<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
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 April 25, 1997
______________________________________ _____________________________
Common Stock, par value $.50 per share 60,014,108
<PAGE>
SUNDSTRAND CORPORATION
FORM 10-Q
For the Quarter Ended March 31, 1997
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
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<TABLE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Sundstrand Corporation and Subsidiaries
Condensed Consolidated Statement of Earnings (Unaudited)
Three Months Ended
March 31,
__________________
(Amounts in millions except per share data) 1997 1996
- ---------------------------------------------------------------
<S> <C> <C>
Net sales $ 389 $ 368
Costs, expenses, and other income:
Costs of products sold 257 241
Marketing and administration 72 79
Interest expense 8 7
Interest income (2) (1)
Other, net (1) -
------- -------
334 326
------- -------
Earnings before income taxes 55 42
Less income taxes 20 16
------- -------
Net earnings $ 35 $ 26
======= =======
Weighted-average number of common
shares outstanding 60.2 61.6
Earnings per share $ .58 $ .42
======= =======
Cash dividends per common share $ .17 $ .17
======= =======
</TABLE>
3
<PAGE>
<TABLE>
Sundstrand Corporation and Subsidiaries
Consolidated Statement of Cash Flows (Unaudited)
Three Months Ended
March 31,
------------------
(Amounts in millions) 1997 1996
- ------------------------------------------------------------------------------
<S> <C> <C>
Cash flow from operating activities:
Net earnings $ 35 $ 26
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation 15 15
Amortization 4 3
Deferred income taxes - 4
Change in operating assets and liabilities excluding
the effects of acquisitions and divestitures:
Accounts receivable (7) -
Inventories (18) (11)
Accounts payable 9 (4)
Accrued expenses 26 18
Other (1) (1)
------ ------
Total adjustments 28 24
------ ------
NET CASH PROVIDED BY OPERATING ACTIVITIES 63 50
------ ------
Cash flow from investing activities:
Cash paid for property, plant, and equipment (32) (16)
Cash paid for acquisitions, net of cash acquired (5) -
Other investing activities 1 3
------ ------
NET CASH USED FOR INVESTING ACTIVITIES (36) (13)
------ ------
Cash flow from financing activities:
Net repayments of borrowings supported by lines of credit (5) (48)
Proceeds from stock options exercised 4 1
Purchase of treasury stock (21) (10)
Dividends paid (10) (11)
------ ------
NET CASH USED FOR FINANCING ACTIVITIES (32) (68)
------ ------
Effect of exchange rate changes on cash 5 1
------ ------
Decrease in cash and cash equivalents - (30)
Cash and cash equivalents at January 1 18 75
------ ------
CASH AND CASH EQUIVALENTS AT MARCH 31 $ 18 $ 45
====== ======
Supplemental cash flow information:
Interest paid $ 3 $ 2
Income taxes paid $ 2 $ 3
</TABLE>
4
<PAGE>
<TABLE>
Sundstrand Corporation and Subsidiaries
Condensed Consolidated Balance Sheet (Unaudited)
March 31, December 31,
(Amounts in millions) 1997 1996
- -----------------------------------------------------------------------------
<S> <C> <C>
Assets
Current Assets
Cash and cash equivalents $ 18 $ 18
Accounts receivable, net 337 313
Inventories, net of progress payments 397 378
Deferred income taxes 57 53
Other current assets 8 10
------- -------
Total current assets 817 772
Property, Plant, and Equipment, net 421 427
Intangible Assets, net 269 273
Deferred Income Taxes 74 78
Other Assets 47 45
------- -------
$ 1,628 $ 1,595
======= =======
Liabilities and Shareholders' Equity
Current Liabilities
Notes payable $ 113 $ 118
Long-term debt due within one year 4 4
Accounts payable 111 104
Accrued salaries, wages, and commissions 28 25
Accrued postretirement benefits
other than pensions 18 18
Restructuring liability 21 20
Other accrued liabilities 128 108
------- -------
Total current liabilities 423 397
Long-Term Debt 222 222
Accrued Postretirement Benefits Other Than Pensions 373 367
Other Liabilities 90 96
Shareholders' Equity
Common stock, at par value 38 38
Other shareholders' equity 482 475
------- -------
520 513
------- -------
$ 1,628 $ 1,595
======= =======
</TABLE>
5
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The financial information contained herein is unaudited but, in
the opinion of the management of the Registrant, includes
all adjustments (all of which are normal recurring adjustments)
necessary for a fair presentation of the results of operations
for the periods indicated.
Notes to 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, 1996.
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.
INVENTORIES
The components of inventories at March 31, 1997, and
December 31, 1996, were:
<TABLE>
March 31, December 31,
(Amounts in millions) 1997 1996
- ----------------------------------------------------------------------
<S> <C> <C>
Raw materials $ 53 $ 45
Work in process 138 151
Finished goods and parts 225 199
--------- ---------
416 395
Less progress payments 19 17
--------- ---------
$ 397 $ 378
========= =========
Prior to the application of progress payments, the inventories
shown above included costs related to long-term contracts of $72
million and $65 million, at March 31, 1997, and December 31,
1996, respectively.
</TABLE>
RESTRUCTURING
In December 1996, the Registrant initiated a restructuring plan
related primarily to the operations of Sullair Europe S.A. which
resulted in a pretax charge of $32 million. The restructuring
was undertaken as a result of continuing losses at these
operations, weakness in the European economy, and significant
competitive pressures in the European markets. The charge
included $11 million in termination benefits for approximately
140 employees, primarily consisting of workers at Sullair
Europe's St. Priest, France, facility. The charge also included
$14 million for the write-down of assets of Sullair Europe and $7
million primarily for disposition of the St. Priest facility and
professional fees. Operations currently at the St. Priest
facility will be transferred to other plant sites in Europe and
the United States. The shutdown of the St. Priest facility and
termination or transfer of the employees is expected to be
completed in 1997 and it is anticipated that the sale of the
facility will be completed by the end of 1999.
Since the charge was recorded in 1996, approximately $2 million
has been paid and charged against the restructuring liability,
including costs to terminate 26 employees.
