-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DzvXDK2Oj2SaPtCug/UdHVCabAwvCRVYwz1K8zUtRqzeUfJRsoWmYQ5lqMUSgpxL JB4v4bnLq387AAGI04hpKw== 0000095395-95-000009.txt : 19951109 0000095395-95-000009.hdr.sgml : 19951109 ACCESSION NUMBER: 0000095395-95-000009 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951108 SROS: CSX SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SUNDSTRAND CORP /DE/ CENTRAL INDEX KEY: 0000095395 STANDARD INDUSTRIAL CLASSIFICATION: AIRCRAFT PART & AUXILIARY EQUIPMENT, NEC [3728] IRS NUMBER: 361840610 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-05358 FILM NUMBER: 95588094 BUSINESS ADDRESS: STREET 1: 4949 HARRISON AVE STREET 2: P O BOX 7003 CITY: ROCKFORD STATE: IL ZIP: 61125 BUSINESS PHONE: 8152266000 10-Q 1 THIRD QUARTER FORM 10-Q 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 September 30, 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 October 25, 1995 ________________________ _______________________________ Common Stock, par value $.50 per share 30,746,802 2 SUNDSTRAND CORPORATION FORM 10-Q For the Quarter Ended September 30, 1995 INDEX Page Part I. Financial Information 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 12 Item 6. Exhibits and Reports on Form 8-K 12 Signatures 13 2 3 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. SUNDSTRAND CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF EARNINGS (UNAUDITED)
Three Months Nine Months Ended September 30, Ended September 30, (Amounts in millions except ------------------- ------------------- per share data) 1995 1994 1995 1994 _______________________________________________________________________________ Net sales $ 355 $ 340 $1,078 $ 995 Costs, expenses, and other income: Costs of products sold 226 226 699 671 Marketing and administration 72 68 224 210 Restructuring charge (3) - 58 - Interest expense 8 7 25 21 Interest income (2) - (4) (3) Other, net (1) 2 (1) 1 ------ ------ ------ ------ 300 303 1,001 900 Earnings before income taxes 55 37 77 95 Less income taxes 21 13 34 34 ------ ------ ------ ------ Net earnings $ 34 $ 24 $ 43 $ 61 ====== ====== ====== ====== Weighted-average number of common shares outstanding 31.5 32.9 31.5 32.9 Earnings per share $ 1.07 $ .72 $ 1.36 $ 1.84 ====== ====== ====== ====== Cash dividends per common share $ .30 $ .30 $ .90 $ .90 ====== ====== ====== ======
3 4 SUNDSTRAND CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITTED)
Nine Months Ended September 30, ------------------- (Amounts in millions) 1995 1994 _______________________________________________________________________________ Cash flow from operating acitivities: Net earnings $ 43 $ 61 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 59 60 Deferred income taxes (16) (20) Change in operating assets and liabilities excluding the effects of acquisitions and divestitures: Accounts receivable 25 16 Inventory (52) 6 Other assets 7 - Accounts payable (1) 28 Accrued expenses 68 (54) Other 4 6 ------ ------ Total adjustments 94 42 ------ ------- NET CASH PROVIDED BY OPERATING ACTIVITIES 137 103 ------ ------ Cash flow from investing activities: Cash paid for property, plant, and equipment (39) (33) Proceeds from sale of assets 41 5 Cash paid for Dowty (8) - Cash paid for HMD-Kontro, net of cash acquired - (25) Investment in IRB trust (4) - Investment in equity companies (2) (6) ------ ------ NET CASH USED FOR INVESTING ACTIVITIES (12) (59) ------ ------ Cash flow from financing activities: Net borrowings (payments) supported by lines of credit (39) 67 Principal payments on long-term debt (5) (2) Issuance of long-term debt 8 - Additional debt for HMD-Kontro acquisition - 25 Purchase of treasury stock (50) (38) Proceeds from stock options exercised 3 - Dividends paid (29) (30) ------ ------ NET CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES (112) 22 ------ ------ Effect of exchange rate changes on cash (4) (13) ------ ------ Increase in cash and cash equivalents 9 53 Cash and cash equivalents at January 1 66 15 ------ ------ CASH AND CASH EQUIVALENTS AT SEPTEMBER 30 $ 75 $ 68 ====== ====== Supplemental cash flow information: Interest paid $ 20 $ 17 Income taxes paid $ 51 $ 87
4 5 SUNDSTRAND CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
September 30, December 31, (Amounts in millions) 1995 1994 ______________________________________________________________________________ Assets Current Assets Cash and cash equivalents $ 75 $ 66 Accounts receivable, net 261 293 Inventories, net of progress payments 349 307 Deferred income taxes 64 55 Other current assets 11 14 ------ ------ Total current assets 760 735 Property, Plant, and Equipment, net 440 459 Intangible Assets, net 266 286 Deferred Income Taxes 69 62 Other Assets 43 45 ------ ------ $1,578 $1,587 ====== ====== Liabilities and Shareholders' Equity Current Liabilities Notes payable $ 154 $ 194 Long-term debt due within one year 8 11 Accounts payable 92 95 Accrued salaries, wages, and commissions 26 23 Accrued postretirement benefits other than pensions 17 19 Other accrued liabilities 129 90 ------ ------ Total current liabilities 426 432 Long-Term Debt 238 236 Accrued Postretirement Benefits Other Than Pensions 362 357 Other Liabilities 88 68 Shareholders' Equity Common stock, at par value 19 19 Other shareholders' equity 445 475 ------ ------ 464 494 ------ ------ $1,578 $1,587 ====== ======
5 6 The financial information contained herein is unaudited but, in the opinion of the management of the Registrant, includes all adjustments (all of which are normal recurring adjustments) necessary for a fair presentation of the results of operations for the periods indicated. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) ACCOUNTING POLICIES The financial statements are condensed and should be read in conjunction with the Annual Report on Form 10-K for the year ended December 31, 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. INVENTORIES The components of inventories at September 30, 1995, and December 31, 1994, were as follows:
September 30, December 31, (Amounts in millions) 1995 1994 ______________________________________________________________________ Raw materials $ 54 $ 49 Work in process 124 117 Finished goods and parts 185 155 ----- ----- 363 321 Less progress payments 14 14 ----- ----- $ 349 $ 307 ===== ===== Prior to the application of progress payments, the inventories shown above included costs related to long-term contracts of $64 million and $51 million, at September 30, 1995, and December 31, 1994, respectively.
