1. Purpose. (a) The purposes of this Harris Corporation 2005 Directors Deferred Compensation Plan (as may be amended from time to time, this Plan), are (i) to establish a method of deferring Directors compensation which will aid Harris Corporation in attracting and retaining as members of its Board persons whose abilities, experience and judgment can contribute to the continued progress of the Corporation, (ii) to align further the interests of Directors with the interests of the stockholders of the Corporation through the crediting to Directors who are not employees of the Corporation or any of its Subsidiaries portions of Director compensation that is required to be paid in Harris Stock Equivalents, and (iii) to provide for the elective deferral of payment of all or a portion of any Director Compensation otherwise payable in cash to such Directors.
(b) American Jobs Creation Act. (i) It is intended that this Plan comply with the provisions of Section 409A of the Code, as enacted by the American Jobs Creation Act of 2004. This Plan shall be administered in a manner that will comply with Section 409A of the Code. Any provisions that would cause this Plan to fail to satisfy Section 409A of the Code shall have no force and effect, and no action shall be taken with respect to this Plan that would violate any provision of Section 409A of the Code.
(ii) The Board is authorized to adopt rules or regulations it deems necessary or appropriate to comply with the requirements of Section 409A of the Code and to enable the Directors to benefit from any transitional or other guidance published by the U.S. Treasury Department.
2. Definitions. For the purposes of this Plan, the following words and phrases shall have the meanings indicated, unless the context clearly indicates otherwise:
Account shall have the meaning set forth in Paragraph 4(a) of this Plan.
Award Date shall have the meaning set forth in Paragraph 3(a) of this Plan.
Board shall mean the Board of Directors of the Corporation.
Change of Control shall mean any of the following events that constitute a change in effective ownership or effective control, or in the ownership of a substantial portion of assets of the Corporation under Section 409A of the Code:
(i) any person (as such term is defined in Section 3(a)(9) of the Securities Exchange Act of 1934 (the Exchange Act) and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes a beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Corporation representing 20% or more of the combined voting power of the Corporations then outstanding securities eligible to vote for the election of the Board (the Corporation Voting Securities); provided, however, that the event described in this paragraph (i) shall not be deemed to be a Change of Control by virtue of any of the following acquisitions: (a) by the Corporation or any of its Subsidiaries, (b) by any employee benefit plan sponsored or maintained by the Corporation or any of its Subsidiaries, (c) by any underwriter temporarily holding securities pursuant to an offering of such securities, or (d) pursuant to a Non-Control Transaction (as defined in paragraph (iii));
(ii) individuals who, on July 1, 2004, constitute the Board (the Incumbent Directors) cease for any reason to constitute at least a majority of the Board, provided that any person becoming a director subsequent to July 1, 2004, whose election or nomination for election was approved by a vote of at least two-thirds of the Incumbent Directors who remain on the Board (either by a specific vote or by approval of the proxy statement of the Corporation in which such person is named as a nominee for director, without objection to such nomination) shall also be deemed to be an Incumbent Director; provided, however, that no individual initially elected or nominated as a director of the Corporation as a result of an actual or threatened election contest with respect to directors or any other actual or threatened solicitation of proxies or consents by or on behalf of any person other than the Board shall be deemed to be an Incumbent Director;
(iii) the consummation of a merger, consolidation, share exchange or similar form of corporate reorganization of the Corporation or any such type of transaction involving the Corporation or any of its Subsidiaries that requires the approval of the Corporations stockholders (whether for such transaction or the issuance of securities in the transaction or otherwise), or the consummation of the direct or indirect sale or other disposition of all or substantially all of the assets, of the Corporation and its Subsidiaries (a Business Combination), unless immediately following such Business Combination: (a) more than 80% of the total voting power of the corporation resulting from such Business Combination (including, without limitation, any corporation which directly or indirectly has beneficial ownership of 100% of the Corporation Voting Securities) eligible to elect directors of such corporation is represented by shares that
were Corporation Voting Securities immediately prior to such Business Combination (either by remaining outstanding or being converted), and such voting power is in substantially the same proportion as the voting power of such Corporation Voting Securities immediately prior to the Business Combination, (b) no person (other than any publicly traded holding company resulting from such Business Combination, any employee benefit plan sponsored or maintained by the Corporation (or the corporation resulting from such Business Combination)), becomes the beneficial owner, directly or indirectly, of 20% or more of the total voting power of the outstanding voting securities eligible to elect directors of the corporation resulting from such Business Combination, and (c) at least a majority of the members of the board of the corporation resulting from such Business Combination were Incumbent Directors at the time of the Boards approval of the execution of the initial agreement providing for such Business Combination (any Business Combination which satisfies the conditions specified in (a), (b) and (c) shall be deemed to be a Non-Control Transaction); or
(iv) the stockholders of the Corporation approve a plan of complete liquidation or dissolution of the Corporation or the direct or indirect sale or other disposition of all or substantially all of the assets of the Corporation and its Subsidiaries.
