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Exhibit 10(i)
HARRIS CORPORATION
1997 DIRECTORS' DEFERRED COMPENSATION
AND ANNUAL STOCK UNIT AWARD PLAN
(AMENDED AND RESTATED EFFECTIVE OCTOBER 24, 1997)
1. PURPOSE. The purpose of this 1997 Directors' Deferred Compensation
and Annual Stock Unit Award Plan (the "Plan") is (a) to establish a method of
deferring Directors' compensation which will aid Harris Corporation in
attracting and retaining as members of its Board persons whose abilities,
experience and judgment can contribute to the continued progress of the
Corporation and (b) to further align the interests of Directors with the
interests of the shareholders of the Corporation through the annual grant of
Harris Stock Equivalents. Prior to the amendment and restatement of the Plan,
the Plan was known as the "1997 Directors' Deferred Compensation Plan," which
replaced and superseded the Harris Corporation Deferred Compensation Plan for
Directors, Amended as of December 2, 1994 (the "Predecessor Plan").
2. DEFINITIONS. For the purposes of this Plan, the following words and
phrases shall have the meanings indicated, unless the context clearly indicates
otherwise:
"Account" shall have the meaning set forth in Paragraph 4(a).
"Annual Units" shall have the meaning set forth in Paragraph 5(a).
"Board" shall mean the Board of Directors of the Corporation.
"Change of Control" shall mean any of the following events:
(i) any "person" (as such term is defined in Section 3(a)(9) of
the Securities Exchange Act of 1934 (the "Exchange Act") and as used in Sections
13(d)(3) and 14(d)(2) of the Exchange Act), is or becomes a "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Corporation representing 20% or more of the combined voting
power of the Corporation's then outstanding securities eligible to vote for the
election of the Board (the "Corporation
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Voting Securities"); provided, however, that the event described in this
paragraph (i) shall not be deemed to be a Change of Control by virtue of any of
the following acquisitions: (a) by the Corporation or any subsidiary, (b) by any
employee benefit plan sponsored or maintained by the Corporation or any
subsidiary, (c) by any underwriter temporarily holding securities pursuant to an
offering of such securities, (d) pursuant to a Non-Control Transaction (as
defined in paragraph (iii)), or (e) pursuant to any acquisition by a corporate
officer of the Corporation or any group of persons including a corporate
officer;
(ii) individuals who, on July 1, 1996, 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,
1996, whose election or nomination for election was approved by a vote of at
least two-thirds of the Incumbent Directors who remain on the Board (either by a
specific vote or by approval of the proxy statement of the Corporation in which
such person is named as a nominee for director, without objection to such
nomination) shall also be deemed to be an Incumbent Director; provided, however,
that no individual initially elected or nominated as a director of the
Corporation as a result of an actual or threatened election contest with respect
to directors or any other actual or threatened solicitation of proxies or
consents by or on behalf of any person other than the Board shall be deemed to
be an Incumbent Director;
(iii) the consummation of a merger, consolidation, share exchange
or similar form of corporate reorganization of the Corporation or any such type
of transaction involving the Corporation or any of its subsidiaries that
requires the approval of the Corporation's stockholders (whether for such
transaction or the issuance of securities in the transaction or otherwise), or
the consummation of the direct or indirect sale or other disposition of all or
substantially all of the assets, of the Corporation and its subsidiaries (a
"Business Combination"), unless immediately following such Business Combination:
(a) more than 80% of the total voting power of the corporation resulting from
such Business Combination (including, without limitation, any corporation which
directly or indirectly has beneficial ownership of 100% of the Corporation
Voting Securities) eligible to elect directors of such corporation is
represented by shares that were Corporation Voting Securities immediately prior
to such Business Combination (either by remaining outstanding or being
converted), and such voting power is in substantially the same proportion as the
voting power of such Corporation Voting Securities immediately prior to the
Business Combination, (b) no person (other than any publicly traded holding
company resulting from such Business Combination, any employee benefit plan
sponsored or maintained by the Corporation (or the corporation resulting from
such Business Combination)), becomes the beneficial owner, directly or
indirectly, of 20% or more of the total voting power of the outstanding voting
securities eligible to elect directors of the corporation resulting from such
Business Combination, and (c) at least a majority of the members of the board of
the corporation resulting from such Business Combination were Incumbent
Directors at the time of the Board's approval of the execution of the initial
agreement providing for such Business Combination (any Business Combination
which satisfies the conditions specified in (a), (b) and (c) shall be deemed to
be a "Non-Control Transaction"); or
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(iv) the stockholders of the Corporation approve a plan of
complete liquidation or dissolution of the Corporation or the direct or indirect
sale or other disposition of all or substantially all of the assets of the
Corporation and its subsidiaries.
