Exhibit 10.5
HARRIS CORPORATION RETIREMENT PLAN
(AMENDED AND RESTATED EFFECTIVE OCTOBER 1, 2005)
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HARRIS CORPORATION RETIREMENT PLAN
(AMENDED AND RESTATED EFFECTIVE OCTOBER 1, 2005)
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ARTICLE 1 TITLE.................................................................................................... 1
ARTICLE 2 DEFINITIONS.............................................................................................. 1
ARTICLE 3 PARTICIPATION............................................................................................ 16
Section 3.1. Eligibility for Participation...................................................................... 16
Section 3.2. Election of Pre-Tax Contributions and After-Tax Contributions...................................... 16
Section 3.3. Transfers to Affiliates............................................................................ 17
ARTICLE 4 PRE-TAX, MATCHING AND PROFIT SHARING CONTRIBUTIONS....................................................... 18
Section 4.1. Pre-Tax Contributions.............................................................................. 18
Section 4.2. Matching Contributions............................................................................. 19
Section 4.3. Profit Sharing Contributions....................................................................... 20
Section 4.4. Deposit of Contributions........................................................................... 23
Section 4.5. Form of Contributions.............................................................................. 23
ARTICLE 5 AFTER-TAX AND ROLLOVER CONTRIBUTIONS..................................................................... 24
Section 5.1. After-Tax Contributions............................................................................ 24
Section 5.2. Rollover Contributions............................................................................. 25
ARTICLE 6 LIMITATIONS ON CONTRIBUTIONS............................................................................. 27
Section 6.1. Annual Limit on Pre-Tax Contributions.............................................................. 27
Section 6.2. Limits on Contributions for Highly Compensated Employees........................................... 28
Section 6.3. Maximum Annual Additions under Section 415 of the Code............................................. 37
Section 6.4. Other Limitations on Employer Contributions........................................................ 40
ARTICLE 7 TRUST AND INVESTMENT FUNDS............................................................................... 41
Section 7.1. Trust.............................................................................................. 41
Section 7.2. Investments........................................................................................ 41
ARTICLE 8 PARTICIPANT ACCOUNTS AND INVESTMENT ELECTIONS............................................................ 42
Section 8.1. Participant Accounts............................................................................... 42
Section 8.2. Investment Elections............................................................................... 43
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Section 8.3. Valuation of Funds and Plan Accounts............................................................... 46
Section 8.4. Valuation of Units within the Harris Stock Fund.................................................... 47
Section 8.5. Allocation of Contributions Other than Profit Sharing Contributions................................ 47
Section 8.6. Allocation of Profit Sharing Contributions......................................................... 47
Section 8.7. Correction of Error................................................................................ 48
ARTICLE 9 WITHDRAWALS AND DISTRIBUTIONS............................................................................ 49
Section 9.1. Withdrawals Prior to Termination of Employment..................................................... 49
Section 9.2. Distribution of Account Upon Termination of Employment............................................. 53
Section 9.3. Time and Form of Distribution upon Termination of Employment....................................... 55
Section 9.4. Payment of Small Account Balances.................................................................. 58
Section 9.5. Medium and Order of Withdrawal or Distribution..................................................... 59
Section 9.6. Direct Rollover Option............................................................................. 60
Section 9.7. Designation of Beneficiary......................................................................... 62
Section 9.8. Missing Persons.................................................................................... 62
Section 9.9. Distributions to Minor and Disabled Distributees................................................... 63
Section 9.10. Payment of Group Insurance Premiums................................................................ 63
ARTICLE 10 LOANS.................................................................................................... 64
Section 10.1. Making of Loans.................................................................................... 64
Section 10.2. Restrictions....................................................................................... 65
Section 10.3. Default............................................................................................ 65
Section 10.4. Applicability...................................................................................... 66
ARTICLE 11 SPECIAL PARTICIPATION AND DISTRIBUTION RULES............................................................. 66
Section 11.1. Change of Employment Status........................................................................ 66
Section 11.2. Reemployment of a Terminated Participant........................................................... 66
Section 11.3. Employment by Affiliates........................................................................... 67
Section 11.4. Leased Employees................................................................................... 67
Section 11.5. Reemployment of Veterans........................................................................... 68
ARTICLE 12 SHAREHOLDER RIGHTS WITH RESPECT TO HARRIS STOCK.......................................................... 71
Section 12.1. Voting Shares of Harris Stock...................................................................... 71
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Section 12.2. Tender Offers...................................................................................... 71
ARTICLE 13 ADMINISTRATION........................................................................................... 74
Section 13.1. The Administrative Committee....................................................................... 74
Section 13.2. Named Fiduciaries.................................................................................. 77
Section 13.3. Allocation and Delegation of Responsibilities...................................................... 77
Section 13.4. Professional and Other Services.................................................................... 78
Section 13.5. Claims Procedure................................................................................... 78
Section 13.6. Notices to Participants............................................................................ 80
Section 13.7. Notices to Administrative Committee or Employers................................................... 80
Section 13.8. Records............................................................................................ 80
Section 13.9. Reports of Trustee and Accounting to Participants.................................................. 81
Section 13.10. Limitations on Investments and Transactions/Conversions............................................ 81
ARTICLE 14 PARTICIPATION BY EMPLOYERS............................................................................... 82
Section 14.1. Adoption of Plan................................................................................... 82
Section 14.2. Withdrawal from Participation...................................................................... 83
Section 14.3. Company, Administrative Committee, Compensation Committee, Executive Committee and
Investment Committee as Agents for Employers....................................................... 83
Section 14.4. Continuance by a Successor......................................................................... 83
ARTICLE 15 MISCELLANEOUS............................................................................................ 84
Section 15.1. Expenses........................................................................................... 84
Section 15.2. Non-Assignability.................................................................................. 85
Section 15.3. Employment Non-Contractual......................................................................... 86
Section 15.4. Merger or Consolidation with Another Plan/Transfer Contributions................................... 86
Section 15.5. Gender and Plurals................................................................................. 87
Section 15.6. Applicable Law..................................................................................... 87
Section 15.7. Severability....................................................................................... 87
Section 15.8. No Guarantee....................................................................................... 87
Section 15.9. Plan Voluntary..................................................................................... 88
ARTICLE 16 TOP-HEAVY PLAN REQUIREMENTS.............................................................................. 88
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Section 16.1. Top-Heavy Plan Determination....................................................................... 88
Section 16.2. Definitions and Special Rules...................................................................... 89
Section 16.3. Minimum Contribution for Top-Heavy Years........................................................... 90
ARTICLE 17 AMENDMENT, ESTABLISHMENT OF SEPARATE PLAN, PLAN TERMINATION AND CHANGE OF CONTROL........................ 91
Section 17.1. Amendment.......................................................................................... 91
Section 17.2. Establishment of Separate Plan..................................................................... 91
Section 17.3. Termination........................................................................................ 92
Section 17.4. Change of Control.................................................................................. 92
Section 17.5. Trust Fund to Be Applied Exclusively for Participants and Their Beneficiaries...................... 94
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ARTICLE 1
TITLE
The title of this Plan shall be the "Harris Corporation Retirement
Plan." This Plan is an amendment and restatement of the Plan in effect as of
September 30, 2005. This amendment and restatement shall be effective October 1,
2005.
The rights and benefits of any Participant whose employment with all
Employers and Affiliates terminates on or after October 1, 2005, and the rights
and benefits of any Beneficiary of any such Participant, shall be determined
solely by reference to the terms of the Plan as amended and restated herein, as
may be amended from time to time. The rights and benefits of any Participant
whose employment with all Employers and Affiliates terminated prior to October
1, 2005 and who is not reemployed after such date, and the rights and benefits
of any Beneficiary of any such Participant, generally shall be determined solely
by reference to the terms of the Plan as in effect on the date of the
Participant's termination of employment.
The Plan is designated as a "profit sharing plan" within the meaning
of U.S. Treasury Regulation section 1.401-1(a)(2)(ii).
ARTICLE 2
DEFINITIONS
As used herein, the following words and phrases shall have the
following respective meanings when capitalized:
Account. The aggregate of a Participant's accounts described in
Section 8.1 and such other accounts that may be established from time to time on
behalf of a Participant, to be credited with contributions made by or on behalf
of the Participant, adjusted for earnings and losses, and debited by
distributions to and withdrawals of the Participant and expenses.
Administrative Committee. The Employee Benefits Committee of the
Company or any successor thereto that is appointed pursuant to Section 13.1 to
administer the Plan. Reference herein to the Administrative Committee also shall
include any person to whom the Administrative Committee has delegated any of its
authority pursuant to Section 13.3 to the extent of the delegation.
Affiliate. (a) A corporation that is a member of the same controlled
group of corporations (within the meaning of section 414(b) of the Code) as an
Employer, (b) a trade or business (whether or not incorporated) under common
control (within the meaning of section 414(c) of the Code) with an Employer, (c)
any organization (whether or not incorporated) that is a member of an affiliated
service group (within the meaning of section 414(m) of the Code) that includes
an Employer, a corporation described in clause (a) of this subdivision or a
trade or business described in clause (b) of this subdivision, or (d) any other
entity that is required to be aggregated with an Employer pursuant to
Regulations promulgated under section 414(o) of the Code.
After-Tax Account. The account established pursuant to Section 8.1
to which any after-tax contributions made for the benefit of a Participant
pursuant to Section 5.1, and earnings and losses thereon, are credited.
Beneficiary. A person entitled under Section 9.7 to receive benefits
in the event of the death of a Participant.
Board. The Board of Directors of the Company.
Break in Service. A period other than a period included in an
Employee's Service; provided, however, that a Break in Service shall not include
a period of absence from employment not in excess of 24 consecutive months
because of (a) the Employee's pregnancy,
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(b) the birth of the Employee's child, (c) the placement of a child with the
Employee in connection with the Employee's adoption of such child or (d) the
need of the Employee to care for any such child for a period beginning
immediately following such birth or placement. Notwithstanding the foregoing,
the immediately preceding sentence shall not apply unless the Employee timely
furnishes to the Administrative Committee or its delegate such information as it
may reasonably require to establish the reason for such absence and its
duration.
Change of Control. For purposes hereof, a "Change of Control" shall
be deemed to have occurred if:
(a) 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 Company representing 20% or
more of the combined voting power of the Company's then outstanding
securities eligible to vote for the election of the Board (the "Company
Voting Securities"); provided however, that the event described in this
paragraph (a) shall not be deemed to be a Change of Control by virtue of
any of the following acquisitions: (1) by the Company or any Subsidiary,
(2) by any employee benefit plan sponsored or maintained by the Company or
any Subsidiary, (3) by any underwriter temporarily holding securities
pursuant to an offering of such securities, or (4) pursuant to a
"Non-Control Transaction" (as defined in paragraph (c));
(b) individuals who, on July 1, 2002, 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, 2002, whose election or
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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 Company 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 Company
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;
(c) the consummation of a merger, consolidation, share exchange or
similar form of corporate reorganization of the Company or any such type
of transaction involving the Company or any of its Subsidiaries that
requires the approval of the Company's stockholders (whether for such
transaction or the issuance of securities in the transaction or otherwise)
(a "Business Combination"), unless immediately following such Business
Combination: (1) 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 Company Voting Securities) eligible to elect
directors of such corporation is represented by shares that were Company
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 Company
Voting Securities immediately prior to the Business Combination, (2) no
person (other than any publicly traded holding company resulting from such
Business Combination or any employee benefit plan sponsored or maintained
by the Company (or the corporation resulting from such
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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 (3) at least a majority of the members
of the board of directors 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 (1), (2) and (3) shall be deemed to be a "Non-Control
Transaction"); or
(d) the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company or the direct or indirect sale
or other disposition of all or substantially all of the assets of the
Company and its Subsidiaries.
Notwithstanding the foregoing, a "Change of Control" shall not occur
solely because any person acquires beneficial ownership of 20% or more of the
Company Voting Securities as a result of the acquisition of Company Voting
Securities by the Company which reduces the number of Company Voting Securities
outstanding; provided however, that if after such acquisition by the Company
such person becomes the beneficial owner of additional Company Voting Securities
that increase the percentage of outstanding Company Voting Securities
beneficially owned by such person, a "Change of Control" shall then occur.
For purposes of this definition of "Change of Control," the term
"Subsidiary" shall mean any corporation or other entity in which the Company has
a direct or indirect ownership interest of 50% or more of the total combined
voting power of the then outstanding securities of such corporation or other
entity entitled to vote generally in the election of directors
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or in which the Company has the right to receive 50% or more of the distribution
of profits or 50% or more of the assets on liquidation or dissolution.
Code. The Internal Revenue Code of 1986, as amended.
Company. Harris Corporation, a Delaware corporation, and any
successor thereto.
Compensation. The following items of remuneration which a
Participant earns for work or personal services performed for an Employer: (a)
salary or wages, including lump sum merit increases; (b) commission paid
pursuant to a sales incentive plan; (c) overtime premium, shift differential or
additional compensation in lieu of overtime premium; (d) compensation in lieu of
vacation; (e) any annual bonus or incentive compensation payable in the form of
cash pursuant to the Harris Corporation Annual Incentive Plan or any successor
thereto or other similar plan or award program adopted from time to time by an
Employer or any stock award made in lieu of an annual cash bonus or incentive
compensation; (f) any compensation of a type described in items (a) through (e)
above which is paid as an employee contribution to the Plan; (g) any salary
reduction contributions to a cafeteria plan (within the meaning of section 125
of the Code) or a non-qualified deferred compensation plan maintained by an
Employer; or (h) any salary reduction contributions to an arrangement maintained
by an Employer providing qualified transportation fringes (within the meaning of
section 132(f)(4) of the Code). Notwithstanding the foregoing, the following
items shall be excluded from "Compensation": (1) any extraordinary compensation
of a recurring or non-recurring nature not included under items (a) through (h)
above, including one-time recognition awards and rewards under a referral
program of an Employer; (2) any award made or amount paid pursuant to the Harris
Corporation Stock Incentive Plan or any successor thereto, including, but not
limited to, performance shares,
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stock options, restricted stock, stock appreciation rights or other stock-based
awards or dividend equivalents; (3) severance pay, separation pay or special
retirement pay; (4) retention bonuses or completion bonuses, unless authorized
by the Administrative Committee in a uniform and nondiscriminatory manner to be
included in Compensation; (5) reimbursement or allowances with respect to
expenses incurred in connection with employment, such as tax equalization,
reimbursement for moving expenses, mileage or expense allowance or education
expenses; or (6) indirect compensation such as employer-paid group insurance
premiums or contributions under this Plan or any other qualified employee
benefit plan, other than a contribution described in item (f) or (h) above.
Notwithstanding any provision herein to the contrary, the
Compensation of a Participant taken into account for any purpose under the Plan
shall not exceed $200,000 (as adjusted pursuant to section 401(a)(17)(B) of the
Code). In addition, in the Plan Year in which an Eligible Employee becomes a
Participant, only Compensation received on or after the date he or she becomes a
Participant shall be taken into account under the Plan.
Compensation Committee. The Management Development and Compensation
Committee of the Board. Reference herein to the Compensation Committee also
shall include any person to whom the Compensation Committee has delegated any of
its authority pursuant to Section 13.3.
Consolidated Subsidiaries. The Company's subsidiaries which are
included in the consolidated annual financial statements for the Company.
Disability. A Participant's total and permanent physical or mental
disability, as evidenced by the Participant's eligibility for disability
benefits under Title II or Title XVI of the
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Federal Social Security Act. A Participant's Disability shall be deemed to occur
as of the effective date determined by the Social Security Administration.
Earnings Per Share. The net income per share of Harris Stock (on a
diluted basis) for the applicable Plan Year, as determined by the Company and as
publicly reported in filings made with the Securities and Exchange Commission or
otherwise. Notwithstanding the preceding sentence, for purposes of this Plan the
Earnings Per Share may be increased, decreased or otherwise adjusted by the
Management Development and Compensation Committee or the Board at any time
before the EPS Profit Sharing Contribution is paid to the Trust for such Plan
Year in recognition of unusual or nonrecurring events affecting the Company or
its financial statements or changes in applicable laws, regulations or
accounting principles, including, without limitation: (a) any stock dividend,
stock split, combination of shares, recapitalization, or other change in the
capital structure of the Company, (b) any merger, consolidation, spin-off,
split-off, spin-out, split-up, reorganization, partial or complete liquidation,
or other distribution of assets or issuance of rights or warrants to purchase
securities, (c) any other corporate transaction or event having an effect
similar to any of the foregoing or (d) any other extraordinary nonrecurring
event.
Effective Date. The effective date of this amendment and restatement
of the Plan, which, with respect to the Company and any other Employer as of
December 31, 2002 shall, except as otherwise provided in Article 1, be January
1, 2003 and, with respect to an entity that becomes an Employer on or after
January 1, 2003, shall be the effective date as of which the Plan is adopted by
such entity.
Eligible Employee. An Employee other than an Employee (a) the terms
of whose employment are subject to a collective bargaining agreement which does
not provide for the
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participation of such Employee in the Plan; (b) who does not receive any
Compensation payable in United States dollars; (c) who is not treated as an
employee of an Employer on such Employer's payroll records (notwithstanding any
determination by a court or administrative agency that such individual is an
Employee); (d) who is not a United States citizen or a resident alien who
provides services in a location other than the United States or (e) who is
designated by the Company as belonging to the separate and distinct business
unit that is known as Harris Orkand Information Systems (business unit 00211)
(or such other designation and name for that unit that may be instituted from
time to time). No individual who renders services for an Employer shall be an
Eligible Employee if such individual renders services pursuant to an agreement
or arrangement (written or oral) (1) that such services are to be rendered by
the individual as an independent contractor; (2) with an entity, including a
leasing organization within the meaning of section 414(n)(2) of the Code, that
is not an Employer or Affiliate or (3) that contains a waiver of participation
in the Plan.
