1
EXHIBIT 10(c)
HARRIS CORPORATION
STOCK INCENTIVE PLAN
AMENDED AS OF AUGUST 26, 1994
1. PURPOSE.
The purpose of the Harris Corporation Stock Incentive Plan (the "Plan") is to
promote the long-term growth and performance of Harris Corporation (the
"Corporation") and its affiliates and to attract and retain outstanding
individuals by awarding directors and salaried employees performance-based
stock awards, restricted stock, stock options, stock appreciation rights and/or
other stock-based awards.
2. DEFINITIONS
The following definitions are applicable to the Plan:
"Award" means the grant of performance shares, restricted stock, stock
options, stock appreciation rights or other stock-based award under the Plan.
"Board" means the Board of Directors of the Corporation.
"Board Committee" means a committee of the Board consisting of the members of
the Board who are not employees of the Corporation or any affiliate thereof.
"Commission" means the Securities and Exchange Commission.
"Committee" means a committee of the Board to which the Board has delegated
authority and responsibility under the Plan and which shall be appointed by,
and serve at the pleasure of, the Board, and shall be constituted so as to
satisfy any applicable legal requirements, including the requirements of Rule
16b-3 promulgated by the Commission under the Securities Exchange Act of 1934,
as amended, or under any successor rule adopted by the Commission.
"Common Stock" means the common stock of the Corporation, $1.00 par value per
share.
"Grant Date" means the date on which the grant of an Option under Section 7.1
hereof or a SAR under Section 8.1 hereof becomes effective pursuant to the
terms of the Stock Option Agreement or Stock Appreciation Rights Agreement, as
the case may be, relating thereto.
"Option" means the option to purchase shares of Common Stock granted under
Sections 7.1 and 10.1 hereof.
2
"Option Price" means the purchase price of each share of Common Stock under
an Option.
"Outside Director" means a member of the Board who is not an employee of the
Corporation or any affiliate thereof.
"Participant" means any salaried employee of the Corporation and its
affiliates designated by the Board Committee to receive an Award under the
Plan.
"Performance Period" means the period of time established by the Board
Committee for achievement of certain objectives under Section 5.1 hereof.
"Restriction Period" means the period of time specified in a Performance
Share Award Agreement or a Restricted Stock Award Agreement, as the case may
be, between the Participant and the Corporation during which the following
conditions remain in effect: (i) certain restrictions on the sale or other
disposition of shares of Common Stock awarded under the Plan, and (ii) subject
to the terms of the applicable agreement, the continued employment of the
Participant.
"Stock Appreciation Rights" or "SARs" means the right to receive a cash
payment from the Corporation equal to the excess of the fair market value of a
stated number of shares of Common Stock at the exercise date over a fixed price
for such shares.
3. SHARES SUBJECT TO PLAN
3.1 SHARES RESERVED UNDER THE PLAN. The aggregate number of shares of
Common Stock which may be awarded under the Plan in each fiscal year of the
Corporation, subject to adjustment as provided in Section 3.2 hereof, shall be
one percent (1%) of the total outstanding shares of Common Stock as of the
first day of such year for which the Plan is in effect; provided that such
number shall be increased in any year by the number of shares of Common Stock
available for grant hereunder in previous years but not subject of Awards
granted hereunder in such year; and provided further, that no more than two
million (2,000,000) shares of Common Stock shall be cumulatively available for
the grant of incentive stock options under the Plan. In addition, any Common
Stock issued by the Corporation through the assumption or substitution of
outstanding grants from an acquired corporation or entity shall not reduce the
shares available for grants under the Plan. Shares of Common Stock to be
issued pursuant to the Plan may be authorized and unissued shares, treasury
shares, or any combination thereof. Subject to Section 8.2 hereof, if any
shares of Common Stock subject to an Award hereunder are forfeited or any such
Award otherwise terminates without the issuance of such shares of Common Stock
to a Participant, or if any shares of Common Stock are surrendered by a
Participant in full or partial payment of the Option Price of an Option, such
shares, to the extent of any
2
3
such forfeiture, termination or surrender, shall again be available for grant
under the Plan; PROVIDED, HOWEVER, that shares of Common Stock surrendered by a
Participant subject to Section 16 of the Securities Exchange Act of 1934, as
amended, or any successor thereto, in payment of the Option Price, shall be
available for grant under the Plan only to Participants not subject to such
Section; and
3.2 ADJUSTMENTS. Subject to Section 12 hereof, the aggregate number of
shares of Common Stock which may be awarded under the Plan and outstanding
Awards shall be adjusted by the Board Committee to reflect a change in the
capitalization of the Corporation, including but not limited to, a stock
dividend or split, recapitalization, reorganization, merger, consolidation,
combination, exchange of shares, spin-off, spin-out or other distribution of
assets to shareholders; provided that the number and price of shares subject to
outstanding Options granted to Outside Directors pursuant to Section 10 hereof
and the number of shares subject to future Options to be granted pursuant to
Section 10 shall be subject to adjustment only as set forth in Section 10
hereof.