6 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 reductions in manufacturing volume and increases in manufacturing productivity, and to write down the assets of Milton Roy's Spectronic Instruments business (Spectronic) and the Aerospace segment's Advanced Power Technology product line (APT) in anticipation of their divestiture. An additional $3 million pretax charge was recorded in the second quarter related to these dispositions. As a result of higher than anticipated awards of funded development contracts and an increased projection of future awards, the accrual for the termination of 125 engineers of approximately $3 million, which was part of the first quarter charge, was reversed in the third quarter, decreasing total year- to-date restructuring charges to $58 million. The year-to-date charges included $24 million in termination 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 and disposition of the Lima facility are expected to be completed by the end of 1996 and the sales of Spectronic and a majority interest in APT were completed on July 12, 1995, and September 6, 1995, respectively. The decision not to terminate development engineers has reduced the 1997 restructuring-related cost savings and cash flow benefits from the amounts disclosed in the Registrant's second quarter report on Form 10-Q. However, the reductions in estimated cost savings and cash flow benefits should be more than offset by projected additional margins from the increased levels of funded development programs. The current anticipated net effects of related expenses which are not subject to accrual, cost savings, and non-recurring gains are a pretax loss of $5 million in 1995 and pretax earnings of $7 million and $14 million in 1996 and 1997, respectively. Excluding the effect of the Spectronic and APT dispositions, the restructuring is expected to reduce cash flow by about $14 million in 1995 and provide a cash flow benefit of about $1 million and $6 million in 1996 and 1997, respectively. Year to date, approximately $15 million has been charged against the restructuring liability. Additionally, approximately $3 million has been charged directly to earnings related primarily to the movement of equipment from the Lima facility to other manufacturing sites. 7 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. The financial information for the quarter ended September 30, 1995, as compared with the financial information for the quarter ended September 30, 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 Third quarter 1995 sales increased by $15 million, to $355 million, compared with third quarter 1994 sales of $340 million. Third quarter 1995 Aerospace segment sales of $186 million were up $11 million compared with third quarter 1994 primarily as a result of higher commercial aftermarket sales partially offset by lower commercial original equipment manufacturer (OEM) and military sales. Third quarter 1995 Industrial segment sales of $169 million were $4 million higher than third quarter 1994 primarily as a result of higher sales of Falk and Milton Roy, excluding the non-core Spectronic Instruments business (Spectronic). Third quarter 1995 net earnings were $34 million, or $1.07 per share, compared with third quarter 1994 net earnings of $24 million, or $.72 per share. The $10 million increase was due primarily to the higher Aerospace operating profit stemming from the increase in commercial aftermarket sales. Also contributing to the increase were higher Industrial segment operating profit and the reversal of a portion of the restructuring reserve related to engineering layoffs, partially offset by restructuring-related period expenses which were recognized as incurred. Sales for the first nine months of 1995 were $1,078 million, an increase of $83 million, from sales of $995 million for the same 1994 period. All three Industrial businesses contributed as Industrial segment sales increased to $559 million for the first nine months of 1995, from $487 million for the first nine months of 1994. Aerospace segment sales were $519 million for the first nine months of 1995 compared with $508 million for the same 1994 period, increasing primarily as a result of higher commercial aftermarket sales partially offset by a decline in military sales. Net earnings were $43 million, or $1.36 per share, for the first nine months of 1995, which included pretax restructuring charges of $58 million. Excluding these charges and the related period costs, net income for the first nine months of 1995 was $85 million, or $2.70 per share, compared with $61 million, or $1.84 per share, for the same 1994 period. Higher sales and the improvement in operating profitability in both the Industrial segment and the commercial aftermarket portion of the Aerospace segment, were primarily responsible for this earnings increase. 8 9 RESTRUCTURING As previously discussed, the Registrant recorded pretax charges totaling $61 million in the first two quarters of 1995. As a result of higher than anticipated awards of funded development contracts and an increased projection of future awards, the accrual for the termination of 125 engineers of approximately $3 million, which was part of the first quarter charge, was reversed in the third quarter, decreasing total year-to-date restructuring charges to $58 million. The decision not to terminate development engineers has reduced the 1997 restructuring-related cost savings and cash flow benefits from the amounts disclosed in the Registrant's second quarter report on Form 10-Q. However, the reductions in estimated cost savings and cash flow benefits should be more than offset by projected additional margins from the increased levels of funded development programs. The current anticipated net effects of related expenses which are not subject to accrual, cost savings, and non-recurring gains are a pretax loss of $5 million in 1995 and pretax earnings of $7 million and $14 million in 1996 and 1997, respectively. Excluding the effect of the dispositions of Spectronic and a majority interest in the Aerospace segment's Advanced Power Technology product line (APT), the restructuring is expected to reduce cash flow by about $14 million in 1995 and provide a cash flow benefit of about $1 million and $6 million in 1996 and 1997, respectively. Year to date, approximately $15 million has been charged against the restructuring liability. Additionally, approximately $3 million has been charged directly to earnings related primarily to the movement of equipment from the Registrant's Lima, Ohio, facility to other manufacturing sites. ORDERS Third quarter 1995 incoming orders were $322 million, a $50 million decrease from third quarter 1994 incoming orders of $372 million. New orders for the first nine months of 1995 increased by $214 million, to $1,244 million, over new orders of $1,030 million for the same period last year 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. Total unfilled orders on September 30, 1995, were $913 million, compared with $717 million on September 30, 1994, and $747 million on December 31, 1994. INDUSTRIAL OVERVIEW The following overview of the Industrial segment excludes the divested Spectronic Instruments business. Third quarter Industrial segment sales increased 7 percent compared with the third quarter of 1994. Sales rose 16 percent at Falk and 5 percent at Milton Roy, and were flat at Sullair. Industrial operating profit in the third quarter of 1995 was $30 million, or 17.8 percent of sales, compared with operating profit in the third quarter of 1994 of $27 million, or 17.1 percent of sales. Total Industrial orders of $173 million in the third quarter of 1995 increased 4 percent from $166 million in the third quarter of 1994. 9 10 AEROSPACE OVERVIEW Aerospace segment sales were up by 6 percent compared with the third quarter of 1994, with a 15 percent increase in commercial sales partially offset by a 9 percent decline in military sales. Commercial aftermarket sales increased 40 percent as worldwide traffic continued to grow, while commercial OEM sales decreased 9 percent reflecting the flat near-term outlook for new aircraft production. Aerospace operating profit in the third quarter of 1995 was $32 million, or 17.2 percent of sales. Operating profit in the third quarter included approximately $2 million of period costs related to the restructuring as well as the reversal of a reserve, of approximately $3 million, booked in the first quarter for the reduction of engineering staff. Because of a strong increase in customer-funded development work, the staff reduction is no longer appropriate. In the third quarter of 1994, the Aerospace segment generated operating profit of $22 million, or 12.6 percent of sales. Aerospace incoming orders were $153 million in the third quarter of 1995, compared with $199 million in the third quarter of 1994. A $29 million increase in commercial orders was more than offset by a $19 million reduction in backlog related to the APT sale and by a $56 million decline in military orders. LIQUIDITY & CAPITAL RESOURCES Working capital was $334 million at September 30, 1995, compared with $303 million at December 31, 1994. The $31 million increase was due primarily to higher inventories and cash and lower notes payable, partially offset by