-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, XfQSOTbVrr3bZCs7fUnUymIcL3q2qfv4Ohi4jtXtuKmTTz9fVAScbtSrxugHxO/X GBqZwm7ZHEM2G0i4eg6htw== 0000950152-94-000975.txt : 19940927 0000950152-94-000975.hdr.sgml : 19940927 ACCESSION NUMBER: 0000950152-94-000975 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 19940630 FILED AS OF DATE: 19940923 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HARRIS CORP /DE/ CENTRAL INDEX KEY: 0000202058 STANDARD INDUSTRIAL CLASSIFICATION: 3663 IRS NUMBER: 340276860 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-03863 FILM NUMBER: 94550201 BUSINESS ADDRESS: STREET 1: 1025 W NASA BLVD CITY: MELBOURNE STATE: FL ZIP: 32919 BUSINESS PHONE: 4077279100 MAIL ADDRESS: STREET 1: 1025 W NASA BLVD CITY: MELBOURNE STATE: FL ZIP: 32919 FORMER COMPANY: FORMER CONFORMED NAME: HARRIS SEYBOLD CO DATE OF NAME CHANGE: 19600201 10-K 1 FORM 10-K 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED JUNE 30, 1994 COMMISSION FILE NUMBER 1-3863 HARRIS CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 34-0276860 - -------------------------------------------------------------------------------------------------------------------- (STATE OF INCORPORATION) (IRS EMPLOYER IDENTIFICATION NO.)
1025 W. NASA Boulevard Melbourne, Florida 32919 --------------------------------------------- (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (407) 727-9100 --------------------------------------------- (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE) SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NAME OF EACH EXCHANGE TITLE OF EACH CLASS ON WHICH REGISTERED ----------------------------------------------- Common Stock, par value $1 per share New York Stock Exchange, Inc. 7 3/4% Sinking Fund Debentures due 2001 New York Stock Exchange, Inc. Preferred Stock Purchase Rights New York Stock Exchange, Inc.
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: None Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO Indicate by check mark if disclosure of delinquent filers pursuant to Section 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. /X/ Aggregate market value of the voting stock held by non-affiliates of the registrant as of August 31, 1994. $1,642,340,000 Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of August 31, 1994. 39,391,006 Shares DOCUMENTS INCORPORATED BY REFERENCE Proxy Statement dated September 15, 1994 (Incorporated by Reference into Part III). 2 PART I ITEM 1. BUSINESS THE COMPANY Harris Corporation was incorporated in Delaware in 1926 as the successor to three companies founded in the 1890's. The executive offices of the Company are located at 1025 W. NASA Boulevard, Melbourne, Florida 32919, and the telephone number is (407) 727-9100. Harris Corporation, along with its subsidiaries (hereinafter called "Harris" or the "Company"), is a worldwide company focused on four core businesses: advanced electronic systems, semiconductors, communications and an office equipment distribution network. The Company's four core businesses were carried out during fiscal 1994 through three business sectors and a subsidiary, which correspond to its business segments used for financial reporting purposes: Electronic Systems Sector, Semiconductor Sector, Communications Sector and Lanier Worldwide, Inc. Harris structures its operations primarily around the markets it serves. Its operating divisions, which are the basic operating units, have been organized on the basis of technology and markets. For the most part, each operating division has its own marketing, engineering, manufacturing and service organizations. Reference is made to the Note Business Segments in the Notes to Financial Statements for further information with respect to business sectors and the subsidiary. Total sales in 1994 increased to $3.3 billion from $3.1 billion a year earlier. Total sales in the United States increased 6.0 percent, and international sales, which amounted to 29 percent of the corporate total, increased 11.9 percent. Net Income increased .6 percent to $111.8 million from $111.1 million. Income from continuing operations before income taxes increased to $193.5 million in 1994 from $169.8 million in 1993. Results for fiscal 1994 included an $11.5 million after-tax charge resulting from the Company's write-off of securities received from the 1990 sale of a discontinued business and a $10.1 million one-time after-tax charge for a cumulative effect of a change in accounting principle. The Company's three business sectors and the subsidiary and their principal products are as follows: Electronic Systems Sector: engages in advanced research, and develops, designs and produces advanced information processing and communication systems and software for defense applications, air traffic control, avionics, satellite communications, space exploration, mobile radio networks, simulation, energy management, law enforcement, electronic systems testing, and newspaper composition. Semiconductor Sector: produces advanced analog, digital and mixed-signal integrated circuits and discrete semiconductors for power, signal processing, data-acquisition, and logic applications for automotive systems, wireless communications, telecommunications line cards, video and imaging systems, industrial equipment, computer peripherals, and military and aerospace systems. Communications Sector: produces broadcast, radio-communication, and telecommunication products and systems, including transmitters and studio equipment for radio and TV, HF, VHF and UHF radio-communication equipment, microwave radios, digital telephone switches, telephone subscriber-loop equipment, and in-building paging equipment. Lanier Worldwide, Inc.: sells, services, supports and provides supplies for copying systems, facsimile systems and networks, dictation systems, optical-based electronic-image management systems, continuous recording systems and PC-based health care management systems. The financial results shown in the tables below are presented to comply with current financial accounting standards relating to business segment reporting. Information concerning the identifiable assets of the Company's business segments is contained in the Note Business Segments in the Notes to Financial Statements. In calculating operating profit, allocations of certain expenses among the business segments involve the exercise of business judgment. Intersegment sales, which are insignificant, are accounted for at prices comparable to those paid by unaffiliated customers. 1 3 NET SALES AND OPERATING PROFIT BY BUSINESS SEGMENT (DOLLARS IN MILLIONS) NET SALES
YEAR ENDED ELECTRONIC SEMI- COMMUNI- LANIER JUNE 30 SYSTEMS CONDUCTOR CATIONS WORLDWIDE TOTAL ----------------------- ---------- -------- -------- ---------- --------- 1992................... $1,016.9 $584.5 $495.6 $907.0 $ 3,004.0 1993................... 1,042.1 590.8 544.2 922.0 3,099.1 1994................... 1,128.9 635.3 628.2 943.7 3,336.1
OPERATING PROFIT
YEAR ENDED ELECTRONIC SEMI- COMMUNI- LANIER CORPORATE INTEREST JUNE 30 SYSTEMS CONDUCTOR CATIONS WORLDWIDE EXPENSE EXPENSE TOTAL ----------------------- ------- ------- ------- ------- ------- ------- ------ 1992................... $100.9 $(14.4 ) $46.0 $83.9 $(25.4 ) $(66.0 ) $125.0 1993................... 98.9 44.4 43.9 84.2 (41.7 ) (59.9 ) 169.8 1994................... 101.3 70.2 57.6 89.8 (67.1 )* (58.3 ) 193.5
- --------------- *Corporate expense in 1994 includes a $17.8 million charge resulting from the write-off of securities received from the 1990 sale of a discontinued business. ELECTRONIC SYSTEMS The Electronic Systems Sector of Harris is composed of several operating divisions and is engaged in advanced research, development, design and production of advanced information processing and communication systems and sub-systems for government and commercial organizations in the United States and overseas. Applications of the sector's state-of-the-art technologies include air traffic control, avionics, communications, space exploration, mobile radio networks, energy management, electronics systems testing, newspaper composition and information management systems. The Electronic Systems Sector is a major supplier of advanced-technology and electronic systems to the United States Department of Defense, the Federal Aviation Administration, National Aeronautics and Space Administration, Federal Bureau of Investigation and other federal and local government agencies, aircraft manufacturers, electric utilities, newspapers and publishing houses. Sales in fiscal 1994 for this business segment increased 8.3 percent to $1,128.9 million from $1,042.1 million in fiscal 1993. Operating profit of $101.3 million increased from $98.9 million in the previous year. This sector contributed 34 percent of Company sales in 1994 and 1993. The sector is the leading supplier of air-traffic control communication systems. The sector is also a major supplier of custom aircraft and spaceborne communication and information processing systems, a leading supplier of terrestrial and satellite communication systems and a preeminent supplier of super-high-frequency military satellite ground terminals for the Department of Defense. The sector is a major supplier of custom ground-based systems and software designed to collect, store, retrieve, process, analyze, display and distribute information for government, defense and law enforcement applications, including meteorological data processing systems and range management information systems. The sector also provides computer controlled electronic maintenance, logistic, simulation and test systems for military aircraft, ships and ground vehicles. The sector is a worldwide supplier of energy management and distribution automation systems for electric utilities and information-processing systems for newspapers and publishing houses. Most of the sales of this sector are made directly or indirectly to the United States government under contracts or subcontracts containing standard government clauses providing for redetermination of profits, if applicable, and for termination for the convenience of the government or for default of the contractor. These 2 4 sales consist of a variety of contracts and programs with various governmental agencies, with no single program accounting for 10 percent or more of total Harris sales. The backlog of unfilled orders for this segment of Harris' business was $530 million at June 30, 1994, substantially all of which is expected to be filled during the 1995 fiscal year, compared with $593 million a year earlier. SEMICONDUCTOR The Semiconductor Sector of the Company produces analog, digital and mixed-signal integrated circuits and discrete and intelligent-power semiconductors for data-acquisition, signal processing, logic and power applications that demand the highest levels of performance in terms of speed, precision, low power consumption and reliability, often in harsh environments. Sales in fiscal 1994 for this business segment increased 7.5 percent to $635.3 million from $590.8 million in fiscal 1993. The sector's operating profit was $70.2 million in fiscal 1994, compared with $44.4 milion in fiscal 1993. The sector contributed 19 percent of Company sales in fiscal 1994 and 1993. The sector produces discrete-power products, including MOS (metal oxide semiconductors) power devices, transistors, rectifiers, power control circuits and transient suppression products. The sector pioneered development of "intelligent-power" technology which permits the combination of analog, logic and power circuits on the same chip. Such products are widely used in automotive electronic systems, such as automotive fuel injection systems, anti-lock braking and engine control, and industrial motor control. The sector is a major supplier of devices which address the needs of signal processing applications, including linears, switches, multiplexers, data conversion and digital signal processing chips. In addition, the sector is a leader in mixed-signal telecommunication line card applications, including SLICs (subscriber line interface circuits), CODECs, and cross-point switches used in private-branch-exchange (PBX) systems and of other circuits for cellular communications, high resolution graphic monitors, broadcast video and military radar systems. The sector is a major supplier of integrated circuits and discrete devices to the military and aerospace markets, with an emphasis on commercial and military space applications. The sector is the leading supplier of radiation-hardened circuits. The sector's custom, semicustom and standard integrated circuits are based on CMOS (complementary metal oxide semiconductor), SOS (silicon-on-sapphire), SOI (silicon-on-insulator), bipolar analog and power analog/digital process technologies. The sector is also a leading supplier of custom and semicustom integrated circuits, known as application specific integrated circuits (ASICs). These circuits are designed for high-performance military, space, automotive and industrial applications. Principal customers for the products of this sector include video imaging, computer, communication, telephone, industrial, medical and other electronic equipment manufacturers, automobile manufacturers, defense contractors and U.S. government agencies. In general, these products are sold directly to customers through a worldwide sales organization, which includes independent manufacturers' representatives, and to distributors, who, in turn, resell to their customers. Internationally, this sector also sells through distributors. See "International Business." The integrated circuit manufacturing technology and integrated circuit industry is characterized by rapid advances in product performance technology. Semiconductor technology is vital to the equipment and electronic systems designed and manufactured by the Electronic Systems Sector and Communications Sector of the Company. Harris is a party to technology exchange agreements with other companies to develop new and expanded technologies. The backlog of unfilled orders for this segment of Harris' business was $298 million at June 30, 1994, substantially all of which is expected to be filled during the 1995 fiscal year, compared with $300 million a year earlier. 3 5 COMMUNICATIONS The Communications Sector of the Company designs, manufactures, and sells products characterized by three principal communication technologies: broadcast, including radio and television products and transmission systems; two-way radio, including high-frequency (HF), very high frequency (VHF) and ultra-high frequency (UHF) products, and complete turnkey communication systems; and telecommunications, including microwave systems, digital telephone switches and auxiliary telecommunication products. Sales in fiscal 1994 for this business segment increased 15.4 percent to $628.2 million from $544.2 million. The sector recorded operating profit of $57.6 million, up from $43.9 million in fiscal 1993. The sector contributed 19 percent of Company sales in fiscal 1994 and 17 percent in 1993. Under the Farinon trademark, the sector is the largest producer of low-and medium-capacity analog and digital microwave systems in North America. The sector is the largest supplier of radio and television broadcast transmission equipment and radio-studio equipment in the United States. The sector's products include radio and television transmitters, antennas, and audio, remote-control and video production systems. The sector is also a leading supplier of mobile broadcast units. This sector is a leading supplier of two-way HF, VHF and UHF radio equipment and offers a comprehensive line of products and systems for long-and short-distance communications. The sector also designs and installs turnkey communication systems involving a variety of communication technologies, including HF, VHF, microwave, fiber-optics and switching systems with command and control centers. The products are sold to commercial and government customers worldwide. The sector is also a worldwide supplier of voice and data digital network switches and private branch exchanges (PBXs) to long-distance carriers, utilities, corporations and government agencies. In addition, the sector supplies telecommunication products and systems under the Dracon trademark, including telephone test systems and tools, ISDN terminal adapters and telephone-integrated voice-paging systems for a wide variety of in-plant applications. Internationally, particularly in the developing and oil-producing nations, the sector designs, sells, installs and services communication systems involving radio and television broadcasting equipment and long-and short-range radios on both a product and a turnkey basis. Principal customers for products of the Communications Sector include foreign and domestic government and military agencies, commercial and industrial firms, radio and TV broadcasters, telephone companies, utilities, construction companies and oil producers. In general, these products are sold and serviced domestically directly to customers through the sales organizations of the operating divisions and through established distribution channels. Internationally, the sector markets and sells its products and services through established distribution channels. See "International Business." The backlog of unfilled orders for this segment of Harris' business was $300 million at June 30, 1994, substantially all of which is expected to be filled during the 1995 fiscal year, compared with $258 million a year earlier. LANIER WORLDWIDE Lanier Worldwide, Inc. is a wholly-owned subsidiary of Harris which markets, sells, and services office equipment and business communication products on a global basis. Sales in fiscal 1994 for this business segment increased 2.4 percent to $943.7 million from $922.0 million. Operating profit was $89.8 million, up from $84.2 million last year. Lanier Worldwide contributed 28 percent of Company sales in fiscal 1994 and 30 percent in 1993. Lanier Worldwide markets office products, including copiers, dictation systems, voice-recording products and systems, facsimile units, and information-management systems through a global network of direct sales 4 6 offices and authorized dealers. Lanier Worldwide also leases certain of these products to customers on a short-term basis. Due to the nature of its business, backlog of unfilled orders is not considered significant to an understanding of this segment's business. INTERNATIONAL BUSINESS In fiscal 1994, sales of products exported from the United States or manufactured abroad were $982 million or 29.4 percent of the corporate total, compared with $877 million (28.3 percent) in fiscal 1993 and $861 million (28.7 percent) in fiscal 1992. Exports from the United States, principally to Europe, Asia and Latin America, totalled $388 million or 39.5 percent of the international sales in fiscal 1994, $295 million or 33.7 percent in fiscal 1993 of the international sales, and $273 million or 31.7 percent of the international sales in fiscal 1992. Foreign operations represented 17.8 percent of consolidated net sales and 23.8 percent of consolidated total assets as of June 30, 1994. Electronic products and systems are produced principally in the United States and international electronic revenues are derived primarily from exports. Semiconductor assembly facilities are located in Malaysia, Ireland and Singapore and electronic products assembly facilities are located in Canada and England. International marketing activities are conducted through subsidiaries which operate in Canada, Europe, Central and South America, Asia and Australia. Reference is made to Exhibit 21 "Subsidiaries of the Registrant" for further information regarding foreign subsidiaries. Harris utilizes indirect sales channels, including dealers, distributors and sales representatives, in the marketing and sale of some lines of equipment, both domestically and internationally. These independent representatives may buy for resale, or, in some cases, solicit orders from commercial or governmental customers for direct sales by Harris. Prices to the ultimate customer in many instances may be recommended or established by the independent representative and may be on a basis which is above or below the Company's list prices. Such independent representative generally receives a discount to the Company's list prices and may mark-up such prices in setting the final sales prices paid by the customer. During the fiscal year, orders came from a large number of foreign countries, no one of which accounted for as much as five percent of total orders. Certain of Harris' exports are paid for by letters of credit, with the balance either on open account or installment note basis. Advance payments, progress payments or other similar payments received prior to or upon shipment often cover most of the related costs incurred. Performance guarantees are generally required on significant foreign government contracts. The particular economic, social and political conditions for business conducted outside the United States differ from those encountered by domestic business. Management believes that the composite business risk for the international business as a whole is somewhat greater than that faced by its domestic operations as a whole. International business may subject the Company to, among other things: the laws and regulations of foreign governments relating to investments, operations, currency exchange controls, revaluations and fluctuations of currencies; uncertainties as to local laws and enforcement of contract and intellectual property rights; and occasional requirements for onerous contract clauses; and, in certain areas, the risk of war, rapid changes in governments and economic policies, the threat of international boycotts and United States anti-boycott legislation. Nevertheless, in the opinion of management, these risks are offset by the diversification of the international business and the protection provided by letters of credit and advance payments. Except for inconsequential matters involving road and utility rights-of-way, Harris has never been subjected to threat of government expropriation, either within the United States or abroad. Financial information regarding the Company's domestic and international operations is contained in the Note Business Segments in the Notes to Financial Statements. 5 7 COMPETITION; PRINCIPAL CUSTOMERS; BACKLOG The Company operates in highly competitive businesses that are sensitive to technological advances. While successful product and systems development is not necessarily dependent on total financial resources, some of Harris' competitors in each of the sectors of its business are larger and can maintain higher levels of expenditures for research and development than Harris. Harris concentrates in each of its sectors on the market opportunities which management believes are compatible with its overall technological capabilities and objectives. Principal competitive factors in these sectors are cost-effectiveness, product reliability, service and ability to meet delivery schedules as well as, in international areas, the effectiveness of dealers. Sales to the U.S. government, which is the Company's only customer accounting for 10 percent or more of total sales, were 34.8 percent, 35.7 percent, and 37.6 percent of total sales in 1994, 1993 and 1992 respectively. It is not expected that Defense Department budget cutbacks will have a material effect on the profitability of the Company, due in part to the Company's efforts to reduce its reliance on defense contracts. Harris' backlog of unfilled orders was approximately $1.1 billion at June 30, 1994 and at June 30, 1993. Substantially all of the backlog orders at June 30, 1994 are expected to be filled by June 30, 1995. RESEARCH AND ENGINEERING Research and engineering expenditures by Harris totaled approximately $624 million in 1994, $564 million in 1993 and $531 million in 1992. Company-sponsored research and product development costs were $128 million in 1994, $121 million in 1993, $122 million in 1992. The balance was funded by government and commercial customers. Company-funded research is directed to the development of new products and to building technological capability in selected semiconductor, communications and electronic systems areas. Government-funded research helps strengthen and broaden the technical capabilities of Harris in its areas of interest. Almost all of the decentralized operating divisions maintain their own engineering and new product development departments, with scientific assistance provided by advanced-technology departments. Harris holds numerous patents which it considers, in the aggregate, to constitute an important asset. However, it does not consider its business or any sector to be materially dependent upon any single patent or any group of related patents. The Company is engaged in a pro-active patent licensing program. ENVIRONMENTAL AND OTHER REGULATIONS The manufacturing facilities of Harris, in common with those of industry generally, are subject to numerous laws and regulations designed to protect the environment, particularly in regard to wastes and emissions. In general, Harris has complied with these requirements and such compliance has not had a material adverse effect on its business or financial condition. Expenditures to protect the environment and to comply with current environmental laws and regulations over the next several years are not expected to have a material impact on the Company's competitive or financial position. If future laws and regulations contain more stringent requirements than presently anticipated, expenditures may be higher than the Company's present estimates of potential environmental costs. New waste treatment facilities and pollution control equipment are being installed to satisfy legal requirements and to achieve the Company's waste minimization and prevention goals. An estimated $4.7 million was spent on environmental capital projects in fiscal 1994. The Company currently forecasts authorization for environmental-related capital projects totalling $2.5 million in fiscal 1995. Such amounts may increase in future years. The Company anticipates that capital expenditures may be required over the next several years for compliance costs under the new Clean Air Act; however, considerable uncertainty remains with regard to estimates of such capital expenditures because the regulations have not yet been issued. EMPLOYEES As of June 30, 1994, Harris had approximately 28,200 employees. 6 8 ITEM 2. PROPERTIES Harris operates approximately 29 plants and approximately 400 offices in the United States, Canada, Europe, Central and South America, Asia and Australia consisting of about 7.1 million square feet of manufacturing, administrative, engineering and office facilities that are owned and about 3.9 million square feet of sales, office and manufacturing facilities that are leased. The leased facilities are occupied under leases for terms ranging from one year to 30 years, a majority of which can be terminated or renewed at no longer than five-year intervals at Harris' option. The location of the principal manufacturing plants owned by the Company in the United States and the sectors which utilize such plants are as follows: Electronic Systems -- Malabar, Melbourne and Palm Bay, Florida; Semiconductor -- Palm Bay, Florida; Findlay, Ohio; and Mountaintop, Pennsylvania; Communications -- Novato and San Carlos, California; Quincy, Illinois; and Rochester, New York; and Lanier Worldwide -- Atlanta, Georgia. Harris considers its facilities to be suitable and adequate for the purposes for which they are used. As of June 30, 1994, the following facilities were in productive use by Harris:
SQ. FT. SQ. FT. TOTAL TOTAL SECTOR FUNCTION OWNED LEASED ------------------------- --------------------- ---------- ---------- Electronic Systems Office/Manufacturing 3,180,000 552,000 Semiconductor Office/Manufacturing 2,621,000 269,000 Communications Office/Manufacturing 779,000 647,000 Lanier Worldwide Office/Manufacturing 144,000 756,000 OTHER Corporate Offices 384,000 625 Sales/Service Offices 13,700 1,653,000 ---------- ---------- TOTALS 7,121,700 3,877,625
ITEM 3. LEGAL PROCEEDINGS From time to time, as a normal incident of the nature and kind of business in which the Company is engaged, various claims or charges are asserted and litigation commenced against the Company arising from or related to product liability; patents, trademarks, or trade secrets; breach of warranty; antitrust; distribution; or contractual relations. Claimed amounts may be substantial, but may not bear any reasonable relationship to the merits of the claim or the extent of any real risk of court awards. In the opinion of management, final judgments, if any, which might be rendered against the Company in such litigation are reserved against, covered by insurance or would not have a material adverse effect on the financial position or the business of the Company as a whole. The Company may from time to time be, either individually or in conjunction with other major U.S. manufacturers or defense contractors, the subject of U.S. government investigations for alleged criminal or civil violations of procurement or other federal laws. No criminal charges are presently known to be filed against the Company and the Company is unable to predict the outcome of such investigations or to estimate the amounts of claims or other actions that could be instituted against it, its officers or employees as a result of such investigations. Under present government procurement regulations, indictment could result in a government contractor, such as the Company, being suspended or debarred from eligibility for awards of new government contracts for up to three years. In addition, foreign export control licenses could be suspended or revoked. The Company is currently involved in various investigations and is cooperating with the representatives of the responsible government agencies. Management does not believe that the outcome of these investigations will have any material adverse effect on the financial position or the business of the Company as a whole. In addition, the Company is subject to numerous federal and state environmental laws and regulatory requirements and is involved from time to time in investigations or litigation of various potential environmental issues concerning the ongoing conduct of its facilities or the cleanup of contamination by past activities. The Company from time to time receives notices from the United States Environmental Protection Agency 7 9 ("EPA") and equivalent state environmental agencies that it is a potentially responsible party ("PRP") under the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA" or the "Superfund Act") and/or equivalent state legislation. Such notices assert potential liability for cleanup costs of various sites, most of which are non-Company owned treatment or disposal sites, allegedly containing hazardous substances attributable to the Company from past operations. The Company has been named as a PRP at only 14 such sites, excluding sites as to which the Company's records disclose no involvement or as to which the Company's liability has been finally determined; the Company expects to resolve most of such exposures on a de minimis basis. The Company is also occasionally a defendant in "toxic tort" litigation involving alleged personal injury or property damage claims resulting from past hazardous waste practices. In the opinion of management, any payments the Company may be required to make as a result of these claims will not have a material adverse effect on the financial condition or the business of the Company as a whole. In August 1991, PLS, Inc., a California software company, filed suit against the Company in California Superior Court for San Diego County alleging fraud, breach of contract and other charges in connection with a license agreement the Company had transferred in January 1990 to a third party, which thereafter filed for bankruptcy protection. In December 1992, the jury returned a verdict in favor of the plaintiff. In May 1993, the court reduced the jury award and entered judgment against the Company for $13,379,000 in compensatory damages and $53,424,700 in punitive damages, together with interest and costs of suit. The Company posted a bond to stay enforcement of the judgment and filed a notice of appeal with the California Court of Appeal. The Company is vigorously pursuing its appeal; and in February 1994 filed its appellate brief. Plaintiff's responsive brief was filed in September 1994 seeking, among other things, reinstatement of the jury verdict of $13,379,000 in compensatory damages and $85,000,000 in punitive damage. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not applicable. EXECUTIVE OFFICERS OF THE REGISTRANT AS OF SEPTEMBER 1, 1994.* (SEE ALSO ITEM 10 OF PART III).
EXECUTIVE BUSINESS EXPERIENCE DURING NAME AGE OFFICE HELD PAST FIVE YEARS - ------------------------------ ------------------------- ------------------------------------- John T. Hartley 64 Chairman of the Chairman of the Board since October, Board of Directors 1987. Chief Executive Officer since and Chief April, 1986. President, 1986 to Executive Officer 1993. President and Chief Operating Officer, 1982 to 1986. President and Principal Operating Officer, 1978 to 1982. Executive Vice President, 1976 to 1978. Vice President -- Group Executive, 1971 to 1976. Vice President -- General Manager, Electronic Systems Division, 1967 to 1971. Director since 1976.
- --------------- *This listing identifies the executive officers of the Company, as defined pursuant to the Securities Exchange Act of 1934, as well as all other corporate officers. 8 10
EXECUTIVE BUSINESS EXPERIENCE DURING NAME AGE OFFICE HELD PAST FIVE YEARS - ------------------------------ ------------------------- ------------------------------------- Phillip W. Farmer 56 President and Chief President and Chief Operating Officer Operating Officer since April, 1993. Executive Vice President and Acting President -- Semiconductor Sector, 1991 to 1993. President -- Electronic Systems Sector, 1989 to 1991. Senior Vice President -- Sector Executive, 1988 to 1989. Vice President -- Palm Bay Operations, 1986 to 1988. Vice President -- General Manager, Government Support Systems Division, 1982 to 1986. Director since 1993. Wesley E. Cantrell 59 President and President and Chief Executive Chief Executive Officer, Lanier Worldwide, Inc. Officer, since March, 1987. Senior Vice Lanier Worldwide, Inc. President -- Sector Executive, Lanier Business Products Sector, 1985 to 1987. President, Lanier Business Products, 1977 to 1987. Executive Vice President and National Sales Manager, Lanier Business Products, 1972 to 1977. Vice President, Lanier Business Products, 1966 to 1972. Employed by Lanier Business Products since 1955. John C. Garrett 51 President -- President -- Semiconductor Sector Semiconductor Sector since April, 1993. Formerly Executive Vice President, Industrial Business, Square D Company 1987 to 1993, and various general management assignments with General Electric Company 1964 to 1987. Allen S. Henry 54 President -- Electronic President -- Electronic Systems Systems Sector Sector since June, 1991. Vice President -- General Manager, Government Communication Systems Division, 1989 to 1991. Vice President -- Programs, Aerospace Systems Division, 1985 to 1989. Vice President -- Engineering, Aerospace Systems Division, 1983 to 1985. Vice President -- Engineering, Electronic Systems Division, 1980 to 1983. Director -- Engineering, Electronic Systems Division, April to December 1980. Employed by Harris since 1972.