Notwithstanding the foregoing, a Change of Control of the
Corporation shall not be deemed to occur solely because any person acquires
beneficial ownership of more than 20% of the Corporation Voting Securities as a
result of the acquisition of Corporation Voting Securities by the Corporation
which reduces the number of Corporation Voting Securities outstanding; provided,
that, if after such acquisition by the Corporation such person becomes the
beneficial owner of additional Corporation Voting Securities that increases the
percentage of outstanding Corporation Voting Securities beneficially owned by
such person, a Change of Control of the Corporation shall then occur.
"Common Stock" shall mean the common stock of Harris Corporation, par
value $1.00 per share.
"Corporation" means Harris Corporation, its successors, and any
organization into which or with Harris Corporation may merge or consolidate or
to which all or substantially all of its assets may be transferred.
"Deferred Stock Units" shall have the meaning set forth in Paragraph
4(b)(ii).
"Director" shall mean a member of the Board.
"Director Compensation" shall mean: (i) the annual retainer fee payable
to a Director as compensation for services in that capacity, (ii) fees payable
for service on any committee of the Board, (iii) fees payable for serving as a
chairperson of any committee; and (iv) the fees payable to a Director for
attendance at Board and committee meetings.
"Exchange Act" shall have the meaning set forth in the definition of
"Change of Control".
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"Fair Market Value" shall mean, as of any date, the closing price of
the Common Stock as reported by the New York Stock Exchange, Inc. for the date
which is the nearest trading date preceding the date on which such value is to
be determined.
"Harris Stock Equivalent" shall mean a unit of value equal to one share
of Common Stock.
"Harris Stock Equivalents Subaccount" shall have the meaning set forth
in Paragraph 4(a).
"Investment Funds" shall have the meaning set forth in Paragraph 4(a).
"Plan" shall mean this 1997 Directors' Deferred Compensation and Annual
Stock Unit Award Plan, as amended from time to time.
"Predecessor Plan" shall have the meaning set forth in Paragraph 1.
"Retirement Plan" shall mean the Harris Corporation Retirement Plan, as
amended from time to time.
"Secretary" shall mean the Secretary of the Corporation.
"Section 16(b)" shall have the meaning set forth in Paragraph 4(b)(iv).
"Units" shall have the meaning set forth in Paragraph 4(b)(ii).
3. RIGHT TO DEFER COMPENSATION. (a) (i) Any Director who is not an
employee of the Corporation or one of its subsidiaries and who has not made an
election under the Predecessor Plan to defer all or any specified part of the
Director Compensation with respect to calendar year 1997 may at any time prior
to August 1, 1997, elect to defer
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under this Plan all or any specified part of the Director Compensation to which
the Director may thereafter be entitled with respect to the remainder of
calendar year 1997; provided, however, that such amounts may only be credited to
the Director's Harris Stock Equivalents Subaccount.
(ii) Any Director who is not an employee of the Corporation or one
of its subsidiaries and who has made an election under the Predecessor Plan to
defer all or any specified part of the Director Compensation with respect to
calendar year 1997 may at any time prior to August 1, 1997, elect to defer all
or a specified part of, the Director Compensation to which the Director may
thereafter be entitled with respect to the remainder of calendar year 1997;
provided, however, that such amounts may only be credited to the Director's
Harris Stock Equivalents Subaccount. Prior to August 1, 1997, such Director may
also elect to have all or any specified part of any existing balances in her/his
Account credited to the Harris Stock Equivalents Subaccount. Elections to have
existing balances credited into the Harris Stock Equivalents Subaccount (x) made
on or prior to June 30, 1997, will be effective on June 30, 1997, and (y) made
on or after July 1, but prior to July 31, 1997, will be effective on July 31,
1997. Amounts credited to a Director's Harris Stock Equivalents Subaccount shall
be converted into Deferred Stock Units pursuant to Paragraph 4(b)(ii).
(iii) Each of the foregoing elections under this Plan for calendar
year 1997 shall specify (x) in the case of an election under Paragraph 3(a)(i),
the amount or part of Director Compensation to be deferred for the remainder of
1997 and (y) in the case of an election under Paragraph 3(a)(ii), the amount or
part of Director Compensation and existing balances to be credited to the Harris
Stock Equivalents Subaccount. Any deferral elections made under the Predecessor
Plan or made in accordance with Paragraph 3(a)(i) or 3(a)(ii) shall be
irrevocable for 1997.