increased accrued liabilities and lower accounts receivable. Inventory increased in response to higher sales and order activity while the accrued liabilities increase was due primarily to the current portion of the restructuring reserve. Lower sales in the third quarter of 1995 compared with the fourth quarter of 1994 were primarily responsible for the lower accounts receivable balance at September 30, 1995, compared with December 31, 1994. Net cash provided by operating activities for the first nine months of 1995 was $137 million compared with $103 million for the first nine months of 1994. The $34 million increase was due primarily to higher net earnings excluding the restructuring charges. Fluctuations in the levels of inventory, accounts payable, and accrued expenses (excluding the restructuring charges) essentially offset each other. The fluctuation in accrued expenses was due in part to higher income taxes paid in 1994 related to the gain from the sale of Sundstrand Data Control. In the nine months ended September 30, 1995, the Registrant used $12 million of cash for investing activities, primarily for the purchase of fixed assets and the ram air turbine product line of Dowty Aerospace Hydraulics, Dowty Group Plc., Cheltenham, England offset, in part, by the proceeds from the sale of assets. The proceeds from sale of assets included cash received in conjunction with the dispositions of Spectronic and APT. In the same 1994 period, the Registrant used $59 million of cash for investing activities, primarily for the purchase of fixed assets and the HMD-Kontro acquisition. In the first nine months of 1995, $112 million of cash was used for financing activities, primarily to repay borrowings supported by lines of credit, repurchase common stock, and pay dividends. In the same period of 1994, $22 million of cash was provided by financing activities, primarily net borrowings supported by lines of credit and borrowings for the HMD-Kontro acquisition, partially offset by cash used to repurchase common stock and pay dividends. 10 11 The Registrant repurchased approximately 564,000 shares of its common stock during the third quarter and an additional 160,000 shares through October 19, 1995, at an average price of approximately $65 per share. Through October 19, 1995, the Registrant has repurchased a total of approximately 6 million shares of the 10 million shares authorized for repurchase. At September 30, 1995, the Registrant's ratio of total debt to total capital was 46.3 percent compared with 47.1 percent at December 31, 1994. DISPOSITIONS On July 12, 1995, the Registrant sold Spectronic for $19 million to Life Sciences International Plc., London, England. On September 6, 1995, the Registrant sold a majority interest in APT in a leveraged buyout with a management-lead group. As a result of the asset write downs included in the restructuring accrual, neither transaction had a material impact on third quarter earnings. OUTLOOK The Registrant currently projects that 1995 full-year earnings per share, excluding restructuring costs, will be in the upper end of the previously disclosed $3.70 to $4.00 range. Industrial segment sales growth in 1996 is expected to range between five and ten percent and the operating profit margin should be at least as strong as the 1995 rate, which is expected to be approximately 18 percent of sales, excluding the charge associated with the divestiture of Spectronic. The Aerospace operating profit margin is expected to be in the 16 percent range in 1996 based on projections that the commercial OEM business should grow by more than 20 percent and the commercial aftermarket business should experience growth in the five to ten percent range. An expected decline of five to ten percent in the military OEM business in 1996 should be mitigated by a modest increase in military aftermarket sales. 11 12 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 resolutions adopted by the Board of Directors of Registrant on September 19, 1995, amending Registrant's By-laws effective September 19, 1995, and October 1, 1995. (b) Registrant's By-laws, including all amendments as effective September 19, 1995. (c) Registrant's By-laws, including all amendments as effective October 1, 1995. (10) Material Contracts (a) Employment Agreement dated September 19, 1995, between Registrant and Robert H. Jenkins, Registrant's President and Chief Executive Officer, effective October 1, 1995. (b) Employment Agreement dated September 19, 1995, between Registrant and Don R. O'Hare, Registrant's Chairman of the Board, effective October 1, 1995. (11) Statement Re Computation of Per Share Earnings (a) Computation of Fully Diluted Earnings Per Share (Unaudited) for the quarters ended September 30, 1995, and 1994, and for the nine months ended September 30, 1995, and 1994. (27) Financial Data Schedule (b) Reports on Form 8-K None 12 13 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Sundstrand Corporation ______________________________ (Registrant) Date: November 7, 1995 /s/ Richard M. Schilling ______________________________ Richard M. Schilling Vice President and General Counsel and Secretary Date: November 7, 1995 /s/ DeWayne J. Fellows ______________________________ DeWayne J. Fellows Vice President and Controller 13 EX-3.A 2 TEXT OF RESOLUTIONS Exhibit (3)(a) AMENDMENT OF 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 immediately, by changing the word "eleven" to the word "twelve" where it appears in the first sentence of Section 3.1. FURTHER RESOLVED, that the By-Laws of the Corporation be, and they hereby are, amended, effective October 1, 1995, as follows: 1. All references in the By-Laws to the title "Chairman of the Board and Chief Executive Officer" are changed to "President and Chief Executive Officer". 2. All references in the By-Laws to "the Board of Directors or the Chairman of the Board and Chief Executive Officer" are changed to "the Board of Directors, the Chairman of the Board and/or the President and Chief Executive Officer". 3. 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; a 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; 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." 4. Section 4.5 is amended to read as follows: "Section 4.5. Chairman of the Board. The Chairman of the Board shall preside at all meetings of stockholders and of the Board. He shall counsel the President and Chief Executive Officer on plans, policies, strategies, budgets and operating plans. The Chairman of the Board shall participate in activities such as strategic planning, acquisitions and divestitures, and presentations to analysts. The Chairman of the Board, the 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." 5. A new Section 4.6 is added reading as follows: "Section 4.6. President and Chief Executive Officer. The President and Chief Executive Officer shall be the chief executive officer of the Corporation. He shall see that all orders and resolutions of the Board are carried into effect. Subject to the control of the Board, the President and Chief Executive Officer shall have general supervision, control and management of the affairs and business of the Corporation. The President and Chief Executive Officer, the Chairman of the Board, 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." 6. Sections 4.6 through 4.15 are renumbered as Sections 4.7 through 4.16. 7. The renumbered Section 4.13(b) is amended to read as follows: "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/or the President and Chief Executive Officer shall prescribe." 8. The renumbered Section 4.16 is amended to read as follows: "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." EX-3.B 3 BY-LAWS EFFECTIVE SEPTEMBER 19, 1995 Exhibit (3)(b) BY-LAWS OF SUNDSTRAND CORPORATION (A Delaware Corporation) Effective September 19, 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 twelve 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. EX-3.C 4 BY-LAWS EFFECTIVE OCTOBER 1, 1995 Exhibit (3)(c) BY-LAWS OF SUNDSTRAND CORPORATION (A Delaware Corporation) Effective October 1, 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 twelve 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; a 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; 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 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 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 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 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 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 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 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 President and Chief Executive Officer shall be determined by the Board of Directors or the 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 President and Chief Executive Officer, as the case may be, may be removed at any time by the Board of Directors or the 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. The Chairman of the Board shall preside at all meetings of stockholders and of the Board. He shall counsel the President and Chief Executive Officer on plans, policies, strategies, budgets and operating plans. The Chairman of the Board shall participate in activities such as strategic planning, acquisitions and divestitures, and presentations to analysts. The Chairman of the Board, the 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. PRESIDENT AND CHIEF EXECUTIVE OFFICER. The President and Chief Executive Officer shall be the chief executive officer of the Corporation. He shall see that all orders and resolutions of the Board are carried into effect. Subject to the control of the Board, the President and Chief Executive Officer shall have general supervision, control and management of the affairs and business of the Corporation. The President and Chief Executive Officer, the Chairman of the Board, 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 4.7. 