<PAGE>
<PAGE> 1
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 March 31, 1995
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 May 2, 1995
__________________________ ___________________________
Common Stock, par value
$.50 per share 31,687,699<PAGE>
<PAGE> 2
SUNDSTRAND CORPORATION
FORM 10-Q
For the Quarter Ended March 31, 1995
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 8
Part II. Other Information
Item 1. Legal Proceedings 11
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 12
2<PAGE>
<PAGE> 3
<TABLE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
SUNDSTRAND CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS (UNAUDITED)
<CAPTION>
Three Months Ended
March 31,
------------------
(Amounts in millions except per share data) 1995 1994
- - -------------------------------------------------------------------
<S> <C> <C>
Net sales $ 346 $ 324
Costs, expenses, and other income:
Costs of products sold 226 224
Marketing and administration 75 69
Restructuring charge 58 -
Interest expense 9 6
Interest income (1) (1)
Other, net 1 (2)
------ ------
368 296
------ ------
Earnings (loss) before income taxes (22) 28
Less income taxes (4) 10
------ ------
Net earnings (loss) $ (18) $ 18
====== ======
Weighted-average number of common
shares outstanding 31.6 33.1
Earnings (loss) per share $ (.59) $ .54
====== ======
Cash dividends per common share $ .30 $ .30
====== ======
</TABLE>
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<TABLE>
SUNDSTRAND CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
<CAPTION>
Three Months Ended
March 31,
------------------
(Amounts in millions) 1995 1994
- - --------------------------------------------------------------------
<S> <C> <C> <C>
Cash flow from operating activities:
Net earnings (loss) $ (18) $ 18
Adjustments to reconcile net earnings
(loss) to net cash provided by
operating activities:
Depreciation 16 18
Amortization 4 5
Deferred income taxes (20) (2)
Change in operating assets and liabilities
excluding the effects of acquisitions
and divestitures:
Accounts receivable 4 9
Inventories (27) 2
Other assets (4) 3
Accounts payable 5 4
Accrued expenses 84 (21)
Other (3) 1
----- -----
Total adjustments 59 19
----- -----
NET CASH PROVIDED BY OPERATING ACTIVITIES 41 37
----- -----
Cash flow from investing activities:
Cash paid for property, plant, and equipment (11) (9)
Proceeds from sale of property, plant, and
equipment 1 2
Investment in IRB trust (6) -
Investment in equity companies (1) -
Cash paid for HMD-Kontro, net of cash acquired - (25)
----- -----
NET CASH USED FOR INVESTING ACTIVITIES (17) (32)
Cash flow from financing activities:
Net borrowings (payments) supported by lines
of credit (23) 22
Issuance of long-term debt 8 -
Principal payments on long-term debt (3) (1)
Proceeds from stock options exercised 2 -
Additional debt for HMD-Kontro acquisition - 25
Purchase of treasury stock - (38)
Dividends paid (10) (10)
----- -----
NET CASH USED FOR FINANCING ACTIVITIES (26) (2)
----- -----
Effect of exchange rate changes on cash (1) (2)
----- -----
Increase (decrease) in cash and cash
equivalents (3) 1
Cash and cash equivalents at January 1 66 15
----- -----
CASH AND CASH EQUIVALENTS AT MARCH 31 $ 63 $ 16
===== =====
Supplemental cash flow information:
Interest paid $ 4 $ 1
Income taxes paid $ 6 $ 37
</TABLE>
4<PAGE>
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<TABLE>
SUNDSTRAND CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
<CAPTION>
March 31, December 31,
(Amounts in millions) 1995 1994
- - ----------------------------------------------------------------------------
<S> <C> <C>
Assets
Current Assets
Cash and cash equivalents $ 63 $ 66
Accounts receivable, net 292 293
Inventories, net of progress payments 335 307
Deferred income taxes 55 55
Other current assets 19 14
------- -------
Total current assets 764 735
Property, Plant, and Equipment, net 456 459
Intangible Assets, net 285 286
Deferred Income Taxes 82 62
Other Assets 51 45
------- -------
$ 1,638 $ 1,587
======= =======
Liabilities and Shareholders' Equity
Current Liabilities
Notes payable $ 171 $ 194
Long-term debt due within one year 8 11
Accounts payable 101 95
Income taxes payable 10 -
Accrued salaries, wages, and commissions 30 23
Accrued postretirement benefits other
than pensions 19 19
Other accrued liabilities 107 90
------- -------
Total current liabilities 446 432
Long-Term Debt 243 236
Accrued Postretirement Benefits Other
Than Pensions 360 357
Other Liabilities 116 68
Shareholders' Equity
Common stock, at par value 19 19
Other shareholders' equity 454 475
------- -------
473 494
------- -------
$ 1,638 $ 1,587
======= =======
</TABLE>
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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 Consolidated Financial Statements
(Unaudited)
ACCOUNTING POLICIES
The financial statements should be read in conjunction with the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1994.
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 March 31, 1995, and December 31,
1994, were:
<CAPTION>
March 31, December 31,
(Amounts in millions) 1995 1994
- - --------------------------------------------------------------------------
<S> <C> <C>
Raw materials $ 54 $ 49
Work in process 132 117
Finished goods and parts 166 155
-------- --------
352 321
Less progress payments 17 14
-------- --------
$ 335 $ 307
======== ========
Prior to the application of progress payments, the inventories
shown above included costs related to long-term contracts of $56
million and $51 million, at March 31, 1995, and December 31,
1994, respectively.
