<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to _____________.
Commission file number 1-5358
Sundstrand Corporation
(Exact name of registrant as specified in its charter)
Delaware 36-1840610
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4949 Harrison Avenue, P.O. Box 7003, Rockford, IL 61125-7003
(Address of principal executive offices and Zip code)
(815) 226-6000
(Registrant's telephone number, including area code)
______________
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at October 31, 1994
Common Stock, par value 32,221,562
$.50 per share
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SUNDSTRAND CORPORATION
FORM 10-Q
For the Quarter Ended September 30, 1994
INDEX
Part I. Financial Information Page
Item 1. Financial Statements 3
Item 2. Management's Discussion and
Analysis of Financial Condition
and Results of Operations 7
Part II. Other Information
Item 1. Legal Proceedings 11
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 12
2
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<TABLE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Sundstrand Corporation and Subsidiaries
Condensed Consolidated Statement of Earnings (Unaudited)
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
(Amounts in millions except ------------------- -------------------
per share data) 1994 1993 1994 1993
- - - - ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $ 339.7 $ 324.7 $ 995.1 $1,007.2
Costs, expenses and other income:
Costs of products sold 225.9 223.2 670.8 662.3
Marketing and administration 68.4 69.8 210.4 224.1
Interest expense 7.5 10.0 21.5 30.8
Interest income (.9) (.8) (3.3) (3.2)
Other, net 1.7 4.6 1.0 6.9
--------- --------- --------- ---------
302.6 306.8 900.4 920.9
--------- --------- --------- ---------
Earnings from continuing operations before
income taxes 37.1 17.9 94.7 86.3
Less income taxes 13.4 2.4 34.1 26.3
--------- --------- --------- ---------
Earnings from continuing operations 23.7 15.5 60.6 60.0
Loss from discontinued SDC business,
prior to discontinuance, net of taxes - - - (.7)
Earnings from discontinued SDC business,
subsequent to discontinuance, net of taxes - 1.6 - 2.1
--------- --------- --------- ---------
Net earnings $ 23.7 $ 17.1 $ 60.6 $ 61.4
========= ========= ========= =========
Weighted-average number of common
shares outstanding 32.9 35.8 32.9 35.8
Earnings (loss) per share:
Earnings from continuing operations $ .72 $ .44 $ 1.84 $ 1.68
Loss from discontinued SDC business,
prior to discontinuance - - - (.02)
Earnings from discontinued SDC business,
subsequent to discontinuance - .05 - .06
--------- --------- --------- ---------
Net earnings $ .72 $ .49 $ 1.84 $ 1.72
========= ========= ========= =========
Cash dividends per common share $ .30 $ .30 $ .90 $ .90
========= ========= ========= =========
</TABLE>
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<TABLE>
Sundstrand Corporation and Subsidiaries
Condensed Consolidated Statement of Cash Flows (Unaudited)
<CAPTION>
Nine Months Ended
September 30,
------------------------
(Amounts in millions) 1994 1993
- - - - -----------------------------------------------------------------------------------------
<S> <C> <C>
Cash flow from operating activities:
Net earnings $ 60.6 $ 61.4
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 59.9 65.6
Deferred income taxes (20.2) (1.2)
Settlements of losses on long-term contracts (2.9) (4.1)
Change in operating assets and liabilities excluding
the effects of acquisitions and divestitures:
Accounts receivable 16.4 57.1
Inventory 6.5 (.1)
Other assets (.4) 13.2
Accounts payable 28.0 (7.5)
Accrued expenses (54.1) (25.8)
Cash provided by discontinued SDC business - 20.9
Other 8.8 13.9
--------- ---------
Total adjustments 42.0 132.0
--------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES 102.6 193.4
--------- ---------
Cash flow from investing activities:
Cash paid for property, plant and equipment (33.1) (43.3)
Proceeds from sale of property, plant and equipment 4.3 2.1
Cash paid for HMD-Kontro, net of cash acquired (24.5) -
Investment in equity companies (6.3) -
Cash used for discontinued SDC business - (5.4)
--------- ---------
NET CASH USED FOR INVESTING ACTIVITIES (59.6) (46.6)
--------- ---------
Cash flow from financing activities:
Net borrowings (payments) supported by lines of credit 66.9 (48.7)
Issuance of short-term debt - 8.0
Principal payments on long-term debt (1.6) (3.5)
Additional debt for HMD-Kontro acquisition 24.5 -
Repurchase of common stock (37.9) (60.4)
Dividends paid (29.5) (32.2)
--------- ---------
NET CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES 22.4 (136.8)
--------- ---------
Effect of exchange rate changes on cash (13.1) (6.1)
--------- ---------
Increase in cash and cash equivalents 52.3 3.9
Cash and cash equivalents at January 1 15.4 5.2
--------- ---------
CASH AND CASH EQUIVALENTS AT SEPTEMBER 30 $ 67.7 $ 9.1
========= =========
Supplemental cash flow information:
Interest paid $ 17.0 $ 24.0
Income taxes paid $ 87.0 $ 60.5
</TABLE>
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<TABLE>
Sundstrand Corporation and Subsidiaries
Condensed Consolidated Balance Sheet (Unaudited)
<CAPTION>
September 30, December 31,
(Amounts in millions) 1994 1993
- - - - -----------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current Assets
Cash and cash equivalents $ 67.7 $ 15.4
Accounts receivable, net 274.2 283.7
Inventories, net of progress payments 309.2 312.6
Deferred income taxes 56.2 71.8
Other current assets 12.5 9.4
--------- ---------
Total current assets 719.8 692.9
Property, Plant and Equipment, net 459.5 471.5
Intangible Assets, net 290.2 274.4
Deferred Income Taxes 66.9 31.3
Other Assets 44.3 41.8
--------- ---------
$1,580.7 $1,511.9
========= =========
Liabilities and Shareholders' Equity
Current Liabilities
Notes payable $ 118.0 $ 26.6
Long-term debt due within one year 7.8 8.2
Accounts payable 110.3 82.1
Income taxes payable - 34.6
Accrued salaries, wages and commissions 28.2 26.4
Accrued postretirement benefits other than pensions 19.3 19.5
Other accrued liabilities 114.4 130.2
--------- ---------
Total current liabilities 398.0 327.6
Long-Term Debt 246.5 246.8
Accrued Postretirement Benefits Other Than Pensions 354.8 348.7
Other Liabilities 64.7 76.6
Shareholders' Equity
Common stock, at par value 18.9 18.9
Other shareholders' equity 497.8 493.3
--------- ---------
516.7 512.2
--------- ---------
$1,580.7 $1,511.9
========= =========
</TABLE>
5
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The financial information contained herein is unaudited but, in
the opinion of the management of the Registrant, includes all
adjustments (all of which are normal recurring adjustments)
necessary for a fair presentation of the results of operations
for the periods indicated.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
ACCOUNTING POLICIES
The financial statements are condensed and should be read in
conjunction with the Annual Report on Form 10-K for the year
ended December 31, 1993.
PRINCIPLES OF CONSOLIDATION provide for the inclusion of the
accounts of Sundstrand Corporation and all subsidiaries. All
intercompany transactions are eliminated in consolidation.
CASH EQUIVALENTS are considered by the Registrant to be all
highly liquid debt instruments purchased with original maturities
of three months or less.
<TABLE>
INVENTORIES
The components of inventories at September 30, 1994, and December
31, 1993, were as follows:
Sept. 30, Dec. 31,
(Amounts in millions) 1994 1993
- - - - ----------------------------------------------------------------------------------------
<S> <C> <C>
Raw materials . . . . . . . . . . . . . . . . . . . . . . . . . . $ 50.1 $ 43.8
Work in process . . . . . . . . . . . . . . . . . . . . . . . . . 121.4 135.8
Finished goods and parts. . . . . . . . . . . . . . . . . . . . . 155.6 156.4
-------- --------
327.1 336.0
Less progress payments. . . . . . . . . . . . . . . . . . . . . . 17.9 23.4
-------- --------
$ 309.2 $ 312.6
======== ========
Prior to the application of progress payments, the inventories
shown above included costs related to long-term contracts of
$57.0 million and $61.4 million, at September 30, 1994, and
December 31, 1993, respectively.
</TABLE>
PROPERTY, PLANT AND EQUIPMENT
During 1994, the Company changed its estimate of the average
useful lives used to compute depreciation for certain fixed
assets. This change resulted from internal asset management
procedures that are designed to ensure continued compliance with
government contract accounting requirements and was made to
better reflect the estimated periods during which such assets
will remain in service. The change had the effect of increasing
net earnings by $1.8 million, or $.06 per share, and $3.6
million, or $.11 per share, in the three months and nine months
ended September 30, 1994, respectively.
6
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Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
The financial information for the quarter ended September 30,
1994, as compared with the financial information for the quarter
ended September 30, 1993, and the balance sheet at December 31,
1993, is discussed below, and should be read in conjunction with
the Registrant's Annual Report on Form 10-K for the year ended
December 31, 1993, and the financial data as presented in Item 1
above.
RESULTS OF OPERATIONS
Third quarter 1994 sales increased by $15.0 million, to $339.7
million, compared with third quarter 1993 sales of $324.7
million. Third quarter 1994 Aerospace segment sales of $175.7
million increased by $6.1 million compared with third quarter
1993 sales of $169.6 million. Commercial original equipment
manufacturer (OEM) sales and commercial aftermarket sales each
increased by approximately $8 million and military OEM sales
decreased by approximately $9 million in third quarter 1994
compared with third quarter 1993. Industrial segment sales
increased to $164.0 million in third quarter 1994 compared with
$155.1 million in third quarter 1993. The 6 percent sales
increase was due primarily to the first quarter acquisitions of
HMD Group Limited and the business of The Kontro Company
(HMD-Kontro acquisition) and improvements in Falk's and Sullair's
sales, partially offset by the effect of the divestiture of
Falk's Brazilian operation and weaker sales at Milton Roy.