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 President and Chief Executive Officer. He and/or the 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 4.8. 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 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 4.9. 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 President and Chief Executive Officer in the general supervision, control and management of the affairs and business of the Corporation's industrial businesses. Section 4.10. EXECUTIVE VICE PRESIDENT FOR SPECIAL PROJECTS. The Executive Vice President for Special Projects shall assist the President and Chief Executive Officer in managing strategic business issues for the Corporation and shall perform such other duties as may be prescribed by the President and Chief Executive Officer. Section 4.11. 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 4.12. OTHER VICE PRESIDENTS. The other Vice Presidents shall perform such duties as may be prescribed by the Board of Directors or the President and Chief Executive Officer. Section 4.13. 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 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 and/or the President and Chief Executive Officer shall prescribe. Section 4.14. 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 President and Chief Executive Officer and the Board of Directors, at the regular meetings of the Board, or whenever they may require it, an account of all his transactions as Treasurer and of the financial condition of the Corporation. (c) If required by the Board of Directors, he shall give the Corporation a bond in such sum, and with such surety or sureties as shall be satisfactory to the Board, for the faithful performance of the duties of his office, and for the restoration to the Corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the Corporation. (d) The Treasurer shall be under the direction of and report to the Executive Vice President and Chief Financial Officer. (e) The Assistant Treasurers in the order of their seniority shall, in the absence or disability of the Treasurer, perform the duties and exercise the powers of the Treasurer and shall perform such other duties as the Board of Directors or the Executive Vice President and Chief Financial Officer shall prescribe. Section 4.15. 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 4.16. 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 President and Chief Executive Officer, an Executive Vice President, or a Vice President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary of the Corporation. If such certificate is countersigned (1) by a transfer agent other than the Corporation or its employee, or, (2) by a registrar other than the Corporation or its employee, any other signature on the certificate may be a facsimile. In case any officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent, or registrar before such certificate is issued, it may be issued by the Corporation with same effect as if he were such officer, transfer agent, or registrar at the date of issue. Section 5.2. TRANSFER OF STOCK. Upon surrender to the Corporation or its transfer agent of a certificate representing shares, duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, a new certificate shall be issued to the person entitled thereto, and the old certificate cancelled, and the transaction recorded upon the books of the Corporation. Section 5.3. LOST, STOLEN OR DESTROYED CERTIFICATES. Any person, claiming a certificate for shares of the Corporation to be lost, stolen or destroyed, shall make affidavit of the fact and lodge the same with the Secretary of the Corporation accompanied by a signed application for a new certificate. Such person shall also give the Corporation a bond of indemnity with one or more sureties satisfactory to the Board of Directors, and in an amount which in their judgment shall be sufficient to save the Corporation from loss, or shall qualify under such blanket bond as may from time to time be approved by the Board of Directors, and thereupon the proper officers may cause to be issued a new certificate of like tenor with the one alleged to be lost, stolen or destroyed. Section 5.4. RECORD DATE. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. Section 5.5. REGISTERED STOCKHOLDERS. The Corporation shall be entitled to treat the holder of record of any share or shares of stock as the holder in fact thereof and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. Section 5.6. TRANSFER AGENTS AND REGISTRARS. The Board of Directors may from time to time appoint a transfer agent and registrar in one or more cities; may require all certificates evidencing shares of stock of the Corporation to bear the signatures of a transfer agent and registrar; and may provide that such certificates shall be transferable in more than one city. ARTICLE VI INDEMNIFICATION OF OFFICERS AND DIRECTORS The Corporation shall, to the fullest extent to which it is empowered to do so by the General Corporation Law of Delaware, or any other applicable laws, as from time to time in effect, indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he is or was a director or officer of the Corporation or a division thereof, or is or was serving at the request of the Corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, against all expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding. The provisions of this Article shall be deemed to be a contract between the Corporation and each director or officer who serves in any such capacity at any time while this Article and the relevant provisions of the General Corporation Law of Delaware or other applicable law, if any, are in effect, and any repeal or modification of any such law or of this Article shall not affect any rights or obligations then existing with respect to any state of facts then or theretofore existing or any action, suit or proceeding theretofore or thereafter brought or threatened based in whole or in part upon any such state of facts. The Corporation shall, to the fullest extent to which it is empowered to do so by the General Corporation Law of Delaware, and with respect to the Employee Retirement Income Security Act of 1974, or any other applicable laws, as from time to time in effect, indemnify any officer, director or employee of the Corporation or an affiliated corporation, who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he is or was serving at the request of the Corporation as an individual Trustee, Committee member, administrator or fiduciary of a pension or other benefit plan for employees of the Corporation, or of an affiliated corporation or other enterprise. Persons who are not covered by the foregoing provisions of this Article and who are or were employees or agents of the Corporation or a division thereof, or are or were serving at the request of the Corporation as employees or agents of another corporation, partnership, joint venture, trust or other enterprise, may be indemnified to the extent authorized at any time or from time to time by the Board of Directors of the Corporation. The indemnification provided or permitted by this Article shall not be deemed exclusive of any other rights to which those indemnified may be entitled by law or otherwise, and shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. The Corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such liability under the provisions of this Article. The Corporation shall, to the fullest extent to which it is empowered to do so by the General Corporation Law of Delaware, or any other applicable laws, as from time to time in effect, pay expenses, including attorneys' fees, incurred in defending any action, suit or proceeding, in advance of the final disposition of such action, suit or proceeding, to any person who is or was a party or is threatened to be made a party to any such threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that such person is or was a director or officer of the Corporation, upon receipt of an undertaking by or on behalf of such person to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified by the Corporation as authorized by applicable laws. ARTICLE VII MISCELLANEOUS PROVISIONS Section 7.1. CHECKS, DRAFTS AND OTHER INSTRUMENTS; SECURITY VOTING AND PROXIES. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness, issued in the name of the Corporation shall be signed by such officer or officers, or such other person or persons, as the Board of Directors may from time to time designate. In the absence of specific action by the Board of Directors, the 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. EX-10.A 5 ROBERT H. JENKINS EMPLOYMENT AGREEMENT Exhibit (10)(a) EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of the 19th day of September, 1995 between SUNDSTRAND CORPORATION, a Delaware corporation (the "Company"), and Robert H. Jenkins ("Executive"). WHEREAS, the Board of Directors of the Company on September 19, 1995 elected Executive as President and Chief Executive Officer of the Company effective October 1, 1995; and WHEREAS, the Company desires to enter into this Agreement to assure the benefits of Executive's future services to the Company, and Executive is willing to commit to render such services, upon the terms and conditions set forth below. It is therefore mutually agreed as follows: 1. EMPLOYMENT. The Company agrees to employ Executive as President and Chief Executive Officer and Executive agrees to serve the Company, upon the terms and conditions and for the period of employment hereinafter set forth. Throughout the Employment Period (as hereinafter defined), unless otherwise agreed in writing by Executive and the Company, the Company shall neither demote Executive nor assign to Executive any duties or responsibilities that are inconsistent with his position, duties, responsibilities and status as President and Chief Executive Officer. 2. EMPLOYMENT PERIOD. The term of Executive's employment under this Agreement shall commence on October 1, 1995, and shall expire, subject to earlier termination of employment as hereinafter provided, on September 30, 1998 (the "Employment Period"), provided however that on September 30, 1996 and each anniversary of such date, the Employment Period shall automatically be extended for an additional year unless prior thereto either party has given written notice to the other that such party does not wish to extend the term of this Agreement. 3. COMPENSATION. Throughout the Employment Period, the Company shall pay or provide Executive with the following, and Executive shall accept the same, as compensation for the performance of his undertakings and the services to be rendered by him under this Agreement. (a) A salary payable not less often than bi-weekly, at a rate not less than the highest salary rate he has attained on an annualized basis, but in no event less than $650,000 per annum (the "Base Salary"). (b) Participation 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 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, Executive's participation in such plans shall be on the same basis and terms as other executive officers of the Company. 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 Executive's entitlements hereunder. (c) Participation in all employee benefit plans, practices and programs maintained by the Company and made available to employees generally including, without limitation, all pension, retirement, savings, medical, hospitalization, disability, dental, life or travel accident insurance benefit plans (collectively the "Benefit Plans"). Executive's participation in such Benefit Plans shall be on the same basis and terms as are applicable to employees of the Company generally. In the event Executive at any time during the Employment Period is not eligible to participate in any Benefit Plan for which Executive was previously eligible or the Company terminates or materially amends any Benefit Plan, the Company shall provide to Executive benefits comparable with those benefits that would have been received by Executive if Executive continued to participate in such Plans. (d) Paid vacations in accordance with the Company's vacation policy as in effect from time to time, and all paid holidays given by the Company to its executive officers. (e) All fringe benefits and perquisites (e.g. physical examinations, financial planning and tax preparation services) made available by the Company to its executive officers. (f) Notwithstanding anything contained in this Agreement to the contrary, in the event that any payment (within the meaning of Section 28OG(b)(2) of the Internal Revenue Code of 1986, as amended (the "Code")), or distribution to or for the benefit of Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise in connection with, or arising out of, his employment with the Company (a "Payment" or "Payments"), would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by Executive with respect to such excise tax (such excise tax, collectively referred to as the "Excise Tax"), then Executive shall be entitled to receive an additional payment (a "Gross-Up Payment") in an amount such that after payment by Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including any Excise Tax, imposed upon the Gross-Up Payment, Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. An initial determination shall be made as to whether a Gross-Up Payment is required pursuant to this Section 3(f) and the amount of such Gross-Up Payment shall be made by a national independent accounting firm selected by Executive (the "Accounting Firm"). All fees, costs and expenses (including, but not limited to, the cost of retaining experts) of the Accounting Firm shall be borne by the Company and the Company shall pay such fees, costs and expenses as they become due. The Accounting Firm shall provide detailed supporting calculations, acceptable to Executive, both to the Company and Executive within fifteen (15) business days of the Termination Date, if applicable, or such other time as requested by the Company or by Executive (provided Executive reasonably believes that any of the Payments may be subject to the Excise Tax). The Gross-Up Payment, if any, as determined pursuant to this Section 3(f) shall be paid by the Company to Executive within five (5) business days of the receipt of the Accounting Firm's determination. If the Accounting Firm determines that no Excise Tax is payable by Executive with respect to a Payment or Payments, it shall furnish Executive with an unqualified opinion that no Excise Tax will be imposed with respect to any such Payment or Payments. Any such initial determination by the Accounting Firm of the Gross-Up Payment shall be binding upon the Company and Executive subject to the application of the paragraph set forth immediately below. As a result of the uncertainty in the application of Section 4999 and 28OG of the Code, it is possible that a Gross-Up Payment (or a portion thereof) will be paid which should not have been paid (an "Overpayment") or a Gross-Up Payment (or a portion thereof) which should have been paid will not have been paid (an "Underpayment"). An Underpayment shall be deemed to have occurred upon notice (formal or informal) to Executive from any governmental taxing authority that the tax liability of Executive (whether in respect of the then current taxable year of Executive or in respect of any prior taxable year of Executive) may be increased by reason of the imposition of the Excise Tax on a Payment or Payments with respect to which the Company has failed to make a sufficient Gross-Up Payment. An Overpayment shall be deemed to have occurred upon a "Final Determination" (as hereinafter defined) that the Excise Tax shall not be imposed upon a Payment or Payments with respect to which Executive had previously received a Gross-Up Payment. A Final Determination shall be deemed to have occurred when Executive has received from the applicable governmental taxing authority a refund of taxes or other reduction in his tax liability by reason of the Overpayment and upon either (i) the date a determination is made by, or an agreement is entered into with, the applicable governmental taxing authority which finally and conclusively binds Executive and such taxing authority, or in the event that a claim is brought before a court of competent jurisdiction, the date upon which a final determination has been made by such court and either all appeals have been taken and finally resolved or the time for all appeals has expired or (ii) the statute of limitations with respect to Executive's applicable tax return has expired. If an Underpayment occurs, Executive shall promptly notify the Company and the Company shall pay to Executive at least five (5) business days prior to the date on which the applicable governmental taxing authority has requested payment, an additional Gross-Up Payment equal to the amount of the Underpayment plus any interest and penalties imposed on the Underpayment. If an Overpayment occurs, the amount of the Overpayment shall be treated as a loan by the Company to Executive and Executive shall, within ten (10) business days of the occurrence of such Overpayment, pay the Company the amount of the Overpayment plus interest at an annual rate equal to the rate provided for in Section 1274(b)(2)(B) of the Code from the date the Gross-Up Payment (to which the Overpayment relates) was paid to Executive. Notwithstanding anything contained in this Agreement to the contrary, in the event it is determined that an Excise Tax will be imposed on any Payment or Payments, the Company shall pay to the applicable governmental taxing authorities as Excise Tax withholding, the amount of the Excise Tax that the Company has actually withheld from the Payment or Payments. 4. EXPENSES. During the Employment Period, the Company shall promptly pay or reimburse Executive for all reasonable expenses incurred by Executive in the performance of duties hereunder. 