</TABLE>
6<PAGE>
<PAGE> 7
RESTRUCTURING
On February 21, 1995, the Registrant's Board of Directors
approved a restructuring plan which resulted in a first quarter
pretax charge of $58 million. The charge was taken to reduce
excess manufacturing and engineering capacity, caused by recent
reductions in manufacturing volume and increases in manufacturing
productivity, and to write-down the assets of two non-core
product lines in anticipation of their divestiture. The charge
consisted of $27 million in termination benefits for
approximately 500 employees, primarily consisting of workers at
the Registrant's Lima, Ohio, facility and engineering personnel
throughout the Aerospace organization. Also included in the
charge was $26 million for the write-down of the assets of the
Lima facility and the two non-core product lines, as well as $5
million for demolition of the Lima facility. The shutdown and
demolition of the Lima facility is expected to be completed by
the end of 1996; the termination of engineering personnel is
expected to be completed during late 1995 or early 1996; and
efforts are currently under way to divest the two non-core
product lines. The anticipated net effects of related expenses
which are not subject to accrual, cost savings, and non-recurring
gains are a pretax loss of $7 million in 1995 and pretax earnings
of $20 million and $25 million in 1996 and 1997, respectively.
The restructuring is expected to reduce cash flow by about $16
million in 1995 and provide a cash flow benefit of about $8
million in 1996 and $13 million in 1997.
7<PAGE>
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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 March 31, 1995,
as compared with the financial information for the quarter ended
March 31, 1994, and the balance sheet at December 31, 1994, 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, 1994, and the financial data as presented in Item 1
above.
RESULTS OF OPERATIONS
Sales in the first quarter of 1995 increased by 7 percent to $346
million from sales of $324 million in the first quarter of 1994.
Aerospace segment sales decreased $10 million to $157 million in
the first quarter of 1995 from $167 million in the first quarter
of 1994. Industrial segment sales increased to $189 million in
the first quarter of 1995, an increase of $32 million from first
quarter 1994 sales of $157 million.
The Registrant recorded a net loss of $18 million, or $.59 per
share, in the first quarter of 1995, primarily as a result of a
$58 million pretax restructuring charge taken to reduce excess
manufacturing capacity and engineering costs and to write-down
the assets of two non-core product lines in anticipation of their
divestiture. Excluding the effects of this restructuring, first
quarter 1995 net income increased to $22 million, or $.70 per
share, compared with $18 million, or $.54 per share, in the first
quarter of 1994. This increase was attributable primarily to
improved sales and operating profit in the Industrial segment,
partially offset by higher interest expense.
RESTRUCTURING
On February 21, 1995, the Registrant's Board of Directors
approved a restructuring plan which resulted in a first quarter
pretax charge of $58 million. The charge was taken primarily to
reduce excess manufacturing and engineering capacity caused by
recent reductions in manufacturing volume and increases in
manufacturing productivity. Included in the charge are one-time
costs for the closure of the Registrant's Lima, Ohio,
manufacturing facility, the reduction of engineering costs, and
the write-down of the assets of two non-core product lines in
anticipation of their divestiture. The charge consisted of $27
million in termination benefits for approximately 500 employees,
primarily consisting of workers at the Registrant's Lima, Ohio,
facility and engineering personnel throughout the Aerospace
organization. Also included in the charge was $26 million for
the write-down of the assets of the Lima facility and the two
non-core product lines, as well as $5 million for demolition of
the Lima facility. Additionally, the plan specifies the
relocation of approximately 40 employees. The anticipated net
effects of related expenses which are not subject to accrual,
cost savings, and non-recurring gains are a pretax loss of $7
million in 1995 and pretax earnings of $20 million and $25
million in 1996 and 1997, respectively. The restructuring is
expected to reduce cash flow by about $16 million in 1995 and
provide a cash flow benefit of about $8 million in 1996 and $13
million in 1997. The 1995 cash outflow will be funded by cash
flow from operations and the Registrant's commercial paper
program.
8<PAGE>
<PAGE> 9
ORDERS
Unfilled orders increased to $968 million at March 31, 1995, from
$747 million at December 31, 1994. Incoming orders were $567
million in the first quarter of 1995, a $232 million increase
from incoming orders of $335 million in the first quarter of
1994. The increase in both unfilled orders and incoming orders
was due primarily to a $172 million long-term contract to provide
the propulsion system for the United Kingdom's Royal Navy
Spearfish heavyweight torpedo program. Improved orders at all
the Industrial businesses also contributed to the increase.
INDUSTRIAL OVERVIEW
Industrial segment sales, excluding acquisitions and
divestitures, increased 20 percent in the first quarter compared
with the first quarter of 1994. Falk's first quarter sales
increased 17 percent, excluding the 1994 divestiture of Falk-
Brazil, while sales at Sullair improved 29 percent. Milton Roy
sales rose 14 percent, excluding sales from HMD Group Limited and
the business of the Kontro Company (HMD-Kontro) which were
acquired in March of 1994. Industrial operating profit in the
first quarter of 1995 was $33 million, or 17.5 percent of sales,
excluding the write-down of a non-core product line, compared
with operating profit in the first quarter of 1994 of $22
million, or 14.0 percent of sales. Total Industrial orders,
excluding acquisitions and divestitures, were up 27 percent in
the first quarter compared with the same period in 1994
reflecting improvements in the U.S. and European economies and
increasing capital project activity in emerging markets.
AEROSPACE OVERVIEW
First quarter Aerospace segment sales declined 6 percent,
reflecting a 17 percent decrease in military sales and a 1
percent increase in commercial sales. Commercial aftermarket
sales rose approximately 11 percent while commercial original
equipment manufacturer sales declined 10 percent, reflecting
lower levels of production for commercial aircraft. Aerospace
operating profit in the first quarter of 1995 was $15 million, or
9.6 percent of sales, excluding the impact of the restructuring,
compared with operating profit in the first quarter of 1994 of
$15 million, or 9.0 percent of sales. Total Aerospace orders
were $194 million higher than the same period in 1994 primarily
driven by the previously mentioned $172 million order for torpedo
propulsion equipment.
LIQUIDITY & CAPITAL RESOURCES
Working capital increased by $15 million to $318 million at March
31, 1995, compared with $303 million at December 31, 1994. The
increase was due primarily to higher inventories and lower notes
payable partially offset by an increase in income taxes payable
and the current portion of the restructuring reserve. The
increase in inventories was due primarily to increased sales and
order activity while the increase in income taxes payable was
related to the first quarter estimated federal income tax
payment not being paid until the second quarter.
