require such statements and reports
from such Asset Manager as may be necessary to enable the Master Trustee and
the Plan Administrator to carry out their recordkeeping and reporting duties
under this Agreement. The Master Trustee shall enter into and execute such
agreements, receipts and releases as shall be required to carry out the
directions of the Benefit Committee with respect to the transfer of any assets
of the Fund to or from an Asset Manager in accordance with this Section 5.2.
- - -61-
5.3 The Master Trustee. Subject to investment policies, objectives and
guidelines set forth in Section 6.1 or communicated to the Master Trustee by
the Benefit Committee as contemplated by this Section 5, the Master Trustee
shall from time to time invest and reinvest the Discretionary Fund described
in Appendix D and keep it invested in accordance with the terms of this
Agreement and such policies, objectives and guidelines.
SECTION 6
Investment Accounts
6.1 Establishment of Investment Accounts. The Benefit Committee shall
direct the Master Trustee to establish on its books and records accounts
sufficient to accommodate investment options, available to the employees. The
Benefit Committee shall establish an investment purpose for each account,
either by separate written designation or through an agreement between the
Benefit Committee and the Master Trustee that shall incorporate therein the
investment purposes and, if applicable, the investment restrictions which the
Plan provides as to investment options. The Master Trustee shall initially
establish and maintain such investment funds as described in Appendix D.
Should the Benefit Committee direct the Master Trustee to establish
additional special investment accounts or funds, the Benefit Committee shall
direct the Master Trustee as to the nature and objectives that such account or
fund is to achieve. The Benefit Committee, in the manner provided in
Section 15.1, may delegate to a special investment committee the power to
direct the general investment philosophy as to such special accounts or funds.
In the investment of any special account or fund, the Master Trustee may
utilize all or any part of the collective investment fund provided in
subsection 7.3(g) in the same manner and according to the same terms as
therein set forth.
6.2 Qualifying Employer Securities. All amounts received by the Master
Trustee which are directed by the Benefit Committee to be placed in an account
which has as its investment purpose investment in Qualifying Employer
Securities or any amount received by the Master Trustee as a result of holding
such Qualifying Employer Securities shall be invested in accordance with the
provisions of Appendix D dealing with Qualifying Employer Securities.
6.3 Allocation of Contributions. The Benefit Committee shall, upon the
making of any contribution to this Master Trust by a Participating Employer,
or, if applicable, a Participant, or both, instruct the Master Trustee in
writing of the manner that such contribution is to be allocated between the
funds or accounts previously established. In addition, from time to time the
Benefit Committee may direct the Master Trustee to transfer moneys from any of
the funds or accounts to be credited to another. The Master Trustee, as
promptly as possible, shall comply with the directions of the Benefit
Committee. The Master Trustee is specifically authorized to establish such
additional funds or accounts for the purpose of investment as the Benefit
Committee shall direct from time to time. The Master Trustee is further
authorized to transfer from any such fund or existing fund or funds any and
all amounts as may be directed by the Benefit Committee from time to time.
- - -62-
6.4 Responsibility of Master Trustee. The Master Trustee shall not be
responsible nor liable to establish or maintain a record or account in the
name of any individual Participant. The Master Trustee shall not be required
to establish the value of any Participant's individual interest in the Fund or
any account established hereunder. Should the Master Trustee and the Benefit
Committee or the Corporation agree that the Master Trustee shall maintain
individual account records, such agreement shall be separate and apart from
the terms of this Trust. Such an agreement shall not be construed as implying
any duty upon the Master Trustee hereunder even though the Master Trustee, in
its corporate capacity as record keeper for the accounts of individual
participants, shall have the right, power or duty to issue instructions or
directions as to the disposition or distribution of any assets held hereunder.
6.5 Accounts as Separate Trusts. For the purposes of application of this
Agreement, each fund or account created hereunder shall be considered a
separate trust insofar as the application of powers granted the Master
Trustee. Notwithstanding the provisions of this Agreement which establishes
powers and duties with regard to the Master Trust as a whole, the Master
Trustee shall exercise such of those powers as are consistent with the
investment purposes of each account. Where applicable or required, the Master
Trustee with the Benefit Committee's consent may subdivide any account as may
be required to fulfill either its duties hereunder or the instructions of the
Benefit Committee.
SECTION 7
Investment of the Fund
7.1 Standard of Care. The Master Trustee, each Asset Manager, the Benefit
Committee and any other Named Fiduciary shall discharge their respective
investment duties as provided under Sections 5 and 6 hereof with the care,
skill, prudence and diligence under the circumstances then prevailing that a
prudent man acting in like capacity and familiar with such matters would use
in the conduct of an enterprise of a like character with like aims and by
diversifying the investments held hereunder consistent with investment
policies, objectives and guidelines so as to minimize the risk of large
losses, unless it would be clearly not prudent to diversify.
7.2 Waiver of Investment Restrictions. Such investment and reinvestment
shall not be restricted to securities or property of the character authorized
for investments by Master Trustees or asset managers under any statute or
other laws of any state, district or territory.
7.3 Grant of Investment Powers. In addition to any power granted to
trustees or asset managers under any statute or other laws, such laws and
statutes if necessary being incorporated herein by reference, the Master
Trustee's, and each Asset Manager's investment powers may, unless restricted
in writing by the Benefit Committee, include, but shall not be limited to,
investment in the following:
(a) domestic or foreign common and preferred stocks and options thereon,
as well as warrants, rights and preferred stocks convertible into common
stock, regardless of where or how traded;
- - -63-
(b) corporate bonds and debentures and any such securities which are
convertible into common stock, domestic or foreign;
(c) bonds or other obligations of the United States of America or any
foreign nation, and any agencies thereof, or any bonds or other obligations
which are directly or indirectly guaranteed by the United States or any
foreign nation, or any agency thereof;
(d) notes of any nature, of foreign or domestic issuers;
(e) savings accounts, certificates of deposit and other types of time
deposits, bearing a reasonable rate of interest based upon the duration,
amount, type and geographical area, with any financial institution or quasi-
financial institution or any department of the same, either domestic or
foreign, under the supervision of the United States or any State, including
any such financial institution owned, operated or maintained by the Master
Trustee in its corporate or association capacity (including any department or
division of the same) or a corporation or association affiliated with the
same;
(f) any collective or common trust fund or composite security owned,
operated and maintained by the Master Trustee, including, but not limited to,
demand notes, short-term notes and cash equivalent funds;
(g) any collective, common or pooled trust fund operated or maintained
exclusively for the commingling and collective investment of moneys or other
assets of employees' pension and profit sharing trusts exempt from tax under
Code section 501(a) by reason of qualifying under Code section 401(a)
including any such fund operated or maintained by the Master Trustee.