Notwithstanding the foregoing, a Change of Control of the Corporation shall not be deemed to occur solely because any person acquires beneficial ownership of more than 20% of the Corporation Voting Securities as a result of the acquisition of Corporation Voting Securities by the Corporation which reduces the number of Corporation Voting Securities outstanding; provided, that, if after such acquisition by the
Corporation such person becomes the beneficial owner of additional Corporation Voting Securities that increases the percentage of outstanding Corporation Voting Securities beneficially owned by such person, a Change of Control of the Corporation shall then occur.
Code shall mean the Internal Revenue Code of 1986, as amended.
Common Stock shall mean the common stock of Harris Corporation, par value $1.00 per share, or such other class of shares or securities as to which this Plan may be applicable pursuant to Paragraph 4(b)(v) of this Plan.
Corporate Secretary shall mean the Corporate Secretary of the Corporation.
Corporation shall mean Harris Corporation, its successors, and any organization into which or with Harris Corporation may merge or consolidate or to which all or substantially all of its assets may be transferred.
Director shall mean a member of the Board.
Director Compensation shall mean all amounts payable for services (excluding expense reimbursement) as a Director including as applicable: (i) the annual retainer fee payable to a Director as compensation for services in that capacity, (ii) the fees payable for service on any committee of the Board, (iii) the fees payable for serving as a chairperson of any committee; and (iv) the fees payable for attendance at Board and committee meetings or other events at the request or on behalf of the Corporation.
Elective Deferred Stock Units shall have the meaning set forth in Paragraph 4(b)(ii) of this Plan.
Exchange Act shall have the meaning set forth in the definition of Change of Control.
Fair Market Value shall mean the closing price of the Common Stock as reported on the New York Stock Exchange consolidated transactions reporting system on the applicable date or, if no such closing price is available on such date, on the preceding date on which such closing price is available, or if the Common Stock is not traded on the New York Stock Exchange, the closing price of the Common Stock as quoted on the NASDAQ or national stock exchange on which the Common Stock is traded, as reported by such source as the Board shall determine.
Harris Stock Equivalent shall mean a unit of value equal to one share of Common Stock.
Harris Stock Equivalents Subaccount shall have the meaning set forth in Paragraph 4(a) of this Plan.
Investment Funds shall have the meaning set forth in Paragraph 4(a) of this Plan.
Mandatory Deferred Units shall have the meaning specified in Paragraph 3(a) of this Plan.
Non-Employee Director shall mean a Director who is not an employee of the Corporation or one of its Subsidiaries.
Retirement Investment Subaccounts shall have the meaning set forth in Paragraph 4(a) of this Plan.
Retirement Plan shall mean the Harris Corporation Retirement Plan, as amended from time to time.
Section 16(b) shall have the meaning set forth in Paragraph 4(b)(iv) of this Plan.
Subsidiary shall mean any corporation, association, partnership, joint venture, or other business entity of which 50% or more of the voting stock or other equity interests (in the case of entities other than corporations), is owned or controlled, directly or indirectly, by the Corporation or by one or more Subsidiaries of the Corporation, or by a combination thereof.
Units shall have the meaning set forth in Paragraph 4(b)(ii) of this Plan.
3. Deferred Compensation.
(a) Mandatory Deferral of Harris Stock Equivalents. On January 1, April 1, July 1, and October 1 (each such day an Award Date) of each year, commencing April 1, 2005, the Corporation shall credit the Harris Stock Equivalents Subaccount of each Non-Employee Director, with a number of Harris Stock Equivalents having a Fair Market Value equal to $24,000. All such Harris Stock Equivalents credited under this Paragraph 3(a) shall be referred to herein as Mandatory Deferred Units. The Fair Market Value of Harris Stock Equivalents to be credited on an Award Date may be changed from time to time by resolution duly adopted by the Board. For any person who served as a Non-Employee Director for a portion of a calendar quarter, a pro rata portion of the quarterly amount that would have been credited to such Non-Employee Directors Harris Stock Equivalents Subaccount had he or she served as a Non-Employee Director
for the full calendar quarter shall be credited to such Non-Employee Directors Harris Stock Equivalent Subaccount based on the number of days in the calendar quarter that such person served as a Non-Employee Director.