Third quarter 1994 earnings from continuing operations were $23.7
million, or $.72 per share, compared with third quarter 1993
earnings from continuing operations of $15.5 million, or $.44 per
share. The increase in third quarter earnings from continuing
operations was due primarily to improved sales and operating
margins in both the Aerospace and Industrial segments. Third
quarter 1994 earnings benefitted by $1.8 million from decreased
depreciation expense due to the change in depreciable lives
described on page 6. Earnings per share for the same period also
benefitted from the effects of the share repurchase program,
although no shares were repurchased during the third quarter of
1994. Third quarter 1993 earnings benefitted by $2.7 million due
to a 1993 tax law change which increased the federal statutory
rate for corporations from 34 percent to 35 percent and allowed
the amortization of certain goodwill to be tax deductible.
Sales for the first nine months of 1994 were $995.1 million, a
decline of $12.1 million, from sales of $1,007.2 million for the
same 1993 period. The decline in military business was primarily
responsible for Aerospace segment sales decreasing to $508.4
million in the first nine months of 1994 from $529.7 million in
the first three quarters of 1993. Including the effects of the
HMD-Kontro acquisition and the divestiture of Falk's Brazilian
operation, Industrial segment sales for the first nine months of
1994 were $486.7 million, a $9.2 million increase from sales of
$477.5 million for the first nine months of 1993.
7
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Earnings from continuing operations, including a $3.6 million
benefit related to the change in depreciable lives, were $60.6
million, or $1.84 per share, for the first nine months of 1994.
Earnings from continuing operations for the first nine months of
1993 were $60.0 million, or $1.68 per share, which included a
$2.7 million benefit from a 1993 tax law change. Decreased
Aerospace segment operating profit in the nine months ended
September 30, 1994, compared with the same 1993 period, was
offset by increased Industrial segment operating profit and
decreased interest expense. The decrease in Aerospace segment
operating profit was due in part to the previously disclosed
short-term manufacturing inefficiencies related primarily to the
transfer of production from the Brea, California, plant to the
Puerto Rico plant and to the realignment of manufacturing
activities at other Aerospace plants and to the decline in
military sales. Earnings per share for the first nine months of
1994 also benefitted from the effects of the share repurchase program.
Third quarter 1994 incoming orders were $371.8 million, a $126.6
million increase over third quarter 1993 incoming orders of
$245.2 million. New orders for the first nine months of 1994
increased by $204.8 million, to $1,029.7 million, over new orders
of $824.9 million for the same period last year. Total unfilled
orders on September 30, 1994, were $717.0 million, compared with
$731.7 million on September 30, 1993, and $682.4 million on
December 31, 1993.
INDUSTRIAL OVERVIEW
Third quarter sales for Falk's ongoing businesses increased 11
percent while sales at Sullair improved 5 percent, as strength
across all U.S. product lines was tempered by prior booking
weakness in Europe. Milton Roy sales were down 4 percent,
excluding the HMD-Kontro acquisition.
Industrial incoming orders, excluding acquisitions and
divestitures, were up 19 percent in the third quarter and 8
percent in the first nine months of 1994, compared with the same
periods in 1993. Industrial unfilled orders at September 30,
1994, were $137.9 million, compared with $103.8 million at
September 30, 1993, and $110.2 million at December 31, 1993.
AEROSPACE OVERVIEW
Aerospace segment sales in the third quarter of 1994 increased 4
percent from the third quarter of 1993, reflecting a 16 percent
increase in commercial revenues partially offset by a 13 percent
decline in military markets.
Aerospace incoming orders were significantly higher in the third
quarter compared with the same period last year, which was
depressed by substantial commercial OEM cancellations.
Commercial aftermarket bookings improved 33 percent in the
quarter and 16 percent compared with the first nine months of
1993. Aerospace unfilled orders at September 30, 1994, were
$579.1 million, compared with $627.9 million at September 30,
1993, and $572.2 million at December 31, 1993.
8
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LIQUIDITY & CAPITAL RESOURCES
Working capital decreased to $321.8 million at September 30,
1994, from $365.3 million at December 31, 1993. The $43.5
million decrease was due primarily to an increase in notes and
accounts payable, partially offset by an increase in cash and a
reduction in income taxes payable. The increase in notes payable
was due primarily to the repurchase of common stock under the
stock repurchase program, the HMD-Kontro acquisition and the
discontinuance of a cash management policy which reduced notes
payable at quarter end using available foreign cash. The
increase in cash also was due primarily to the discontinuation of
this cash management policy. The reduction in income taxes
payable related primarily to a $34.9 million first quarter 1994
payment relating to the gain on the sale of Sundstrand Data
Control (SDC).
Net cash provided by operating activities for the first nine
months of 1994 declined to $102.6 million compared with $193.4
million for the first nine months of 1993. The decrease was due
primarily to the decline in accounts receivable being $40.7
million less in the first nine months of 1994 compared with the
same 1993 period, the previously mentioned tax payment relating
to the gain on the sale of SDC and the absence of cash flow in
1994 from SDC, which was reflected as a discontinued operation in
1993.
In the nine months ended September 30, 1994, the Registrant used
$59.6 million of cash for investing activities, primarily for the
purchase of fixed assets and the HMD-Kontro acquisition. In the
same 1993 period, $46.6 million of cash was used for investing
activities, primarily for the purchase of fixed assets. In the
first nine months of 1994, $22.4 million of cash was provided by
financing activities, primarily net borrowings supported by lines
of credit and borrowings for the HMD-Kontro acquisition,
partially offset by cash used to repurchase common stock and pay
dividends. In the same 1993 period, $136.8 million of cash was
used for financing activities, primarily for debt and dividend
payments and for the repurchase of common stock.
As previously disclosed, the Registrant's Board of Directors
authorized the repurchase of up to ten million shares of the
Registrant's outstanding common stock. As of September 30, 1994,
a total of approximately four million of the authorized shares
had been repurchased. No repurchases of common stock were made
under this program in the third quarter.
At September 30, 1994, the Registrant's ratio of total debt to
total capital was 41.9 percent compared with 35.5 percent at
December 31, 1993. The increase was due primarily to the
previously discussed increase in notes payable and the effects of
the share repurchase program.
TAX ISSUES
As previously disclosed, the Registrant has been pursuing a legal
reversal of a 1992 Tax Court opinion related to the allocation of
payments made upon the resolution of government contract
disputes. In the third quarter, after having its Petition for
Writ of Certiorari to the United States Supreme Court denied, the
Registrant ceased its efforts to reverse the Tax Court decision
and made a payment of $17.8 million to the U.S. government.
Existing tax and interest provisions were sufficient to cover the
resolution of this issue.
9
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GOVERNMENT CONTRACT MATTERS
As previously disclosed, the Registrant has been involved in
settlement negotiations with the U.S. Navy related to the
termination of a contract for the supply of jet aircraft start
units. In October 1994, a settlement was reached in which the
Registrant expects to recover approximately $9.5 million.
Actions are ongoing to implement the settlement agreement,
including the verification of termination settlement expenses,
arrangement of payment and commencement of the administrative
closeout process. The resolution of this matter is not expected
to have a material financial impact on the Registrant, nor impact
the Registrant's ability to enter into future contractual
agreements with the U.S. Navy.
OUTLOOK
Based on the strength of orders during the first nine months, the
Registrant is maintaining its outlook for 1994 earnings to be
between $2.70 and $3.00 per share, exclusive of the impact on
earnings of the change in depreciable lives, which is expected to
be $5.5 million, or $.17 per share. Although the Registrant
projects that 1995 earnings will exceed the 1994 forecasted
range, it does not expect that earnings will reach the $3.60 per
share average recently projected by analysts.
10
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Registrant has disclosed various legal proceedings in its
Form 10-K for the fiscal year ended December 31, 1993. There
have been no material legal developments since that time, except
as set forth under "Tax Issues" and "Government Contract Matters"
in Part I, Item 2 herein, and under "Tax Issues" in Part I, Item
2 of the Registrant's Form 10-Q for the quarterly period ended
June 30, 1994.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(3) Articles of Incorporation and By-laws
(a) Text of resolution adopted by the Board
of Directors of Registrant on April 19,
1994, amending Registrant's By-laws,
effective July 1, 1994.
(b) Registrant's By-laws, including all
amendments as effective July 1, 1994.
(10) Material Contracts
(a) Agreement dated September 24, 1994,
between Registrant and Harry C.
Stonecipher, Registrant's former
Chairman of the Board, President and
Chief Executive Officer, providing for
Mr. Stonecipher's early retirement from
his employment with the Registrant.
(b) Employment Agreement dated October 3,
1994, between Registrant and Don R.
O'Hare, Registrant's Chairman of the
Board and Chief Executive Officer.
(11) Statement Re Computation of Per Share
Earnings
(a) Computation of Fully Diluted Earnings
Per Share (Unaudited) for the quarters
ended September 30, 1994, and 1993,
and for the nine months ended
September 30, 1994, and 1993.
(27) Financial Data Schedule
(b) Reports on Form 8-K
None
11
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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.
