Exhibit 10.4
HARRIS CORPORATION
1997 DIRECTORS' DEFERRED COMPENSATION
AND ANNUAL STOCK UNIT AWARD PLAN
(AMENDED AND RESTATED EFFECTIVE JANUARY 1, 2006)
1. Purpose. The purpose of this 1997 Directors' Deferred Compensation and Annual
Stock Unit Award Plan (the "Plan") is (a) 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 and (b) to
further align the interests of Directors with the interests of the shareholders
of the Corporation through the annual grant of Harris Stock Equivalents. Prior
to October 24, 1997, the first amendment and restatement of the Plan, the Plan
was known as the "1997 Directors' Deferred Compensation Plan," which replaced
and superseded the Harris Corporation Deferred Compensation Plan for Directors,
Amended as of December 2, 1994 (the "Predecessor Plan").
Effective as of December 31, 2004, no further deferral of Director
Compensation shall be permitted and no further awards of Annual Units shall be
granted under the Plan.
Effective as of January 1, 2006, the Plan is hereby amended and restated.
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).
"Annual Units" shall have the meaning set forth in Paragraph 5(a).
"Board" shall mean the Board of Directors of the Corporation.
"Change of Control" shall mean any of the following events:
(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 Corporation's 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 subsidiary, (b) by any employee benefit plan sponsored or
maintained by the Corporation or any subsidiary, (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, 2005, 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,
2005, 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 Corporation's 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 Board's 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
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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.
"Corporation" means 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.
"Deferred Stock Units" shall have the meaning set forth in Paragraph
4(b)(ii).
"Director" shall mean a member of the Board.
"Director Compensation" shall mean: (i) the annual retainer fee payable to
a Director as compensation for services in that capacity, (ii) fees payable for
service on any committee of the Board, (iii) fees payable for serving as a
chairperson of any committee; and (iv) the fees payable to a Director for
attendance at Board and committee meetings.
"Exchange Act" shall have the meaning set forth in the definition of
"Change of Control".
"Fair Market Value" shall mean, as of any date, the closing price of the
Common Stock as reported by the New York Stock Exchange, Inc. for the date which
is the nearest trading date preceding the date on which such value is to be
determined.
"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).
"Investment Funds" shall have the meaning set forth in Paragraph 4(a).
"Plan" shall mean this 1997 Directors' Deferred Compensation and Annual
Stock Unit Award Plan, as amended from time to time.
"Predecessor Plan" shall have the meaning set forth in Paragraph 1.
"Retirement Plan" shall mean the Harris Corporation Retirement Plan, as
amended from time to time.
"Secretary" shall mean the Secretary of the Corporation.
"Section 16(b)" shall have the meaning set forth in Paragraph 4(b)(ii).
"Units" shall have the meaning set forth in Paragraph 4(b)(ii).
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3. Right to Defer Compensation. (a) (i) Any Director who is not an employee of
the Corporation or one of its subsidiaries and WHO HAS NOT made an election
under the Predecessor Plan to defer all or any specified part of the Director
Compensation with respect to calendar year 1997 may at any time prior to August
1, 1997, elect to defer under this Plan all or any specified part of the
Director Compensation to which the Director may thereafter be entitled with
respect to the remainder of calendar year 1997; provided, however, that such
amounts may only be credited to the Director's Harris Stock Equivalents
Subaccount.
(ii) Any Director who is not an employee of the Corporation or one
of its subsidiaries and WHO HAS made an election under the Predecessor Plan to
defer all or any specified part of the Director Compensation with respect to
calendar year 1997 may at any time prior to August 1, 1997, elect to defer all
or a specified part of, the Director Compensation to which the Director may
thereafter be entitled with respect to the remainder of calendar year 1997;
provided, however, that such amounts may only be credited to the Director's
Harris Stock Equivalents Subaccount. Prior to August 1, 1997, such Director may
also elect to have all or any specified part of any existing balances in her/his
Account credited to the Harris Stock Equivalents Subaccount. Elections to have
existing balances credited into the Harris Stock Equivalents Subaccount (x) made
on or prior to June 30, 1997, will be effective on June 30, 1997, and (y) made
on or after July 1, but prior to July 31, 1997, will be effective on July 31,
1997. Amounts credited to a Director's Harris Stock Equivalents Subaccount shall
be converted into Deferred Stock Units pursuant to Paragraph 4(b)(ii).
(iii) Each of the foregoing elections under this Plan for calendar
year 1997 shall specify (x) in the case of an election under Paragraph 3(a)(i),
the amount or part of Director Compensation to be deferred for the remainder of
1997 and (y) in the case of an election under Paragraph 3(a)(ii), the amount or
part of Director Compensation and existing balances to be credited to the Harris
Stock Equivalents Subaccount. Any deferral elections made under the Predecessor
Plan or made in accordance with Paragraph 3(a)(i) or 3(a)(ii) shall be
irrevocable for 1997.