Eligible Profit Sharing Participant. For any Plan Year, a
Participant who has completed a Year of Service on or prior to the last day of
the applicable Plan Year and who (a) is actively employed as an Eligible
Employee on the earlier of (1) the last day of such Plan Year or (2) the June
30th nearest to the last day of such Plan Year (the "Eligibility Date"); (b) was
actively employed as an Eligible Employee during such Plan Year but is not
actively employed on the Eligibility Date due to Leave of Absence or a period of
Qualified Military Service; or (c) was actively employed as an Eligible Employee
during such Plan Year but terminated employment during such Plan Year (1) on or
after the attainment of age 55, (2) due to death or Disability, (3) as a result
of a Reduction in Force or (4) as a result of a transfer from employment with an
Employer to employment with an Affiliate that is not an Employer.
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Employee. An individual whose relationship with an Employer is,
under common law, that of an employee.
Employer. The Company or any other entity that, with the consent of
the Compensation Committee, elects to participate in the Plan in the manner
described in Section 14.1, including any successor entity that is substituted
for an Employer pursuant to Section 14.4. If an Employer withdraws from
participation in the Plan pursuant to Section 14.2, or terminates its
participation in the Plan pursuant to Section 17.3, it shall thereupon cease to
be an Employer. An entity shall cease being an Employer as of the date it ceases
to be an Affiliate, unless the Compensation Committee consents to such entity's
continued participation in the Plan.
ERISA. The Employee Retirement Income Security Act of 1974, as
amended.
Excess Compensation. The portion of a Participant's Compensation
that exceeds the Taxable Wage Base for the applicable Plan Year.
Executive Committee. The Executive and Finance Committee of the
Board (or such other committee of the Board as the Board may designate from time
to time). Reference herein to the Executive Committee also shall include any
person to whom the Executive Committee has delegated any of its authority
pursuant to Section 13.3.
Fiscal Year. The fiscal year of the Company.
Full-Time Employee. An Employee who regularly is scheduled by an
Employer to work 30 or more hours per week and who is not designated on the
payroll records of an Employer as a temporary Employee, intern, or co-op
Employee.
Harris Stock. Common stock of the Company.
Harris Stock Fund. An investment option, the assets of which consist
primarily of shares of Harris Stock.
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Highly Compensated Employee. For a Plan Year, any Employee who (a)
is a 5%-owner (as determined under section 416(i)(1) of the Code) at any time
during the current Plan Year or the preceding Plan Year or (b) for the preceding
Plan Year, was paid compensation in excess of $90,000 (as adjusted in accordance
with section 414(q)(1)(B) of the Code) from an Employer or Affiliate and was a
member of the "top-paid group" (as defined in section 414(q)(3) of the Code).
Hour of Service. Each hour for which an Employee is paid or entitled
to payment for the performance of duties for an Employer.
Investment Committee. The Investment Committee -- Employee Benefit
Plans of the Company. Reference herein to the Investment Committee also shall
include any person to whom the Investment Committee has delegated any of its
authority pursuant to Section 13.3.
Leave of Absence. A period of interruption of the active employment
of an Employee granted by an Employer or Predecessor Company with the
understanding that the Employee will return to active employment at the
expiration of such period (or such extension thereof granted by the Employer or
Predecessor Company). The term "Leave of Absence" does not include a period of
Qualified Military Service.
Matching Account. The account established pursuant to Section 8.1 to
which any matching contributions made for the benefit of a Participant pursuant
to Section 4.2, and earnings and losses thereon, are credited.
Maximum Contribution Percentage. The maximum percentage of a
Participant's Compensation for a payroll period that may be contributed to the
Plan pursuant to Section 5.1, as determined from time to time by the
Administrative Committee. The Administrative Committee in its sole discretion
may establish different Maximum Contribution Percentages with respect to
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Participants who are not Highly Compensated Employees for a given Plan Year and
Participants who are Highly Compensated Employees for such Plan Year, and with
respect to classes of Highly Compensated Employees for a given Plan Year.
Maximum Deferral Percentage. The maximum percentage of a
Participant's Compensation for a payroll period that may be contributed to the
Plan pursuant to Section 4.1(a), as determined from time to time by the
Administrative Committee. The Administrative Committee in its sole discretion
may establish different Maximum Deferral Percentages with respect to
Participants who are not Highly Compensated Employees for a given Plan Year and
Participants who are Highly Compensated Employees for such Plan Year, and with
respect to classes of Highly Compensated Employees for a given Plan Year.
Participant. An Eligible Employee who has satisfied the requirements
set forth in Section 3.1. An individual shall cease to be a Participant upon the
complete distribution of his or her vested Account.
Plan. The plan herein set forth, as from time to time amended.
Plan Year. The Fiscal Year.
Predecessor Company. Any entity (a) of which an Affiliate is a
successor by reason of having acquired all or substantially all of its business
and assets or (b) from which an Affiliate acquired a business formerly conducted
by such entity; provided, however, that in the case of any such entity that
continues to conduct a trade or business subsequent to the acquisition by an
Affiliate referred in (a) or (b) above, the status of such entity as a
Predecessor Company relates only to the period of time prior to the date of such
acquisition.
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Pre-Tax Account. The account established pursuant to Section 8.1 to
which any pre-tax contributions made for the benefit of a Participant pursuant
to Section 4.1, and earnings and losses thereon, are credited.
Profit Sharing Account. The account established pursuant to Section
8.1 to which any profit sharing contributions made for the benefit of a
Participant pursuant to Section 4.3, and earnings and losses thereon, are
credited.
Qualified Military Service. An individual's service in the uniformed
services (as defined in 38 U.S.C. Section 4303) if such individual is entitled
to reemployment rights under USERRA with respect to such service.
Reduction in Force. An involuntary or voluntary reduction in force,
as defined in the Company's Severance Pay Program.
Regulations. Written regulations promulgated by the Department of
Labor construing Title I of ERISA or by the Internal Revenue Service construing
the Code.
Rollover Account. The account established pursuant to Section 8.1 to
which any rollover contributions made by a Participant pursuant to Section 5.2,
and earnings and losses thereon, are credited.
Savings Account. The account established pursuant to Section 8.1 to
which any savings contributions under the Plan as in effect prior to July 1,
1983, and earnings and losses thereon, are credited.
Service. The aggregate of the periods during which an Employee is
employed by an Employer and any periods of employment or service taken into
account pursuant to Sections 11.3 and 11.4, subject to the following:
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(a) An Employee shall be deemed to be employed by an Employer during
(1) any period of absence from employment by an Employer that is of less
than twelve months' duration, (2) the first twelve months of any period of
absence from employment by an Employer for any reason other than the
Employee's quitting, retiring, being discharged or death, and (3) any
period of absence from employment by an Employer during which the Employee
is in Qualified Military Service, provided that the Employee returns to
the employ of an Employer within the period prescribed by USERRA.
(b) An Employee's period of employment by an entity other than an
Affiliate that becomes a Predecessor Company shall be included as Service
only to the extent expressly provided in the documents effecting the
acquisition or otherwise required by law.
(c) An Employee's period of employment by an entity in which the
Company owns less than 80% but more than 1% of the outstanding equity
interest (a "joint venture") shall be included as Service if (1) the
Company or its delegate designates employment with the joint venture as
eligible for service credit under the Plan; (2) such Employee was employed
by an Affiliate prior to such Employee's employment by the joint venture
and was not employed by any person or entity other than an Affiliate (an
"unrelated employer") between such Employee's employment by an Affiliate
and the joint venture; and (3) such Employee returns to employment with an
Affiliate following the Employee's termination of employment with the
joint venture without having been employed by an unrelated employer
between such Employee's employment by the joint venture and an Affiliate.
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(d) Solely for purposes of determining the nonforfeitable portion of
a Participant's Account under Section 9.2(b), if an Employee (1) is
terminated by an Employer or Affiliate in connection with a Reduction in
Force and (2) has, as of the date of such termination, completed at least
One Year of Service, the Service of the Employee shall include the first
twelve months of absence from employment, effective as of the date of such
termination of employment.
Service shall be computed in terms of completed years and completed days.
Taxable Wage Base. The maximum amount of earnings that may be
considered wages under section 3121(a)(1) of the Code, except for purposes of
Medicare taxes, as in effect on the first day of a Plan Year.
Trust. The trust described in Section 7.1 and created by agreement
between the Company and the Trustee.
Trust Fund. All money and property of every kind of the Trust held
by the Trustee pursuant to the terms of the agreement governing the Trust.
Trustee. The person or entity appointed by the Executive Committee
and serving as trustee of the Trust or, if there is more than one such trustee
acting at a particular time, all of such trustees collectively.
USERRA. The Uniformed Services Employment and Reemployment Rights
Act of 1994, as amended.
Valuation Date. Each day on which the New York Stock Exchange is
open for trading and any other day determined by the Administrative Committee.
Year of Service. A period of Service of 365 days.
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ARTICLE 3
PARTICIPATION
Section 3.1. Eligibility for Participation. Each Eligible Employee
who was a Participant immediately before the Effective Date shall continue to be
a Participant as of the Effective Date. Each other Eligible Employee who is a
Full-Time Employee shall become a Participant on the day he or she first
performs an Hour of Service. Each other Eligible Employee who is not a Full-Time
Employee shall become a Participant on the day he or she first completes a Year
of Service.
Section 3.2. Election of Pre-Tax Contributions and After-Tax
Contributions. (a) Participant Election. A Participant who desires to make
pre-tax contributions or after-tax contributions to the Plan shall make an
election, in accordance with procedures prescribed by the Administrative
Committee, specifying the Participant's chosen rate of such contributions. Such
election shall authorize the Participant's Employer to reduce the Participant's
Compensation by the amount of any such pre-tax contributions, shall authorize
the Participant's Employer to make regular payroll deductions of any such
after-tax contributions, shall specify the Participant's investment election as
described in Section 8.2(a) and shall evidence the Participant's acceptance and
agreement to all provisions of the Plan. Any election made pursuant to this
Section 3.2(a) shall be effective only with respect to Compensation not
immediately available to the Participant as of the effective date of such
election and shall be effective as of the first payroll period commencing after
the date on which the election is received, or such later date as may be
administratively practicable.
(b) Deemed Election for Full-Time Employees. A Participant who is a
Full-Time Employee and who does not at the time and in the manner prescribed by
the Administrative
16
Committee elect otherwise shall be deemed to have elected to make pre-tax
contributions to the Plan each payroll period at the rate of 6% of the
Participant's Compensation for such payroll period and to have authorized the
Participant's Employer to reduce his or her Compensation by the amount thereof.
Any deemed election described in this Section 3.2(b) shall be effective only
with respect to Compensation not immediately available to the Participant as of
the effective date of the deemed election and shall be effective as of the first
payroll period commencing after the Participant becomes eligible to participate
in the Plan, or such later date as may be administratively practicable.
Section 3.3. Transfers to Affiliates. If a Participant is
transferred from one Employer to another Employer or from an Employer to an
Affiliate that is not an Employer, such transfer shall not terminate the
Participant's participation in the Plan, and such Participant shall continue to
participate in the Plan until an event occurs which would have entitled the
Participant to a complete distribution of the Participant's vested interest in
his or her Account had the Participant continued to be employed by an Employer
until the occurrence of such event. Notwithstanding the foregoing, a Participant
shall not be entitled to make pre-tax contributions, after-tax contributions or
rollover contributions to the Plan, to receive under the Plan allocations of
matching contributions or to receive under the Plan allocations of profit
sharing contributions during any period of employment by an Affiliate that is
not an Employer, and periods of employment by an Affiliate that is not an
Employer shall be taken into account only to the extent set forth in Section
11.3. Payments that are received by a Participant from an Affiliate that is not
an Employer shall not be treated as Compensation for any purpose under the Plan.
17
ARTICLE 4
PRE-TAX, MATCHING AND PROFIT SHARING CONTRIBUTIONS
Section 4.1. Pre-Tax Contributions. (a) Initial Election. Subject to
the limitations set forth in Article 6, each Employer shall make a pre-tax
contribution for each payroll period on behalf of each Participant who is an
Eligible Employee of such Employer in an amount equal to a whole percentage of
such Participant's Compensation for such payroll period as elected by the
Participant pursuant to Section 3.2. The percentage of Compensation so
designated by a Participant for a payroll period may not be less than 1% and may
not be more than the Maximum Deferral Percentage with respect to such
Participant. Notwithstanding the foregoing, the aggregate of a Participant's
pre-tax contributions for a payroll period pursuant to this Section 4.1(a) and a
Participant's after-tax contributions for a payroll period pursuant to Section
5.1 may not exceed an amount equal to the Maximum Deferral Percentage with
respect to such Participant.
(b) Changes in the Rate or Suspension of Pre-Tax Contributions. A
Participant's pre-tax contributions shall continue in effect at the rate elected
by the Participant pursuant to Section 3.2 until the Participant changes or
suspends such election. A Participant may change or suspend such election at
such time and in such manner as may be prescribed by the Administrative
Committee, provided that only the last change made by a Participant during a
payroll period shall be effectuated. Such change or suspension shall be
effective as of the first payroll period commencing after the date on which the
change or suspension is received, or such later payroll period as may be
administratively practicable. A Participant who has suspended pre-tax
contributions pursuant to this subsection may resume pre-tax contributions by
making an election at such time and in such manner as may be prescribed by the
Administrative Committee.
18
(c) Catch-Up Contributions. Each Participant who (i) is eligible to
make pre-tax contributions under the Plan and (ii) will attain age 50 before the
end of a calendar year ending with or within a Plan Year shall be eligible to
have pre-tax contributions made on his or her behalf in addition to those
described in Section 4.1(a) ("catch-up contributions"). Catch-up contributions
shall be elected, made, suspended, resumed and credited in accordance with and
subject to the rules and limitations of section 414(v) of the Code and such
other rules and limitations prescribed by the Administrative Committee from time
to time; provided, however, that (i) the amount of catch-up contributions made
on behalf of a Participant during a calendar year shall not exceed the maximum
amount permitted under section 414(v)(2) of the Code for the calendar year
($2,000 for 2003); (ii) the amount of catch-up contributions made on behalf of a
Participant for a payroll period shall not exceed the percentage of the
Participant's Compensation that is established from time to time by the
Administrative Committee and (iii) no matching contributions shall be made
pursuant to Section 4.2 in connection with catch-up contributions. Catch-up
contributions shall not be taken into account for purposes of Sections 6.1 and
6.3, and the Plan shall not be treated as failing to satisfy its provisions
implementing the requirements of section 401(k)(3), 401(k)(11), 401(k)(12),
410(b) or 416 of the Code, as applicable, by reason of the making of catch-up
contributions.
Section 4.2. Matching Contributions. (a) Basic. Subject to the
limitations set forth in Article 6, each Employer shall make a matching
contribution for each payroll period on behalf of each Participant who is an
Eligible Employee of such Employer, and who has completed a Year of Service, in
an amount equal to 100% of the aggregate of (i) the pre-tax contribution made on
behalf of such Participant pursuant to Section 4.1 and (ii) the after-tax
contribution made on behalf of such Participant pursuant to Section 5.1,
provided that the
19
matching contribution shall not exceed 6% of the Participant's Compensation for
such payroll period.
(b) Discounted Stock Contribution. Subject to the limitations set
forth in Article 6, each Employer may, in its discretion, make a matching
contribution for each payroll period (in addition to the matching contribution
made pursuant to Section 4.2(a)) on behalf of each Participant who is an
Eligible Employee of such Employer and who (i) has completed a Year of Service,
(ii) for such payroll period makes a pre-tax contribution to the Plan pursuant
to Section 4.1 or an after-tax contribution to the Plan pursuant to Section 5.1
and (iii) elects that all or a portion of such contribution be invested in the
Harris Stock Fund (with the result that pursuant to Section 8.2(c) any related
matching contributions also are invested in the Harris Stock Fund). The amount
of any matching contribution made pursuant to this Section 4.2(b) shall be
determined in the Company's sole discretion.
(c) Special Encoda Matching Contribution. Notwithstanding any
provision of the Plan to the contrary, matching contributions for the period
from January 1, 2005 through June 30, 2005 to Participants who are Eligible
Employees of Encoda Systems Inc. shall be calculated as follows. Matching
contributions shall be in the amount specified in Subsection (a) of this Section
4.2; provided, however, that the matching contributions relating to pre-tax or
after-tax contributions that are attributable to the annual bonus that is paid
to such Eligible Employees in February of 2005 shall be in an amount equal to
twenty-five percent (25%) of such contributions; subject to a maximum of 1.25%
of such bonus (and also subject to any other limitations contained in the Plan).
Section 4.3. Profit Sharing Contributions.
(a) EPS Profit Sharing Contributions.
20
(1) Subject to the limitations below and set forth in Article 6 and
Section 8.6(c), for each Plan Year the Employers shall make a profit
sharing contribution (the "EPS Profit Sharing Contribution") to the Trust
on behalf of each Eligible Profit Sharing Participant in an amount equal
to a specified percentage of such Participant's Compensation; provided
however, that a EPS Profit Sharing Contribution shall not be made for any
Plan Year in which the Company does not have any net profits (which, for
this purpose, are defined as net income or profits for the Plan Year
determined on the basis of the Company's books of account in accordance
with generally accepted accounting principles, without any reduction for
taxes based upon income or for contributions made to this Plan or any
qualified retirement plan). The EPS Profit Sharing Contribution (if any)
shall be allocated to the Account of each Eligible Profit Sharing
Participant in the manner and amounts provided as follows:
(i) Percentage applicable to Compensation up to the Taxable
Wage Base,
Earnings Percent of Compensation
Per Share Up to Taxable Wage Base
- --------------------------------------------------------------------------------- -----------------------
If Earnings Per Share are Less than or Equal to Minimum Earnings Per Share Target 2%
If Earnings Per Share Equal or Exceed Maximum Earnings Per Share Target 6%
(ii) The EPS Profit Sharing Contribution percentage
applicable to Excess Compensation will be double the
percentage
21
applicable for Compensation up to the Taxable Wage Base,
subject to the restrictions in Section 8.6(c).
(iii) For purposes of determining the amount of the EPS Profit
Sharing Contribution hereunder, if Earnings Per Share
for a particular Plan Year exceeds the Minimum Earnings
Per Share Target but is less than the Maximum Target
Earnings Per Share Target, the EPS Profit Sharing
Contribution shall be determined using straight line
interpolations.