Notwithstanding the provisions of this Agreement which place restrictions upon
the actions of the Master Trustee or an Investment Manager, to the extent
moneys or other assets are utilized to acquire units of any collective trust,
the terms of the collective trust indenture shall solely govern the investment
duties, responsibilities and powers of the trustee of such collective trust
and, to the extent required by law, such terms, responsibilities and powers
shall be incorporated herein by reference and shall be part of this Agreement.
For purposes of valuation, the value of the interest maintained by the Fund in
such collective trust shall be the fair market value of the collective fund
units held, determined in accordance with generally recognized valuation
procedures;
(h) individual or group insurance policies and contracts including, but
not limited to, life insurance, annuity (fixed or variable) and investment
policies and contracts, but only if directed by the Benefit Committee or
another Named Fiduciary, as appropriate, to purchase or retain such policies
and contracts.
7.4 Maintenance of Cash Balances. The Master Trustee shall keep such
portion of the Fund in cash or cash balances as may be specified from time to
time in a written request from the Plan Administrator or as required by the
Benefit Committee to meet contemplated payments from the Fund. The Master
Trustee shall invest such cash balances and any other portions of the Fund
which may be in cash or cash balances in accordance with such investment
policies, objectives and guidelines as may be communicated to the Master
- - -64-
Trustee from time to time by the Benefit Committee pursuant to Section 5. The
Master Trustee shall not be liable for interest on any reasonable cash
balances so maintained.
SECTION 8
Powers of the Master Trustee,
Asset Managers and the Named Fiduciary
8.1 Qualifying Employer Securities Accounts. With respect to accounts
established to invest in Qualifying Employer Securities, the Master Trustee
shall act only in accordance with the procedures set forth in the Plans,
Appendix D, and with respect to the right to vote, the right to tender in the
event of a tender offer or the exercise of certain other rights concerning
such securities, Appendix E.
8.2 General Powers. As to all assets other than Qualifying Employer
Securities, the Master Trustee shall have and exercise the following powers
and authority in the administration of the Fund only on the direction of an
Asset Manager and the Benefit Committee where such powers and authority relate
to a Directed Fund and in its sole discretion where such powers and authority
relate to a Discretionary Fund:
(a) to purchase, receive or subscribe for any securities or other property
and to retain in trust such securities or other property;
(b) to sell, exchange, convey, transfer, lend, or otherwise dispose of any
property held in the Fund and to make any sale by private contract or public
auction; and no person dealing with the Master Trustee shall be bound to see
to the application of the purchase money or to inquire into the validity,
expediency or propriety of any such sale or other disposition;
(c) to vote in person or by proxy any stocks, bonds or other securities
held in the Fund;
(d) to exercise any rights appurtenant to any such stocks, bonds or other
securities for the conversion thereof into other stocks, bonds or securities,
or to exercise rights or options to subscribe for or purchase additional
stocks, bonds or other securities, and to make any and all necessary payments
with respect to any such conversion or exercise, as well as to write options
with respect to such stocks and to enter into any transactions in other forms
of options with respect to any options which the Fund has outstanding at any
time;
(e) to join in, dissent from or oppose the reorganization,
recapitalization, consolidation, sale or merger of corporations or properties
of which the Fund may hold stocks, bonds or other securities or in which it
may be interested, upon such terms and conditions as deemed wise, to pay any
expenses, assessments or subscriptions in connection therewith, and to accept
any securities or property, whether or not Master Trustees would be authorized
to invest in such securities or property, which may be issued upon any such
reorganization, recapitalization, consolidation, sale or merger and thereafter
to hold the same, without any duty to sell;
- - -65-
(f) to insure, according to customary standards, any property held in the
Fund for any amount and to pay any premiums required for such coverage;
(g) to purchase or otherwise acquire and make payment therefor from the
Fund any bond or other form of guarantee or surety required by any authority
having jurisdiction over this Trust and its operation, or believed by the
Master Trustee or Asset Manager to be in the best interests of the Fund,
except the Master Trustee or Asset Manager may not obtain any insurance whose
premium obligation extends to the Fund which would protect the Master Trustee
or Asset Manager against its liability for breach of fiduciary duty;
(h) to enter into any type of contract with any insurance company or
companies, either for the purposes of investment or otherwise; provided that
no insurance company dealing with the Master Trustee shall be considered to be
a party to this Agreement and shall only be bound by and held accountable to
the extent of its contract with the Master Trustee. Except as otherwise
provided by any contract, the insurance company need only look to the Master
Trustee with regard to any instructions issued and shall make disbursements or
payments to any person, including the Master Trustee, as shall be directed by
the Master Trustee. Where applicable, the Master Trustee shall be the sole
owner of any and all insurance policies or contracts issued. Such contracts
or policies, unless otherwise determined, shall be held as an asset of the
Fund for safekeeping or custodian purposes only;
(i) to lend the assets of the Fund to participants of the Plan. The
Benefit Committee shall have full and exclusive responsibility for loans made
to participants, including, without limitation, full and exclusive
responsibility for the following: development of procedures and documentation
for such loans; acceptance of loan applications; approval of loan
applications; disclosure of interest rate information required by Regulation Z
of the Federal Reserve Board promulgated pursuant to the Truth in Lending Act,
15 U.S.C. 1601 et seq., compliance with the record retention requirements
promulgated under the Equal Credit Opportunity Act, 15 U.S.C. 1691 et seq.
and its implementing regulation, Regulation B, 12 C.F.R. part 202; acting as
agent for the physical custody and safekeeping of the promissory notes and
other loan documents; performing necessary and appropriate recordkeeping and
accounting functions with respect to loan transactions; enforcement of
promissory note terms, including, but not limited to, directing the Master
Trustee to take specified actions; and maintenance of accounts and records
regarding interest and principal payments on notes. The Master Trustee shall
not in any way be responsible for holding or reviewing such documents, records
and procedures and shall be entitled to rely upon such information as is
provided by the Benefit Committee or its own sub-agent or recordkeeper without
any requirement or responsibility to inquire as to the completeness or
accuracy thereof, but may from time to time examine such documents, records
and procedures, as it deems appropriate.