Sundstrand Corporation
(Registrant)
Date: November 3, 1994 /s/ Richard M. Schilling
--------------------------
Richard M. Schilling
Vice President and General
Counsel and Secretary
Date: November 3, 1994 /s/ DeWayne J. Fellows
-------------------------
DeWayne J. Fellows
Vice President, Controller
12
Exhibit (3)(a)
AMENDMENT OF BY-LAWS
Mr. Stonecipher referred to the material in the Board
Agenda Book regarding the amendment of the Corporation's By-
Laws effective July 1, 1994, to eliminate the officer position
of Vice President, International Relations and Business
Development. Thereupon, on motion duly made by Don R. O'Hare,
and seconded by Charles Marshall, the following resolution was
adopted:
RESOLVED, by the Board of Directors of Sundstrand
Corporation, that the By-Laws of the Corporation be, and
they hereby are, amended effective July 1, 1994, as
follows:
1. The first sentence of Section 4.1 of Article IV
(OFFICERS) is amended to read as follows:
"The officers of the Corporation shall consist of a
Chairman of the Board, President and Chief Executive
Officer; an Executive Vice President and Chief
Financial Officer; an Executive Vice President and
Chief Operating Officer, Aerospace; an Executive Vice
President and Chief Operating Officer, Industrial; a
Vice President, Personnel and Public Relations; a
Vice President and General Counsel; one or more other
Vice Presidents; a Secretary; a Treasurer; and a
Controller, all of whom shall be elected by the Board
of Directors and shall hold office until their
successors are duly elected and qualified."
2. Section 4.11 of Article IV (OFFICERS) is deleted in
its entirety.
3. Sections 4.12 through 4.16 of Article IV (OFFICERS)
are renumbered Sections 4.11 through 4.15,
respectively.
Exhibit (3)(b)
BY-LAWS
OF
SUNDSTRAND CORPORATION
(A Delaware Corporation)
Effective July 1, 1994
ARTICLE I
OFFICES
Section 1.1. PRINCIPAL OFFICE. The principal office of the
Corporation in the State of Delaware shall be in the City of
Wilmington, County of New Castle.
Section 1.2. OTHER OFFICES. The Corporation may also have
offices at such other places, either within or without the State
of Delaware, as the Board of Directors may from time to time
determine or the business of the Corporation may require.
ARTICLE II
STOCKHOLDERS' MEETINGS
Section 2.1. PLACE OF MEETINGS. All annual and special
meetings of the stockholders shall be held at such place, either
within or without the State of Delaware, as may be fixed by the
Board and specified in the notice of the meeting.
Section 2.2. ANNUAL MEETINGS. An annual meeting of
stockholders shall be held on such date and at such hour as may
be fixed by the Board and specified in the notice of the meeting,
when they shall elect by a plurality vote a Board of Directors
and transact such other business as may properly be brought
before the meeting.
Section 2.3. LIST OF STOCKHOLDERS. The Secretary shall
prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to
vote at the meeting, arranged in alphabetical order, and showing
the address of each stockholder and the number of shares
registered in the name of each stockholder. Such list shall be
open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a
period of at least ten days prior to the meeting, either at a
place within the city where the meeting is to be held, which
place shall be specified in the notice of the meeting, or, if not
so specified, at the place where the meeting is to be held. The
list shall also be produced and kept at the time and place of the
meeting during the whole time thereof, and may be inspected by
any stockholder who is present. The original or duplicate stock
ledger shall be the only evidence as to who are the stockholders
entitled to examine such list or stock ledger or transfer book or
to vote in person or by proxy at any meeting of stockholders.
Section 2.4. SPECIAL MEETINGS OF STOCKHOLDERS. Special
meetings of the stockholders, for any purpose or purposes, unless
otherwise prescribed by statute, may be called by the Chairman of
the Board and shall be called by the Chairman of the Board or
Secretary at the request in writing of a majority of the Board of
Directors, or at the request in writing of stockholders owning
eighty percent or more in amount of the entire capital stock of
the Corporation issued and outstanding and entitled to vote.
Such request shall state the purpose or purposes of the proposed
meeting.
Section 2.5. NOTICE OF MEETINGS. Except as otherwise
expressly provided by law or by the Certificate of Incorporation
or these By-Laws, written or printed notice of each annual or
special meeting of stockholders shall be given by mail at least
ten but not more than sixty days before the meeting to the
stockholders of record entitled to vote thereat. Every such
notice shall be directed to a stockholder at his address as it
shall appear on the transfer books of the Corporation; shall
state the date, time and place of the meeting; and, in the case
of a special meeting, shall state briefly the purposes thereof.
Business transacted at all special meetings shall be confined to
the purposes stated in the notice thereof.
Section 2.6. QUORUM AND ADJOURNMENTS. The holders of a
majority of the stock issued and outstanding and entitled to vote
thereat, present in person or represented by proxy, shall be
necessary and sufficient to constitute a quorum at all meetings
of the stockholders for the transaction of business, except as
otherwise provided by statute, by the Certificate of
Incorporation, or by these By-Laws. If, however, such quorum
shall not be present or represented at any meeting of the
stockholders, the stockholders entitled to vote thereat, present
in person or represented by proxy, shall have power to adjourn
the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present or
represented. At such adjourned meeting, at which a quorum shall
be present or represented, any business may be transacted which
might have been transacted at the meeting as originally notified.
The absence from any meeting of the number required by law or by
the Certificate of Incorporation or these By-Laws for action upon
any given matter shall not prevent action at such meeting upon
any other matter or matters which may properly come before the
meeting if the number required in respect of such other matter or
matters shall be present. Once a quorum is present at a meeting,
it shall be deemed to be acting thereafter throughout the
meeting, irrespective of any withdrawals. Nothing in these By-
Laws shall affect the right to adjourn where a quorum is present.
Section 2.7. VOTING BY STOCKHOLDERS. When a quorum is
present at any meeting, the vote of the holders of a majority of
the stock having voting power present in person or represented by
proxy shall decide any question brought before such meeting,
unless the question is one upon which by express provision of the
statutes or of the Certificate of Incorporation or of these By-
Laws a different vote is required, in which case such express
provision shall govern and control the decision of such question.
At any meeting of the stockholders every stockholder having
the right to vote shall be entitled to vote in person, or by
proxy appointed by an instrument in writing, subscribed by such
stockholder or by his attorney or agent thereunto authorized in
writing, and bearing a date not more than three years prior to
said meeting, unless said instrument provides for a longer
period. Except as otherwise provided by the Certificate of
Incorporation, each stockholder present in person or by proxy at
any meeting shall have, on each matter on which stockholders are
entitled to vote, one vote for each share of stock having voting
power, registered in his name on the books of the Corporation.
Section 2.8. NEW BUSINESS PROPOSALS AT ANNUAL MEETINGS.
Only such new business shall be conducted, and only such
proposals shall be acted upon at an annual meeting of
stockholders, as shall have been properly brought before such
annual meeting (a) by, or at the direction of, the Board of
Directors, or (b) by any stockholder of the Corporation who
complies with the notice procedures set forth in this Section
2.8. A stockholder who wishes to bring a proposal before an
annual meeting shall give timely notice thereof in writing to the
Secretary of the Corporation. Such notice, to be timely, shall
be delivered to, or mailed and received by the Secretary at the
principal executive offices of the Corporation at least sixty
days but not more than ninety days prior to the scheduled annual
meeting, regardless of any postponements, deferrals or
adjournments of that meeting to a later date; provided, however,
that if less than seventy days' notice or prior public disclosure
of the date of the scheduled annual meeting is given or made,
such notice by a stockholder to be timely shall be so delivered
or received not later than the close of business on the tenth day
following the earlier of the day on which notice of the scheduled
annual meeting was mailed or the day on which public disclosure
thereof was made.
Each such stockholder notice shall set forth as to each
proposal to be brought before the annual meeting (a) a brief
description of the proposal and the reasons for conducting such
business at the annual meeting, (b) the name and address, as they
appear on the transfer books of the Corporation, of the
stockholder proposing such business and any other stockholders
known by such stockholder to be supporting the proposal, (c) the
class and number of shares of the Corporation's stock which are
beneficially owned by the stockholder on the date of such
stockholder notice and by any other stockholders known by such
stockholder to be supporting such proposal, and (d) any financial
interest of the stockholder in such proposal.
The Board of Directors may reject any stockholder proposal
not timely made in accordance with the terms of this Section 2.8.
If the Board of Directors, or a designated committee thereof,
determines that the information provided in a stockholder's
notice does not satisfy the informational requirements of this
Section 2.8 in any material respect, the Secretary shall promptly
notify such stockholder of the deficiency in the notice. The
stockholder shall have an opportunity to cure the deficiency by
providing additional information to the Secretary within five
days from the date such notice of deficiency is given to the
stockholder, as the Board of Directors or such committee shall
reasonably determine. If the deficiency is not cured within such
period, or if the Board of Directors or such committee determines
that the additional information provided by the stockholder,
together with the information previously provided, does not
satisfy the requirements of this Section 2.8 in any material
respect, then the Board of Directors may reject such proposal.
The Secretary shall notify the stockholder in writing whether his
proposal has been made in accordance with the time and
informational requirements of this Section 2.8. Notwithstanding
the procedure set forth in this Section 2.8, if neither the Board
of Directors nor such committee makes a determination as to the
validity of any stockholder proposal, the presiding officer of
the annual meeting shall determine and declare at the annual
meeting whether the stockholder proposal was made in accordance
with the terms of this Section 2.8. If the presiding officer
determines that the stockholder's proposal was not made in
accordance with the terms of this Section 2.8, he shall so
declare at the annual meeting and any such proposal shall not be
acted upon at the annual meeting.
This Section 2.8 shall not prevent the consideration and
approval or disapproval at an annual meeting of reports of
officers, directors and committees of the Board of Directors,
but, in connection with such reports, no new business shall be
acted upon at such annual meeting unless stated, filed and
received as herein provided.
ARTICLE III
DIRECTORS
Section 3.1. NUMBER, ELECTION AND TERMS OF OFFICE OF
DIRECTORS. The number of directors which shall constitute the
whole Board shall be eleven in number. Directors need not be
stockholders in the Corporation. Except as provided in Section
3.3, the directors shall be elected at the annual meeting of the
stockholders, and each director elected shall hold office until
his successor is elected and qualified or until his earlier
resignation. The directors shall be divided into three classes:
Class I, Class II and Class III. Such classes shall be as nearly
equal in number as possible. The term of office of the initial
Class I directors shall expire at the annual meeting of
stockholders in 1971, the term of office of the initial Class II
directors shall expire at the annual meeting of stockholders in
1972, and the term of office of the initial Class III directors
shall expire at the annual meeting of stockholders in 1973, or
thereafter in each case when their respective successors are
elected and qualified. At each annual election held after
classification and the initial election of directors according to
classes, the directors chosen to succeed those whose terms then
expire shall be identified as being of the same class as the
directors they succeed and shall be elected for a term expiring
at the third succeeding annual meeting or thereafter when their
respective successors in each case are elected and qualified.