(iv) Notwithstanding the foregoing, in no event shall the
total EPS Profit Sharing Contribution amount exceed the
Company's net profits (as previously defined) for the
Plan Year.
(2) Establishment of Earnings Per Share Targets. No later than 90
days after the first day of each Plan Year, the Compensation Committee or
the Board shall establish the Minimum Earnings Per Share Target and the
Maximum Earnings Per Share Target for such Plan Year.
(b) Special Profit Sharing Contributions. Subject to the limitations set
forth in Article 6 and Section 8.6, the Employers, at the direction of the
Company, may, in their discretion, make a profit sharing contribution for a Plan
Year (in addition to the EPS Profit Sharing Contribution made pursuant to
subsection (a) above, if any) in a specified dollar amount or pursuant to a
formula, to be allocated to Eligible Profit Sharing Participants in accordance
with the following formula. A special profit sharing contribution for a Plan
Year made pursuant to this Section 4.3(b) shall be allocated among the Eligible
Profit Sharing Participants in the
22
proportion that the aggregate of the Compensation and Excess Compensation paid
by the Employers or the Company to each such Eligible Profit Sharing Participant
during such Plan Year bears to the aggregate of the total Compensation and
Excess Compensation paid by the Employers or the Company to all such Eligible
Profit Sharing Participants during such Plan Year.
Section 4.4. Deposit of Contributions. An Employer shall deliver to
the Trustee any pre-tax contributions for a payroll period as soon as
administratively practicable after the date such contributions otherwise would
have been paid to the Participants as cash compensation, but in no event later
than the 15th business day of the month following the month during which such
contributions otherwise would have been paid to the Participants. An Employer
shall deliver to the Trustee any matching contributions for a payroll period
concurrently with the delivery of the pre-tax contributions or after-tax
contributions to which such matching contributions relate. An Employer shall
deliver to the Trustee any profit sharing contribution for a Plan Year no later
than the date prescribed by the Code, including any authorized extensions
thereof, for filing such Employer's federal income tax return for the Fiscal
Year which ends with such Plan Year.
Section 4.5. Form of Contributions. Pre-tax contributions, matching
contributions and profit sharing contributions shall be contributed to the Plan
in cash; provided, however, that if a Participant elects that pre-tax
contributions and matching contributions made on his or her behalf be invested
in the Harris Stock Fund, the Company in its discretion may make such
contributions in shares of Harris Stock, which may be contributed at a discount
from fair market value. The portion of any such contribution that is
attributable to a discount from fair market value on shares of Harris Stock
shall be disregarded for purposes of determining (i)
23
whether the pre-tax contributions made on behalf of a Participant exceed the
Maximum Deferral Percentage under Section 4.1(a) with respect to such
Participant; (ii) whether the pre-tax contributions made on behalf of a
Participant exceed the annual limit on pre-tax contributions described in
Section 6.1(a); and (iii) whether the matching contributions made on behalf of a
Participant exceed 6% of the Participant's Compensation for a payroll period, as
described in Section 4.2.
ARTICLE 5
AFTER-TAX AND ROLLOVER CONTRIBUTIONS
Section 5.1. After-Tax Contributions. (a) Initial Election. Subject
to the limitations set forth in Article 6, each Participant may elect in
accordance with Section 3.2 to make an after-tax contribution for each payroll
period by payroll deduction. The percentage of a Participant's Compensation for
a payroll period subject to such election shall be a whole percentage not less
than 1% and not more than the Maximum Contribution Percentage with respect to
such Participant. Notwithstanding the foregoing, the aggregate of a
Participant's pre-tax contributions for a payroll period pursuant to Section
4.1(a) and a Participant's after-tax contributions for a payroll period pursuant
to this Section 5.1 may not exceed an amount equal to the Maximum Contribution
Percentage with respect to such Participant. An Employer shall deliver to the
Trustee any after-tax contributions for a payroll period as soon as
administratively practicable after the date such contributions otherwise would
have been paid to the Participants as cash compensation, but in no event later
than the 15th business day of the month following the month during which such
contributions otherwise would have been paid to the Participants.
(b) Changes in the Rate or Suspension of After-Tax Contributions. A
Participant's after-tax contributions shall continue in effect at the rate
elected by the Participant
24
pursuant to Section 3.2 until the Participant changes or suspends such election.
A Participant may change or suspend such election at such time and in such
manner as may be prescribed by the Administrative Committee, provided that only
the last change made by a Participant during a payroll period shall be
effectuated. Such change or suspension shall be effective as of the first
payroll period commencing after the date on which the change or suspension is
received, or such later payroll period as may be administratively practicable. A
Participant who has suspended after-tax contributions pursuant to this
subsection may resume after-tax contributions by making an election at such time
and in such manner as may be prescribed by the Administrative Committee.
(c) Form of Contributions. After-tax contributions shall be
contributed to the Plan in cash; provided, however, that if a Participant elects
that after-tax contributions made on his or her behalf be invested in the Harris
Stock Fund, the Company in its discretion may make such contributions in shares
of Harris Stock, which may be contributed at a discount from fair market value.
The portion of any such contribution that is attributable to a discount from
fair market value on shares of Harris Stock shall be disregarded for purposes of
determining whether the after-tax contributions made on behalf of a Participant
exceed the Maximum Contribution Percentage under Section 5.1(a) with respect to
such Participant.
Section 5.2. Rollover Contributions. (a) Requirements for Rollover
Contributions. If a Participant receives an "eligible rollover distribution"
(within the meaning of section 402(c)(4) of the Code) from an employees' trust
described in section 401(a) of the Code that is exempt from tax under section
501(a) of the Code, from a qualified annuity plan described in section 403(a) of
the Code or from an individual retirement account or annuity described in
section 408(a) or (b) of the Code (provided that such amount is eligible to be
rolled over from
25
such individual retirement account or annuity and no amount in such individual
retirement account or annuity is attributable to any source other than an
eligible rollover distribution from an employees' trust described in section
401(a) of the Code that is exempt from tax under section 501(a) of the Code or
from a qualified annuity plan described in section 403(a) of the Code, and any
earnings thereon), then such Participant may contribute to the Plan an amount
that does not exceed the amount of such eligible rollover distribution
(including the proceeds from the sale of any property received as part of such
eligible rollover distribution). Notwithstanding the foregoing, rollover
contributions to the Plan may not include any portion of an eligible rollover
distribution that consists of after-tax employee contributions. A rollover
contribution may be in the form of cash or, with the consent of the
Administrative Committee or its delegate, a promissory note evidencing an
outstanding loan balance.
(b) Delivery of Rollover Contributions. Any rollover contribution
made pursuant to this Section shall be delivered by the Participant to the
Trustee on or before the 60th day after the day on which the Participant
receives the distribution (or on or before such later date as may be prescribed
by law) or shall be transferred to the Trustee on behalf of the Participant
directly from the trust from which the eligible rollover distribution is made.
Any such contribution must be accompanied by any information or documentation in
connection therewith requested by the Administrative Committee or the Trustee.
Notwithstanding the foregoing, the Administrative Committee shall not permit a
rollover contribution if in its judgment accepting such contribution would cause
the Plan to violate any provision of the Code or Regulations.
26
ARTICLE 6
LIMITATIONS ON CONTRIBUTIONS
Section 6.1. Annual Limit on Pre-Tax Contributions. (a) General
Rule. Notwithstanding the provisions of Section 4.1, pre-tax contributions made
on behalf of a Participant pursuant to such Section for any calendar year shall
not exceed the dollar limitation in effect for such calendar year under section
402(g) of the Code, except to the extent permitted under Section 4.1(c) of the
Plan and section 414(v) of the Code with respect to "catch-up contributions."
(b) Excess Pre-Tax Contributions.
(1) Characterization as After-Tax Contributions. Except to the
extent set forth in Section 4.1(c) of the Plan and section 414(v) of
the Code with respect to "catch-up contributions," if for any
calendar year the pre-tax contributions to the Plan or the aggregate
of the pre-tax contributions to the Plan plus amounts contributed
under other plans or arrangements described in section 401(k),
403(b), 408(k) or 408(p) of the Code for a Participant reach the
limit imposed by subsection (a) of this Section for such calendar
year, any contributions under the Plan during the calendar year that
exceed such limit ("excess deferrals") shall be characterized as
after-tax contributions.
(2) Distribution. Notwithstanding the foregoing, and except to
the extent set forth in Section 4.1(c) of the Plan and section
414(v) of the Code with respect to "catch-up contributions," if any
excess deferrals of a Participant are not characterized as after-tax
contributions, because of the limitation set forth in Section 5.1 on
the amount of after-tax contributions that may be made to the Plan
27
or otherwise, such Participant shall, pursuant to such rules and at
such time following such calendar year as determined by the
Administrative Committee, be allowed to submit a written request
that the excess deferrals, plus any income and minus any loss
allocable thereto, be distributed to the Participant. The amount of
any income or loss allocable to such excess deferrals shall be
determined pursuant to Regulations. Such amount of excess deferrals,
as adjusted for income or loss, shall be distributed to the
Participant no later than April 15 following the calendar year for
which such contributions were made. Notwithstanding the provisions
of this subsection (b)(2), any such excess deferrals shall be
treated as "annual additions" for purposes of Section 6.3 for the
limitation year in which such contributions were made. The amount of
excess deferrals that may be distributed under this subsection
(b)(2) with respect to a Participant for a calendar year shall be
reduced by any amounts previously distributed pursuant to Section
6.2(d)(1) with respect to such Participant for such year.
Section 6.2. Limits on Contributions for Highly Compensated
Employees.
(a) Actual Deferral Percentage Test Imposed by Section 401(k)(3) of
the Code. Notwithstanding the provisions of Section 4.1, if the pre-tax
contributions made pursuant to Section 4.1 for a Plan Year fail, or in the
judgment of the Administrative Committee are likely to fail, to satisfy both of
the tests set forth in paragraphs (1) and (2) of this subsection, the
adjustments prescribed in Section 6.2(d)(1) shall be made. Any pre-tax
contributions which are "catch-up contributions" described in Section 4.1(c)
shall not be considered to be pre-tax contributions for purposes of determining
whether the tests set forth in paragraphs (1) and (2) of
28
this subsection are satisfied or for purposes of making any adjustments
prescribed by Section 6.2(d)(1).
(1) The HCE average deferral percentage for such year does not
exceed the product of the NHCE average deferral percentage for such
year and 1.25.
(2) The HCE average deferral percentage for such year (i) does
not exceed the NHCE average deferral percentage for such year by
more than two percentage points and (ii) does not exceed the product
of the NHCE average deferral percentage for such year and 2.0.
(b) Actual Contribution Percentage Test Imposed by Section 401(m) of
the Code. Notwithstanding the provisions of Sections 4.2 and 5.1, if the
aggregate of the matching contributions made pursuant to Section 4.2 and the
after-tax contributions made pursuant to Section 5.1 for a Plan Year fail, or in
the judgment of the Administrative Committee are likely to fail, to satisfy both
of the tests set forth in paragraphs (1) and (2) of this subsection, the
adjustments prescribed in Section 6.2(d)(2) shall be made.
(1) The HCE average contribution percentage for such year does
not exceed the product of the NHCE average contribution percentage
for such year and 1.25.
(2) The HCE average contribution percentage for such year (i)
does not exceed the NHCE average contribution percentage for such
year by more than two percentage points and (ii) does not exceed the
product of the NHCE average contribution percentage for such year
and 2.0.
29
(c) Definitions and Special Rules. For purposes of this Section, the
following definitions and special rules shall apply:
(1) The "actual deferral percentage test" refers collectively
to the tests set forth in paragraphs (1) and (2) of subsection (a)
of this Section relating to pre-tax contributions. The actual
deferral percentage test shall be satisfied if either of such tests
are satisfied.
(2) The "HCE average deferral percentage" for a Plan Year is a
percentage determined for the group of Eligible Employees who are
eligible to make pre-tax contributions for the current Plan Year and
who are Highly Compensated Employees for the current Plan Year. Such
percentage shall be equal to the average of the ratios, calculated
separately for each such Eligible Employee to the nearest
one-hundredth of one percent, of the pre-tax contributions for the
benefit of such Eligible Employee for the current Plan Year (if any)
to the total compensation for the current Plan Year paid to such
Eligible Employee.
(3) The "NHCE average deferral percentage" for a Plan Year is
a percentage determined for the group of Eligible Employees who were
eligible to make pre-tax contributions for the immediately preceding
Plan Year and who were not Highly Compensated Employees for the
immediately preceding Plan Year. Such percentage shall be equal to
the average of the ratios, calculated separately for each such
Eligible Employee to the nearest one-hundredth of one percent, of
the pre-tax contributions for the benefit of such Eligible Employee
for
30
the immediately preceding Plan Year (if any) to the total
compensation for the immediately preceding Plan Year paid to such
Eligible Employee.
(4) The "actual contribution percentage test" refers
collectively to the tests set forth in paragraphs (1) and (2) of
subsection (b) of this Section relating to matching contributions
and after-tax contributions. The actual contribution percentage test
shall be satisfied if either of such tests are satisfied.
(5) The "HCE average contribution percentage" for a Plan Year
is a percentage determined for the group of Eligible Employees who
are eligible to have matching contributions, after-tax
contributions, or in the discretion of the Administrative Committee
and to the extent permitted under rules prescribed by the Secretary
of the Treasury or otherwise under the law, pre-tax contributions,
made for their benefit for the current Plan Year and who are Highly
Compensated Employees for the current Plan Year. Such percentage
shall be equal to the average of the ratios, calculated separately
for each such Eligible Employee to the nearest one-hundredth of one
percent, of the matching contributions, after-tax contributions and,
in the discretion of the Administrative Committee and to the extent
permitted under rules prescribed by the Secretary of the Treasury or
otherwise under the law, pre-tax contributions, made for the benefit
of such Eligible Employee for the current Plan Year (if any) to the
total compensation for the current Plan Year paid to such Eligible
Employee.
(6) The "NHCE average contribution percentage" for a Plan Year
is a percentage determined for the group of Eligible Employees who
were eligible to have matching contributions, after-tax
contributions, or in the discretion of the
31
Administrative Committee and to the extent permitted under rules
prescribed by the Secretary of the Treasury or otherwise under the
law, pre-tax contributions, made for their benefit for the
immediately preceding Plan Year and who were not Highly Compensated
Employees for the immediately preceding Plan Year. Such percentage
shall be equal to the average of the ratios, calculated separately
for each such Eligible Employee to the nearest one-hundredth of one
percent, of the matching contributions, after-tax contributions and,
in the discretion of the Administrative Committee and to the extent
permitted under rules prescribed by the Secretary of the Treasury or
otherwise under the law, pre-tax contributions, made for the benefit
of such Eligible Employee for the immediately preceding Plan Year
(if any) to the total compensation for the immediately preceding
Plan Year paid to such Eligible Employee.
(7) The term "compensation" shall have the meaning set forth
in section 414(s) of the Code or, in the discretion of the
Administrative Committee, any other meaning in accordance with the
Code for these purposes.
(8) If the Plan and one or more other plans of an Employer to
which pre-tax contributions, matching contributions or employee
contributions (as such terms are defined for purposes of section
401(m) of the Code), or qualified non-elective contributions (as
such term is defined in section 401(m)(4)(C) of the Code), are made
are treated as one plan for purposes of section 410(b) of the Code,
such plans shall be treated as one plan for purposes of this
Section. If a Highly Compensated Employee participates in the Plan
and one or more other
32
plans of an Employer to which any such contributions are made, all
such contributions shall be aggregated for purposes of this Section.
(9) Solely for purposes of this Section 6.2, if shares of
Harris Stock are contributed to the Plan at a discount from fair
market value in connection with a Participant's election to invest
his or her pre-tax contribution in the Harris Stock Fund, then the
amount of such discount shall be treated as a matching contribution.
(d) Adjustments to Comply with Limits.
(1) Adjustments to Comply with Actual Deferral Percentage
Test. The Administrative Committee shall cause to be made such
periodic computations as it shall deem necessary or appropriate to
determine whether the actual deferral percentage test will be
satisfied during a Plan Year, and, if it appears to the
Administrative Committee that such test will not be satisfied, the
Administrative Committee shall take such steps as it deems necessary
or appropriate to adjust the pre-tax contributions made pursuant to
Section 4.1 for all or a portion of the remainder of such Plan Year
for the benefit of some or all of the Highly Compensated Employees
to the extent necessary in order for the actual deferral percentage
test to be satisfied. If, after the end of the Plan Year, the
Administrative Committee determines that, notwithstanding any
adjustments made pursuant to the preceding sentence, the actual
deferral percentage test was not satisfied, the Administrative
Committee shall calculate a total amount by which pre-tax
contributions must be reduced in order to satisfy such test in the
manner prescribed by section 401(k)(8)(B) of the Code (the "excess
contributions
33
amount"). The amount of pre-tax contributions to be reduced for each
Participant who is a Highly Compensated Employee shall be determined
by first reducing the pre-tax contributions of each Participant
whose actual dollar amount of pre-tax contributions for such Plan
Year is highest until such reduced dollar amount equals the next
highest actual dollar amount of pre-tax contributions made for such
Plan Year on behalf of any Highly Compensated Employee or until the
total reduction equals the excess contributions amount. If further
reductions are necessary, then the pre-tax contributions on behalf
of each Participant who is a Highly Compensated Employee and whose
actual dollar amount of pre-tax contributions for such Plan Year is
the highest (determined after the reduction described in the
preceding sentence) shall be reduced in accordance with the
preceding sentence. Such reductions shall continue to be made to the
extent necessary so that the total reduction equals the excess
contributions amount. The portion of a Participant's pre-tax
contributions to be reduced in accordance with this Section
6.2(d)(1) shall be recharacterized as an after-tax contribution, and
the Participant shall be notified of such recharacterization and the
tax consequences thereof no later than 2-1/2 months after the end of
the Plan Year (or if notification by such date is administratively
impracticable, no later than the last day of the subsequent Plan
Year). The amount of a Participant's pre-tax contributions to be
reduced in accordance with this Section shall be reduced by any
excess deferrals previously distributed to such Participant pursuant
to Section 6.1 in order to comply with the limitations of section
402(g) of the Code. The amount of any
34
income or loss allocable to any such reductions shall be determined
pursuant to the applicable Regulations promulgated by the U.S.