4. ADMINISTRATION OF PLAN
4.1 ADMINISTRATION BY THE BOARD. The Plan shall be administered by the
Board Committee; PROVIDED, HOWEVER, the Board Committee may delegate some or
all of its authority and responsibility under the Plan to the Committee;
PROVIDED, FURTHER, that the Board Committee may not delegate to the Committee
any authority to make Awards hereunder to the Chief Executive Officer of the
Corporation. The Board Committee shall have authority to interpret the Plan,
to establish, amend, and rescind any rules and regulations relating to the
Plan, to prescribe the form of any agreement or instrument executed in
connection herewith, and to make all other determinations necessary or
advisable for the administration of the Plan. All such interpretations, rules,
regulations and determinations shall be conclusive and binding on all persons
and for all purposes. In addition, the Board Committee shall have authority,
without amending the Plan, to grant Awards hereunder to Participants who are
foreign nationals or employed outside the United States or both, on terms and
conditions different from those specified herein as may, in the sole judgment
and discretion of the Board Committee, be necessary or desirable to further the
purpose of the Plan. Notwithstanding the foregoing, neither the Board, the
Board Committee nor the Committee shall have any discretion with respect to
Options granted to Outside Directors pursuant to Section 10 hereof.
4.2 DESIGNATION OF PARTICIPANTS. Participants shall be selected, from time
to time, by the Board Committee, from those salaried employees of the
Corporation and its affiliates who, in the opinion of the Board Committee, have
the capacity to contribute materially to the continued growth and successful
performance of the Corporation.
3
4
5. PERFORMANCE AWARDS
5.1 AWARDS. Awards of shares of Common Stock may be made, from time to
time, to such salaried employees of the Corporation and its affiliates as may
be selected by the Board Committee. The release of such shares to the
Participant at the lapse of restriction on the sale or transfer of shares
subject to such Awards shall be contingent upon (i) achievement of such
corporate, sector, division or other objectives during the Performance Period
as shall be established by the Board Committee and (ii) the expiration of the
Restriction Period. Except as provided in Section 11 hereof and the
Performance Share Award Agreement between the Participant and the Corporation,
shares subject to such Awards under this Section 5.1 shall be released to the
Participant only after the expiration of the relevant Restriction Period. Each
Award under this Section 5.1 shall be evidenced by a Performance Share Award
Agreement between the Participant and the Corporation which shall specify the
applicable performance objectives, the Performance Period, the Restriction
Period, any forfeiture conditions and such other terms and conditions as the
Board Committee shall determine.
5.2 STOCK CERTIFICATES. Upon expiration of the Restriction Period, the
Corporation shall issue a certificate registered in the name of the Participant
or his designee evidencing the shares of Common Stock to which the Participant
is entitled and release such shares to the custody of the Participant.
5.3 RIGHTS AS SHAREHOLDERS. Subject to the provisions of the Performance
Share Award Agreement between the Participant and the Corporation, during the
Performance Period, Participants may exercise full voting rights with respect
to all shares awarded thereto under Section 5.1 hereof and shall be entitled to
receive dividends and other distributions paid with respect to those shares.
During the period between the completion of the Performance Period and the
expiration of the Restriction Period, Participants may exercise full voting
rights and shall be entitled to receive dividends and other distributions only
as to the number of shares determined in accordance with the Performance Share
Award Agreement between the Participant and the Corporation.