(b) For calendar years subsequent to 1997, any Director who is not an
employee of the Corporation or one of its subsidiaries may at any time prior to
the commencement of a calendar year elect to defer under this Plan all or any
specified part of the Director Compensation to which the Director may be
entitled with respect to such subsequent calendar year. Any person who is not an
employee of the Corporation or one of its subsidiaries who is elected as a
Director and who was not a Director on the last day of the calendar year
immediately prior to her/his election may, within thirty days of the
commencement of her/his term, elect to defer all or any specified part of the
Director Compensation to which she/he may thereafter be entitled with respect to
the year in which she/he is so elected.
(c) Each of the foregoing deferral elections under this Plan shall be made
by written notice delivered to the Secretary, specifying the year or years with
respect to which the election shall apply and the amount or part of Director
Compensation to be deferred for such year or years (and in the case of an
election under Paragraph 3(a)(ii) the portion of existing balances to be
credited to the Director's Harris Stock Equivalents Subaccount). A deferral
election 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 Director on the last day of the calendar
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year immediately prior to her/his election, within thirty days after the
commencement of her/his term.
(d) Notwithstanding the foregoing provisions of this Section 3 and any
provision in the Plan to the contrary, no deferrals of Director Compensation
shall be permitted for calendar years commencing after December 31, 2004.
4. Accounts. (a) General. On the first day of the month following each calendar
month in which Director Compensation deferred under this Plan would have become
payable to a Director, the amount of such Director Compensation shall be
credited to an account ("Account") which shall be established and maintained for
such Director as a special ledger account on the Corporation's books. A
Director's Account shall consist of a Harris Stock Equivalents subaccount
("Harris Stock Equivalents Subaccount") and a number of other subaccounts
(sometimes referred to 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 Account of a Director
shall be invested in accordance with the investment election of such Director
among the investment funds of the Retirement Plan identified on Exhibit A hereto
(other than the Harris Stock Fund), and Harris Stock Equivalents. The investment
funds set forth on Exhibit A, as amended from time to time (other than the
Harris Stock Fund), and Harris Stock Equivalents are sometimes referred to as
the "Investment Funds". Subject to the provisions of Section 4(b) below for
investments credited to the Harris Stock Equivalents Subaccount and the
crediting of Annual Units, a Director may invest her/his account balance or
future Director Compensation in 1.0% increments in any of the Investment Funds
(or in such other increments as are permitted under the Retirement Plan) and,
may change her/his investment elections in a manner consistent with the changing
of investment elections as set forth in the Retirement Plan. A Director's
account balance and future deferred Director Compensation shall be invested in
the Balanced Fund described on Exhibit A until the Director makes a valid
investment election pursuant to this Paragraph 4. Earnings and losses with
respect to a Director's Account shall be allocated to such Account with the same
frequency and in the same manner as allocations 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, Annual Units credited to the Harris
Stock Equivalents Subaccount of a Director's Account).
(i) Restrictions On Intra-Plan Transfers into and out of the Harris
Stock Equivalents Subaccounts. A Director may not make an election to transfer
or reallocate amounts invested in any of the Director's retirement investment
subaccounts into the Director's Harris Stock Equivalents Subaccount. Subject to
any restrictions imposed by Section 16(b) of the Exchange Act ("Section 16(b)"),
amounts invested in the Harris Stock Equivalents Subaccount, including Annual
Units, may thereafter be reallocated to any other retirement investment
subaccount by the Director only if any such reallocation does not cause the
Director to fail to satisfy the Corporation's minimum stock ownership guidelines
applicable to such Director.
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(ii) Value of Harris Stock Equivalents. Amounts of Director's
Compensation deferred by a Director hereunder which the Director elects to be
invested in Harris Stock Equivalents shall be credited to the Director's 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 Director's 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
Director's Harris Stock Equivalents Subaccount (such Harris Stock Equivalents
are sometimes referred to herein as "Deferred Stock Units"). In the case of
Annual Units, each Director's Harris Stock Equivalents Subaccount shall be
credited with a number of Annual Units on January 1 of each year as set forth in
Paragraph 5(a). Deferred Stock Units and Annual Units are sometimes referred to
collectively as "Units."
(iii) Earnings on Harris Stock Equivalents. A Director's 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),
changes in investment elections with respect to future crediting of Director's
Compensation into the Harris Stock Equivalents Subaccount may be made at the
Director's discretion, except that a Director shall have no investment
discretion with respect to the crediting of Annual Units.
(v) Adjustments to Avoid Dilution. 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 Director's 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 shareholder of the Corporation with respect to any Units credited to the
Director's Harris Stock Equivalents Subaccount.
5. Annual Awards of Deferred Stock Units; Conversion Award.
(a) Annual Unit Awards. On January 1 of each year, commencing with January
1, 1998, the Corporation shall credit the Harris Stock Equivalents Subaccount of
each Director who
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is not an employee of the Corporation or one of its subsidiaries with 500 Harris
Stock Equivalents. The number of Annual Units to be credited on each January 1
may be changed from time to time by a resolution adopted by the Board. All such
annually awarded units shall be referred to herein as the "Annual Units."