Treasury Department.
(2) Adjustments to Comply with Actual Contribution Percentage
Test. The Administrative Committee shall cause to be made such
periodic computations as it shall deem necessary or appropriate to
determine whether the average contribution percentage test will be
satisfied during a Plan Year, and, if it appears to the
Administrative Committee that such test will not be satisfied, the
Administrative Committee shall take such steps as it deems necessary
or appropriate to adjust the matching contributions and the
after-tax contributions made pursuant to Section 4.2 and 5.1,
respectively, for all or a portion of the remainder of such Plan
Year on behalf of some or all of the Highly Compensated Employees to
the extent necessary in order for the average contribution
percentage test to be satisfied. If, after the end of the Plan Year,
the Administrative Committee determines that, notwithstanding any
adjustments made pursuant to the preceding sentence, the average
contribution percentage test was not satisfied, the Administrative
Committee shall, in its discretion, (1) allocate a qualified
nonelective contribution pursuant to Section 6.2(e) or (2) reduce
the matching contributions and after-tax contributions made on
behalf of each Participant who is a Highly Compensated Employee and
whose actual dollar amount of matching contributions and after-tax
contributions for such Plan Year is the highest in the same manner
described in subparagraph (1) of this paragraph to the extent
necessary to comply with the average contribution percentage test.
The reduction described in the preceding sentence shall be made
first with respect
35
to a Participant's after-tax contributions in excess of six percent
of Compensation, second with respect to any remaining after-tax
contributions and any matching contributions attributable thereto,
and third with respect to any other matching contributions. With
respect to contributions to be so reduced, no later than 2-1/2
months after the end of the Plan Year (or if correction by such date
is administratively impracticable, no later than the last day of the
subsequent Plan Year), the Administrative Committee shall cause to
be distributed to each such Participant the amount of such
reductions made with respect to vested matching contributions to
which such Participant would be entitled under the Plan if such
Participant had terminated service on the last day of the Plan Year
for which such contributions are made (or on the date of the
Participant's actual termination of employment, if earlier) and with
respect to after-tax contributions (plus any income and minus any
loss allocable thereto), and any remaining amount of such reductions
(plus any income and minus any loss allocable thereto) shall be
forfeited. Any amounts forfeited pursuant to this paragraph shall be
treated in the same manner as forfeitures described in Section
9.2(b). The amount of any such income or loss allocable to any such
reduction to be so distributed or forfeited shall be determined
pursuant to applicable Regulations promulgated by the U.S. Treasury
Department.
(e) Qualified Nonelective Contributions. Subject to the limitations
set forth in Sections 6.3 and 6.4, and to the extent permitted by Regulations or
other pronouncements of the Internal Revenue Service, for purposes of satisfying
the actual contribution percentage test set forth in Section 6.2(b), the
Employers may contribute for a Plan Year such amount, if any, as
36
may be designated as a "qualified nonelective contribution" within the meaning
of section 401(m)(4)(C) of the Code. Any qualified nonelective contribution to
the Plan shall be allocated to the Accounts of those Participants who are not
Highly Compensated Employees for the Plan Year with respect to which such
qualified nonelective contribution is made and who are actively employed by the
contributing Employer on the date such contribution is made, beginning with the
Participant with the lowest Compensation for such Plan Year and allocating the
maximum amount permissible under Section 6.3 before allocating any portion of
such qualified nonelective contribution to the Participant with the next lowest
Compensation for the Plan Year. Such allocation shall continue until the Plan
satisfies the requirements in Section 6.2(b) or until the amount of such
qualified nonelective contribution has been completely allocated. Any such
qualified nonelective contributions and earnings and losses thereon shall be
accounted for separately by the Trustee and shall be distributable in accordance
with the provisions of Article 9. Notwithstanding any provision of the Plan to
the contrary, the portion of a Participant's account derived from qualified
nonelective contributions at all times shall be nonforfeitable.
Section 6.3. Maximum Annual Additions under Section 415 of the Code.
Notwithstanding any other provision of the Plan, and except to the extent
permitted under Section 4.1(c) of the Plan and section 414(v) of the Code with
respect to "catch-up contributions," the amounts allocated to the Account of
each Participant for any limitation year shall be limited so that the aggregate
annual additions for such year to the Participant's Account and to the
Participant's accounts in all other defined contribution plans maintained by an
employer shall not exceed the lesser of:
(a) $40,000 (as adjusted pursuant to section 415(d) of the Code);
and
37
(b) 100% of the Participant's compensation for such limitation year
(or such other percentage of compensation set forth in section 415(c) of the
Code).
If the annual additions to a Participant's Account exceed the
limitations set forth above for any limitation year (i) as a result of a
reasonable error in estimating a Participant's annual compensation, (ii) as a
result of a reasonable error in determining the amount of pre-tax contributions
that may be made by a Participant under section 415 of the Code or (iii) under
other limited facts and circumstances as determined by the Commissioner of
Internal Revenue, the amounts to be allocated to such Participant's Account for
such year shall be reduced to the extent of the excess in the following order:
(1) Pre-tax contributions in excess of 6% of the Participant's
Compensation;
(2) Remaining pre-tax contributions and any matching
contributions attributable thereto on a pro rata basis;
(3) Profit sharing contributions;
(4) After-tax contributions in excess of 6% of the
Participant's Compensation; and
(5) Remaining after-tax contributions and any matching
contributions attributable thereto on a pro rata basis.
Any pre-tax contributions or after-tax contributions so reduced, plus earnings
thereon, shall be distributed to the Participant. Any matching contributions or
profit sharing contributions so reduced, plus earnings thereon, shall be held in
a segregated suspense account and shall be treated in the next limitation year
as matching contributions or profit sharing contributions, as the case may be,
thereby reducing amounts actually contributed by the Employers for such year.
38
Upon termination of the Plan, any balance in such suspense account shall be
returned to each Employer in the amount determined by the Administrative
Committee, but only if the allocation upon Plan termination of such amount to
Participants would cause all Participants to receive annual additions in excess
of the limitations of section 415 of the Code.
The "annual additions" for a Plan Year to a Participant's Account
and to the Participant's accounts in any other defined contribution plan is the
sum for such limitation year of:
(a) the amount of employer contributions (including pre-tax
contributions) allocated to the Participant's account, excluding, however, any
pre-tax contributions that are "catch-up contributions" made pursuant to Section
4.1(c) of the Plan and section 414(v) of the Code,
(b) the amount of forfeitures allocated to the Participant's
account,
(c) the amount allocated to any individual medical benefit account
(as defined in section 415(l) of the Code) maintained on behalf of the
Participant, and
(d) the amount of contributions by the Participant to any such plan,
but excluding any rollover contribution made thereto.
For purposes of this Section, the "limitation year" shall be the
Plan Year, the term "compensation" shall have the meaning set forth in U.S.
Treasury Regulation section 1.415-2(d)(10), the term "defined contribution plan"
shall have the meaning set forth in section 415(k)(1) of the Code, and a
Participant's employer shall include entities that are members of the same
controlled group (within the meaning of section 414(b) of the Code as modified
by section 415(h) of the Code) or affiliated service group (within the meaning
of section 414(m) of the Code) as the Participant's employer or under common
control (within the meaning of section
39
414(c) of the Code as modified by section 415(h) of the Code) with the
Participant's employer or such entities.
Section 6.4. Other Limitations on Employer Contributions. The
contributions of the Employers for a Plan Year shall not exceed the maximum
amount for which a deduction is allowable to such Employers for federal income
tax purposes for the fiscal year of such Employers that ends with such Plan
Year.
Any contribution made by an Employer by reason of a good faith
mistake of fact, or the portion of any contribution made by an Employer that
exceeds the maximum amount for which a deduction is allowable to such Employer
for federal income tax purposes by reason of a good faith mistake in determining
the maximum allowable deduction, shall upon the request of such Employer be
returned by the Trustee to the Employer. An Employer's request and the return of
any such contribution must be made within one year after such contribution was
mistakenly made or after the deduction of such excess portion of such
contribution was disallowed, as the case may be. The amount to be returned to an
Employer pursuant to this paragraph shall be the excess of (i) the amount
contributed over (ii) the amount that would have been contributed had there not
been a mistake of fact or a mistake in determining the maximum allowable
deduction. Earnings attributable to the mistaken contribution shall not be
returned to the Employer, but losses attributable thereto shall reduce the
amount to be so returned. If the return to the Employer of the amount
attributable to the mistaken contribution would cause the balance of any
Participant's Account as of the date such amount is to be returned (determined
as if such date coincided with the close of a Plan Year) to be reduced to less
than what would have been the balance of such Account as of such date had the
mistaken amount not been contributed, the amount to be returned to the Employer
shall be limited so as to avoid such reduction.
40
ARTICLE 7
TRUST AND INVESTMENT FUNDS
Section 7.1. Trust. A Trust shall be created by the execution of a
trust agreement between the Company (acting on behalf of the Employers) and the
Trustee. All contributions under the Plan shall be paid to the Trustee. The
Trustee shall hold all monies and other property received by it and invest and
reinvest the same, together with the income therefrom, on behalf of the
Participants collectively in accordance with the provisions of the trust
agreement. The Trustee shall make distributions from the Trust Fund at such time
or times to such person or persons and in such amounts as the Administrative
Committee directs in accordance with the Plan.
Section 7.2. Investments. (a) In General. The Investment Committee
shall establish an investment policy for the Plan. The Investment Committee
shall cause the Trustee to establish and maintain two or more separate
investment funds exclusively for the collective investment and reinvestment as
directed by Participants of amounts credited to their Accounts. Additional
investment funds may be established as determined by the Investment Committee
from time to time in its sole discretion. The Investment Committee, in its sole
discretion, may appoint investment managers to provide services in connection
with the investment funds established under the Plan.
(b) Harris Stock Fund. In addition to the investment funds
established pursuant to Section 7.2(a), the Investment Committee may cause the
Trustee to establish, operate and maintain a Harris Stock Fund. The assets of
the Harris Stock Fund shall be invested primarily in shares of Harris Stock. The
assets of the Harris Stock Fund also may be invested in short-term liquid
investments. Each Participant's interest in the Harris Stock Fund shall be
41
represented by units of participation, and each such unit shall represent a
proportionate interest in all the assets of such fund.
ARTICLE 8
PARTICIPANT ACCOUNTS
AND INVESTMENT ELECTIONS
Section 8.1. Participant Accounts. The Administrative Committee
shall establish and maintain, or cause the Trustee or such other agent as the
Administrative Committee may select, to establish and maintain a separate
Account for each Participant. Such Account shall be solely for accounting
purposes, and no segregation of assets of the Trust Fund among the separate
Accounts shall be required. Each Account shall consist of the following
subaccounts:
(a) if pre-tax contributions have been made for the benefit of a
Participant pursuant to Section 4.1, a Pre-Tax Account to which shall be
credited such amounts and subsequent earnings and losses thereon;
(b) if matching contributions have been made for the benefit of a
Participant pursuant to Section 4.2, a Matching Account to which shall be
credited such amounts and subsequent earnings and losses thereon;
(c) if profit sharing contributions have been made for the benefit
of a Participant pursuant to Section 4.3, a Profit Sharing Account to which
shall be credited such amounts and subsequent earnings and losses thereon;
(d) if after-tax contributions have been made by a Participant
pursuant to Section 5.1, an After-Tax Account to which shall be credited such
amounts and subsequent earnings and losses thereon;
42
(e) if a rollover contribution has been made by a Participant
pursuant to Section 5.2, a Rollover Account to which shall be credited such
amount and subsequent earnings and losses thereon; and
(f) if applicable, a Savings Account to which shall be credited a
Participant's savings contributions under the Plan as in effect prior to July 1,
1983, and subsequent earnings and losses thereon.
The Administrative Committee shall establish and maintain, or cause
the Trustee or such other agent as the Administrative Committee may select, to
establish and maintain investment subaccounts with respect to each investment
fund described in Section 7.2 to which amounts contributed under the Plan shall
be credited according to each Participant's investment elections pursuant to
Section 8.2. All such investment subaccounts shall be solely for accounting
purposes, and there shall be no segregation of assets within the investment
funds among the separate investment subaccounts.
Section 8.2. Investment Elections. (a) Initial Election. Each
Participant shall make, in the manner prescribed by the Administrative
Committee, an investment election that shall apply to the investment of
contributions made for a Participant's benefit and any earnings on such
contributions, subject to such limitations set forth herein or imposed by the
Administrative Committee from time to time. Such election shall specify that
such contributions be invested either (i) wholly in one of the funds maintained
by the Trustee pursuant to Section 7.2, or (ii) divided among two or more of
such funds in increments of 1% (or such larger percentage established by the
Administrative Committee from time to time). During any period in which no
direction as to the investment of a Participant's Account is on file with the
43
Administrative Committee, contributions made for a Participant's benefit shall
be invested in the Balanced Fund.
(b) Change of Election. A Participant may change his or her
investment election as of any Valuation Date, subject to such limitations as the
Administrative Committee from time to time may impose (including restrictions on
investment election changes that apply solely to a particular investment fund).
A Participant's investment election change shall be limited to the investment
funds then maintained by the Trustee pursuant to Section 7.2. A change in
investment election made pursuant to this Section shall apply to a Participant's
existing Account or contributions made for the benefit of the Participant after
such change, or both. Any such change shall specify that such Account or
contributions be invested either (i) wholly in one of the funds maintained by
the Trustee pursuant to Section 7.2 or (ii) divided among two or more of such
funds in increments of 1% (or such larger percentage established by the
Administrative Committee from time to time) or, solely with respect to a
Participant's existing Account, in fixed dollar amounts. A Participant's change
of investment election must be made in the manner prescribed by the
Administrative Committee. The Administrative Committee shall prescribe rules
regarding the time by which such an election must be made in order to be
effective for a particular Valuation Date.
(c) Special Rules Concerning the Harris Stock Fund. Notwithstanding
any provision of the Plan to the contrary, the following rules shall apply to
investments in the Harris Stock Fund:
(1) Availability. Only pre-tax contributions, after-tax
contributions and matching contributions may be invested in the
Harris Stock Fund. If the aggregate of a Participant's pre-tax
contribution and after-tax contribution for any
44
payroll period is equal to or greater than 5% of the Participant's
Compensation for such payroll period, the aggregate of the pre-tax
contribution and after-tax contribution invested in the Harris Stock
Fund for any payroll period shall not exceed 1% (or such larger
percentage established by an appropriate committee of the Board from
time to time) of the Participant's Compensation for the payroll
period. If the aggregate of a Participant's pre-tax contribution and
after-tax contribution for any payroll period is less than 5% of the
Participant's Compensation in any payroll period, the aggregate of
his or her pre-tax contributions and after-tax contributions
invested in the Harris Stock Fund for the payroll period shall not
exceed 20% of the Participant's aggregate pre-tax contribution and
after-tax contribution for the payroll period. The portion of any
pre-tax contribution or after-tax contribution that is attributable
to a discount from fair market value on shares of Harris Stock,
shall be disregarded for purposes of the two foregoing sentences. To
the extent that pre-tax contributions or after-tax contributions are
invested in the Harris Stock Fund, the matching contributions
attributable thereto also shall be invested in the Harris Stock
Fund.
(2) Restrictions on Transfers. A Participant may not transfer
amounts from other investment funds to the Harris Stock Fund. Any
contributions invested in the Harris Stock Fund must remain in the
fund for a minimum of two Plan Years following the end of the Plan
Year in which the investment is made (the "Holding Period"),
provided that amounts invested in the Harris Stock Fund may be
distributed before the expiration of the Holding Period if a
Participant or Beneficiary is entitled to a distribution under the
Plan pursuant to Section 9.3.
45
The Investment Committee, in its sole discretion, may impose
additional restrictions or requirements regarding transfers from the
Harris Stock Fund.
(3) Dividends. A Participant's allocable share of cash or
stock dividends (and other cash earnings) credited to the Harris
Stock Fund shall be reinvested in the Harris Stock Fund and shall be
subject to the same Holding Period as applies to the underlying
stock on which the dividends (or other cash earnings) are paid.
(4) Contributions. Amounts invested in the Harris Stock Fund
normally shall be contributed in cash; provided, however, that the
Company, in its discretion, may contribute such amounts in Harris
Stock, which may be contributed at a discount from fair market
value. The Trustee is authorized to purchase shares of Harris Stock
on the open market, and to give effect to any discount from fair
market value established from time to time by allocating shares to a
Participant's Account in addition to the number of shares that would
have been allocated to the Participant's Account if the discount had
not been established.
Section 8.3. Valuation of Funds and Plan Accounts. The value of an
investment fund as of any Valuation Date shall be the market value of all assets
(including any uninvested cash) held by the fund on such Valuation Date as
determined by the Trustee, reduced by the amount of any accrued liabilities of
the fund on such Valuation Date. The Trustee's determination of market value
shall be binding and conclusive upon all parties. The value of a Participant's
Account as of any Valuation Date shall be the sum of the values of his or her
investment subaccounts in each of the accounts listed in Section 8.1.
46
Section 8.4. Valuation of Units within the Harris Stock Fund. As
soon as practicable after the close of business on each Valuation Date, the
Trustee shall determine the value of the Harris Stock Fund on such Valuation
Date in the manner prescribed in Section 8.3, and the value so determined shall
be divided by the total number of Harris Stock Fund participating units
allocated to the investment subaccounts of Participants. The resulting quotient
shall be the value of a participating unit in the Harris Stock Fund as of such
Valuation Date and shall constitute the "price" of a participating unit as of
such Valuation Date. Participating units shall be credited, at the price so
determined, to the investment subaccounts of Participants with respect to moneys
contributed or transferred to such investment subaccounts on their behalf on
such Valuation Date. The price of such participating units shall be debited to
the investment subaccounts of Participants with respect to moneys divested from
such investment subaccounts on their behalf on such Valuation Date. The value of
all participating units credited to Participants' investment subaccounts shall
be redetermined in a similar manner as of each Valuation Date.