5.4 TRANSFERABILITY OF SHARES. Certificates evidencing the shares of Common
Stock awarded under the Plan shall not be sold, exchanged, assigned,
transferred, pledged, hypothecated or otherwise disposed of until the
expiration of the Restriction Period.
5.5 TERMINATION OF EMPLOYMENT. If a Participant ceases to be an employee of
either the Corporation or of one of its affiliates, the number of shares
subject of the Award, if any, to which the Participant shall be entitled shall
be determined in accordance with the Performance Share Award Agreement between
the Participant and the Corporation.
4
5
5.6 TRANSFER OF EMPLOYMENT. If a Participant transfers employment from one
business unit of the Corporation or any of its affiliates to another business
unit during a Performance Period, such Participant shall be eligible to receive
such number of shares of Common Stock as the Board Committee may determine
based upon such factors as the Board Committee in its sole discretion may deem
appropriate.
6. RESTRICTED STOCK AWARDS
6.1 AWARDS. Awards of shares of Common Stock subject to such restrictions
as to vesting and otherwise as the Board Committee shall determine, may be
made, from time to time, to salaried employees of the Corporation and its
affiliates as may be selected by the Board Committee. The Board Committee may
in its sole discretion at the time of the Award or at any time thereafter
provide for the early vesting of such Award prior to the expiration of the
Restriction Period. Each Award under this Section 6.1 shall be evidenced by a
Restricted Stock Award Agreement between the Participant and the Corporation
which shall specify the vesting schedule, any rights of acceleration, any
forfeiture conditions, and such other terms and conditions as the Board
Committee shall determine.
6.2 STOCK CERTIFICATES. Upon expiration of the Restriction Period, the
Corporation shall issue a certificate registered in the name of the Participant
or his designee evidencing the shares of Common Stock to which the Participant
is entitled and release such shares to the custody of the Participant.
6.3 RIGHTS AS SHAREHOLDERS. During the Restriction Period, Participants may
exercise full voting rights with respect to all shares awarded thereto under
Section 6.1 hereof and shall be entitled to receive dividends and other
distributions paid with respect to those shares.
6.4 TRANSFERABILITY OF SHARES. Certificates evidencing the shares of Common
Stock awarded under the Plan shall not be sold, exchanged, assigned,
transferred, pledged, hypothecated or otherwise disposed of until the
expiration of the Restriction Period.
6.5 TERMINATION OF EMPLOYMENT. If a Participant ceases to be an employee of
either the Corporation or of any of its affiliates, the number of shares
subject of the Award, if any, to which the Participant shall be entitled shall
be determined in accordance with the Restricted Stock Award Agreement between
the Participant and the Corporation. All remaining shares as to which
restrictions apply at the date of termination of employment shall be forfeited
subject to such exceptions, if any, authorized by the Board Committee.
5
6
7. STOCK OPTIONS
7.1 GRANTS. Options may be granted, from time to time, to such salaried
employees of the Corporation and its affiliates as may be selected by the Board
Committee. The Option Price shall be determined by the Board Committee
effective on the Grant Date; PROVIDED HOWEVER, that such price shall not be
less than one hundred percent (100%) of the fair market value of a share of
Common Stock on the Grant Date. The number of shares of Common Stock subject
to each option granted to each Participant, the terms of each option, and any
other terms and conditions of an Option granted hereunder shall be determined
by the Board Committee, in its sole discretion, effective on the Grant Date;
PROVIDED, HOWEVER, that no option shall be exercisable any later than ten (10)
years from the Grant Date. Each option shall be evidenced by a Stock Option
Agreement between the Participant and the Corporation which shall specify the
type of Option granted, the Option Price, the term of the Option, the number of
shares of Common Stock to which the Option pertains, the conditions upon which
the Option becomes exercisable and such other terms and conditions as the Board
Committee shall determine.
7.2 PAYMENT OF OPTION PRICE. No shares of Common Stock shall be issued upon
exercise of an Option until full payment of the Option Price therefor by the
Participant. Upon exercise, the Option Price may be paid in cash, in shares of
Common Stock having a fair market value equal to the Option Price, or in any
combination thereof.
7.3 RIGHTS AS SHAREHOLDERS. Participants shall not have any of the rights
of a shareholder with respect to any shares subject to an Option until such
shares have been issued upon the proper exercise of such Option.