Section 3.2. CORPORATE RECORDS. The directors may keep the
books of the Corporation, except such as are required by law to
be kept within the State of Delaware, outside of Delaware at such
place or places as they may from time to time determine.
Section 3.3. VACANCIES. Vacancies occurring in the Board of
Directors and newly created directorships resulting from any
increase in the authorized number of directors may be filled by
a majority of the directors then in office, although less than a
quorum, and any director so chosen shall hold office until his
successor is elected and qualified. A director elected to fill
a vacancy shall be elected for the unexpired portion of the term
of his predecessor in office. A director elected to fill a newly
created directorship shall serve for the term provided herein for
the class of directors for which such director was elected.
Section 3.4. GENERAL POWERS. The business and affairs of
the Corporation shall be managed by its Board of Directors which
may exercise all such powers of the Corporation and do all such
lawful acts and things as are not by statute or by the
Certificate of Incorporation or by these By-Laws directed or
required to be exercised or done by the stockholders.
Section 3.5. PLACE OF MEETINGS. The Board of Directors of
the Corporation may hold meetings, both regular and special,
either within or without the State of Delaware.
Section 3.6. ANNUAL MEETINGS. The first meeting of each
newly elected Board shall constitute the annual meeting of said
Board and shall be convened as soon as is conveniently possible
but in no event more than two weeks after the date of the annual
meeting of stockholders in each year at such time and place as
shall be fixed by the Chairman of the Board.
Section 3.7. REGULAR MEETINGS. Regular meetings of the
Board shall be held upon notice, or without notice, at least
quarterly, at such time and place as shall from time to time be
determined by the Board.
Section 3.8. SPECIAL MEETINGS. Special meetings of the
Board may be called by the Chairman of the Board or any four
directors. Notice of each special meeting of the Board may be
given by mail, telegraph or cable, personal delivery or
telephone. Notice by mail shall be given at least three days
before the meeting; notice by any other means shall be given a
reasonable period of time before the time of such meeting but in
no event shall such notice be given less than one hour before
such meeting. If notice is by telephone, such notice shall be
promptly confirmed by telegraph or cable to each director.
Section 3.9. QUORUM. At all meetings of the Board, the
presence of a majority of the full number of directors shall be
necessary and sufficient to constitute a quorum for the
transaction of business, and the act of a majority of the
directors present at any meeting at which there is a quorum shall
be the act of the Board of Directors, except as may be otherwise
specifically provided by statute or by the Certificate of
Incorporation or by these By-Laws. If a quorum shall not be
present at any meeting of the Board of Directors, the directors
present thereat may adjourn the meeting from time to time,
without notice other than announcement at the meeting, until a
quorum shall be present.
Section 3.10. ACTION BY BOARD WITHOUT MEETING.
Notwithstanding anything contained in these By-Laws, any action
required or permitted to be taken at any meeting of the Board of
Directors or of any Committee thereof may be taken without a
meeting, if a written consent thereto is signed by all members of
the Board or of such Committee, as the case may be, and such
written consent is filed with the minutes of proceedings of the
Board of Directors or the Committee.
Section 3.11. COMPENSATION OF DIRECTORS. The Board of
Directors, by resolution adopted by a majority of the whole
Board, may establish reasonable compensation of all directors for
services to the Corporation as directors, officers or otherwise.
No such payment shall preclude any director from serving the
Corporation in any other capacity and receiving compensation
therefor. Members of any Committee may be allowed like
compensation for their services to the Corporation.
Section 3.12. INTERESTED DIRECTORS. No contract or
transaction between the Corporation and one or more of its
directors or officers, or between the Corporation and any other
corporation, partnership, association, or other organization in
which one or more of its directors or officers are directors or
officers, or have a financial interest, shall be void or voidable
solely for this reason, or solely because the director or officer
is present at or participates in the meeting of the Board or
Committee which authorizes the contract or transaction, or solely
because his or their votes are counted for such purpose, if (1)
the material facts as to his relationship or interest and as to
the contract or transaction are disclosed or are known to the
Board of Directors or the Committee, and the Board or Committee
in good faith authorizes the contract or transaction by the
affirmative votes of a majority of the disinterested directors,
even though the disinterested directors be less than a quorum; or
(2) the material facts as to his relationship or interest and as
to the contract or transaction are disclosed or are known to
stockholders entitled to vote thereon, and the contract or
transaction is specifically approved in good faith by vote of the
stockholders; or (3) the contract or transaction is fair as to
the Corporation as of the time it is authorized, approved or
ratified, by the Board of Directors, Committee, or the
stockholders. Common or interested directors may be counted in
determining the presence of a quorum at a meeting of the Board or
of the Committee which authorizes the contract or transaction.
Section 3.13. COMMITTEES. The Board of Directors may, by
resolution passed by a majority of the whole Board, designate one
or more Committees, each Committee to consist of two or more of
the directors of the Corporation. Any such Committee, to the
extent provided in the resolution not inconsistent with the
provisions of the Statutes of Delaware, shall have and may
exercise the powers and authority of the Board of Directors in
the management of the Corporation and may authorize the seal of
the Corporation to be affixed to all papers which may require it.
A majority of the members of the Committee then holding office
shall constitute a quorum at all meetings and each such Committee
shall keep regular minutes of its proceedings and report the same
to the whole Board.
Section 3.14. NOMINATION FOR ELECTION OF DIRECTORS.
Nominations for the election of Directors shall be properly made
by the Board of Directors or a nominating committee appointed by
the Board of Directors or by any stockholder entitled to vote in
the election of Directors generally; provided, however, that any
such stockholder may nominate one or more persons for election as
Directors at a meeting only if such stockholder has given written
notice of such stockholder's intent, either by personal delivery
or by United States mail, postage prepaid, to the Secretary not
later than (1) with respect to an election to be held at an
annual meeting of stockholders, ninety days prior to the
anniversary date of the immediately preceding annual meeting, and
(2) with respect to an election to be held at a special meeting
of stockholders for the election of directors, the close of
business on the tenth day following the date on which notice of
such meeting is first given to stockholders. Each such notice
shall set forth: (a) the name and address, as they appear on the
transfer books of the Corporation, of the stockholder who intends
to make the nomination and of the person or persons to be
nominated; (b) a representation that the stockholder is a holder
of record of stock of the Corporation entitled to vote at such
meeting and intends to appear in person or by proxy at the
meeting to nominate the person or persons specified in the
notice; (c) a description of all arrangements or understandings
between the stockholder and each nominee and any other person or
persons (naming such person or persons) pursuant to which the
nomination or nominations are to be made by the stockholder; (d)
such other information regarding each nominee proposed by such
stockholder as would be required to be included in a proxy
statement filed pursuant to the proxy rules of the Securities and
Exchange Commission as then in effect; and (e) the consent of
each nominee to serve as a director of the Corporation if so
elected.
The presiding officer of any meeting at which a stockholder
or its representative attempts to nominate one or more persons
for election as directors may refuse to acknowledge the
nomination of any person not made in compliance with the
provisions of this Section 3.14.
ARTICLE IV
OFFICERS
Section 4.1. DESIGNATION: NUMBER. The officers of the
Corporation shall consist of a Chairman of the Board, President
and Chief Executive Officer; an Executive Vice President and
Chief Financial Officer; an Executive Vice President and Chief
Operating Officer, Aerospace; an Executive Vice President and
Chief Operating Officer, Industrial; a Vice President, Personnel
and Public Relations; a Vice President and General Counsel; one
or more other Vice Presidents; a Secretary; a Treasurer; and a
Controller, all of whom shall be elected by the Board of
Directors and shall hold office until their successors are duly
elected and qualified. In addition, the Chairman of the Board,
President and Chief Executive Officer may appoint a Tax Director,
one or more Assistant Secretaries, Assistant Treasurers and
Assistant Controllers and such other officers and agents as the
Chairman of the Board, President and Chief Executive Officer may
deem necessary or desirable, who shall hold their offices for
such terms and shall have such authority and perform such duties
as shall be determined by the Chairman of the Board, President
and Chief Executive Officer from time to time. Any Executive
Vice President or Vice President designated by a resolution of
the Board of Directors or by delegation of the Chairman of the
Board, President and Chief Executive Officer shall have authority
to sign contracts and any other documents as specifically
authorized by the Board of Directors or the Chairman of the
Board, President and Chief Executive Officer or which are within
the ordinary course of the business of the Corporation.
Section 4.2. NON-CORPORATE OFFICERS. The Chairman of the
Board, President and Chief Executive Officer shall have authority
to appoint from time to time officers of divisions, product
groups or other segments of the Corporation's business for such
terms, with such authority and at such salary as the Chairman of
the Board, President and Chief Executive Officer in his sole
discretion shall determine; provided, however, such appointed
officer shall under no circumstances have authority to bind any
other division, product group or other segment of the
Corporation's business nor to bind the Corporation, except as to
the normal and usual business affairs of the division, product
group or other segment of the Corporation's business of which he
is an officer. Such appointed officer, as such, shall not be
construed as an officer of the Corporation.
Section 4.3. SALARIES. The salaries of the officers elected
pursuant to Section 4.1 above shall be determined by the Board of
Directors. The salaries of all other officers and agents of the
Corporation appointed by the Chairman of the Board, President and
Chief Executive Officer shall be determined by the Board of
Directors or the Chairman of the Board, President and Chief
Executive Officer.