(b) Conversion Award. On January 1, 1998, a Director's Harris Stock
Equivalents Subaccount shall be credited with a number of Harris Stock
Equivalents equal to the actuarial present value of the Director's annual
retirement benefit (assuming retirement at age 72) under the Directors'
Retirement Plan if, as of January 1, 1998; either (i) the Director had less than
ten years of service under such Plan or (ii) the Director had ten or more years
of service under such Plan and elected to have such actuarial present value
transferred to the Plan. The number of Harris Stock Equivalents to be credited
to such a Director's Harris Stock Equivalents Subaccount shall be determined in
the manner described in Paragraph 4(b)(ii) as of January 1, 1998, except that
the fair market value shall be equal to the average daily closing price for the
Common Stock for the period from October 1, 1997 through December 31, 1997.
(c) Cessation of Annual Unit Awards. Notwithstanding the foregoing
provisions of this Section 5 and any provision in the Plan to the contrary, no
awards of Annual Units shall be granted after December 31, 2004.
6. Payment of Deferred Director Compensation and Annual Units. In accordance
with the forms of payment permissible under this Paragraph 6, a Director shall
elect the time or times in which the amounts credited to her/his Account,
including Annual Units credited to the Harris Stock Equivalents Subaccount,
shall be paid by a written election delivered to the Secretary at the time such
Director elects to participate in this Plan. A Director may modify his or her
election at any time before the beginning of the 120-day period immediately
preceding the effective date of the Director's resignation or retirement, at
which time the election shall become irrevocable; provided, however, that if a
Director has Units credited to his/her Harris Stock Equivalents Subaccount, 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 if such
approval is advisable to avoid exposing a Director to a claim for recovery of
short swing profits under Section 16(b). Payments must commence no later than
age 72. A Director's payout election shall apply to all amounts credited to a
Director's Account and all earnings thereon regardless of the year in which the
amounts were deferred or credited. Upon a Director's resignation or retirement,
amounts credited to the Director's Account shall be payable to her/him at
her/his election in (i) a cash lump sum on a date certain within five (5) years
of resignation or retirement or (ii) in annual payments over a designated number
of years provided the Account is fully paid within ten (10) years of resignation
or retirement. Annual payments shall be made on or before January 15. Until a
Director's Account has been completely distributed, earnings and losses on the
unpaid balance thereof shall be allocated as provided in Paragraph 4 above.
Notwithstanding any provision of this Section 6 to the contrary, if advisable to
avoid exposing a Director to a claim for recovery of short swing profits under
Section 16(b), prior to the payment of the amount reflected in the Director's
Account, such payment must be approved in advance by the Board or a Committee
comprised solely of "non-employee directors" as defined in Rule 16(b)-3(b)(3)
under the Exchange Act, as amended.
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7. Payments in Connection with Change of Control. Notwithstanding anything
contained in this Plan to the contrary, 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 in his/her Account. This
Paragraph may not be amended, altered or modified following a Change of Control.
8. Modification of Payment Terms in Certain Circumstances. If after a person
shall have ceased to be a Director, but prior to full payment to such person of
the entire amount of her or his Account, the Director shall, after reasonable
warning from the Board, persist in an affiliation with any business that is a
principal competitor with a significant portion of the business conducted by the
Corporation, the entire balance of such Account may, if directed by the Board in
its sole discretion, be paid immediately to such person in a lump sum.
9. 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, the
unpaid balance shall be paid to such beneficiary as the Director may have
designated in a written notice delivered to the 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 Director's 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.
10. Non-Assignability. None of the rights or interests of any Director or former
Director in amounts of compensation deferred under this Plan or Annual 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.
11. 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
Corporation's assets.
12. Miscellaneous. 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 the Corporation's independent certified public accountants.
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 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
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the manner of distribution thereof, unless such Director or former Director
shall have consented thereto in writing. This Plan shall be construed and
governed by the laws of Delaware.
13. Section 409A of the Code. It is intended that this Plan qualify for
"grandfathered" status and continue to be governed by the law applicable to
nonqualified deferred compensation prior to enactment of Section 409A of the
Code. This Plan shall be administered in a manner consistent with this intent,
and any provision that would cause this Plan to fail to qualify for such
"grandfathered" status shall have no force and effect.
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IN WITNESS WHEREOF, Harris Corporation does hereby amend and restate this
1997 Directors' Deferred Compensation and Annual Stock Unit Award Plan as of
January 1, 2006.
HARRIS CORPORATION
Date: October 28, 2005 By /s/ Howard L. Lance
------------------------- --------------------------------
Howard L. Lance
Chairman of the Board, President
and Chief Executive Officer
ATTEST
Scott T. Mikuen
- -------------------------------
Corporate Secretary
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EXHIBIT A
TO
HARRIS CORPORATION 1997
DIRECTORS' DEFERRED COMPENSATION AND
ANNUAL STOCK UNIT AWARD PLAN
Harris Stock Equivalents Money Market Fund
Balanced Fund Passive Aggregate
Equity Income Fund Stable Value Fund
Growth Fund International Equity Fund
Index Equity Fund Wilshire 4500
Russell 2000 Global Technology
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