(b) Elective Deferral of Compensation. (i) Any Non-Employee Director may at any time prior to the commencement of a calendar year elect to defer under this Plan all or a portion of any component (for example annual retainer, committee retainers, chairperson retainers, Board or committee meeting fees, etc.) of the Director Compensation (other than such compensation which is mandatorily deferred pursuant to Paragraph 3(a)) to which the Non-Employee Director may be entitled with respect to such calendar year by filing a written election with the Corporate Secretary. Any Non-Employee Director who is elected as a Director and who was not a Non-Employee Director on the last day of the calendar year immediately prior to his or her election may, within thirty days of the commencement of his or her term, elect to defer all or a portion of any component of Director Compensation to which such Non-Employee Director may thereafter be entitled with respect to the year in which such initial term commenced.
(ii) Each of the foregoing elective deferral elections under this Paragraph 3(b) shall be made by written notice executed by the Non-Employee Director and delivered to the Corporate Secretary, specifying the year or years with respect to which the election shall apply and the amount or component of Director Compensation (other than such compensation which is mandatorily deferred pursuant to Paragraph 3(a)) to be deferred for such year or years. An elective deferral under this Plan with respect to any calendar year shall be irrevocable after commencement of such calendar year or, in the case of a person who was not a Non-Employee Director on the last day of the calendar year immediately prior to such persons election, thirty days after the commencement of his or her initial term. Each election shall continue in effect for succeeding calendar years unless the Non-Employee Director terminates such election by written notice filed with the Corporate Secretary. Any such termination shall become effective as of the first day of the calendar year following the calendar year in which such notice is given and only
with respect to Director Compensation earned for service as a Non-Employee Director in such following calendar year and thereafter.
(c) Payment Forms. Deferral elections made pursuant to Paragraph 3(b) must also specify whether the payment of the amount reflected in the Directors Account shall be made either in (i) a cash lump sum on a date certain within five years of the Directors resignation or retirement; or (ii) in annual substantially equal installments over a designated number of years beginning on a date certain within five years of beginning of the Directors retirement or resignation, provided that the Account is fully paid within ten years of the Directors resignation or retirement. Mandatory Deferred Units shall be paid in the same form as the form of payments a Director elected with respect to amounts of Director Compensation that the Director elected to defer pursuant to Paragraph 3(b). If a Director did not make a deferral election pursuant to Paragraph 3(b), the Director shall make an election to receive payment of his or her Mandatory Deferred Units in either of the forms and time permitted in the first sentence hereof prior to the calendar year on which time such Mandatory Deferred Units are credited to the Directors Harris Stock Equivalents Subaccount or in the case of a Non-Employee Director who is elected as a Director and who was not a Non-Employee Director on the last day of the calendar year immediately prior to his or her election, within thirty days of the commencement of his or her initial term, provided that such election may apply only to Mandatory Deferred Units earned by such Non-Employee Director after the date of such election. Payments must commence no later than age 72. If no election is made, amounts credited to a Directors Account shall be paid in a cash lump sum on or before January 15th following the year in which the Director resigns or retires.
Notwithstanding any provision of this Paragraph 3(c) to the contrary, no payments shall be made prior to separation from service or, in the case of a specified employee, prior to the date which is six months after the date of separation from service. Separation from service and specified employee shall have the meanings provided to such terms under Section 409A of the Code.
4. Accounts. (a) General. On each Award Date, any Director Compensation (other than Mandatory Deferred Units) earned subsequent to the prior Award Date that is deferred under the terms of this Plan shall be credited to an account (Account) which shall be established and maintained for such Director as a special ledger account on the Corporations books. A Directors Account shall consist of a Harris Stock Equivalents subaccount (Harris Stock Equivalents Subaccount) and a number of other subaccounts (sometimes referred to herein as Retirement Investment Subaccounts) equal to the number of investment funds available from time to time under the Retirement Plan (as set forth on Exhibit A hereto, as such exhibit may be amended from time to time). Amounts of Director Compensation credited to the Retirement Investment Subaccounts of a Director shall be invested in accordance with the investment election of such Director among the investment funds of the Retirement Plan, other than the Harris Stock Fund, identified on Exhibit A hereto, and Harris Stock Equivalents. The investment funds set forth on Exhibit A, as amended from time to time, and Harris Stock Equivalents are sometimes referred to as the Investment Funds. Subject to the provisions of Paragraph 4(b) below for investments credited to the Harris Stock Equivalents Subaccount, a Non-Employee Director may invest his or her Retirement Investment Subaccount or future Director Compensation (other than Mandatory Deferred Units) in 1.0% increments (or in such other increments as are permitted under the Retirement Plan) in any of the Investment Funds and may change his or her investment elections in a manner consistent with the changing of investment elections as set forth in the Retirement Plan. Amounts deferred by a Non-Employee Director shall be invested in the Balanced Fund described on Exhibit A until the Director makes a valid investment election pursuant to this Paragraph 4(a). Earnings and losses with respect to a Directors Account shall be allocated to such Account with the same frequency and in the same manner as allocations under the Retirement Plan. Exhibit A hereto shall, without further action of the Board, be deemed to be automatically amended to reflect changes, modifications or amendments to investment funds offered under the Retirement Plan.