9<PAGE>
<PAGE> 10
Net cash provided by operating activities was $41 million for the
first quarter of 1995 compared with $37 million for the first
quarter of 1994. The increase was due primarily to the absence
in 1995 of a $35 million cash payment made during the first
quarter of 1994 for income taxes on the gain from the sale of
Sundstrand Data Control (SDC) which was partially offset in the
first quarter of 1995 by cash used to increase inventories.
Fluctuations in the cash flow related to net earnings (loss),
deferred income taxes, and accrued expenses (excluding the
previously mentioned fluctuation in taxes paid on the gain from
the sale of SDC) were due primarily to the restructuring charge.
However, the restructuring charge had no net effect on cash
provided by operating activities in the first quarter of 1995.
In the quarter ended March 31, 1995, the Registrant used $17
million of cash for investing activities primarily for the
purchase of fixed assets and for the formation of an industrial
revenue bond (IRB) trust related to capital improvements at the
Registrant's Auburn, Alabama, facility. Net cash used for
financing activities was $26 million in the first three months of
1995 and consisted primarily of cash used to reduce commercial
paper borrowings and to pay dividends partially offset by the
issuance of the Auburn, Alabama, IRB. The Registrant used $32
million of cash for investing activities in the first quarter of
1994 primarily for the acquisition of HMD-Kontro. Net cash used
for financing activities in the first three months of 1994 was $2
million as common stock repurchases and dividend payments were
largely offset by an increase in net commercial paper borrowings,
including debt resulting from the HMD-Kontro acquisition.
The Registrant did not repurchase any of its common stock in the
first quarter of 1995. As of March 31, 1995, the Registrant had
repurchased approximately 5 million shares of the 10 million
shares authorized for repurchase by the Board of Directors. The
Registrant plans to continue to repurchase stock on an
opportunistic basis.
On April 18, 1995, the Board of Directors declared a quarterly
cash dividend of $.30 per share payable on June 20, 1995, to
holders of record on June 6, 1995. It will be the 204th
consecutive quarter that the Registrant has paid a dividend.
On March 31, 1995, the Registrant's ratio of total debt to total
capital was 47.2 percent compared with 47.1 percent at December
31, 1994.
OUTLOOK
In its quarterly earnings release of April 17, 1995, the
Registrant increased its 1995 full-year earnings forecast before
restructuring actions and share repurchases to a range of between
$3.55 and $3.75 per share. The previous range was $3.25 to $3.45
per share. The Registrant also disclosed that the Aerospace
operating profit margin for 1995 is still projected to be
approximately 13 percent on flat sales, excluding the effects of
the restructuring. This margin is projected to improve in 1996,
and is expected to return to historical levels as the benefits
from the current restructuring take effect. Due to the strength
being experienced at Falk and Sullair, full-year Industrial sales
are now projected to be approximately 15 percent higher than the
levels achieved during 1994 and operating profit is expected to
exceed 17 percent of sales, excluding the write-down of a non-
core product line.
10<PAGE>
<PAGE> 11
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Registrant has disclosed various legal proceedings in its
Annual Report on Form 10-K for the fiscal year ended December 31,
1994. There have been no material changes in those proceedings
or other material legal developments since that time.
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 18, 1995, amending
Registrant's By-laws.
(b) Registrant's By-laws, including all amendments, as
effective April 18, 1995.
(10) Material Contracts
(a) Employment Agreement dated April 18, 1995, between
Registrant and James F. Ricketts, Registrant's Vice
President and Treasurer.
(b) Text of Resolution adopted by the Board of Directors
of Registrant on April 18, 1995, amending
Registrant's Stock Incentive Plan.
(11) Statement Re Computation of Per Share Earnings
(a) Computation of Fully Diluted Earnings Per Share
(Unaudited) for the quarters ended March 31, 1995 and
1994.
(27) Financial Data Schedule
(b) Reports on Form 8-K.
None
11<PAGE>
<PAGE> 12
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: May 8, 1995 /s/ Richard M. Schilling
----------------------------
Richard M. Schilling
Vice President and General
Counsel and Secretary
Date: May 8, 1995 /s/ DeWayne J. Fellows
-----------------------------
DeWayne J. Fellows
Vice President and Controller
12
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<PAGE> 1
Exhibit (3)(a)
AMENDMENT OF BY-LAWS
Effective April 2, 1995, Gary J. Hedges, Vice President,
Personnel and Public Relations, resigned from his position.
Management has determined that for the time being it will not
fill this position. Accordingly, it should be deleted from the
Corporation's By-Laws.
RESOLVED, by the Board of Directors of Sundstrand
Corporation, that the By-Laws of the Corporation be, and
they hereby are, amended effective April 18, 1995, 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 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;
an Executive Vice President for Special Projects; 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 4.10 of Article IV (OFFICERS) is deleted in
its entirety.
3. Sections 4.11 through 4.16 of Article IV (OFFICERS)
are renumbered Sections 4.10 through 4.15,
respectively.
<PAGE>
<PAGE> 1
Exhibit (3)(b)
BY-LAWS
OF
SUNDSTRAND CORPORATION
(A Delaware Corporation)
Effective April 18, 1995
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 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; an Executive Vice President
for Special Projects; 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
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 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 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 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 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 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 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 and Chief
Executive Officer shall be determined by the Board of Directors
or the Chairman of the Board 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 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 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 AND CHIEF EXECUTIVE
OFFICER. The Chairman of the Board and Chief Executive Officer
shall be the chief executive officer of the Corporation. The
Chairman of the Board 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 and Chief Executive Officer shall have general supervision,
control and management of the affairs and business of the
Corporation. The Chairman of the Board 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 and Chief Executive Officer. He and/or the
Chairman of the Board 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 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 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. EXECUTIVE Vice President for Special Projects.
The Executive Vice President for Special Projects shall assist
the Chairman of the Board and Chief Executive Officer in managing
strategic business issues for the Corporation and shall perform
such other duties as may be prescribed by the Chairman of the
Board and Chief Executive 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 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 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 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 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 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 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.