8.3 Specific Powers of the Master Trustee. The Master Trustee shall have
the following powers and authority, to be exercised in its sole discretion
with respect to the Fund:
(a) to appoint agents, custodians, depositories or counsel, domestic or
foreign, as to part or all of the Fund and functions incident thereto where,
in the sole discretion of the Master Trustee, such delegation is necessary in
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order to facilitate the operations of the Fund and such delegation is not
inconsistent with the purposes of the Fund or in contravention of any
applicable law. To the extent that the appointment of any such person or
entity may be deemed to be the appointment of a fiduciary, the Master Trustee
may exercise the powers granted hereby to appoint as such a fiduciary any
person or entity, including, but not limited to, the Benefit Committee or the
Corporation, notwithstanding the fact that such person or entity is then
considered a fiduciary, a party in interest or a disqualified person within
the meaning of the applicable provisions of ERISA. Upon such delegation, the
Master Trustee may require such reports, bonds or written agreements as it
deems necessary to properly monitor the actions of its delegate;
(b) to cause any investment, either in whole or in part, in the Fund to be
registered in, or transferred into, the Master Trustee's name or the names of
a nominee or nominees, including but not limited to that of the Master
Trustee, a clearing company, or a depository, or in book entry form, or to
retain any such investment unregistered or in a form permitting transfer by
delivery, provided that the books and records of the Master Trustee shall at
all times show that such investments are a part of the Fund; and to cause any
such investment, or the evidence thereof, to be held by the Master Trustee, in
a depository, in a clearing company, in book entry form, or by any other
entity or in any other manner permitted by law;
(c) to make, execute and deliver, as Master Trustee, any and all deeds,
leases, mortgages, conveyances, waivers, releases or other instruments in
writing necessary or desirable for the accomplishment of any of the foregoing
powers;
(d) to defend against or participate in any legal actions involving the
Fund or the Master Trustee in its capacity stated herein, in the manner and to
the extent it deems advisable, the costs of any such defense or participation
to be borne by the Fund, unless paid by the Corporation in accordance with
Section 11; provided however, the Master Trustee shall notify the Benefit
Committee of all such actions and the Benefit Committee may, in its sole
discretion, determine against the incurrence of any such legal fees and
expenses which may be incurred beyond those necessary to protect the Fund
against default or immediate loss and may participate in the selection of and
instructions to legal counsel;
(e) to form corporations and to create trusts, to hold title to any
security or other property, to enter into agreements creating partnerships or
joint ventures for any purpose or purposes determined by the Master Trustee to
be in the best interests of the Fund;
(f) to establish and maintain such separate accounts in accordance with
the instructions of the Plan Administrator for the proper administration of
the Plans, or as determined to be necessary by the Master Trustee. Such
accounts shall be subject to the general terms of this Agreement, unless the
Master Trustee is notified of a contrary intent by the Plan Administrator or
the Benefit Committee in writing; and
(g) to generally take all action, whether or not expressly authorized,
which the Master Trustee may deem necessary or desirable for the protection of
the Fund.
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8.4 Maintenance of Indicia of Ownership. The Master Trustee shall not
maintain indicia of ownership of any asset of the Fund held by it outside the
jurisdiction of the District Courts of the United States unless such holding
is approved through ruling or regulations promulgated under ERISA by the
Secretary of Labor.
8.5 Third Party Transactions. In addition, and not by way of limitation,
the Master Trustee shall have any and all powers and duties concerning the
investment, retention or sale of property held in trust as if it were absolute
owner of the property, and no restrictions with regard to the property so held
shall be implied, warranted or sustained by reason of this Agreement;
provided, however, at no time shall the exercise of such powers and duties
establish any evidence which would permit a third party to assert a right,
title or interest superior to that of the Plans in the property held in the
Fund.
SECTION 9
Discretionary Powers
9.1 Master Trustee Granted Discretion. The Master Trustee is hereby
granted any and all discretionary powers not explicitly or implicitly
conferred by this Agreement which it may deem necessary or proper for the
protection of the property held hereunder.
SECTION 10
Prohibited Transactions
10.1 Transactions which are Prohibited. Notwithstanding any provision of
this Agreement, either appearing before or after this Section, the Master
Trustee shall not engage in or cause the Trust to engage in any transaction if
it knows or should know, that such transaction constitutes a direct or
indirect prohibited transaction, as defined in ERISA section 406 or Code
section 4975 except to the extent there exists a statutory or administrative
prohibited transaction exemption.
10.2 Provision of Ancillary Services by Master Trustee. Notwithstanding
the foregoing, the Master Trustee may, in addition to the services rendered in
conjunction with its duties and responsibilities as Master Trustee under the
terms of this Agreement, provide such ancillary services as meet the following
standards:
(a) there have been adopted by the Master Trustee internal safeguards
which assure that such ancillary services are consistent with sound banking
and financial practices as determined by the appropriate banking authority;
(b) the ancillary services are provided in accordance with guidelines
which are intended to meet the standards established by the appropriate
banking authority; and
(c) the compensation received by the Master Trustee for such services is
reasonable and established in an arm's-length manner.
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SECTION 11
Expenses, Compensation and Taxes
11.1 Compensation and Expenses of the Master Trustee. The Master Trustee
shall be entitled to such reasonable compensation for services rendered by it
in accordance with the schedule of compensation as agreed upon by the Benefit
Committee and the Master Trustee from time to time together with all
reasonable expenses incurred by the Master Trustee as a result of the
execution of its duties hereunder, including, but not limited to, legal and
accounting expenses, expenses incurred as a result of disbursements and
payments made by the Master Trustee, and reasonable compensation for agents,
counsel or other services rendered to the Master Trustee by third parties and
expenses incident thereto.
11.2 Payment from the Fund.
(a) Except as provided in Paragraph (b) below, properly approved
reasonable fees and expenses of any of the following shall be paid from the
Fund and shall constitute a charge on the Fund until so paid: the Master
Trustee, any other Master Trustee, any Investment Manager, any fees from the
Plan's auditors, any fees from the Plan's recordkeeper, legal fees, any
investment advisor and any other costs and fees related to the Fund; provided,
however, that in no event shall the Fund pay any such fees or expenses
incurred:
(1) for preparation or prosecution of any action against the
Corporation, the Plans, the Plan Administrator or any member of
the Benefit Committee, 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 Plans or out of any alleged wrongful
act against the Plans.