(b) Special Rules Concerning Harris Stock Equivalents Subaccounts. Notwithstanding any other provisions of this Plan to the contrary, the following rules shall apply to investments credited to the Harris Stock Equivalents Subaccounts (including, as appropriate, Mandatory Deferred Units credited to the Harris Stock Equivalents Subaccount of a Directors Account pursuant to Paragraph 3(a)).
(i) No Intra-Plan Transfers into or out of the Harris Stock Equivalents Subaccounts. A Director may not make an election to transfer or reallocate amounts invested in any of the Directors Retirement Investment Subaccounts into the Directors Harris Stock Equivalents Subaccount. In addition, amounts invested in the Harris Stock Equivalents Subaccount, including Mandatory Deferred Units, may not thereafter be reallocated in any other Retirement Investment Subaccounts.
(ii) Value of Harris Stock Equivalents. Amounts of Directors Compensation deferred by a Director hereunder which the Director elects to be invested in Harris Stock Equivalents shall, unless such amount is payable on an Award Date, be credited to the Directors Harris Stock Equivalents Subaccount on the first day of the month following each calendar month in which such amount would be payable. The Corporation shall credit a Directors Harris Stock Equivalents Subaccount with that number of units (including fractions) obtained by dividing such amounts by the Fair Market Value of a share of Common Stock on the date such amounts are credited to the Directors Harris Stock Equivalents Subaccount (such Harris Stock Equivalents are sometimes referred to herein as Elective Deferred Stock Units). In the case of Mandatory Deferred Units, each Directors Harris Stock Equivalents Subaccount shall be credited with a number of Mandatory Deferred Units on each Award Date as set forth in Paragraph 3(a). Elective Deferred Stock Units and Mandatory Deferred Units are sometimes referred to collectively as Units.
(iii) Earnings on Harris Stock Equivalents. A Directors Harris Stock Equivalents Subaccount shall be credited with the amount of cash dividends
payable with respect to that number of shares of Common Stock equal to the number of Units (including fractions) credited to such subaccount on the date on which dividend payments are credited under the Retirement Plan (which may be the ex-dividend date). The amount of cash dividends so credited shall then be converted into Units in the manner described above using the Fair Market Value on the same day, and in a manner consistent with the Retirement Plan.
(iv) Reallocations of Future Investments into Harris Stock Equivalents Subaccount. Subject to any restrictions imposed by Section 16(b) of the Exchange Act (Section 16(b)), changes in investment elections with respect to future crediting of Directors Compensation into the Harris Stock Equivalents Subaccount may be made at the Directors discretion, except that a Director shall have no investment discretion with respect to the crediting of Mandatory Deferred Units.
(v) Adjustments to Avoid Dilution, Etc. In the event of any stock dividend or split, recapitalization, merger, consolidation, spin-off, extraordinary dividends, combination or exchange of shares or other similar event, the value and attributes of each Unit shall be appropriately adjusted consistent with such change to the same extent as if such Units were issued and outstanding shares of Common Stock. Such adjustments shall be made by the Board and shall be conclusive and binding for all purposes of the Plan.
(vi) Cash Distributions. Distributions from a Directors Harris Stock Equivalents Subaccount shall be made in cash with the amount of cash to be paid on account of each Unit being determined by reference to the Fair Market Value on the last day of the month preceding the date of distribution.
(vii) No Rights as Shareholder. A Director shall not have any rights as a stockholder of the Corporation with respect to any Units credited to the Directors Harris Stock Equivalents Subaccount.