9 11
EXECUTIVE BUSINESS EXPERIENCE DURING NAME AGE OFFICE HELD PAST FIVE YEARS - ------------------------------ ------------------------- ------------------------------------- Guy W. Numann 62 President -- President -- Communications Sector Communications Sector since August, 1989. Senior Vice President -- Sector Executive, 1984 to 1989. Vice President -- Group Executive, RF Communications Group, 1983 to 1984. Vice President -- General Manager, RF Communications Division, 1974 to 1983. Vice President -- Engineering, RF Communications Division, 1970 to 1974. Frank J. Lewis 63 Senior Vice President -- Senior Vice President -- Assistant to Assistant to the the Chairman and Chief Executive Chairman and Chief Officer since April, 1988. Sector Executive Officer Executive, 1982 to 1988. Vice President -- Group Executive, 1979 to 1982. Vice President -- General Manager, Government Communications Systems Division, 1978 to 1979. Vice President -- Programs, Electronic Systems Division, 1976 to 1978. Bryan R. Roub 53 Senior Vice President -- Senior Vice President -- Finance Chief Financial Officer since July, 1984. Formerly with Midland-Ross Corporation in the capacities of Executive Vice President -- Finance, 1982 to 1984; Senior Vice President, 1981 to 1982; Vice President and Controller, 1977 to 1981; and Controller, 1973 to 1977. Robert E. Sullivan 62 Senior Vice President -- Senior Vice President -- Administration Administration since September, 1986. Formerly Senior Vice President -- Finance and Administration at Harris Graphics Corporation, 1983 to 1986. Vice President -- Controller at Harris, 1981 to 1983 and various management positions, including Vice President -- Treasurer, 1971 to 1981. Richard L. Ballantyne 54 Vice President -- General Vice President -- General Counsel and Counsel and Secretary Secretary since November, 1989. Formerly Vice President -- General Counsel and Secretary, Prime Computer, Inc., 1982 to 1989.
10 12
EXECUTIVE BUSINESS EXPERIENCE DURING NAME AGE OFFICE HELD PAST FIVE YEARS - ------------------------------ ------------------------- ------------------------------------- Fayette Brown III 51 Vice President -- Vice President -- Corporate Corporate Development Development since August, 1985. Director -- Corporate Development, February to August 1985. Director -- Marketing, Semiconductor Sector, 1982 to 1985. Director -- Matra-Harris Liaison, 1979 to 1982. Manager -- Corporate Development, 1976 to 1979. Various financial positions, 1967 to 1976. W. Peter Carney 62 Vice President -- Vice President -- Corporate Relations Corporate Relations since October, 1987. Director -- Corporate Communications, 1981 to 1987. James L. Christie 42 Vice President -- Vice President -- Internal Audit Internal Audit since August, 1992. Director -- Internal Audit, 1986 to 1992. Formerly Director -- Internal Audit and Division Controller at Harris Graphics Corporation, 1985 to 1986. Various corporate and division financial positions at Harris, 1978 to 1985. Robert W. Fay 47 Vice President -- Vice President -- Controller since Controller January, 1993. Acting Vice President -- Controller, Semiconductor Sector, 1991 to 1993. Vice President -- Treasurer, 1988 to 1993. Treasurer, 1985 to 1988. Director -- Financial Operations, Semiconductor Sector, 1984 to 1985. Controller -- Bipolar Digital Semiconductor Division, 1981 to 1984. Manager -- Corporate Finance and Cash Management, 1978 to 1981. Nick E. Heldreth 52 Vice President -- Vice President -- Human Resources Human Resources since June, 1986. Formerly Vice President -- Personnel and Industrial Relations, Commercial Products Division, Pratt & Whitney and various related assignments with United Technologies Corporation, 1974 to 1986. Herbert N. McCauley 61 Vice President -- Vice President -- Information Information Management Management since August, 1980. Director -- Management Information Systems, 1976 to 1980.
11 13
EXECUTIVE BUSINESS EXPERIENCE DURING NAME AGE OFFICE HELD PAST FIVE YEARS - ------------------------------ ------------------------- ------------------------------------- Phillip Mighdoll 52 Vice President -- Quality Vice President -- Quality since and New Products January, 1991. Formerly President and Chief Executive Officer, SWEDtech, Inc., 1990 to 1991. Senior Consultant, Arthur D. Little, Inc., 1986 to 1989. David S. Wasserman 51 Vice President -- Vice President -- Treasurer since Treasurer January, 1993. Vice President -- Taxes 1987 to 1993. Formerly Senior Vice President, Midland-Ross Corporation, 1979 to 1987.
There is no family relationship between any of the Company's executive officers or directors. All of the Company's executive officers are elected by and serve at the pleasure of the Board of Directors. 12 14 PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS Harris Corporation Common Stock, par value $1 per share (the "Common Stock"), is listed on the New York Stock Exchange, Inc. and is also traded on the Boston, Midwest, Philadelphia and Pacific Stock Exchanges and through the Intermarket Trading System. As of August 31, 1994, there were 10,562 holders of record of the Common Stock. The high and low closing prices as reported in the consolidated transaction reporting system and the dividends paid on the Common Stock for each quarterly period in the last two fiscal years are reported below:
PER SHARE AMOUNTS (IN DOLLARS) -------------------------------------------------------- QUARTERS ENDED -------------------------------------------------------- 9-30-93 12-31-93 3-31-94 6-30-94 TOTAL ----------- ----------- ----------- ----------- ----------- Fiscal 1994 Dividends................... .28 .28 .28 .28 1.12 Stock prices (high/low)..... 43 3/4-36 3/8 47 3/8-41 1/2 52 1/4-44 49-41 3/4
9-25-92 12-25-92 3-26-93 6-30-93 TOTAL ----------- ----------- ----------- ----------- ----------- Fiscal 1993 Dividends................... .26 .26 .26 .26 1.04 Stock prices (high/low)..... 33 1/4-27 1/4 35 1/2-28 3/4 38 5/8-32 7/8 39 1/4-33 7/8
In August, 1994, the directors declared a quarterly cash dividend of 31 cents per share. The Company has paid cash dividends in every year since 1941. ITEM 6. SELECTED FINANCIAL DATA The following table summarizes selected financial information of Harris Corporation and its subsidiaries for each year during the five year period ended June 30, 1994. This table should be read in conjunction with other financial information of Harris, including "Management's Discussion and Analysis of Financial Condition and Results of Operations" and financial statements included elsewhere herein.
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS) YEAR ENDED JUNE 30 ------------------------------------------------------------ 1994 1993 1992 1991 1990 -------- -------- -------- -------- -------- Net sales..................... $3,336.1 $ 3099.1 $3,004.0 $3,040.1 $3,052.7 Income from continuing operations before extraordinary item and cumulative effect of change in accounting principle..... 121.9 111.1 87.5 19.5 130.7 Discontinued operations....... -- -- (9.3) -- -- Extraordinary loss from early retirement of debt.......... -- -- (3.0) -- -- Cumulative effect of change in accounting principle........ (10.1) -- -- -- -- Net income.................... 111.8 111.1 75.2 19.5 130.7 Per share data: Income from continuing operations before extraordinary item and cumulative effect of change in accounting principle................ 3.07 2.82 2.24 .50 3.30 Discontinued operations..... -- -- (.24) -- -- Extraordinary loss.......... -- -- (.08) -- -- Cumulative effect of accounting change........ (.25) -- -- -- -- Net income.................. 2.82 2.82 1.92 .50 3.30 Cash dividends.............. 1.12 1.04 1.04 1.04 .96 Net working capital........... 893.6 792.5 768.9 643.0 390.4 Total assets.................. 2,677.1 2,542.0 2,483.8 2,485.8 2,625.1 Long-term debt................ 661.7 612.0 612.5 563.3 300.8
13 15 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS The information in this review, along with Business Segment data shown on page 2, reflects the Company's continuing operations. RESULTS OF OPERATIONS FISCAL 1994 COMPARED WITH 1993 -- Sales in fiscal 1994 increased 8 percent, while income from continuing operations before cumulative effect of change in accounting principle increased 10 percent. Income from continuing operations for 1994 included a $17.8 million charge ($11.5 million after income taxes) for the Company's write-off of securities received from a prior-year sale of a discontinued business. Semiconductor segment sales increased 8 percent while net income was up 85 percent. Strong sales and earnings of commercial products more than offset a decline in military shipments. In 1994, the segment took actions to streamline its manufacturing operations as a response to declining military-related sales. Segment profit margins increased in 1994 due to ongoing cost reduction programs and a larger mix of higher-value products. Results for the year included an after-tax charge of $12.1 million to establish reserves for restructuring actions to be carried out during fiscal 1995. These charges were partially offset by an after-tax gain of $9.9 million from the sale of a fabrication facility. Segment net income in both years also includes comparable gains from ongoing sales of investment securities. Communications segment sales increased 15 percent and net income increased 33 percent. Sales growth was principally in international markets. International sales accounted for 53 percent and 48 percent of total sales in 1994 and 1993, respectively. International sales in 1994 were particularly strong in rapidly developing countries such as China, Mexico, and Russia. The segment expects international sales to account for two-thirds of total segment sales within the next few years. International segment sales are transacted on terms that substantially mitigate credit and foreign currency risks. The increase in segment earnings was due to higher sales while maintaining operating expenses at prior-year levels. Lanier Worldwide segment sales increased 2 percent and net income increased 17 percent. In the United States, segment sales and net income continued their strong performance. The segment returned to profitability in Europe in the second half of 1994, as a result of restructuring efforts with special emphasis on the French, Italian, and European Headquarters operations. This turnaround occurred despite unfavorable foreign exchange rates and economic conditions that continue in many of the segment's European markets. Electronic Systems segment sales increased 8 percent while segment net income decreased 8 percent. Strong sales in the segment's air traffic control business and information systems business were responsible for the sales increase and reflect continuing diversification of the segment's product lines and markets. Changing defense priorities and federal budget pressure are expected to restrain funding of defense-related programs in the future, thereby making the segment's diversification strategy a continuing emphasis of the business. Segment net income declined due to losses incurred in its telecommunications business and costs associated with the close-down of the segment's facilities in Orlando, Florida. In the fourth quarter of 1994, the telecommunications business was downsized and moved to the Company's Communications segment. As a result of these actions, the Company expects the telecommunications business to improve in fiscal 1995. Cost of sales, rentals, and services as a percentage of sales increased to 68.2 percent from 67.3 percent in the prior year due to slightly higher cost ratios in all segments. This trend is not expected to continue in fiscal 1995. Engineering, selling, and administrative expenses as a percentage of sales were 24.9 percent in fiscal 1994, compared to 26.5 percent in the prior year. While total operating expenses were higher than 1993, the increase in these expenses was less than the relative increase in sales. Lower marketing expenses for the Lanier Worldwide segment contributed to the 1994 lower expense ratio as this segment began to realize the savings from combining many of its marketing and distribution units. Company-sponsored research and development expenditures were 5.8 percent more than the previous year. Interest income and interest expense were slightly lower during fiscal 1994. The increase in income in the "Other-net" category resulted from a gain on the sale of a semiconductor facility, offset in part by higher provisions for doubtful accounts receivable, foreign currency losses, and reductions in gains from the sale of investment securities. 14 16 The provision for income taxes in fiscal 1994 was 37.0 percent of income before income taxes compared to 34.6 percent in the prior year. The increase from the statutory rate in both years resulted from the provision for state income taxes. CAPITAL EXPENDITURES -- Expenditures for land, buildings, and equipment totaled $117 million in 1994, up from $95 million in the prior year. During fiscal 1994, $51 million was invested in equipment for rental to customers, down from $54 million invested in the prior year. Substantially all of this investment in rental equipment is related to Lanier Worldwide products. FISCAL 1993 COMPARED WITH 1992 -- Sales in fiscal 1993 increased slightly, while income from continuing operations before extraordinary item increased 27.0 percent. Semiconductor segment sales were relatively unchanged; however, the segment posted a significant increase in earnings due to improved operating margins. Operating expense decreased as a result of prior years restructuring activities and improved product mix. Strong growth in strategic products replaced lower revenues that resulted from a downturn in defense sales and a move away from low-value-added products. Segment net income in both years also includes comparable gains from ongoing sales of investment securities. Electronic Systems sales increased slightly, while segment net income decreased 9 percent due to lower computer sales and costs associated with the realignment of the segment's government automatic-test and support systems business. Computer sales were down due to vendor-related manufacturing problems associated with a new series of computers. Communications segment sales increased 10 percent and net income decreased 7 percent. International sales grew at more than 20 percent while domestic sales remained flat. Earnings increases in several of the segment's business units were more than offset by a significant decline in earnings of the broadcast products unit. Depressed market conditions and new product delays resulted in lower sales and profit margins for this unit. Lanier Worldwide's net income decreased significantly on slightly higher sales due to losses in European operations that resulted from recessionary market conditions and currency fluctuations. All international operations were consolidated into one business unit and plans were developed to restructure these operations in 1994. Cost of sales, rentals, and services as a percentage of sales decreased to 67.3 percent from 67.7 percent in the prior year due primarily to improved gross margins in the Semiconductor segment. Engineering, selling, and administrative expenses as a percentage of sales were 26.5 percent in fiscal 1993, compared to 27.2 percent in the prior year due to lower operating expenses in the Semiconductor segment. Company-sponsored research and development expenditures were slightly lower than the previous year. The $3.7-million decrease in interest income resulted from $4.0 million of interest recognized on a federal tax claim in the previous year. Interest expense was lower in fiscal 1993 due to lower interest rates and a reduced level of borrowing. "Other-net" includes gains from the sale of investment securities in both years. Income was higher in this category primarily due to prior-year foreign currency losses and bad debt expenses. The provision for income taxes as a percentage of income before income taxes was 34.6 percent compared to 30.0 percent in the prior year. The increase from the statutory federal tax rate of 34 percent during the current year was primarily due to the provision for state income taxes, which were partially offset by adjustments made to prior tax accruals. The reduction from the statutory federal tax rate in the prior year was primarily due to tax benefits associated with foreign income and adjustments made to prior tax accruals, which were partially offset by the provision for state income taxes. CAPITAL EXPENDITURES -- Expenditures for land, buildings, and equipment totaled $95 million in 1993, up from $72 million in the prior year. During fiscal 1993, $54 million was invested in equipment for rental to customers, down from $70 million invested in the prior year. Substantially all of this investment related to Lanier Worldwide products. 15 17 FINANCIAL CONDITION Cash Position. At June 30, 1994, cash, and cash equivalents totaled $139 million, an increase from $132 million at June 30, 1993. Receivables, Unbilled Costs, and Inventories. Notes and accounts receivable amounted to $798 million at June 30, 1994, compared to $755 million a year earlier. Unbilled costs and inventories increased $68 million over the prior year to $833 million. The increase in these accounts is proportionate to the increase in revenues. Borrowing Arrangements. The Company has available $220 million under revolving credit agreements until December 1, 1998. Under these agreements, no borrowings were outstanding at June 30, 1994. In addition, the Company has $131 million in open bank credit lines, of which $98 million was available at June 30, 1994. Capitalization. At June 30, 1994, debt totaled $683 million, representing 36.5 percent of total capitalization (defined as the sum of total debt plus shareholders' equity). A year earlier, debt of $649 million was 36.2 percent of total capitalization. Year-end long-term debt included $150 million of 10 3/8 percent debentures due 2018, $250 million of notes payable to insurance companies, $200 million of notes payable to banks and $35 million of unsecured term notes. In 1994, the Company issued 621,560 shares of the Common Stock to employees under the terms of the Company's stock purchase, option and incentive plans. The Company expects to maintain operating ratios, fixed-charge coverages, and balance-sheet ratios sufficient for retention of its present debt ratings. Retirement Plans. Retirement benefits for substantially all of the Company's employees are provided primarily through a retirement plan having profit-sharing and savings elements. The Company also has non-contributory defined-benefit pension plans. All obligations under the Company's retirement plans have been fully funded by the Company's contributions, the provision for which totaled $70 million during the 1994 fiscal year. The Company provides limited health-care benefits to retirees who have 10 or more years of service. In the first quarter of fiscal 1994, the Company adopted Statement of Financial Accounting Standards No. 106 "Employers' Accounting for Postretirement Benefits Other Than Pensions." The implementation of this accounting standard in relation to the benefits described above resulted in a one-time after-tax charge of $10.1 million. The ongoing impact of this accounting standard is not expected to have a material effect in future years. Impact of Foreign Exchange. The U.S. dollar weakened against a majority of international currencies in 1994. Approximately 80 percent of the Company's international business is transacted in local currency environments. The impact of translating the assets and liabilities of these operations to fewer U.S. dollars is included as a component of Shareholders' Equity. At June 30, 1994, the cumulative translation adjustment reduced Shareholders' Equity by $22 million compared to a reduction of $13 million at June 30, 1993. The Company utilizes exchange rate agreements with customers and suppliers and foreign currency hedging instruments to minimize the currency risks of international transactions. Gains and losses resulting from currency rate fluctuations did not have a material effect on the Company's result in 1994, 1993, or 1992. IMPACT OF INFLATION To the extent feasible, the Company has consistently followed the practice of adjusting its prices to reflect the impact of inflation on wages and salaries for employees and the cost of purchased materials and services. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The financial statements and supplementary data required by this Item are set forth in the pages indicated in Item 14(a)(1) and (2) below. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable. 16 18 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The information required by this Item, with respect to Directors of the Company, is incorporated herein by reference to the Company's Proxy Statement dated September 15, 1994. See also pages 8 through 11 of Part I above. ITEM 11. EXECUTIVE COMPENSATION The information required by this Item, with respect to compensation of Directors and Executive Officers of the Company, is incorporated herein by reference to the Company's Proxy Statement dated September 15, 1994. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information required by this Item, with respect to security ownership of certain beneficial owners and management, is incorporated herein by reference to the Company's Proxy Statement dated September 15, 1994. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS During the fiscal year ended June 30, 1994, there existed no relationships and there were no transactions reportable under this Item. 17 19 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) The following documents are filed as a part of this report:
PAGE (1) Financial Statements: Consolidated Statement of Income -- Years ended June 30, 1994, 1993 and 1992........................................................... 23 Consolidated Statement of Retained Earnings -- Years ended June 30, 1994, 1993 and 1992.......................... 23 Consolidated Balance Sheet -- June 30, 1994 and 1993................ 24 Consolidated Statement of Cash Flows -- Years ended June 30, 1994, 1993 and 1992.......................... 25 Notes to Financial Statements....................................... 26 (2) Financial Statement Schedules: For each of the three years in the period ended June 30, 1994. Schedule II -- Amounts Receivable from Related Parties and Underwriters, Promoters and Employees other than Related Parties.......................... 33 Schedule V -- Property, Plant and Equipment.................. 34 Schedule VI -- Accumulated Depreciation, Depletion and Amortization of Property, Plant and Equipment...................................................... 37 Schedule VIII -- Valuation and Qualifying Accounts............. 40 Schedule IX -- Short-Term Borrowings.......................... 41 Schedule X -- Supplementary Income Statement Information..... 42
All other schedules are omitted because they are not applicable or the required information is shown in the financial statements or the notes thereto. (3) Exhibits (3)(a) Restated Certificate of Incorporation of Harris Corporation (October 1986) is incorporated herein by reference to Exhibit 3 to the Company's Quarterly Report on Form 10-Q for the quarter ended December 26, 1986. (3)(b) By-laws of Harris Corporation as in effect on the date hereof is incorporated herein by reference to Exhibit 3(b) to the Company's Annual Report on Form 10-K for the year ended June 30, 1986. (4)(a) Specimen stock certificate for the Company's Common Stock is incorporated herein by reference to Exhibit 4(c) to the Company's Registration Statement on Form S-3 filed with the Securities and Exchange Commission on September 13, 1982 (Registration Number 2-79308). (4)(b) Rights Agreement dated as of November 24, 1986, between Harris Corporation and Ameritrust Company National Association, as Rights Agent, is incorporated herein by reference to Exhibit 1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on December 9, 1986. (4)(c) Registrant by this filing agrees, upon request, to furnish to the Securities and Exchange Commission copies of financial documents evidencing long-term debt. (10) Material Contracts: *(a) Senior Executive Severance Agreements are incorporated herein by reference to Exhibit 10(a) to the Company's Annual Report on Form 10-K for the year ended June 30, 1987. 18 20 *(b) Harris Corporation Annual Incentive Plan is incorporated herein by reference to Exhibit 10(b) to the Company's Annual Report on Form 10-K for the year ended June 30, 1991. *(c) Harris Corporation Stock Incentive Plan. *(d) Harris Corporation 1981 Stock Option Plan for Key Employees is incorporated herein by reference to Exhibit 10(d) of the Company's Annual Report on Form 10-K for the year ended June 30, 1991. *(e) Lanier Worldwide, Inc. Key Contributor Bonus Plan is incorporated herein by reference to Exhibit 10(e) to the Company's Annual Report on Form 10-K for the year ended June 30, 1992. *(f) Lanier Worldwide, Inc. Longer-Term Incentive Plan for Key Employees is incorporated herein by reference to Exhibit 10(f) of the Company's Annual Report on Form 10-K for the year ended June 30, 1991. *(g) Harris Corporation Retirement Plan. *(h) Revised Harris Corporation Supplemental Executive Retirement Plan. *(i) Lanier Worldwide, Inc. Pension Plan. *(j) Lanier Worldwide, Inc. Savings Incentive Plan. *(k) Lanier Worldwide, Inc. Supplemental Executive Retirement Plan. *(l) Directors Retirement Plan is incorporated herein by reference to Exhibit 10(l) to the Company's Annual Report on Form 10-K for the year ended June 30, 1990. (11) Statement regarding computation of net income per share. (21) Subsidiaries of the Registrant. (23) Consent of Ernst & Young. (27) Financial Data Schedule. (b) Reports on Form 8-K. No reports on Form 8-K were filed during the last quarter of the fiscal year ended June 30, 1994. - ------------------ *Management contract or compensatory plan or arrangement. 19 21 SIGNATURES PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED. HARRIS CORPORATION (Registrant) Dated: September 23, 1994 By /s/ BRYAN R. ROUB Bryan R. Roub Senior Vice President-Chief Financial Officer PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE - --------------------------------------------------------------------------- ---------------- /s/ JOHN T. HARTLEY Chairman of the Board John T. Hartley and Chief Executive Officer (Principal Executive Officer) /s/ BRYAN R. ROUB Senior Vice President -- Chief Bryan R. Roub Financial Officer (Principal Financial Officer) /s/ ROBERT W. FAY Vice President -- Controller Robert W. Fay (Principal Accounting Officer) /s/ ROBERT CIZIK Director Robert Cizik /s/ LESTER E. COLEMAN Director Lester E. Coleman
September 23, 1994 /s/ RALPH D. DENUNZIO Director Ralph D. DeNunzio /s/ JOSEPH L. DIONNE Director Joseph L. Dionne /s/ PHILLIP W. FARMER Director Phillip W. Farmer /s/ C. JACKSON GRAYSON, JR. Director C. Jackson Grayson, Jr. /s/ WALTER F. RAAB Director Walter F. Raab /s/ ALEXANDER B. TROWBRIDGE Director Alexander B. Trowbridge
20 22 ANNUAL REPORT ON FORM 10-K ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA YEAR ENDED JUNE 30, 1994 HARRIS CORPORATION MELBOURNE, FLORIDA 21 23 REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS To Harris Directors and Shareholders: We have audited the accompanying consolidated balance sheets of Harris Corporation and subsidiaries as of June 30, 1994 and 1993, and the related consolidated statements of income, retained earnings, and cash flows for each of the three years in the period ended June 30, 1994. Our audits also included the financial statement schedules listed in the Index at Item 14(a). These financial statements and schedules are the responsibility of the Corporation's management. Our responsibility is to express an opinion on these financial statements and schedules based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Harris Corporation and subsidiaries at June 30, 1994 and 1993, and the consolidated results of their operations and their cash flows for each of the three years in the period ended June 30, 1994, in conformity with generally accepted accounting principles. Also, in our opinion, the related financial statement schedules, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein. As discussed in the Accounting Change note to the financial statements, effective July 1, 1993, the Corporation changed its method of accounting for postretirement benefits other than pensions. ERNST & YOUNG LLP Orlando, Florida August 2, 1994 22 24 FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF INCOME
YEARS ENDED JUNE 30 - --------------------------------------------------------------------------------------- IN MILLIONS EXCEPT PER SHARE AMOUNTS 1994 1993 1992 - --------------------------------------------------------------------------------------- REVENUE Revenue from product sales and rentals $2,972.0 $2,739.2 $2,658.0 Revenue from services 364.1 359.9 346.0 Interest 33.3 34.2 37.9 - --------------------------------------------------------------------------------------- 3,369.4 3,133.3 3,041.9 COSTS AND EXPENSES Cost of product sales and rentals 2,055.7 1,872.7 1,821.0 Cost of services 219.1 213.3 211.6 Engineering, selling, and administrative expenses 830.8 822.2 816.5 Interest 58.3 59.9 66.0 Other-net (5.8) (4.6) 1.8 - --------------------------------------------------------------------------------------- 3,158.1 2,963.5 2,916.9 - --------------------------------------------------------------------------------------- Income from continuing operations before write-off of securities and income taxes 211.3 169.8 125.0 Write-off of securities received from 1990 sale of discontinued data-communications business 17.8 -- -- - --------------------------------------------------------------------------------------- Income from continuing operations before income taxes 193.5 169.8 125.0 Income taxes 71.6 58.7 37.5 - --------------------------------------------------------------------------------------- Income from continuing operations before extraordinary item and cumulative effect of change in accounting principle 121.9 111.1 87.5 Discontinued operations net of income taxes -- -- (9.3) - --------------------------------------------------------------------------------------- Income before extraordinary item and cumulative effect of change in accounting principle 121.9 111.1 78.2 Extraordinary loss from early retirement of debt net of income taxes -- -- (3.0) Cumulative effect of change in accounting principle net of income taxes (10.1) -- -- - --------------------------------------------------------------------------------------- Net income $ 111.8 $ 111.1 $ 75.2 ======================================================================================= Income per share: Continuing operations before extraordinary item and cumulative effect of change in accounting principle $3.07 $2.82 $2.24 Discontinued operations -- -- (.24) Extraordinary loss -- -- (.08) Cumulative effect of change in accounting principle (.25) -- -- - --------------------------------------------------------------------------------------- Net income per share $2.82 $2.82 $1.92 =======================================================================================
CONSOLIDATED STATEMENT OF RETAINED EARNINGS
YEARS ENDED JUNE 30 - --------------------------------------------------------------------------------------- IN MILLIONS EXCEPT PER SHARE AMOUNTS 1994 1993 1992 - --------------------------------------------------------------------------------------- Balance at beginning of year $ 906.7 $ 836.4 $ 801.7 Net income for the year 111.8 111.1 75.2 Cash dividends ($1.12 per share in 1994, $1.04 per share in 1993 and 1992) (44.2) (40.8) (40.5) Treasury stock retired (31.2) -- -- - --------------------------------------------------------------------------------------- Balance at end of year $943.1 $906.7 $836.4 ======================================================================================= See Notes to Financial Statements.
23 25 FINANCIAL STATEMENTS CONSOLIDATED BALANCE SHEET
JUNE 30 - ------------------------------------------------------------------------------------------------------- In millions 1994 1993 - ------------------------------------------------------------------------------------------------------- ASSETS CURRENT ASSETS Cash and cash equivalents $ 139.1 $ 131.7 Receivables 647.2 607.6 Unbilled costs and accrued earnings on fixed-price contracts 369.7 320.9 Inventories 463.1 444.4 Deferred income taxes 79.2 66.0 - ------------------------------------------------------------------------------------------------------- Total current assets 1,698.3 1,570.6 OTHER ASSETS Plant and equipment 551.3 564.1 Notes receivable-net 151.1 147.2 Intangibles resulting from acquisitions 166.0 162.8 Other assets 110.4 97.3 - ------------------------------------------------------------------------------------------------------- $2,677.1 $2,542.0 ======================================================================================================= LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABLILITIES Short-term debt $ 19.8 $ 35.2 Trade accounts payable 184.5 169.4 Compensation and benefits 188.5 168.0 Other accrued items 164.9 150.6 Advance payments by customers 59.7 55.5 Unearned leasing and service income 129.3 120.6 Income taxes 57.0 77.4 Current portion of long-term debt 1.0 1.4 - ------------------------------------------------------------------------------------------------------- Total current liabilities 804.7 778.1 OTHER LIABILITIES Deferred income taxes 22.7 10.6 Long-term debt 661.7 612.0 STOCKHOLDERS' EQUITY Preferred Stock, without par value: Authorized-1,000,000 shares; issued-none Common Stock, $1.00 par value: Authorized-100,000,000 shares; issued and outstanding 32,298,118 shares in 1994 and 39,604,496 shares in 1993 39.3 39.6 Other capital 230.3 216.3 Retained earnings 943.1 906.7 Unearned compensation (3.2) (8.3) Cumulative translation adjustments (21.5) (13.0) - ------------------------------------------------------------------------------------------------------- Total shareholders' equity 1,188.0 1,141.3 - ------------------------------------------------------------------------------------------------------- $2,677.1 $2,542.0 ======================================================================================================= See Notes to Financial Statements.