<PAGE>
<PAGE> 1
Exhibit (10)(a)
EMPLOYMENT AGREEMENT
THIS AGREEMENT entered into as of the 18th day of April,
1995, by and between Sundstrand Corporation (the "Company"), and
James F. Ricketts, an individual (the "Executive") (hereinafter
collectively referred to as "the parties").
WHEREAS, the Board of Directors of the Company (the
"Board") recognizes that the possibility of a Change in Control
(as hereinafter defined in Section 8(d)) exists and that the
threat of or the occurrence of a Change in Control can result in
significant distractions of its key management personnel because
of the uncertainties inherent in such a situation;
WHEREAS, the Board has determined that it is essential
and in the best interest of the Company and its stockholders to
retain the services of the Executive in the event of a threat or
occurrence of a Change in Control and to ensure his continued
dedication and efforts in such event without undue concern for
his personal financial and employment security; and
WHEREAS, in order to induce the Executive to remain in
the employ of the Company, particularly in the event of a threat
of or the occurrence of a Change of Control, the Company desires
to enter into this Agreement with the Executive.
NOW, THEREFORE, in consideration of the respective
agreements of the parties contained herein, it is agreed as
follows:
l. Employment Term. (a) The "Employment Term" shall
commence on the first date during the Protected Period (as
defined in Section l(c) below) on which a Change in Control
occurs (the "Effective Date") and shall expire on the third
anniversary of the Effective Date; provided, however, that on
each anniversary of the Effective Date, the Employment Term shall
automatically be extended for one (l) year unless either the
Company or the Executive shall have given written notice to the
other at least ninety (90) days prior thereto that the Employment
Term shall not be so extended; and provided, further, that the
Employment Term shall in no event extend beyond the first day of
the month following the month in which the Executive attains age
sixty-five (65).
(b) Notwithstanding anything contained in this
Agreement to the contrary, if the Executive's employment is
terminated prior to the Effective Date and the Executive
reasonably demonstrates that such termination (l) was at the
request of a third party who has indicated an intention or taken
steps reasonably calculated to effect a Change in Control or (2)
otherwise occurred in connection with or in anticipation of a <PAGE>
<PAGE> 2
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Change in Control, then for all purposes of this Agreement, the
Effective Date shall mean the date immediately prior to the date
of such termination of the Executive's employment.
(c) For purposes of this Agreement, the "Protected
Period" shall be the two (2) year period commencing on April 18,
1995, provided, however, that the Protected Period shall be
automatically extended for one (l) year on April 18, 1996 and on
each April 18th thereafter unless the Company shall have given
written notice to the Executive at least ninety (90) days prior
thereto that the Protected Period shall not be so extended; and
provided, further, that notwithstanding any such notice by the
Company not to extend, the Protected Period shall not end if
prior to the expiration thereof any third party has indicated an
intention or taken steps reasonably calculated to effect a Change
in Control, in which event the Protected Period shall end only
after such third party publicly announces that it has abandoned
all efforts to effect a Change in Control.
2. Employment. (a) Subject to the provisions of
Section 8 hereof, the Company agrees to continue to employ the
Executive and the Executive agrees to remain in the employ of the
Company during the Employment Term. During the Employment Term,
the Executive shall be employed as Vice President and Treasurer
of the Company or in such other executive capacity as may be
mutually agreed to in writing by the parties. The Executive
shall perform the duties, undertake the responsibilities and
exercise the authority customarily performed, undertaken and
exercised by persons situated in a similar executive capacity.
He shall also promote, by entertainment or otherwise, the
business of the Company.
(b) Excluding periods of vacation and sick leave
to which the executive is entitled, during the Employment Term
the Executive agrees to devote reasonable attention and time
during usual business hours to the business and affairs of the
Company to the extent necessary to discharge the responsibilities
assigned to the Executive hereunder. The executive may (i) serve
on corporate, civil or charitable boards or committees (ii)
manage personal investments and (iii) deliver lectures and teach
at educational institutions, so long as such activities do not
significantly interfere with the performance of the Executive's
responsibilities hereunder.
3. Base Salary. During the Employment Term, the
Company agrees to pay or cause to be paid to the Executive during
the term of this Agreement a base salary at the rate of $170,000
per annum or such larger amount as the Company may from time to
time determine (hereinafter referred to as the "Base Salary").
Such Base Salary shall be payable in accordance with the
Company's customary practices applicable to its executives.<PAGE>
<PAGE> 3
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4. Employee Benefits. During the Employment Term, the
Executive shall be entitled to participate in all employee
benefit plans, practices and programs maintained by the Company
and made available to employees generally including, without
limitation all pension, retirement, profit sharing, savings,
medical, hospitalization, disability, dental, life or travel
accident insurance benefit plans. The Executive's participation
in such plans, practices and programs shall be on the same basis
and terms as are applicable to employees of the Company
generally.
5. Executive Benefits. During the Employment Term,
the Executive shall be entitled to participate in all executive
benefit or incentive compensation plans now maintained or
hereafter established by the Company for the purpose of providing
compensation and/or benefits to executives of the Company
including, but not limited to, the Company's 1989 Restricted
Stock Plan, the Sundstrand Corporation Stock Incentive Plan, the
Officer Incentive Compensation Plan, and any supplemental
retirement, salary continuation, stock option, deferred
compensation, supplemental medical or life insurance or other
bonus or incentive compensation plans. Unless otherwise provided
herein, the Executive's participation in such plans shall be on
the same basis and terms as other similarly situated executives
of the Company, but in no event on a basis less favorable in
terms of benefit levels or reward opportunities applicable to the
Executive as in effect on the Effective Date. No additional
compensation provided under any of such plans shall be deemed to
modify or otherwise affect the terms of this Agreement or any of
the Executive's entitlements hereunder.
6. Other Benefits. (a) Fringe Benefits and
Perquisites. During the Employment Term, the Executive shall be
entitled to all fringe benefits and perquisites made available by
the Company to similarly situated executives.