6
<PAGE>
During 1995, the Registrant's Board of Directors approved a
restructuring plan which resulted in a pretax charge of $58
million. The charge was taken to reduce excess Aerospace
manufacturing capacity caused by reductions in manufacturing
volume and increases in manufacturing productivity, and to write
down the assets of the Industrial segment's Spectronic
Instruments business (Spectronic) and the Aerospace segment's
Advanced Power Technology, Inc. (APT) in anticipation of their
divestiture. The charge included $24 million in termination
benefits, including recognition of certain long-term retirement
benefits, for approximately 350 employees, primarily consisting
of workers at the Registrant's Lima, Ohio, facility. Also
included in the charge was $29 million for the write-down of the
assets of the Lima facility, Spectronic, and APT, as well as $5
million for disposition of the Lima facility. The shutdown of
the Lima facility was completed during 1996. The disposition of
the Lima facility is expected to be completed in 1997 and the
sales of Spectronic and a majority interest in APT were completed
in the third quarter of 1995.
Since the 1995 restructuring charge was recorded, approximately
$8 million has been paid and charged against the restructuring
liability, including costs to terminate 360 employees.
7
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
The financial information for the quarter ended March 31, 1997,
as compared with the financial information for the quarter ended
March 31, 1996, and the balance sheet at December 31, 1996, 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, 1996, and the financial data as presented in Item 1
above.
RESULTS OF OPERATIONS
Sales in the first quarter of 1997 were $389 million, an
increase of $21 million from first quarter of 1996 sales of $368
million. The increase was due to higher Aerospace segment sales,
driven by a 50 percent increase in commercial OEM sales, partially
offset by lower Industrial segment sales.
First quarter 1997 net earnings were $35 million, or $.58 per
share, compared with net earnings of $26 million, or $.42 per
share, in the first quarter of 1996. Excluding restructuring
related period costs, first quarter 1996 net earnings were $29
million, or $.47 per share. This quarter over quarter earnings
increase is attributable primarily to the higher Aerospace
segment sales.
ORDERS
Unfilled orders totaled $996 million at March 31, 1997, and
$967 million at December 31, 1996. Incoming orders were $418
million in the first quarter of 1997, a $55 million increase
compared with incoming orders of $363 million in the first quarter
of 1996. The increase was primarily in the Aerospace segment.
AEROSPACE OVERVIEW (EXCLUDING RESTRUCTURING CHARGES)
First quarter sales for the Aerospace segment were $212 million,
an increase of $35 million or 20 percent from the first quarter
of 1996 as a result of a 50 percent increase in commercial OEM
sales. Operating profit increased $11 million or 41 percent to
$38 million and operating profit margins increased to 17.9
percent from 15.3 percent during the first quarter of 1997
compared with the first quarter of 1996 primarily as a result
of the increase in sales.
Incoming orders in the first quarter were $226 million, an
increase of $50 million or 28 percent compared with the first
quarter of 1996 due to higher commercial aftermarket and military
OEM orders.
INDUSTRIAL OVERVIEW (EXCLUDING RESTRUCTURING CHARGES)
First quarter 1997 sales for the Industrial segment were $177
million, down $14 million or 7 percent compared with the first
quarter of 1996 as a result of lower orders during the fourth
quarter of 1996 and customer delivery requirements. Operating
profit was $27 million, a decline of only $2 million from the
first quarter 1996 as a result of the reduced sales levels.
Despite the decline, margins rose slightly to 15.3 percent from
15.2 percent in the first quarter of 1996.
Incoming orders in the first quarter were up 3 percent compared
with the first quarter of 1996.
8
<PAGE>
LIQUIDITY & CAPITAL RESOURCES
Working capital increased to $394 million at March 31, 1997,
compared with $375 million at December 31, 1996. Higher accounts
receivable and inventories were partially offset by higher income
taxes payable. The increase in accounts receivable was due
primarily to an interest bearing deposit related to an anticipated
purchase of equipment in the second quarter and the inventories
increase was due to increased sales and order activity. Income
taxes payable were higher due to the timing of the first quarter
estimated income tax payment.
Net cash provided by operating activities increased to $63 million
for the first quarter of 1997 from $50 million for the first
quarter of 1996. The increase was due primarily to higher net
earnings and income taxes payable, partially offset by higher
accounts receivable.
In the quarters ended March 31, 1997 and 1996, the Registrant used
$36 million and $13 million of cash, respectively, for investing
activities primarily for the purchase of fixed assets. Net cash
used for financing activities was $32 million in the first three
months of 1997 and consisted primarily of cash used to repurchase
common stock and to pay dividends. Net cash used for financing
activities totaled $68 million in the first quarter of 1996 and
was used primarily to repay notes payable, repurchase common
stock, and pay dividends.
The Registrant repurchased approximately 445,000 shares of its
common stock in the first quarter of 1997 and an additional 67,000
shares through April 18, 1997. As of that date, the Registrant
had repurchased approximately 14 million shares of the 20 million
shares authorized for repurchase by the Registrant's Board of
Directors. The Registrant plans to continue to repurchase stock
on an opportunistic basis.
On March 31, 1997, the Registrant's ratio of total debt to total
capital was 39.5 percent compared with 40.1 percent at December
31, 1996.
On April 15, 1997, the Registrant's Board of Directors declared a
quarterly cash dividend of $.17 per share payable on June 17,
1997, to holders of record on June 3, 1997.
INCOME TAX ISSUES
As previously disclosed by the Registrant, the Internal Revenue
Service (IRS) had proposed to increase the Registrant's taxable
income by approximately $225 million, for the years 1984 and 1985,
based upon the IRS' assertion that certain intercompany loans
between the Registrant and its Sunpac subsidiary in Singapore
should be taxed as if they were dividends to the Registrant. This
issue has been resolved as a result of an agreement between the
Registrant and the IRS and will not have a material impact on the
results of operations or financial position of the Registrant.
9
<PAGE>
OUTLOOK
The following discussion contains forward-looking information
which is subject to market risks and opportunities that could have
a material impact on the Registrant's actual results and,
accordingly, should be read in conjunction with the cautionary
language set forth in the Registrant's report on Form 8-K filed on
February 13, 1997.
The Registrant continues to expect that its 1997 sales will
increase between 10 percent and 15 percent, which should generate
earnings per share between $2.65 and $2.85, excluding previously
announced restructuring charges and any future share repurchases.