24 26 FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF CASH FLOWS
YEARS ENDED JUNE 30 - ------------------------------------------------------------------------------------------------ IN MILLIONS 1994 1993 1992 - ------------------------------------------------------------------------------------------------ CASH FLOWS FROM OPERATING ACTIVITIES Income from continuing operations before extraordinary item and cumulative effect of change in accounting principle $ 121.9 $ 111.1 $ 87.5 Adjustments to reconcile income to net cash provided by operating activities: Depreciation 145.7 150.0 164.7 Amortization 7.7 7.3 6.6 Non-current deferred income taxes 12.1 (27.8) (2.5) Loss from discontinued operations -- -- (9.3) Extraordinary loss -- -- (3.0) Changes in assets and liabilities: Receivables (43.6) 8.0 35.9 Unbilled costs and inventories (67.4) (58.1) (17.7) Trade payables and accrued liabilities 39.7 (18.8) (64.1) Advance payments and unearned income 12.9 7.8 21.2 Income taxes (33.6) 50.6 36.7 Other (22.3) (20.8) 19.2 - ------------------------------------------------------------------------------------------------ Net cash provided by operating activities 173.1 209.3 275.2 CASH FLOWS FROM INVESTING ACTIVITIES Cash paid for acquired business -- (25.9) -- Capital expenditures-net of normal disposals (134.9) (137.1) (122.0) - ------------------------------------------------------------------------------------------------ Net cash used in investing activities (134.9) (163.0) (122.0) CASH FLOW FROM FINANCING ACTIVITIES Proceeds from borrowings 302.7 362.1 344.5 Payments of borrowings (267.1) (373.7) (391.7) Dividends (44.2) (40.8) (40.5) Purchase of Common Stock for treasury (36.7) -- -- Proceeds from sale of Common Stock 13.5 10.3 2.0 - ------------------------------------------------------------------------------------------------ Net cash used in financing activities (31.8) (42.1) (85.7) - ------------------------------------------------------------------------------------------------ Effect of translation on cash equivalents 1.0 3.3 (1.8) - ------------------------------------------------------------------------------------------------ INCREASE IN CASH AND CASH EQUIVALENTS 7.4 7.5 65.7 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 131.7 124.2 58.5 - ------------------------------------------------------------------------------------------------ CASH AND CASH EQUIVALENTS, END OF YEAR $ 139.1 $ 131.7 $ 124.2 ================================================================================================ See Notes to Financial Statements.
25 27 NOTES TO FINANCIAL STATEMENTS SIGNIFICANT ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION--The consolidated financial statements include the accounts of the Corporation and its subsidiaries. Significant intercompany transactions and account have been eliminated. CASH EQUIVALENTS--Cash equivalents are temporary cash investments with a maturity of three months or less when purchased. These investments include accrued interest and are carried at the lower of cost or market. INVENTORIES--Inventories are priced at the lower of cost (determined by average and first-in, first-out methods) or market. PLANT AND EQUIPMENT--Plant and equipment are carried on the basis of cost. Depreciation is computed by straight-line and accelerated methods using estimated useful lives of the assets. INTANGIBLES--Intangibles resulting from acquisitions are being amortized by the straight-line method principally over 40 years. INCOME TAXES--The Corporation follows the liability method of account for income taxes. REVENUE RECOGNITION--Revenue is recognized from sales other than a long-term contracts when a product is shipped, from rentals as they accrue, and from services when performed. Revenue on long-term contracts is accounted for principally by the percentage-of-completion method whereby income is recognized based on the estimated stage of completion of individual contracts. Unearned income on service contracts is amortized by the straight-line method over the term of the contracts. FUTURES AND FORWARD CONTRACTS--Gains and losses on futures and forward contracts that qualify as hedges are deferred and recognized as an adjustment of the carrying amount of the hedged asset or liability or anticipated transaction. RETIREMENT BENEFITS--The Corporation and its subsidiaries provide retirement benefits to substantially all employees primarily through a retirement plan having profit-sharing and savings elements. Contributions by the Corporation to the retirement plan are based on profits and employee' savings with no other funding requirements. The Corporation may make additional contributions to the fund at its discretion. The Corporation also has noncontributory defined-benefit pension plans which are fully funded. Retirement benefits also include an unfunded limited health-care plan for U.S. based retirees. In 1994, the Corporation began accruing the estimated cost of retiree medical benefits during an employee's active service life. The Corporation previously expensed the cost of these benefits on a pay-as-you-go basis. EARNINGS PER SHARE--Income per share is based upon the weighted average of common shares outstanding during each year. RECLASSIFICATIONS--Certain prior year amounts have been reclassified to conform with current-year classifications. ACCUNTING CHANGE In 1994, the Corporation adopted Statement of Financial Accounting Standards No. 106 "Employers' Accounting for Postretirement Benefits Other Than Pensions." Health-care benefits are provided on a limited cost-sharing basis to retirees who have 10 or more years of service. The cumulative effect at July 1, 1993, of adopting this statement resulted in a one-time charge of $10,100,000, net of income tax benefits of $6,400,000. The impact of this change on income before extraordinary item and cumulative effect of change in accounting principle was not material in fiscal 1994. DISCONTINUED OPERATIONS In 1989, the Corporation decided to exit a significant portion of its data-communications and computer-based office systems businesses. In 1992, the Corporation provided $9,300,000 (net of income tax benefits of $5,700,000) for additional losses incurred in the disposal of the computer-based office systems business. 26 28 In 1993, a California state court awarded damages against the Corporation in the amount of $66.9 million to a California software company. The suit arose from a contract between the plantiff and a discontinued operation of the Corporation. The Corporation believes the judgment is unjustified and has filed an appeal with the California Court of Appeals. The ultimate outcome of this ligitation is unknown. Accordingly, no provisions, beyond those already provided as part of prior discontinued operation charges, have been made in the accompanying consolidated financial statements. NONRECURRING ITEM In 1994, the Corporations residual holdings in a company that acquired its 1989 discontinued data-based communication business became impaired. Consequently, the Corporation provided $17,800,000 ($11,500,000 after income taxes or 29 cents per share) to write off its interest in this company. RECEIVABLES Receivables are summarized below: (In millions) 1994 1993 - ------------------------------------------------------------- Accounts receivable $581.8 $547.0 Notes receivable due within one year-net 94.9 88.0 - ------------------------------------------------------------- 676.7 635.8 Less allowances for collection losses 29.5 28.2 - -------------------------------------------------------------- $647.2 $607.6 ============================================================= INVENTORIES AND UNBILLED COSTS Inventories are summarized below: (In millions) 1994 1993 - ------------------------------------------------------------- Finished products $185.6 $176.9 Work in process 200.0 206.1 Raw materials and supplies 77.5 61.4 - ------------------------------------------------------------- $463.1 $444.4 ============================================================= Unbilled costs and accrued earnings on fixed-price contracts are net of progress payments of $206.4 million in 1994 and $162.3 million in 1993. PLANT AND EQUIPMENT Plant and equipment are summarized below: (In millions) 1994 1993 - ------------------------------------------------------------- Land $ 30.3 $ 35.7 Buildings 431.4 442.1 Machinery and equipment 1,257.1 1,214.8 - ------------------------------------------------------------- 1,718.8 1,692.6 Less allowances for depreciation 1,167.5 1,128.5 - ------------------------------------------------------------- $ 551.3 $ 564.1 ============================================================= INTANGIBLES Accumulated amortization of intangible assets at June 30 was $33,100,000 for 1994 and $29,100,000 for 1993. CREDIT ARRANGEMENTS The Corportion maintains revolving credit agreements which provide for borrowings up to $220,000,000 until December 1, 1998. These agreements provide for various interest rates at the Corporation's election, but in no event above LIBOR plus 0.5 percent. A commitmenet fee of 0.2 percent per annum is payable on the unused portion of the credit. The Corporation is not required to maintain compensation balances in connection with these agreements. No borrowings were outstanding at June 30, 1994 under these agreements. The Corporation also has lines of credit for short-term financing aggregating $130,700,000 from various U.S. and foreign banks, of which $97,700,000 was available on June 30, 1994. These arrangements provide for borrowing at various interest rates, are reviewed annually for renewal, and may be used on such terms as the Corporation and the banks mutually agree. These lines do not require compensating balances. Short-term debt is summarized below: (In millions) 1994 1993 - ------------------------------------------------------------- Bank notes $14.5 $28.4 Other 5.3 6.8 - ------------------------------------------------------------- $19.8 $35.2 ============================================================= 27 29 NOTES TO FINANCIAL STATEMENTS LONG-TERM DEBT
Long-term debt includes the following: - ---------------------------------------------------------------------- (IN MILLIONS) 1994 1993 - ---------------------------------------------------------------------- Notes payable to insurance companies $250.0 $250.0 Notes payable to banks 200.0 150.0 10 3/8% debentures, due 2018 150.0 150.0 Unsecured term notes 34.5 34.5 Other 27.2 27.5 - ---------------------------------------------------------------------- $661.7 $612.0 ======================================================================
Notes payable to insurance companies mature $100,000,000 in 1996, $54,000,000 in 1999, $34,000,000 in 2000, and $62,000,000 in 2001. The weighted average interest rate for this debt is 9.42 percent. In 1992, the Corporation refinanced $80,950,000 of its 11.5 percent debentures, due 2010, and a portion of its short-term debt with $150,000,000 of unsecured bank notes. The debenture redemption resulted in an extraordinary loss of $3,020,000, net of income tax benefits of $1,851,000. In 1994, the Corporation borrowed an additional $50,000,000 of unsecured bank notes. These bank notes currently bear an interest rate of LIBOR plus 0.5 percent and mature in fiscal 1999. The fiscal 1994 weighted average interest rate for notes payable to banks is 4.26 percent. Indentures and note agreements contain certain financial covenants including maintenance of at least $800,000,000 of tangible net worth and total debt not to exceed 45 percent of total capital. Maturities on long-term debt for the five years following 1994 are: $1,049,000 in 1995. $131,019,000 in 1996, $503,000 in 1997, $4,886,000 in 1998, and $256,436,000 in 1999. SHAREHOLDERS' EQUITY Changes in shareholders' equity accounts other than retained earnings are summarized as follows:
COMMON CUMULATIVE STOCK OTHER UNEARNED TRANSLATION (IN MILLIONS) AMOUNT CAPITAL COMPENSATION ADJUSTMENTS - -------------------------------------------------------------------------------------------------------------------------- BALANCE AT JULY 1, 1991 $38.9 $196.5 $ (8.9) $ .2 Shares issued under Stock Option Plan (56,722 shares) .1 1.5 -- -- Shares granted under Stock Incentive Plans (214,250 shares) .2 5.3 (5.5) -- Compensation expense -- -- 1.6 -- Termination of shares granted under Stock Incentive Plans (39,442 shares) -- (1.3 ) 1.3 -- Shares sold under Employee Stock Purchase Plans (23,200 shares) -- .4 -- -- Foreign currency translation adjustments -- -- -- 1.8 - -------------------------------------------------------------------------------------------------------------------------- BALANCE AT JUNE 30, 1992 39.2 202.4 (11.5) 2.0 Shares issued under Stock Option Plan (299,811 shares) .3 9.7 -- -- Shares granted under Stock Incentive Plans (228,750 shares) .2 6.2 (6.5) -- Compensation expense -- -- 7.3 -- Termination of shares granted under Stock Incentive Plans (75,192 shares) (.1 ) (2.3 ) 2.4 -- Shares sold under Employee Stock Purchase Plans (10,294 shares) -- .3 -- -- Foreign currency translation adjustments -- -- -- (15.0) - -------------------------------------------------------------------------------------------------------------------------- BALANCE AT JUNE 30, 1993 39.6 216.3 (8.3) (13.0) Shares issued under Stock Option Plan (315,747 shares) .3 11.1 -- -- Shares granted under Stock Incentive Plans (257,909 shares) .3 9.6 (9.8) -- Compensation expense -- -- 10.7 -- Termination of shares granted under Stock Incentive Plans (126,638 shares) (.1 ) (4.1 ) 4.2 -- Shares sold under Employee Stock Purchase Plans (47,904 shares) -- 2.1 -- -- Foreign currency translation adjustments -- -- -- (8.5) Purchase and retirement of Common Stock for treasury (801,300 shares) (.8 ) (4.7 ) -- -- - -------------------------------------------------------------------------------------------------------------------------- BALANCE AT JUNE 30, 1994 $39.3 $230.3 $ (3.2) $ (21.5) ==========================================================================================================================
PREFERRED STOCK PURCHASE RIGHTS Each outstanding share of Common Stock includes one preferred share purchase right that entitles the holder to purchase one two-hundredth share of a new series of participating preferred stock at an exercise price of $125. The rights will not be exercisable, or transferrable apart from the Common Stock, until 10 days following an announcement that a person or affiliated group has acquired, or obtained the right to acquire, beneficial ownership of 20 percent or more of the Common Stock or until 10 days following an announcement of a tender or exchange offer for 30 percent or more of the Common Stock. The rights, which do not have voting rights, will be exercisable by all holders except for a holder or affiliated group 28 30 beneficially owning 20 percent or more of the Common Stock. All rights will expire on November 23, 1996, and may be redeemed by the Corporation at a price of $.01 per right at any time prior to either their expiration or such time that the rights become exercisable. In the event the Corporation is acquired in a merger or other business combination or certain other events occur, provision shall be made so that each holder of a right shall have the right to receive, upon exercise thereof at the then current exercise price, that number of shares of common stock of the surviving company which at the time of such transaction would have a market value of two times the exercise price of the right. STOCK OPTIONS AND AWARDS The following information relates to stock option and incentive stock awards. Option prices are 100 percent of market value on the date the options are granted. Option grants are for a maximum of ten years after dates of grant and may be exercised in installments. Number of Option Prices Shares Per Share - ------------------------------------------------------------------------------- Exercised during the Year: 1992 56,722 $14.38 to $28.38 1993 411,538 $14.38 to $35.69 1994 504,203 $14.38 to $38.63 Granted during 1994 172,848 $40.88 to $52.25 Expired during 1994 2,000 $35.69 Terinations during 1994 20,546 $14.38 to $42.50 Outstanding at June 30, 1993 1,105,827 $14.38 to $38.63 Outstanding at June 30, 1994 751,926 $14.38 to $52.25 Exercised at June 30, 1993 862,227 $14.38 to $38.63 Exercised at June 30, 1994 581,660 $14.38 to $46.88 =============================================================================== The Corporation has a stock incentive plan for directors and key employees. Awards under this plan may include the grant of performance shares, restricted stock, stock options, stock appreciation rights, or other stock-based awards. The aggregate number of shares of Common Stock which may be awarded under the plan in each fiscal year is one percent of the total outstanding shares of Common Stock plus shares available from prior years. Performance shares outstanding were 735,966 at June 30, 1994; 608,306 at June 30, 1993; and 454,748 at June 30, 1992. Shares of Common Stock reserved for future awards under the plan were 864,970 at June 30, 1994; 749,169 at June 30, 1993; and 668,841 at June 30, 1992. Unearned compensation resulting from the stock incentive plan and charged to shareholders' equity was $10,646,000 in 1994, $6,434,000 in 1993 and $5,490,000 in 1992. Unearned compensation is amortized to expense over the vesting period of the performance shares and is adjusted for changes in the market value of the Common Stock. Under the Corporation's domestic retirement plan, employees may purchase a limited amount of the Corporation's Common Stock at 70 percent of current market value. Under employee stock purchase plans, 47,904 shares were issued during fiscal 1994. Shares of Common Stock reserved for future purchases by the retirement plan were 1,460,497 at June 30, 1994. RESEARCH AND DEVELOPMENT Corporation-sponsored research and product development costs were $127,770,000 in 1994, $120,600,000 in 1993, and $122,100,000 in 1992. RETIREMENT PLANS Retirement and defined-benefit plans expense amounted to $70,200,000 in 1994, $56,900,000 in 1993, and $53,000,000 in 1992. INTEREST EXPENSE Total interest was $58,600,000 in 1994, $60,200,000 in 1993, and $66,100,000 in 1992, of which $300,000, $300,000, and $100,000, respectively, was capitalized. Interest paid was $59,000,000 in 1994, $60,800,000 in 1993, and $67,600,000 in 1992. INCOME TAXES The provisions for income taxes from continuing operations are summarized as follows: - ------------------------------------------------------------- (In millions) 1994 1993 1992 - ------------------------------------------------------------- Current: United States $50.0 $18.6 $ 4.0 International 11.3 20.7 16.3 State and local 4.9 6.0 5.6 - -------------------------------------------------------------- 66.2 45.3 25.9 - -------------------------------------------------------------- Deferred: United States (2.8) 15.6 7.2 International 5.6 (.4) 1.1 State and local 2.6 (1.8) 3.3 - -------------------------------------------------------------- 5.4 13.4 11.6 - -------------------------------------------------------------- $71.6 $58.7 $37.5 ============================================================== 29 31 NOTES TO FINANCIAL STATEMENTS The components of deferred income tax assets (liabilities) at June 30 are as follows:
- ----------------------------------------------------------------------------------- (In millions) 1994 1993 - ----------------------------------------------------------------------------------- Current Non-Current Current Non-Current Deferred Deferred Deferred Deferred - ----------------------------------------------------------------------------------- Completed contracts $(13.2) $ 20.6 $(22.0) $ 18.1 Inventory valuations 15.8 - 17.2 - Accruals 73.9 8.5 62.7 22.6 Depreciation - (49.3) - (51.4) Leases (1.0) (18.3) (1.6) (13.1) International tax loss carryforwards - 12.8 - 14.6 All other - net 6.6 15.8 13.0 13.2 - ----------------------------------------------------------------------------------- 82.1 (9.9) 69.3 4.0 Valuation allowance (2.9) (12.8) (3.3) (14.6) - ----------------------------------------------------------------------------------- $79.2 $(22.7) $ 66.0 $(10.6) ===================================================================================
A reconciliation of the effective income tax rate follows: - ----------------------------------------------------------------------------------- 1994 1993 1992 - ----------------------------------------------------------------------------------- Statutory U.S. income tax rate 35.0% 34.0% 34.0% State taxes 2.6 1.6 4.7 Adjustment to prior year accruals - (3.1) (4.0) Interantional incvome 1.2 2.2 (4.3) Tax benefits related to export sales (3.1) (1.4) (1.0) Nondeductible amortization .9 .7 .9 Other items .4 .6 (.3) - ----------------------------------------------------------------------------------- Effective income tax rate 37.0% 34.6% 30.0% ===================================================================================
United States income taxes have not been provided on $414,900,000 of undistributed earnings of international subsidiaries because of the Corporation's intention to reinvest these earnings. The determination of unrecognized deferred U.S. tax liability for the undistributed earnings of international subsidiaries is not practicable. Pretax income from continuing operations of international subsidiaries was $55,900,000 in 1994, $38,200,000 in 1993, and $47,700,000 in 1992. BUSINESS SEGMENTS Descriptions of the Corporation's business segments appear on page 1. Net sales and operating profit by segment are on page 2. Sales made to the U.S government by all segments (primarily Electronic Systems segment) were 34.8 percent of total sales in 1994, 35.7 percent of total sales in 1993, and 37.6 percent of total sales in 1992. Intersegment sales, which are insignificant, are accounted for at prices comparable to unaffiliated customers. Selected information by business segment and geographical area is summarized below:
- ----------------------------------------------------------------------------------- (In millions) 1994 1993 1992 - ----------------------------------------------------------------------------------- IDENTIFIABLE ASSETS Electronic Systems $ 730.8 $ 657.9 $ 555.6 Semiconductor 609.3 643.1 702.0 Communications 406.2 370.5 359.7 Lanier Worldwide 738.6 689.2 682.7 Corporate 192.2 181.3 183.8 - ----------------------------------------------------------------------------------- $2,677.1 $2,542.0 $2,483.8 =================================================================================== CAPITAL EXPENDITURES Electronic Systems $ 26.5 $ 34.5 $ 27.7 Semiconductor 43.6 27.4 21.8 Communications 17.5 16.5 13.1 Lanier Worldwide 14.1 8.9 6.3 Corporate 14.9 8.1 2.8 - ----------------------------------------------------------------------------------- $ 116.6 $ 95.4 $ 71.7 =================================================================================== DEPRECIATION Electronic Systems $ 29.0 $ 30.4 $ 30.8 Semiconductor 47.5 52.0 69.0 Communications 13.9 13.1 13.5 Lanier Worldwide 7.0 6.9 6.1 Corporate 6.5 6.8 7.7 - ----------------------------------------------------------------------------------- $ 103.9 $ 109.2 $ 127.1 =================================================================================== GEOGRAPHICAL INFORMATION U.S. operations: Net sales $2,741.8 $2,517.2 $2,415.5 Operating profit 137.6 131.6 77.3 Identifiable assets 2,041.2 1,951.0 1,913.7 International operations: Net sales $594.3 $ 581.9 $ 588.5 Operating profit 55.9 38.2 47.7 Identifiable assets 635.9 591.0 570.1 ===================================================================================
Corporate assets consist primarily of cash, cash equivalents, deferred income taxes, and plant equipment. Export sales approximated $387,600,000 in 1994, $295,400,000 in 1993, and $272,700,000 in 1992. Export sales and net sales of international operations were principally to Europe, Asia, and Latin America. LEASE COMMITMENTS Total rental expense from continuing operations amounted to $52,900,000 in 1994, $56,100,000 in 1993. Future minimum rental commitments under leases, primarily for land and buildings, amounted to approximately $148,800,000 at June 30, 1994. These commitments for the years following 1994 are: 1995-$41,100,000, 1996-$30,700,000, 1997-$22,900,000, 1998-$13,900,000, 1999-$8,200,000 and $32,000,000 thereafter. 30 32 FINANCIAL INSTRUMENTS The Corporation uses foreign exchange contracts and options to hedge intercompany accounts and off-balance-sheet foreign currency commitments. Management believes the use of foreign currency financial instruments should not subject the Corporation to undue risk resulting from changes in foreign currency exchange rates. The Corporation had foreign exchange forward and option contracts with a face value of $288,800,000 at June 30, 1994 and $195,500,000 at June 30, 1993. These contracts were primarily agreements to buy or sell Japanese, European and Malaysian currencies for periods consistent with the terms of the underlying transaction, generally one year or less. Foreign exchange forward and option contracts used to hedge off-balance sheet commitments were $165,600,000 at June 30, 1994 and $88,400,000 at June 30, 1993. Concentractions of credit risk with respect to trade and notes receivable are limited due to the wide variety of customers and markets into which the Corporation sells its products and services. The net carrying amounts of foreign exchange contracts, long-term investments and debt approximates the quoted fair market value of these financial instruments. 31 33 QUARTERLY FINANCIAL DATA (UNAUDITED) Selected quarterly financial data is summarized below.
QUARTERS ENDED - ---------------------------------------------------------------------------------------------------------------------------- DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS 9-30-93 12-31-93 3-31-94 6-30-94(1) TOTAL YEAR - ---------------------------------------------------------------------------------------------------------------------------- FISCAL 1994 Net sales $769.1 $807.5 $838.3 $921.2 $3,336.1 Gross profit 248.6 257.8 259.5 295.4 1,061.3 Income before income taxes 39.8 48.4 51.0 54.3 193.5 Income before cumulative effect of change in accounting principle 24.7 30.0 33.0 34.2 121.9 Cumulative effect of change in accounting principle (10.1) -- -- -- (10.1) Net income 14.6 30.0 33.0 34.2 111.8 Per share: Income before continuing operations before cumulative effect of change in accounting principle .62 .75 .83 .87 3.07 Cumulative effect of change in accounting principle (.25) -- -- -- (.25) Net income .37 .75 .83 .87 2.82 Dividends .28 .28 .28 .28 1.12 Stock prices (high/low) 43 3/4-36 3/8 47 3/8-41 1/2 52 1/4-44 49-41 3/4 =========================================================================================================================== (1) Fiscal 1994 fourth quarter results include a $17.8 million ($11.5 million after income taxes or 29 cents per share) charge for the write-off of securities received from a prior-year sale of a discontinued business.
QUARTERS ENDED - ----------------------------------------------------------------------------------------------------------------------------- DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS 9-25-92 12-25-92 3-26-93 6-30-93 TOTAL YEAR - ----------------------------------------------------------------------------------------------------------------------------- FISCAL 1993 Net sales $727.6 $768.8 $744.2 $858.5 $3,099.1 Gross profit 234.3 251.4 244.7 282.7 1,013.1 Income before income taxes 31.9 40.2 42.9 54.8 169.8 Net income 20.7 25.4 27.5 37.5 111.1 Per share: Net income .53 .64 .70 .95 2.82 Dividends .26 .26 .26 .26 1.04 Stock prices (high/low) 33 1/4-27 1/4 35 1/2-28 3/4 38 5/8-32 7/8 39 1/4-33 7/8 ============================================================================================================================
32 34 SCHEDULE II -- AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS, PROMOTERS, AND EMPLOYEES OTHER THAN RELATED PARTIES - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E - --------------------------------------------------------------------------------------------------------- BALANCE AT END OF DEDUCTIONS PERIOD BALANCE ------------------------- ---------------------- AT (1) (2) (2) BEGINNING AMOUNTS AMOUNTS (1) NOT NAME OF DEBTOR OF PERIOD ADDITIONS COLLECTED WRITTEN OFF CURRENT CURRENT - --------------------- YEAR ENDED JUNE 30, 1994: Ricardo A. Diaz.... $773,890 $ 8,510 -- $9,171 $756,209 Gerald L. Doyle.... $373,015 $235,907 (C) $ 4,140 -- $6,107 $598,675 YEAR ENDED JUNE 30, 1993: Ricardo A. Diaz.... $781,141 -- $ 7,251 -- $8,510 $765,380 Gerald L. Doyle.... -- $375,000 (B) $ 1,985 -- $3,611 $369,404 YEAR ENDED JUNE 30, 1992: Ricardo A. Diaz.... $786,569 (A) -- $ 5,428 -- $5,936 $775,205 - --------------- Note A -- Amount represents a 7.5% Employee Note Receivable due April 1996. Note is secured by employee's real property. Note B -- Amount represents a 7.5% Employee Note Receivable due December 1997. Note is secured by employee's real property. Note C -- Amount represents a 7.5% Employee Note Receivable due March 1999. Note is secured by employee's real property.