Section 4.4. REMOVAL. Any officer elected by the Board of
Directors and any officer or agent appointed by the Chairman of
the Board, President and Chief Executive Officer, as the case may
be, may be removed at any time by the Board of Directors or the
Chairman of the Board, President and Chief Executive Officer,
respectively, whenever in its or his judgment the best interests
of the Corporation will be served thereby, but such removal shall
be without prejudice to the contract rights, if any, of the
person so removed. Any vacancy occurring in any elected office
of the Corporation shall be filled by the Board of Directors.
Section 4.5. CHAIRMAN OF THE BOARD, PRESIDENT AND CHIEF
EXECUTIVE OFFICER. The Chairman of the Board, President and
Chief Executive Officer shall be the chief executive officer of
the Corporation. The Chairman of the Board, President and Chief
Executive Officer shall preside at all meetings of stockholders
and of the Board and shall see that all orders and resolutions of
the Board are carried into effect. Subject to the control of the
Board, the Chairman of the Board, President and Chief Executive
Officer shall have general supervision, control and management of
the affairs and business of the Corporation. The Chairman of the
Board, President and Chief Executive Officer and/or the Executive
Vice President and Chief Financial Officer shall execute bonds,
mortgages and other contracts requiring a seal, under the seal of
the Corporation, except where required by law to be otherwise
signed and executed and except where the signing and execution
thereof shall be expressly delegated by the Board of Directors to
some other officer or agent of the Corporation.
Section 4.6. EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL
OFFICER. The Executive Vice President and Chief Financial
Officer shall be the chief financial officer of the Corporation
and shall be in charge of the financial, accounting, taxation,
administration, personnel and public relations activities of the
Corporation and shall be under the direction and report to the
Chairman of the Board, President and Chief Executive Officer. He
and/or the Chairman of the Board, President and Chief Executive
Officer shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the Corporation, except where
required by law to be otherwise signed and executed and except
where the signing and execution thereof shall be expressly
delegated by the Board of Directors to some other officer or
agent of the Corporation.
Section 4.7. EXECUTIVE VICE PRESIDENT AND CHIEF OPERATING
OFFICER, AEROSPACE. The Executive Vice President and Chief
Operating Officer, Aerospace shall be the chief operating officer
of the Corporation's aerospace businesses. He shall assist the
Chairman of the Board, President and Chief Executive Officer in
the general supervision, control and management of the affairs
and business of the Corporation's aerospace businesses and the
Corporation's government contracts and compliance activities.
Section 4.8. EXECUTIVE VICE PRESIDENT AND CHIEF OPERATING
OFFICER, INDUSTRIAL. The Executive Vice President and Chief
Operating Officer, Industrial shall be the chief operating
officer of the Corporation's industrial businesses. He shall
assist the Chairman of the Board, President and Chief Executive
Officer in the general supervision, control and management of the
affairs and business of the Corporation's industrial businesses.
Section 4.9. VICE PRESIDENT, PERSONNEL AND PUBLIC RELATIONS.
The Vice President, Personnel and Public Relations shall be in
charge of the personnel functions of the Corporation and shall be
directly responsible in such capacity for labor relations
involving the Corporation and its employees. He shall also be in
charge of the public relations activities of the Corporation. He
shall be under the direction of and report to the Executive Vice
President and Chief Financial Officer.
Section 4.10. VICE PRESIDENT AND GENERAL COUNSEL. The Vice
President and General Counsel shall be the chief legal officer of
the Corporation, shall be responsible for all legal matters
involving the Corporation and shall direct the Corporation's
legal staff. He shall be under the direction of and report to
the Chief Executive Officer.
Section 4.11. OTHER VICE PRESIDENTS. The other Vice
Presidents shall perform such duties as may be prescribed by the
Board of Directors or the Chairman of the Board, President and
Chief Executive Officer.
Section 4.12. SECRETARY AND ASSISTANT SECRETARIES.
(a) The Secretary shall attend all sessions of the Board of
Directors and all meetings of the stockholders and record the
minutes of all proceedings in a book to be kept for that purpose,
and shall perform like duties for Committees of the Board when
required. He shall give, or cause to be given, notice of all
meetings of the stockholders and of the Board of Directors, and
shall perform such other duties as may be prescribed by the Board
of Directors or the Chairman of the Board, President and Chief
Executive Officer. He shall keep in safe custody the seal of the
Corporation, and affix the same to any instrument requiring it,
and when affixed it shall be attested by his signature or by the
signature of the Treasurer or an Assistant Secretary.
(b) The Assistant Secretaries in the order of their
seniority shall, in the absence or disability of the Secretary,
perform the duties and exercise the powers of the Secretary, and
shall perform such other duties as the Chairman of the Board,
President and Chief Executive Officer shall prescribe.
Section 4.13. TREASURER AND ASSISTANT TREASURERS.
(a) The Treasurer shall, subject to the direction of the
Executive Vice President and Chief Financial Officer, have the
custody of the corporate funds and securities and shall keep full
and accurate accounts of receipts and disbursements in books
belonging to the Corporation and shall deposit all money and
other valuable effects in the name and to the credit of the
Corporation, in such depositories as may be designated by the
Board of Directors.
(b) He shall disburse the funds of the Corporation when
proper to do so, taking proper vouchers for such disbursements,
and shall render to the Executive Vice President and Chief
Financial Officer, the Chairman of the Board, President and Chief
Executive Officer and the Board of Directors, at the regular
meetings of the Board, or whenever they may require it, an
account of all his transactions as Treasurer and of the financial
condition of the Corporation.
(c) If required by the Board of Directors, he shall give
the Corporation a bond in such sum, and with such surety or
sureties as shall be satisfactory to the Board, for the faithful
performance of the duties of his office, and for the restoration
to the Corporation, in case of his death, resignation, retirement
or removal from office, of all books, papers, vouchers, money and
other property of whatever kind in his possession or under his
control belonging to the Corporation.
(d) The Treasurer shall be under the direction of and
report to the Executive Vice President and Chief Financial
Officer.
(e) The Assistant Treasurers in the order of their
seniority shall, in the absence or disability of the Treasurer,
perform the duties and exercise the powers of the Treasurer and
shall perform such other duties as the Board of Directors or the
Executive Vice President and Chief Financial Officer shall
prescribe.
Section 4.14. CONTROLLER AND ASSISTANT CONTROLLERS.
(a) The Controller shall be the chief accounting officer of
the Corporation and shall be responsible for the installation and
supervision of all accounting records, including the preparation
and interpretation of financial statements, the continuous audit
of accounts and records, and such other duties usually incident
to the office of Controller. He shall be under the direction of
the Executive Vice President and Chief Financial Officer and
shall, in addition to the foregoing duties, perform such other
duties as may be assigned to him by the Board of Directors or the
Executive Vice President and Chief Financial Officer.
(b) The Assistant Controllers in the order of their
seniority shall, in the absence or disability of the Controller,
perform the duties and exercise the powers of the Controller and
shall perform such other duties as the Board of Directors or the
Executive Vice President and Chief Financial Officer shall
prescribe.
Section 4.15. TAX DIRECTOR. The Tax Director shall be
responsible for the preparation and signing of all federal and
state tax returns, consents, elections, closing agreements and
all other documents related to the determination of any federal
or state tax liability of the Corporation, and as such shall be
under the direction of and report to the Executive Vice President
and Chief Financial Officer.
ARTICLE V
SHARES AND THEIR TRANSFER
Section 5.1. CERTIFICATES OF STOCK. Certificates for shares
of stock of the Corporation shall be in such form as shall be
approved by the Board, and during the period while more than one
class of stock or more than one series of any class of the
Corporation is authorized, the powers, designations, preferences
and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights
shall be set forth in full or summarized on the face or back of
the certificates which the Corporation shall issue to represent
such class or series of stock, or else there shall appear on the
certificates a statement that the Corporation shall furnish such
information to a stockholder without charge if it be requested.
They shall exhibit the holder's name and number of shares, and,
with respect to each class of stock of the Corporation, or series
thereof, if there be more than one class or series thereof, shall
bear a distinguishing letter, and each class or series thereof,
if any, shall be numbered serially and be issued in consecutive
order. They shall bear the Corporate seal or a facsimile thereof
and shall be signed by the Chairman of the Board, President and
Chief Executive Officer, an Executive Vice President, or a Vice
President, and by the Treasurer or an Assistant Treasurer, or the
Secretary or an Assistant Secretary of the Corporation. If such
certificate is countersigned (1) by a transfer agent other than
the Corporation or its employee, or, (2) by a registrar other
than the Corporation or its employee, any other signature on the
certificate may be a facsimile. In case any officer, transfer
agent, or registrar who has signed or whose facsimile signature
has been placed upon a certificate shall have ceased to be such
officer, transfer agent, or registrar before such certificate is
issued, it may be issued by the Corporation with same effect as
if he were such officer, transfer agent, or registrar at the date
of issue.
Section 5.2. TRANSFER OF STOCK. Upon surrender to the
Corporation or its transfer agent of a certificate representing
shares, duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, a new
certificate shall be issued to the person entitled thereto, and
the old certificate cancelled, and the transaction recorded upon
the books of the Corporation.
Section 5.3. LOST, STOLEN OR DESTROYED CERTIFICATES. Any
person, claiming a certificate for shares of the Corporation to
be lost, stolen or destroyed, shall make affidavit of the fact
and lodge the same with the Secretary of the Corporation
accompanied by a signed application for a new certificate. Such
person shall also give the Corporation a bond of indemnity with
one or more sureties satisfactory to the Board of Directors, and
in an amount which in their judgment shall be sufficient to save
the Corporation from loss, or shall qualify under such blanket
bond as may from time to time be approved by the Board of
Directors, and thereupon the proper officers may cause to be
issued a new certificate of like tenor with the one alleged to be
lost, stolen or destroyed.