Aerospace commercial aftermarket orders were greater than expected
in the first quarter and should this trend continue, the
Registrant's projections for Aerospace may prove to be slightly
conservative. However, the Registrant presently believes it is on
track to meet its projection of overall Aerospace sales growth
between 20 percent to 25 percent with an operating profit margin
in the mid 17 percent to the mid 18 percent range for 1997.
Industrial order trends have improved in the first quarter and
quote activity has become stronger. As a result of this and
customer delivery requirements, the Registrant is looking for
sales improvements in its Industrial businesses during the second
quarter. The Registrant continues to project sales growth of up
to 5 percent in 1997, with operating profit margins in the 16
percent to 17 percent range, which should result in our Industrial
operating profit growing by 5 percent to 10 percent.
10
<PAGE>
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,
1996. There have been no material changes in those proceedings or
other material legal developments since that time. However, as
noted under the heading "Income Tax Issues" in Part I, Item 2
herein, an issue with the Internal Revenue Service has been
resolved.
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 15, 1997, amending
Registrant's By-laws, effective April 15, 1997.
(b) Registrant's By-laws, including all amendments as
effective April 15, 1997.
(10) Material Contracts
(a) Consulting Agreement Dated April 15, 1997,
between Registrant and Don R. O'Hare, Registrant's
retired Chairman of the Board, effective April 15,
1997.
(11) Statement Re Computation of Per Share Earnings
(a) Computation of Fully Diluted Earnings Per Share
(Unaudited) for the quarters ended March 31,
1997 and 1996.
(27) Financial Data Schedule
(b) Reports on Form 8-K.
On February 13, 1997, the Registrant filed a report on Form
8-K containing the Registrant's cautionary statement for
purposes of the "Safe Harbor for Forward-Looking Statements"
provision of the Private Securities Litigation Reform Act of
1995.
11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
Sundstrand Corporation
----------------------------
(Registrant)
Date: April 29, 1997 /s/ Richard M. Schilling
----------------------------
Richard M. Schilling
Vice President and General
Counsel and Secretary
Date: April 29, 1997 /s/ DeWayne J. Fellows
-----------------------------
DeWayne J. Fellows
Vice President and Controller
12
<PAGE>
Exhibit (3) (a)
RESOLVED, by the Board of Directors of Sundstrand
Corporation, that the By-Laws of the Corporation be, and they
hereby are amended, effective April 15, 1997, as follows:
1. All references in the By-Laws, except the first
sentence of Section 4.1 and Section 4.12(b), to the
titles "Chairman of the Board", "President and Chief
Executive Officer" and "Chief Executive Officer" are
changed to "Chairman of the Board, President and Chief
Executive Officer".
2. The first sentence of Section 4.1 is amended to
read as follows:
"The officers of the Corporation shall consist of
a Chairman of the Board, President and Chief Executive
Officer; an Executive Vice President and Chief Financial
Officer; an Executive Vice President and Chief Operating
Officer, Aerospace; an Executive Vice President and Chief
Operating Officer, Industrial; a Vice President 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."
3. Section 4.5 is amended to read as follows:
"Section 4.5. Chairman of the Board, President and
Chief Executive Officer. The Chairman of the Board,
President and Chief Executive Officer shall be the chief
executive officer of the Corporation. The Chairman of the
Board, President and Chief Executive Officer shall preside
at all meetings of stockholders and of the Board and shall
see that all orders and resolutions of the Board are carried
into effect. Subject to the control of the Board, the
Chairman of the Board, President and Chief Executive Officer
shall have general supervision, control and management of
the affairs and business of the Corporation. The Chairman
of the Board, President and Chief Executive Officer and/or
the Executive Vice President and Chief Financial Officer
shall execute bonds, mortgages and other contracts requiring
a seal, under the seal of the Corporation, except where
required by law to be otherwise signed and executed and
except where the signing and execution thereof shall be
expressly delegated by the Board of Directors to some other
officer or agent of the Corporation."
4. Section 4.6 is deleted in its entirety.
<PAGE>
-2-
5. Section 4.12(b) is amended to read as follows:
"(b) The Assistant Secretaries in the order of
their seniority shall, in the absence or disability of the
Secretary, perform the duties and exercise the powers of
the Secretary, and shall perform such other duties as the
Chairman of the Board, President and Chief Executive Officer
shall prescribe."
6. Sections 4.7 through 4.15 are renumbered as Sections 4.6
through 4.14.
<PAGE>
Exhibit (3) (b)
BY-LAWS
OF
SUNDSTRAND CORPORATION
(A Delaware Corporation)
Effective April 15, 1997
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, President and Chief Executive Officer and shall be called
by the Chairman of the Board, President and Chief Executive Officer
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 eight 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, President & Chief Executive Officer.
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, President and Chief
Executive Officer or any four directors. Notice of each special
meeting of the Board may be given by mail, telegraph or cable,
personal delivery or telephone. Notice by mail shall be given at
least three days before the meeting; notice by any other means shall
be given a reasonable period of time before the time of such meeting
but in no event shall such notice be given less than one hour before
such meeting. If notice is by telephone, such notice shall be
promptly confirmed by telegraph or cable to each director.
Section 3.9. QUORUM. At all meetings of the Board, the
presence of a majority of the full number of directors shall be
necessary and sufficient to constitute a quorum for the transaction
of business, and the act of a majority of the directors present at
any meeting at which there is a quorum shall be the act of the Board
of Directors, except as may be otherwise specifically provided by
statute or by the Certificate of Incorporation or by these By-Laws.
If a quorum shall not be present at any meeting of the Board of
Directors, the directors present thereat may adjourn the meeting from
time to time, without notice other than announcement at the meeting,
until a quorum shall be present.
Section 3.10. ACTION BY BOARD WITHOUT MEETING. Notwithstanding
anything contained in these By-Laws, any action required or permitted
to be taken at any meeting of the Board of Directors or of any
Committee thereof may be taken without a meeting, if a written consent
thereto is signed by all members of the Board or of such Committee,
as the case may be, and such written consent is filed with the minutes
of proceedings of the Board of Directors or the Committee.
Section 3.11. COMPENSATION OF DIRECTORS. The Board of
Directors, by resolution adopted by a majority of the whole Board,
may establish reasonable compensation of all directors for services
to the Corporation as directors, officers or otherwise. No such
payment shall preclude any director from serving the Corporation in
any other capacity and receiving compensation therefor. Members of
any Committee may be allowed like compensation for their services to
the Corporation.