33 35 SCHEDULE V -- PROPERTY, PLANT AND EQUIPMENT HARRIS CORPORATION AND SUBSIDIARIES YEAR ENDED JUNE 30, 1994 (IN THOUSANDS) - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E COL. F - -------------------------------------------------------------------------------------------------------- OTHER CHANGES-- BALANCE AT ADD BALANCE BEGINNING ADDITIONS (DEDUCT)-- AT END OF CLASSIFICATION OF PERIOD AT COST RETIREMENTS DESCRIBE PERIOD - --------------------------------- Plant and Equipment Land........................... $ 35,655 -- $ 5,388 -- $ 30,267 $ (131)(A) Buildings...................... 387,973 $ 14,882 20,738 52(B) 382,038 Construction in progress....... 5,695 (150) -- -- 5,545 Land improvements.............. 19,910 164 13 -- 20,061 (232)(A) Leasehold improvements......... 28,611 2,758 7,139 (264)(B) 23,734 ---------- -------- -------- ----------- ---------- Land and buildings.......... 477,844 17,654 33,278 (575) 461,645 ---------- -------- -------- ----------- ---------- 5(A) Machinery and equipment........ 941,667 92,083 63,693 (999)(B) 969,063 (80)(A) Rental equipment............... 174,287 50,797 32,432 (4,282)(B) 188,290 Tools, jigs and fixtures....... 2,518 139 57 4(B) 2,604 Trucks and automobiles......... 4,732 594 936 27(B) 4,417 438(A) Furniture and fixtures......... 66,916 7,246 5,211 (243)(B) 69,146 Plant orders in progress....... 24,669 (1,019) 8 -- 23,642 ---------- -------- -------- ----------- ---------- Machinery and equipment..... 1,214,789 149,840 102,337 (5,130) 1,257,162 ---------- -------- -------- ----------- ---------- Totals.................... $1,692,633 $167,494 $135,615 $(5,705) $1,718,807 ========= ======== ======== =========== =========
[FN] Note A -- Transfers between property, plant and equipment classifications. Note B -- Foreign currency translation gains and losses. Note C -- The annual provisions for depreciation have been computed principally in accordance with the following rates: Buildings............................... 2% to 20% Land improvements....................... 2% to 33% Leasehold improvements.................. 5% to 50% Machinery and equipment................. 5% to 33% Rental equipment........................ 20% to 50% Tools, jigs and fixtures................ 10% to 33% Trucks and automobiles.................. 14% to 33% Furniture and fixtures.................. 5% to 33%
34 36 SCHEDULE V -- PROPERTY, PLANT AND EQUIPMENT HARRIS CORPORATION AND SUBSIDIARIES YEAR ENDED JUNE 30, 1993 (IN THOUSANDS) - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E COL. F - ------------------------------------------------------------------------------------------------------ OTHER CHANGES-- BALANCE AT ADD BALANCE BEGINNING ADDITIONS (DEDUCT)-- AT END OF CLASSIFICATION OF PERIOD AT COST RETIREMENTS DESCRIBE PERIOD - --------------------------------- Plant and Equipment $ 184(A) Land........................... $ 34,614 $ 126 -- 731(B) $ 35,655 (302)(A) 9,306(B) Buildings...................... 368,722 13,988 $ 3,310 (431)(C) 387,973 902(A) Construction in progress....... 5,788 (998) -- 3(B) 5,695 Land improvements.............. 17,582 1,443 2 887(B) 19,910 412(A) (605)(C) Leasehold improvements......... 28,217 2,552 2,204 239(D) 28,611 ---------- -------- ------- ---------- ---------- Land and buildings.......... 454,923 17,111 5,516 11,326 477,844 ---------- -------- ------- ---------- ---------- (222)(A) 1,609(B) (3,195)(C) Machinery and equipment........ 911,066 64,700 33,952 1,661(D) 941,667 (969)(A) (5,926)(C) Rental equipment............... 163,135 54,059 36,029 17(D) 174,287 (92)(A) Tools, jigs and fixtures....... 2,431 298 -- (119)(C) 2,518 (129)(A) 135(B) (213)(C) Trucks and automobiles......... 4,486 1,047 632 38(D) 4,732 1,123(A) 3,064(B) (612)(C) Furniture and fixtures......... 60,618 4,526 2,157 354(D) 66,916 Plant orders in progress....... 17,987 7,739 150 (907)(A) 24,669 ---------- -------- ------- ---------- ---------- Machinery and equipment..... 1,159,723 132,369 72,920 (4,383) 1,214,789 ---------- -------- ------- ---------- ---------- Totals.................... $1,614,646 $149,480 $78,436 $ 6,943 $1,692,633 ========= ======== ======= ========== =========
[FN] Note A -- Transfers between property, plant and equipment classifications. Note B -- Transfers (to) from other classifications in the Consolidated Balance Sheet. Note C -- Foreign currency translation gains and losses. Note D -- Assets acquired in acquisition. Note E -- The annual provisions for depreciation have been computed principally in accordance with the following rates: Buildings............................... 2% to 20% Land improvements....................... 2% to 33% Leasehold improvements.................. 5% to 50% Machinery and equipment................. 5% to 33% Rental equipment........................ 20% to 50% Tools, jigs and fixtures................ 10% to 33% Trucks and automobiles.................. 14% to 33% Furniture and fixtures.................. 5% to 33%
35 37 SCHEDULE V -- PROPERTY, PLANT AND EQUIPMENT HARRIS CORPORATION AND SUBSIDIARIES YEAR ENDED JUNE 30, 1992 (IN THOUSANDS) - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E COL. F - ------------------------------------------------------------------------------------------------------- OTHER CHANGES-- BALANCE AT ADD BALANCE BEGINNING ADDITIONS (DEDUCT)-- AT END OF CLASSIFICATION OF PERIOD AT COST RETIREMENTS DESCRIBE PERIOD - --------------------------------- Plant and Equipment Land........................... $ 34,988 -- $ 338 $ (36)(A) $ 34,614 1,270(A) Buildings...................... 355,988 $ 12,837 1,687 314(C) 368,722 Construction in progress....... 12,064 (6,276) -- -- 5,788 Land improvements.............. 17,096 167 9 328(A) 17,582 (2,746)(A) Leasehold improvements......... 31,902 2,183 3,449 327(C) 28,217 ---------- -------- ------- ----------- ---------- Land and buildings.......... 452,038 8,911 5,483 (543) 454,923 ---------- -------- ------- ----------- ---------- 1,172(A) 1,900(B) Machinery and equipment........ 883,140 63,969 40,324 1,209(C) 911,066 24(A) Rental equipment............... 118,394 69,528 31,289 6,478(C) 163,135 (2)(A) 1(B) Tools, jigs and fixtures....... 2,205 184 -- 43(C) 2,431 43(A) Trucks and automobiles......... 4,471 557 755 170(C) 4,486 (82)(A) Furniture and fixtures......... 58,461 4,792 3,302 749(C) 60,618 Plant orders in progress....... 24,719 (6,671) 90 29(A) 17,987 ---------- -------- ------- ----------- ---------- Machinery and equipment..... 1,091,390 132,359 75,760 11,734 1,159,723 ---------- -------- ------- ----------- ---------- Totals.................... $1,543,428 $141,270 $81,243 $11,191 $1,614,646 ========= ======== ======= =========== =========
[FN] Note A -- Transfers between property, plant and equipment classifications. Note B -- Transfers (to) from other classifications in the Consolidated Balance Sheet. Note C -- Foreign currency translation gains and losses. Note D -- The annual provisions for depreciation have been computed principally in accordance with the following rates: Buildings............................... 2% to 20% Land improvements....................... 2% to 33% Leasehold improvements.................. 5% to 50% Machinery and equipment................. 5% to 33% Rental equipment........................ 20% to 50% Tools, jigs and fixtures................ 10% to 33% Trucks and automobiles.................. 14% to 33% Furniture and fixtures.................. 5% to 33%
36 38 SCHEDULE VI -- ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT HARRIS CORPORATION AND SUBSIDIARIES YEAR ENDED JUNE 30, 1994 ($000) - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E COL. F - ------------------------------------------------------------------------------------------------------- OTHER CHANGES-- BALANCE AT ADD BALANCE BEGINNING ADDITIONS (DEDUCT)-- AT END OF DESCRIPTION OF PERIOD AT COST RETIREMENTS DESCRIBE PERIOD - --------------------------------- Plant and Equipment $ (245)(A) Buildings...................... $178,178 $19,316 $6,992 (4)(B) $190,253 Land improvements.............. 11,777 852 7 -- 12,622 (102)(A) Leasehold improvements........... 20,816 3,176 6,628 (116)(B) 17,146 ---------- -------- -------- ---------- ---------- Buildings and improvements.............. 210,771 23,344 13,627 (467) 220,021 ---------- -------- -------- ---------- ---------- 460(A) Machinery and equipment.......... 759,080 74,688 58,215 (670)(B) 775,343 (212)(A) Rental equipment................. 100,561 41,787 25,962 (2,583)(B) 113,591 2(A) Tools, jigs and fixtures......... 2,436 215 43 2(B) 2,612 (84)(A) Trucks and automobiles........... 3,577 514 506 12(B) 3,513 181(A) Furniture and fixtures........... 52,068 5,099 4,780 (158)(B) 52,410 ---------- -------- -------- ---------- ---------- Machinery and equipment........ 917,722 122,303 89,506 (3,050) 947,469 ---------- -------- -------- ---------- ---------- Totals.................... $1,128,493 $145,647 $103,133 $ (3,517) $1,167,490 ========= ======== ======== ========== ========= Note A -- Transfers between property, plant and equipment classifications. Note B -- Foreign currency translation gains and losses.
37 39 SCHEDULE VI -- ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT HARRIS CORPORATION AND SUBSIDIARIES YEAR ENDED JUNE 30, 1993 (IN THOUSANDS) - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E COL. F - ---------------------------------------------------------------------------------------------------- OTHER CHANGES-- BALANCE AT ADD BALANCE BEGINNING ADDITIONS (DEDUCT)-- AT END OF DESCRIPTION OF PERIOD AT COST RETIREMENTS DESCRIBE PERIOD - --------------------------------- Plant and Equipment $ (78)(A) Buildings...................... $ 154,490 $ 20,270 $ 2,280 5,776(C) $ 178,178 Land improvements.............. 10,431 847 1 500(C) 11,777 (39)(A) Leasehold improvements......... 20,369 2,821 1,767 (568)(B) 20,816 ---------- -------- ------- -------- ---------- Buildings and improvements................... 185,290 23,938 4,048 5,591 210,771 ---------- -------- ------- -------- ---------- (65)(A) (1,942)(B) Machinery and equipment........ 710,258 78,940 29,688 1,577(C) 759,080 (517)(A) Rental equipment............... 94,719 40,834 29,846 (4,629)(B) 100,561 (24)(A) Tools, jigs and fixtures....... 2,180 273 -- 7(B) 2,436 44(A) (167)(B) Trucks and automobiles......... 3,374 697 506 135(C) 3,577 679(A) (300)(B) Furniture and fixtures......... 45,769 5,362 1,956 2,514(C) 52,068 ---------- -------- ------- -------- ---------- Machinery and equipment..... 856,300 126,106 61,996 (2,688) 917,722 ---------- -------- ------- -------- ---------- Totals.................... $1,041,590 $150,044 $66,044 $2,903 $1,128,493 ========= ======== ======= ======== ========= Note A -- Transfers between property, plant and equipment classifications. Note B -- Foreign currency translation gains and losses. Note C -- Transfers (to) from other classifications in the Consolidated Balance Sheet.
38 40 SCHEDULE VI -- ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT HARRIS CORPORATION AND SUBSIDIARIES YEAR ENDED JUNE 30, 1992 (IN THOUSANDS) - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E COL. F - -------------------------------------------------------------------------------------------------- ADDITIONS BALANCE CHARGED OTHER AT TO CHANGES-- BEGINNING COSTS ADD BALANCE OF AND (DEDUCT)-- AT END OF DESCRIPTION PERIOD EXPENSES RETIREMENTS DESCRIBE PERIOD - --------------------------------- Plant and Equipment $ (145)(A) Buildings...................... $136,485 $ 19,599 $ 1,455 6(B) $ 154,490 Land improvements.............. 9,707 741 9 (8)(A) 10,431 (176)(A) Leasehold improvements......... 20,414 3,167 3,311 275(B) 20,369 -------- -------- ------- -------- ---------- Buildings and improvements................... 166,606 23,507 4,775 (48) 185,290 -------- -------- ------- -------- ---------- 715(A) Machinery and equipment........ 649,392 96,019 36,616 748(B) 710,258 (292)(A) Rental equipment............... 69,691 37,606 16,987 4,701(B) 94,719 (2)(A) Tools, jigs and fixtures....... 1,914 261 -- 7(B) 2,180 24(A) Trucks and automobiles......... 3,126 687 543 80(B) 3,374 (116)(A) Furniture and fixtures......... 42,030 6,582 3,083 356(B) 45,769 -------- -------- ------- -------- ---------- Machinery and equipment..... 766,153 141,155 57,229 6,221 856,300 -------- -------- ------- -------- ---------- Totals.................... $932,759 $164,662 $62,004 $6,173 $1,041,590 ======== ======== ======= ======== ========= Note A -- Transfers between property, plant and equipment classifications. Note B -- Foreign currency translation gains and losses.
39 41 SCHEDULE VIII -- VALUATION AND QUALIFYING ACCOUNTS HARRIS CORPORATION AND SUBSIDIARIES (IN THOUSANDS) - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E - ------------------------------------------------------------------------------------------------------------- ADDITIONS ------------------------- (1) (2) BALANCE CHARGED CHARGED AT TO COSTS TO OTHER BALANCE BEGINNING AND ACCOUNTS DEDUCTIONS-- AT END OF DESCRIPTION OF PERIOD EXPENSES DESCRIBE DESCRIBE PERIOD - ----------------------------------- YEAR ENDED JUNE 30, 1994: Amounts Deducted From Respective Asset Accounts $ 891(A) 6,754(B) ------------ Allowances for collection losses........................... $28,245 $ 8,790 $ 102(C) $ 7,645 $29,492 ========= ========= =========== ============ ======== YEAR ENDED JUNE 30, 1993: Amounts Deducted From Respective Asset Accounts $ 1,028(A) 8,058(B) ------------ Allowances for collection losses........................... $29,638 $ 7,648 $ 45(D) $ 9,086 $28,245 ========= ========= =========== ============ ======== YEAR ENDED JUNE 30, 1992: Amounts Deducted From Respective Asset Accounts $ 1,118(A) $ 11,583(B) 65(D) 1,526(C) ----------- ------------ Allowances for collection losses........................... $30,545 $11,019 $ 1,183 $ 13,109 $29,638 ========= ========= =========== ============ ======== Note A -- Foreign currency translation gains and losses. Note B -- Uncollectible accounts charged off, less recoveries on accounts previously charged off. Note C -- Amounts reclassified to other accounts in the Consolidated Balance Sheet. Note D -- Additions resulting from businesses acquired.
40 42 SCHEDULE IX -- SHORT-TERM BORROWINGS HARRIS CORPORATION AND SUBSIDIARIES (IN THOUSANDS) - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E COL. F - ---------------------------------------------------------------------------------------------------------- WEIGHTED AVERAGE AVERAGE MAXIMUM AMOUNT INTEREST AMOUNT OUTSTANDING RATE BALANCE WEIGHTED OUTSTANDING DURING DURING AT AVERAGE DURING THE THE CATEGORY OF AGGREGATE END OF INTEREST THE PERIOD PERIOD SHORT-TERM BORROWINGS PERIOD RATE PERIOD (B) (C) - ------------------------------------- YEAR ENDED JUNE 30, 1994: Short-term debt payable to banks (A)................................ $ 19,765 9.4 % $163,466 $101,977 6.5% YEAR ENDED JUNE 30, 1993: Short-term debt payable to banks (A)................................ $ 35,222 9.3 % $103,688 $ 65,157 11.8% YEAR ENDED JUNE 30, 1992: Short-term debt payable to banks (A)................................ $ 43,043 11.5 % $206,544 $102,867 10.6% - --------------- Note A -- Short-term debt includes borrowings by Harris international subsidiaries from banks under bank overdraft, lines of credit, or short-term note agreements. Maturity dates under bank overdraft arrangements are not formalized but are reviewed periodically -- generally on an annual basis. Note B -- The average amount outstanding during the period was computed by dividing the total month-end principal balances by 13. Note C -- The weighted average interest rate during the period was computed by dividing the actual interest expense on short-term debt by the average short-term debt outstanding.
41 43 SCHEDULE X -- SUPPLEMENTARY INCOME STATEMENT INFORMATION HARRIS CORPORATION AND SUBSIDIARIES (IN THOUSANDS) - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
COL. A COL. B - ----------------------------------------------------------------------------------------------- CHARGED TO COSTS AND EXPENSES YEARS ENDED JUNE 30, -------------------------------- ITEM 1994 1993 1992 - ----------------------------------------------------------- 1. Maintenance and repairs................................ $56,081 $57,400 $59,847 2. Depreciation and amortization of intangible assets, preoperating costs and similar deferrals.............. A A A 3. Taxes, other than payroll and income taxes............. A A A 4. Royalties.............................................. A A A 5. Advertising costs...................................... A $31,859 $34,092 - --------------- Note A -- Amounts are not presented as such amounts are less than 1% of total sales and revenues.
42 EX-10.C 2 FORM 10-K EXHIBIT 10(C) 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 EX-10.G 3 FORM 10-K EXHIBIT 10(G) 1 Exhibit 10(g) HARRIS CORPORATION RETIREMENT PLAN 2 TABLE OF CONTENTS ARTICLE I DEFINITIONS 1.1 Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1.2 After-Tax Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1.3 After-Tax Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1.4 Basic Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1.5 Balanced Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1.6 Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 1.7 Break-in-Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 1.8 Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 1.9 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 1.10 Consolidated Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 1.11 Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 1.12 Corporation Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 1.13 Disability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 1.14 Early Retirement Age . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 1.15 Employment Unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 1.16 Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 1.17 ERISA - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 1.18 Excess Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
- i - 3 1.19 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 1.20 Harris Stock Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 1.21 Harris Stock After-Tax Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 1.22 Harris Stock Matching After-Tax Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 1.23 Harris Stock Matching Pre-Tax Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 1.24 Harris Stock Pre-Tax Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 1.25 Highly Compensated Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 1.26 Hour of Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 1.27 Investment Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 1.28 Layoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 1.29 Leave of Absence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 1.30 Matching After-Tax Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 1.31 Matching After-Tax Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 1.32 Matching Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 1.33 Matching Pre-Tax Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 1.34 Matching Pre-Tax Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 1.35 Military Leave . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 1.36 Normal Retirement Age . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 1.37 Original Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 1.38 Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 1.39 Participating Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 1.40 Period of Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
- ii - 4 1.41 Period of Severance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 1.42 Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 1.43 Plan Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 1.44 Predecessor Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 1.45 Pre-Tax Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 1.46 Pre-Tax Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 1.47 Profit-Sharing Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 1.48 Profit-Sharing Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 1.49 Related Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 1.50 Rollover Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 1.51 Savings Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 1.52 Severance from Service Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 1.53 Supplemental Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 1.54 Taxable Wage Base . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 1.55 Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 1.56 Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 1.57 Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 1.58 Valuation Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
- iii - 5 ARTICLE II PARTICIPATION 2.1 In General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 2.2 Renewal of Participation on Reemployment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 2.3 Periods of Service on Reemployment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 2.4 Service with Predecessor Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 2.5 Participation for Purposes of Rollover Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE III CONTRIBUTIONS AND ALLOCATIONS 3.1 Profit-Sharing Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 3.2 Allocation of Profit-Sharing Contributions to Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 3.3 Pre-Tax Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 3.4 Matching Pre-Tax Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 3.5 After-Tax Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 3.6 Matching After-Tax Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 3.7 Elections to Make Pre-Tax and After-Tax Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 3.8 Rollover Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 3.9 Participating Company's Obligation to Make Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 3.10 Treatment of Forfeited Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 3.11 Finality of Allocations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
- iv - 6 ARTICLE IV LIMITATIONS ON CONTRIBUTIONS 4.1 In General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 4.2 Pre-Tax Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 4.3 Percentage Limitation on Pre-Tax Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 4.4 Percentage Limitation on After-Tax and Matching Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 4.5 Multiple Use of Alternative Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 4.6 Limitations on Annual Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE V VESTING AND FORFEITURES 5.1 In General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 5.2 Vesting on Retirement, Death or Disability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 5.3 Vesting on Other Termination of Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 5.4 Effect of In-Service Withdrawals on a Participant's Vested Percentage . . . . . . . . . . . . . . . . . . . . . 43 5.5 Forfeitures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE VI ACCOUNTS AND INVESTMENTS 6.1 Establishment of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 6.2 Investment of Profit-Sharing Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 6.3 Investment of Accounts Other than Profit-Sharing Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
- v - 7 6.4 Allocation of Earnings and Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 6.5 Special Rules Concerning Harris Stock Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE VII DISTRIBUTIONS 7.1 In General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 7.2 Small Benefit Cash-out . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 7.3 Form of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 7.4 Time of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 7.5 Direct Rollover . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 7.6 Payments on Death . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 7.7 Benefit Amount and Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 7.8 Order of Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 7.9 Statutory Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 7.10 Designating Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 7.11 Payment of Group Insurance Premiums . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 7.12 Inability to Locate Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
ARTICLE VIII LOANS 8.1 In General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 8.2 Loan Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 8.3 Terms and Conditions of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
- vi - 8 8.4 Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 8.5 Repayment and Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 8.6 Mechanics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 8.7 Special Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
ARTICLE IX IN-SERVICE WITHDRAWALS 9.1 At-Will Withdrawals from Savings Account and After-Tax Account . . . . . . . . . . . . . . . . . . . . . . . . . 75 9.2 Hardship Withdrawals from Pre-Tax Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 9.3 Emergency Withdrawals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 9.4 Reduction of Investment Fund Balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
ARTICLE X TOP-HEAVY PROVISIONS 10.1 In General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 10.2 Minimum Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 10.3 Minimum Vesting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 10.4 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
ARTICLE XI ADMINISTRATION 11.1 Named Fiduciaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87 11.2 Corporation Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87 11.3 Powers and Duties of Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
- vii - 9 11.4 Actions of Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87 11.5 Finality of Decisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88 11.6 Immunities of Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88 11.7 Advisers and Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88 11.8 Committee Member who is Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89 11.9 Information Provided by Participating Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89 11.10 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89 11.11 Trust Fund Available to Pay All Plan Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
ARTICLE XII AMENDMENT AND TERMINATION AND CHANGE OF CONTROL 12.1 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91 12.2 Termination of Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92 12.3 Discontinuance of Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92 12.4 Vesting on Termination or Discontinuance of Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . 92 12.5 Distribution on Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93 12.6 Change of Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
ARTICLE XIII MISCELLANEOUS PROVISIONS 13.1 Restrictions on Alienation; Qualified Domestic Relations Orders . . . . . . . . . . . . . . . . . . . . . . . . 97 13.2 Exclusive Benefit Requirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98 13.3 Return of Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
- viii - 10 13.4 No Contract of Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 13.5 Payment of Benefits on Incapacity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 13.6 Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 13.7 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 13.8 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101 13.9 Mistaken Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
ARTICLE XIV SPECIAL PROVISIONS FOR EMPLOYEES OF HARRIS TECHNICAL SERVICES DIVISION OF HARRIS TECHNICAL SERVICES CORPORATION 14.1 Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102 14.2 Profit-Sharing Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102 14.3 Pre-Tax Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103 14.4 No Matching Pre-Tax Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103 14.5 No Investment in the Harris Stock Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103 14.6 Vesting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
- ix - 11 INTRODUCTION The Harris Corporation Retirement Plan (the "Plan") is hereby amended and restated effective July 1, 1994. Those Participants in the Plan who are Employees on July 1, 1994 shall continue to participate in the Plan, as restated. Those Participants in the Plan who are not Employees on July 1, 1994 shall not be participants in the Plan, as restated, and their benefits shall be determined under the terms of the Plan that were in effect prior to July 1, 1994 unless they are reemployed as Employees by a Participating Company. The Plan and the related trust are intended to be a tax-exempt plan and trust under sections 401(a) and 501(a) of the Code, respectively. The Plan also is intended to be a profit-sharing plan that contains a qualified cash or deferred arrangement under section 401(k) of the Code. - 1 - 12 ARTICLE I DEFINITIONS 1.1 ACCOUNTS -- means all of the accounts described in section 6.1, and such other accounts that may be established on behalf of each Participant, to be credited with contributions made on behalf of a Participant, adjusted for earnings and losses as provided in the Plan and debited by Plan expenses allocable to the Accounts, distributions, withdrawals and loans to the Participant. 1.2 AFTER-TAX ACCOUNT - means the account established to record After-Tax Contributions made on the Participant's behalf other than those invested in the Harris Stock Fund. 1.3 AFTER-TAX CONTRIBUTIONS -- means the contributions described in section 3.5. 1.4 BASIC ACCOUNT -- means the account established to record the portion of the Profit-Sharing Contributions allocable to a Participant's Compensation. 1.5 BALANCED FUND -- means the Balanced Fund described in Appendix A. - 2 - Harris Retirement Plan 13 Definitions 1.6 BENEFICIARY -- means the person or persons entitled to receive any benefits payable under the Plan on account of a Participant's death. 1.7 BREAK-IN-SERVICE -- means a Period of Severance, as defined below. 1.8 CODE -- means the Internal Revenue Code of 1986, as amended from time to time. 1.9 COMPENSATION -- means the following items of remuneration which an Employee earns for work or personal services performed for a Participating Company: (a) salary or wage; (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 Annual Incentive Plan or any successor thereto or other similar plan adopted by the Corporation from time to time or any stock award made in lieu of an annual cash bonus or incentive compensation; - 3 - Harris Retirement Plan 14 Definitions (f) any cash bonus or incentive compensation payable in the form of cash or any stock awards made pursuant to an established plan of the Corporation or Employee's Employment Unit, including but not limited to, bonus awards, spot awards, lump sum, profit sharing, team awards and gain sharing awards; (g) any compensation of a type described in items (a) through (f) above which is paid as an employee contribution to the Plan; (h) any salary reduction contributions to a Section 125 plan maintained by a Participating Company; but excluding: (i) any extraordinary compensation of a recurring or non-recurring nature not included under items (a) to (f) above; (ii) any extraordinary compensation in the nature of bonus, commission or incentive compensation which is not paid pursuant to an established plan of the Employee's Employment Unit or pursuant to an established sales incentive plan; - 4 - Harris Retirement Plan 15 Definitions (iii) any bonus or special allowance paid by reason of employment in a foreign country; (iv) any award made or amount paid pursuant to the Stock Incentive Plan or any successor thereto, including, but not limited to, performance shares, stock options, restricted stock, SARs, or other stock-based awards or dividend equivalents; (v) severance pay or special retirement pay; (vi) retention bonuses or completion bonuses unless authorized by the appropriate officer of the Corporation in a uniform and nondiscriminatory manner; (vii) 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 refund. In no event does the term "Compensation" include indirect compensation such as employer paid group insurance premiums, or contributions under this or other qualified employee benefit plan, other than as a contribution described in item (g) above. Only Compensation not in excess of the amount allowed under Code section 401(a)(17), which is $150,000 for 1994, shall be taken into account. In - 5 - Harris Retirement Plan 16 Definitions addition, in the year in which an Employee becomes a Participant, only Compensation received after he becomes a Participant shall be taken into account. For purposes of any test imposed under any section of the Code, the Plan authorizes the use of any definition of Compensation that satisfies the requirements of such section. 1.10 CONSOLIDATED SUBSIDIARIES -- means those subsidiaries of the Corporation which are included in the consolidated annual financial statement for the Corporation. 1.11 CORPORATION -- means Harris Corporation. 1.12 CORPORATION COMMITTEE -- means the committee established under section 11.2. 1.13 DISABILITY -- means a disability that qualifies a Participant for disability benefits under title II or title XVI of the Federal Social Security Act, and occurs on the effective date determined by the Social Security Administration. 