Section 8.5. Allocation of Contributions Other than Profit Sharing
Contributions. Any pre-tax contribution, matching contribution, after-tax
contribution or rollover contribution shall be allocated to the Pre-Tax Account,
Matching Account, After-Tax Account or Rollover Account, as applicable, of the
Participant for whom such contribution is made as soon as practicable after the
Valuation Date coinciding with or next following the date on which such
contribution is delivered to the Trustee and shall be credited to such
Participant's Account as of such Valuation Date.
Section 8.6. Allocation of Profit Sharing Contributions.
47
(a) Amount. Profit sharing contributions for a Plan Year shall be
allocated among the Eligible Profit Sharing Participants in accordance with the
formulas specified in Section 4.3.
(b) Timing of Allocation. A profit sharing contribution made by the
Employers or the Company pursuant to Section 4.3 for a Plan Year shall be
allocated to the Profit Sharing Accounts of Eligible Profit Sharing Participants
as of the last day of such Plan Year; provided, however, that such contributions
shall be credited to such Participant's Profit Sharing Accounts as of the
Valuation Date coinciding with or next following the date on which the profit
sharing contribution is delivered to the Trustee.
(c) Limitation on Amount. Notwithstanding any provision of the Plan
to the contrary, the amount allocated to an Eligible Profit Sharing Participant
with respect to Excess Compensation shall not exceed the "base contribution
percentage" by more than the lesser of (i) the base contribution percentage and
(ii) 5.7% (or if greater, the percentage equal to the Old Age portion of the tax
under section 3111(a) of the Code, as in effect on the first day of the Plan
Year). Any remaining amount shall be allocated based on the ratio of each
Eligible Profit Sharing Participant's Compensation for the Plan Year to the
Compensation of all Eligible Participants for the Plan Year. The term "base
contribution percentage" means the percentage of Compensation of an Eligible
Profit Sharing Participant contributed by the Employers or the Company with
respect to such Participant's Compensation not in excess of the Participant's
Taxable Wage Base.
Section 8.7. Correction of Error. If it comes to the attention of
the Administrative Committee that an error has been made in any of the
allocations prescribed by this Article 8, appropriate adjustment shall be made
to the Accounts of all Participants and
48
Beneficiaries that are affected by such error, except that no adjustment need be
made with respect to any Participant or Beneficiary whose Account has been
distributed in full prior to the discovery of such error.
ARTICLE 4
WITHDRAWALS AND DISTRIBUTIONS
Section 9.1. Withdrawals Prior to Termination of Employment. (a)
Withdrawals from After-Tax Account and Savings Account. As of any Valuation
Date, a Participant may withdraw all or any portion of his or her After-Tax
Account or Savings Account; provided, however, that (i) only one such withdrawal
may be made in any three-month period; (ii) such withdrawal shall be in the form
of a lump sum payment; (iii) a Participant may not withdraw any amount from his
or her Savings Account until the entire balance of his or her After-Tax Account
has been withdrawn; and (iv) a Participant's election under the Plan to make
after-tax contributions, if any, shall be suspended, and no after-tax
contributions or matching contributions attributable to after-tax contributions
shall be allocated to the Participant's Account, for a period of three months
after the date of such withdrawal from the Participant's After-Tax Account. At
the expiration of such three-month suspension period, a Participant may resume
making after-tax contributions in accordance with the procedures set forth in
Section 5.1.
(b) Hardship Withdrawals. Subject to the provisions of this
subsection, a Participant who has taken all loans available to the Participant
under Article 10, has taken all withdrawals available to the Participant under
Sections 9.1(a), (c) and (d) and has incurred a financial hardship may withdraw
as of any Valuation Date all or any portion of the combined balance of his or
her (i) pre-tax contributions and (ii) vested Profit Sharing Account. The amount
of such withdrawal shall not exceed the amount needed to satisfy the financial
hardship,
49
including amounts necessary to pay any federal, state or local taxes
or any penalties reasonably anticipated to result from the hardship withdrawal.
The determination of the existence of a financial hardship and the amount
required to be distributed to satisfy such hardship shall be made in a uniform
and non-discriminatory manner according to the following rules:
(1) A financial hardship shall be deemed to exist if and only
if the Participant certifies that the financial need is on account
of:
(i) expenses for medical care described in section
213(d) of the Code previously incurred by the
Participant, the Participant's spouse, or any
dependents of the Participant (as defined in section
152 of the Code) or necessary for such persons to
obtain medical care described in section 213(d) of
the Code;
(ii) costs directly related to the purchase of a
principal residence for the Participant (excluding
mortgage payments);
(iii) payment of tuition, room and board and related
educational fees for the next 12 months of
post-secondary education for the Participant, the
Participant's spouse or any dependents of the
Participant (as defined in section 152 of the Code);
(iv) payments necessary to prevent the eviction of the
Participant from the Participant's principal
residence or foreclosure of the mortgage on that
residence; or
50
(v) the occurrence of any other event determined by the
Commissioner of Internal Revenue pursuant to
Treasury Regulation section 1.401(k)-1(d)(2)(iv).
(2) A distribution shall be treated as necessary to satisfy a
financial need if and only if the Participant certifies (and if the
Administrative Committee has no reason to believe that such
certification is inaccurate) that such hardship cannot be relieved
by or through:
(i) reimbursement or compensation by insurance or
otherwise;
(ii) cessation of pre-tax contributions and after-tax
contributions under the Plan;
(iii) reasonable liquidation of the Participant's assets
(including assets of the Participant's spouse and
minor children that are reasonably available to the
Participant), to the extent such liquidation would
not itself cause an immediate and heavy financial
need; or
(iv) other distributions or nontaxable (at the time of
the loan) loans from this Plan or other plans
maintained by an Employer or by another employer, or
by borrowing from commercial sources on reasonable
commercial terms.
(3) The Participant shall be required to submit any additional
supporting documentation as may be requested by the Administrative
Committee.
(4) Any hardship withdrawal pursuant to this Section 9.1(b)
shall be in the form of a lump sum payment.
51
(5) A Participant may receive a hardship withdrawal pursuant
to this Section 9.1(b) no more than once during any six-month
period.
(6) Amounts distributed to a Participant pursuant to this
Section 9.1(b) shall be withdrawn first from the Participant's
pre-tax contributions and next from the vested portion of the
Participant's Profit Sharing Account and shall not be taken from the
next source until the previous source has been depleted.
(7) Notwithstanding any provision of the Plan to the contrary,
a Participant who receives a hardship withdrawal hereunder on or
after July 1, 2003 shall be prohibited from making any pre-tax
contributions or after-tax contributions under Section 4.1 or
Section 5.1, respectively, and under all other plans of the
Employers and Affiliates until the first payroll period commencing
coincident with or next following the date which is six months after
the date the hardship withdrawal was made (or such earlier date as
may be permitted by applicable Regulations). Such a Participant may
elect to resume making pre-tax contributions in accordance with the
procedures set forth in Section 4.1 and resume making after-tax
contributions in accordance with the procedures set forth in Section
5.1. For purposes of this paragraph, "all other plans of the
Employers and Affiliates" shall include stock option plans, stock
purchase plans, qualified and nonqualified deferred compensation
plans and such other plans as may be designated under Regulations,
but shall not include health and welfare plans and the mandatory
employee contribution portion of a defined benefit plan.
(c) Withdrawals On or After Age 59-1/2. As of any Valuation Date, a
Participant who has attained age 59-1/2 may withdraw all or any portion of his
or her vested
52
Account. A withdrawal made pursuant to this Section 9.1(c) shall be made at the
Participant's election in any form of payment provided under Section 9.3(c).
(d) Withdrawals from Rollover Account. As of any Valuation Date, a
Participant may withdraw all or any portion of his or her Rollover Account. Any
withdrawal pursuant to this Section 9.1(d) shall be in the form of a lump sum
payment.
(e) Conditions Applicable to All Withdrawals. A Participant's
request for a withdrawal pursuant to this Section 9.1 shall be made at such time
and in such manner as may be prescribed by the Administrative Committee. The
amount available for withdrawal pursuant to this Section 9.1 shall be reduced by
the amount of any loan made pursuant to Article 10 that is outstanding at the
time of withdrawal, and no withdrawal pursuant to this Section 9.1 shall be
permitted to the extent that such withdrawal would cause the aggregate amount of
such outstanding loan to exceed the limits described in Section 10.1. No
withdrawal shall be permitted under this Section 9.1 of the portion of a
Participant's Account, if any, which is invested in the Harris Stock Fund and
which has not satisfied the Holding Period described in Section 8.2(c). The
amount available for withdrawal under this Section 9.1 is subject to reduction
in the sole discretion of the Administrative Committee to take into account the
investment experience of the Trust Fund between the date of the withdrawal
election and the date of the withdrawal.
Section 9.2. Distribution of Account Upon Termination of Employment.
(a) Termination of Employment under Circumstances Entitling Participant to Full
Distribution of Account. If a Participant's employment with all Employers and
Affiliates terminates under any of the following circumstances, then the
Participant or his or her designated Beneficiary, as the case may be, shall be
entitled to receive the Participant's entire Account:
53
(1) on or after the date the Participant attains age 55;
(2) on account of the Participant's death;
(3) on account of the Participant's Disability; or
(4) after the Participant is credited with at least six Years
of Service.
(b) Termination of Employment under Circumstances Resulting in
Partial Forfeiture of the Participant's Account. If a Participant's employment
with all Employers and Affiliates terminates under circumstances other than
those set forth in Section 9.2(a), then the Participant shall be entitled to
receive (i) the entire balance of the Participant's Pre-Tax Account, After-Tax
Account, Rollover Account and Savings Account and (ii) a percentage of the
balance of the Participant's Matching Account and Profit Sharing Account, which
percentage shall be determined as follows by reference to the Participant's
Years of Service as of the date of the Participant's termination of employment:
Years of Service Percentage
- ---------------- ----------
Less than 2 0%
At least 2 but less than 3 20%
At least 3 but less than 4 40%
At least 4 but less than 5 60%
At least 5 but less than 6 80%
6 or more 100%
In the event of the sale or disposition of a business or a sale of
substantially all of the assets of a trade or business, a Participant affected
by such sale may be entitled to the entire balance of the Participant's Account,
irrespective of the Participant's Years of Service, if expressly provided in the
documents effecting the transaction or otherwise authorized by the Company.
Any portion of a Participant's Matching Account and Profit Sharing
Account which the Participant is not entitled to receive pursuant to this
Section 9.2(b) shall be charged to
54
such accounts and forfeited as of the earlier of (i) the date the Participant
receives a distribution of the Participant's vested Account and (ii) the date
the Participant incurs a Break in Service of five consecutive years. For
purposes of this Section 9.2(b), if a Participant is entitled to receive zero
percent (0%) of his or her Matching Account and Profit Sharing Account, the
Participant shall be deemed to have received a distribution of such accounts on
the first day of the Plan Year following the Participant's termination of
employment. If a Participant who receives, or is deemed to have received, a
distribution of the Participant's vested Account is reemployed prior to
incurring a Break in Service of five consecutive years, then such forfeiture
shall be reinstated as prescribed in Section 11.2(b). Amounts forfeited by a
Participant pursuant to this Section shall be used (i) first, to restore the
Accounts of recently located Participants previously employed by such
Participant's Employer (or the recently located Beneficiaries of Participants
previously employed by such Participant's Employer) whose Accounts were
forfeited as described in Section 9.8, (ii) next, to restore the Accounts of
Participants who are reemployed by such Participant's Employer as described in
Section 11.2(b), (iii) next, to fund any matching contributions or profit
sharing contributions to be allocated to Participants who are reemployed by such
Participant's Employer after a period of Qualified Military Service as described
in Section 11.5 and (iv) finally, to reduce future contributions to the Plan by
such Participant's Employer.
Section 9.3. Time and Form of Distribution upon Termination of
Employment. (a) In General. A Participant shall be entitled to a distribution of
his or her vested Account upon the Participant's termination of employment with
all Employers and Affiliates.
(b) Time of Distribution. A Participant shall be entitled to a
distribution of his or her vested Account as soon as administratively
practicable after the date of the Participant's
55
termination of employment, or, subject to Section 9.4, may defer distribution to
a later date; provided, however, that:
(1) subject to Section 9.4, a Participant's Account shall not be
distributed prior to the Participant's 65th birthday unless the
Participant has consented in writing to such distribution;
(2) if a Participant dies before the commencement of distribution of
his or her Account, distributions paid or commencing after the
Participant's death shall be completed no later than December 31 of the
calendar year which contains the fifth anniversary of the Participant's
death, except that (i) if the Participant's Beneficiary is the
Participant's spouse, distribution may be deferred until December 31 of
the calendar year in which the Participant would have attained age 70-1/2
and (ii) if the Participant's Beneficiary is a person other than the
Participant's spouse and distributions commence on or before December 31
of the calendar year immediately following the calendar year in which the
Participant died, such distributions may be made over a period not longer
than the life expectancy of such Beneficiary;
(3) if at the time of a Participant's death, distribution of his or
her Account has commenced, the remaining portion of the Participant's
Account shall be paid at least as rapidly as under the method of
distribution being used prior to the Participant's death, as determined
pursuant to Regulation section 1.401(a)(9)-2;
(4) unless a Participant files a written election to defer
distribution, distribution shall be made to a Participant by payment in a
single lump sum
56
payment no later than 60 days after the end of the Plan Year which
contains the latest of (i) the date of the Participant's termination of
employment, (ii) the tenth anniversary of the date the Participant
commenced participation in the Plan and (iii) the Participant's 65th
birthday; provided, however, that if the Participant does not elect a
distribution prior to the latest to occur of the events listed above, the
Participant shall be deemed to have elected to defer such distribution
until a date no later than April 1 of the calendar year following the
calendar year in which the Participant attains age 70-1/2; and
(5) with respect to a Participant who continues in employment after
attaining age 70-1/2, distribution of the Participant's Account shall
commence no later than the Participant's required beginning date. For
purposes of this paragraph, the term "required beginning date" shall mean
(A) with respect to a Participant who is a 5%-owner (within the meaning of
section 416(i) of the Code), April 1 of the calendar year following the
calendar year in which the Participant attains age 70-1/2 and (B) with
respect to any other Participant, April 1 of the calendar year following
the calendar year in which the Participant terminates employment with all
Employers and Affiliates. Distributions made under this paragraph shall be
made in accordance with Section 9.3(d).
(c) Form of Distribution. Any distribution to which a Participant (or in
the event of the Participant's death, his or her Beneficiary) becomes entitled
upon the Participant's termination of employment shall be distributed by the
Trustee by whichever of the following methods the Participant (or Beneficiary)
elects:
57
(1) an amount not greater than the vested balance of the
Participant's Account, provided, however, that only one such payment
may be made in any single month;
(2) substantially equal periodic installment payments, payable
not less frequently than annually and not more frequently than
monthly, over a period to be elected by the Participant (or
Beneficiary); provided, however, that such period shall not exceed
the life expectancy of the Participant or, to the extent permitted
by Regulation section 1.401(a)(9)-5, the joint and last survivor
expectancy of the Participant and the Participant's Beneficiary; or
(3) a combination of (1) and (2).
A Participant (or Beneficiary) may change his or her election with respect to
the form of distribution at any time before or after distribution of benefits
commences.
(d) Required Minimum Distributions. Notwithstanding any provision of
the Plan to the contrary, all distributions under the Plan will be made in
accordance with the minimum distribution requirements of section 401(a)(9) of
the Code and the final Regulations promulgated thereunder.
Section 9.4. Payment of Small Account Balances. Notwithstanding any
provision of Section 9.3 to the contrary and subject to Section 9.6, if a
Participant's vested Account to be distributed upon the Participant's
termination of employment does not exceed $5,000 (or such other amount
prescribed by section 411(a)(11) of the Code), then such amount shall be
distributed as soon as practicable after the Participant's termination of
employment in the form of a lump sum payment to the Participant or his or her
Beneficiary, as the case may be. In the event of a mandatory distribution
greater than $1,000 under this Section 9.4, if the
58
Participant does not elect to have such distribution paid as a direct rollover
pursuant to Section 9.6 or to receive the distribution directly, then the
distribution will be paid in a direct rollover to an individual retirement plan
designated by the Administrative Committee.
Section 9.5. Medium and Order of Withdrawal or Distribution. (a)
Medium of Withdrawal or Distribution. All withdrawals and distributions under
the Plan shall be made in cash; provided, however, that other than with respect
to withdrawals pursuant to Sections 9.1(a) and (b), a Participant or Beneficiary
may elect, in accordance with procedures established by the Administrative
Committee, to receive the portion of his or her Account, if any, that is
invested in the Harris Stock Fund in shares of Harris Stock (with fractional
shares and de minimis amounts, as determined by the Administrative Committee,
distributed in cash). If a Participant or Beneficiary has elected to receive a
withdrawal or distribution of any portion of his or her Account that is invested
in the Harris Stock Fund in shares of Harris Stock, then such distribution
shall, in the discretion of the Administrative Committee, either be made in
certificated form or credited to an account established for the Participant
under a plan maintained by an Affiliate.
(b) Order of Withdrawal or Distribution. To the extent not otherwise
set forth in Section 9.1, any withdrawal pursuant to Section 9.1 and any
distribution pursuant to Section 9.3 shall be charged against a Participant's
contribution and investment subaccounts in the order determined by the
Administrative Committee; provided, however, that in order to maximize the tax
benefits associated with participation in the Plan, any such withdrawal or
distribution first shall be charged against the Participant's After-Tax Account.
In the case of a withdrawal made pursuant to Section 9.1, reduction of amounts
invested in the Harris Stock Fund shall be subject to the satisfaction of the
Holding Period prescribed in Section 8.2(c).