(b) Expenses. During the Employment Term, the
Executive shall be entitled to receive prompt reimbursement of
all expenses reasonably incurred by him in connection with the
performance of his duties hereunder or for promoting, pursuing or
otherwise furthering the business or interests of the Company.
7. Vacation and Sick Leave. During the Employment
Term, at such reasonable times as the Board shall in its
discretion permit, the Executive shall be entitled, without loss
of pay, to absent himself voluntarily from the performance of his
employment under this Agreement, provided that:
(a) The Executive shall be entitled to annual
vacation in accordance with the policies as periodically
established by the Board for similarly situated executives of the
Company.<PAGE>
<PAGE> 4
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(b) The Executive shall be entitled to sick leave
(without loss of pay) in accordance with the Company's policies
as in effect from time to time.
8. Termination. During the Employment Term, the
Executive's employment hereunder may be terminated under the
following circumstances:
(a) Disability. The Company may terminate the
Executive's employment after having established the Executive's
Disability. For purposes of this Agreement, "Disability" means a
physical or mental infirmity which impairs the Executive's
ability to substantially perform his duties under this Agreement
which continues for a period of at least one hundred eighty (180)
consecutive days and which cannot be reasonably accommodated by
the Company. The Executive shall be entitled to the compensation
and benefits provided for under this Agreement for any period
during the term of this Agreement and prior to the establishment
of the Executive's Disability during which the Executive is
unable to work due to a physical or mental infirmity.
Notwithstanding anything contained in this Agreement to the
contrary, until the Termination Date specified in a Notice of
Termination (as each term is hereinafter defined) relating to the
Executive's Disability, the Executive shall be entitled to return
to his position with the Company as set forth in this Agreement
in which event no Disability of the Executive will be deemed to
have occurred.
(b) Cause. The Company may terminate the
Executive's employment for "Cause." A Termination for Cause is a
termination evidenced by a resolution adopted in good faith by a
majority of the Board that the Executive (i) willfully and
continually failed to substantially perform his duties with the
Company (other than a failure resulting from the Executive's
incapacity due to physical or mental illness) which failure
continued for a period of at least thirty (30) days after a
written notice of demand for substantial performance has been
delivered to the Executive specifying the manner in which the
Executive has failed to substantially perform, or (ii) willfully
engaged in conduct which is demonstrably and materially injurious
to the Company, monetarily or otherwise; provided, however, that
no termination of the Executive's employment shall be for Cause
as set forth in clause (ii) above until (x) there shall have been
delivered to the Executive a copy of a written notice setting
forth that the Executive was guilty of the conduct set forth in
clause (ii) and specifying the particulars thereof in detail, and
(y) the Executive shall have been provided an opportunity to be
heard by the Board (with the assistance of the Executive's
counsel if the Executive so desires). No act, nor failure to
act, on the Executive's part, shall be considered "willful"
unless he has acted or failed to act, with an absence of good
faith and without a reasonable belief that his action or failure
to act was in the best interest of the Company. Notwithstanding<PAGE>
<PAGE> 5
-5-
anything contained in this Agreement to the contrary, no failure
to perform by the Executive after Notice of Termination is given
by the Executive shall constitute Cause for purposes of this
Agreement.
(c) (l) Good Reason. The Executive may terminate
his employment for Good Reason. For purposes of this Agreement,
"Good Reason" shall mean the occurrence after a Change in Control
(as hereinafter defined in this Section 8(d)) of any of the
events or conditions described in Subsections (i) through (vii)
hereof:
(i) a change in the Executive's status,
title, position or responsibilities (including reporting
responsibilities) which, in the Executive's reasonable
judgment, does not represent a promotion from his
status, title, position or responsibilities as in effect
immediately prior thereto; the assignment to the
Executive of any duties or responsibilities which, in
the Executive's reasonable judgment, are inconsistent
with such status, title, position or responsibilities;
or any removal of the Executive from or failure to
reappoint or reelect him to any of such positions,
except in connection with the termination of his
employment for Disability, Cause, as a result of his
death or by the Executive other than for Good Reason;
(ii) a reduction in the Executive's Base
Salary or any failure to pay the Executive any
compensation or benefits to which he is entitled within
five (5) days of the date due;
(iii) the failure by the Company to (A)
continue in effect any material compensation or benefit
plan in which the Executive was participating at the
time of the Change in Control, including, but not
limited to, the Company's 1989 Restricted Stock Plan,
the Sundstrand Corporation Stock Incentive Plan, and the
Officer Incentive Compensation Plan or (B) provide the
Executive with compensation and benefits at least equal
(in terms of benefit levels and/or reward opportunities)
to those provided for under each employee benefit plan,
program and practice as in effect immediately prior to
the Change in Control (or as in effect following the
Change in Control, if greater);
(iv) the insolvency or the filing (by any
party, including the Company) of a petition for
bankruptcy, of the Company;
(v) any material breach by the Company
of any provision of this Agreement;<PAGE>
<PAGE> 6
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(vi) any purported termination of the
Executive's employment for Cause by the Company which
does not comply with the terms of Section 8 of this
Agreement; and
(vii) the failure of the Company to obtain
an agreement, satisfactory to the Executive, from any
successor or assign of the Company to assume and agree
to perform this Agreement, as contemplated in Section 11
hereof.
(2) Any event or condition described in this
Section 8(c)(i) through (vii) which occurs prior to the Effective
Date but which the Executive reasonably demonstrates (i) was at
the request of a third party who has indicated an intention or
taken steps reasonably calculated to effect a Change in Control,
or (ii) otherwise arose in connection with or in anticipation of
a Change in Control, shall constitute Good Reason for purposes of
this Agreement notwithstanding that it occurred prior to the
Effective Date.
(3) The Executive's right to terminate his
employment pursuant to this Section (8)(c) shall not be affected
by his incapacity due to physical or mental illness.