Section 3.12. INTERESTED DIRECTORS. No contract or transaction
between the Corporation and one or more of its directors or
officers, or between the Corporation and any other corporation,
partnership, association, or other organization in which one or more
of its directors or officers are directors or officers, or have a
financial interest, shall be void or voidable solely for this
reason, or solely because the director or officer is present at or
participates in the meeting of the Board or Committee which
authorizes the contract or transaction, or solely because his or
their votes are counted for such purpose, if (1) the material facts
as to his relationship or interest and as to the contract or
transaction are disclosed or are known to the Board of Directors or
the Committee, and the Board or Committee in good faith authorizes
the contract or transaction by the affirmative votes of a majority
of the disinterested directors, even though the disinterested
directors be less than a quorum; or (2) the material facts as to his
relationship or interest and as to the contract or transaction are
disclosed or are known to stockholders entitled to vote thereon, and
the contract or transaction is specifically approved in good faith
by vote of the stockholders; or (3) the contract or transaction is
fair as to the Corporation as of the time it is authorized, approved
or ratified, by the Board of Directors, Committee, or the
stockholders. Common or interested directors may be counted in
determining the presence of a quorum at a meeting of the Board or of
the Committee which authorizes the contract or transaction.
Section 3.13. COMMITTEES. The Board of Directors may, by
resolution passed by a majority of the whole Board, designate one or
more Committees, each Committee to consist of two or more of the
directors of the Corporation. Any such Committee, to the extent
provided in the resolution not inconsistent with the provisions of
the Statutes of Delaware, shall have and may exercise the powers and
authority of the Board of Directors in the management of the
Corporation and may authorize the seal of the Corporation to be
affixed to all papers which may require it. A majority of the
members of the Committee then holding office shall constitute a
quorum at all meetings and each such Committee shall keep regular
minutes of its proceedings and report the same to the whole Board.
Section 3.14. NOMINATION FOR ELECTION OF DIRECTORS. Nominations
for the election of Directors shall be properly made by the Board of
Directors or a nominating committee appointed by the Board of
Directors or by any stockholder entitled to vote in the election of
Directors generally; provided, however, that any such stockholder
may nominate one or more persons for election as Directors at a
meeting only if such stockholder has given written notice of such
stockholder's intent, either by personal delivery or by United States
mail, postage prepaid, to the Secretary not later than (1) with
respect to an election to be held at an annual meeting of stockholders,
ninety days prior to the anniversary date of the immediately preceding
annual meeting, and (2) with respect to an election to be held at a
special meeting of stockholders for the election of directors, the
close of business on the tenth day following the date on which notice
of such meeting is first given to stockholders. Each such notice
shall set forth: (a) the name and address, as they appear on the
transfer books of the Corporation, of the stockholder who intends to
make the nomination and of the person or persons to be nominated;
(b) a representation that the stockholder is a holder of record of
stock of the Corporation entitled to vote at such meeting and intends
to appear in person or by proxy at the meeting to nominate the person
or persons specified in the notice; (c) a description of all
arrangements or understandings between the stockholder and each
nominee and any other person or persons (naming such person or persons)
pursuant to which the nomination or nominations are to be made by the
stockholder; (d) such other information regarding each nominee
proposed by such stockholder as would be required to be included in
a proxy statement filed pursuant to the proxy rules of the
Securities and Exchange Commission as then in effect; and (e) the
consent of each nominee to serve as a director of the Corporation if
so elected.
The presiding officer of any meeting at which a stockholder or
its representative attempts to nominate one or more persons for
election as directors may refuse to acknowledge the nomination of
any person not made in compliance with the provisions of this
Section 3.14.
ARTICLE IV
OFFICERS
Section 4.1. DESIGNATION: NUMBER. The officers of the
Corporation shall consist of a Chairman of the Board, President and
Chief Executive Officer; an Executive Vice President and Chief
Financial Officer; an Executive Vice President and Chief Operating
Officer, Aerospace; an Executive Vice President and Chief Operating
Officer, Industrial; a Vice President and General Counsel; one or
more other Vice Presidents; a Secretary; a Treasurer; and a
Controller, all of whom shall be elected by the Board of Directors
and shall hold office until their successors are duly elected and
qualified. In addition, the Chairman of the Board, President and
Chief Executive Officer may appoint a Tax Director, one or more
Assistant Secretaries, Assistant Treasurers and Assistant
Controllers and such other officers and agents as the Chairman of
the Board, President and Chief Executive Officer may deem necessary
or desirable, who shall hold their offices for such terms and shall
have such authority and perform such duties as shall be determined
by the Chairman of the Board, President and Chief Executive Officer
from time to time. Any Executive Vice President or Vice President
designated by a resolution of the Board of Directors or by
delegation of the Chairman of the Board, President and Chief
Executive Officer shall have authority to sign contracts and any
other documents as specifically authorized by the Board of Directors
or the Chairman of the Board, President and Chief Executive Officer
or which are within the ordinary course of the business of the
Corporation.
Section 4.2. NON-CORPORATE OFFICERS. The Chairman of the
Board, President and Chief Executive Officer shall have authority to
appoint from time to time officers of divisions, product groups or
other segments of the Corporation's business for such terms,
with such authority and at such salary as the Chairman of the Board,
President and Chief Executive Officer in his sole discretion shall
determine; provided, however, such appointed officer shall under no
circumstances have authority to bind any other division, product
group or other segment of the Corporation's business nor to bind the
Corporation, except as to the normal and usual business affairs of
the division, product group or other segment of the Corporation's
business of which he is an officer. Such appointed officer, as
such, shall not be construed as an officer of the Corporation.
Section 4.3. SALARIES. The salaries of the officers elected
pursuant to Section 4.1 above shall be determined by the Board of
Directors. The salaries of all other officers and agents of the
Corporation appointed by the Chairman of the Board, President and
Chief Executive Officer shall be determined by the Board of
Directors or the Chairman of the Board, President and Chief
Executive Officer.
Section 4.4. REMOVAL. Any officer elected by the Board of
Directors and any officer or agent appointed by the Chairman of the
Board, President and Chief Executive Officer, as the case may be,
may be removed at any time by the Board of Directors or the Chairman
of the Board, President and Chief Executive Officer, respectively,
whenever in its or his judgment the best interests of the
Corporation will be served thereby, but such removal shall be
without prejudice to the contract rights, if any, of the person so
removed. Any vacancy occurring in any elected office of the
Corporation shall be filled by the Board of Directors.