7.4 TRANSFERABILITY OF OPTIONS. Options granted under the Plan may not be
sold, transferred, pledged, assigned, hypothecated or otherwise disposed of
except by will or by the laws of descent and distribution. All Options granted
to a Participant under the Plan shall be exercisable during the lifetime of
such Participant only by such Participant, his agent, guardian or
attorney-in-fact.
7.5 TERMINATION OF EMPLOYMENT. If a Participant ceases to be an employee of
either the Corporation or of any of its affiliates, the Options granted
hereunder shall be exercisable in accordance with the Stock Option Agreement
between the Participant and the Corporation.
8. STOCK APPRECIATION RIGHTS
8.1 GRANTS. Stock Appreciation Rights may be granted, from time to time, to
such salaried employees of the Corporation and its affiliates as may be
selected by the Board Committee. SARs may be granted at the discretion of the
Board Committee
6
7
either (i) in connection with an Option or (ii) independent of an Option. The
price from which appreciation shall be computed shall be established by the
Board Committee at the Grant Date; PROVIDED, HOWEVER, that such price shall not
be less than one-hundred percent (100%) of the fair market value of the number
of shares of Common Stock subject of the grant on the Grant Date. In the event
the SAR is granted in connection with an Option, the fixed price from which
appreciation shall be computed shall be the Option Price. Each grant of a SAR
shall be evidenced by a Stock Appreciation Rights Agreement between the
Participant and the Corporation which shall specify the type of SAR granted,
the number of SARs, the conditions upon which the SARs vest and such other
terms and conditions as the Board Committee shall determine.
8.2 EXERCISE OF SARS. SARs may be exercised upon such terms and conditions
as the Board Committee shall determine; PROVIDED, HOWEVER, that SARs granted in
connection with Options may be exercised only to the extent the related Options
are then exercisable. Notwithstanding Section 3.1 hereof, upon exercise of a
SAR granted in connection with an Option as to all or some of the shares
subject of such Award, the related Option shall be automatically cancelled to
the extent of the number of shares subject of the exercise, and such shares
shall no longer be available for grant hereunder. Conversely, if the related
Option is exercised as to some or all of the shares subject of such Award, the
related SAR shall automatically be cancelled to the extent of the number of
shares of the exercise, and such shares shall no longer be available for grant
hereunder.
8.3 PAYMENT OF EXERCISE. Upon exercise of a SAR, the holder shall be paid
in cash the excess of the fair market value of the number of shares subject of
the exercise over the fixed price, which in the case of a SAR granted in
connection with an Option shall be the Option Price for such shares.
8.4 RIGHTS OF SHAREHOLDERS. Participants shall not have any of the rights
of a shareholder with respect to any Options granted in connection with a SAR
until shares have been issued upon the proper exercise of an Option.
8.5 TRANSFERABILITY OF SARS. SARs granted under the Plan may not be sold,
transferred, pledged, assigned, hypothecated or otherwise disposed of except by
will or by the laws of descent and distribution. All SARs granted to a
Participant under the Plan shall be exercisable during the lifetime of such
Participant only by such Participant, his agent, guardian, or attorney-in-fact.
8.6 TERMINATION OF EMPLOYMENT. If a Participant ceases to be an employee of
either the Corporation or of any of its affiliates, SARs granted hereunder
shall be exercisable in accordance with the Stock Appreciation Rights Agreement
between the Participant and the Corporation.
7
8
9. OTHER STOCK-BASED AWARDS
Awards of shares of Common Stock and other awards that are valued in whole or
in part by reference to, or are otherwise based on, Common Stock, may be made,
from time to time, to salaried employees of the Corporation and its affiliates
as may be selected by the Board Committee. Such Awards may be made alone or in
addition to or in connection with any other Award hereunder. The Board
Committee may in its sole discretion determine the terms and conditions of any
such Award. Each such Award shall be evidenced by an agreement between the
Participant and the Corporation which shall specify the number of shares of
Common Stock subject of the Award, any consideration therefor, any vesting or
performance requirements and such other terms and conditions as the Board
Committee shall determine.
10. OUTSIDE DIRECTORS' OPTIONS
10.1 GRANTS. Effective the date of the 1990 Annual Meeting of Shareholders
and on the date of each Annual Meeting thereafter, each Outside Director shall
automatically be granted an Option to purchase 1,000 shares of Common Stock.