59
Section 9.6. Direct Rollover Option. In the case of a distribution
that is an "eligible rollover distribution" within the meaning of section
402(c)(4) of the Code, a Participant, a Beneficiary who is a surviving spouse of
a Participant, or a spouse or former spouse who is an alternate payee under a
qualified domestic relations order, as defined in section 414(p) of the Code,
may elect that all or any portion of such distribution to which he or she is
entitled shall be directly transferred from the Plan to (i) an individual
retirement account or annuity described in section 408(a) or (b) of the Code, or
(ii) if the terms of which permit the acceptance of eligible rollover
distributions, to another retirement plan qualified under section 401(a) of the
Code, to a qualified annuity plan described in section 403(a) of the Code, to an
annuity contract described in section 403(b) of the Code or to an eligible plan
under section 457(b) of the Code which is maintained by a state, political
subdivision of a state, or any agency or instrumentality of a state or political
subdivision of a state and which agrees to account separately for amounts
transferred into such plan from this Plan. Notwithstanding the foregoing, any
portion of an eligible rollover distribution that consists of after-tax
contributions which are not includible in gross income may be transferred only
to an individual retirement account or annuity described in section 408(a) or
(b) of the Code or to a qualified defined contribution plan described in section
401(a) or 403(a) of the Code that agrees to account separately for amounts so
transferred.
Section 9.7. Designation of Beneficiary. (a) In General. Each
Participant shall have the right to designate a Beneficiary or Beneficiaries
(who may be designated contingently or successively and that may be an entity
other than a natural person) to receive any distribution to be made under this
Article upon the death of such Participant or, in the case of a Participant who
dies after his or her termination of employment but prior to the distribution of
the entire
60
amount to which he or she is entitled under the Plan, any undistributed balance
to which such Participant would have been entitled. No such designation of a
Beneficiary other than a Participant's spouse shall be effective if the
Participant was married through the one-year period ending on the date of his or
her death unless such designation was consented to in writing (or by such other
method permitted by the Internal Revenue Service) at the time of such
designation by the person who was the Participant's spouse during such period,
acknowledging the effect of such consent and witnessed by a notary public or,
prior to October 1, 1993, a Plan representative, or it is established to the
satisfaction of the Administrative Committee that such consent could not be
obtained because the Participant's spouse could not be located or because of the
existence of other circumstances as the Secretary of the Treasury may prescribe
as excusing the requirement of such consent. Subject to the immediately
preceding sentence, a Participant may from time to time, without the consent of
any Beneficiary, change or cancel any such designation. Such designation and
each change thereof shall be made in the manner prescribed by the Administrative
Committee and shall be filed with the Administrative Committee. If (i) no
Beneficiary has been named by a deceased Participant or (ii) a Beneficiary
designation is not effective pursuant to the second sentence of this section,
any undistributed Account of the deceased Participant shall be distributed by
the Trustee (a) to the surviving spouse of such deceased Participant, if any,
(b) if there is no surviving spouse, to the then living descendants, if any, of
the deceased Participant, per stirpes, or (c) if there is no surviving spouse
and there are no living descendants, to the executor or administrator of the
estate of such deceased Participant. Unless otherwise set forth in the
applicable beneficiary designation form or the instructions thereto, if a
Beneficiary designated by a Participant predeceases the Participant, any
61
undistributed Account of the deceased Participant shall be distributed by the
Trustee in the order prescribed by the immediately preceding sentence.
(b) Successor Beneficiaries. A Beneficiary who has been designated
in accordance with Section 9.7(a) may name a successor beneficiary or
beneficiaries in the manner prescribed by the Administrative Committee. Unless
otherwise set forth in the applicable form pursuant to which a Participant
designates a Beneficiary or the instructions thereto, if such Beneficiary dies
after the Participant and before distribution of the entire amount of the
Participant's benefit under the Plan in which the Beneficiary has an interest,
then any remaining amount shall be distributed, as soon as practicable after the
death of such Beneficiary, in the form of a lump sum payment to the successor
beneficiary or beneficiaries or, if there is no such successor beneficiary, to
the executor or administrator of the estate of such deceased Beneficiary.
Section 9.8. Missing Persons. If following the date on which
pursuant to Section 9.3(b) or 9.4 a Participant's Account may be distributed
without the Participant's consent, the Administrative Committee in the exercise
of reasonable diligence has been unable to locate the person or persons entitled
to the Participant's Account, then the Participant's Account shall be forfeited;
provided, however, that to the extent required by law the Plan shall reinstate
and pay to such person or persons the amount so forfeited upon a claim for such
amount made by such person or persons. The amount to be so reinstated shall be
obtained from the total amount that shall have been forfeited pursuant to this
Section and Section 9.2(b) during the Plan Year that the claim for such
forfeited benefit is made, and shall not include any earnings or losses from the
date of the forfeiture under this Section. If the amount to be reinstated
exceeds the amount of such forfeitures, the Employer in respect of whose
Eligible Employee the claim for forfeited benefit is made shall make a
contribution in an amount equal to such excess. To the
62
extent the forfeitures under this Section exceed any claims for forfeited
benefits made pursuant to this Section, such excess shall be utilized (i) first,
to restore the Accounts as described in Section 11.2(b) of Participants who are
reemployed by the Employer in respect of whose Eligible Employee experienced the
forfeiture hereunder, (ii) next, to fund any matching contributions or profit
sharing contributions to be allocated to Participants who are reemployed by such
Employer after a period of Qualified Military Service as described in Section
11.5 and (iii) finally, to reduce future contributions to the Plan by such
Employer.
Section 9.9. Distributions to Minor and Disabled Distributees. Any
distribution that is payable to a distributee who is a minor or to a distributee
who has been legally determined to be unable to manage his or her affairs by
reason of illness or mental incompetency may be made to, or for the benefit of,
any such distributee at such time consistent with the provisions of this Plan
and in such of the following ways as the legal representative of such
distributee shall direct: (a) directly to any such minor distributee if, in the
opinion of such legal representative, he or she is able to manage his or her
affairs, (b) to such legal representative, (c) to a custodian under a Uniform
Gifts to Minors Act for any such minor distributee, or (d) as otherwise directed
by such legal representative. Neither the Administrative Committee nor the
Trustee shall be required to oversee the application by any third party other
than the legal representative of a distributee of any distribution made to or
for the benefit of such distributee pursuant to this Section.
Section 9.10. Payment of Group Insurance Premiums. The
Administrative Committee may, in its sole discretion, permit a Participant who
(i) is eligible to be included in any contributory group insurance program
maintained or sponsored by an Employer, (ii) elects to be covered under such
contributory group insurance program and (iii) is receiving benefits under
63
the Plan in monthly installments to direct that a specified portion of the
installment payments be withheld and paid by the Trustee on the Participant's
behalf to the Employer as the Participant's contribution under such contributory
group insurance program. Such direction by a Participant, if permitted by the
Administrative Committee, shall be made at the time and in the manner prescribed
by the Administrative Committee. Any such direction may be revoked by a
Participant upon at least 15 days' prior written notice to the Administrative
Committee. Any withholding and payment of insurance costs on behalf of a
Participant shall be made in accordance with Treasury Regulation section
1.401(a)-13.
ARTICLE 10
LOANS
Section 10.1. Making of Loans. Subject to the provisions of this
Article 10, the Administrative Committee shall establish a loan program whereby
any Participant who is an Employee may request, by such method prescribed by the
Administrative Committee, to borrow funds from the Participant's Pre-Tax
Account, After-Tax Account and Rollover Account, and which loan program hereby
is incorporated into this Plan by reference. The principal balance of such loan,
when aggregated with the outstanding balances of all other loans of the
Participant from plans maintained by the Employers and Affiliates, shall not
exceed the least of:
(a) $50,000, reduced by the excess, if any, of (x) the highest
outstanding loan balance of the Participant under all plans maintained by the
Employers and Affiliates during the period beginning one year and one day prior
to the date on which such loan is made and ending on the day prior to the date
on which such loan is made, over (y) the outstanding loan balance from all such
plans on the date on which such loan is made;
64
(b) fifty percent (50%) of the vested portion of the Participant's
Account as of the Valuation Date coinciding with or immediately preceding the
date on which the loan is made; and
(c) the aggregate value of the Participant's Pre-Tax Account,
After-Tax Account and Rollover Account as of the Valuation Date coinciding with
or immediately preceding the date on which the loan is made.
Section 10.2. Restrictions. An application for a loan shall be made
at the time and in the manner prescribed by the Administrative Committee. The
action of the Administrative Committee or its delegate in approving or
disapproving a request for a loan shall be final. Any loan under the Plan shall
be subject to the terms, conditions and restrictions set forth in the loan
program established by the Administrative Committee.
Section 10.3. Default. If any loan or portion of a loan made to a
Participant under the Plan, together with the accrued interest thereon, is in
default, the Trustee, upon direction from the Administrative Committee, shall
take appropriate steps to collect the outstanding balance of the loan and to
foreclose on the security; provided, however, that the Trustee shall not levy
against any portion of the Participant's Account until such time as a
distribution from such Account otherwise could be made under the Plan. Default
shall occur (i) if the Participant fails to make any scheduled loan payment when
due or within 90 days thereafter (or within such other grace period as permitted
under applicable law and by the Administrative Committee) or (ii) upon the
occurrence of any other event that is considered a default event under the loan
program established by the Administrative Committee. On the date a Participant
is entitled to receive a distribution of his or her Account pursuant to Article
9, any defaulted loan or portion thereof, together with the accrued interest
thereon, shall be charged to
65
the Participant's Account after all other adjustments required under the Plan,
but before any distribution pursuant to Article 9.
Section 10.4. Applicability. Notwithstanding the foregoing, for
purposes of this Article 10, any Participant or Beneficiary who is a "party in
interest" as defined in section 3(14) of ERISA may apply for a loan from the
Plan, regardless of such Participant's or Beneficiary's employment status. As a
condition of receiving a loan from the Plan, such a Participant or Beneficiary
who is not an Employee shall consent to have such loan repaid in substantially
equal installments at the times and in the manner determined by the
Administrative Committee, but not less frequently than quarterly.
ARTICLE 11
SPECIAL PARTICIPATION AND DISTRIBUTION RULES
Section 11.1. Change of Employment Status. If an Employee who is not
an Eligible Employee becomes an Eligible Employee, then the Employee shall
become a Participant (i) as of the date such Employee becomes an Eligible
Employee, if such Employee has satisfied the service requirement set forth in
Section 3.1, or (ii) as of the date such Employee satisfies the service
requirement set forth in Section 3.1.
Section 11.2. Reemployment of a Terminated Participant. (a)
Participation. If a terminated Participant is reemployed as an Eligible
Employee, then the terminated Participant again shall become a Participant as of
the date of the terminated Participant's reemployment. If a terminated
Participant is receiving installment payments pursuant to Section 9.3(c), such
payments shall be suspended upon such terminated Participant's reemployment
unless such Participant has attained age 59-1/2 on or before the date of such
reemployment.
66
(b) Restoration of Forfeitures. If a terminated Participant is
reemployed prior to incurring a Break in Service of five consecutive years, and,
at or after the Participant's termination of employment, any portion of the
Participant's Account was forfeited pursuant to Section 9.2(b), then an amount
equal to the portion of the Participant's Account that was forfeited shall be
credited to the Participant's Account as soon as administratively practicable
after the Participant is reemployed. Any amount to be restored pursuant to this
subsection shall be obtained from the total amounts that have been forfeited
pursuant to Sections 9.2(b) and 9.8 during the Plan Year in which such
Participant is reemployed from the Accounts of Participants employed by the same
Employer as the reemployed Participant. If the aggregate amount to be so
restored to the Accounts of Participants who are Employees of a particular
Employer exceeds the amount of such forfeitures, such Employer shall make a
contribution in an amount equal to such excess. Any such contribution shall be
made without regard to whether or not the limitations set forth in Article 6
will be exceeded by such contribution.
Section 11.3. Employment by Affiliates. If an individual is employed
by an Affiliate that is not an Employer, then any period of such employment
shall be taken into account under the Plan solely for the purposes of (i)
measuring such individual's Service and (ii) determining when such individual
has terminated his or her employment for purposes of Article 9, to the same
extent it would have been had such period of employment been as an Employee.
Section 11.4. Leased Employees. If an individual who performed
services as a leased employee (defined as any person (other than an Employee of
an Employer) who pursuant to an agreement between an Employer and a leasing
organization has performed services for the Employer (or for the Employer and
related persons determined in accordance with section 414(n)(6) of the Code) on
a substantially full-time basis for a period of at least one year, where
67
such services are performed under the primary direction or control of the
Employer) of an Employer or an Affiliate becomes an Employee, or if an Employee
becomes such a leased employee, then any period during which such services were
so performed shall be taken into account under the Plan solely for the purposes
of (i) measuring such individual's Service and (ii) determining when such
individual has terminated his or her employment for purposes of Article 9, to
the same extent it would have been had such period of service been as an
Employee. This Section shall not apply to any period of service during which
such a leased employee was covered by a plan described in section 414(n)(5) of
the Code.
Section 11.5. Reemployment of Veterans. The provisions of this
Section shall apply in the case of the reemployment by an Employer of an
Eligible Employee, within the period prescribed by USERRA, after the Eligible
Employee's completion of a period of Qualified Military Service. The provisions
of this Section are intended to provide such Eligible Employee with the rights
required by USERRA and section 414(u) of the Code, and shall be interpreted in
accordance with such intent.
(a) Make-Up of Pre-Tax and After-Tax Contributions. Such Eligible
Employee shall be entitled to make contributions under the Plan ("make-up
participant contributions"), in addition to any pre-tax and after-tax
contributions which the Eligible Employee elects to have made under the Plan
pursuant to Sections 4.1 and 5.1. From time to time while employed by an
Employer, such Eligible Employee may elect to contribute such make-up
participant contributions during the period beginning on the date of such
Eligible Employee's reemployment and ending on the earlier of:
(1) the end of the period equal to the product of three and
such Eligible Employee's period of Qualified Military Service, and
68
(2) the fifth anniversary of the date of such reemployment.
Such Eligible Employee shall not be permitted to contribute make-up
participant contributions to the Plan in excess of the amount which
the Eligible Employee could have elected to have made under the Plan
in the form of pre-tax and after-tax contributions if the Eligible
Employee had continued in active employment with his or her Employer
during such period of Qualified Military Service. The manner in
which an Eligible Employee may elect to contribute make-up
participant contributions pursuant to this subsection (a) shall be
prescribed by the Administrative Committee.
(b) Make-Up of Matching Contributions. An Eligible Employee who
contributes make-up participant contributions as described in subsection (a) of
this Section shall be entitled to an allocation of matching contributions to his
or her Account in an amount equal to the amount of matching contributions that
would have been allocated to the Account of such Eligible Employee during the
period of Qualified Military Service if such make-up participant contributions
had been made in the form of pre-tax and after-tax contributions during such
period. The amount necessary to make such allocation of matching contributions
shall be derived from forfeitures during the Plan Year in which such matching
contributions are made, and if such forfeitures are not sufficient for this
purpose, then the Eligible Employee's Employer shall make a special contribution
to the Plan which shall be utilized solely for purposes of such allocation.
(c) Make-Up of Profit Sharing Contributions. Upon the timely
reemployment of an Eligible Employee following the completion of a period of
Qualified Military Service, such Eligible Employee shall be entitled to an
allocation of profit sharing contributions to his or her
69
Account in an amount equal to the difference between (i) the amount of profit
sharing contributions that would have been allocated to the Account of such
Eligible Employee during the period of Qualified Military Service if the
Eligible Employee had continued in active employment with his or her Employer
during such period and (ii) the amount of profit sharing contributions that was
allocated to the Account of such Eligible Employee during the period of
Qualified Military Service pursuant to Section 8.6. The amount necessary to make
such allocation of profit sharing contributions shall be derived from
forfeitures during the Plan Year in which such profit sharing contributions are
made, and if such forfeitures are not sufficient for this purpose, then the
Eligible Employee's Employer shall make a special contribution to the Plan which
shall be utilized solely for purposes of such allocation.
(d) Miscellaneous Rules Regarding Make-Up Contributions. For
purposes of determining the amount of contributions to be made under this
Section, an Eligible Employee's "Compensation" during any period of Qualified
Military Service shall be determined in accordance with section 414(u) of the
Code. Any contributions made by an Eligible Employee or an Employer pursuant to
this Section on account of a period of Qualified Military Service in a prior
Plan Year shall not be subject to the limitations prescribed by Sections 6.1,
6.3 and 6.4 of the Plan (relating to sections 402(g), 415, and 404 of the Code)
for the Plan Year in which such contributions are made. The Plan shall not be
treated as failing to satisfy the nondiscrimination rules of Section 6.2 of the
Plan (relating to sections 401(k)(3) and 401(m) of the Code) for any Plan Year
solely on account of any make-up contributions made by an Eligible Employee or
an Employer pursuant to this Section.
70
ARTICLE 12
SHAREHOLDER RIGHTS WITH RESPECT TO HARRIS STOCK
Section 12.1. Voting Shares of Harris Stock. The Trustee, or the
Company upon written notice to the Trustee, shall furnish to each Participant
(and Beneficiary) who has Harris Stock credited to his or her individual account
under the Harris Stock Fund the date and purpose of each meeting of the
shareholders of the Company at which Harris Stock is entitled to be voted. The
Trustee, or the Company if it has furnished such information to such
Participants (and Beneficiaries) with respect to a particular shareholders'
meeting, shall request from each such Participant (or Beneficiary) instructions
to be furnished to the Trustee (or to a tabulating agent appointed by the
Trustee, which may be the Company's transfer agent) regarding the voting at such
meeting of Harris Stock credited to the Participant's (or Beneficiary's)
account. If the Participant (or Beneficiary) furnishes such instructions to the
Trustee or its agent within the time specified in the notification, then the
Trustee shall vote such Harris Stock in accordance with such instructions. All
Harris Stock credited to accounts as to which the Trustee or its agent do not
receive instructions as specified above and all unallocated Harris Stock held in
the Harris Stock Fund shall be voted by the Trustee proportionately in the same
manner as it votes Harris Stock as to which the Trustee or its agent have
received voting instructions as specified above.