Neither the Plan Administrator nor any member of the Benefit Committee
shall be compensated from the Plans but may be compensated by the Corporation
for services rendered on behalf of the Plans.
The Corporation may, if it deems necessary, pay these fees and
expenses directly and may or may not seek reimbursement from the Fund.
(b) Brokerage fees, commissions, stock transfer taxes and other charges
and expenses incurred in connection with transactions related to the
acquisition or disposition of property for or of the Master Trust, including
any part segregated in an Investment Manager Account, or distributions
therefrom shall be paid from the Fund, including any part segregated in an
Investment Manager Account. Taxes, if any, payable by the Master Trustee on
the assets at any time held in the Fund or on the income thereof shall be paid
from the Fund.
(c) The frequency of the billing of a particular expense, the particular
Investment Account to be charged and the basis of the expense allocation shall
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be governed by the provisions of Appendix C; which appendix may be amended,
from time to time, by the Benefit Committee; provided, however, that no such
amendment shall affect expenses charged against an Investment Vehicle prior
the Master Trustee's receipt of notice of the amendment.
11.3 Payment of Taxes. The Master Trustee shall notify the Benefit
Committee upon receipt of notice with regard to any proposed tax deficiencies
or any tax assessments which it receives on any income or property in the Fund
and, unless notified to the contrary by the Benefit Committee within thirty
(30) days, shall pay any such assessments. If the Benefit Committee notifies
the Master Trustee within said period that, in its opinion or the opinion of
counsel, such assessments are invalid or that they should be contested, then
the Master Trustee shall take whatever action is indicated in the notice
received from the Benefit Committee or counsel, including contesting the
assessment or litigating any claims.
SECTION 12
Accounts, Books and Records of the Fund
12.1 Recordkeeping Duty of Master Trustee. The Master Trustee shall keep
accurate and detailed accounts of all investments, receipts and disbursements
and other transactions hereunder, and all accounts, books and records relating
thereto shall be open at all reasonable times to inspection and audit by any
person designated by the Benefit Committee.
12.2 Periodic Reports. In addition, within sixty (60) days following the
close of each fiscal year of the Fund, or following the close of such other
period as may be agreed upon between the Master Trustee and the Benefit
Committee, and within one hundred twenty (120) days, or such other agreed upon
period, unless such period be waived, after the removal or resignation of the
Master Trustee as provided for in this Agreement, the Master Trustee shall
file with the Plan Administrator and the Benefit Committee, a certified
written report setting forth all investments, receipts and disbursements, and
other transactions effected during the fiscal year or other annual period or
during the period from the close of the preceding fiscal year or other
preceding period to the date of such removal or resignation, including a
description of all securities and investment purchases and sales with the cost
or net proceeds of such purchases or sales and showing all cash, securities
and other property held at the close of such fiscal year or other period,
valued currently, and such other information as may be required of the Master
Trustee under any applicable law.
12.3 Additional Accounting. Except as provided below, neither the Plan
Administrator, Benefit Committee, the Corporation, nor any Participating
Employer shall have the right to demand or be entitled to any further
accounting different from the normal accounting rendered by the Master
Trustee. Further, no participant, beneficiary or any other person shall have
the right to demand or be entitled to any accounting by the Master Trustee,
other than those to which they may be entitled under the law. The Plan
Administrator, Benefit Committee, or the Corporation shall have the right to
inspect the Master Trustee's books and records relating to the Fund during
normal business hours or to designate an accountant to make such inspection,
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study, and/or audit with all expenses related thereto to be paid by the
Corporation.
12.4 Judicial Determination of Accounts. Nothing contained herein will be
construed or interpreted to deny the Master Trustee or the Benefit Committee
the right to have the Master Trustee's account judicially determined.
12.5 Limitation of Actions. Notwithstanding any other provision of the
Plans or this Agreement, the Master Trustee shall not be subject to any
liability for any act or omission, regardless of its nature, after the
expiration of six (6) years commencing with the day next following the date
that any report is filed with the Secretary of Labor which discloses such
error or omission, or, if earlier, six (6) years after the date a party
plaintiff did or should have had knowledge of such act or omission.
12.6 Filings by the Plan Administrator. For the purposes of this Section,
the Master Trustee shall conclusively presume that the Plan Administrator has
made or caused to be made, or will make or cause to be made, all Federal
filings as of the date required.
12.7 Determination of Fair Market Value. The Master Trustee shall
determine the fair market value of the Fund monthly and annually based upon
generally accepted accounting principles applicable to trusts of a same or
similar nature to the one created herein.
12.8 Retention of Records. All records and accounts maintained by the
Master Trustee with respect to the Fund shall be preserved for such period as
may be required under any applicable law. Upon the expiration of any such
required retention period, the Master Trustee shall have the right to destroy
such records and accounts after first notifying the Benefit Committee in
writing of its intention and transferring to the Benefit Committee any records
and accounts requested. The Master Trustee shall have the right to preserve
all records and accounts in original form, or on microfilm, magnetic tape, or
any other similar process.
SECTION 13
Fiduciary Duties of Master Trustee
13.1 Acknowledgment of Fiduciary Duty. The Master Trustee acknowledges
that it assumes the fiduciary duties established by this Agreement.
13.2 Judicial Determination. The Master Trustee shall not, however, be
liable for any loss to or diminution of the Fund except to the extent that any
such loss or diminution results from act or inaction on the part of the Master
Trustee which is judicially determined to be due to its negligence or a breach
of its fiduciary duties.
SECTION 14
Resignation and Removal
14.1 Power to Resign or Remove. The Master Trustee may be removed with
respect to all, or a part of, the Fund by the Benefit Committee, upon written
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notice to the Master Trustee to that effect. The Master Trustee may resign as
Master Trustee hereunder, upon written notice to that effect delivered to the
Benefit Committee.
14.2 Notice. Such removal or resignation shall become effective as of the
last day of the month which coincides with or next follows the expiration of
ninety (90) days from the date of the delivery of such written notice, unless
an earlier or later date is agreed upon in writing by the Benefit Committee
and the Master Trustee.
14.3 Successor Appointment. In the event of such removal or resignation, a
successor master trustee, or a separate trustee or trustees, shall be
appointed by the Benefit Committee to become master trustee, or a separate
trustee or trustees, as of the time such removal or resignation becomes
effective. Such successor master trustee, or separate trustee or trustees,
shall accept such appointment by an instrument in writing delivered to the
Benefit Committee and the Master Trustee and upon becoming successor master
trustee, or separate trustee or trustees, shall be vested with all the rights,
powers, duties, privileges and immunities as successor master trustee, or
separate trustee or trustees, hereunder as if originally designated as Master
Trustee, or separate trustee or trustees, in this Agreement.