(b) For calendar years subsequent to 1997, any Director who is not an
employee of the Corporation or one of its subsidiaries may at any time prior to
the
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commencement of a calendar year elect to defer under this Plan all or any
specified part of the Director Compensation to which the Director may be
entitled with respect to such subsequent calendar year. Any person who is not an
employee of the Corporation or one of its subsidiaries who is elected as a
Director and who was not a Director on the last day of the calendar year
immediately prior to her/his election may, within thirty days of the
commencement of her/his term, elect to defer all or any specified part of the
Director Compensation to which she/he may thereafter be entitled with respect to
the year in which she/he is so elected.
(c) Each of the foregoing deferral elections under this Plan shall
be made by written notice delivered to the Secretary, specifying the year or
years with respect to which the election shall apply and the amount or part of
Director Compensation to be deferred for such year or years (and in the case of
an election under Paragraph 3(a)(ii) the portion of existing balances to be
credited to the Director's Harris Stock Equivalents Subaccount). A deferral
election under this Plan with respect to any calendar year shall be irrevocable
after commencement of such calendar year or, in the case of a person who was not
a Director on the last day of the calendar year immediately prior to her/his
election, within thirty days after the commencement of her/his term.
4. ACCOUNTS. (a) GENERAL. On the last day of each calendar month in
which Director Compensation deferred under this Plan would have become payable
to a Director, the amount of such Director Compensation shall be credited to an
account ("Account") which shall be established and maintained for such Director
as a special ledger account on the Corporation's books. A Director's Account
shall consist of a Harris Stock Equivalents subaccount ("Harris Stock
Equivalents Subaccount") and a number of other subaccounts (sometimes referred
to as retirement investment subaccounts) equal to the number of investment funds
available from time to time under the Retirement Plan (as set forth on EXHIBIT A
hereto, as such exhibit may be amended from time to time). Amounts of Director
Compensation credited to the Account of a Director shall be invested in
accordance with the investment election of such Director
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among the investment funds of the Retirement Plan identified on EXHIBIT A hereto
(other than the Harris Stock Fund), and Harris Stock Equivalents. The investment
funds set forth on EXHIBIT A, as amended from time to time (other than the
Harris Stock Fund), and Harris Stock Equivalents are sometimes referred to as
the "Investment Funds". Subject to the provisions of Section 4(b) below for
investments credited to the Harris Stock Equivalents Subaccount and the
crediting of Annual Units, a Director may invest her/his account balance or
future Director Compensation in 1.0% increments in any of the Investment Funds
(or in such other increments as are permitted under the Retirement Plan) and,
may change her/his investment elections in a manner consistent with the changing
of investment elections as set forth in the Retirement Plan. A Director's
account balance and future deferred Director Compensation shall be invested in
the Balanced Fund described on EXHIBIT A until the Director makes a valid
investment election pursuant to this Paragraph 4. Earnings and losses with
respect to a Director's Account shall be allocated to such Account with the same
frequency and in the same manner as allocations under the Retirement Plan.
(b) SPECIAL RULES CONCERNING HARRIS STOCK EQUIVALENTS SUBACCOUNTS.
Notwithstanding any other provisions of this Plan to the contrary, the following
rules shall apply to investments credited to the Harris Stock Equivalents
Subaccounts (including, as appropriate, Annual Units credited to the Harris
Stock Equivalents Subaccount of a Director's Account).
(i) NO INTRA-PLAN TRANSFERS INTO OR OUT OF THE HARRIS STOCK
EQUIVALENTS SUBACCOUNTS. Except for a reallocation of a Director's Account
balance as set forth in Paragraph 3(a)(ii), a Director may not make an election
to transfer or reallocate amounts invested in any of the Director's retirement
investment subaccounts into the Director's Harris Stock Equivalents Subaccount.
In addition, amounts invested in the Harris Stock Equivalents Subaccount,
including Annual Units, may not thereafter be reallocated in any other
retirement investment subaccounts.