(d) For purposes of this Agreement, a "Change in
Control" shall mean any of the following events:
(l) The acquisition (other than from the
Company) by any person (as such term is defined in Sections 13(d)
or 14(d) of the Securities Exchange Act of 1934, as amended (the
"1934 Act")) of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the 1934 Act) of thirty-three percent
(33%) or more of the combined voting power of the Company's then
outstanding voting securities; or
(2) The individuals who, as of the date
hereof, are members of the Board (the "Incumbent Board"), cease
for any reason to constitute a majority of the Board, unless the
election, or nomination for election by the Company stockholders,
of any new director was approved by a vote of a majority of the
Incumbent Board, and such new director shall, for purposes of
this Agreement, be considered as a member of the Incumbent Board;
or
(3) Approval by stockholders of the Company
of (i) a merger or consolidation involving the Company if the
stockholders of the Company, immediately before such merger or
consolidation, do not, as a result of such merger or
consolidation, own, directly or indirectly, more than sixty-seven
percent (67%) of the combined voting power of the then
outstanding voting securities of the corporation resulting from
such merger or consolidation in substantially the same proportion<PAGE>
<PAGE> 7
-7-
as their ownership of the combined voting power of the voting
securities of the Company outstanding immediately before such
merger or consolidation or (ii) a complete liquidation or
dissolution of the Company or an agreement for the sale or other
disposition of all or substantially all of the assets of the
Company.
Notwithstanding the foregoing, a Change in Control shall not be
deemed to occur pursuant to Section 8(d)(l), solely because
thirty-three percent (33%) or more of the combined voting power
of the Company's then outstanding securities is acquired by (i) a
trustee or other fiduciary holding securities under one or more
employee benefit plans maintained by the Company or any of its
subsidiaries or (ii) any corporation which, immediately prior to
such acquisition, is owned directly or indirectly by the
stockholders of the Company in the same proportion as their
ownership of stock in the Company immediately prior to such
acquisition.
(e) Notice of Termination. Any purported
termination by the Company or by the Executive shall be
communicated by written Notice of Termination to the other. For
purposes of this Agreement, a "Notice of Termination" shall mean
a notice which indicates the specific termination provision in
this Agreement relied upon and shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so
indicated. For purposes of this Agreement, no such purported
termination of employment shall be effective without such Notice
of Termination.
(f) Termination Date, Etc. "Termination Date"
shall mean in the case of the Executive's death, his date of
death, or in all other cases, the date specified in the Notice of
Termination subject to the following:
(1) If the Executive's employment is
terminated by the Company for Cause or due to Disability, the
date specified in the Notice of Termination shall be at least
thirty (30) days from the date the Notice of Termination is given
to the Executive, provided that in the case of Disability the
Executive shall not have returned to the full-time performance of
his duties during such period of at least thirty (30) days; and
(2) If the Executive's employment is
terminated for Good Reason, the date specified in the Notice of
Termination shall not be more than sixty (60) days from the date
the Notice of Termination is given to the Company.
9. Compensation Upon Termination. Upon termination of
the Executive's employment during the Employment Term, the
Executive shall be entitled to the following benefits:
<PAGE>
<PAGE> 8
-8-
(a) If the Executive's employment is terminated by
the Company for Cause or Disability or by the Executive (other
than for Good Reason), or by reason of the Executive's death, the
Company shall pay the Executive all amounts earned or accrued
hereunder through the Termination Date but not paid as of the
Termination Date, including Base Salary, vacation pay, bonuses or
incentive compensation and any previous compensation which the
Executive has previously deferred (including any interest earned
or credited thereon) (collectively, "Accrued Compensation"). In
addition to the foregoing, if the Executive's employment is
terminated by the Company for Disability or by reason of the
Executive's death, the Company shall pay to the Executive or his
beneficiaries an amount equal to the bonus or incentive award
that the Executive would have been entitled to receive in respect
of the fiscal year in which the Executive's Termination Date
occurs had he continued in employment until the end of such
fiscal year, calculated as if all performance targets and goals
(if applicable) had been fully met by the Company and by the
Executive, as applicable, for such year, multiplied by a fraction
the numerator of which is the number of days in such fiscal year
through the Termination Date and the denominator of which is 365
(a "Pro Rata Bonus"). The Executive's entitlement to any other
compensation or benefits shall be determined in accordance with
the Company's employee benefit plans and other applicable
programs and practices then in effect.
(b) If the Executive's employment by the Company
shall be terminated (1) by the Company other than for Cause,
death or Disability, or (2) by the Executive for Good Reason,
then the Executive shall be entitled to the benefits provided
below:
(i) the Company shall pay the Executive all
Accrued Compensation and a Pro Rata Bonus;
(ii) the Company shall pay the Executive as
severance pay and in lieu of any further salary for
periods subsequent to the Termination Date, in a single
payment an amount in cash equal to one-half of the sum
of (A) the Executive's Base Salary at the highest rate
in effect at any time within the ninety (90) day period
ending on the date the Notice of Termination is given
(or if the Executive's employment is terminated after a
Change in Control, the Executive's Base Salary
immediately prior to the Change in Control, if greater)
and (B) the "Bonus Amount" (as defined below).