Section 4.5. CHAIRMAN OF THE BOARD, PRESIDENT AND CHIEF
EXECUTIVE OFFICER. The Chairman of the Board, President and Chief
Executive Officer shall be the chief executive officer of the
Corporation. The Chairman of the Board, President and Chief
Executive Officer shall preside at all meetings of stockholders and
of the Board and shall see that all orders and resolutions of the
Board are carried into effect. Subject to the control of the Board,
the Chairman of the Board, President and Chief Executive Officer
shall have general supervision, control and management of the
affairs and business of the Corporation. The Chairman of the Board,
President and Chief Executive Officer and/or the Executive Vice
President and Chief Financial Officer shall execute bonds, mortgages
and other contracts requiring a seal, under the seal of the
Corporation, except where required by law to be otherwise signed and
executed and except where the signing and execution thereof shall be
expressly delegated by the Board of Directors to some other officer
or agent of the Corporation.
Section 4.6. EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL
OFFICER. The Executive Vice President and Chief Financial Officer
shall be the chief financial officer of the Corporation and shall be
in charge of the financial, accounting, taxation, administration,
personnel and public relations activities of the Corporation and
shall be under the direction and report to the Chairman of the
Board, President and Chief Executive Officer. He and/or the
Chairman of the Board, President and Chief Executive Officer shall
execute bonds, mortgages and other contracts requiring a seal, under
the seal of the Corporation, except where required by law to be
otherwise signed and executed and except where the signing and
execution thereof shall be expressly delegated by the Board of
Directors to some other officer or agent of the Corporation.
Section 4.7. EXECUTIVE VICE PRESIDENT AND CHIEF OPERATING
OFFICER, AEROSPACE. The Executive Vice President and Chief
Operating Officer, Aerospace shall be the chief operating officer
of the Corporation's aerospace businesses. He shall assist the
Chairman of the Board, President and Chief Executive Officer in the
general supervision, control and management of the affairs and
business of the Corporation's aerospace businesses and the
Corporation's government contracts and compliance activities.
Section 4.8. EXECUTIVE VICE PRESIDENT AND CHIEF OPERATING
OFFICER, INDUSTRIAL. The Executive Vice President and Chief
Operating Officer, Industrial shall be the chief operating officer
of the Corporation's industrial businesses. He shall assist the
Chairman of the Board, President and Chief Executive Officer in the
general supervision, control and management of the affairs and
business of the Corporation's industrial businesses.
Section 4.9. VICE PRESIDENT AND GENERAL COUNSEL. The Vice
President and General Counsel shall be the chief legal officer of
the Corporation, shall be responsible for all legal and
environmental matters involving the Corporation and shall direct the
Corporation's legal and environmental affairs staffs. He shall be
under the direction of and report to the Chairman of the Board,
President and Chief Executive Officer.
Section 4.10. OTHER VICE PRESIDENTS. The other Vice Presidents
shall perform such duties as may be prescribed by the Board of
Directors or the Chairman of the Board, President and Chief
Executive Officer.
Section 4.11. SECRETARY AND ASSISTANT SECRETARIES.
(a) The Secretary shall attend all sessions of the Board
of Directors and all meetings of the stockholders and record the
minutes of all proceedings in a book to be kept for that purpose,
and shall perform like duties for Committees of the Board when
required. He shall give, or cause to be given, notice of all
meetings of the stockholders and of the Board of Directors, and
shall perform such other duties as may be prescribed by the Board of
Directors or the Chairman of the Board, President and Chief
Executive Officer. He shall keep in safe custody the seal of the
Corporation, and affix the same to any instrument requiring it, and
when affixed it shall be attested by his signature or by the
signature of the Treasurer or an Assistant Secretary.
(b) The Assistant Secretaries in the order of their
seniority shall, in the absence or disability of the Secretary,
perform the duties and exercise the powers of the Secretary, and
shall perform such other duties as the Chairman of the Board,
President and Chief Executive Officer shall prescribe.
Section 4.12. TREASURER AND ASSISTANT TREASURERS.
(a) The Treasurer shall 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 Chairman of the Board, President and Chief
Executive Officer and the Board of Directors, at the regular
meetings of the Board, or whenever they may require it, an account
of all his transactions as Treasurer and of the financial condition
of the Corporation.
(c) If required by the Board of Directors, he shall give
the Corporation a bond in such sum, and with such surety or sureties
as shall be satisfactory to the Board, for the faithful performance
of the duties of his office, and for the restoration to the
Corporation, in case of his death, resignation, retirement or
removal from office, of all books, papers, vouchers, money and
other property of whatever kind in his possession or under his
control belonging to the Corporation.
(d) The 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 shall
prescribe.
Section 4.13. 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 4.14. 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 Treasurer.
ARTICLE V
SHARES AND THEIR TRANSFER
Section 5.1. CERTIFICATES OF STOCK. Certificates for shares of
stock of the Corporation shall be in such form as shall be approved
by the Board, and during the period while more than one class of
stock or more than one series of any class of the Corporation is
authorized, the powers, designations, preferences and relative,
participating, optional or other special rights of each class of
stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights shall be set forth in
full or summarized on the face or back of the certificates which the
Corporation shall issue to represent such class or series of stock,
or else there shall appear on the certificates a statement that the
Corporation shall furnish such information to a stockholder without
charge if it be requested. They shall exhibit the holder's name and
number of shares, and, with respect to each class of stock of the
Corporation, or series thereof, if there be more than one class or
series thereof, shall bear a distinguishing letter, and each class
or series thereof, if any, shall be numbered serially and be issued
in consecutive order. They shall bear the Corporate seal or a
facsimile thereof and shall be signed by the Chairman of the Board,
President and Chief Executive Officer, an Executive Vice President,
or a Vice President, and by the Treasurer or an Assistant Treasurer,
or the Secretary or an Assistant Secretary of the Corporation. If
such certificate is countersigned (1) by a transfer agent other than
the Corporation or its employee, or, (2) by a registrar other than
the Corporation or its employee, any other signature on the
certificate may be a facsimile. In case any officer, transfer
agent, or registrar who has signed or whose facsimile signature has
been placed upon a certificate shall have ceased to be such officer,
transfer agent, or registrar before such certificate is issued, it
may be issued by the Corporation with same effect as if he were such
officer, transfer agent, or registrar at the date of issue.