5. CONDITIONS OF EMPLOYMENT. Throughout the Employment Period, (a) the Company shall not require or assign duties to Executive which would require him to move the location of his principal business office or his principal place of residence outside the area of Rockford, Illinois (the "Rockford Area"), (b) the Company shall not require or assign duties to Executive which would require him to spend more than forty-five (45) normal working days away from the Rockford Area during any consecutive twelve-month period, (c) the Company shall provide an office to Executive, the location and furnishings of which shall be equivalent to the offices provided to other members of the executive office of the Company on the date of this Agreement, and (d) the Company shall provide secretarial services and other administrative services to Executive which shall be equivalent to the secretarial services and other administrative services provided to other members of the executive office of the Company on the date of this Agreement. 6. CONTINUATION OF BENEFITS. If the Company shall fail to observe or perform any covenant or agreement contained in this Agreement to be observed or performed by the Company, then Executive shall, until such time as Executive's Employment Period hereunder would otherwise terminate pursuant to the provisions of Section 2 or Section 7, continue to receive all benefits which the Company has hereinabove in Section 3 agreed to pay to and provide for Executive, in each case in the amounts and at the times provided for in Section 3. The parties agree that, in such event, such payments and benefits shall be deemed to constitute liquidated damages for the Company's breach of this Agreement. 7. TERMINATION. This Agreement shall terminate upon the following circumstances: (a) The date of death of Executive during the Employment Period; provided, however, that Executive's estate, heirs and beneficiaries shall be entitled to receive the full amount of his salary for the month in which death occurs and all other benefits available to them under the Company's Benefit Plans as in effect on the date of death of Executive; (b) Following conviction of Executive of a felony, the date as of which Executive's right to file an appeal after conviction has expired, or if Executive files an appeal after conviction, the date as of which the appellate court fails to reverse the conviction, and the Company shall pay Executive his full salary through such date of termination and the Company shall have no further obligations to Executive under this Agreement except with respect to any rights Executive might otherwise have under the Company's Benefit plans as in effect on the date of termination of Executive; or (c) The date as of which the Company elects to terminate this Agreement in accordance with Section l0. 8. COVENANT NOT TO COMPETE. Without the consent of the Company, Executive shall not at any time during the Employment 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 line of the Company; provided, however, that Executive shall not be deemed to have breached this undertaking if his sole relation with such entity consists of his holding, directly or indirectly, an equity interest in such entity not greater than two percent (2%) of such entity's outstanding equity interest. For purposes hereof the term "material product or product line of the Company" shall mean any product or product line of the Company, the gross sales of which during any calendar year during the five (5) year period preceding Executive's undertaking such employment were at least $50 million. 9. UNAUTHORIZED DISCLOSURE. Executive shall not make any Unauthorized Disclosure. For purposes of this Agreement, "Unauthorized Disclosure" shall mean disclosure by 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 Executive of his duties as an executive of the Company or as may be legally required, of any confidential information obtained by 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 Executive, without consent, of any information known generally to the public (other than as a result of disclosure by him in violation of this Section 9) or any information not otherwise considered confidential by a reasonable person engaged in the same business as that conducted by the Company. 10. BREACH OF SECTION 8 OR SECTION 9. In the event of a breach by Executive of the provisions of Section 8 or Section 9 of this Agreement, the Company may terminate this Agreement under Section 7(c), but only if the Company complies with the following provisions: (a) The Company shall provide Executive with written notice of its belief that a breach of Section 8 or Section 9 of this Agreement has occurred and shall afford Executive sixty (60) days or such longer period as the Company may determine to cure the alleged breach. (b) In the event Executive does not cure the breach, the Company shall be required to institute a judicial proceeding to determine whether a breach of Section 8 or Section 9 of this Agreement has occurred and Executive has not cured such breach. (c) This Agreement may then be terminated only upon a judicial determination that Executive has breached the provisions of Section 8 or Section 9 and has failed to cure such breach; provided, however, that this Agreement may not be terminated until either all appellate proceedings have been exhausted or the time within which Executive may appeal an adverse ruling has expired. 11. LITIGATION EXPENSES. The Company shall pay to Executive all out-of-pocket expenses, including attorneys' fees, incurred by Executive in connection with any claim or legal action or proceeding brought under or involving this Agreement, whether brought by Executive or by or on behalf of the Company or by another party; provided, however, the Company shall not be obligated to pay to Executive out-of-pocket expenses, including attorneys' fees, incurred by Executive in any claim or legal action or proceeding involving Section 8 or Section 9 of this Agreement if Company prevails in such litigation. 12. RETIREMENT PLANS. Executive shall participate in the Sundstrand Corporation Retirement Plan-Aerospace and the Sundstrand Corporation Supplemental Retirement Plan (collectively, the "Retirement Plans"). For purposes of determining the amount of Executive's accrued benefit under the Retirement Plans, he shall be deemed to accrue "Years of Service" and "Years of Participation" (as those terms are defined and used in the Retirement Plans) from the date of this Agreement at the rate of two (2) months for each month (or fraction thereof) of actual service. If Executive's employment with the Company terminates prior to completion of thirty (30) months of actual service, he shall be entitled to a nonqualified benefit computed pursuant to the Retirement Plans and the immediately preceding sentence but without regard to any service requirement for eligibility. Notwithstanding the foregoing, in the event of a Change in Control (as hereinafter defined), Executive will immediately become fully-vested in a benefit payable from the Retirement Plans, which benefit will be calculated as though, at the time of such Change in Control, he had twenty (20) Years of Service and Years of Participation in the Retirement Plans, regardless of the actual number of Years of Service and Years of Participation at such time. 13. CHANGE IN CONTROL. For purposes of this Agreement, a "Change in Control" shall mean any of the following events: (a) 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; (b) 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's 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 (c) 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 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 13(a), 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. 14. RETIREE HEALTH AND LIFE INSURANCE BENEFITS UPON A CHANGE IN CONTROL. Notwithstanding anything to the contrary contained in the Company's Benefit Plans and other applicable programs and practices, upon a Change in Control: (a) The eligibility requirements for the Company's Retiree Health Insurance Plan shall be waived, and commencing on the later of Executive's termination of employment or attainment of age 55, he shall be provided with the same health care coverage as provided to other eligible retirees at that time; and (b) The age 62 and 30-year requirements of the Executive Life Insurance Program for retirees are waived, and commencing on the later of Executive's termination of employment or attainment of age 55, he shall be provided with a life insurance benefit of one time his annual Base Salary at the higher of the annual rate in effect at the time of his termination of employment or immediately prior to the Change in Control. 15. STOCK AWARDS UPON A CHNAGE IN CONTROL. Upon a Change in Control, all restrictions on any stock purchased by or otherwise granted to Executive pursuant to the Company's 1989 Restricted Stock Plan, the Sundstrand Corporation Stock Incentive Plan and any other restricted stock plan sponsored by the Company shall immediately lapse and all such stock shall become fully (100%) vested immediately, and shall be immediately deliverable to Executive; all such stock shall be freely transferable by Executive and the Company will have no right to direct or restrict the disposition of such stock; and all stock options shall become fully (100%) vested and shall become immediately exercisable. 