Section 12.2. Tender Offers. (a) Rights of Participants. In the
event a tender offer is made generally to the shareholders of the Company to
transfer all or a portion of their shares of Harris Stock in return for valuable
consideration, including, but not limited to, offers regulated by section 14(d)
of the Securities Exchange Act of 1934, as amended, the Trustee shall respond to
such tender offer in respect of shares of Harris Stock held by the Trustee in
the Harris Stock Fund in accordance with instructions obtained from Participants
(or Beneficiaries). Each
71
Participant (or Beneficiary) shall be entitled to instruct the Trustee regarding
how to respond to any such tender offer with respect to the number of shares of
Harris Stock represented by the participating units in the Harris Stock Fund
then allocated to his or her Account. Each Participant (or Beneficiary) who does
not provide timely instructions to the Trustee shall be presumed to have
directed the Trustee not to tender shares of Harris Stock represented by the
participating units then allocated to his or her Account. A Participant (or
Beneficiary) shall not be limited in the number of instructions to tender or
withdraw from tender which he or she can give, but a Participant (or
Beneficiary) shall not have the right to give instructions to tender or withdraw
from tender after a reasonable time established by the Trustee pursuant to
subsection (c) of this Section. For purposes of this Section, the shares of
Harris Stock held in the Harris Stock Fund shall be treated as allocated to the
accounts of Participants in proportion to their respective participating units
in the Harris Stock Fund as of the immediately preceding record date for
ownership of Harris Stock for stockholders entitled to tender. The
Administrative Committee may direct the Trustee to make a special valuation of
the Harris Stock Fund in connection with such tender offer. Any securities or
other property received by the Trustee as a result of having tendered Harris
Stock shall be held, and any cash so received shall be invested, in short term
investments pending any further action which the Trustee may be required or
directed to take pursuant to the Plan. Notwithstanding anything to the contrary,
during the period of any public offer for Harris Stock, the Trustee shall
refrain from making purchases of Harris Stock in connection with the Plan and
the Trust. In addition to compensation otherwise payable, the Trustee shall be
entitled to reasonable compensation and reimbursement for its reasonable
out-of-pocket expenses for any services attributable to the duties and
responsibilities described in this Section.
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(b) Duties of the Administrative Committee. Within a reasonable time
after the commencement of a tender offer, the Administrative Committee shall
cause the Trustee to provide to each Participant or Beneficiary, as the case may
be:
(1) the offer to purchase as distributed by the offeror to the
shareholders of the Company;
(2) a statement of the number of shares of Harris Stock
represented by the participating units in the Harris Stock Fund
allocated to his or her Account; and
(3) directions as to the means by which instructions with
respect to the tender offer can be given.
The Administrative Committee shall establish, and the Company shall
pay for, a means by which instructions with respect to a tender offer
expeditiously can be delivered to the Trustee. The Administrative Committee at
its election may engage an agent to receive such instructions and transmit them
to the Trustee. All such individual instructions shall be confidential and shall
not be disclosed to any person, including any Employer.
For purposes of allocating the proceeds of any sale or exchange
pursuant to a tender offer, the Trustee shall then treat as having been sold or
exchanged from each of the Accounts of Participants (and Beneficiaries) who
provided timely directions to the Trustee under this Section to tender that
number of shares of Harris Stock represented by participating units in the
Harris Stock Fund (if any) subject to such directions and the proceeds of such
sale or exchange shall be allocated accordingly. Any proceeds from the sale or
exchange of shares of Harris Stock in the Harris Stock Fund shall be invested in
a commingled fund maintained by the
73
Trustee designated to hold such amounts pending investment instructions from the
Participants (and Beneficiaries) or the Administrative Committee, as the case
may be.
(c) Duties of the Trustee. The Trustee shall follow the instructions
of the Participants (and Beneficiaries) with respect to the tender offer as
transmitted to the Trustee. The Trustee may establish a reasonable time, taking
into account the time restrictions of the tender offer, after which it shall not
accept instructions of Participants (or Beneficiaries).
ARTICLE 13
ADMINISTRATION
Section 13.1. The Administrative Committee. (a) The Management
Development and Compensation Committee of the Board shall appoint at least two
members to the Administrative Committee. The Administrative Committee shall be
the "administrator" of the Plan within the meaning of such term as used in ERISA
and shall be responsible for the administration of the Plan. The Chief Executive
Officer of the Company, or such Board committee, as the case may be, shall have
the right at any time, with or without cause, to remove any member of the
Administrative Committee. In addition, any member of the Administrative
Committee at any time may resign by giving at least fifteen (15) days' advance
written notice to the Chief Executive Officer or such Board committee (or such
shorter period of advance written notice acceptable to the Chief Executive
Officer or such Board committee). An Employee who serves on the Administrative
Committee shall be deemed to have resigned from such committee upon the
termination of the Employee's employment with the Company and its Affiliates,
effective as of the date of the termination of employment. Upon the removal or
resignation of any member of the Administrative Committee, or the failure or
inability for any reason of any member of the Administrative Committee to act
hereunder, the Chief Executive Officer of the
74
Company or such Board committee, as the case may be, shall appoint a successor
member of the Administrative Committee if such removal, resignation, failure or
inability causes the Administrative Committee to have fewer than two members.
Any successor member of the Administrative Committee shall have all the rights,
privileges and duties of the predecessor, but shall not be held accountable for
the acts of the predecessor.
(b) Any member of the Administrative Committee may, but need not, be
an employee, director, officer or shareholder of an Employer and such status
shall not disqualify him or her from taking any action hereunder or render him
or her accountable for any distribution or other material advantage received by
such member under the Plan, provided that no member of the Administrative
Committee who is a Participant shall take part in any action of the
Administrative Committee or any matter involving solely his or her rights under
the Plan.
(c) Promptly after the appointment of the members of the
Administrative Committee and promptly after the appointment of any successor
member of the Administrative Committee, the Trustee shall be notified in writing
as to the names of the new members.
(d) The Administrative Committee shall have the duty and authority
to interpret and construe, in its sole discretion, the terms of the Plan in all
respects, including, but not limited to, all questions of eligibility, the
status and rights of Participants, distributees and other persons under the
Plan, and the manner, time and amount of payment of any distribution under the
Plan. Each Employer shall, from time to time, upon request of the Administrative
Committee, furnish to the Administrative Committee such data and information as
the Administrative Committee shall require in the performance of its duties. All
determinations and actions of the Administrative Committee shall be conclusive
and binding upon all affected parties, except that the Administrative Committee
may revoke or modify a determination or
75
action that it determines to have been in error. Benefits will be paid under the
Plan only if the Administrative Committee decides in its sole discretion that
the applicant is entitled to the benefits.
(e) The Administrative Committee shall direct the Trustee to make
payments of amounts to be distributed from the Trust under Article 9.
(f) The Administrative Committee may act at a meeting by the vote of
a majority of a quorum of its members or without a meeting by the unanimous
written consent of its members. The Administrative Committee shall keep records
of all of its meetings and forward all necessary communications to the Trustee.
The Administrative Committee may adopt such rules and procedures as it deems
desirable for the conduct of its affairs and the administration of the Plan,
provided that any such rules and procedures shall be consistent with the
provisions of the Plan and ERISA.
(g) The members of the Administrative Committee shall discharge
their duties with respect to the Plan (i) solely in the interest of the
Participants and Beneficiaries, (ii) for the exclusive purpose of providing
benefits to the Participants and Beneficiaries and of defraying reasonable
expenses of administering the Plan and (iii) with the care, skill, prudence, and
diligence under the circumstances then prevailing that a prudent person acting
in a like capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims. The Employers hereby jointly
and severally indemnify the members of the Administrative Committee, the members
of the Compensation Committee, the members of the Executive Committee and the
members of the Investment Committee from the effects and consequences of their
acts, omissions and conduct in their official capacity, except to the extent
76
that such effects and consequences result from their own willful or gross
misconduct or criminal acts.
(h) The members of the Administrative Committee shall not receive
any compensation or fee for services as members of the Administrative Committee.
The Employers shall reimburse the members of each of the Administrative
Committee, Compensation Committee, Executive Committee and Investment Committee
for any necessary expenditures incurred in the discharge of their duties
hereunder.
Section 13.2. Named Fiduciaries. The Investment Committee shall be a
"named fiduciary" of the Plan within the meaning of such term as used in ERISA
solely with respect to its power to appoint certain fiduciaries under the Plan
and its management of the assets of the Plan. The Administrative Committee shall
be a "named fiduciary" of the Plan within the meaning of such term as used in
ERISA solely with respect to its power to appoint certain fiduciaries under the
Plan and the exercise of its administrative duties set forth in the Plan that
are fiduciary acts. Each of the Compensation Committee and the Executive
Committee shall be a "named fiduciary" of the Plan within the meaning of such
term as used in ERISA solely with respect to its power to appoint certain
fiduciaries under the Plan. Each fiduciary has only those duties and
responsibilities specifically assigned to such fiduciary under the Plan.
Section 13.3. Allocation and Delegation of Responsibilities. Each of
the Administrative Committee, the Compensation Committee, the Executive
Committee and the Investment Committee may allocate its responsibilities among
its members and may designate any person, partnership, corporation or another
committee to carry out any of its responsibilities with respect to the Plan. Any
such allocation or designation shall be in writing and shall be kept with the
records of the Plan.
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Section 13.4. Professional and Other Services. The Company may
employ counsel (who may be counsel for an Employer) to advise the Administrative
Committee, the Compensation Committee, the Executive Committee and the
Investment Committee and their agents and may arrange for clerical and other
services as the Administrative Committee, the Compensation Committee, the
Executive Committee and the Investment Committee and their agents may require in
carrying out their duties hereunder.
Section 13.5. Claims Procedure. If any Participant or distributee
believes he or she is entitled to benefits in an amount greater than those which
he or she is receiving or has received, he or she (or his or her duly authorized
representative) may file a claim with the Administrative Committee. Such a claim
shall be in writing and state the nature of the claim, the facts supporting the
claim, the amount claimed and the address of the claimant. The Administrative
Committee shall review the claim and, unless special circumstances require an
extension of time, within 90 days after receipt of the claim give written or
electronic notice to the claimant of its decision with respect to the claim. If
special circumstances require an extension of time, the claimant shall be so
advised in writing or by electronic means within the initial 90-day period and
in no event shall such an extension exceed 90 days. The notice of the decision
of the Administrative Committee with respect to the claim shall be written in a
manner calculated to be understood by the claimant and, if the claim is wholly
or partially denied, shall set forth the specific reasons for the denial,
specific references to the pertinent Plan provisions on which the denial is
based, a description of any additional material or information necessary for the
claimant to perfect the claim and an explanation of why such material or
information is necessary, and an explanation of the claim review procedure under
the Plan and the time limits applicable to such
78
procedure (including a statement of the claimant's right to bring a civil action
under section 502(a) of ERISA following the final denial of a claim).
The claimant (or his or her duly authorized representative) may
request a review of the denial by filing with the Administrative Committee a
written request for such review within 60 days after notice of the denial has
been received by the claimant. Within the same 60-day period, the claimant may
submit to the Administrative Committee written comments, documents, records and
other information relating to the claim. Upon request and free of charge, the
claimant also may have reasonable access to, and copies of, documents, records
and other information relevant to the claim. If a request for review is so
filed, review of the denial shall be made by the Administrative Committee and
the claimant shall be given written or electronic notice of the Administrative
Committee's final decision within, unless special circumstances require an
extension of time, 60 days after receipt of such request. If special
circumstances require an extension of time, the claimant shall be so advised in
writing or by electronic means within the initial 60-day period and in no event
shall such an extension exceed 60 days. If the appeal of the claim is wholly or
partially denied, the notice of the Administrative Committee's final decision
shall include specific reasons for the denial, specific references to the
pertinent Plan provisions on which the denial is based and a statement that the
claimant is entitled, upon request and free of charge, to reasonable access to,
and copies of, all relevant documents, records and information. The notice shall
be written in a manner calculated to be understood by the claimant and shall
notify the claimant of his or her right to bring a civil action under section
502(a) of ERISA.
In making determinations regarding claims for benefits, the
Administrative Committee shall consider all of the relevant facts and
circumstances, including, without
79
limitation, governing plan documents, consistent application of Plan provisions
with respect to similarly situated claimants and any comments, documents,
records and other information with respect to the claim submitted by the
claimant (the "Claimant's Submissions"). The Claimant's Submissions shall be
considered by the Administrative Committee without regard to whether the
Claimant's Submissions were submitted or considered by the Administrative
Committee in the initial benefit determination.
Section 13.6. Notices to Participants. All notices, reports and
statements given, made, delivered or transmitted to a Participant or distributee
or any other person entitled to or claiming benefits under the Plan shall be
deemed to have been duly given, made, delivered or transmitted when provided via
such written or other means as may be permitted by applicable Regulations. A
Participant, distributee or other person may record any change of his or her
address by written notice filed with his or her Employer.
Section 13.7. Notices to Administrative Committee or Employers.
Written directions and notices and other written or electronic communications
from Participants, distributees or other persons entitled to or claiming
benefits under the Plan to the Administrative Committee or the Employers shall
be deemed to have been duly given, made, delivered or transmitted when given,
made, delivered or transmitted in the manner and to the location prescribed by
the Administrative Committee or the Employers for the giving of such directions,
notices and other communications.
Section 13.8. Records. The Administrative Committee shall keep a
record of all of its proceedings with respect to the Plan and shall keep or
cause to be kept all books of account, records and other data as may be
necessary or advisable in its judgment for the administration of the Plan.
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Section 13.9. Reports of Trustee and Accounting to Participants. The
Administrative Committee shall keep on file, in such form as it shall deem
convenient and proper, all reports concerning the Trust Fund received by it from
the Trustee, and, as soon as practicable after the close of each Plan Year, each
Participant and Beneficiary shall be provided a written benefit statement
indicating the balance credited to any Account for such individual as of the
close of such Plan Year. Any Participant or Beneficiary claiming that an error
has been made with respect to such balance shall notify the Administrative
Committee in writing within ninety (90) days following the delivery of such
benefit statement. If no notice of error timely is provided, the benefit
statement shall be presumed to be correct.
Section 13.10. Limitations on Investments and
Transactions/Conversions. Notwithstanding any provision of the Plan to the
contrary:
(a) The Employee Benefits Committee, in its sole and absolute
discretion, may temporarily suspend, in whole or in part, certain Plan
transactions, including, without limitation, the right to change or suspend
contributions and/or the right to receive a distribution, loan or withdrawal
from an Account in the event of any conversion, change in recordkeeper, change
in investment funds and/or Plan merger or spinoff.
(b) The Employee Benefits Committee, in its sole and absolute
discretion, may suspend, in whole or in part, temporarily or permanently, Plan
transactions dealing with investments, including without limitation, the right
of a Participant to change investment elections or reallocate Account balances
in the event of any conversion, change in recordkeeper, change in investment
funds and/or Plan merger or spinoff.
(c) In the event of a change in investment funds and/or a Plan
merger or spinoff, the Employee Benefits Committee, in its sole and absolute
discretion, may decide to
81
map investments from a Participant's prior investment fund elections to the then
available investment funds under the Plan. In the event that investments are
mapped in this manner, the Participant shall be permitted to reallocate funds
among the investment funds (in accordance with Article 8 and any relevant rules
and procedures adopted for this purpose) after the suspension period (if any) is
lifted.
(d) Notwithstanding any provision of the Plan to the contrary, the
investment funds shall be subject to, and governed by, (1) all applicable legal
rules and restrictions, (2) the rules specified by the investment fund
providers in the fund prospectus(es) or other governing documents thereof and/or
(3) any rules or procedures adopted by the Employee Benefits Committee governing
the transfers of assets into or out of such funds. Such rules, procedures and
restrictions may limit the ability of a Participant to make transfers into or
out of a particular investment fund and/or may result in additional transaction
fees or other costs relating to such transfers. In furtherance of, but without
limiting the foregoing, the Plan may decline to implement any investment
election or instruction where it deems appropriate.
ARTICLE 14
PARTICIPATION BY EMPLOYERS
Section 14.1. Adoption of Plan. With the consent of the Compensation
Committee, any entity may become an Employer under the Plan by (a) taking such
action as shall be necessary to adopt the Plan and (b) executing and delivering
such instruments and taking such other action as may be necessary or desirable
to put the Plan and Trust into effect with respect to such entity, as prescribed
by the Compensation Committee. The powers and control of the Company, as
provided in the Plan and the trust agreement, shall not be diminished by reason
of participation of any such adopting entity in the Plan.
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Section 14.2. Withdrawal from Participation. An Employer may
withdraw from participation in the Plan at any time by filing with the
Compensation Committee a duly certified copy of a written instrument duly
adopted by the Employer to that effect and giving notice of its intended
withdrawal to the Compensation Committee, the Employers and the Trustee prior to
the effective date of withdrawal.
Section 14.3. Company, Administrative Committee, Compensation
Committee, Executive Committee and Investment Committee as Agents for Employers.
Each entity which becomes an Employer pursuant to Section 14.1 or Section 14.4
by so doing shall be deemed to have appointed the Company, the Administrative
Committee, the Compensation Committee, the Executive Committee and the
Investment Committee as its agents to exercise on its behalf all of the powers
and authorities conferred upon the Company, the Administrative Committee, the
Compensation Committee, the Executive Committee and the Investment Committee by
the terms of the Plan. The authority of the Company, the Administrative
Committee, the Compensation Committee, the Executive Committee or the Investment
Committee to act as such agent shall continue unless and until the portion of
the Trust Fund held for the benefit of Employees of the particular Employer and
their Beneficiaries is set aside in a separate Trust Fund as provided in Section
17.2.