1.14 EARLY RETIREMENT AGE -- means age 55. - 6 - Harris Retirement Plan 17 Definitions 1.15 EMPLOYMENT UNIT - means any division or other readily identifiable segment of the operations of a Participating Company, for example, as identified in the annual report or such other segments as may be established for purposes of the Plan by the Corporation, in its discretion. 1.16 EMPLOYEE -- means an individual who is employed by a Participating Company, or division or operation thereof, designated in Appendix C either (a) within the United States or (b) outside the United States who is covered by the Corporation's current expatriate assignment policy; provided that the individual is not covered by a retirement plan which is maintained by the Participating Company pursuant to a collective bargaining agreement and which was in effect on or after July 1, 1990. With respect to a Participating Company not all of whose employees are eligible to be participants (a "Limited Participating Company"), the term "Employee" shall include those employees of the Participating Company who were Participants prior to their employment by the Limited Participating Company. Solely for Plan qualification testing, the term "Employee" includes a "leased employee" only to the extent required in section 414(n) of the Code. 1.17 ERISA -- means the Employee Retirement Income Security Act of 1974, as amended from time to time. - 7 - Harris Retirement Plan 18 Definitions 1.18 EXCESS COMPENSATION -- means the portion of a Participant's Compensation that exceeds the Taxable Wage Base for the year in which the Compensation is received. 1.19 FISCAL YEAR -- means the fiscal year of the Corporation commencing on July 1 and ending on June 30. 1.20 HARRIS STOCK FUND -- means the Fund described in Appendix A that is designed to be invested in qualifying employer securities within the meaning of Section 407 of ERISA, as it applies to an eligible individual account plan. 1.21 HARRIS STOCK AFTER-TAX ACCOUNT -- means the portion of the After-Tax Contributions made on the Participant's behalf invested in the Harris Stock Fund. 1.22 HARRIS STOCK MATCHING AFTER-TAX ACCOUNT -- means the portion of the Matching After-Tax Contributions made on the Participant's behalf invested in the Harris Stock Fund. - 8 - Harris Retirement Plan 19 Definitions 1.23 HARRIS STOCK MATCHING PRE-TAX ACCOUNT -- means the portion of the Matching Pre-Tax Contributions made on the Participant's behalf invested in the Harris Stock Fund. 1.24 HARRIS STOCK PRE-TAX ACCOUNT -- means the portion of the Pre-Tax Contributions made on the Participant's behalf invested in the Harris Stock Fund. 1.25 HIGHLY COMPENSATED EMPLOYEE -- means a "highly compensated employee" for a Plan Year as defined in section 414(q) of the Code, including the family aggregation rules contained therein. 1.26 HOUR OF SERVICE -- means each hour for which an Employee is paid or entitled to payment for the performance of duties for a Participating Company or Related Company. 1.27 INVESTMENT FUNDS -- means the funds described in Appendix A to the Plan. 1.28 LAYOFF -- means a temporary suspension of the active employment of an Employee with the understanding that the Employee will be recalled to active employment if and when his services are again required. A period of - 9 - Harris Retirement Plan 20 Definitions Layoff terminates, and a Participant who is not recalled is deemed to terminate employment, on the earliest of the following dates: (a) the expiration date specified in a notice of recall delivered to the Employee; (b) the first anniversary of the date the Layoff began, or (c) the election of an Employee to terminate the Layoff by written notice delivered to the Corporation. 1.29 LEAVE OF ABSENCE -- means a period of interruption of the active employment of an Employee granted by the Participating Company or Predecessor Company with the understanding that the Employee will return to active employment at the expiration of the period of time. A Leave of Absence is of definite duration, but may be extended by the Participating Company or Predecessor Company for additional periods. The term Leave of Absence does not include a Military Leave. - 10 - Harris Retirement Plan 21 Definitions 1.30 MATCHING AFTER-TAX ACCOUNT -- means the account established to record Matching After-Tax Contributions made on the Participant's behalf other than those invested in the Harris Stock Fund. 1.31 MATCHING AFTER-TAX CONTRIBUTIONS -- means the contributions made on behalf of a Participant under section 3.6. 1.32 MATCHING CONTRIBUTIONS -- means the aggregate of the Matching After-Tax Contributions and the Matching Pre-Tax Contributions. 1.33 MATCHING PRE-TAX ACCOUNT -- means the account established to record the Matching Pre-Tax Contributions made on the Participant's behalf other than those invested in the Harris Stock Fund. 1.34 MATCHING PRE-TAX CONTRIBUTIONS -- means the contributions made on behalf of a Participant under section 3.4. 1.35 MILITARY LEAVE -- means an interruption of active employment of an Employee with a Participating Company or Predecessor Company to enter the Armed Forces of the United States under such circumstances that the Employee - 11 - Harris Retirement Plan 22 Definitions thereby becomes entitled to reemployment rights under Federal law. Military Leave terminates on the expiration of such reemployment rights. 1.36 NORMAL RETIREMENT AGE -- means age 65. 1.37 ORIGINAL PLAN -- means the terms of the 1990 Revised Harris Corporation Retirement Plan, and any prior plan to the extent incorporated therein. 1.38 PARTICIPANT -- means an Employee who satisfies the requirements of Section 2.1. Employees who do not satisfy the requirements of Article II may, nevertheless, be Participants solely for purposes of making Rollover Contributions under Section 3.8. 1.39 PARTICIPATING COMPANY -- means the Corporation and any Related Company or division or operation thereof so designated by the Corporation. Appendix C, as it may be amended from time to time, lists each Participating Company, or division thereof, whose Employees may become Participants. 1.40 PERIOD OF SERVICE -- means the period of time that begins on the Employee's employment or reemployment date, whichever is applicable, and ends - 12 - Harris Retirement Plan 23 Definitions on his Severance from Service Date. The Employee's employment or reemployment date is the date on which the Employee first performs an Hour of Service. 1.41 PERIOD OF SEVERANCE -- means the period of time commencing on the Severance from Service Date and ending on the date on which the Employee again performs an Hour of Service. 1.42 PLAN -- means the Harris Corporation Retirement Plan. 1.43 PLAN YEAR -- means the Fiscal Year. 1.44 PREDECESSOR COMPANY -- means any corporation (a) of which a Related Company is a successor by reason of having acquired all or substantially all of its business and assets by purchase, merger, consolidation or liquidation, or (b) from which a Related Company acquired a business formerly conducted by such corporation; provided, however, that in the case of any such corporation that continued to conduct a trade or business subsequent to the acquisition by a Related Company referred in (a) or (b) above, the status of such corporation as a Predecessor Company relates only to the period of time prior to the date of such acquisition. - 13 - Harris Retirement Plan 24 Definitions 1.45 PRE-TAX ACCOUNT -- means the account established to record the Pre-Tax Contributions made on the Participant's behalf other than those invested in the Harris Stock Fund. 1.46 PRE-TAX CONTRIBUTIONS -- means the contributions made on behalf of a Participant under section 3.3. 1.47 PROFIT-SHARING ACCOUNT -- means the account established to record the Profit-Sharing Contributions made on a Participant's behalf, and includes the Basic Account and the Supplemental Account. 1.48 PROFIT-SHARING CONTRIBUTIONS -- means the contributions described in section 3.1. 1.49 RELATED COMPANY -- means the Corporation and any corporation that is a member of a controlled group of corporations (as defined in section 414(b) of the Code) with the Corporation; any trade or business (whether or not incorporated) which is under common control (as defined in section 414(c) of the Code) with the Corporation; any organization (whether or not incorporated) which is a member of an affiliated service group (as defined in section 414(m) of the - 14 - Harris Retirement Plan 25 Definitions Code) which includes the Corporation, and any other entity required to be aggregated with the Corporation under section 414(o) of the Code. 1.50 ROLLOVER ACCOUNT -- means the account established to record the Rollover Contributions made by a Participant from another tax-qualified plan. 1.51 SAVINGS ACCOUNT -- means the account established under section 6.1(f). 1.52 SEVERANCE FROM SERVICE DATE -- means, with respect to a Related Company, the earlier of (a) the date on which the Employee quits, retires, is discharged or dies, or (b) the first anniversary of the first date of a period in which an Employee remains absent from service (with or without pay) for any reason other than quitting, retirement, discharge or death; provided that "second anniversary" shall be substituted for "first anniversary" if the absence is due to maternity or paternity reasons as defined in section 410(a)(5)(E) of the Code. The period between the first and the second anniversary shall not be a Period of Service or a Period of Severance. - 15 - Harris Retirement Plan 26 Definitions 1.53 SUPPLEMENTAL ACCOUNT -- means the account established to record the portion of the Profit-Sharing Contribution allocable to a Participant's Excess Compensation. 1.54 TAXABLE WAGE BASE -- means 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 the Plan Year. In the case of an Employee who was a Participant for only a portion of a particular Plan Year, the Taxable Wage Base shall be multiplied by the ratio of the number of calendar months (including a fraction of a month as a full month) in the Plan Year during which he was a Participant to 12 months. 1.55 TRUST AGREEMENT -- means the Trust Agreement relating to the Harris Corporation Retirement Plan, entered into between the Corporation and the Trustee, as it may be amended from time to time. 1.56 TRUST FUND -- means the assets held by the Trustee in accordance with the Trust Agreement. 1.57 TRUSTEE -- means Boston Safe Deposit & Trust Company, or such successor (or successors) thereto designated by the Corporation to act as trustee - 16 - Harris Retirement Plan 27 Definitions under the provisions of the Trust Agreement, who shall agree to act as such by executing the Trust Agreement. 1.58 VALUATION DATE -- means the last day of each calendar month. - 17 - Harris Retirement Plan 28 ARTICLE II PARTICIPATION 2.1 IN GENERAL. An Employee shall become a Participant in the Plan on the date he completes a one-year Period of Service, provided that he is employed by a Participating Company on that date. 2.2 RENEWAL OF PARTICIPATION ON REEMPLOYMENT. An Employee who terminates employment after he has become a Participant and is reemployed by a Participating Company shall become a Participant immediately on reemployment. An Employee who terminates employment before he has become a Participant shall become a Participant as provided in section 2.1, provided that his Period of Service prior to reemployment shall be used to satisfy the one-year Period of Service requirement of Section 2.1 to the extent provided under section 2.3. 2.3 PERIODS OF SERVICE ON REEMPLOYMENT. The following rules apply to an Employee who terminates employment before he has become a Participant and is reemployed by a Related Company and, for purposes of section 5.3, to a Participant who terminates employment and is reemployed by a Participating Company or Related Company: - 18 - Harris Retirement Plan 29 Participation (a) EARLY REEMPLOYMENT. If the Employee (or Participant) is reemployed before he incurs a one-year Period of Severance, his Period of Service before he terminated employment shall be counted as service. (b) LATER REEMPLOYMENT. If the Employee (or Participant) is reemployed after he incurs a one-year Period of Severance, his Period of Service before he terminated shall be counted as service, unless his Period of Severance equals or exceeds the greater of his prior Period of Service or five years. (c) MEASURING THE TIME PERIOD FOR REEMPLOYMENT UNDER SPECIAL CIRCUMSTANCES. If an Employee terminates employment for any reason other than quitting, discharge, or retirement, and subsequently quits, is discharged, or retires, his Period of Severance shall be counted as service only if he is reemployed by a Related Company within 12 months of when he first terminated employment. 2.4 SERVICE WITH PREDECESSOR COMPANY. In the case of a corporation (other than a Related Company) which becomes a Predecessor Company by reason of the acquisition of all or substantially all of the assets and business of such corporation by a Related Company, an Employee's Period of Service shall include employment with such Predecessor Company, as provided in the corporate documents effecting the acquisition. - 19 - Harris Retirement Plan 30 Participation 2.5 PARTICIPATION FOR PURPOSES OF ROLLOVER CONTRIBUTIONS. Employees of a Participating Company who do not satisfy the requirements of Section 2.1 may, nevertheless, be Participants solely for purposes of making Rollover Contributions under Section 3.8. - 20 - Harris Retirement Plan 31 ARTICLE III CONTRIBUTIONS AND ALLOCATIONS 3.1 PROFIT-SHARING CONTRIBUTIONS. (a) BASIC. The amount of Profit-Sharing Contributions made on behalf of Participating Companies for a Fiscal Year with respect to Participants in this Plan and the Harris Corporation Union Retirement Plan shall equal 11-1/2 percent of the adjusted consolidated net income of the Corporation and its Consolidated Subsidiaries before net income taxes for such Fiscal Year as determined in subsection (d), reduced by the portion of such amount that would have been allocable under Section 3.2 with respect to Participants' Compensation, if Compensation were determined without regard to statutory limits under section 401(a)(17) or 415 of the Code. (b) SPECIAL. The Corporation, in its discretion, may provide for an additional Profit-Sharing Contribution in a specified dollar amount or pursuant to a formula with respect to any Fiscal Year. (c) APPORTIONMENT BETWEEN THE PLAN AND THE HARRIS UNION RETIREMENT PLAN. Profit-Sharing Contributions for a Plan Year shall be apportioned for accounting and payment purposes between the Plan and the Harris Corporation Union Retirement Plan (the "Union Plan") based on the ratio - 21 - Harris Retirement Plan 32 Contributions and Allocations of the total Compensation plus Excess Compensation for the Plan Year of participants in each plan to the total Compensation plus Excess Compensation of all participants in the Plan and the Union Plan for the Plan Year. (d) ADJUSTED CONSOLIDATED NET INCOME. The adjusted consolidated net income of the Corporation and its Consolidated Subsidiaries before net income taxes shall be determined on the basis of the annual audit report prepared by the Corporation's independent public accountants by adjusting the consolidated net income shown in the report to eliminate the effect, if any, of the following items: (1) any provision for taxes on or measured by income for such years required by the laws of the United States or of any state or political subdivision thereof (including the Ohio Franchise Income Tax, whether or not in fact measured by income), or any provision for similar taxes required by the laws of any other country; - 22 - Harris Retirement Plan 33 Contributions and Allocations (2) all items consisting of credits or deficiencies relating to taxes described in clause (1) above on or measured by income for prior Fiscal Years: (3) any provision for contributions for such Fiscal Year under this Plan or under any profit-sharing retirement plan of a Consolidated Subsidiary of the Corporation; (4) all dividends received during such Fiscal Year with respect to stock of a Related Company which is not included among the Consolidated Subsidiaries; (5) gains or losses from the sale, exchange or other disposition of capital or depreciable property, as defined in the Code; (6) any income from the use of the "lifo" inventory method resulting from either a reduction in inventory or a decrease in the cost index; - 23 - Harris Retirement Plan 34 Contributions and Allocations (7) all items of income and expense which relate directly to the conduct by a Related Company of a business (i) which was formerly conducted by a corporation which was not then a Related Company, and (ii) the net income (or loss) of which was included for the first time in determining the consolidated net income of the Corporation and its Consolidated Subsidiaries for the Fiscal Year in question; (8) all exchange adjustments resulting from translating to United States currency those year-end balance sheet items of subsidiaries which are denominated in a foreign currency; (9) any item of income or expense relating to the right of any employee to receive cash upon cancellation of an unexercised stock option, and (10) the net of all items of income and expense, other than tax items described in subsection (1) and (2) above, - 24 - Harris Retirement Plan 35 Contributions and Allocations relating to Lanier Business Products, Inc. and any subsidiary thereof which is a Related Company. 3.2 ALLOCATION OF PROFIT-SHARING CONTRIBUTIONS TO PARTICIPANTS. (a) IN GENERAL. The Profit-Sharing Contributions for a Plan Year with respect to an Employment Unit shall be allocated among eligible Participants described in subsection (c) who are employed by the Employment Unit during some part or all of the Plan Year based on the ratio of each eligible Participant's Compensation plus Excess Compensation for the Plan Year to the Compensation plus Excess Compensation of all eligible Participants for the Plan Year. (b) LIMITATION ON AMOUNT. Notwithstanding subsection (a), the amount allocated to an eligible Participant with respect to Excess Compensation shall not exceed the "base contribution percentage" by more than the lesser of (i) the base contribution percentage or (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). The term "base contribution percentage" means the percentage of Compensation contributed by the Participating Company with - 25 - Harris Retirement Plan 36 Contributions and Allocations respect to each Participant's Compensation not in excess of the Participant's Taxable Wage Base. (c) LIMITATION ON ELIGIBILITY. A Participant shall be eligible to receive an allocation of Profit-Sharing Contributions for a Plan Year if (1) the Participant is employed on the last day of the Plan Year or (2) the Participant terminates employment during the Plan Year on or after Early Retirement Age or Normal Retirement Age, or due to Disability, death, Lay-off, Leave of Absence or Military Leave. 3.3 PRE-TAX CONTRIBUTIONS. (a) MAXIMUM ELECTION. A Participant may elect to reduce his Compensation by an amount equal to any whole percentage not to exceed 12 percent and have the amount of such reduction contributed to the Plan as a Pre-Tax Contribution. A Participant's Pre-Tax Contribution to the Plan and other plan of the Participating Company or Related Company for any calendar year shall not exceed $7,000 (as adjusted in accordance with Code section 402(g)(5) for increases in the cost of living) including the full fair market value of any Common Stock contributed as a Pre-Tax Contribution. For Pre-Tax Contributions invested in the Harris Stock Fund, the normal form of contribution shall be cash; provided, - 26 - Harris Retirement Plan 37 Contributions and Allocations however, that the Corporation, in its discretion, may make the contribution in common stock of the Corporation; which may be contributed at a discount from fair market value. (b) CONTRIBUTIONS IN EXCESS OF THE MAXIMUM. If the Pre-Tax Contribution on behalf of a Participant reaches the limit described in subsection (a), any additional contributions made during the calendar year pursuant to the Participant's election shall be deemed to be After-Tax Contributions and any Matching Pre-Tax Contributions with respect to that amount shall be deemed to be Matching After-Tax Contributions. 3.4 MATCHING PRE-TAX CONTRIBUTIONS. The Participating Company shall make a Matching Pre-Tax Contribution on behalf of each Participant employed by it in the amount of 100 percent of the first six percent of the Pre-Tax Contributions made on behalf of the Participant during the Plan Year. The normal form of matching contribution for Pre-Tax Contributions invested in the Harris Stock Fund shall be in cash; provided, however, that the Corporation in its discretion, may make the contribution in common stock of the Corporation, which may be contributed at a discount from fair market value. The Trustee is authorized to purchase common stock of the Corporation in the open market, and to give effect to the discount, if any, that has been established from time to time - 27 - Harris Retirement Plan 38 Contributions and Allocations by allocating shares to Participants' Accounts in addition to the number of shares purchased on the open market by means of a given contribution. 3.5 AFTER-TAX CONTRIBUTIONS. A Participant may elect to reduce his Compensation by an amount equal to any whole percentage not to exceed 12 percent and have the amount of such reduction contributed to the Plan as an After-Tax Contribution. In no event shall the sum of the Participant's Pre-Tax Contributions and After-Tax Contributions for a Plan Year exceed 12 percent of Compensation. 3.6 MATCHING AFTER-TAX CONTRIBUTIONS. The Participating Company shall make a Matching After-Tax Contribution on behalf of each Participant employed by one of its constituent Employment Units in the amount of 100 percent of the first six percent of the After-Tax Contributions on behalf of the Participant, reduced by the amount of the Matching Pre-Tax Contribution made on behalf of the Participant during the Plan Year. The normal form of matching contribution for After-Tax Contributions invested in the Harris Stock Fund shall be in cash; provided, however, that the Corporation in its discretion, may make the contribution in common stock of the Corporation, which may be contributed at a discount from fair market value. The Trustee is authorized to purchase common stock of the Corporation in the open market, and to give effect to the discount, if - 28 - Harris Retirement Plan 39 Contributions and Allocations any, that has been established from time to time by allocating shares to Participants' Accounts in addition to the number of shares purchased on the open market by means of a given contribution. 3.7 ELECTIONS TO MAKE PRE-TAX AND AFTER-TAX CONTRIBUTIONS. (a) WRITTEN ELECTIONS. A Participant's initial election to reduce his Compensation and have Pre-Tax Contributions and/or After-Tax Contributions made on his behalf shall be made in writing by filing the appropriate form, which shall specify the effective date of the election. The initial election shall take effect as of the first payroll period commencing immediately after the effective date of the election. (b) CHANGING ELECTIONS. A Participant may change the percentage (in increments of one percent) of future Pre-Tax Contributions and/or After-Tax Contributions made on his behalf by filing the appropriate form or by following the appropriate telephone procedures for changing elections as established by the Corporation Committee. A change may be made not more than once each month. A change of election shall become effective as of the first payroll period commencing immediately after the effective date of the election. - 29 - Harris Retirement Plan 40 Contributions and Allocations (c) TERMINATING ELECTIONS. A Participant may terminate his election to have Pre-Tax Contributions and/or After-Tax Contributions made on his behalf by filing the appropriate form. The termination election shall become effective as of the first payroll period commencing immediately after the effective date of the election. (d) CORPORATION'S DISCRETION TO LIMIT ELECTIONS. The Corporation Committee may direct that Participant elections with respect to Pre-Tax Contributions and/or After-Tax Contributions be changed in any manner the Corporation Committee, in its discretion, shall determine appropriate to preserve the qualification of the Plan under section 401(a) of the Code and as a cash or deferred arrangement under section 401(k) of the Code. 3.8 ROLLOVER CONTRIBUTIONS. Employees, with the consent of the Corporation Committee or its delegate, may at any time make a rollover contribution to the Plan. Rollover contributions shall include only (1) cash funds transferred directly from a tax-qualified plan within the meaning of section 401 of the Code, and (2) cash funds distributed from a tax-qualified plan or a conduit individual retirement account that are eligible for rollover treatment and are transferred to the Plan within 60 days of the Employee's receipt thereof. An Employee may be required to establish that the transfer of amounts into a - 30 - Harris Retirement Plan 41 Contributions and Allocations Rollover Account will not require any changes to the terms of the Plan or risk adverse consequences for the Plan or Trust. 3.9 PARTICIPATING COMPANY'S OBLIGATION TO MAKE CONTRIBUTIONS. (a) CONTRIBUTIONS. Each Participating Company agrees to pay to the Trustee the contributions that are required with respect to Participants who are employed by one of its constituent Employment Units. Profit-Sharing Contributions with respect to a Fiscal Year shall be paid to the Trustee no later than the time for filing the Participating Company's federal income tax return for such Fiscal Year, including extensions. Pre-Tax Contributions and After-Tax Contributions shall be withheld and paid by the Employment Unit, and Matching Contributions shall be paid by the Participating Company to the Trustee no later than 20 days following the last day of the calendar month in which the amounts were withheld from the Participants' Compensation. (b) LIMITATION. Contributions under this Article III shall not be required to the extent they exceed the limitations of section 404 of the Code, in which case they shall be reduced to the extent allowable and necessary in the - 31 - Harris Retirement Plan 42 Contributions and Allocations following order: (1) Profit-Sharing Contributions; (2) Matching Contributions, and (3) Pre-Tax Contributions. 3.10 TREATMENT OF FORFEITED AMOUNTS. (a) REDUCTION OF CONTRIBUTIONS. Forfeitures shall be allocated to Employment Units as provided in subsection (b) and used to reduce Profit-Sharing Contributions and Matching Contributions of the Participating Companies in which the Employment Units are included. (b) ALLOCATION OF FORFEITURES TO EMPLOYMENT UNITS. Forfeitures of Profit-Sharing Contributions and Matching Contributions shall be credited to the Employment Unit with which the Participant was last employed before the forfeiture occurred. 3.11 FINALITY OF ALLOCATIONS The Corporation Committee shall give a written benefit statement to each Participant at least annually setting forth the amount of the contributions allocated to his Accounts; provided, however, that if any such Participant is deceased, such statement shall be given to his Beneficiary. Any Participant or Beneficiary claiming that an error has been made in a benefit statement shall - 32 - Harris Retirement Plan 43 Contributions and Allocations notify the Corporation Committee in writing within 90 days following the delivery or mailing of such statement. The Corporation Committee shall review the claim and advise the Participant or Beneficiary of its decision in writing. If no such notice of error is filed, the benefit statement shall be presumed to be correct. - 33 - Harris Retirement Plan 44 ARTICLE IV LIMITATIONS ON CONTRIBUTIONS 4.1 IN GENERAL. Notwithstanding any provisions of Article III to the contrary, the contributions provided for in Article III shall be limited to the extent necessary to meet the requirements of this Article IV. 4.2 PRE-TAX CONTRIBUTIONS. (a) TREATMENT OF CERTAIN CONTRIBUTIONS AS AFTER-TAX. If the Corporation Committee determines that a Participant's Pre-Tax Contributions for a calendar year have reached the dollar limit of section 402(g) of the Code, any additional contributions for that calendar year pursuant to the Participant's Pre-Tax Contribution election shall be deemed to be After-Tax Contributions and the Matching Contributions with respect to that amount, if any, shall be deemed to be Matching After-Tax Contributions. (b) RETURN OF EXCESS DEFERRALS. In the event that a Participant's Pre-Tax Contributions already made to the Plan for a calendar year exceed the limits of section 402(g) of the Code, the excess amount, as adjusted for income and loss, may, in the discretion of the Corporation Committee, be distributed to the Participant no later than April 15 of the following year in - 34 - Harris Retirement Plan 45 Limitations on Contributions accordance with the requirements of section 402(g) of the Code and Treasury Regulation section 1.402(g)1. 4.3 PERCENTAGE LIMITATION ON PRE-TAX CONTRIBUTIONS. (a) SATISFYING THE ACTUAL DEFERRAL PERCENTAGE TEST. The Pre-Tax Contributions made on behalf of Participants with respect to a Plan Year shall satisfy the "actual deferral percentage test" of section 401(k)(3) of the Code and Treasury regulation section 1.401(k)-1(b)(2), the provisions of which are incorporated herein by reference. (b) TREATMENT OF EXCESS CONTRIBUTIONS AS AFTER-TAX. In the event it is necessary to reduce or limit the amount of any Participant's Pre-Tax Contributions, the amount of Pre-Tax Contributions made on behalf of Highly Compensated Employees shall be deemed to be After-Tax Contributions and any Matching Pre-Tax Contributions made with respect to those Contributions shall be deemed to be Matching After-Tax Contributions. The Highly Compensated Employees to whom this recharacterization is applicable shall be determined in accordance with Treasury regulation section 1.401(k)-1(f)(2), the provisions of which are incorporated herein by reference. - 35 - Harris Retirement Plan 46 Limitations on Contributions 4.4 PERCENTAGE LIMITATION ON AFTER-TAX AND MATCHING CONTRIBUTIONS. (a) SATISFYING THE ACTUAL CONTRIBUTION PERCENTAGE TEST. The After-Tax Contributions and Matching Contributions made on behalf of Participants with respect to a Plan Year shall satisfy the "actual contribution percentage test" of section 401(m)(3) of the Code and Treasury regulation section 1.401(m)-1(b), the provisions of which are incorporated herein by reference. (b) REDUCTION AND FORFEITURE OF AFTER-TAX CONTRIBUTIONS AND MATCHING CONTRIBUTIONS. In the event it is necessary to reduce or limit a Participant's After-Tax Contributions and Matching Contributions to satisfy the actual contribution percentage test, the amount of such contributions, as adjusted for income and losses, on behalf of Highly Compensated Employees shall be reduced in accordance with Treasury regulation section 1.401(m)-1(e)(2), the provisions of which are incorporated herein by reference. The amount of the After-Tax Contributions and Matching Contribution shall be returned to the Highly Compensated Employees (including return by transfer to a non-qualified deferred compensation plan, in accordance with a timely election filed by the Participant) or forfeited as follows: - 36 - Harris Retirement Plan 47 Limitations on Contributions (1) After-Tax Contributions in excess of six percent of Compensation shall be returned, and (2) Remaining After-Tax Contributions and Matching After-Tax Contributions attributable thereto. After-Tax Contributions shall be returned. Matching After-Tax Contributions to the extent vested shall be returned and to the extent not vested shall be forfeited and used to reduce contributions in accordance with section 3.10. 4.5 MULTIPLE USE OF ALTERNATIVE LIMITATIONS. Multiple use of the alternative limitations of sections 401(k)(3)(A)(iii)(II) and 401(m)(A)(ii) of the Code shall be restricted in accordance with Treasury Regulation 1.401(m)-2, the provisions of which are incorporated herein by reference. - 37 - Harris Retirement Plan 48 Limitations on Contributions 4.6 LIMITATIONS ON ANNUAL ADDITIONS. (a) The Defined Contribution Limit. The "annual addition," as defined herein, for any Plan Year, to a Participant's Accounts in all defined contribution plans maintained by the Participating Company or Related Company shall not exceed the lesser of (i) 25 percent of the Participant's Compensation for the Plan Year, or (ii) $30,000 (as adjusted in accordance with section 415(d) of the Code). The term "annual additions" means the sum of all contributions and forfeitures allocated to a Participant's Accounts (other than his Rollover Account). (b) The Combined Limit. If the Participant also has participated in a defined benefit plan maintained by a Related Company, the limitations of section 415(e) of the Code shall apply. If the limitations of section 415(e) are exceeded, the benefits under any defined benefit plan maintained by the Participating Company or Related Company shall be reduced before the annual additions to the Plan are reduced. (c) Reduction of Contributions. If the Corporation Committee determines at any time that the annual addition to any Participant's Accounts exceeds such limitation for any Plan Year, the contributions on behalf of the Participant shall be reduced, to the extent necessary, in the following order: - 38 - Harris Retirement Plan 49 Limitations on Contributions (1) Pre-Tax Contributions in excess of six percent; (2) Remaining Pre-Tax Contributions and Matching Pre-Tax Contributions attributable thereto shall be reduced proportionately; (3) Profit-Sharing Contributions; (4) After-Tax Contributions in excess of six percent; (5) Remaining After-Tax Contributions and Matching After-Tax Contributions attributable thereto shall be reduced proportionately. After-Tax Contributions and Pre-Tax Contributions, as adjusted for gains, shall be returned to the Participant (including return by transfer to a non-qualified deferred compensation plan, in accordance with a timely election filed by the Participant). Profit-Sharing Contributions and Matching Contributions, as adjusted for gains, to the extent allowable shall be held in a suspense account and allocated to the Accounts of such Participant in the next Plan Year; provided that if the Participant is not covered by the Plan in the next Plan Year, the amount shall be allocated to the remaining Participants in the Plan who are employed by the Employment Unit that employed the Participant. (d) LIMITS ON LIMITS. The limits stated on this Article IV shall apply only to the extent required under the Code. Except as otherwise specifically - 39 - Harris Retirement Plan 50 Limitations on Contributions provided in this section 4.6, all of the requirements of section 415 of the Code, and limitations thereon, including the transitional rules and grandfather rules, are incorporated herein by reference. - 40 - Harris Retirement Plan 51 ARTICLE V VESTING AND FORFEITURES 5.1 IN GENERAL. A Participant shall have a fully vested interest at all times in his Pre-Tax Account, After-Tax Account, Harris Stock Pre-Tax Account, Harris Stock After Tax Account and Savings Account (other than the portion attributable to matching contributions made after October 1, 1984) and Rollover Account. 5.2 VESTING ON RETIREMENT, DEATH OR DISABILITY. A Participant shall have a fully vested interest in his Profit Sharing Account, Matching Pre-Tax Account, Matching After-Tax Account, Harris Stock Matching Pre-Tax Account, Harris Stock Matching After-Tax Account and portion of his Savings Account attributable to matching contributions made after October 1, 1984, on termination of employment by any Related Company in the event of: (a) retirement on or after Normal Retirement Age; (b) retirement on or after Early Retirement Age; (c) retirement on or after the effective date of a Participant's Disability determination by the Social Security Administration. (d) death. - 41 - Harris Retirement Plan 52 Vesting and Forfeitures 5.3 VESTING ON OTHER TERMINATION OF EMPLOYMENT. (a) VESTING SCHEDULE. A Participant who terminates employment other than on the occurrence of one of the events described in section 5.2 shall have a vested interest in his Profit-Sharing Account, Matching Pre-Tax Account, Matching After-Tax Account, Harris Stock Matching Pre-Tax Account, Harris Stock Matching After-Tax Account and the portion of his Savings Account attributable to matching contributions made after October 1, 1984 in accordance with the following schedule:
Period of Service Vested Percentage Less than 3 years 0% 3 years but less than 4 years 30% 4 years but less than 5 years 40% 5 years but less than 6 years 60% 6 years but less than 7 years 80% 7 years or more 100%
(b) COMPUTING A PARTICIPANT'S PERIOD OF SERVICE. For the purpose of determining a Participant's Period of Service under subsection (a), the rules of section 2.3 shall apply. (c) VESTING ON SALE OF BUSINESS. In the event of the sale or disposition of a business or a sale of substantially all of the assets of a trade or - 42 - Harris Retirement Plan 53 Vesting and Forfeitures business, the Corporation may, in its discretion, provide for accelerated vesting with respect to those Participants affected by the sale. 5.4 EFFECT OF IN-SERVICE WITHDRAWALS ON A PARTICIPANT'S VESTED PERCENTAGE. If a Participant receives a withdrawal under Article IX or distribution under Article VII from his Profit-Sharing Account at a time when the Participant has less than a fully vested interest in that account, the dollar amount of his vested interest in his Profit-Sharing Account (X) shall be determined at any time by the following formula: X = P(AB + D) - D For the purpose of applying the formula, P is the Participant's vested interest in his Profit-Sharing Account at the time the determination is made, AB is the balance credited to the Profit-Sharing Account at the time the determination is made, and D is the amount of the withdrawal. 5.5 FORFEITURES. (a) TIMING OF FORFEITURE. Effective July 1, 1985, a Participant who terminates employment with less than a fully vested interest in his Accounts shall forfeit the nonvested interest on the earlier of the date on which the Participant: - 43 - Harris Retirement Plan 54 Vesting and Forfeitures (1) receives a lump sum distribution of all or a portion of the vested interest in such Accounts, provided that such distribution is made no later than the close of the second Plan Year following the year in which the Participant terminates employment; (2) incurs five consecutive one-year Periods of Severance; or (3) at any earlier date allowable under the Code. (b) EFFECT OF PARTIAL DISTRIBUTION ON A PARTICIPANT'S VESTED PERCENTAGE. If the Participant elects to receive a lump sum distribution of less than the full amount of his vested interest, the part of his nonvested interest that shall be forfeited under subsection (a)(1) is the total nonvested interest multiplied by a fraction, the numerator of which is the amount of the distribution and the denominator of which is the total value of his vested interest in his Accounts other than his After-Tax Account, Harris Stock After-Tax Account and Rollover Account. (c) EFFECT OF REPAYMENT OF DISTRIBUTION. If a Participant incurs a forfeiture under subsection (a)(1), then returns to employment with a - 44 - Harris Retirement Plan 55 Vesting and Forfeitures Participating Company and becomes a Participant in the Plan before incurring five consecutive one-year Periods of Severance, the forfeited amount shall be restored by the Employment Unit of the Participating Company with which the Participant is reemployed. - 45 - Harris Retirement Plan 56 ARTICLE VI ACCOUNTS AND INVESTMENTS 6.1 ESTABLISHMENT OF ACCOUNTS. The Committee shall establish and maintain for each Participant the following Accounts showing the Participant's interest under the Plan: (a) Profit-Sharing Account, which shall consist of (1) a Basic Account to reflect the portion of Profit-Sharing Contributions allocable to the Participant's Compensation, and (2) a Supplemental Account to reflect the portion of Profit-Sharing Contributions allocable to the Participant's Excess Compensation; (b) Pre-Tax Account to reflect Pre-Tax Contributions made on the Participant's behalf other than those invested in the Harris Stock Fund; (c) After-Tax Account to reflect After-Tax Contributions made on the Participant's behalf other than those invested in the Harris Stock Fund; - 46 - Harris Retirement Plan 57 Accounts and Investments (d) Matching Pre-Tax Account to reflect Matching Pre-Tax Contributions made on the Participant's behalf other than those invested in the Harris Stock Fund; (e) Matching After-Tax Account to reflect Matching After-Tax Contributions made on the Participant's behalf other than those invested in the Harris Stock Fund; (f) Savings Account to reflect the Savings Contributions under the Plan as in effect prior to July 1, 1990, and the aggregate of the Participant's voluntary and required contributions to the Harris Video Systems Savings/Incentive Plan less withdrawals, as of June 30, 1990; (g) Harris Stock Pre-Tax Account to reflect the portion of the Pre-Tax Contributions made on the Participant's behalf invested in the Harris Stock Fund; (h) Harris Stock After-Tax Account to reflect the portion of the After-Tax Contributions made on the Participant's behalf invested in the Harris Stock Fund; - 47 - Harris Retirement Plan 58 Accounts and Investments (i) Harris Stock Matching After-Tax Account to reflect the portion of the Matching After-Tax Contributions made on the Participant's behalf invested in the Harris Stock Fund; (j) Harris Stock Matching Pre-Tax Account to reflect the portion of the Matching Pre-Tax Contributions made on the Participant's behalf invested in the Harris Stock Fund, and (k) Rollover Account to reflect the Participant's Rollover Contributions. 6.2 INVESTMENT OF PROFIT-SHARING ACCOUNT. (a) IN GENERAL. Except as provided in subsection (b), the amounts allocated to a Participant's Profit-Sharing Account shall be invested in the Balanced Fund. (b) PARTICIPANT-DIRECTED INVESTMENTS AT AGE 55. On attaining age 55, a Participant shall be entitled to direct the investment of his Profit-Sharing Account in accordance with the procedures set out in section 6.3. - 48 - Harris Retirement Plan 59 Accounts and Investments The Profit-Sharing Account shall remain invested in the Balanced Fund until the Participant changes his or her election with respect thereto. 6.3 INVESTMENT OF ACCOUNTS OTHER THAN PROFIT-SHARING ACCOUNT. Except as provided in section 6.2, effective October 1, 1993, each Participant shall have the right to direct the investment of his Accounts and future contributions to his Accounts among the Investment Funds in accordance with the following procedures and such other procedures provided in the documents pertaining to each Investment Fund: (a) WRITTEN OR TELEPHONIC DIRECTION. Each election shall be completed by filing the appropriate election form or by following the appropriate telephone procedures for direct transfer as established by the Corporation Committee. (b) ELECTIONS IN 10% INCREMENTS FOR CURRENT BALANCES. An election with respect to current account balances, including the Participant's initial election with respect to the balance arising from a Rollover Contribution, shall be made in increments of ten percent of the account balance; - 49 - Harris Retirement Plan 60 Accounts and Investments (c) ELECTIONS IN 10% INCREMENTS FOR FUTURE CONTRIBUTIONS. An election with respect to future contributions shall be made in increments of ten percent of the contribution (after the contribution is reduced by the dollar amount directed into the Harris Stock Fund), provided that the combined Pre-Tax Contributions and After-Tax Contributions invested in the Harris Stock Fund shall equal no more than one percent of Compensation. To the extent Pre-Tax Contributions and After-Tax Contributions are invested in the Harris Stock Fund, the Matching Contributions attributable thereto also shall be invested in the Harris Stock Fund; (d) CHANGING ELECTIONS. A change of election may be made at any time; provided that an election change shall become effective only on the first day of the month. To be effective on the first day of any month, a written election must be made on or before the 20th day of the preceding month, and a telephonic election must be made on or before the 25th day of the preceding month. If more than one election change is made on or before the applicable deadline, the most recent election change shall be given effect. (e) ELECTIONS APPLY TO ALL ACCOUNTS. Each of the Participant's Accounts (including his Profit-Sharing Account on the Participant's attaining age 55) shall be invested among the Investment Funds in the same manner, such that - 50 - Harris Retirement Plan 61 Accounts and Investments each election by a Participant with respect to the Investment Funds shall apply to all of his Accounts in the same proportion. (f) INVESTMENT IN BALANCED FUND ABSENT ELECTION. A Participant's Accounts and contributions made on behalf of the Participant shall be invested in the Balanced Fund until the Participant makes a valid investment election pursuant to this section 6.3 and any other procedures established by the Corporation Committee. 6.4 ALLOCATION OF EARNINGS AND LOSSES. Earnings and losses shall be allocated at least annually. In determining a Participant's share of the earnings or losses of each of the Investment Funds as of any Valuation Date, the total earnings or losses of the particular Investment Fund, net of expenses allocable to that fund, shall be allocated among the Participants' Accounts invested in that Investment Fund based on the ratio of each Participant's Accounts to the aggregate of the Accounts of all Participants, before taking into account any contributions that are required to be but are not yet made as of the Valuation Date and before taking into account any distributions, withdrawals or loans to Participants for the period coinciding with the Valuation Date. Contributions to Accounts are not credited with earnings in the month in which they are credited to any Account. - 51 - Harris Retirement Plan 62 Accounts and Investments 6.5 SPECIAL RULES CONCERNING HARRIS STOCK FUND. Notwithstanding any other provision of section 6.2 and 6.3 to the contrary, the following rules shall apply to investments in the Harris Stock Fund: (a) AVAILABILITY. Only Pre-Tax Contributions, After-Tax Contributions and Matching Contributions made with respect to Compensation earned on or after October 1, 1993 may be invested in this fund. For any Plan Year, the combined Pre-Tax Contributions and After-Tax Contributions invested in this fund on behalf of a Participant in each Plan Year shall equal no more than one percent of the Participant's Compensation for such Plan Year. An election to invest in the Harris Stock Fund shall take effect as soon as administratively feasible after the election is received. (b) RESTRICTIONS ON TRANSFERS. A Participant may not transfer amounts from other Investment Funds to the Harris Stock Fund. Any contributions invested in this Fund must remain in this fund for a minimum of 36 months, provided that amounts invested in this fund may be distributed to the Participant before the expiration of the 36-month period, if the Participant is otherwise entitled to a distribution under the Plan. - 52 - Harris Retirement Plan 63 Accounts and Investments (c) DIVIDENDS. A Participant's allocable share of cash dividends (and other cash earnings) credited to the Harris Stock Fund, will be reinvested in the Harris Stock Fund unless the Participant elects with respect to the dividends credited to his Account for a quarter to invest such cash dividends (and other cash earnings) among the Investment Funds other than the Harris Stock Fund in increments of ten percent of the amount of the dividends (and other earnings). Only cash dividends (and earnings) that have been credited to the Participant's Accounts for at least one month are subject to the Participant's investment election under this subsection (c). Each election shall be completed by filing the appropriate form or by following the appropriate telephone procedures as established by the Corporation Committee, pursuant to section 6.3(d). Dividends paid in the form of stock shall be retained in a Participant's Account until liquidated, in the sole discretion of the Trustee. Such liquidated dividends shall be cash earnings subject to investment elections in accordance with this subsection of the Plan. (d) CONTRIBUTIONS. The normal form of contributions for amounts invested in the Harris Stock Fund shall be in cash; provided, however, that the Corporation, in its discretion, may make the contribution in common stock of the Corporation, which may be contributed at a discount from fair market value. The Trustee is authorized to purchase common stock of the Corporation in - 53 - Harris Retirement Plan 64 Accounts and Investments the open market, and to give effect to the discount, if any, that has been established from time to time by allocating shares to Participants' Accounts in addition to the number of shares purchased on the open market by means of a given contribution. (e) DISTRIBUTIONS. Distributions from the Harris Stock Fund shall be in the form of cash or shares of Harris Stock at the election of the Participant. Fractional shares and distributions of a de minimis amount as determined by the Corporation Committee shall be paid in cash. (f) VOTING. Participants may submit non-binding proxies to the Trustee, which will vote the shares in the Harris Stock Fund in the exercise of its sole discretion. - 54 - Harris Retirement Plan 65 ARTICLE VII DISTRIBUTIONS 7.1 IN GENERAL. A Participant shall be entitled to receive a distribution of the vested interest in his Accounts on the earlier of termination of employment or attainment of age 59 1/2, except that his Pre-Tax Contributions and Matching Pre-Tax Contributions are distributable only as allowed under section 401(k) of the Code. Distributions shall be made upon the sale or disposition of the stock in a subsidiary, or the sale or disposition of substantially all the assets of a trade or business, as provided, under the corporate documents effecting the sale or disposition and in accordance with Section 401(k)(10) of the Code. A termination of employment shall not be deemed to occur for purposes of this section 7.1 and section 7.2 until the Participant is no longer employed by a Related Company. A Participant may elect to receive any amount invested in the Harris Stock Fund in the form of stock; provided that fractional shares and distributions of a de minimis amount as determined by the Corporation Committee shall be paid in cash. 7.2 SMALL BENEFIT CASH-OUT. Except as provided in section 7.5, in any case in which a Participant's vested interest in his Accounts does not (and did not at the time of any prior distributions) exceed $3,500 (or such larger amount as may be permitted by law), the vested interest shall be paid to the Participant in a lump sum as soon as reasonably practicable upon termination of employment. - 55 - Harris Retirement Plan 66 Distributions 7.3 FORM OF PAYMENT. (a) OPTIONS. In any case in which a Participant's vested interest in his Accounts exceeds the amount provided in Section 7.2, the Participant may elect at any time to receive payment in: (1) a lump sum of any portion or all of the balance of the Participant's Accounts; (2) substantially equal periodic installment payments over a period of time to be elected by the Participant; (3) a combination of (a) and (b), or (4) a direct rollover. (b) CHANGES ALLOWED. A Participant may change his election with respect to the form of payment at any time before or after distribution of benefits commences, subject to the provisions of section 7.9. - 56 - Harris Retirement Plan 67 Distributions (c) EFFECT OF FAILURE TO SPECIFY AN OPTION. If a Participant fails to file an election under this section 7.3, his benefits shall be paid in accordance with section 7.4. 7.4 TIME OF PAYMENT. On termination of employment, a Participant, other than one described in section 7.2, may elect that payment of benefits begin immediately or at any other time. If a Participant fails to file an election under this section 7.4 and payment of benefits has not already commenced, payment of his benefits shall commence on April 1 of the calendar year following the year in which the Participant attains 70 1/2 and shall be paid in accordance with the minimum distributions requirements of section 401(a)(9) of the Code. 7.5 DIRECT ROLLOVER. (a) Effective January 1, 1993, a Participant or "distributee" may elect at any time to have any portion of an "eligible rollover distribution" paid in a direct rollover to the trustee or custodian of an "eligible retirement plan" specified by the Participant or distributee, whichever is applicable. Payment of a direct rollover in the form of a check payable to the trustee or custodian of an eligible retirement plan, for the benefit of the Participant or distributee, may be mailed to the Participant or distributee. - 57 - Harris Retirement Plan 68 Distributions (b) For purposes of this section 7.5, the following terms shall have the following meanings: (1) "Distributee" means a surviving spouse or a spouse or former spouse who is an alternate payee under a Qualified Domestic Relations Order defined in section 414(p) of the Code. (2) "Eligible retirement plan" means an individual retirement account described in section 408(a) of the Code, an individual retirement annuity described in section 408(b) of the Code, an annuity plan described in section 403(a) of the Code, or a qualified trust described in section 401(a) of the Code that accepts an eligible rollover distribution; provided that if the distributee is a surviving spouse, an eligible retirement plan means an individual retirement account or individual retirement annuity. (3) "Eligible rollover distribution" means any distribution of all or a portion of the Participant's Accounts, other - 58 - Harris Retirement Plan 69 Distributions than the portion of his After-Tax Account and Harris Stock After-Tax Account attributable to After-Tax Contributions, but does not include a distribution (i) in installments over a period of ten years or more or over a period described in section 7.9(c), or (ii) to the extent the distribution is required under section 401(a)(9) of the Code. 7.6 PAYMENTS ON DEATH. If a Participant dies before he has received the full amount of the vested interest in his Accounts, the unpaid amount shall be paid to his Beneficiary in the manner provided in this Article VII (including section 7.5 only if the Beneficiary is the spouse) as though the Beneficiary were the Participant. 7.7 BENEFIT AMOUNT AND WITHHOLDING. (a) Vested Amount and Adjustments. For purposes of this Article VII, a Participant's vested interest in his Accounts shall be determined as of the Valuation Date coinciding with or immediately following the date of the event giving rise to the distribution, plus any Profit-Sharing Contribution to which the Participant may be entitled under section 3.2 that has not yet been credited to - 59 - Harris Retirement Plan 70 Distributions the Participant's Profit-Sharing Account. Any unpaid amount in the Participant's Accounts shall continue to be adjusted for earnings and losses as provided in section 6.4 until it is distributed. (b) WITHHOLDING. The amount of any distribution shall be reduced to the extent necessary to comply with Federal, state and local income tax withholding requirements. 7.8 ORDER OF DISTRIBUTIONS. Any distribution under this Plan shall be charged against the Participant's Accounts pursuant to administrative procedures designed to maximize the tax benefits to the Participant by distributing to him first his After-Tax Contributions to the extent permitted by law. 7.9 STATUTORY REQUIREMENTS. Notwithstanding any other provisions of the Plan to the contrary, the following rules shall apply to all payments under the Plan: (a) LATEST COMMENCEMENT DATE. Unless the Participant files a written election to defer payment of benefits, benefits payments with respect to any Participant shall commence no later than the 60th day after the close of the Plan Year in which the latest of the following occurs: - 60 - Harris Retirement Plan 71 Distributions (1) the date on which the Participant attains Normal Retirement Age; (2) the 10th anniversary of the date on which the Participant commenced participation in the Plan, or (3) the date on which the Participant terminated employment. Failure to file an election under section 7.4 for payment of benefits to commence shall be deemed to be a written election to defer payment of benefits under this subsection (a). (b) REQUIRED BEGINNING DATE. Notwithstanding subsection (a) above, payment of benefits to a Participant shall commence no later than April 1 of the calendar year following the calendar year in which the Participant attains age 70 1/2. (c) MAXIMUM DURATION OF DISTRIBUTIONS. Payment of a Participant's benefit shall be made over a period not to exceed one of the following periods: (1) the life of the Participant; - 61 - Harris Retirement Plan 72 Distributions (2) the life of the Participant and the Participant's Beneficiary; (3) a period certain not extending beyond the life expectancy of the Participant, or (4) a period certain not extending beyond the joint and last survivor expectancy of the Participant and his Beneficiary. The amount to be distributed each year must be at least equal to the quotient obtained by dividing the Participant's benefit by the life expectancy of the Participant or the joint and last survivor expectancy of the Participant and his Beneficiary. Life expectancy and joint and last survivor expectancy shall be computed by the use of the return multiples contained in Treasury regulation section 1.72-9. For purposes of this computation, a Participant's and a spouse's life expectancy may be recalculated annually; however, the life expectancy of a Beneficiary, other than the Participant's spouse, may not be recalculated. If the Participant's spouse is not the Beneficiary, the method of distribution selected must ensure that at least 50 percent of the present value of the amount available for distribution is paid within the life expectancy of the Participant. - 62 - Harris Retirement Plan 73 Distributions (d) DISTRIBUTION AFTER THE PARTICIPANT'S DEATH. In the event a Participant who is receiving benefits dies, the remaining balance of his benefits shall be distributed at least as rapidly as under the method of distribution elected by the Participant. If a Participant dies before distribution of benefits commences, the Participant's entire interest will be distributed no later than five years after the Participant's death, except to the extent that an election is made to receive distributions in accordance with (1) or (2) below: (1) if any portion of the Participant's benefit is payable to a Beneficiary, installment distributions may be made over the life or life expectancy of the Beneficiary, provided that the installments commence no later than one year after the Participant's death, and (2) if the Beneficiary is the Participant's spouse, the commencement of distributions may be delayed until the date on which the Participant would have attained age 70 1/2. If the spouse dies before payments begin, subsequent distribution shall be made as if the spouse had been the Participant. - 63 - Harris Retirement Plan 74 Distributions For purposes of the foregoing, payments may be calculated by use of the return multiples specified in Treasury regulation section 1.72-9. Life expectancy of a spouse may be recalculated annually. However, in the case of any other Beneficiary, such life expectancy shall be calculated at the time payment first commences without further recalculation. Any amount paid to a child of the Participant shall be treated as if it had been paid to the surviving spouse if the amount becomes payable to the spouse when the child reaches the age of majority. (e) LIMIT ON LIMITS. All distributions under this section 7.9 shall be determined and made in accordance only to the extent required under section 401(a)(9) of the Code, including the minimum distribution incidental benefit requirement of Treasury regulation section 1.401(a)(9)2, the provisions of which are incorporated herein by reference. 7.10 DESIGNATING BENEFICIARIES. (a) WRITTEN DESIGNATION. Each Participant may, by filing a written notice with the Corporation Committee, designate a Beneficiary or Beneficiaries to receive any benefits payable as a result of the death of the Participant. This designation may be changed by the Participant at any time by giving written notice to the Corporation Committee. Any designation of a - 64 - Harris Retirement Plan 75 Distributions Beneficiary other than the Participant's spouse must be consented to by the spouse in writing and witnessed by a notary public (or a representative of the Plan prior to October 1, 1993). Any consent required under this section 7.10 shall be valid only with respect to the spouse who signed it. Spousal consent shall not be required if the Participant establishes to the satisfaction of a Plan representative that such consent may not be obtained because (a) there is no spouse; (b) the spouse cannot be located, or (c) there exists such other circumstances as the Secretary of the Treasury may prescribe as excusing the requirement for such consent. A Participant may revoke any prior election without obtaining the consent of the spouse to such revocation. In the absence of a new election that meets the requirements of this section 7.10, the spouse shall be the Beneficiary. (b) DEATH PRIOR TO DESIGNATING BENEFICIARY. In the event the Participant dies with no beneficiary designation on file, the Participant's Beneficiary shall be the Participant's surviving spouse, if any, and if there is no surviving spouse, the Participant's estate. 7.11 PAYMENT OF GROUP INSURANCE PREMIUMS. If a retired Participant is eligible to be included in any contributory group insurance program maintained or sponsored by an Employment Unit, a retired Participant who is receiving benefits under the Plan in installments and who elects to be covered under such - 65 - Harris Retirement Plan 76 Distributions contributory group insurance program may direct that a specified portion of the installment payments be withheld and paid by the Trustee on his behalf to the Employment Unit as his contribution under such group insurance program. Such direction by a retired Participant shall be in writing on a form prescribed by the Corporation Committee. Any such direction may be revoked by the retired Participant not less than 15 days prior to the effective date of such revocation. Any withholding and payment of insurance costs on behalf of a retired Participant shall be made in accordance with Treasury regulation section 1.401(a)-13. 7.12 INABILITY TO LOCATE PARTICIPANT. If, when any payment becomes due, the Corporation Committee is unable to locate the Participant or Beneficiary after exercising reasonable diligence, payment shall be stopped and future payments to such individual discontinued. Any remaining unpaid benefits with respect to such Participant or Beneficiary shall be deemed to be forfeited, provided that if the Participant or Beneficiary later notifies the Corporation Committee of his address, to the extent required by law payment of the forfeited amount shall be reinstated by the Participating Company with which the Participant was last employed. - 66 - Harris Retirement Plan 77 ARTICLE VIII LOANS 8.1 IN GENERAL. Each "party in interest," as defined in section 3(14) of ERISA, with respect to the Plan for whom a Pre-Tax Account, After-Tax Account and/or Rollover Account is maintained may request that a loan be made to him from his Pre-Tax Account, After-Tax Account and/or Rollover Account by filing an appropriate application, pursuant to procedures adopted by the Corporation Committee. All loan requests shall be approved on a reasonably equivalent basis (within the meaning of section 4975(d)(1)(A) of the Code and section 408(b)(1)(A) of ERISA), subject to the conditions set forth in this Article VIII. 8.2 LOAN ADMINISTRATION. The Corporation Committee shall be responsible for administering the loan program, but may delegate the operation of the program to the Plan's record-keeper. The procedures for applying for a loan and the basis on which loans will be approved or denied shall be described in the summary plan description for the Plan or in other documents prepared by or at the direction of the Corporation for this purpose and such additional documents are hereby incorporated by reference to the extent required by the Department of Labor. - 67 - Harris Retirement Plan 78 Loans 8.3 TERMS AND CONDITIONS OF LOANS. The terms and conditions of each loan shall be set forth in the promissory note and security agreement evidencing the loan and shall include, but not be limited to, the following: (a) MAXIMUM AMOUNT. The principal amount of a loan made under this Plan to any individual together with the outstanding principal amount of any other loan made to such individual under any other qualified plan under section 401(a) of the Code maintained by a Related Company shall not exceed the lesser of (1) 50 percent of the individual's vested interest in his Accounts, (2) $50,000 reduced by the highest outstanding balance of any previous loans from the Plan and any other plans of a Related Company during the one-year period ending immediately before the date on which the current loan is made. - 68 - Harris Retirement Plan 79 Loans (3) such amount that repayment of principal plus interest does not exceed 25 percent of the individual's gross pay. (b) MINIMUM AMOUNT. The minimum loan amount shall be $500 and all loan amounts shall be in increments of $100. (c) PERIOD. No loan shall be made for a period less than 12 months or longer than four and one-half years or such other periods as may be established from time to time under the Corporation Committee's written loan procedures. (d) SECURITY. A loan shall be secured by the Participant's Accounts up to the amount of the outstanding balance of the loan. (e) NUMBER OF LOANS. Effective January 1, 1994, two loans shall be available under the Plan to a Participant at any time, but no third loan shall be made to an individual within 30 days following the repayment in full of a prior loan, or such other time period as may be provided from time to time under Plan procedures. - 69 - Harris Retirement Plan 80 Loans (f) PARTICIPANT COVERS LOAN EXPENSES. Any loan made under the Plan shall be subject to such other terms and conditions as the Corporation Committee shall deem necessary or appropriate, including the condition that the individual execute a satisfactory promissory note and security agreement and the condition that he reimburse the Plan for any state documentary stamps and other taxes, and any other reasonable expenses specified by the Corporation Committee, which the Plan incurs to extend, make and service the loan. (g) HOW TO APPLY. A loan may be initiated by following the appropriate telephonic or other procedures established by the record-keeper, as the delegate of the Corporation Committee. 