All such Options shall be nonstatutory stock options. The Option Price shall
be one hundred percent (100%) of the fair market value of the shares of Common
Stock on the date of grant.
10.2 EXERCISE OF OPTIONS. Except as set forth in this Section 10,
twenty-five percent (25%) of the total number of shares subject of an Option
granted to an Outside Director shall become exercisable on the first
anniversary of the date of grant of the year in which the option is granted and
twenty-five percent (25%) on the anniversary date of each of the next three
succeeding years. The right to purchase shares with respect to shares which
have become exercisable shall be cumulative during the term of the Option. Any
Option granted to Outside Directors that has been outstanding for more than one
(1) year shall immediately become exercisable in the event of a Change of
Control, as hereinafter defined. The Option may be exercised by the Outside
Director during the period that the Outside Director remains a member of the
Board and for a period of three (3) months following retirement, provided that
only those Options exercisable at the date of the Outside Director's retirement
may be exercised during the period following retirement and, provided further,
that in no event shall the Option be exercisable more than ten (10) years after
the date of grant.
In the event of the death of an Outside Director, the Option shall be
exercisable only within the twelve (12) months next succeeding the date of
death, and then only (i) by the executor or administrator of the Outside
Director's estate or by the person or persons to whom the Outside Director's
rights under the Option shall pass by the Outside Director's will or the laws
of descent and distribution, and (ii) if and to the extent that the Outside
Director was entitled to exercise the Option at the date of the Outside
Director's death, provided that in no event shall the Option be exercisable
8
9
more than ten (10) years after the date of grant.
10.3 PAYMENT OF OPTION PRICE. An Option granted to an Outside Director
shall be exercisable only upon payment to the Corporation of the Option Price.
Payment for the shares shall be in United States dollars, payable in cash or by
check.
10.4 ADJUSTMENTS. In case there shall be a merger, reorganization,
consolidation, recapitalization, stock dividend or other change in corporate
structure such that the shares of Common Stock are changed into or become
exchangeable for a larger or smaller number of shares, thereafter the number of
shares subject to outstanding Options granted to Outside Directors and the
number of shares subject to Options to be granted to Outside Directors pursuant
to the provisions of this Section 10 shall be increased or decreased, as the
case may be, in direct proportion to the increase or decrease in the number of
shares of Common Stock by reason of such change in corporate structure,
provided that the number of shares shall always be a whole number, and the
purchase price per share of any outstanding Options shall, in the case of an
increase in the number of shares, be proportionately reduced, and in the case
of a decrease in the number of shares, shall be proportionately increased.
11. CHANGE OF CONTROL
11.1 DEFINITION OF CHANGE OF CONTROL. For purposes hereof, a "change of
control" shall be deemed to have occurred if (i) a third person, including a
"group" as defined in Section 13(d)(3) of the Securities Exchange Act of 1934
or any rules or regulations thereunder, acquires shares of the Corporation
having twenty percent (20%) or more of the total number of votes that may be
cast for the election of directors of the Corporation, or (ii) as the result of
any tender or exchange offer, merger or other business combination, sale of
assets or contested election, or any combination of the foregoing transactions
(a "Transaction"), the persons who were directors of the Corporation before the
Transaction shall cease to constitute a majority of the Board of the
Corporation or any successor to the Corporation.
11.2 ACCELERATION OF BENEFITS. In the event of a "change of control" of the
Corporation, all outstanding Awards shall be cashed out immediately prior to
the occurrence of the "change of control" in such manner and in such amounts as
determined by the Board Committee in its sole discretion at the time such
Awards are made.
12. AMENDMENT OR TERMINATION OF PLAN
Until such time as a "change of control" shall have occurred, the Board or
the Board Committee may amend, suspend or terminate the Plan or any part
thereof from time to time, provided that no change may be made which would
impair the rights of
9
10
a Participant to whom shares of Common Stock have theretofore been awarded
without the consent of said Participant; and provided, further, that neither
the Board nor the Board Committee may make any alteration or amendment to the
Plan which would materially increase the benefits accruing to Participants
under the Plan, increase the aggregate number of shares which may be issued
under the Plan (other than an increase reflecting a change in capitalization of
the Corporation), change the class of employees eligible to participate in the
Plan, or amend, modify or delete Section 10 hereof, without the approval of the
shareholders of the Corporation so long as such approval is required by
applicable law or regulation. Further, Section 10 hereof may not be amended
more frequently than once every six months, except to comply with changes to
the Internal Revenue Code, the Employee Retirement Income Security Act, or the
rules promulgated thereunder.