Section 5.2. TRANSFER OF STOCK. Upon surrender to the
Corporation or its transfer agent of a certificate representing
shares, duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, a new certificate
shall be issued to the person entitled thereto, and the old
certificate canceled, and the transaction recorded upon the books of
the Corporation.
Section 5.3. LOST, STOLEN OR DESTROYED CERTIFICATES. Any
person, claiming a certificate for shares of the Corporation to be
lost, stolen or destroyed, shall make affidavit of the fact and
lodge the same with the Secretary of the Corporation accompanied by
a signed application for a new certificate. Such person shall also
give the Corporation a bond of indemnity with one or more sureties
satisfactory to the Board of Directors, and in an amount which in
their judgment shall be sufficient to save the Corporation from
loss, or shall qualify under such blanket bond as may from time to
time be approved by the Board of Directors, and thereupon the proper
officers may cause to be issued a new certificate of like tenor with
the one alleged to be lost, stolen or destroyed.
Section 5.4. RECORD DATE. In order that the Corporation may
determine the stockholders entitled to notice of or to vote at any
meeting of stockholders or any adjournment thereof, or to express
consent to corporate action in writing without a meeting, or
entitled to receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the
purpose of any other lawful action, the Board of Directors may fix,
in advance, a record date, which shall not be more than sixty nor
less than ten days before the date of such meeting, nor more than
sixty days prior to any other action.
Section 5.5. REGISTERED STOCKHOLDERS. The Corporation shall be
entitled to treat the holder of record of any share or shares of
stock as the holder in fact thereof and, accordingly, shall not be
bound to recognize any equitable or other claim to or interest in
such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as otherwise
provided by the laws of Delaware.
Section 5.6. TRANSFER AGENTS AND REGISTRARS. The Board of
Directors may from time to time appoint a transfer agent and
registrar in one or more cities; may require all certificates
evidencing shares of stock of the Corporation to bear the signatures
of a transfer agent and registrar; and may provide that such
certificates shall be transferable in more than one city.
ARTICLE VI
INDEMNIFICATION OF OFFICERS AND DIRECTORS
The Corporation shall, to the fullest extent to which it is
empowered to do so by the General Corporation Law of Delaware, or
any other applicable laws, as from time to time in effect, indemnify
any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason
of the fact that he is or was a director or officer of the
Corporation or a division thereof, or is or was serving at the
request of the Corporation as a director or officer of another
corporation, partnership, joint venture, trust or other enterprise,
against all expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by
him in connection with such action, suit or proceeding.
The provisions of this Article shall be deemed to be a contract
between the Corporation and each director or officer who serves in
any such capacity at any time while this Article and the relevant
provisions of the General Corporation Law of Delaware or other
applicable law, if any, are in effect, and any repeal or
modification of any such law or of this Article shall not affect any
rights or obligations then existing with respect to any state of
facts then or theretofore existing or any action, suit or proceeding
theretofore or thereafter brought or threatened based in whole or in
part upon any such state of facts.
The Corporation shall, to the fullest extent to which it is
empowered to do so by the General Corporation Law of Delaware, and
with respect to the Employee Retirement Income Security Act of 1974,
or any other applicable laws, as from time to time in effect,
indemnify any officer, director or employee of the Corporation or an
affiliated corporation, who was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he is or was serving at
the request of the Corporation as an individual Trustee, Committee
member, administrator or fiduciary of a pension or other benefit
plan for employees of the Corporation, or of an affiliated
corporation or other enterprise.
Persons who are not covered by the foregoing provisions of
this Article and who are or were employees or agents of the
Corporation or a division thereof, or are or were serving at the
request of the Corporation as employees or agents of another
corporation, partnership, joint venture, trust or other enterprise,
may be indemnified to the extent authorized at any time or from time
to time by the Board of Directors of the Corporation.
The indemnification provided or permitted by this Article shall
not be deemed exclusive of any other rights to which those
indemnified may be entitled by law or otherwise, and shall continue
as to a person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.
The Corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him and incurred
by him in any such capacity, or arising out of his status as such,
whether or not the Corporation would have the power to indemnify him
against such liability under the provisions of this Article.
The Corporation shall, to the fullest extent to which it is
empowered to do so by the General Corporation Law of Delaware, or
any other applicable laws, as from time to time in effect, pay
expenses, including attorneys' fees, incurred in defending any
action, suit or proceeding, in advance of the final disposition of
such action, suit or proceeding, to any person who is or was a party
or is threatened to be made a party to any such threatened, pending
or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that such
person is or was a director or officer of the Corporation, upon
receipt of an undertaking by or on behalf of such
person to repay such amount if it shall ultimately be determined
that such person is not entitled to be indemnified by the
Corporation as authorized by applicable laws.
ARTICLE VII
MISCELLANEOUS PROVISIONS
Section 7.1. CHECKS, DRAFTS AND OTHER INSTRUMENTS; SECURITY
VOTING AND PROXIES. All checks, drafts or other orders for the
payment of money, notes or other evidences of indebtedness, issued
in the name of the Corporation shall be signed by such officer or
officers, or such other person or persons, as the Board of Directors
may from time to time designate. In the absence of specific action
by the Board of Directors, the Chairman of the Board, President and
Chief Executive Officer or any Executive Vice President or Vice
President shall have the authority to grant proxies to vote, or
vote, on behalf of the Corporation the securities of other
corporations, both domestic and foreign, held by the Corporation.
Section 7.2. SEAL. The corporate seal of the Corporation
shall be in such form as the Board of Directors may determine and
shall include the name of the Corporation and the words "Corporate
Seal, Delaware." The seal may be used by causing it, or a facsimile
thereof, to be impressed or affixed or in any manner reproduced.
Section 7.3. FISCAL YEAR. The fiscal year of the Corporation
shall commence on the first day of January in each year and end on
the following 31st day of December.
Section 7.4. NOTICES. Notice by mail shall be deemed to have
been given at the time the same shall be mailed. Notice by
telegraph shall be deemed to have been given when the same shall
have been delivered for prepaid transmission into the custody of a
company ordinarily engaged in the transmission of such messages.