Section 5.4. RECORD DATE. In order that the Corporation may
determine the stockholders entitled to notice of or to vote at
any meeting of stockholders or any adjournment thereof, or to
express consent to corporate action in writing without a meeting,
or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise
any rights in respect of any change, conversion or exchange of
stock or for the purpose of any other lawful action, the Board of
Directors may fix, in advance, a record date, which shall not be
more than sixty nor less than ten days before the date of such
meeting, nor more than sixty days prior to any other action.
Section 5.5. REGISTERED STOCKHOLDERS. The Corporation shall
be entitled to treat the holder of record of any share or shares
of stock as the holder in fact thereof and, accordingly, shall
not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person,
whether or not it shall have express or other notice thereof,
except as otherwise provided by the laws of Delaware.
Section 5.6. TRANSFER AGENTS AND REGISTRARS. The Board of
Directors may from time to time appoint a transfer agent and
registrar in one or more cities; may require all certificates
evidencing shares of stock of the Corporation to bear the
signatures of a transfer agent and registrar; and may provide
that such certificates shall be transferable in more than one
city.
ARTICLE VI
INDEMNIFICATION OF OFFICERS AND DIRECTORS
The Corporation shall, to the fullest extent to which it is
empowered to do so by the General Corporation Law of Delaware, or
any other applicable laws, as from time to time in effect,
indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit
or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he is or was a director
or officer of the Corporation or a division thereof, or is or was
serving at the request of the Corporation as a director or
officer of another corporation, partnership, joint venture, trust
or other enterprise, against all expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually
and reasonably incurred by him in connection with such action,
suit or proceeding.
The provisions of this Article shall be deemed to be a
contract between the Corporation and each director or officer who
serves in any such capacity at any time while this Article and
the relevant provisions of the General Corporation Law of
Delaware or other applicable law, if any, are in effect, and any
repeal or modification of any such law or of this Article shall
not affect any rights or obligations then existing with respect
to any state of facts then or theretofore existing or any action,
suit or proceeding theretofore or thereafter brought or
threatened based in whole or in part upon any such state of
facts.
The Corporation shall, to the fullest extent to which it is
empowered to do so by the General Corporation Law of Delaware,
and with respect to the Employee Retirement Income Security Act
of 1974, or any other applicable laws, as from time to time in
effect, indemnify any officer, director or employee of the
Corporation or an affiliated corporation, who was or is a party
or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he is
or was serving at the request of the Corporation as an individual
Trustee, Committee member, administrator or fiduciary of a
pension or other benefit plan for employees of the Corporation,
or of an affiliated corporation or other enterprise.
Persons who are not covered by the foregoing provisions of
this Article and who are or were employees or agents of the
Corporation or a division thereof, or are or were serving at the
request of the Corporation as employees or agents of another
corporation, partnership, joint venture, trust or other
enterprise, may be indemnified to the extent authorized at any
time or from time to time by the Board of Directors of the
Corporation.
The indemnification provided or permitted by this Article
shall not be deemed exclusive of any other rights to which those
indemnified may be entitled by law or otherwise, and shall
continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
The Corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director,
officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted
against him and incurred by him in any such capacity, or arising
out of his status as such, whether or not the Corporation would
have the power to indemnify him against such liability under the
provisions of this Article.
The Corporation shall, to the fullest extent to which it is
empowered to do so by the General Corporation Law of Delaware, or
any other applicable laws, as from time to time in effect, pay
expenses, including attorneys' fees, incurred in defending any
action, suit or proceeding, in advance of the final disposition
of such action, suit or proceeding, to any person who is or was
a party or is threatened to be made a party to any such
threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by
reason of the fact that such person is or was a director or
officer of the Corporation, upon receipt of an undertaking by or
on behalf of such person to repay such amount if it shall
ultimately be determined that such person is not entitled to be
indemnified by the Corporation as authorized by applicable laws.
ARTICLE VII
MISCELLANEOUS PROVISIONS
Section 7.1. CHECKS, DRAFTS AND OTHER INSTRUMENTS; SECURITY
VOTING AND PROXIES. All checks, drafts or other orders for the
payment of money, notes or other evidences of indebtedness,
issued in the name of the Corporation shall be signed by such
officer or officers, or such other person or persons, as the
Board of Directors may from time to time designate. In the
absence of specific action by the Board of Directors, the
Chairman of the Board, President and Chief Executive Officer or
any Executive Vice President or Vice President shall have the
authority to grant proxies to vote, or vote, on behalf of the
Corporation the securities of other corporations, both domestic
and foreign, held by the Corporation.
Section 7.2. SEAL. The corporate seal of the Corporation
shall be in such form as the Board of Directors may determine and
shall include the name of the Corporation and the words
"Corporate Seal, Delaware." The seal may be used by causing it,
or a facsimile thereof, to be impressed or affixed or in any
manner reproduced.
Section 7.3. FISCAL YEAR. The fiscal year of the
Corporation shall commence on the first day of January in each
year and end on the following 31st day of December.
Section 7.4. NOTICES. Notice by mail shall be deemed to
have been given at the time the same shall be mailed. Notice by
telegraph shall be deemed to have been given when the same shall
have been delivered for prepaid transmission into the custody of
a company ordinarily engaged in the transmission of such
messages.
Section 7.5. WAIVER OF NOTICE. Whenever any notice whatever
is required to be given under the provisions of the laws of the
State of Delaware or under the provisions of the Certificate of
Incorporation or these By-Laws, a waiver thereof in writing,
signed by the person or persons entitled to such notice, whether
before or after the time stated therein, shall be deemed
equivalent thereto. Except as may be otherwise specifically
provided by law, any waiver by mail, telegraph, cable or wireless
bearing the name of the person entitled to notice shall be deemed
a waiver in writing duly signed. The presence of any person at
any meeting either in person or by proxy shall be deemed the
equivalent of a waiver in writing duly signed, except where the
person attends for the express purpose of objecting to the
transaction of any business because the meeting is not lawfully
called or convened.
Section 7.6. DIVIDENDS. Dividends upon the capital stock of
the Corporation, subject to the provisions of the Certificate of
Incorporation, if any, may be declared by the Board at any
regular or special meeting, pursuant to law. Dividends may be
paid in cash, in property, or in shares of the capital stock,
subject to the provisions of law and of the Certificate of
Incorporation.
Section 7.7. CREATION OF RESERVES. Before payment of any
dividend or making any distribution of profits, there may be set
aside out of any funds of the Corporation available for dividends
such sum or sums as the Board from time to time, in its absolute
discretion, may think proper as a reserve or reserves to meet
contingencies, or for equalizing dividends, or for repairing or
maintaining any property of the Corporation, or for such other
purpose as the Board shall think conducive to the interest of the
Corporation, and the Board may at any time modify or abolish any
such reserve in the manner in which it was created.
Section 7.8. AMENDMENTS. These By-Laws may be altered or
repealed by the affirmative vote of the majority of the entire
number of directors specified from time to time in the restated
Certificate of Incorporation at any regular meeting of the Board
or at any special meeting of the Board, if notice of the proposed
alteration or repeal be contained in the notice of such special
meeting; provided, however, that any provisions of these By-Laws
resulting from such alteration or repeal shall at all times be in
conformance with the Restated Certificate of Incorporation and
the laws of the State of Delaware.
Exhibit (10)(a)
SUNDSTRAND CORPORATION
Corporate Offices
4949 Harrison Avenue
P.O. Box 7003
Rockford, Illinois 61125-7003
Phone (815) 226-6000
TWX 910-631-4255
Telex 25-7440
September 24, 1994
Mr. Harry C. Stonecipher
2304 Stoneridge Close
Rockford, IL 61107
Dear Harry:
For good and valuable consideration both parties
acknowledge having received, this letter agreement proposes terms
and conditions under which Sundstrand Corporation (the "Company")
will, for certain purposes only, grant your request to take an
early retirement from your employment with the Company effective
this date. Your signing below will indicate your agreement with
the provisions of this letter, which shall constitute the entire
agreement between the Company and you regarding your retirement.
It is agreed that, other than as set forth herein, the
Company's grant of your request to take an early retirement shall
not trigger any right in you, or any duty or obligation on the
part of the Company, under any corporate stock plan or otherwise,
and you hereby expressly waive any agreement to the contrary.
You will be paid your accrued salary through the date
hereof.
You presently have 144,000 unreleased restricted shares of
stock under the Company's Restricted Stock Plans and the Stock
Incentive Plan. The Compensation Committee has authorized the
Company to release from applicable restrictions 40,000 of the
said shares as soon as possible. For this purpose, the Company
will cause to be released from escrow such 40,000 shares, less
the number of shares, based upon the closing price (less $.50 per
share for shares issued under the Stock Incentive Plan upon
conversion of your Cash Equivalent Rights) on the New York Stock
Exchange of a Sundstrand common share as of the release date,
necessary to pay any withholding under applicable federal, state
and local tax laws. The Company will determine such necessary
amount, deem it to have been paid to you and then reimbursed by
you to the Company to meet the said withholding requirements.
PAGE
<PAGE>
Harry C. Stonecipher
September 24, 1994
Page 2
Under the Stock Incentive Plan, you presently have 45,000
options granted as of December 1, 1992, at an option price of
$38.625 per option. The Compensation Committee has determined
that the options will become fully exercisable by you as of the
date of this letter and the exercise period will end one year
from the date hereof.
As a result of your decision to retire, under terms of the
Officer Incentive Compensation Plan, no bonus would be payable to
you for the 1994 plan year. However, the Company, after the end
of 1994, based upon the overall performance of the Company for
such year, will determine whether a bonus would otherwise have
been payable. If a bonus would have been payable, the Company
will pay to you 75% of such amount.