Section 14.4. Continuance by a Successor. In the event that an
Employer other than the Company is reorganized by way of merger, consolidation,
transfer of assets or otherwise, so that another entity other than an Employer
succeeds to all or substantially all of such Employer's business, such successor
entity may, with the consent of the Compensation Committee, be substituted for
such Employer under the Plan by adopting the Plan. Contributions by such
Employer automatically shall be suspended from the effective date of any such
83
reorganization until the date upon which the substitution of such successor
entity for the Employer under the Plan becomes effective. If, within 90 days
following the effective date of any such reorganization, such successor entity
shall not have elected to adopt the Plan, the Compensation Committee fails to
consent to such adoption, or an Employer adopts a plan of complete liquidation
other than in connection with a reorganization, the Plan automatically shall be
terminated with respect to employees of such Employer as of the close of
business on the 90th day following the effective date of such reorganization or
as of the close of business on the date of adoption of such plan of complete
liquidation, as the case may be, and the Administrative Committee shall direct
the Trustee to distribute the portion of the Trust Fund applicable to such
Employer in the manner provided in Section 17.3.
If such successor entity is substituted for an Employer as described
above, then, for all purposes of the Plan, employment of each Employee with such
Employer, including service with and compensation paid by such Employer, shall
be considered to be employment with such successor entity.
ARTICLE 15
MISCELLANEOUS
Section 15.1. Expenses. All costs and expenses of administering the
Plan and the Trust, including the expenses of the Company, the Administrative
Committee, the Compensation Committee, the Executive Committee and the
Investment Committee, the fees of counsel and of any agents for the Company or
such committees, investment advisory and recordkeeping fees, the fees and
expenses of the Trustee, the fees of counsel for the Trustee and other
administrative expenses, shall be paid under the direction of the Administrative
Committee from the Trust Fund to the extent such expenses are not paid by the
Employers. The
84
Administrative Committee, in its sole discretion, having regard to the nature of
a particular expense, shall determine the portion of such expense that is to be
borne by each Employer. An Employer may seek reimbursement of any expense paid
by such Employer that the Administrative Committee determines is properly
payable from the Trust Fund.
Section 15.2. Non-Assignability.
(a) In General. No right or interest of any Participant or
Beneficiary in the Plan shall be assignable or transferable in whole or in part,
either directly or by operation of law or otherwise, including, but not by way
of limitation, execution, levy, garnishment, attachment, pledge or bankruptcy,
but excluding devolution by death or mental incompetency, and any attempt to do
so shall be void, and no right or interest of any Participant or Beneficiary in
the Plan shall be liable for, or subject to, any obligation or liability of such
Participant or Beneficiary, including claims for alimony or the support of any
spouse, except as provided below.
(b) Exception for Qualified Domestic Relations Orders.
Notwithstanding any provision of the Plan to the contrary, if a Participant's
Account under the Plan, or any portion thereof, is the subject of one or more
qualified domestic relations orders (as defined in section 414(p) of the Code),
such Account or portion thereof shall be paid to the person, at the time and in
the manner specified in any such order. The Administrative Committee shall adopt
rules and procedures, in accordance with section 414(p) of the Code, relating to
its (i) review of any domestic relations order for purposes of determining
whether the order is a qualified domestic relations order and (ii)
administration of a qualified domestic relations order. A domestic relations
order shall not fail to constitute a qualified domestic relations order solely
because such order provides for distribution to an alternate payee of the
benefit assigned to the alternate payee
85
under the Plan prior to the applicable Participant's earliest retirement age (as
defined in section 414(p) of the Code) under the Plan.
(c) Other Exception. Notwithstanding any provision of the Plan to
the contrary, if a Participant is ordered or required to pay an amount to the
Plan pursuant to (i) a judgement in a criminal action, (ii) a civil judgement in
connection with a violation (or alleged violation) of Part 4 of Subtitle B of
Title I of ERISA or (iii) a settlement agreement between the Secretary of Labor
and the Participant or the Pension Benefit Guaranty Corporation and the
Participant in connection with a violation (or alleged violation) of Part 4 of
Subtitle B of Title I of ERISA, the Participant's Account under the Plan may, to
the extent permitted by law, be offset by such amount.
Section 15.3. Employment Non-Contractual. The Plan confers no right
upon an Employee to continue in employment.
Section 15.4. Merger or Consolidation with Another Plan/Transfer
Contributions.
(a) The Employee Benefits Committee shall have the right to merge or
consolidate all or a portion of the Plan with, or transfer all or part of the
assets or liabilities of the Plan to, any other plan; provided, however, that
the terms of such merger, consolidation or transfer are such that each
Participant, distributee, Beneficiary or other person entitled to receive
benefits from the Plan would, if the Plan were to terminate immediately after
the merger, consolidation or transfer, receive a benefit equal to or greater
than the benefit such person would be entitled to receive if the Plan were to
terminate immediately before the merger, consolidation or transfer.
86
(b) Amounts transferred to the Plan pursuant to Subsection (a) above
(the "Transfer Contributions") shall be subject to all terms and conditions of
the Plan as in effect from time to time, except to the extent provided on a
Schedule to the Plan which may contain additional terms and conditions governing
the application of the Plan to the Transfer Contributions. The terms of any such
Schedule are hereby incorporated and made part of the Plan and, in the event of
any inconsistency between the terms of the Plan and the terms of the Schedule,
the Schedule shall control with respect to the Transfer Contributions covered by
the Schedule; provided, however, that if such inconsistency results from changes
made in the provisions of the Plan to comply with applicable law, then such
provisions of the Plan shall control.
Section 15.5. Gender and Plurals. Wherever used in the Plan, words
in the masculine gender shall include the masculine or feminine gender, and,
unless the context otherwise requires, words in the singular shall include the
plural, and words in the plural shall include the singular.
Section 15.6. Applicable Law. The Plan and all rights hereunder
shall be governed by and construed in accordance with the laws of the State of
Florida to the extent such laws have not been preempted by applicable federal
law. Venue for any action arising under the Plan shall be in Brevard County,
Florida.
Section 15.7. Severability. If any provision of the Plan is held
illegal or invalid, the illegality or invalidity shall not affect the remaining
provisions of the Plan and the Plan shall be construed and enforced as if the
illegal or invalid provision had not been included in the Plan.
Section 15.8. No Guarantee. None of the Company, the Employers, the
Administrative Committee, the Compensation Committee, the Executive Committee,
the
87
Investment Committee or the Trustee in any way guarantees the Trust from loss or
depreciation nor the payment of any benefit that may be or become due to any
person from the Trust Fund. Nothing in the Plan shall be deemed to give any
Participant, distributee or Beneficiary an interest in any specific part of the
Trust Fund or any other interest except the right to receive benefits from the
Trust Fund in accordance with the provisions of the Plan and the trust
agreement.
Section 15.9. Plan Voluntary. Although it is intended that the Plan
shall be continued and that contributions shall be made as herein provided, the
Plan is entirely voluntary on the part of the Employers and the continuance of
the Plan and the contributions hereunder are not and shall not be regarded as
contractual obligations of the Employers.
ARTICLE 16
TOP-HEAVY PLAN REQUIREMENTS
Section 16.1. Top-Heavy Plan Determination. If as of the
determination date (as hereinafter defined) for any Plan Year the aggregate of
(a) the account balances under the Plan and all other defined contribution plans
in the aggregation group (as hereinafter defined) and (b) the present value of
accrued benefits under all defined benefit plans in such aggregation group of
all participants in such plans who are key employees (as hereinafter defined)
for such Plan Year exceeds 60% of the aggregate of the account balances and the
present value of accrued benefits of all participants in such plans as of the
determination date, then the Plan shall be a "top-heavy plan" for such Plan
Year, and the requirements of Section 16.3 shall be applicable for such Plan
Year as of the first day thereof. If the Plan is a top-heavy plan for any Plan
Year and is not a top-heavy plan for any subsequent Plan Year, the requirements
of Section 16.3 shall not be applicable for such subsequent Plan Year.
88
Section 16.2. Definitions and Special Rules.
(a) Definitions. For purposes of this Article 16, the following
definitions shall apply:
(1) Determination Date. The determination date for all plans
in the aggregation group shall be the last day of the preceding Plan
Year, and the valuation date applicable to a determination date
shall be (i) in the case of a defined contribution plan, the date as
of which account balances are determined that coincides with or
immediately precedes the determination date, and (ii) in the case of
a defined benefit plan, the date as of which the most recent
actuarial valuation for the Plan Year that includes the
determination date is prepared, except that if any such plan
specifies a different determination or valuation date, such
different date shall be used with respect to such plan.
(2) Aggregation Group. The aggregation group shall consist of
(a) each plan of an Employer in which a key employee is a
participant, (b) each other plan that enables such a plan to be
qualified under section 401(a) of the Code, and (c) any other plans
of an Employer that the Company designates as part of the
aggregation group.
(3) Key Employee. Key employee shall have the meaning set
forth in section 416(i) of the Code.
(4) Compensation. Compensation shall have the meaning set
forth in U.S. Treasury Regulation section 1.415-2(d).
(b) Special Rules. For the purpose of determining the accrued
benefit or account balance of a participant, (i) the accrued benefit or account
balance of any person who
89
has not performed services for an Employer at any time during the one-year
period ending on the determination date shall not be taken into account pursuant
to this Section, and (ii) any person who received a distribution from a plan
(including a plan that has terminated) in the aggregation group during the
one-year period ending on the determination date shall be treated as a
participant in such plan, and any such distribution shall be included in such
participant's account balance or accrued benefit, as the case may be; provided,
however, that in the case of a distribution made for a reason other than a
person's severance from employment, death or disability, clause (ii) of this
Section 16.2(b) shall be applied by substituting "five-year period" for
"one-year period."
Section 16.3. Minimum Contribution for Top-Heavy Years.
Notwithstanding any provision of the Plan to the contrary, for any Plan Year for
which the Plan is a top-heavy plan, a minimum contribution shall be made on
behalf of each Participant (other than a key employee) who is an Employee on the
last day of the Plan Year in an amount equal to the lesser of (i) 3% of such
Participant's compensation during such Plan Year and (ii) the highest percentage
at which Employer contributions (including pre-tax contributions) are made on
behalf of any key employee for such Plan Year. If during any Plan Year for which
this Section 16.3 is applicable a defined benefit plan is included in the
aggregation group and such defined benefit plan is a top-heavy plan for such
Plan Year, the percentage set forth in clause (i) of the first sentence of this
Section 16.3 shall be 5%. The percentage referred to in clause (ii) of the first
sentence of this Section 16.3 shall be obtained by dividing the aggregate of
Employer contributions made pursuant to Article 4 and pursuant to any other
defined contribution plan that is required to be included in the aggregation
group (other than a defined contribution plan that enables a defined benefit
plan that is required to be included in such group to be qualified under
90
section 401(a) of the Code) during the Plan Year on behalf of such key employee
by such key employee's compensation for the Plan Year. Notwithstanding the
foregoing, the minimum contribution described in this Section 16.3 for any Plan
Year for which the Plan is a top-heavy plan shall not be made under this Plan
with respect to any Participant who receives a minimum contribution or minimum
benefit for purposes of section 416(c) of the Code under another plan maintained
by an Affiliate.
In order to satisfy the minimum contribution required by this
Section 16.3, the profit sharing contribution for a Plan Year for which the Plan
is a top-heavy plan first shall be allocated, without regard to any Social
Security contribution, to all Participants who are Employees on the last day of
such Plan Year in an amount that meets the minimum contribution requirement. Any
remaining profit sharing contribution shall be allocated in accordance with
Sections 4.3 and 8.6.
ARTICLE 17
AMENDMENT, ESTABLISHMENT OF
SEPARATE PLAN, PLAN TERMINATION AND CHANGE OF CONTROL
Section 17.1. Amendment. The Compensation Committee (or such other
committee of the Board as the Board may designate from time to time) may, at any
time and from time to time, amend or modify the Plan. Any such amendment or
modification shall become effective as of such date determined by the
Compensation Committee (or such other committee), including retroactively to the
extent permitted by law, and may apply to Participants in the Plan at the time
thereof as well as to future Participants.
Section 17.2. Establishment of Separate Plan. If an Employer
withdraws from the Plan pursuant to Section 14.2, then the Administrative
Committee shall determine the portion
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of each of the funds of the Trust Fund that is applicable to the Participants of
such Employer and their Beneficiaries and direct the Trustee to segregate such
portions in a separate trust. Such separate trust thereafter shall be held and
administered as a part of the separate plan of such Employer. The portion of a
fund of the Trust Fund applicable to the Participants (and Beneficiaries) of a
particular Employer shall be an amount that bears the same ratio to the value of
such fund as the total value of the fund accounts of Participants (and
Beneficiaries) of such Employer bears to the total value of the fund accounts of
all Participants (and Beneficiaries).
Section 17.3. Termination. The Company at any time may terminate the
Plan by resolution of an appropriate committee of the Board. An Employer at any
time may terminate its participation in the Plan by resolution of its board of
directors. In the event of any such termination, or in the event of the partial
termination of the Plan with respect to a group of Participants, the Accounts of
Participants with respect to whom the Plan is terminated shall become fully
vested and thereafter shall not be subject to forfeiture. In the event that an
Employer terminates its participation in the Plan, the Administrative Committee
shall determine, in the manner provided in Section 17.2, the portion of each of
the funds of the Trust Fund that is applicable to the Participants of such
Employer and their Beneficiaries and direct the Trustee to distribute such
portions to such Participants and Beneficiaries ratably in proportion to the
balances of their respective Accounts.
A complete discontinuance of contributions by an Employer shall be
deemed a termination of such Employer's participation in the Plan for purposes
of this Section.
Section 17.4. Change of Control. (a) Effect. Notwithstanding any
provision of the Plan to the contrary, during the period commencing on the date
of a Change of Control and ending at the close of business on the last day of
the Fiscal Year during which the Change of
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Control occurs (the "Restriction Period"), the Plan may not be terminated, and
the Plan may not be amended to:
(1) revise the definition of Eligible Employee such that fewer
Employees are eligible to participate in the Plan, lengthen the
service requirement for participation in the Plan, create an age
requirement or entry dates for participation in the Plan or
otherwise reduce coverage under the Plan;
(2) reduce the amount of profit sharing contribution required
to be made for the Plan Year ending on the last day of the
Restriction Period;
(3) reduce the amount of pre-tax contributions or after-tax
contributions that a Participant is permitted to make under the
Plan; or
(4) reduce the amount of matching contributions required to be
made under the Plan.
(b) Miscellaneous. (1) Notwithstanding any provision of the Plan to
the contrary, the amount of the EPS Profit Sharing Contribution for the Plan
Year ending on the last day of the Restriction Period shall be in an amount not
less than the amount that would be determined as if the Earnings Per Share had
reached the midpoint between the Minimum Earnings Per Share Target and Maximum
Earnings Per Share Target as originally approved for the Plan Year;
notwithstanding actual results or any changes or modifications occurring after
any such Change of Control.
(2) Any person who was an Eligible Employee on the day
immediately preceding a Change of Control shall be deemed to be an
Eligible Employee during the Restriction Period so long as the
person is employed by a member of a "controlled group of
corporations" which includes, or by a trade or business that
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is under common control with (as those terms are defined in sections
414(b) and (c) of the Code), the Company, any corporation which is
the survivor of any merger or consolidation to which the Company was
a party, or any corporation into which the Company has been
liquidated.
Section 17.5. Trust Fund to Be Applied Exclusively for Participants
and Their Beneficiaries. Subject only to the provisions of Article 6 and
Sections 15.2(b) and (c), and any other provision of the Plan to the contrary
notwithstanding, no part of the Trust Fund shall be used for or diverted to any
purpose not for the exclusive benefit of the Participants and their
Beneficiaries either by operation or termination of the Plan, power of amendment
or other means.
IN WITNESS WHEREOF, the Company has caused this instrument to be
executed by its duly authorized officer this 31st day of October, 2005.
HARRIS CORPORATION
By: /s/ John D. Gronda
------------------
John D. Gronda
Title: Secretary, Employee Benefits Committee
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SCHEDULE A
TERMS OF MERGER OF THE ENCODA SYSTEMS, INC.
PROFIT SHARING PLAN AND TRUST (THE "ENCODA PLAN")
1. All capitalized terms used in this Schedule A and not otherwise defined
herein shall have the meaning assigned to them by this Plan or the Encoda
Plan, as applicable.
2. To the extent determined by the Administration Committee, a separate
sub-account will be maintained under Section 8.1 of the Plan for each
Participant who had an account balance under the Encoda Plan on March 31,
2005 (the "Effective Date") for the amounts transferred from the Encoda
Plan to the Plan (the "Transfer Contributions"). The Transfer
Contributions shall further be sub-divided and classified as follows:
(a) Transfer Contributions attributable to pre-tax contributions under
the Encoda Plan shall be classified as pre-tax contributions under
the Plan.
(b) Transfer Contributions attributable to after-tax contributions under
the Encoda Plan shall be classified as after-tax contributions under
the Plan.
(c) Transfer Contributions attributable to the profit sharing
contributions under the Encoda Plan, if any, shall be classified as
profit sharing contributions under the Plan.
(d) Transfer Contributions attributable to matching contributions under
the Encoda Plan shall be classified as matching contributions under
the Plan.
(e) Transfer Contributions attributable to rollover contributions under
the Encoda Plan shall be classified as rollover contributions under
the Plan.
3. Notwithstanding the foregoing, each Participant shall be fully vested in
his Transfer Contributions from the Encoda Plan.
4. The Transfer Contributions from the Encoda Plan shall be subject to the
withdrawal and distribution provisions of the Plan, except as noted below:
(a) Any loan outstanding from the Encoda Plan shall continue in effect
until paid off or defaulted under the terms of the loan instruments.
All outstanding loans shall be counted towards the maximum number of
loans permitted under the Plan.
(b) A Participant who continues employment after attaining age 70-1/2
will be entitled to elect to commence distribution of his Transfer
Contributions Account no later than April 1 of the calendar year
following the calendar year in which the Participant attains age
70-1/2 even if such Participant remains employed. Distributions
under this paragraph will be made in accordance with Section 9.1(c)
(age 59-1/2 withdrawals) or Section 9.3(d) (age 70-1/2 minimum
distributions), as elected by the Participant.
2