8.4 INTEREST RATE. The interest rate for a loan made under this Plan shall be fixed for the term of each loan, and shall be set as determined by the Corporation Committee on a quarterly basis at a rate which it deems reasonable at the time for a fully secured loan and which is consistent with applicable Department of Labor regulations. - 70 - Harris Retirement Plan 81 Loans 8.5 REPAYMENT AND DEFAULT. (a) PAYMENTS. A loan made under the Plan shall require that repayment be made in substantially level installments through payroll withholding while the individual is an Employee and through such other means (not less frequently than quarterly) as the Corporation Committee deems appropriate for an individual who is not an Employee. Nevertheless, any individual who terminates employment for any reason other than retirement, discharge or lay-off must repay all of the outstanding principal balance of his loan, plus interest due, within 90 days of the date of termination. (b) PREPAYMENT. An individual may repay, at any time, all of the outstanding principal balance of his loan, plus interest due, without penalty. (c) CREDITING PAYMENTS. Principal and interest payments shall be credited to the Participant's Pre-Tax Account, After-Tax Account and/or Rollover Account and shall be invested in the same manner as Pre-Tax Contributions, After-Tax Contributions and Rollover Contributions. - 71 - Harris Retirement Plan 82 Loans (d) DEFAULT. The events of default shall be set forth in the promissory note and security agreement which evidence the loan. Such events shall include, but not be limited to, the following: (1) an individual terminates employment as an Employee for any reason and does not make payments when due, subject to a 90-day grace period; (2) the Trustee concludes that the individual no longer is a good credit risk; (3) to the extent permissible under federal law, the individual's obligation to repay the loan has been discharged through bankruptcy or any other legal process of action which did not actually result in payment in full, and (4) the individual does not make payments when due, subject to the applicable 90 day grace period. - 72 - Harris Retirement Plan 83 Loans (d) EFFECT OF DEFAULT. Upon the existence or occurrence of an event of default, the loan may become due and payable in full and, if such loan is not actually repaid in full, shall be cancelled on the books and records of the Plan and the amount otherwise distributable to such individual shall be reduced, as of the date his Accounts otherwise become distributable, by the principal amount of the loan then due plus any accrued but unpaid interest. Such principal and interest shall be determined without regard to whether the loan had been discharged through bankruptcy or any other legal process or action which did not actually result in payment in full; however, interest shall continue to accrue on such loan only to the extent permitted under applicable law. Cancellation of the amount distributable to an individual under this subsection (d) shall not occur until a distributable event occurs under the Plan. In the event a default occurs before a distributable event occurs, the Corporation Committee shall take such other steps to cure the default as it deems appropriate under the circumstances to preserve Plan assets. 8.6 MECHANICS. A loan to an individual under this Plan shall be made from his Pre-Tax Account, After-Tax Account and Rollover Account, and the loan shall be an asset of the respective accounts. For investment purposes, the principal amount of the loan shall be deducted from the Participant's Investment - 73 - Harris Retirement Plan 84 Loans Funds other than the Harris Stock Fund in proportion to their value in his Accounts as of the Valuation Date immediately preceding the loan. 8.7 SPECIAL POWERS. The Corporation Committee shall have the power to take such action as it deems necessary or appropriate to stop the benefit payments to or on behalf of an individual who fails to repay a loan (without regard to whether the obligation to repay the loan had been discharged through bankruptcy or other legal process or action) until his Pre-Tax Account, After-Tax Account and/or Rollover Account has been reduced by the principal due (without regard to such discharge) on such loan or to distribute the note which evidences such loan in full satisfaction of any interest in the Pre-Tax Account, After-Tax Account, and/or Rollover Account which is attributable to the unpaid balance of such loan. - 74 - Harris Retirement Plan 85 ARTICLE IX IN-SERVICE WITHDRAWALS 9.1 AT-WILL WITHDRAWALS FROM SAVINGS ACCOUNT AND AFTER-TAX ACCOUNT. (a) AVAILABILITY. Subject to section 9.4, a Participant may elect to withdraw at any time in a lump sum all or a portion of the balance in his Savings Account and After-Tax Account for any purpose by filing the appropriate election with the Local Committee. (b) LIMITATIONS. A Participant may make a withdrawal under this subsection (a) not more than once every three months. A Participant's election to make After-Tax Contributions shall be suspended, and no After-Tax Contributions or Matching After-Tax Contributions shall be credited to the Participant's Account, for a period of six months after the date of a Participant's withdrawal from the After-Tax Account. The Participant's election shall automatically be reinstated at the expiration of such six-month period, unless the Participant has filed a change of election pursuant to section 3.7. 9.2 HARDSHIP WITHDRAWALS FROM PRE-TAX ACCOUNT. (a) AVAILABILITY. Subject to section 9.4, a Participant who has taken all loans and withdrawals under section 9.1, may elect to withdraw in a - 75 - Harris Retirement Plan 86 In-Service Withdrawals lump sum up to 100 percent of his Pre-Tax Contributions, plus earnings on that amount that were credited to the Pre-Tax Account no later than June 30, 1989, and/or his Rollover Account to satisfy an immediate and heavy financial need, by filing an election with the Corporation Committee. Withdrawals under this section 9.3 shall be authorized by the Corporation Committee in the event of financial need meeting the safe harbor standards of Treasury regulation section 1.401(k)-1(d)(2), which is incorporated herein by reference. A withdrawal shall be deemed to be made on account of an immediate and heavy financial need under those regulations if the withdrawal is for: (1) medical expenses incurred by the Participant, his spouse or any of his dependents; (2) purchase (excluding mortgage payments) of a principal residence for the Participant; (3) payment of tuition and related education fees for the next 12 months of post-secondary education for the Participant, his spouse, children or dependents; - 76 - Harris Retirement Plan 87 In-Service Withdrawals (4) payment to prevent the eviction of the Participant from his principal residence or foreclosure on the mortgage of the Participant's principal residence. (5) any other event determined by the Commissioner of Internal Revenue. A withdrawal shall be deemed necessary to satisfy an immediate and heavy financial need of the Participant if: (i) the withdrawal is not in excess of the amount required to meet the financial need of the Participant, including taxes and additions to tax applicable to such withdrawal, and (ii) the Participant has obtained all other distributions, withdrawals, and all nontaxable loans currently available under this Plan and any other plans maintained by a Related Company. - 77 - Harris Retirement Plan 88 In-Service Withdrawals (b) LIMITATIONS. A Participant may take a withdrawal under this section 9.2 no more than once in a six-month period. 9.3 EMERGENCY WITHDRAWALS. Subject to section 9.4, a Participant who has taken all withdrawals available under Sections 9.1 and 9.2 above may elect to withdraw in a lump sum all or a portion of the balance in his Basic Account and Supplemental Account if the withdrawal otherwise satisfies the requirements of section 9.2(a). An election to withdraw under this section 9.3 is subject to the approval of the "sector executive" which shall be granted on a uniform and nondiscriminatory basis. 9.4 REDUCTION OF INVESTMENT FUND BALANCES. The Investment Funds in which a Participant's Accounts are invested, other than the Harris Stock Fund, shall be reduced proportionately to reflect the amount of the Participant's withdrawals under this Article IX, except that a Participant may not withdraw contributions invested in the Harris Stock Fund, and no more than 80 percent of the balance determined as of the Valuation Date immediately preceding the withdrawal shall be available to be withdrawn from equity and fixed income fund balances; provided that the amount remaining in the equity and fixed income funds determined as of the Valuation Date coinciding with or next following the withdrawal may be withdrawn as part of the withdrawal request. - 78 - Harris Retirement Plan 89 ARTICLE X TOP-HEAVY PROVISIONS 10.1 IN GENERAL. Notwithstanding any other provisions of the Plan to the contrary, for any Plan Year in which this Plan is "top-heavy," as defined herein, the provisions of this Article X shall apply. If the Plan is top-heavy and then ceases to be top-heavy, except as otherwise provided in section 10.3, the provisions of this Article X shall cease to apply. 10.2 MINIMUM ALLOCATION. (a) For any Plan Year for which the Plan is top-heavy, a minimum allocation shall be made for each "non-key employee" who is employed by a Participating Company on the last day of the Plan Year in an amount equal to the lesser of (a) three percent of Compensation or (b) the largest percentage of Compensation allocated to any "key employee" during the Plan Year. The minimum allocation is determined without regard to any Social Security contribution. The minimum allocation shall not apply to any non-key employee who receives a minimum contribution or minimum benefit under any other plan of a Related Company. (b) To satisfy subsection (a), the Profit-Sharing Contributions for such Plan Year first shall be allocated to all Participants employed on the last day of the Plan Year in an amount that meets the minimum allocation amount, - 79 - Harris Retirement Plan 90 Top-Heavy Provisions and any remaining Profit-Sharing Contribution then shall be allocated in accordance with section 3.2. 10.3 MINIMUM VESTING. For any Plan Year for which the Plan is top-heavy, the vested interest of a Participant who is employed by a Participating Company during any part of the Plan Year shall be determined under the following schedule:
PERIOD OF SERVICE VESTED PERCENTAGE ----------------- ----------------- Less than 2 years 0% 2 years but less than 3 years 20% 3 years but less than 4 years 40% 4 years but less than 5 years 60% 5 years but less than 6 years 80% 6 years or more 100%
If the Plan becomes top-heavy and ceases to be top-heavy, a Participant who have a five-year Period of Service as determined under section 5.3 may elect to have his vested interest continue to be determined under this section 10.3, notwithstanding that the Plan is no longer top-heavy. 10.4 DEFINITIONS. For purposes of this Article X, the following terms shall have the following meanings: - 80 - Harris Retirement Plan 91 Top-Heavy Provisions (a) "Determination date" means the last day of the preceding Plan Year. (b) "Determination period" means the Plan Year containing the determination date and the four preceding Plan Years. (c) "Key employee" means an Employee or former employee (and their Beneficiaries) who, at any time during the determination period, is (1) an officer of the Participating Company and has annual compensation greater than 50 percent of the dollar limitation in effect under section 415(b)(1)(A) of the Code for any such Plan Year, (2) one of the ten Employees having annual compensation in excess of the limitation in effect under section 415(c)(1)(A) of the Code and owning (or considered as owning with the meaning of section 318 of the Code) the largest interests in the Participating Company, - 81 - Harris Retirement Plan 92 Top-Heavy Provisions (3) a five-percent owner (within the meaning of section 416(i)(1)(B) of the Code) of the Participating Company, or (4) a one-percent owner of the Participating Company having annual compensation from the Participating Company of more than $150,000. The determination of "key employee" shall be made under section 416(i)(1) of the Code, the terms of which are incorporated herein by reference. (d) "Non-key employee" means any Employee who is not a key employee. (e) "Permissive aggregation group" means the "required aggregation group" and any other plans of the Participating Company which, when considered as a group with the required aggregation group, would continue to satisfy the requirements of sections 401(a)(4) and 410 of the Code. (f) "Required aggregation group" means (1) each qualified plan of the Participating Company in which at least one key employee participates or participated at any time during the determination period (regardless of whether - 82 - Harris Retirement Plan 93 Top-Heavy Provisions the plan has terminated), and (2) any other qualified plan of the Participating Company which enables a plan described in (1) to meet the requirements of sections 401(a) and 410 of the Code. (g) "Top-heavy" means: (1) the top-heavy ratio for the Plan exceeds 60 percent and the Plan is not part of any required aggregation group or permissive aggregation group; (2) the Plan is part of a required aggregation group but not a permissive aggregation group and the top-heavy ratio for the required aggregation group exceeds 60 percent; (3) the Plan is part of a required aggregation group and a permissive aggregation group and the top-heavy ratio for the permissive aggregation group exceeds 60 percent. - 83 - Harris Retirement Plan 94 Top-Heavy Provisions (h) "Top-heavy ratio" means: (1) if the Participating Company or Related Company has not maintained any defined benefit plan which during the five-year period ending on the determination date had accrued benefits, the top-heavy ratio is a fraction, the numerator of which is the sum of the account balances of all key employees as of the determination date (including any part of any account balance distributed in the five-year period ending on the determination date), and the denominator of which is the sum of all account balances (including any part of any account balance distributed in the five-year period ending on the determination date). (2) If a Related Company maintains or has maintained a defined benefit plan which during the five-year period ending on the determination date had accrued benefits, the top-heavy ratio is a fraction, the numerator of which is the sum of account balances - 84 - Harris Retirement Plan 95 Top-Heavy Provisions under the defined contributions plans for all key employees (including any part of any account balance distributed in the five-year period ending on the determination date), and the present value of accrued benefits under the defined benefit plans for all key employees as of the determination date, and the denominator of which is the sum of the account balances under the defined contribution plans for all participants (including any part of any account balance distributed in the five-year period ending on the determination date), and the present value of accrued benefits under the defined benefit plans for all participants as of the determination date. (3) For purposes of (1) and (2) above, the value of account balances and the present value of accrued benefits shall be determined as of the most recent "valuation date" that falls within or ends with the 12-month period ending on the determination date, except as provided in section 416 of the Code for the first and second plan years of a defined benefit plan. In the - 85 - Harris Retirement Plan 96 Top-Heavy Provisions case of a defined benefit plan, the "present value of accrued benefits" shall be determined under the terms of the applicable defined benefit plan. The account balances and accrued benefits of a Participant who is not a key employee but who was a key employee in a prior year, or who has not been credited with at least an Hour of Service with any Participating Company maintaining the plan at any time during the five-year period ending on the determination date shall be disregarded. When aggregating plans, the value of account balances and accrued benefits shall be calculated with reference to the determination dates that fall within the same calendar year. (4) The calculation of the top-heavy ratio shall be determined in accordance with section 416 of the Code, the provisions of which are incorporated herein by reference. (i) "Valuation date" means the last day of the Plan Year. - 86 - Harris Retirement Plan 97 ARTICLE XI ADMINISTRATION 11.1 NAMED FIDUCIARIES. The Corporation shall be the "named fiduciary" responsible for the control, management and administration of the Plan. 11.2 CORPORATION COMMITTEE. The Corporation shall establish a Corporation Committee to administer the Plan. The members of the Corporation Committee shall be appointed, and removed at any time, by the appropriate officers of the Corporation. A member of the Corporation Committee may resign at any time by giving written notice to the Corporation at least 15 days prior to the effective date of the resignation. 11.3 POWERS AND DUTIES OF COMMITTEE. The Corporation Committee shall have the powers and duties conferred on it by the terms of the Plan. The Corporation Committee may establish such rules and regulations as it deems necessary to enable it to administer the Plan. The Corporation Committee shall have the discretionary authority to determine eligibility for benefits and construe the terms of the Plan. 11.4 ACTIONS OF COMMITTEE. No formal meeting and no minutes shall be required with respect to actions taken by the Corporation Committee. - 87 - Harris Retirement Plan 98 Administration 11.5 FINALITY OF DECISIONS. All decisions and directions made by the Corporation Committee, in the discretionary exercise of its powers and duties, shall be final and binding on all parties concerned. 11.6 IMMUNITIES OF COMMITTEE. Except as otherwise provided by law, no member of the Corporation Committee shall be liable to a Participating Company or to any Participant or Beneficiary by reason of the exercise in good faith of any power or discretion vested in him by the terms of the Plan. 11.7 ADVISERS AND AGENTS. The Corporation, or the Corporation Committee, with the consent of the Corporation, may employ one or more persons to render advice with respect to any responsibility that the Corporation, or the Corporation Committee, respectively, has under the Plan. The Corporation, or the Corporation Committee, may appoint unrelated parties to carry out trustee, investment management and record-keeping responsibilities with respect to the Plan. The Corporation shall indemnify any person, including an employee of the Corporation, who is acting on behalf of the Corporation or the Corporation Committee in this capacity with respect to liability that may arise by reason of his action or failure to act concerning the Plan, excepting any willful or gross misconduct or criminal acts, to the extent required in the respective contracts governing such arrangements. - 88 - Harris Retirement Plan 99 Administration 11.8 COMMITTEE MEMBER WHO IS PARTICIPANT. A member of the Corporation Committee who also is a Participant shall have no right to vote with respect to any action that pertains solely to him as a Participant. In the event a majority of the remaining members are unable to agree as to the action to be taken with respect to the Participant, the chief executive officer of the Corporation shall appoint an impartial person to arbitrate the matter between the remaining members and to reach a decision. 11.9 INFORMATION PROVIDED BY PARTICIPATING COMPANIES. Each Participating Company and Employment Unit shall provide the Corporation, the Corporation Committee and the Trustee with complete and timely information regarding employment data for each Employee and Participant needed by the Corporation, Corporation Committee or Trustee to administer the Plan, including, but not limited to, information concerning Compensation, date of employment, date of termination of employment, reason for termination and any other information required by the Corporation, Corporation Committee, or Trustee. 11.10 EXPENSES. All reasonable and proper expenses of the Plan and the Trust, including, but not limited to, investment advisory fees, record-keeping fees, and Trustee's fees shall be paid from Participants' Accounts in a uniform and nondiscriminatory manner, which may be ratably, unless otherwise paid by the - 89 - Harris Retirement Plan 100 Administration Corporation. The Corporation may seek reimbursement of any expense which it pays that is properly payable by the Trust Fund. 11.11 TRUST FUND AVAILABLE TO PAY ALL PLAN BENEFITS. The Plan is intended to be a single plan under Treasury regulation section 1.414(l)-1(b)(1). The maintenance of Accounts as required by the terms of the Plan shall be for record-keeping purposes only. All of the Trust Fund shall be available to pay benefits to all Participants and Beneficiaries. - 90 - Harris Retirement Plan 101 ARTICLE XII AMENDMENT AND TERMINATION AND CHANGE OF CONTROL 12.1 AMENDMENT. The Corporation reserves the right to amend the Plan by action of its Board of Directors or the appropriate committee thereof at any time and from time to time, subject to the following limitations: (a) no amendment shall be made which vests in any Participating Company any interest in any assets of the Plan other than as specifically provided in section 12.2; (b) no amendment shall be made which would have the effect of decreasing a Participant's "accrued benefit" as proscribed in section 411(d)(6) of the Code; and (c) no amendment shall have the effect of reducing a Participant's vested interest in his Accounts. If the Plan is amended to change the vesting schedule, each Participant with at least a three-year Period of Service shall have the right to elect to have his vested interest computed without regard to the amendment. Each Participant shall be permitted to make this election during the period ending 60 days after the latest of the date (1) the amendment is adopted; (2) the amendment is effective, and (3) the Participant is issued a written notice of the amendment by the Corporation or its delegate. - 91 - Harris Retirement Plan 102 Amendment and Termination and Change of Control Amendments will normally be initiated by the Corporation Committee, approved by upper management of the Corporation, then adopted by resolution of the Retirement Plan Investment Committee of the Board of Directors. 12.2 TERMINATION OF PLAN. This Plan is intended to be permanent, and it is the expectation of the Corporation that it will continue indefinitely. However, the Corporation reserves the right to terminate the Plan by resolution of its Board of Directors or the appropriate committee thereof. In the case of a complete termination of the Plan, previously unallocated forfeitures shall be allocated as otherwise provided in the Plan. To the extent previously unallocated forfeitures cannot be allocated because all Participants have reached the limitations of section 415 of the Code, the unallocated amount shall revert back to the appropriate Participating Company, as provided in section 3.10. 12.3 DISCONTINUANCE OF CONTRIBUTIONS. The Corporation reserves the right to discontinue contributions to the Plan by amendment or by resolution of the Board of Directors or the appropriate committee thereof. 12.4 VESTING ON TERMINATION OR DISCONTINUANCE OF CONTRIBUTIONS. As of the date of the partial or complete termination of the Plan or upon the complete discontinuance of contributions to the Plan, each affected Participant shall - 92 - Harris Retirement Plan 103 Amendment and Termination and Change of Control become fully vested in his Accounts and no further allocations of contributions or forfeitures shall be made after such date on behalf of an affected Participant. 12.5 DISTRIBUTION ON TERMINATION. Upon the complete termination of the Plan, the Trustee shall distribute to each affected Participant the full amount standing to the credit of his Accounts; provided that if such amount exceeds (or at the time of any prior distribution exceeded) $3,500 and the Participant is not yet age 65, such lump sum shall not be paid without his consent. If the Participant does not consent, an annuity contract shall be purchased for and distributed to the Participant. 12.6 CHANGE OF CONTROL. (a) DEFINITION. Notwithstanding any other provisions of the Plan to the contrary, if (1) a third person, including a "group" as defined in Section 12(d)(3) of the Securities Exchange Act of 1934 (or any rules or regulations thereunder), acquires shares of the Corporation having 20 percent or more of the total number of votes that may be cast for the election of directors of the Corporation; or - 93 - Harris Retirement Plan 104 Amendment and Termination and Change of Control (2) as a result of any cash tender or exchange offer, merger or other business combination of the foregoing transactions (the "Transaction"), the persons who were directors of the Corporation before the Transaction cease to constitute a majority of the Board of Directors of the Corporation or any successor to the Corporation, then during the period commencing on the date of acquisition of said voting power or control of the Board of Directors of the Corporation or any successor thereto and ending at the close of business on the next following June 30 (the "Restriction Period"), the provisions of this section 12.6 shall apply. (b) EFFECT. During the Restriction Period, the Plan may not be terminated or amended to the extent the amendment would: (1) reduce coverage under the Plan; (2) reduce the amount of Profit-Sharing Contributions required to be made for the Plan Year ending on the last day of the Restriction Period; - 94 - Harris Retirement Plan 105 Amendment and Termination and Change of Control (3) reduce the amount of After-Tax Contributions eligible for a matching contribution that a Participant is permitted to make or the amount of the Matching After-Tax Contributions required under sections 3.5 and 3.6; or (4) reduce the amount of Pre-Tax Contributions that a Participant is permitted to make or the amount of Matching Pre-Tax Contributions required under sections 3.3 and 3.4. (c) For the purpose of computing the amount of the Profit-Sharing Contributions for the twelve-month period ending on the last day of a Restriction Period, the adjusted consolidated net income of the Corporation and its Consolidated Subsidiaries before net income taxes for the Fiscal Year ending on such date is deemed to be the forecast of the consolidated net income of the Corporation and its Consolidated Subsidiaries for such Fiscal Year as set forth in the annual operating plan of the Corporation for such Fiscal Year. (d) During the Restriction Period, any person who was an Employee on the day preceding the first day of the Restriction Period shall be - 95 - Harris Retirement Plan 106 Amendment and Termination and Change of Control deemed to be an Employee so long as he is employed by a member of a "controlled group of corporations" which includes, or by a trade or business that is under common control with (as those terms are defined in sections 414(b) and (c) of the Code) the Corporation, any corporation which is the survivor of any merger or consolidation to which the Corporation was a party, or any corporation into which the Corporation has been liquidated. - 96 - Harris Retirement Plan 107 ARTICLE XIII MISCELLANEOUS PROVISIONS 13.1 RESTRICTIONS ON ALIENATION; QUALIFIED DOMESTIC RELATIONS ORDERS. Except as otherwise may be required for Federal, state or local income tax withholding purposes, no benefit or interest under this Plan shall be subject to assignment or alienation, either voluntarily or involuntarily. The preceding sentence shall apply to the creation, assignment or recognition of a right to any benefit payable with respect to a Participant pursuant to a domestic relations order, unless such order is determined to be a Qualified Domestic Relations Order, as defined in section 414(p) of the Code. In accordance with uniform and nondiscriminatory procedures established by the Corporation Committee from time to time, the Corporation Committee upon the receipt of a domestic relations order which seeks to require the distribution of a Participant's Account in whole or in part to an "alternative payee" (as that term is defined in Code section 414(p)(8)) shall: (1) promptly notify the Participant and such "alternate payee" of the receipt of such order and of the procedure which the Corporation Committee will follow to determine whether such order constitutes a "Qualified Domestic Relations Order" within the meaning of Code section 414(p), - 97 - Harris Retirement Plan 108 Miscellaneous Provisions (2) determine whether such order constitutes a "Qualified Domestic Relations Order" and notify the Participant and the "alternate payee" of the results of such determination and, (3) if the Corporation Committee determines that such order does constitute a "Qualified Domestic Relations Order," distribute to such "alternate payee" under the terms of such order the amount called for under the order in a single sum within 60 days of the date such order is determined to constitute a Qualified Domestic Relations Order, without regard to whether a distribution would be permissible to the Participant at such time under this Plan. The determination and the distribution made by, or at the direction of, the Corporation Committee under this section 13.1 shall be final and binding on the Participant and on all other persons interested in such order. An "alternate payee" under this section 13.1 shall not be an eligible person for purposes of obtaining a loan pending the distribution of such alternate payee's entire interest under this Plan. 13.2 EXCLUSIVE BENEFIT REQUIREMENT. Except as provided in sections 12.2 and 13.3, no assets of the Plan shall revert to a Participating Company or be - 98 - Harris Retirement Plan 109 Miscellaneous Provisions used for or diverted to purposes other than providing benefits to Participants and their Beneficiaries and defraying reasonable costs of administering the Plan. 13.3 RETURN OF CONTRIBUTIONS. (a) Mistakes of fact. Any contribution made by a Participating Company due to a mistake of fact shall be returned to the Participating Company within one year of the date the contribution was made. (b) Nondeductible Contributions. In the event the deduction of a contribution made by a Participating Company is disallowed under section 404 of the Code, such contribution (to the extent disallowed) shall be returned to the Participating Company within one year of the disallowance of the deduction. 13.4 NO CONTRACT OF EMPLOYMENT. Neither the establishment and maintenance of the Plan nor the participation in the Plan by any Employee shall be construed as a contract between the Employee and any Participating Company so as to give any Employee the right to be retained by any Participating Company, or to interfere with the rights of any Participating Company to discharge the Employee at any time. - 99 - Harris Retirement Plan 110 Miscellaneous Provisions 13.5 PAYMENT OF BENEFITS ON INCAPACITY. In the event the Corporation Committee determines that any person to whom a distribution is to be made is unable to care for his affairs by reason of illness or other disability, any amount distributable to such person (unless prior claim thereto shall have been made by a duly qualified guardian or other legal representative) may, in the discretion of the Corporation Committee, be paid to such other person deemed by the Corporation Committee to be responsible for such person. Any such payment made under this section 13.5 shall constitute a complete discharge of any liability under this Plan. 13.6 MERGER. In the event of a merger or consolidation with, or transfer of assets or liabilities to any other plan, each Participant shall receive a benefit immediately after such merger, consolidation or transfer (if the Plan then terminated) which is at least equal to the benefit the Participant was entitled to receive immediately before such merger, consolidation or transfer (if the Plan had then terminated). 13.7 CONSTRUCTION. The headings and subheadings in this Plan have been inserted for convenience of reference only and are to be ignored in the construction of its provisions. Wherever appropriate, the masculine shall be read as the feminine, the plural as the singular, and the singular as the plural. References in this Plan to a section shall be to a section in this Plan unless - 100 - Harris Retirement Plan 111 Miscellaneous Provisions otherwise indicated. References in this Plan to a section of the Code, ERISA or any other federal law shall also refer to the regulations issued under such section. 13.8 GOVERNING LAW. This Plan shall be construed, to the extent to which state law is applicable, in accordance with the laws of the State of Florida. Venue for any action arising under this Plan shall be in Brevard County, Florida. 13.9 MISTAKEN PAYMENTS. If a mistake is made in favor of a Participant or Beneficiary in the payment of benefits under this Plan, the Corporation or the Trustee (acting at the Corporation direction and on behalf of the Plan) shall take such action against the Participant or Beneficiary to remedy such mistake and to make the Plan whole as the Corporation deems proper and appropriate under the circumstances, and any mistake in favor of the Plan shall promptly be corrected by, or at the direction of, the Corporation. - 101 - Harris Retirement Plan 112 ARTICLE XIV SPECIAL PROVISIONS FOR EMPLOYEES OF HARRIS TECHNICAL SERVICES DIVISION OF HARRIS TECHNICAL SERVICES CORPORATION ------------------------------------- Notwithstanding the provisions of any other Article of this Plan to the contrary, the following special provisions apply to Participants who are employees of the Harris Technical Services Division of Harris Technical Services Corporation. 14.1 PARTICIPATION. Notwithstanding section 2.1, an Employee shall become a Participant on the first day on which the Employee performs an Hour of Service. 14.2 PROFIT-SHARING CONTRIBUTIONS. (a) Notwithstanding section 3.1, a Profit-Sharing Contribution shall be made for each Plan Year on behalf of Employees of the Employment Unit consisting of the Harris Technical Services Division in an amount equal to 7 percent of before-tax M-2 profits. Ten (10) percent of the estimated Profit-Sharing Contribution for each Plan Year shall be made no later than the last day of October, January, and April of each year. The remaining Profit-Sharing Contribution for each Plan Year shall be made no later than the last day of September. (b) Notwithstanding any provision to the contrary in Section 3.2, Profit-Sharing Contributions shall be allocated pro rata to each Participant on the basis of the number of full months of his or her Period of - 102 - Harris Retirement Plan 113 Miscellaneous Provisions Service completed during the Plan Year, provided that fractional months shall be aggregated. The limitation in eligibility in section 3.2(c) shall not apply. 14.3 PRE-TAX CONTRIBUTIONS. Section 3.3(a) shall apply, provided, however, that a Participant may elect to reduce his Compensation by an amount equal to any whole percentage not to exceed 15 percent and have the amount of such reduction contributed to the Plan as a Pre-Tax Contribution. 14.4 NO MATCHING PRE-TAX CONTRIBUTIONS. Notwithstanding any other provision of the Plan to the contrary, no Matching Pre-Tax Contributions will be made on behalf of Participants. 14.5 NO INVESTMENT IN THE HARRIS STOCK FUND. Notwithstanding any provision of the Plan to the contrary, Participants may not direct investments into the Harris Stock Fund. 14.6 VESTING. The Vesting Schedule in section 5.3(a) shall be replaced by the following vesting schedule: - 103 - Harris Retirement Plan 114 Miscellaneous Provisions