Section 7.5. WAIVER OF NOTICE. Whenever any notice whatever
is required to be given under the provisions of the laws of the
State of Delaware or under the provisions of the Certificate of
Incorporation or these By-Laws, a waiver thereof in writing, signed
by the person or persons entitled to such notice, whether before or
after the time stated therein, shall be deemed equivalent thereto.
Except as may be otherwise specifically provided by law, any waiver
by mail, telegraph, cable or wireless bearing the name of the person
entitled to notice shall be deemed a waiver in writing duly signed.
The presence of any person at any meeting either in person or by
proxy shall be deemed the equivalent of a waiver in writing duly
signed, except where the person attends for the express purpose of
objecting to the transaction of any business because the meeting is
not lawfully called or convened.
Section 7.6. DIVIDENDS. Dividends upon the capital stock of
the Corporation, subject to the provisions of the Certificate of
Incorporation, if any, may be declared by the Board at any regular
or special meeting, pursuant to law. Dividends may be paid in cash,
in property, or in shares of the capital stock, subject to the
provisions of law and of the Certificate of Incorporation.
Section 7.7. CREATION OF RESERVES. Before payment of any
dividend or making any distribution of profits, there may be set
aside out of any funds of the Corporation available for dividends
such sum or sums as the Board from time to time, in its absolute
discretion, may think proper as a reserve or reserves to meet
contingencies, or for equalizing dividends, or for repairing or
maintaining any property of the Corporation, or for such other
purpose as the Board shall think conducive to the interest of the
Corporation, and the Board may at any time modify or abolish any
such reserve in the manner in which it was created.
Section 7.8. AMENDMENTS. These By-Laws may be altered or
repealed by the affirmative vote of the majority of the entire
number of directors specified from time to time in the restated
Certificate of Incorporation at any regular meeting of the Board or
at any special meeting of the Board, if notice of the proposed
alteration or repeal be contained in the notice of such special
meeting; provided, however, that any provisions of these By-Laws
resulting from such alteration or repeal shall at all times be in
conformance with the Restated Certificate of Incorporation and the
laws of the State of Delaware.
<PAGE>
Exhibit (10) (a)
CONSULTING AGREEMENT
--------------------
This Agreement is made as of the 15th day of April,
1997, by and between Sundstrand Corporation, a Delaware corporation
(the "Company") and Don R. O'Hare ("Consultant").
WHEREAS, Consultant is the Chairman of the Board of the
Company;
WHEREAS, Consultant's employment as Chairman of the
Board will terminate effective as of the date of this Agreement, and
the Board of Directors wishes him to remain as a consultant to
assist the President and Chief Executive Officer, and Consultant is
willing to render such services upon the terms and conditions set
forth below.
NOW, THEREFORE, in consideration of the premises and the
mutual promises contained herein, and other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. DUTIES. During the Consultation Period (as defined
below), Consultant shall provide the Chairman, President and Chief
Executive Officer of the Company with his best advice and assistance
on such matters as the Chairman, President and Chief Executive
Officer shall request, including relations with the Company's
investors and identification and evaluation of potential acquisition
candidates. The Company will not have the right to direct or
supervise the manner in which Consultant performs services under
this Consulting Agreement.
2. TERM. The term of this Agreement shall commence on the
date hereof and shall expire, subject to earlier termination as
hereinafter provided, on April 14, 2000 (the "Consultation Period").
This Agreement may be extended or renewed upon mutual agreement of
the parties.
3. COMPENSATION. The Company shall pay Consultant the
following, and Consultant shall accept the same, as compensation for
the performance of his undertakings and the services to be rendered
by him under this Agreement: An annual fee of $360,000, payable in
installments to be paid not less often than biweekly.
4. EMPLOYEE BENEFITS. Except as otherwise expressly
provided herein, employee benefits enjoyed by the Consultant during
his employment by the Company will be terminated, except to the
extent that such benefits are available to directors of the Company
or to other retired employees of the Company.
5. EXPENSES. Upon submission of appropriate invoices or
vouchers, the Company shall promptly pay or reimburse Consultant for
all reasonable expenses incurred by Consultant during the
Consultation Period in the performance of his duties hereunder.
6. CONDITIONS OF CONSULTANT'S PERFORMANCE OF SERVICES.
Throughout the Consultation Period, (a) the Company shall not
require or assign projects to Consultant which would require him to
move the location of his principal business office or his principal
place of residence outside the City of Rockford or the County of
Winnebago, Illinois (the "Rockford Area"), (b) the Company shall not
require or assign projects to Consultant which would require him to
spend more than forty-five (45) normal working days away from the
Rockford Area during any consecutive twelve-month period, (c) the
Company shall provide office, secretarial and administrative
services, which shall be reasonably satisfactory to Consultant, to
assist Consultant in the performance of his services under this
Consulting Agreement.
7. CONTINUATION OF FEES. If the Company shall fail to
observe or perform any covenant or agreement contained in this
Agreement to be observed or performed by the Company, then
Consultant shall, until such time as the Consultation Period
hereunder would otherwise terminate pursuant to the provisions of
Section 2 or Section 8, continue to receive all fees which the
Company has hereinabove in Section 3 agreed to pay to and provide
for Consultant, in each case in the amounts and at the times
provided for in Section 3. The parties agree that, in such event,
such payments shall be deemed to constitute liquidated damages for
the Company's breach of this Agreement, and the Company agrees that
Consultant shall not be required to mitigate his damages by seeking
other employment or otherwise.
8. TERMINATION. This Agreement shall terminate upon the
following circumstances:
(a) The date of death of Consultant during the
Consultation Period; provided, however,
that Consultant's estate, heirs and
beneficiaries shall be entitled to receive the
full amount of his fee for the month in which
death occurs, and the Company shall have no
further obligations to Consultant under this
Agreement;
(b) Following the conviction of Consultant of a
felony, the date as of which Consultant's right
to file an appeal after conviction has expired,
or, if Consultant files an appeal after
conviction, the date as of which the appellate
court fails to reverse the conviction, and the
Company shall pay Consultant his full fee
through such date of termination and the
Company shall have no further obligations to
Consultant under this Agreement; or
(c) The date as of which the Company elects to
terminate this Agreement in accordance with
Section 12.