14.4 Transfer of Fund to Successor. Upon such appointment and acceptance,
the retiring Master Trustee shall endorse, transfer, assign, convey and
deliver to the successor master trustee, or separate trustee or trustees, all
of the funds, securities and other property then held by it in the Fund,
except such amount as may be reasonable and necessary to cover its
compensation and expenses as may be agreed to by the Benefit Committee in
connection with the settlement of its accounts and the delivery of the Fund to
the successor master trustee, or separate trustee or trustees, and the balance
remaining of any amount so reserved shall be transferred and paid over to the
successor master trustee, or separate trustee or trustees, promptly upon
settlement of its accounts, subject to the right of the retiring Master
Trustee to retain any property deemed unsuitable by it for transfer until such
time as transfer can be made.
14.5 Retention of Nontransferable Assets. If the retiring Master Trustee
holds any property unsuitable for transfer, it shall retain such property, and
as to such property alone it shall be a trustee with the successor master
trustee, or separate trustee or trustees, its duties and obligations being
solely limited to any such property, and it shall not have fiduciary duties of
any nature as to assets transferred. Should the successor master trustee, or
separate trustee or trustees, accept fiduciary responsibility as to such
property, the Master Trustee shall retain only custodian duties as to such
property.
14.6 Accounting. In the event of the removal or resignation of the Master
Trustee hereunder, the Master Trustee shall file with the Benefit Committee a
statement and report of its accounts and proceedings covering the period from
its last annual statement and report, and its liability and accountability to
anyone with respect to the propriety of its acts and transactions shown in
such written statement and report shall be governed by the terms of this
Agreement.
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SECTION 15
Actions by the Corporation,
the Plan Administrator or Benefit Committee
15.1 Action by Corporation. Any action by the Corporation pursuant to this
Agreement shall, in accordance with Section 23.1, be evidenced or empowered in
writing to the Master Trustee, and the Master Trustee shall be entitled to
rely on such writing.
15.2 Action by the Plan Administrator or Benefit Committee. Any action by
any person or entity duly empowered to act on behalf of the Plan Administrator
or Benefit Committee with respect to any rights, powers or duties specified in
this Agreement shall be in writing, signed by such person or by the person
designated by the Plan Administrator or Benefit Committee or any other Named
Fiduciary, and the Master Trustee shall act and shall be fully protected in
acting in accordance with such writing.
SECTION 16
Amendment or Termination
16.1 Amendment or Termination. The Benefit Committee shall have the right
at any time and from time to time by appropriate action:
(a) to modify or amend in whole or in part any or all of the provisions of
this Agreement upon sixty (60) days' prior notice in writing to the Master
Trustee, unless the Master Trustee agrees to waive such notice; provided,
however, that no modification or amendment which affects the rights, duties or
responsibilities of the Master Trustee may be made without the Master
Trustee's consent, or
(b) to terminate this Agreement upon sixty (60) days' prior notice in
writing delivered to the Master Trustee;
provided, further, that no termination, modification or amendment shall permit
any part of the corpus or income of the Fund to be used for or diverted to
purposes other than for the exclusive benefit of such participants, retired
participants and their beneficiaries, except for the return of Participating
Employer contributions which are allowed by law.
16.2 Termination of a Plan. Should the Corporation notify the Master
Trustee of the termination of a Plan by a Participating Employer, the Master
Trustee shall distribute all cash, securities and other property then held in
the Fund with respect to such Plan, less any amounts constituting charges and
expenses payable from the Fund, on the date or dates specified by the Plan
Administrator to such persons and in such manner as the Plan Administrator
shall direct. In making such distributions, the Master Trustee shall be
entitled to assume that such distributions are in full compliance with and are
not in violation of any applicable law regulating the termination of any kind
whatsoever arising from any distribution made by the Master Trustee at the
direction of the Plan Administrator as a result of the termination of this
Agreement.
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16.3 Retention of Nontransferable Property. The Master Trustee reserves
the right to retain such property as is not, in the sole discretion of the
Master Trustee, suitable for distribution at the time of termination of this
Agreement and shall hold such property as custodian for those persons or other
entities entitled to such property until such time as the Master Trustee is
able to make distribution. The Master Trustee's duties and obligations with
respect to any property held in accordance with the above shall be purely
custodial in nature and the Master Trustee shall only be obligated to see to
the safekeeping of such property and make a reasonable effort to prevent
deterioration or waste of such property prior to its distribution. Upon
complete distribution of all property constituting the Fund, this Agreement
shall be deemed terminated.
16.4 Termination in the Absence of Directions from the Plan Administrator.
In the event no direction is provided by the Plan Administrator with respect
to the distribution of a Plan's portion of the Fund upon termination of this
Agreement, the Master Trustee shall make such distributions as are specified
by the Plan after notice to the Benefit Committee. In the event the Plan is
silent as to the distributions to be made upon termination of the Plan or the
terms of the Plan are inconsistent with the then applicable law or the Master
Trustee cannot obtain a copy of the most recent Plan, the Master Trustee shall
distribute the Fund to participants and their beneficiaries under the Plan in
an equitable manner that will not adversely affect the qualified status of the
Plan under Code section 401(a) or any other statute of similar import and that
will comply with any applicable provisions of ERISA regulating the allocation
of assets upon termination of plans such as the Plan. The Master Trustee, in
such case, reserves the right to seek a judicial and administrative
determination as to the proper method of distribution of the Fund upon
termination of this Agreement.
16.5 Termination on Corporate Dissolution. If any Participating Employer
ceases to exist as a result of liquidation, dissolution or acquisition in some
manner, that portion of the Fund attributable to the Plans of the affected
Participating Employer shall be distributed as provided above upon termination
of a Plan unless a successor to the affected Participating Employer elects to
continue the Plan and this Agreement as provided in this Agreement.
SECTION 17
Merger or Consolidation
17.1 Merger or Consolidation of Master Trustee. Any corporation, or
national association, into which the Master Trustee may be merged or with
which it may be consolidated, or any corporation, or national association,
resulting from any merger or consolidation to which the Master Trustee is a
party, or any corporation, or national association, succeeding to the trust
business of the Master Trustee, shall become the successor of the Master
Trustee hereunder, without the execution or filing of any instrument or the
performance of any further act on the part of the parties hereto.