Notwithstanding the foregoing, the amount to be paid
under this Subsection (ii) shall be multiplied by a
fraction (which in no event shall be greater than one
(1)) the numerator of which shall be the number of
months (for this purpose any partial month shall be
considered as a whole month) remaining until the
Executive's 65th birthday and the denominator of which<PAGE>
<PAGE> 9
-9-
shall be six (6). The term "Bonus Amount" shall mean
(x) the greatest amount of any cash bonus or incentive
compensation received by the Executive during the three
fiscal years immediately preceding the Termination Date
or (y) if no such bonus was received by the Executive
during any of such three years, then an amount equal to
the Executive's maximum bonus which could be awarded for
the fiscal year in which the Termination Date occurs had
he continued in employment until the end of such fiscal
year, assuming all performance targets and goals (if
applicable) had been fully met by the Company and by the
Executive, as applicable, for such year;
(iii) for a number of months equal to the
lesser of (A) six (6) or (B) the number of months
remaining until the Executive's 65th birthday, the
Company shall at its expense continue on behalf of the
Executive and his dependents and beneficiaries the life
insurance, disability, medical, dental and
hospitalization benefits which were being provided to
the Executive at the time Notice of Termination is given
(or, if the Executive is terminated following a Change
in Control, the benefits provided to the Executive at
the time of the Change in Control, if greater). The
benefits provided in this Section 9(b)(iii) shall be no
less favorable to the Executive, in terms of amounts and
deductibles and costs to him, than the coverage provided
the Executive under the plans providing such benefits at
the time of Notice of Termination is given (or, if the
Executive is terminated following a Change in Control,
at the time of the Change in Control if more favorable
to the Executive). The Company's obligation hereunder
with respect to the foregoing benefits shall be limited
to the extent that the Executive obtains any such
benefits pursuant to a subsequent employer's benefit
plans, in which case the Company may reduce the coverage
of any benefits it is required to provide the Executive
hereunder as long as the aggregate coverage of the
combined benefit plans is no less favorable to the
Executive, in terms of amounts and deductibles and costs
to him, than the coverage required to be provided
hereunder. This Subsection (iii) shall not be
interpreted so as to limit any benefits to which the
Executive or his dependents may be entitled under any of
the Company's employee benefit plans, programs or
practices following the Executive's termination of
employment, including without limitation, retiree
medical and life insurance benefits;
(iv) the Company shall pay in a single payment
an amount in cash equal to the excess of (A) the
actuarial equivalent of the aggregate retirement benefit
the Executive would have been entitled to receive under<PAGE>
<PAGE> 10
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the Company's supplemental and excess retirement plans
and under the Sundstrand Corporation Retirement Plan-
Aerospace had (x) the executive remained employed by the
Company for an additional six (6) complete months of
credited service (or until his 65th birthday if
earlier), (y) his annual compensation during such period
been equal to his Base Salary (at the rate used for
purposes of Section 9(b)(ii)) and the Bonus Amount, and
(z) he been fully (100%) vested in his benefit under
each such retirement plan, over (B) the actuarial
equivalent of the aggregate retirement benefit the
Executive is actually entitled to receive under such
retirement plans. For purposes of this Subsection (iv),
"actuarial equivalent" shall be determined in accordance
with the actuarial assumptions used for the calculation
of benefits under the Sundstrand Corporation Retirement
Plan as applied prior to the Termination Date in
accordance with such plan's past practices (but shall in
any event take into account the value of any subsidized
early retirement benefit); and
(v) all restrictions on any outstanding award
granted to the Executive shall lapse and such awards
shall become fully (100%) vested immediately, and all
stock options and stock appreciation rights granted to
the Executive shall become fully (100%) vested and shall
become immediately exercisable.
(c) The amounts provided for in Sections 9(a) and
9(b)(i), (ii) and (iv) shall be paid within five (5) days after
the Executive's Termination Date.
(d) The Executive shall not be required to
mitigate the amount of any payment provided for in this Agreement
by seeking other employment or otherwise and no such payment
shall be offset or reduced by the amount of any compensation or
benefits provided to the Executive in any subsequent employment.
10. Unauthorized Disclosure. The Executive shall not
make any Unauthorized Disclosure. For purposes of this
Agreement, "Unauthorized Disclosure" shall mean disclosure by the
Executive without the consent of the Board to any person, other
than an employee of the Company or a person to whom disclosure is
reasonably necessary or appropriate in connection with the
performance by the Executive of his duties as an executive of the
Company or as may be legally required, of any confidential
information obtained by the Executive while in the employ of the
Company (including, but not limited to, any confidential
information with respect to any of the Company's customers or
methods of distribution) the disclosure of which he knows or has
reason to believe will be materially injurious to the Company;
provided, however, that such term shall not include the use or
disclosure by the Executive, without consent, of any information<PAGE>
<PAGE> 11
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known generally to the public (other than as a result of
disclosure by him in violation of this Section 10) or any
information not otherwise considered confidential by a reasonable
person engaged in the same business as that conducted by the
Company.
11. Successors and Assigns. (a) This Agreement
shall be binding upon and shall inure to the benefit of the
Company, its successors and assigns and the Company shall require
any successor or assign to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession or
assignment had taken place. The term "the Company" as used
herein shall include such successors and assigns. The term
"successors and assigns" as used herein shall mean a corporation
or other entity acquiring all or substantially all the assets and
business of the Company (including this Agreement) whether by
operation of law or otherwise.
(b) Neither this Agreement nor any right or
interest hereunder shall be assignable or transferable by the
Executive, his beneficiaries or legal representatives, except by
will or by the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the
Executive's legal representative.
12. Fees and Expenses. As of the Effective Date, the
Company shall pay all legal fees and related expenses (including
the costs of experts, evidence and counsel) reasonably incurred
by the Executive as they become due as a result of (i) the
Executive's termination of employment (including all such fees
and expenses, if any, incurred in contesting or disputing any
such termination of employment), (ii) the Executive's hearing
before the Board as contemplated in Section (8)(b) of this
Agreement, (iii) the Executive's seeking to obtain or enforce any
right or benefit provided by this Agreement or by any other plan
or arrangement maintained by the Company under which the
Executive is or may be entitled to receive benefits.
13. Notice. For the purposes of this Agreement,
notices and all other communications provided for in the
Agreement (including the Notice of Termination) shall be in
writing and shall be deemed to have been duly given when
personally delivered or sent by certified mail, return receipt
requested, postage prepaid, addressed to the respective addresses
last given by each party to the other, provided that all notices
to the Company shall be directed to the attention of the Board
with a copy to the Secretary of the Company. All notices and
communications shall be deemed to have been received on the date
of delivery thereof or on the third business day after the
mailing thereof, except that notice of change of address shall be
effective only upon receipt.<PAGE>
<PAGE> 12
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14. Non-exclusivity of Rights. Nothing in this
Agreement shall prevent or limit the Executive's continuing or
future participation in any benefit, bonus, incentive or other
plan or program provided by the Company or any of its
subsidiaries and for which the Executive may qualify, nor shall
anything herein limit or reduce such rights as the Executive may
have under any other agreements with the Company or any of its
subsidiaries. Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan or
program of the Company or any of its subsidiaries shall be
payable in accordance with such plan or program, except as
explicitly modified by this Agreement.