16. TERMINATION FOLLOWING A CHANGE IN CONTROL. (a) TERMINATION DATE. For the purposes of this Section 16, "Termination Date" shall mean in the case of Executive's death, his date of death, or in all other cases, the date of Executive's last day of employment with the Company. (b) COMPENSATION UPON TERMINATION FOLLOWING A CHANGE IN CONTROL. Notwithstanding the provisions of Section 7 or any other section of this Agreement and in addition to any other amounts or benefits payable to Executive or on his behalf pursuant to the terms of this Agreement, following a Change in Control upon termination of Executive's employment: (i) for any reason, during the Employment Period, the Company shall pay Executive or his beneficiaries on his behalf 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 Executive has previously deferred (including any interest earned or credited thereon) (collectively "Accrued Compensation"); and (ii) (A) for any reason other than pursuant to the provisions of Section 7, during the Employment Period, the Company shall pay Executive a "Bonus Amount" equal to the product of (x) (a) the greatest amount of any cash bonus or incentive compensation received by Executive during the three fiscal years immediately preceding the Termination Date or (b) if no such bonus was received by Executive during any of such three years, then an amount equal to 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 Executive, as applicable, for such year and (y) a fraction (which shall not be less than one) the numerator of which shall be the number of months (each partial month shall be treated as a full month) remaining in the Employment Period (if Executive were to continue in the employ of the Company) and the denominator of which is 12; or (B) for any reason pursuant to the provisions of Section 7, during the Employment Period, the Company shall pay to Executive or his beneficiaries an amount equal to the bonus or incentive award that Executive would have been entitled to receive in respect of the fiscal year in which 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 Executive, as applicable, for such year, multiplied by a fraction (which shall not be less than 0) the numerator of which is the number of months (each partial month shall be treated as a full month) remaining in such fiscal year through the Termination Date and the denominator of which is 12 (a "Pro Rata Bonus"). (c) The Accrued Compensation and Bonus Amount or Pro Rata Bonus, as the case may be, provided under this Section 16 shall be paid in cash by the Company within five (5) days after Executive's Termination Date. (d) Executive's entitlement to any other compensation or benefits shall be determined in accordance with the terms of this Agreement and in accordance with the Company's employee Benefit Plans and other applicable programs, practices and arrangements then in effect, to the extent that such plans, programs, practices and arrangements do not conflict with the terms of this Agreement. 17. NO MITIGATION. 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 Executive in any subsequent employment. 18. NOTICES. Notice 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 of the Company, 4949 Harrison Avenue, P.O. Box 7003, Rockford, Illinois 61125, or if to Executive, at 24868 Blue Stem Court, Barrington, Illinois 60010, or to such other address as either party may have previously designated by notice to the other party given in the foregoing manner. 19. SUCCESSORS AND ASSIGNS. 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 assignee 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. Neither this Agreement nor any right or interest hereunder shall be assignable or transferable by 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 Executive's legal representative. 20. WAIVER, MODIFICATION AND INTERPRETATION. No provisions of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in a writing signed by Executive and an appropriate officer of the Company empowered to sign same by the Board of Directors of the Company. No waiver by either party at any time of any breach by the 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 or subsequent time. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Illinois. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement. 21. HEADINGS. The headings contained herein are for reference purposes only and shall not in any way affect the meaning or interpretation of any provision of this Agreement. IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first written above. SUNDSTRAND CORPORATION By: /s/ Richard M. Schilling --------------------------- Vice President and General Counsel and Secretary By: /s/ Robert H. Jenkins --------------------------- Executive EX-10.B 6 DON R. O'HARE EMPLOYMENT AGREEMENT Exhibit (10)(b) EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of this 19th day of September, 1995, between SUNDSTRAND CORPORATION, a Delaware corporation (the "Company"), and Don R. O'Hare ("Executive"). WHEREAS, Executive is employed as Chairman of the Board and Chief Executive Officer of the Company and the Company desires to assure the benefits of the Executive's future services as Chairman of the Board, and Executive is willing to commit to render such services, upon the terms and conditions set forth below. NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein, the parties have agreed as follows: 1. EMPLOYMENT. The Company agrees to employ Executive as Chairman of the Board, and Executive agrees to serve the Company, upon the terms and conditions and for the period of employment hereinafter set forth. Throughout the Employment Period (as hereinafter defined), unless otherwise agreed in writing by Executive and the Company, the Company shall neither demote Executive nor assign to Executive any duties or responsibilities that are inconsistent with his position as Chairman of the Board and the duties, responsibilities and status of such position. 2. EMPLOYMENT PERIOD. The term of the Executive's employment under this Agreement shall commence as of October 1, 1995, and, subject to earlier termination of Executive's employment and termination of this Agreement as provided in Section 7, shall expire at the close of business on the date of the Annual Meeting of Stockholders in 1997 (the "Employment Period"). 3. COMPENSATION. Throughout the Employment Period, the Company shall pay or provide Executive with the following, and Executive shall accept the same, as compensation for the performance of his undertakings and the services to be rendered by him under this Agreement. (a) A salary payable not less often than bi-weekly, at a rate not less than the highest salary rate he has attained on an annualized basis but in no event less than $650,000 per annum. (b) Participation in the Company's Officer Incentive Compensation Plan for the 1995 through 1997 plan years, provided that for any plan year the bonus amount will be prorated to reflect the actual period of employment. Such bonus shall be determined based upon the opportunity level under the Plan for the Chairman of the Board and the performance elements approved by the Compensation Committee for the 1994 plan year. (c) Participation in the Sundstrand Corporation Stock Incentive Plan with respect to non-qualified stock options granted thereunder. (d) Participation in the following employee benefit plans, policies, practices and arrangements maintained by the Company in which Executive is presently eligible to participate: - Sundstrand Corporation Disability Plan - Accidental Death Insurance - Executive and Spouse Physical - Sundstrand Corporation Group Life Insurance Plan - Use of Company Airplane - Financial Services - Snow Plowing and Other Personal Services Such plans are hereinafter collectively referred to as the "Benefit Plans". In the event Executive at any time during the Employment Period is not eligible to participate in any Benefit Plan for which Executive was previously eligible or the Company terminates or materially amends any Benefit Plan, the Company shall provide to Executive benefits comparable with those benefits that would have been received by Executive if Executive continued to participate in such Plans. (e) Paid vacations in accordance with the Company's vacation policy as in effect from time to time, and all paid holidays given by the Company to its executive officers. 4. EXPENSES. During the Employment Period, the Company shall promptly pay or reimburse Executive for all reasonable expenses incurred by Executive in the performance of duties hereunder. 5. CONDITIONS OF EMPLOYMENT. Throughout the Employment Period: (a) The Company shall not require or assign duties to Executive which would require him to move the location of his principal business office or his principal place of residence outside the City of Rockford or the County of Winnebago, Illinois (the "Rockford Area"); (b) The Company shall not require or assign duties to Executive which would require him to spend more than forty-five (45) normal working days away from the Rockford Area during any consecutive twelve-month period; (c) The Company shall provide an office to Executive, the location and furnishings of which shall be equivalent to the offices provided to him on the date of this Agreement; and (d) The Company shall provide secretarial services and other administrative services to Executive which shall be equivalent to the secretarial services and other administrative services provided to him on the date of this Agreement. 