Your benefits under the tax-qualified employee retirement
plans in which you participate and under the non tax-qualified
supplemental retirement plan will be determined as soon as
possible after your retirement from employment and paid in
accordance with applicable provisions of such plans and in
addition you will receive benefits to which you are entitled
under your special retirement arrangement with the Company and
under the Director Emeritus Retirement Plan.
The Board of Directors has accepted your resignation as a
director effective the date of this letter and has elected you a
Director Emeritus entitling you to all benefits that persons
holding such title are entitled to.
To the extent the Company is required by applicable law to
withhold from the amounts or benefits set forth in the preceding
paragraphs which are to be paid to you, the Company shall have
the right to make such withholding, as applicable, from such
amounts or in accordance with plan provisions.
As Chairman of the Board, President and Chief Executive
Officer of the Company, you have had access to confidential
information regarding the business and products of the Company
and its subsidiary companies and divisions and its affiliates
(collectively "Sundstrand"). You agree that during the period
beginning on the date of this letter and for a period of three
years thereafter, you will not, without the written consent of
the Company's Chief Executive Officer, use or disclose to others
any Confidential Information which you received directly or
indirectly from Sundstrand or any information which you shall, or
should have reason to, believe is of a confidential nature. For
purposes of this letter, "Confidential Information" shall mean
the designs, inventions, developments, processes, techniques,
testing and servicing procedures, programs, equipment,
prototypes, costs and pricing structures, market analyses and
marketing plans, sales figures and customer relationships not
generally known. In addition, you agree that, except for the
PAGE
<PAGE>
Harry C. Stonecipher
September 24, 1994
Page 3
position you have identified to the undersigned, for the period
aforestated you will not undertake employment as an owner,
director, officer, employee or consultant with any company or
other organization engaged in the manufacture and/or sale of
products competitive with any of the present products of
Sundstrand without the previous written consent of the Company's
Chief Executive Officer, which consent will not be unreasonably
withheld.
You hereby fully and unconditionally release and forever
discharge the Company and its subsidiary companies, and their
directors, officers, employees, agents and shareholders from, and
agree to indemnify and hold them harmless from, any and all
actions, causes of action, claims, rights, obligations, damages,
costs (including attorneys' fees), suits and demands of
whatsoever kind, nature and character, known or unknown, in law
or in equity, which you, your heirs, representatives or assigns
now or in the future may have, or have ever had, which arose
prior to the date of this letter, including any thereof arising
out of or based upon any obligations of the Company under your
employment agreement with the Company or under the 1975, 1982 and
1989 Restricted Stock Plans and the 1992 Stock Incentive Plan of
the Company except as specifically provided for in this letter
agreement, but excluding any thereof arising out of or based upon
any obligations of the Company to you under this letter, post
retirement benefits and any indemnification to you under the
Company's Certificate of Incorporation, By-laws or applicable
laws.
You understand there is a risk that subsequent to the
execution of this letter you may discover, incur or suffer claims
which are unknown or unanticipated, and which if known on the
date this letter was executed may have materially affected your
decision to execute this letter. Despite this, you expressly
waive all rights under any laws of any state or territory in the
United States or other jurisdiction which might otherwise
preserve such claims.
By signing below, you acknowledge your understanding and
agreement that conduct contrary to these provisions on your part
will constitute a breach of this letter agreement. In the event
of your breach of the terms of this letter, you hereby
acknowledge and agree that damages constitute an inadequate
remedy at law and that the Company shall be entitled, at its
election, to specifically enforce the terms and provisions hereof
by equitable relief including specific performance and/or
injunctive relief. You hereby acknowledge and agree that the
Company's failure to enforce any aspect of this letter agreement
shall not cure any breach by you, nor shall it prevent the
Company from pursuing any other breach of this agreement.
Further, in the event of a breach by either party, it is agreed
that the reasonable attorneys' fees, costs and expenses incurred
by the prevailing party in enforcement hereof will be paid by the
losing party.
PAGE
<PAGE>
Harry C. Stonecipher
September 24, 1994
Page 4
This letter agreement supersedes and cancels any other
obligations the Company may have had to you in any form regarding
your retirement or the termination of your employment with the
Company, and contains the entire agreement between the parties
hereto with respect to that subject. This letter agreement may
not be modified except in a writing signed by the signatories
hereto. Notices or correspondence by one party to this letter
may be addressed to the other at its address as set forth on the
first page of this letter, unless notice is provided in writing
of any change of address.
This letter and all questions of its interpretation,
performance, enforcement and the rights and remedies of the
parties hereto shall be determined in accordance with the laws of
the State of Illinois.
You acknowledge and affirm that (1) you have not purchased
or sold any shares of common stock of the Company, or other
options thereon or related rights thereto, within the past 6
months and 1 day, (2) you are subject to certain filing
obligations under Section 16(a) of the Securities Exchange Act of
1934 (including, but not limited to, the Form 5 filing or
substitute statement therefor) and (3) to the best of your
knowledge, you have timely filed any necessary Section 16(a)
reports with the Securities and Exchange Commission and the New
York Stock Exchange.
Legal rights which you may have could be affected by your
agreeing to the foregoing. You represent and acknowledge that
you have consulted an attorney prior to signing this letter
agreement. By signing, you will be acknowledging that you have
had adequate time and advice to consider the terms stated herein,
that you have carefully read this letter, that you understand the
provisions of this letter and are fully aware of its effect, and
that you are executing this letter of your own free will. This
letter shall be effective upon signing by both parties.
Very truly yours,
SUNDSTRAND CORPORATION
By: /s/ Richard M. Schilling
Richard M. Schilling
Vice President and General
Counsel and Secretary
I have read and agree to the terms and conditions stated above.
/s/ Harry C. Stonecipher
Harry C. Stonecipher
Date: September 24, 1994
Exhibit (10)(b)
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered
into as of this 3rd day of October, 1994, between SUNDSTRAND
CORPORATION, a Delaware corporation (the "Company"), and Don R.
O'Hare ("Executive").
WHEREAS, Executive is employed as Chairman of the Board
and Chief Executive Officer of the Company and the Company
desires to assure the benefits of the Executive's future
services, and Executive is willing to commit to render such
services, upon the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the premises and
mutual covenants contained herein, the parties have agreed as
follows:
1. Employment. The Company agrees to employ Executive
in an executive capacity, and Executive agrees to serve the
Company, upon the terms and conditions and for the period of
employment hereinafter set forth. Throughout the Employment
Period (as hereinafter defined), except as otherwise provided in
Section 11 or unless otherwise agreed in writing by Executive and
the Company, the Company shall neither demote Executive nor
assign to Executive any duties or responsibilities that are
inconsistent with his position as Chief Executive Officer and the
duties, responsibilities and status of such position.
2. Employment Period. The term of the Executive's
employment under this Agreement shall commence as of September
26, 1994, and, subject to earlier termination of Executive's
employment and termination of this Agreement as provided in
Section 7, shall expire upon the earlier of September 25, 1996,
or the employment by the Company as provided in Section 11 of a
new Chief Executive Officer (the "Employment Period").
3. Compensation. Throughout the Employment Period,
the Company shall pay or provide Executive with the following,
and Executive shall accept the same, as compensation for the
PAGE
<PAGE>
-2-
performance of his undertakings and the services to be rendered
by him under this Agreement.
(a) A salary payable not less often than bi-weekly, at
a rate of $650,000 per annum.
(b) (i) A prorated bonus for the period September
26, 1994 through December 31, 1994 (or if
earlier the date of hiring of a Chief
Executive Officer as provided in Section 11)
based upon the assumption that Executive was
a participant in the Company's Officer
Incentive Compensation Plan during such
period. Such bonus shall be determined
based upon the opportunity level under the
Plan for the Chief Executive Officer and the
performance elements approved by the
Compensation Committee for the 1994 plan
year.
(ii) Participation in the Company's Officer
Incentive Compensation Plan for the 1995 and
1996 plan years, provided that for any plan
year the bonus amount will be prorated to
reflect the actual period of employment as
Chief Executive Officer.
(c) Participation in the following employee benefit
plans, policies, practices and arrangements
maintained by the Company in which Executive is
presently eligible to participate:
- Sundstrand Corporation Disability Plan
- Accidental Death Insurance
- Executive and Spouse Physical
- Sundstrand Corporation Group Life Insurance
Plan
- Use of Company Airplane
- Financial Services
- Snow Plowing and Other Personal Services
Such plans are hereinafter collectively referred to
as the "Benefit Plans". In the event Executive at
any time during the Employment Period is not
eligible to participate in any Benefit Plan for
which Executive was previously eligible or the
Company terminates or materially amends any Benefit
Plan, the Company shall provide to Executive
benefits comparable with those benefits that would
have been received by Executive if Executive
continued to participate in such Plans.
(d) Paid vacations in accordance with the Company's
vacation policy as in effect from time to time, and
PAGE
<PAGE>
-3-
all paid holidays given by the Company to its
executive officers.
4. Expenses. During the Employment Period, the
Company shall promptly pay or reimburse Executive for all
reasonable expenses incurred by Executive in the performance of
duties hereunder.
5. Conditions of Employment. Throughout the
Employment Period:
(a) The Company shall not require or assign duties to
Executive which would require him to move the
location of his principal business office or his
principal place of residence outside the City of
Rockford or the County of Winnebago, Illinois (the
"Rockford Area");
(b) The Company shall not require or assign duties to
Executive which would require him to spend more
than forty-five (45) normal working days away from
the Rockford Area during any consecutive
twelve-month period;
(c) The Company shall provide an office to Executive,
the location and furnishings of which shall be
equivalent to the offices provided to him on the
date of this Agreement; and
(d) The Company shall provide secretarial services and
other administrative services to Executive which
shall be equivalent to the secretarial services and
other administrative services provided to him on
the date of this Agreement.