17.2 Merger or Consolidation of Corporation or any Participating Employer.
Any partnership or corporation into which the Corporation or any Participating
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Employer may be merged or with which it may be consolidated, or any
partnership or corporation succeeding to all or a substantial part of the
business interests of the Corporation or any Participating Employer may become
the Corporation or any Participating Employer hereunder by expressly adopting
and agreeing to be bound by the terms and conditions of the Plan and this
Agreement and so notifying the Master Trustee to such effect by submission to
the Master Trustee of an appropriate written document.
17.3 Merger or Consolidation of Plan. In the event that the Benefit
Committee authorizes and directs that the assets of another plan be merged or
consolidated with or transferred to a Plan participating in this Master Trust,
the Master Trustee shall take no action with regard to such merger,
consolidation or transfer until it has been notified in writing that each
participant covered under the plan the assets of which are to be merged
consolidated or transferred will immediately after such merger, consolidation
or transfer be entitled to a benefit either equal to or then greater than the
benefit he would have been entitled to had the Plan been terminated.
SECTION 18
Acceptance of Master Trust
18.1 Acceptance by Master Trustee. Master Trustee accepts the Master Trust
created hereunder and agrees to be bound by all the terms of this Agreement.
SECTION 19
Nonalienation of Master Trust
19.1 Master Trust not Subject to Assignment or Alienation. Except as
heretofore provided, no Participating Employer, participant or beneficiary of
the Plans to which the Master Trust applies shall have any interest in or
right to the assets of this Master Trust, and to the full extent of all
applicable laws, the assets of this Master Trust shall not be subject to any
form of attachment, garnishment, sequestration or other actions of collection
afforded creditors of a Participating Employer, participants or beneficiaries.
The Master Trustee shall not recognize any assignment or alienation of
benefits unless, and then only to the extent, written notices are received
from the Plan Administrator.
19.2 Plans' Interest in Master Trust not Assignable. The equity or
interest of any participating Plan in the Fund shall not be assignable.
SECTION 20
Governing Law
20.1 Governing Law. This Agreement shall be construed and enforced, to the
extent possible, according to the laws of the State of California, and all
provisions hereof shall be administered according to the laws of said State
and any federal laws, regulations or rules which may from time to time be
applicable.
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SECTION 21
Parties to Court Proceedings
21.1 Only Benefit Committee and Master Trustee Necessary. To the extent
permitted by law, only the Master Trustee and the Benefit Committee shall be
necessary parties in any application to the courts for an interpretation of
this Agreement or for an accounting by the Master Trustee, and no participant
under any Plan of any Participating Employer or other person having an
interest in the Fund shall be entitled to any notice or service of process.
Any final judgment entered in such an action or proceeding shall, to the
extent permitted by law, be conclusive upon all persons claiming under this
Agreement or any Plan.
SECTION 22
Subsidiaries and Affiliates
22.1 Adoption of Master Trust by Subsidiaries and Affiliates. Any
Controlled Group Member which is now or may hereafter be organized under the
laws of the United States of America, or of any State or Territory thereof,
with the approval of the Corporation, by resolution of its own board of
directors, may adopt this Agreement, if such subsidiary or affiliate shall
have adopted one or more Plans qualified under Code section 401(a). If any
such Controlled Group Member so adopts this Agreement, such Controlled Group
Member shall be deemed a Participating Employer hereunder and this Agreement
shall establish the trust for such Plans as are specified by such
Participating Employer and shall constitute a continuation, amendment and
restatement of any prior trust for any such Plans. Furthermore, the assets of
any such Plans may be commingled with the assets of other Plans held in the
Fund pursuant to Section 2.6 hereof. However, the assets of any Plan so held
in the Fund shall not be subject to any claim arising under any other Plan,
the assets of which are commingled therewith by the Master Trustee for
investment purposes, and under no circumstances shall any of the assets of one
Plan be available to provide the benefits under another Plan. A separate
trust shall be deemed to have been created with respect to each Plan of such
Participating Employer.
22.2 Segregation from Further Participation. Any Participating Employer
may, at any time, with the consent of the Corporation, segregate a Plan's
trust from further participation in this Agreement. In such event, such
Participating Employer shall file with the Master Trustee a document
evidencing the segregation of the Plan from the Fund and its continuance of a
separate trust in accordance with the provisions of this Agreement as though
such Participating Employer were the sole creator thereof. In such event, the
Master Trustee shall deliver to itself as Master Trustee of such separate
trust such share of the Fund as may be determined by the Master Trustee to
constitute the appropriate share of the Fund, as confirmed by the Benefit
Committee, then held in respect of the participating employees of such former
Participating Employer. Such former Participating Employer may thereafter
exercise, in respect of such separate trust, all of the rights and powers
reserved to the Benefit Committee under the provisions of this Agreement. The
equitable share of any Plan participating in the Fund shall be immediately
segregated and withdrawn from the Fund if the Plan ceases to be qualified
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under Code section 401(a) and the Corporation shall promptly notify the Master
Trustee of any determination by the Internal Revenue Service that any such
Plan has ceased to be so qualified.
22.3 Segregation of Assets Allocable to Specific Employees. The Plan
Administrator may at any time direct the Master Trustee to segregate and
withdraw the equitable share of any such Plan, or that portion of such
equitable share as may be certified to the Master Trustee by the Plan
Administrator as allocable to any specified group or groups of employees or
beneficiaries. Whenever segregation is required, the Master Trustee shall
withdraw from the Fund such assets as it shall in its absolute discretion deem
to be equal in value to the equitable share to be segregated. Such withdrawal
from the Fund shall be in cash or in any property held in such Fund, or in a
combination of both, in the absolute discretion of the Master Trustee. The
Master Trustee shall thereafter hold the assets so withdrawn as a separate
trust fund in accordance with the provisions of this Agreement, which shall be
construed in respect of such assets as if the Participating Employer
maintaining such Plan (determined without regard to whether any subsidiaries
or affiliates of such Participating Employer have joined in such Plan) has
been named as the Benefit Committee hereunder. Such segregation shall not
preclude later readmission to the Fund.
SECTION 23
Authorities
23.1 Corporation. Whenever the provisions of this Agreement specifically
require or permit any action to be taken by "the Corporation", such action
must be authorized by the Board of Directors. Any resolution adopted by the
Board of Directors or other evidence of such authorization shall be certified
to the Master Trustee by the Secretary or Assistant Secretary of the
Corporation, and the Master Trustee may rely upon any authorization so
certified until revoked or modified by a further action of the Board of
Directors similarly certified to the Master Trustee.