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(ii) VALUE OF HARRIS STOCK EQUIVALENTS. Amounts of Director's
Compensation deferred by a Director hereunder which the Director elects to be
invested in Harris Stock Equivalents shall be credited to the Director's Harris
Stock Equivalents Subaccount on the last day of each calendar month in which
such amount would be payable. The Corporation shall credit a Director's Harris
Stock Equivalents Subaccount with that number of units (including fractions)
obtained by dividing such amounts by the Fair Market Value of a share of Common
Stock on the date such amounts are credited to the Director's Harris Stock
Equivalents Subaccount (such Harris Stock Equivalents are sometimes referred to
herein as "Deferred Stock Units"). In the case of Annual Units, each Director's
Harris Stock Equivalents Subaccount shall be credited with a number of Annual
Units on January 1 of each year as set forth in Paragraph 5(a). Deferred Stock
Units and Annual Units are sometimes referred to collectively as "Units."
(iii) EARNINGS ON HARRIS STOCK EQUIVALENTS. A Director's Harris
Stock Equivalents Subaccount shall be credited with the amount of cash dividends
payable with respect to that number of shares of Common Stock equal to the
number of Units (including fractions) credited to such subaccount on the
dividend payment date. The amount of cash dividends so credited shall then be
converted into Units in the manner described above using the Fair Market Value
on the same day, and in a manner consistent with the Retirement Plan.
(iv) REALLOCATIONS OF FUTURE INVESTMENTS INTO HARRIS STOCK
EQUIVALENTS SUBACCOUNT. Subject to any restrictions imposed by Section 16(b) of
the Exchange Act ("Section 16(b)"), changes in investment elections with respect
to future crediting of Director's Compensation into the Harris Stock Equivalents
Subaccount may be made at the Director's discretion, except that a Director
shall have no investment discretion with respect to the crediting of Annual
Units.
(v) ADJUSTMENTS TO AVOID DILUTION. In the event of any stock
dividend or split, recapitalization, merger, consolidation, spin-off,
extraordinary dividends,
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combination or exchange of shares or other similar event, the value and
attributes of each Unit shall be appropriately adjusted consistent with such
change to the same extent as if such Units were issued and outstanding shares of
Common Stock. Such adjustments shall be made by the Board and shall be
conclusive and binding for all purposes of the Plan.
(vi) CASH DISTRIBUTIONS. Distributions from a Director's Harris
Stock Equivalents Subaccount shall be made in cash with the amount of cash to be
paid on account of each Unit being determined by reference to the Fair Market
Value on the last day of the month preceding the date of distribution.
(vii) NO RIGHTS AS SHAREHOLDER. A Director shall not have any
rights as a shareholder of the Corporation with respect to any Units credited to
the Director's Harris Stock Equivalents Subaccount.
5. ANNUAL AWARDS OF DEFERRED STOCK UNITS; CONVERSION AWARD.
(a) ANNUAL UNIT AWARDS. On January 1 of each year, commencing with
January 1, 1998, the Corporation shall credit the Harris Stock Equivalents
Subaccount of each Director who is not an employee of the Corporation or one of
its subsidiaries with 500 Harris Stock Equivalents. The number of Annual Units
to be credited on each January 1 may be changed from time to time by a
resolution adopted by the Board. All such annually awarded units shall be
referred to herein as the "Annual Units."
(b) CONVERSION AWARD. On January 1, 1998 a Director's Harris Stock
Equivalents Subaccount shall be credited with a number of Harris Stock
Equivalents equal to the actuarial present value of the Director's annual
retirement benefit (assuming retirement at age 72) under the Directors'
Retirement Plan if, as of January 1, 1998; either (i) the Director had less than
ten years of service under such Plan or (ii) the Director had ten or more years
of service under such Plan and elected to have such actuarial present value
transferred to the Plan. The number of Harris Stock Equivalents to be credited
to such a Director's Harris Stock Equivalents Subaccount shall be determined in
the manner
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described in Paragraph 4(b)(ii) as of January 1, 1998, except that the fair
market value shall be equal to the average daily closing price for the Common
Stock for the period from October 1, 1997 through December 31, 1997.