5. Subsequent Elections. A Director may modify his or her election at any time at least twelve (12) months before the date of the previously elected payment date and the newly elected payment date (or payment commencement date) must be at least five years after the previously elected payment date or the previously elected payment commencement date; provided, however, that (a) such modification shall not be effective unless the Director remains or Director for at least twelve (12) months after the date on which such modification was made, (b) no such modification shall be made without the prior approval of the Board or a committee comprised solely of non-employee directors as defined in Rule 16b-3(b)(3) under the Exchange Act, as amended from time to time, and (c) any change in payment form (as provided in Paragraph 3(c)) shall not accelerate the schedule of payments. Payments must commence no later than age 72. A Directors payout election shall apply to all amounts credited to a Directors Account and all earnings thereon regardless of the year in which the amounts were deferred or credited. Annual payments shall be made on or before January 15. Until a Directors Account has been completely distributed, earnings and losses on the unpaid balance thereof shall be allocated as provided in Paragraph 4 above.
6. Payments in Connection with Change of Control. Notwithstanding anything contained in this Plan to the contrary and to the extent permitted by Section 409A of the Code, within 90 days following a Change of Control, the Corporation shall pay to each Director (or former Director) a cash lump sum payment equal to the then remaining balance of the Directors Account. This Paragraph may not be amended, altered or modified following a Change of Control.
7. Payment in the Event of Death. In the event a Director or former Director dies prior to receiving payment of the entire amount of her or his Account, then, to the extent permitted by Section 409A of the Code, the unpaid balance shall be paid to such beneficiary as the Director may have designated in a written notice delivered to the Corporate Secretary as the person, firm or trust to receive any such post-death distribution
under this Plan or, in the absence of such written designation, to the former Directors legal representative or any person, firm or organization designated in her or his last will to receive such distributions. Distributions subsequent to the death of a Director or former Director shall be made in a lump sum.
8. Non-Assignability. None of the rights or interests of any Director or former Director in (a) amounts of Director Compensation deferred under this Plan; or (b) Mandatory Deferred Units shall be assignable or transferable in whole or in part, either voluntarily or by operation of law or otherwise, and shall not be subject to payment of debts by execution, levy, garnishment, attachment, pledge, bankruptcy or in any other manner.
9. Plan to Be Unfunded. The Corporation shall be under no obligation to acquire, segregate, or reserve any funds or other assets for purposes relating to this Plan and no Director or former Director shall have any rights whatsoever in or with respect to any funds or other assets held by the Corporation for purposes of this Plan or otherwise. Accounts maintained for purposes of this Plan shall merely constitute bookkeeping records of the Corporation and shall not constitute any allocation whatsoever of any assets of the Corporation or be deemed to create any trust or special deposit with respect to any of the Corporations assets.
10. Miscellaneous. The Board, and any committee of the Board designated by the Board, shall in its sole discretion, have the complete authority to interpret this Plan, to adopt rules for carrying out the purposes of this Plan and to make all other determinations necessary or advisable for the administration of this Plan. The Board or the relevant Committee, if applicable, may delegate any of its responsibilities, powers, or duties under this Plan to any person or committee. The Board, any committee of the Board, and any officer of the Corporation charged with responsibility for the administration and operation of this Plan may rely upon information supplied to them by the officers of the Corporation and by any public accountants retained by the Corporation. No member of
the Board nor any officer of the Corporation charged with responsibility for the administration and operation of this Plan shall be liable, except in circumstances involving his or her bad faith, for any act or action, whether of commission or omission, taken by any other member or by any other officer, agent, or employee, for anything done or omitted to be done. The Board by duly adopted resolution may from time to time amend, suspend, terminate or reinstate any or all of the provisions of this Plan, except that no such amendment, suspension or termination shall adversely affect the Account of any Director or former Director as it existed immediately before such amendment, suspension or termination or the manner of distribution thereof, unless such Director or former Director shall have consented thereto in writing; provided, however, that this limitation shall not apply to any amendment or termination that is deemed necessary by the Corporation to ensure compliance with Section 409A of the Code. This Plan shall be construed and governed by the laws of Delaware. Notwithstanding the foregoing, this Plan shall not be administered and interpreted in a manner that is inconsistent with the requirements of Section 409A of the Code.
|By||/s/ Howard Lance|
|Howard L. Lance|
|Chairman of the Board, President and Chief Executive Officer|
/s/ Scott T. Mikuen
Harris Stock Equivalents
|Money Market Fund|
|Passive Aggregate Strategy Fund|
Equity Income Fund
|Stable Value Fund|
|International Equity Fund|
Index Equity Fund
|Wilshire 4500 Index Fund|
Russell 2000 Growth Index Fund
|RCM Global Technology Fund|