23.2 Participating Employer. Any action required or permitted to be taken
under this Agreement by a Participating Employer shall be given by the board
of directors thereof in the manner described in Section 23.1.
23.3 Benefit Committee and Plan Administrator. The Benefit Committee shall
furnish the Master Trustee from time to time with a list of the names and
signatures of all Persons (other than the Benefit Committee): authorized to
act as the designee of the Benefit Committee under Section 1.1, serving as
members of the Benefit Committee; serving as the Plan Administrator; or in any
other manner authorized to issue orders, notices, requests, instructions and
objections to the Master Trustee pursuant to the provisions of this Agreement.
Any such list shall be certified by the Secretary of the Benefit Committee,
and may be relied upon for accuracy and completeness by the Master Trustee.
Each such Person shall thereupon furnish the Master Trustee with a list of the
names and signatures of those individuals who are authorized, jointly or
severally, to act for such Person hereunder, and the Master Trustee shall be
fully protected in acting upon any notices or directions received from any of
them.
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23.4 Investment Manager. The Benefit Committee shall cause each Investment
Manager to furnish the Master Trustee from time to time with the names and
signatures of those persons authorized to direct the Master Trustee on its
behalf hereunder.
23.5 Form of Communications. Any agreement between the Benefit Committee
and any Person (including an Investment Manager) or any other provision of
this Agreement to the contrary notwithstanding, all notices, directions and
other communications to the Master Trustee shall be in writing or in such
other form, including transmission by electronic means through the facilities
of third parties or otherwise, specifically agreed to in writing by the Master
Trustee, and the Master Trustee shall be fully protected in acting in
accordance therewith.
23.6 Continuation of Authority. The Master Trustee shall have the right to
assume, in the absence of written notice to the contrary, that no event
constituting a change in the Plan Administrator, or membership of the Benefit
Committee or terminating the authority of any Person, including any Investment
Manager, has occurred.
23.7 No Obligation to Act on Unsatisfactory Notice. The Master Trustee
shall incur no liability under this Agreement for any failure to act pursuant
to any notice, direction or any other communication from any Asset Manager,
the Corporation, the Plan Administrator, the Benefit Committee, or any other
Person or the designee of any of them unless and until it shall have received
instructions in form satisfactory to it.
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SECTION 24
Counterparts
24.1 Execution in Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, and said
counterparts shall constitute but one and the same instrument and may be
sufficiently evidenced by any one counterpart.
IN WITNESS WHEREOF, the parties hereto, each intending to be legally
bound hereby, have hereunto set their hands and seals as of the day and year
first above written.
THE EMPLOYEE BENEFIT COMMITTEE OF ROCKWELL
INTERNATIONAL CORPORATION - Named Fiduciary
By
Name: Lee H. Cramer
Title:
Vice President and Treasurer
FIRST INTERSTATE BANK OF CALIFORNIA - Master Trustee
By
Name: Susana R. Ryan
Title:
Vice President
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Appendix A
Prior Agreements
Amendatory Trust Agreement Number Three effective November 9, 1983 between
Rockwell International Corporation and First Interstate Bank of California.
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Appendix B
Participating Plans
Rockwell International Corporation Savings Plan
Rockwell Retirement Savings Plan for Certain Employees
Allen-Bradley Company Savings Plan for Salaried Employees
Allen-Bradley Company Savings Plan for Hourly Employees
Allen-Bradley Company Savings Plan for IAM Union Employees
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Appendix D
Investment Funds
D.1 To the extent directed by the Benefit Committee, the Master Trustee
shall establish:
(i) A Diversified Fund consisting of all contributions made by
Participants under the Plan prior to March 1, 1971, and all subsequent
contributions made by Participants under the plan and designated
pursuant to provisions of the Plan as applicable from time to time
(including provisions, if any, regarding transfers of sums between
funds), as contributions to the Diversified Fund and all contributions
made by a Participating Employer 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
Participants under the Plan subsequent to March 1, 1971, and
designated pursuant to provisions of the Plan as applicable from time
to time (including provisions, if any, regarding transfers of sums
between funds), as contributions to the Fixed Income Fund, all
property purchased therewith and proceeds and income of such
contributions and property; and
(iii) A Stock Fund A consisting of all cash and Qualifying
Employer Securities of the Corporation or a Controlled Group Member
contributed by the Corporation or a Participating Employer to match
contributions deducted from the Participant's compensation on or after
March 1, 1969, and the proceeds and income therefrom; and
(iv) A Stock Fund B consisting of all contributions made by
Participants under the Plan and designated pursuant to provisions of
the Plan as applicable from time to time (including provisions, if
any, regarding transfers of sums between funds), as contributions to
the Stock Fund B, all Qualifying Employer Securities purchased
therewith and proceeds and income therefrom; and
(v) A Guaranteed Return Fund consisting of all contributions
made by Participants under the Plan and designated pursuant to
provisions of the Plan as applicable from time to time as
contributions to the Guaranteed Return Fund (including provisions, if
any, regarding transfers of sums between funds), any interest in a
guaranteed return contract or contracts with an insurance company or
companies acquired therewith and any other proceeds therefrom.
D.2 To the extent directed by the Benefit Committee, the Master Trustee
shall from time to time:
(i) Subject to the terms of the Agreement, invest and reinvest
the principal and income of the Diversified Fund, without direction
and without distinction between principal and income of said
Diversified Fund, which has not been segregated in an Investment
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Manager Account or accounts, 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 men of prudence, acting in a like
capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims, as the Master
Trustee shall in its discretion determine, provided that the Master
Trustee shall not invest such principal and income in any security
issued by the Corporation or a Controlled Group Member.