6. PAYMENT OF DEFERRED DIRECTOR COMPENSATION AND ANNUAL UNITS. In
accordance with the forms of payment permissible under this Paragraph 6, a
Director shall elect the time or times in which the amounts credited to her/his
Account, including Annual Units credited to the Harris Stock Equivalents
Subaccount, shall be paid by a written election delivered to the Secretary at
the time such Director elects to participate in this Plan. A Director may modify
his or her election at any time before the beginning of the 120-day period
immediately preceding the effective date of the Director's resignation or
retirement, at which time the election shall become irrevocable; provided,
however, that if a Director has Units credited to his/her Harris Stock
Equivalents Subaccount, no such modification shall be made without the prior
approval of the Board or a committee comprised solely of "non-employee
directors" as defined in Rule 16b-3(b)(3) under the Exchange Act, as amended
from time to time. Payments must commence no later than age 72. A Director's
payout election shall apply to all amounts credited to a Director's Account and
all earnings thereon regardless of the year in which the amounts were deferred
or credited. Upon a Director's resignation or retirement, amounts credited to
the Director's Account shall be payable to her/him at her/his election in (i) a
cash lump sum on a date certain within five (5) years of resignation or
retirement or (ii) in annual payments over a designated number of years provided
the Account is fully paid within ten (10) years of resignation or retirement.
Annual payments shall be made on or before January 15. Until a Director's
Account has been completely distributed, earnings and losses on the unpaid
balance thereof shall be allocated as provided in Paragraph 4 above.
7. PAYMENTS IN CONNECTION WITH CHANGE OF CONTROL. Notwithstanding
anything contained in this Plan to the contrary, within 90 days following a
Change of Control, the Corporation shall pay to each Director (or former
Director) a cash lump sum
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payment equal to the then remaining balance in his/her Account. This Paragraph
may not be amended, altered or modified following a Change of Control.
8. MODIFICATION OF PAYMENT TERMS IN CERTAIN CIRCUMSTANCES. If after a
person shall have ceased to be a Director, but prior to full payment to such
person of the entire amount of her or his Account, the Director shall, after
reasonable warning from the Board, persist in an affiliation with any business
that is a principal competitor with a significant portion of the business
conducted by the Corporation, the entire balance of such Account may, if
directed by the Board in its sole discretion, be paid immediately to such person
in a lump sum.
9. PAYMENT IN THE EVENT OF DEATH. In the event a Director or former
Director dies prior to receiving payment of the entire amount of her or his
Account, the unpaid balance shall be paid to such beneficiary as the Director
may have designated in a written notice delivered to the Secretary as the
person, firm or trust to receive any such post-death distribution under this
Plan or, in the absence of such written designation, to the former Director's
legal representative or any person, firm or organization designated in her or
his last will to receive such distributions. Distributions subsequent to the
death of a Director or former Director shall be made in a lump sum.
10. NON-ASSIGNABILITY. None of the rights or interests of any Director
or former Director in amounts of compensation deferred under this Plan or Annual
Units shall be assignable or transferable in whole or in part, either
voluntarily or by operation of law or otherwise, and shall not be subject to
payment of debts by execution, levy, garnishment, attachment, pledge, bankruptcy
or in any other manner.
11. PLAN TO BE UNFUNDED. The Corporation shall be under no obligation
to acquire, segregate, or reserve any funds or other assets for purposes
relating to this Plan and no Director or former Director shall have any rights
whatsoever in or with respect to any funds or other assets held by the
Corporation for purposes of this Plan or otherwise.
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Accounts maintained for purposes of this Plan shall merely constitute
bookkeeping records of the Corporation and shall not constitute any allocation
whatsoever of any assets of the Corporation or be deemed to create any trust or
special deposit with respect to any of the Corporation's assets.
12. MISCELLANEOUS. The Board, any committee of the Board, and any
officer of the Corporation charged with responsibility for the administration
and operation of this Plan may rely upon information supplied to them by the
officers of the Corporation and by the Corporation's independent certified
public accountants. No member of the Board nor any officer of the Corporation
charged with responsibility for the administration and operation of this Plan
shall be liable, except in circumstances involving his or her bad faith, for any
act or action, whether of commission or omission, taken by any other member or
by any other officer, agent, or employee, for anything done or omitted to be
done. The Board may from time to time amend, suspend, terminate or reinstate any
or all of the provisions of this Plan, except that no such amendment, suspension
or termination shall adversely affect the Account of any Director or former
Director as it existed immediately before such amendment, suspension or
termination or the manner of distribution thereof, unless such Director or
former Director shall have consented thereto in writing. This Plan shall be
construed and governed by the laws of Delaware.
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IN WITNESS WHEREOF, Harris Corporation does hereby amend and restate
this 1997 Directors' Deferred Compensation and Annual Stock Unit Award Plan as
of October 24, 1997.
HARRIS CORPORATION
By /s/ Phillip W. Farmer
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Phillip W. Farmer
Chairman of the Board, President
and Chief Executive Officer
ATTEST
/s/ Richard L. Ballantyne
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Corporate Secretary
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