9. COVENANT NOT TO COMPETE. Without the consent of the
Company, Consultant shall not at any time during the Consultation
Period undertake employment as an owner, director, officer, employee
or consultant with any business entity directly engaged in the
manufacture and/or sale of products competitive with any material
product or product lines of the Company; provided, however, that
Consultant shall not be deemed to have breached this undertaking if
his sole relation with such entity consists of his holding, directly
or indirectly, an equity interest in such entity not greater than
two percent (2%) of such entity's outstanding equity interest. For
purposes hereof, the term "material product or product line of the
Company" shall mean any product or product line of the Company the
gross sales of which during any calendar year during the five (5)
year period preceding the Consultant's undertaking such employment
were at least $50 million.
10. DISCLOSURE OF CONFIDENTIAL INFORMATION. Without the
consent of the Company, Consultant shall not at any time during the
Consultation Period disclose to any other business entity
confidential information concerning the Company or the Company's
trade secrets of which Consultant has gained knowledge during his
employment with, or consultation to, the Company.
11. BUSINESS MATERIALS. All written materials, records and
documents made by the Consultant or coming into his possession
concerning the business or affairs of the Company or any of its
affiliates shall be the sole property of the Company and its
affiliates; and, upon the termination of the Consultation Period
or upon the request of the Company at any time, the Consultant
shall promptly deliver the same to the Company.
12. BREACH OF SECTION 9 OR SECTION 10. In the event of a
breach by Consultant of the provisions of Section 9 or Section 10 of
this Agreement, the Company may terminate this Agreement under
Section 8(c), but only if the Company complies with the following
provisions:
(a) The Company shall provide Consultant with
written notice of its belief that a breach of
Section 9 or Section 10 of this Agreement has
occurred and shall afford Consultant sixty (60)
days or such longer period as the Company may
determine to cure the alleged breach.
(b) In the event Consultant does not cure the
breach, the Company shall be required to
institute a judicial proceeding to determine
whether a breach of Section 9 or Section 10 of
this Agreement has occurred and Consultant has
not cured such breach.
(c) This Agreement may then be terminated only
upon a judicial determination that Consultant
has breached the provisions of Section 9 or
Section 10 and has failed to cure such breach;
provided, however, that this Agreement may not be
terminated until either all appellate proceedings
have been exhausted or the time within which
Consultant may appeal an adverse ruling has
expired.
13. LITIGATION EXPENSES. The Company shall pay to
Consultant out-of-pocket expenses, including attorneys' fees,
incurred by Consultant in connection with any claim or legal action
or proceeding brought under or involving this Agreement, whether
brought by Consultant or by or on behalf of the Company or by
another party; provided, however, the Company shall not be obligated
to pay to Consultant out-of-pocket expenses, including attorneys'
fees, incurred by Consultant in any claim or legal
action or proceeding involving Section 9 or Section 10 of this
Agreement if Company prevails in such litigation.
14. INDEPENDENT CONTRACTOR. Nothing contained herein shall
constitute the Consultant an employee or agent of the Company, but
the relationship of the Consultant to the Company shall be one of an
independent contractor.
15. NOTICES. Notices given pursuant to this Agreement
shall be in writing and shall be deemed given when received and if
mailed shall be mailed by United States registered or certified
mail, return receipt requested, addressee only, postage prepaid if
to the Company, to the Board of Directors of Sundstrand Corporation,
Attention: Vice President and General Counsel and Secretary, P.O.
Box 7003, 4949 Harrison Avenue, Rockford, Illinois 61125, or if to
Consultant, at 2939 Imperial Oaks, Rockford, Illinois 61111, or to
such other address as either party may have previously designated by
notice to the other party given in the foregoing manner.
16. SUCCESSORS. This Agreement may not be assigned by the
Company, and the obligations of the Company provided for in this
Agreement shall be binding legal obligations of any successor to the
Company by purchase, merger, consolidation or otherwise. This
Agreement may not be assigned by Consultant during his life and,
upon his death, will be binding upon and inure to the benefit of his
heirs, legatees and the legal representatives of his estate.
17. WAIVER, MODIFICATION AND INTERPRETATION. No provisions
of this Agreement may be modified, waived or discharged unless such
waiver, modification or discharge is agreed to in a writing signed
by Consultant and an appropriate officer of the Company empowered to
sign same by the Board. No waiver by either party at any time of
any breach by the other party of, or compliance with, any condition
or provision of this Agreement to be performed by the other party
shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same time or at any prior subsequent time. The
validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of Illinois.
The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any
other provision of this Agreement.
18. HEADINGS. The headings contained herein are for
reference purposes only and shall not in any way affect the meaning
or interpretation of any provision of this Agreement.
IN WITNESS WHEREFORE, the parties hereto have executed
this Agreement on the day and year first written above.
SUNDSTRAND CORPORATION
By: /s/ Richard M. Schilling
-----------------------------
Vice President and General
Counsel and Secretary
By: /s/ Don R. O'Hare
-----------------------------
Consultant
<PAGE>
Exhibit (11)(a)
Computation of Fully Diluted Earnings Per Share (Unaudited)
<TABLE>
Quarter Ended
March 31,
------------------
(Amounts in millions except per share data) 1997 1996
- --------------------------------------------------------------------------
<S> <C> <C>
Earnings
Net earnings $ 35 $ 26
======= =======
- --------------------------------------------------------------------------
Shares
Weighted-average number of common shares outstanding 60.2 61.6
Additional shares assuming conversion of stock options 0.5 0.5
------- -------
Pro forma shares 60.7 62.1
======= =======
- --------------------------------------------------------------------------
Fully diluted earnings per share
Net earnings $ .58 $ .42
======= =======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE REGISTRANT'S FORM 10-Q FOR THE QUARTERLY PERIOD ENDED
MARCH 31, 1997, 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-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 18
<SECURITIES> 0
<RECEIVABLES> 337
<ALLOWANCES> 0
<INVENTORY> 397
<CURRENT-ASSETS> 817
<PP&E> 421
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,628
<CURRENT-LIABILITIES> 423
<BONDS> 222
0
0
<COMMON> 38
<OTHER-SE> 482
<TOTAL-LIABILITY-AND-EQUITY> 1,628
<SALES> 389
<TOTAL-REVENUES> 389
<CGS> 257
<TOTAL-COSTS> 329
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8
<INCOME-PRETAX> 55
<INCOME-TAX> 20
<INCOME-CONTINUING> 35
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 35
<EPS-PRIMARY> .58
<EPS-DILUTED> 0
</TABLE>