15. Settlement of Claims. The Company's obligation to
make the payments provided for in this Agreement and otherwise
to perform its obligations hereunder shall not be affected by any
circumstances, including, without limitation, any set-off,
counterclaim, recoupment, defense or other right which the
Company may have against the Executive or others.
16. Miscellaneous. No provision of this Agreement may
be modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing and signed by
the Executive and the Company. No waiver by either party hereto
at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to
be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at
any prior or subsequent time. No agreement or representations,
oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are
not expressly set forth in this Agreement.
17. Governing Law. This Agreement shall be governed by
and construed and enforced in accordance with the laws of the
State of Illinois without giving effect to the conflict of law
principles thereof.
18. Severability. The provisions of this Agreement
shall be deemed severable and the invalidity or unenforceability
of any provision shall not affect the validity or enforceability
of the other provisions hereof.
19. Entire Agreement. This Agreement constitutes the
entire agreement between the parties hereto and supersedes all
prior agreements, if any, understandings and arrangements, oral
or written, between the parties hereto with respect to the
subject matter hereof.<PAGE>
<PAGE> 13
-13-
IN WITNESS WHEREOF, The Company has caused this
Agreement to be executed by its duly authorized officer and the
Executive has executed this Agreement as of the day and year
first above written.
SUNDSTRAND CORPORATION
By: /s/ Don R. O'Hare
---------------------
ATTEST: Chairman of the Board
and Chief Executive
Officer
/s/ Richard M. Schilling By: /s/ James F. Ricketts
- - ---------------------------- ---------------------
Richard M. Schilling James F. Ricketts
<PAGE>
<PAGE> 1
Exhibit (10)(b)
AMENDMENT OF STOCK INCENTIVE PLAN
The Corporation's Stock Incentive Plan (the "Plan") does
not permit the recipient of an option granted thereunder to
transfer the option except by will or by the laws of descent and
distribution. The Plan also states that all options granted to a
participant under the Plan may be exercisable during his lifetime
only by him or his guardian or legal representative. It is
desirable to grant the Compensation Committee the authority, on a
case-by-case basis, to provide for the transfer of an option by
the optionee for estate planning or other purposes determined by
the Committee to be appropriate to persons or entities on terms
and conditions as may be permitted by Securities and Exchange
Commission (the "SEC") interpretation of, or amendment to, Rule
16b-3 under Section 16 of the Securities Exchange Act of 1934.
Under current SEC interpretations, an optionee may transfer
options to (i) members of his immediate family (i.e., children,
grandchildren or spouse); (ii) trusts for the benefit of such
family members; and (iii) partnerships whose only partners are
such family members. The grant of an option that may be
transferred (or the amendment of an outstanding option to allow
for its transferability) would not be exempt under former Rule
16b-3 and, accordingly, the option price would be matched against
any sale of Sundstrand stock by the recipient within a period of
six months before or after the option is granted or amended.
Such grant or amendment, however, would not affect the exemption
provided by Rule 16b-3 for the recipient of other options which
are not transferrable. Accordingly, it is proposed that the Plan
be amended as set forth in the following resolution.
RESOLVED, by the Board of Directors of Sundstrand
Corporation, that Section 6.11 of the Sundstrand
Corporation Stock Incentive Plan be, and it hereby is,
amended to read as follows (the amended language is
italicized):
"6.11 Nontransferability of Options. No Option
granted under the Plan may be sold, transferred,
pledged, assigned, or otherwise alienated or
hypothecated, except in accordance with the
Participant's beneficiary designation, by will, or
by the laws of descent and distribution. Further,
all Options granted to a Participant under the Plan
shall be exercisable during his lifetime only by
such Participant or his guardian or legal
representative. [The foregoing notwithstanding, the
Committee, on a case-by-case basis, may provide for the
transferability of an Option in the manner established by the
Committee, by a Participant to persons or entities on terms and
conditions as may be permitted by Securities and Exchange
Commission interpretation of, or amendment to, Rule 16b-3.<PAGE>
<PAGE> 2
-2-
Any determination by the Committee to provide for
the transferability of an option by any one
Participant under the Plan shall not be deemed to
provide to any other Participant under the Plan a
right of transferability with respect to an Option
granted under this Plan to such other Participant."]
<PAGE>
<PAGE> 1
<TABLE>
Exhibit (11)(a)
Computation of Fully Diluted Earnings Per Share (Unaudited)
Three Months Ended
March 31,
-------------------
(Amounts in millions except per share data) 1995 1994
- - -------------------------------------------------------------------------
<S> <C> <C> <C>
Earnings
Net earnings (loss) $ (18) $ 18
======= =======
________________________________________________________________________
Shares
Weighted-average number of common shares
outstanding 31.6 33.1
Additional shares assuming conversion of
stock options 0.1 0.1
------- -------
Pro forma shares 31.7 33.2
======= =======
________________________________________________________________________
Fully diluted earnings (loss) per share
Net earnings (loss) $ (.58) $ .54
======= =======
</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 MARCH 31, 1995 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 63
<SECURITIES> 0
<RECEIVABLES> 292
<ALLOWANCES> 0
<INVENTORY> 335
<CURRENT-ASSETS> 764
<PP&E> 456
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,638
<CURRENT-LIABILITIES> 446
<BONDS> 243
<COMMON> 19
0
0
<OTHER-SE> 454
<TOTAL-LIABILITY-AND-EQUITY> 1,638
<SALES> 346
<TOTAL-REVENUES> 346
<CGS> 226
<TOTAL-COSTS> 359
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9
<INCOME-PRETAX> (22)
<INCOME-TAX> (4)
<INCOME-CONTINUING> (18)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (18)
<EPS-PRIMARY> (.59)
<EPS-DILUTED> (.59)
</TABLE>