13. MISCELLANEOUS
13.1 RIGHTS OF EMPLOYEES. Nothing in the Plan shall interfere with or limit
in any way the right of the Corporation or any affiliate to terminate any
Participant's employment at any time, nor confer upon any Participant any right
to continued employment with the Corporation or any affiliate.
13.2 TAX WITHHOLDING. The Corporation shall have the authority to
withhold, or to require a Participant to remit to the Corporation, prior to
issuance or delivery of any shares or cash hereunder, an amount sufficient to
satisfy federal, state and a local tax withholding requirements associated with
any Award. In addition, the Corporation may, in its sole discretion, permit a
Participant to satisfy any tax withholding requirements, in whole or in part,
by (i) delivering to the Corporation shares of Common Stock held by such
Participant having a fair market value equal to the amount of the tax or (ii)
directing the Corporation to retain shares of Common Stock otherwise issuable
to the Participant under the Plan.
13.3 STATUS OF AWARDS. Awards hereunder shall not be deemed compensation
for purposes of computing benefits under any retirement plan of the Corporation
or affiliate and shall not affect any benefits under any other benefit plan now
or hereafter in effect under which the availability or amount of benefits is
related to the level of compensation.
13.4 WAIVER OF RESTRICTIONS. The Board Committee may, in its sole
discretion, based on such factors as the Board Committee may deem appropriate,
waive in whole or in part, any remaining restrictions or vesting requirements
in connection with any Award hereunder.
13.5 DELEGATION TO MANAGEMENT. The Board Committee may delegate to one or
more officers of the Corporation or a committee of officers the right to grant
Awards hereunder to employees who are not officers or directors of the
Corporation
10
11
and to cancel or suspend Awards to employees who are not officers or directors
of the Corporation.
13.6 ADJUSTMENT OF AWARDS. Subject to Section 12, the Board Committee shall
be authorized to make adjustments in performance award criteria or in the terms
and conditions of other Awards (except Options granted pursuant to Section 10
hereof) in recognition of unusual or nonrecurring events affecting the
Corporation or its financial statements or changes in applicable laws,
regulations or accounting principles; provided, however, that no such
adjustment shall impair the rights of any Participant without his consent. The
Board Committee may also make Awards hereunder in replacement of, or as
alternatives to, Awards previously granted to Participants, including without
limitation, previously granted Options having higher Option Prices and grants
or rights under any other plan of the Corporation or of any acquired entity.
The Board Committee may correct any defect, supply any omission or reconcile
any inconsistency in the Plan or any Award in the manner and to the extent it
shall deem desirable to carry it into effect. In the event the Corporation
shall assume outstanding employee benefit awards or the right or obligation to
make future such awards in connection with the acquisition of another
corporation or business entity, the Board Committee may, in its discretion,
make such adjustments in the terms of Awards under the Plan as it shall deem
appropriate. Notwithstanding the above, neither the Board, the Board Committee
nor any Committee shall have the right to make any adjustments in the terms or
conditions of Options granted pursuant to Section 10.
13.7 CONSIDERATION FOR AWARDS. Except as otherwise required in any
applicable agreement or by the terms of the Plan, Participants under the Plan
shall not be required to make any payment or provide consideration for an Award
other than the rendering of services.
13.8 EFFECTIVE DATE AND TERM OF PLAN. The Plan shall be effective as of July
1, 1989, subject to the approval of the Plan by the holders of a majority of
the shares of Common Stock at the 1990 Annual Shareholders meeting. Any grants
made hereunder prior to such approval shall be effective when made (unless
otherwise specified by the Board Committee at the time of grant), but shall be
conditioned on, and subject to, the approval of the Plan by shareholders.
Unless terminated under the provisions of Section 12 hereof, the Plan shall
continue in effect until terminated by the Board.
Approved by the Board of Directors this 26th day of August, 1994.
Attested:
______________________________
/c/ R. L. Ballantyne
f94064
11