Notwithstanding any other provision of this Appendix D, up to 10% of
the contributions made after March 1, 1969, to the Diversified Fund
may, to the extent directed by the Benefit Committee, be invested by
the Master Trustee in any special investment fund maintained by the
Master Trustee designed to offer unusual possibilities for growth and
capital investment, and specifically within the contemplation hereof,
and notwithstanding any other provision of this instrument, the
persons, natural or legal, who control the investments of this Trust,
may cause any part or all of the assets of this Trust to be invested
collectively with the money and other assets of trust created by
others by causing such money and other assets to be invested as part
of any common, collective or commingled trust fund, as the same may
have heretofore been or may hereafter be established by the Master
Trustee, which is qualified under the provisions of Code section
401(a) and exempt under the provisions of Code section 501(a), as the
same may be amended. The money and other assets of this Trust so
added to any such common, collective or commingled trust fund
maintained by the Master Trustee shall be subject to all of the
provisions of the Agreement, as the same may be amended, under which
any such common, collective or commingled trust fund shall be
maintained, and for the period of any such collective investment of
assets of this Trust such Agreement, as the same may be amended, shall
constitute a part of this instrument. The Master Trustee shall have
the sole responsibility with respect to selecting, making and
retaining investments; and
(ii) 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, 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 Master Trustee shall not invest such principal
and income in any instrument of debt issued by the Corporation or a
Controlled Group Member. The Master Trustee shall have the sole
responsibility with respect to selecting, making and retaining
investments, and
(iii) Use all cash in the Stock Fund A only to purchase Qualifying
Employer Securities. Purchases may be made from or through any source
(other than the Corporation or a Controlled Group Member) including a
Participant. Rights, options or warrants offered to purchase Qualifying
Employer Securities shall be exercised by the Master Trustee in his
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discretion but only to the extent that there is cash available in the
Stock Fund A 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 the Corporation or a Controlled Group Member
other than Qualifying Employer Securities shall be sold by the Master
Trustee on the open market; and
(iv) Use all cash in the Stock Fund B only to purchase Qualifying
Employer Securities. Purchases may be made from or through any source
(other than the Corporation) including a Participant. Rights, options
or warrants offered to purchase Qualifying Employer Securities shall be
exercised by the Master Trustee in his discretion but only to the extent
that there is cash available in 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 the
Corporation or a Controlled Group Member other than Qualifying Employer
Securities shall be sold by the Master Trustee on the open market; and
(v) Invest and reinvest the principal and income of the
Guaranteed Return Fund only in one or more contracts executed by,
assumed by, or transferred to the Master Trustee and one or more
insurance companies whereby such companies agree to guarantee a defined
rate or rates of earnings or interest on amounts so invested. Such
contract or contracts shall contain such terms, and shall be with such
insurance company or companies, as the Benefit Committee may direct; and
(vi) In making all investments pursuant to subsections (i), (ii),
(iii), (iv) and (v) above, the Master Trustee (A) shall not, except as
provided in Part 4 of Title I of ERISA, be bound by any law or court
doctrine of any state or jurisdiction limiting trust investments, (B)
makes no warranty or representation with respect to the continuing value
of participating units, and (C) shall give consideration to the cash
requirements of the Plan.
D.3 While the provisions of Article XVII of the Rockwell International
Corporation Savings Plan are in effect, the Master Trustee shall
establish:
(i) A Sub Fund A consisting of any cash, securities or other
consideration received by the Master Trustee as payment for shares of
Qualifying Employer Securities previously held in the Stock Fund A which
were tendered or deposited in accordance with Appendix E, 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 Master Trustee as payment for shares of
Qualifying Employer Securities previously held in the Stock Fund B which
were tendered or deposited in accordance with Appendix E, all property
purchased therewith and the proceeds and income therefrom.
The Master 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 Master Trustee and any Investment
Manager may invest and reinvest the principal and income of the Fixed
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Income Fund pursuant to Paragraph D.1 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 Master
Trustee for Participants in the Sub Fund A or the Sub Fund B pursuant to
a tender or deposit of shares of Qualifying Employer Securities in
accordance with Appendix E shall be similarly invested and reinvested.
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Appendix E
Voting of Qualifying Employer Securities
(a) Except as otherwise provided in this Appendix E, the duty with respect
to the voting, retention, and tendering of Qualifying Employer Securities held
in the Stock Fund A or the Stock Fund B shall be solely that of the Master
Trustee, to be exercised solely in the Master Trustee's discretion.
(b) With respect to any matter as to which a vote of the outstanding
shares of Qualifying Employer Securities is solicited by proxies, consents or
authorizations:
(i) Each Participant shall be entitled to direct the Master
Trustee, and the Master Trustee shall solicit the direction in writing
of each Participant, as to the manner in which voting rights of shares
of Qualifying Employer Securities 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 Qualifying Employer Securities 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 Master 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 Corporation will cause to be furnished to each
Participant and the Master 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 Corporation distributes to stockholders generally
regarding the exercise of such voting rights; and
(ii) The duty with respect to the exercise of voting rights on
shares of Qualifying Employer Securities 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 Master Trustee, to be exercised solely in the Master
Trustee's discretion.
(c) In the event of any Tender Offer (as defined in Section 17.1 of the
Rockwell International Corporation Savings Plan):
(i) Each Participant shall be entitled to direct the Master
Trustee, and the Master Trustee shall solicit the direction in writing
of each Participant, as to the tendering or disposition of any shares of
Qualifying Employer Securities 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 Stock Fund B account of such Participant, and,
except as limited by paragraph (iii) hereof, the Master Trustee shall
tender or deposit into a sub-fund established pursuant to Appendix D
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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
Qualifying Employer Securities 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 Master
Trustee to be exercised solely in the Master Trustee's discretion; and
(iii) Shares of Qualifying Employer Securities held in the Stock
Fund A or the Stock Fund B shall not be tendered or deposited into a
sub-fund established pursuant to Appendix D by the Master Trustee
pursuant to any such Tender Offer until the earliest 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 Qualifying
Employer Securities 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 Master 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 Qualifying Employer
Securities held in the Stock Fund A or the Stock Fund B which have been
tendered or deposited into a sub-fund established pursuant to Appendix D
pursuant to any such Tender Offer shall be solely that of the Master
Trustee, provided that the Master Trustee may solicit the direction in
writing of each Participant with respect to whom any such shares of
Qualifying Employer Securities have been tendered or deposited pursuant
to any such Tender Officer as to the withdrawing of, or other exercise
of any right to withdraw, such shares of Qualifying Employer Securities,
and if such solicitation is made, the Master Trustee shall act in
accordance with the last dated timely written direction, if any, of each
such Participant.
As used in this subparagraph (c) with respect to a Participant, the
term "Tender Date" means the date on which the Master Trustee tenders or
deposits into a sub-fund established pursuant to Appendix D any shares of the
Qualifying Employer Securities either representing the vested or non-vested
interest of such Participant in the Stock Fund A or credited to the Stock Fund
B account of such Participant in accordance with this subparagraph (c).
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