6. CONTINUATION OF BENEFITS. If the Company shall fail to observe or perform any covenant or agreement contained in this Agreement to be observed or performed by the Company, then Executive shall, until such time as Executive's Employment Period hereunder would otherwise terminate pursuant to the provisions of Section 2 or Section 7, continue to receive all benefits which the Company has hereinabove in Section 3 agreed to pay to and provide for Executive, in each case in the amounts and at the times provided for in Section 3. The parties agree that, in such event, such payments and benefits shall be deemed to constitute liquidated damages for the Company's breach of this Agreement. 7. TERMINATION. This Agreement shall terminate upon the following circumstances: (a) The date of death of Executive during the Employment Period; provided, however, that Executive's estate, heirs and beneficiaries shall be paid the full amount of Executive's salary through the end of the sixth month following the month in which his death occurs, but in no event for any period thereafter, and all other benefits which would be applicable to Executive or Executive's estate, heirs and beneficiaries under the Company's Benefit Plans in which Executive participates as in effect on the date of Executive's death; (b) Following conviction of Executive of a felony, the date as of which Executive's right to file an appeal after conviction has expired, or if Executive files an appeal after conviction, the date as of which the appellate court fails to reverse the conviction, and the Company shall pay Executive his full salary through such date of termination and the Company shall have no further obligations to Executive under this Agreement except with respect to any rights Executive might otherwise have under the Company's Benefit plans as in effect on the date of termination of Executive; (c) The date as of which the Company elects to terminate this Agreement in accordance with Section 10. 8. COVENANT NOT TO COMPETE. Without the consent of the Company, Executive shall not at any time during the term of this Agreement, or for a period of two years thereafter, undertake employment as an owner, director, officer, employee or consultant with any business entity directly engaged in the manufacture and/or sale of products competitive with any material product or product line of the Company; provided, however, that Executive shall not be deemed to have breached this undertaking if his sole relation with such entity consists of his holding, directly or indirectly, an equity interest in such entity not greater than two percent (2%) of such entity's outstanding equity interest. For purposes hereof the term "material product or product line of the Company" shall mean any product or product line of the Company, the gross sales of which during any calendar year during the five (5) year period preceding the Executive's undertaking such employment were at least $50 million. 9. DISCLOSURE OF CONFIDENTIAL INFORMATION. Without the consent of the Company, Executive shall not at any time during the term of this Agreement, or for a period of two years thereafter, disclose to any other business entity confidential information concerning the Company or the Company's trade secrets of which Executive has gained knowledge during his employment with the Company. 10. BREACH OF SECTION 8 OR SECTION 9. In the event of a breach by Executive of the provisions of Section 8 or Section 9 of this Agreement, the Company may terminate this Agreement under Section 7(c), but only if the Company complies with the following provisions: (a) The Company shall provide Executive with written notice of its belief that a breach of Section 8 or Section 9 of this Agreement has occurred and shall afford Executive sixty (60) days or such longer period as the Company may determine to cure the alleged breach. (b) In the event Executive does not cure the breach, the Company shall be required to institute a judicial proceeding to determine whether a breach of Section 8 or Section 9 of this Agreement has occurred and Executive has not cured such breach. (c) This Agreement may then be terminated only upon a judicial determination that Executive has breached the provisions of Section 8 or Section 9 and has failed to cure such breach; provided, however, that this Agreement may not be terminated until either all appellate proceedings have been exhausted or the time within which Executive may appeal an adverse ruling has expired. 11. LITIGATION EXPENSES. The Company shall pay to Executive all out-of-pocket expenses, including attorneys' fees, incurred by Executive in connection with any claim or legal action or proceeding brought under or involving this Agreement, whether brought by Executive or by or on behalf of the Company or by another party; provided, however, the Company shall not be obligated to pay to Executive out-of-pocket expenses, including attorneys' fees, incurred by Executive in any claim or legal action or proceeding involving Section 8 or Section 9 of this Agreement if Company prevails in such litigation. 12. NOTICES. Notice given pursuant to this Agreement shall be in writing and shall be deemed given when received and if to the Company, to the Board of Directors of Sundstrand Corporation, Attention: Vice President and General Counsel and Secretary of the Company. 13. SUCCESSORS AND ASSIGNS. 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 assignee 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. Neither this Agreement nor any right or interest hereunder shall be assignable or transferable by 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 Executive's legal representative. 14. WAIVER, MODIFICATION AND INTERPRETATION. No provisions of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in a writing signed by Executive and an appropriate officer of the Company empowered to sign same by the Board of Directors of the Company. No waiver by either party at any time of any breach by the other party of, or compliance with, any condition or provision of this Agreement to be performed by the other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same time or at any prior or subsequent time. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Illinois. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement. 15. TERMINATION OF PRIOR EMPLOYMENT AGREEMENT; CONSULTING AGREEMENT. Effective as of the date hereof, the Employment Agreement between the Company and Executive entered into as of October 3, 1994, is terminated and no further payments will be made to Executive thereunder. Executive shall, upon termination of the Employment Period, other than as a result of termination pursuant to Section 7, and provided Executive is not physically or mentally incapacitated, become a consultant to the President and Chief Executive Officer pursuant to a Consulting Agreement in the form of Exhibit A attached hereto, which Executive and the Company shall enter into. 16. HEADINGS. The headings contained herein are for reference purposes only and shall not in any way affect the meaning or interpretation of any provision of this Agreement. IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first written above. SUNDSTRAND CORPORATION By: /s/ Richard M. Schilling --------------------------- Vice President and General Counsel and Secretary By: /s/ Don R. O'Hare -------------------------- Executive Exhibit 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 bi-weekly. 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: -------------------------- Vice President and General Counsel and Secretary By: -------------------------- Consultant EX-11.A 7 COMPUTATION OF PER SHARE EARNINGS Exhibit (11)(a) Computation of Fully Diluted Earnings Per Share (Unaudited)
Quarter Ended Nine Months Ended September 30, September 30, -------------- ----------------- (Amounts in millions except per share data) 1995 1994 1995 1994 ________________________________________________________________________________ EARNINGS Net earnings $ 34 $ 24 $ 43 $ 61 ===== ===== ===== ===== _______________________________________________________________________________ SHARES Weighted-average number of common shares outstanding 31.5 32.9 31.5 32.9 Additional shares assuming conversion of stock options .2 .1 .2 .1 ----- ----- ----- ----- Fully diluted shares 31.7 33.0 31.7 33.0 ===== ===== ===== ===== _______________________________________________________________________________ FULLY DILUTED EARNINGS PER SHARE Net earnings $1.06 $ .72 $1.35 $1.84 ===== ===== ===== =====
EX-27 8 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE REGISTRANT'S FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000,000 9-MOS DEC-31-1995 SEP-30-1995 75 0 261 0 349 760 440 0 1578 426 238 19 0 0 445 1578 1078 1078 699 981 0 0 25 77 34 43 0 0 0 43 1.36 1.35
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