6. Continuation of Benefits. If the Company shall
fail to observe or perform any covenant or agreement contained in
this Agreement to be observed or performed by the Company, then
Executive shall, until such time as Executive's Employment Period
hereunder would otherwise terminate pursuant to the provisions of
Section 2 or Section 7, continue to receive all benefits which
the Company has hereinabove in Section 3 agreed to pay to and
provide for Executive, in each case in the amounts and at the
times provided for in Section 3. The parties agree that, in such
event,
PAGE
<PAGE>
-4-
such payments and benefits shall be deemed to constitute
liquidated damages for the Company's breach of this Agreement.
7. Termination. This Agreement shall terminate upon
the following circumstances:
(a) The date of resignation or death of Executive
during the Employment Period; provided, however,
that Executive or Executive's estate, heirs and
beneficiaries, as the case may be, shall be paid
the full amount of Executive's salary through the
end of the month in which his resignation or death
occurs, but in no event for any period thereafter,
and all other benefits which would be applicable to
Executive or Executive's estate, heirs and
beneficiaries under the Company's Benefit Plans in
which Executive participates as in effect on the
date of Executive's resignation or death;
(b) Following conviction of Executive of a felony, the
date as of which Executive's right to file an
appeal after conviction has expired, or if
Executive files an appeal after conviction, the
date as of which the appellate court fails to
reverse the conviction, and the Company shall pay
Executive his full salary through such date of
termination and the Company shall have no further
obligations to Executive under this Agreement
except with respect to any rights Executive might
otherwise have under the Company's Benefit plans as
in effect on the date of termination of Executive;
(c) The date of Executive's resignation in accordance
with Section 11, unless Executive becomes a
consultant as provided in Section 12;
(d) The date Executive ceases to be a consultant as
provided in Section 12; or
(e) The date as of which the Company elects to
terminate this Agreement in accordance with Section
10.
8. Covenant Not to Compete. Without the consent of
the Company, Executive shall not at any time during the term of
this Agreement undertake employment as an owner, director,
officer, employee or consultant with any business entity directly
engaged in the manufacture and/or sale of products competitive
with any material product or product line of the Company;
provided, however,
PAGE
<PAGE>
-5-
that Executive shall not be deemed to have breached this
undertaking if his sole relation with such entity consists of his
holding, directly or indirectly, an equity interest in such
entity not greater than two percent (2%) of such entity's
outstanding equity interest. For purposes hereof the term
"material product or product line of the Company" shall mean any
product or product line of the Company, the gross sales of which
during any calendar year during the five (5) year period
preceding the Executive's undertaking such employment were at
least $50 million.
9. Disclosure of Confidential Information. Without
the consent of the Company, Executive shall not at any time
during the term of this Agreement disclose to any other business
entity confidential information concerning the Company or the
Company's trade secrets of which Executive has gained knowledge
during his employment with the Company.
10. Breach of Section 8 or Section 9. In the event of
a breach by Executive of the provisions of Section 8 or Section 9
of this Agreement, the Company may terminate this Agreement under
Section 7(e), but only if the Company complies with the following
provisions:
(a) The Company shall provide Executive with written
notice of its belief that a breach of Section 8 or
Section 9 of this Agreement has occurred and shall
afford Executive sixty (60) days or such longer
period as the Company may determine to cure the
alleged breach.
(b) In the event Executive does not cure the breach,
the Company shall be required to institute a
judicial proceeding to determine whether a breach
of Section 8 or Section 9 of this Agreement has
occurred and Executive has not cured such breach.
(c) This Agreement may then be terminated only upon a
judicial determination that Executive has breached
the provisions of Section 8 or Section 9 and has
failed to cure such breach; provided, however, that
this Agreement may not be terminated until either
all appellate proceedings have been exhausted or
the time
PAGE
<PAGE>
-6-
within which Executive may appeal an
adverse ruling has expired.
11. Hiring of Chairman and CEO. The Board of Directors
of the Company intends to identify and hire an individual to
assume the position of and replace Executive as Chief Executive
Officer of the Company. Executive shall provide such assistance
to the Board with respect to this effort as the Board reasonably
requests. Upon the hiring of such an individual to fill the
position of Chief Executive Officer of the Company (the "Chief
Executive"), Executive shall immediately resign from the position
of Chief Executive Officer of the Company and, except as provided
in Articles 12 and 13, Executive shall not be entitled to any
further compensation or benefits under this Agreement other than
the payment of all compensation and benefits earned or accrued to
the date of his resignation which have not been paid as of such
date.
12. Consultant. Executive shall, upon request of the
Board of Directors or its designee, become a consultant to the
Chief Executive, until the earlier of Executive's death,
Executive's termination of the consultant position, or September
25, 1996. During the period he is a consultant, Executive shall
perform such services as the Board or its designee reasonably
requests which services shall not be inconsistent with the
consulting services required under the Consulting Agreement
heretofore in effect between the Company and Executive, which
agreement is referred to in Section 17. The compensation to be
provided to Executive during the period he is a consultant
pursuant to this Section 12 shall be limited to a consultant's
fee payable bi-monthly at a rate of $650,000 per annum. In the
event of either the termination of the consulting arrangement
under this Section 12 or the death of Executive prior to
September 25, 1996, Executive or Executive's estate, heirs and
beneficiaries, as the case may be, shall within ten (10) days
thereafter be paid a single lump sum amount equal to $1.3 million
less the sum of all salary compensation paid to Executive
pursuant to Section 3(a) and all
PAGE
<PAGE>
-7-
consultant compensation paid to Executive pursuant to this
Section 12.
13. Termination Following Hiring of Chief Executive
Officer. In the event Executive, following the hiring of the
Chief Executive, does not become a consultant pursuant to Section
12, Executive within ten (10) days after his resignation as Chief
Executive Officer, in addition to the compensation and benefits
to be paid pursuant to Section 11, shall be paid a single lump
sum amount equal to $1.3 million less the amount of all salary
compensation otherwise paid to executive pursuant to Section 3(a)
and Section 11 of this Agreement.
14. Notices. Notice given pursuant to this Agreement
shall be in writing and shall be deemed given when received and
if to the Company, to the Board of Directors of Sundstrand
Corporation, Attention: Vice President and General Counsel and
Secretary of the Company.
15. Successors. This Agreement may not be assigned by
the Company, and the obligations of the Company provided for in
this Agreement shall be binding legal obligations of any
successor to the Company by purchase, merger, consolidation, or
otherwise. This Agreement may not be assigned by Executive
during his life, and upon his death will be binding upon and
inure to the benefit of his heirs, legatees and the legal
representatives of his estate.
16. Waiver, Modification and Interpretation. No
provisions of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is
agreed to in a writing signed by Executive and an appropriate
officer of the Company empowered to sign same by the Board of
Directors of the Company. No waiver by either party at any time
of any breach by the other party of, or compliance with, any
condition or provision of this Agreement to be performed by the
other party shall be deemed a waiver of similar or dissimilar
provisions or conditions
PAGE
<PAGE>
-8-
at the same time or at any prior or subsequent time. The
validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of Illinois.
The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any
other provision of this Agreement.
17. Termination of Consulting Agreement. Effective as
of the date hereof, the Consulting Agreement between the Company
and Executive, which was extended through September 30, 1995, is
terminated and no further payments will be made to Executive
thereunder.
18. Headings. The headings contained herein are for
reference purposes only and shall not in any way affect the
meaning or interpretation of any provision of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day and year first written above.
SUNDSTRAND CORPORATION
By: /s/ Richard M. Schilling
Vice President and General
Counsel and Secretary
/s/ Don R. O'Hare
Executive
<TABLE>
Exhibit (11)(a)
Computation of Fully Diluted Earnings Per Share (Unaudited)
Quarter Ended Nine Months Ended
September 30, September 30,
---------------- -----------------
(Amounts in millions except per share data) 1994 1993 1994 1993
- - - - ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
EARNINGS
Earnings from continuing operations $ 23.7 $ 15.5 $ 60.6 $ 60.0
Loss from discontinued SDC business,
prior to discontinuance, net of taxes - - - (.7)
Earnings from discontinued SDC business,
subsequent to discontinuance, net of taxes - 1.6 - 2.1
------- ------- ------- -------
Net earnings $ 23.7 $ 17.1 $ 60.6 $ 61.4
======= ======= ======= =======
===================================================================================================
SHARES
Weighted-average number of common shares
outstanding 32.9 35.8 32.9 35.8
Additional shares assuming conversion
of stock options .1 - .1 -
------- ------- ------- -------
Fully diluted shares 33.0 35.8 33.0 35.8
======= ======= ======= =======
===================================================================================================
FULLY DILUTED EARNINGS PER SHARE
Earnings from continuing operations $ .72 $ .44 $ 1.84 $ 1.68
Loss from discontinued SDC business,
prior to discontinuance, net of taxes - - - (.02)
Earnings from discontinued SDC business,
subsequent to discontinuance, net of taxes - .05 - .06
------- ------- ------- -------
Net earnings $ .72 $ .49 $ 1.84 $ 1.72
======= ======= ======= =======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1994 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1994
<CASH> 67,700
<SECURITIES> 0
<RECEIVABLES> 274,200
<ALLOWANCES> 0
<INVENTORY> 309,200
<CURRENT-ASSETS> 719,800
<PP&E> 459,500
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,580,700
<CURRENT-LIABILITIES> 398,000
<BONDS> 246,500
<COMMON> 18,900
0
0
<OTHER-SE> 497,800
<TOTAL-LIABILITY-AND-EQUITY> 1,580,700
<SALES> 995,100
<TOTAL-REVENUES> 995,100
<CGS> 670,800
<TOTAL-COSTS> 670,800
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 21,500
<INCOME-PRETAX> 94,700
<INCOME-TAX> 34,100
<INCOME-CONTINUING> 60,600
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 60,600
<EPS-PRIMARY> 1.84
<EPS-DILUTED> 1.84
</TABLE>