PERIOD OF SERVICE VESTED PERCENTAGE ----------------- ----------------- Less than 1 year 0% 1 year but less than 2 years 20% 2 years but less than 3 years 40% 3 years but less than 4 years 60% 4 years but less than 5 years 80% 5 years or more 100%
HARRIS CORPORATION Date: /S/ JUNE 24, 1994 By: /S/ DAVID S. WASSERMAN ---------------------------- -------------------------- Attest: /S/ KAREN G. FINK Title: /s/ Vice President and --------------------------- Treasurer -------------------------- - 104 - Harris Retirement Plan 115 APPENDIX A INVESTMENT FUNDS. The Investment Funds available under the plan as of October 1, 1993 are as follows: (a) BALANCED FUND. Assets held in this fund will be invested in a variety of stocks, bonds, mortgages, fixed-income securities such as U.S. Treasury bills, certificates of deposit, commercial paper and real estate. (b) SHORT-TERM BOND FUND. Assets in this fund will be invested in shorter-term fixed-income securities such as government bonds, U.S. Treasury bills and notes, certificates of deposit, federal agency obligations, mortgage securities and corporate bonds. (c) MONEY MARKET FUND. Assets in this fund will be invested in a diversified portfolio of high-quality, short-term fixed instruments such as U.S. Treasury bills, federal agency obligations, commercial paper, certificates of deposit and banker's acceptances. (d) STABLE VALUE FUND. Assets held in this fund will be invested in a diversified portfolio of investment contracts and short-term, high-quality fixed income instruments that guarantee principal and a specified rate of return for a specified period. Harris Retirement Plan - 105 - 116 (e) EQUITY INCOME FUND. Assets held in this fund will be invested primarily in dividend-paying common stocks of established companies but may also be invested in convertible bonds and/or convertible preferred stock. (f) INDEXED EQUITY FUND. Assets held in this fund will be invested in a stock portfolio that mirrors the Standard & Poor's 500 Stock Index. (g) GROWTH FUND. Assets in this fund will be invested for the longer term, primarily in common stocks of companies which are currently experiencing an above-average rate of earnings growth. The fund's stock selection criteria include a requirement that each company have a five-year average performance record of sales, earnings, dividend growth, pre-tax margins, return on equity. (h) HARRIS STOCK FUND. Assets in this fund will be invested in common stock of the Corporation. The Investment Funds may be changed at any time and from time to time. - 106 - Harris Retirement Plan 117 APPENDIX B SPECIAL PROVISIONS FOR TRANSFERRED PARTICIPANTS ----------------------------------------------- The provisions of this Appendix B are effective as of January 1, 1990. (a) For purposes of this Appendix B, the following terms shall have the following meanings: (1) "TRANSFERRED PARTICIPANTS" means those former Employees whose employment with a Participating Company ceased due to a sale of the stock or assets of a Sold Operation. (2) "SOLD OPERATION" means (i) the Data Communications Division and (ii) the Chatsworth Operation. (3) "CLOSING DATE" means the date as of which the sale of the relevant Sold Operation was effective. (b) Each Transferred Participant shall be fully vested in his Accounts as of the relevant Closing Date. - 107 - Harris Retirement Plan EX-10.H 4 FORM 10-K EXHIBIT 10(H) 1 EXHIBIT 10(h) HARRIS CORPORATION SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN ARTICLE I - PURPOSE AND EFFECTIVE DATE 1.1 PURPOSE. The Harris Corporation Supplemental Executive Retirement Plan (the "SERP") is intended to provide deferred compensation for a "select group of management or highly compensated employees" as defined in section 201(2) of ERISA. In particular, the SERP is intended to provide participants in the Harris Corporation Retirement Plan (the "Retirement Plan") with contributions that would have been made on their behalf, but for the limitations of sections 401(a)(17), 401(k)(3) and 415 of the Code. 1.2 EFFECTIVE DATE. The SERP, as amended herein, is effective as of July 1, 1994. ARTICLE II - DEFINITIONS Each term used in this Plan shall have the definition given to it in the Retirement Plan, unless otherwise specifically provided herein. 2.1 ACCOUNT - means the account established under section 5.1 for each Participant. 2.2 CODE - means the Internal Revenue Code of 1986, as amended from time to time. 2.3 COMMITTEE - means the Corporation Committee, the members of which shall be appointed in the exercise of discretion of the Retirement Plan Investment Committee of the Board of Directors of the Corporation. 2.4 CORPORATION - means Harris Corporation. 2.5 ERISA - means the Employee Retirement Income Security Act of 1974, as amended from time to time. 2 - 2 - 2.6 PARTICIPANT - means an individual who meets the requirements of sections 3.1 or 3.2 and, where applicable, enters into a salary deferral agreement pursuant to Article IV. 2.7 RETIREMENT PLAN - means the Harris Corporation Retirement Plan, as amended from time to time.21 2.8 SERP - means the Harris Corporation Supplemental Executive Retirement Plan, as amended from time to time. ARTICLE III - PARTICIPATION 3.1 CONTINUED PARTICIPATION. Any individual who is a participant in the Harris Corporation Supplemental Executive Retirement Plan as of June 30, 1994 shall continue to participate in this SERP. 3.2 GENERAL PARTICIPATION. The following shall be eligible to participate: Any employee who receives compensation for a Plan Year from the Corporation of at least $120,000 (as indexed for inflation in a manner to be determined in the sole discretion of the Committee) and has completed one Year of Service and (a) for whom contributions under the Retirement Plan are reduced as a result of sections 401(a)(17), 401(k)(3) or 415 of the Code, or (b) who is designated by the Committee as a Participant. ARTICLE IV - CONTRIBUTIONS 4.1 IN GENERAL. (a) Subject to the provisions of subsection 4.2, whenever contributions to the Retirement Plan on behalf of a Participant are reduced pursuant to sections 401(a)(17), 401(k)(3) or 415 of the Code, the amount of the reduction shall be credited to the Participant's Account. (b) For any Plan Year during which a Participant is not a participant in the Retirement Plan and has filed a Salary Deferral Agreement under Section 4.3, contributions shall be made to the SERP in an amount equal to the Profit-Sharing Contribution that he would have received under Section 3.2 of the Retirement Plan had he been a participant in the Retirement Plan (without regard to sections 401(a)(17), 401(k) and 415 of the Code) and any other contributions attributable to his Salary Deferral Agreement under Section 4.3 of this SERP, had it been made under Section 3.7 of the Retirement Plan (without regard to sections 401(a)(17), 401(k) and 415 of the Code). 3 - 3 - 4.2 SALARY DEFERRAL AGREEMENT. Pre-Tax Contributions and Matching Pre-Tax Contributions under the Retirement Plan that are reduced pursuant to sections 401(a)(17), 401(k)(3) or 415 of the Code shall be credited to the Participant's Account only if he or she timely enters into a deferral election on the form and in the manner prescribed by the Committee. 4.3 SALARY DEFERRAL AGREEMENT. A Participant who is not a participant in the Retirement Plan may enter into a Salary Deferral Agreement, electing to defer into the SERP a percentage of his or her Compensation, in one percent increments up to 12 percent, without regard to any limitation under section 401(a)(17) of the Code. The Salary Deferral Agreement shall be made on the form and in the manner prescribed by the Committee. A Participant described in this Section 4.3 may increase or decrease the deferral percentage for a subsequent Plan Year by filing a new deferral election prior to the first day of the Plan Year to which the new deferral election applies. Any deferral election made by the Participant will remain in effect for subsequent Plan Years unless the Participant timely files a new deferral election. 4.4 SPECIAL AWARD AMOUNTS. The Corporation, in its sole discretion, may make additional special award contributions on behalf of some or all Participants. 4.5 TRANSFERRED ACCOUNTS. A Participant's Account under this SERP may include amounts transferred directly from a prior employer's nonqualified deferred compensation plan, subject to the sole discretion of the Committee, and shall be held, managed and distributed under the terms of this SERP; provided, however, that such transferred amounts shall be fully vested at all times. 4.6 INDIVIDUAL ARRANGEMENTS. A Participant's Account under this SERP may include additional amounts of salary deferrals pursuant to a written individual deferred compensation agreement between the Corporation and the Participant, subject to the sole discretion of the Committee. Such arrangements must be memorialized in a writing signed before the Participant performs the services for which the compensation is to be deferred. Such amounts shall be held, managed and distributed under the terms of this SERP; provided, however, that such amounts shall be fully vested at all times. ARTICLE V - ACCOUNTS AND INVESTMENTS 5.1 ESTABLISHMENT OF ACCOUNTS. The Account established for each Participant shall be credited with contributions, then adjusted for earnings, losses, expenses 4 - 4 - and distributions as provided herein at least annually or more frequently as determined by the Committee. 5.2 INVESTMENTS. Amounts credited to the Account of a Participant shall be deemed to be invested pursuant to the Participant's investment election under the Retirement Plan. If a Participant who is also a participant in the Retirement Plan has no investment election in effect under the Retirement Plan, such Participant's Account shall be invested in the Balanced Fund. If a Participant is not a participant in the Retirement Plan, the Participant may file an investment election under the SERP, directing the investment of his Account in conformity with the terms of the Retirement Plan, except that Participants may not direct the investment of their SERP Account in Harris Stock unless they are participants in the Retirement Plan and their account under the Retirement Plan is invested in the Harris Stock Fund. ARTICLE VI - VESTING AND DISTRIBUTIONS 6.1 VESTING. Contributions shall have the character that they would have had if they been made to the Retirement Plan and shall become vested in accordance with the terms of the Retirement Plan. 6.2 TIME OF PAYMENT. A Participant shall begin to receive payment of benefits on the attainment of age 55 or termination of employment, if later; provided, however, that if a Participant makes an election under section 6.3(a), benefits shall not commence earlier than 30 days after the date the election is filed with the Committee. 6.3 FORM OF PAYMENT. (a) A Participant who has attained age 60 by June 30, 1994, or who has not participated in the Retirement Plan may elect the form in which benefits shall be paid by filing an election with the Committee on the form and in the manner prescribed by the Committee. A Participant who has not attained age 60 by June 30, 1994 may elect the form in which benefits shall be paid by filing an election with the Committee on the form and in the manner prescribed by the Committee when he or she becomes a Participant. An election period shall be provided for each Participant during the period commencing on the 90th day and ending on the 30th day preceding such Participant's retirement date. During this period, a Participant may elect the form in which benefits shall be paid or may change a prior election. All elections shall become irrevocable on the 30th day preceding a Participant's retirement date. 5 - 5 - (b) Except as provided in 6.3(c), a Participant who has not filed an election under section 6.3(a) shall receive benefits either (i) at the same time and in the same manner that benefits are paid under the Retirement Plan; or (ii) if such Participant has not participated in the Retirement Plan, the balance of the Participant's Account under this SERP shall be paid in annual installments over ten years. A participant who makes an election under section 6.3(a) may elect to receive benefits in the following forms: (1) Except as provided in section 6.3(c), payment of benefits at the same time and in the same manner that benefits are paid under the Retirement Plan; (2) Payment of benefits in annual installments over a five year period; or (3) Payment of benefits in annual installments over a ten year period. (c) If a Participant elects payment of benefits at the same time and in the same manner that benefits are paid under the Retirement Plan or if benefits will be paid in such manner because a Participant has not filed an election under section 6.3(a), and: (1) after separating from service, elects to have a substantial amount, as determined in the sole discretion of the Committee, of his or her benefits under the Retirement Plan paid as a direct distribution to the Participant, the balance of the Participant's Account under this SERP shall be paid in a lump sum; or (2) after separating from service, elects to have a substantial amount, as determined in the sole discretion of the Committee, of his or her benefit under the Retirement Plan paid as a direct rollover under section 401(a)(31) of the Code, the balance of the Participant's Account under this SERP shall be paid in annual installments over a period of ten years. (d) Notwithstanding the above, if a Participant's vested interest in his Account does not exceed $3,500 (or such larger amount applicable under the Small Benefit Cash-out provision of the Retirement Plan), the vested interest shall be paid to the Participant in a lump sum as soon as reasonably practicable upon entitlement to a distribution. 6.4 DEATH. Any amounts credited to the Participant's Account at death shall be paid to the Participant's beneficiary, determined under section 6.5 below, in the same manner that they would have been paid to the Participant. 6.5 DESIGNATION OF BENEFICIARY. Each Participant may designate a beneficiary to receive any benefits payable as a result of the Participant's death. The beneficiary 6 - 6 - designation shall be effective only if it is made on the form and in the manner prescribed by the Committee. A beneficiary designation may be revoked or changed by the Participant at any time by filing a new form with the Committee. Absent a valid beneficiary designation hereunder, the Participant's beneficiary shall be determined under the terms of the Retirement Plan. 6.6 FINANCIAL HARDSHIP. All or a portion of any amounts credited to the Participant's Account may be immediately paid to the Participant if the Participant incurs a financial hardship, as determined in the sole discretion of the Committee. 6.7 PAYMENT ON INCAPACITY. In the event the Committee determines that any person to whom a distribution is to be made is unable to care for his or her affairs by reason of illness or other disability, any amount distributable to such person hereunder may be paid to such other person deemed by the Committee, in its sole discretion, to be responsible for such person (unless prior claim thereto has been made by a duly qualified guardian or other legal representative). Any such payment made under this section 6.7 shall constitute a complete discharge of any liability under this Plan. 6.8 OVERPAYMENTS. In the event the benefits actually paid with respect to a Participant exceed the benefits to which he or she is entitled under the terms of this Plan, future benefits shall be reduced in any manner which the Committee, in its sole discretion, deems equitable. 6.9 WITHHOLDING FOR TAXES. The Corporation shall have the right to deduct any Federal, state or local income, employment, or other taxes required by law to be withheld with respect to any benefits payable under this SERP, and to withhold such amounts from any payment otherwise due the Participant (or beneficiary). ARTICLE VII - ADMINISTRATION 7.1 COMMITTEE. This Plan shall be administered by the Committee. 7.2 AUTHORITY OF COMMITTEE. The Committee shall, in its sole and absolute discretion, have the complete authority to interpret this SERP, to adopt rules for carrying out the purposes of this SERP and to make all other determinations necessary or advisable for the administration of this SERP. To the extent practicable, the Committee shall conform the administration of this SERP to the provisions of the Retirement Plan. Any decision or interpretation of any provision of this SERP made by the Committee, the Corporation, or their delegates, shall be final and conclusive, and shall be binding on all Participants (and their 7 - 7 - beneficiaries). A Participant who is a member of the Committee may participate in a decision of the Committee that may affect his or her rights or obligations under this SERP only if the decision does not require a vote of the Committee. 7.3 DELEGATION OF AUTHORITY. The Committee may delegate any of its administrative powers or duties with respect to this SERP to any person or committee designated by it and may employ such attorneys, agents, and advisors as it may deem necessary or advisable to assist it in carrying out its duties hereunder. 7.4 LIABILITY OF COMMITTEE. No member of the Committee and no individual to whom the Committee has delegated authority to administer this SERP shall be liable for any action or failure to act under this SERP, except where such action or failure to act was due to gross negligence or fraud. ARTICLE VIII - GENERAL PROVISIONS 8.1 AMENDMENT AND TERMINATION. The Corporation may amend or terminate this Plan at any time, in whole or in part. Amendments will normally be initiated by the Committee, approved by upper management of the Corporation, then adopted by resolution of the Retirement Plan Investment Committee of the Board of Directors. 8.2 ANTI-ALIENATION. A Participant's rights and interest under this SERP may not be assigned or transferred except by will or the laws of descent or distribution. Any other purported transfer, assignment, pledge or other encumbrance or attachment of any payments or benefits under this SERP shall not be permitted or recognized. 8.3 FUNDING. The Corporation may, but is not required to, establish a trust to fund the benefits under this SERP, provided that the assets in such trust are subject to the claims of the Corporation's general creditors in the event of insolvency. To the extent benefits are not funded by a trust, a Participant (and beneficiary) shall have no interest in any fund or specific asset of the Corporation, and the rights of a Participant (and beneficiary) to any benefits under this SERP shall be solely those of an unsecured creditor of the Corporation. 8.4 SEPARABILITY. If any provision of this SERP is found unlawful by any court having proper jurisdiction, such provision shall be construed by such court to most nearly reflect the Corporation's original intent in adopting this SERP, consistent with applicable law. 8 - 8 - 8.5 NOT A CONTRACT OF EMPLOYMENT. This SERP shall not constitute a contract of continuing employment or in any manner obligate the Corporation to continue or discontinue the service of an employee. 8.6 CONSTRUCTION OF SERP. This SERP shall be construed in accordance with the laws of the State of Florida. IN WITNESS WHEREOF, Harris Corporation does hereby adopt this SERP, as amended, effective July 1, 1994. HARRIS CORPORATION Date: /S/ June 24, 1994 By: /S/ David S. Wasserman ----------------- --------------------------- 1027300 EX-10.I 5 FORM 10-K EXHIBIT 10(I) 1 Exhibit 10(i) LANIER WORLDWIDE, INC. PENSION PLAN AS EFFECTIVE AS OF JULY 1, 1994 2 TABLE OF CONTENTS
Page ---- Section 1 HISTORY AND EFFECTIVE DATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Section 2 CONSTRUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 2.1. Controlling Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 2.2. Plan Types . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 2.3. Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Section 3 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 3.1. Accrued Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 (a) General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 (b) Grandfather Rule . . . . . . . . . . . . . . . . . . . . . . . . . . 3 3.2. Actuarial Equivalent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 3.3. Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 3.4. Annuity Starting Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 3.5. Average Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 3.6. Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 3.7. Benefit Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 3.8. Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 3.9. Break in Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 3.10. Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 3.11. Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 3.12. Covered Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 3.13. Determination Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 3.14. Early Retirement Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 3.15. Eligible Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 3.16. Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 3.17. Employer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 3.18. Employment Commencement Date . . . . . . . . . . . . . . . . . . . . . . . . 8 3.19. Employment Termination Date . . . . . . . . . . . . . . . . . . . . . . . . . 8 3.20. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 3.21. Harris/LBP Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 3.22. Hour of Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 3.23. Named Fiduciary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 3.24. Normal Retirement Age . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 3.25. Normal Retirement Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 3.26. Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 3.27. Participation Requirement . . . . . . . . . . . . . . . . . . . . . . . . . . 9
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Page ---- 3.28. Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 3.29. Plan Sponsor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 3.30. Plan Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 3.31. Spouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 3.32. TRA 86 Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 3.33. Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 3.34. Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 3.35. Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 3.36. Vested Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 3.37. Vesting Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 3.38. Year of Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 (a) Vesting and Participation . . . . . . . . . . . . . . . . . . . . . . 10 (1) Period of Employment . . . . . . . . . . . . . . . . . . . . 10 (2) Termination/Reemployment . . . . . . . . . . . . . . . . . . 10 (3) Rule of Parity for 6 Breaks in Service . . . . . . . . . . . 11 (4) Service With Other Entities . . . . . . . . . . . . . . . . 11 (5) Special Rule for Harris Employees . . . . . . . . . . . . . 11 (6) Special Rule for July 31, 1991 Participants . . . . . . . . 12 (b) Benefit Accrual . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 (1) Period of Employment . . . . . . . . . . . . . . . . . . . . 12 (2) Termination/Reemployment . . . . . . . . . . . . . . . . . . 13 (3) Rule of Parity for 6 Breaks in Service . . . . . . . . . . . 13 Section 4 PARTICIPATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 4.1. General Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 4.2. Transferred Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 4.3. Reemployment Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 (a) Prior Service Disregarded . . . . . . . . . . . . . . . . . . . . . . 14 (b) Prior Service Aggregated . . . . . . . . . . . . . . . . . . . . . . 14 4.4. Absence from Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 4.5. Plan Not An Employment Contract . . . . . . . . . . . . . . . . . . . . . . . 14 4.6. Pre-1988 Age Limitation . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Section 5 BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 5.1. Normal Retirement Benefits . . . . . . . . . . . . . . . . . . . . . . . . . 15 5.2. Early Retirement Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . 15 (a) General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 (b) Early Commencement . . . . . . . . . . . . . . . . . . . . . . . . . 15 (c) Early Commencement Reduction Factor . . . . . . . . . . . . . . . . . 15
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Page ---- 5.3. Vested Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 (a) General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 (b) Early Commencement . . . . . . . . . . . . . . . . . . . . . . . . . 16 (c) Early Commencement Reduction . . . . . . . . . . . . . . . . . . . . 17 5.4. Disability Retirement Benefit . . . . . . . . . . . . . . . . . . . . . . . . 17 (a) At Normal Retirement Date . . . . . . . . . . . . . . . . . . . . . . 17 (b) Definition of Total and Permanent Disability . . . . . . . . . . . . 17 (c) Proof of Disability . . . . . . . . . . . . . . . . . . . . . . . . . 18 (d) Early Commencement . . . . . . . . . . . . . . . . . . . . . . . . . 18 (e) Survivor Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . 19 (f) Termination of Disability . . . . . . . . . . . . . . . . . . . . . . 19 5.5. Suspension of Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 (a) Reemployment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 (b) Continued Employment . . . . . . . . . . . . . . . . . . . . . . . . 20 (c) Suspension Notice . . . . . . . . . . . . . . . . . . . . . . . . . . 21 (d) Actuarial Adjustment for Certain Months . . . . . . . . . . . . . . . 21 (1) Following Receipt of Suspension Notice . . . . . . . . . . . 21 (2) Prior to Receipt of Suspension Notice . . . . . . . . . . . 21 (3) Actuarial Equivalence . . . . . . . . . . . . . . . . . . . 22 5.6. Calculation of Additional Accrued Benefit Following Initial Commencement of Benefits . . . . . . . . . . . . . . . . . . . . . . 22 (a) General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 (b) Annuity-Benefits Suspended . . . . . . . . . . . . . . . . . . . . . 22 (c) Lump-Sum - Benefits Suspended . . . . . . . . . . . . . . . . . . . . 23 (d) Adjustment Where Benefits Not Suspended . . . . . . . . . . . . . . . 23 (e) Certain Lump Sum Payments . . . . . . . . . . . . . . . . . . . . . . 23 Section 6 BENEFIT PAYMENT FORMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 6.1. Normal Payment Forms . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 (a) Annuities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 (b) Lump Sum Cash Out . . . . . . . . . . . . . . . . . . . . . . . . . . 24 (c) Employee Contributions . . . . . . . . . . . . . . . . . . . . . . . 25 6.2. Election Procedures and Timing . . . . . . . . . . . . . . . . . . . . . . . 25 (a) General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 (b) Procedures and Spousal Consent . . . . . . . . . . . . . . . . . . . 25 (c) Timing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 (d) Required Beginning Date . . . . . . . . . . . . . . . . . . . . . . . 26 6.3. Description of Options . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 (a) Actuarial Equivalent and Other Special Rules . . . . . . . . . . . . 26 (1) Actuarial Equivalent . . . . . . . . . . . . . . . . . . . . 26 (2) Minimum Incidental Death Benefit Rule . . . . . . . . . . . 26
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Page ---- (3) Death . . . . . . . . . . . . . . . . . . . . . . . . . . 26 (4) Recomputation of Period Certain . . . . . . . . . . . . . . 27 (b) Payment Options . . . . . . . . . . . . . . . . . . . . . . . . . . 27 (1) Single Life Annuity Option . . . . . . . . . . . . . . . . . 27 (2) 10 Year Period Certain and Continuous Annuity Option . . . . . . . . . . . . . . . . . . . . . . . 27 (3) Joint and Survivor Annuity Option . . . . . . . . . . . . . 27 (4) Lump Sum Option . . . . . . . . . . . . . . . . . . . . . . 27 (c) Other Payment Options . . . . . . . . . . . . . . . . . . . . . . . 27 (d) Direct Rollover . . . . . . . . . . . . . . . . . . . . . . . . . . 27 6.4. Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 6.5. No Estoppel of Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 6.6. Claims for Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Section 7 SURVIVOR BENEFIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 7.1. Preretirement Survivor Benefit For Married Participants . . . . . . . . . . . 29 (a) General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 (b) Exclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 (c) Commencement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 (1) Normal . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 (2) Early . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 (d) Lump Sum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 7.2. Preretirement Survivor Annuity For Participants Who Terminate Employment after 55 or are Disabled . . . . . . . . . . . . . . 31 (a) General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 (b) Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 (c) Exclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 (d) Commencement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 7.3. No Post Retirement Survivor Benefits . . . . . . . . . . . . . . . . . . . . 32 Section 8 PLAN FUNDING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 8.1. Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 8.2. Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 8.3. Prohibition Against Reversion . . . . . . . . . . . . . . . . . . . . . . . . 33 Section 9 NAMED FIDUCIARIES AND PLAN SPONSOR . . . . . . . . . . . . . . . . . . . . . . . . . . 34 9.1. Named Fiduciaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 9.2. Allocation and Delegation by Named Fiduciaries . . . . . . . . . . . . . . . 34 9.3. Advisers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
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Page ---- 9.4. Dual Fiduciary Capacities . . . . . . . . . . . . . . . . . . . . . . . . . . 35 9.5. Plan Sponsor Power and Duties . . . . . . . . . . . . . . . . . . . . . . . . 35 (a) General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 (b) Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 (c) Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 (d) Reliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 (e) Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Section 10 TRUST FUND AND TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Section 11 TERMINATION, AMENDMENT AND ADOPTION . . . . . . . . . . . . . . . . . . . . . . . . . . 36 11.1. Right to Terminate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 11.2. Full Vesting Upon Termination . . . . . . . . . . . . . . . . . . . . . . . . 36 11.3. Allocation of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 11.4. Merger, Consolidation and Transfer of Assets or Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 11.5. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Section 12 RESTRICTIONS ON CERTAIN BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 12.1. Limitations on Annual Benefit . . . . . . . . . . . . . . . . . . . . . . . . 37 12.2. Limit on Benefits of Highest-Paid Employees . . . . . . . . . . . . . . . . . 38 (a) Restricted Participants . . . . . . . . . . . . . . . . . . . . . . . 38 (b) Applicability of Limit . . . . . . . . . . . . . . . . . . . . . . . 38 (c) Limit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 (d) Security Arrangement . . . . . . . . . . . . . . . . . . . . . . . . 39 (e) Plan Termination . . . . . . . . . . . . . . . . . . . . . . . . . . 39 (f) Transition Period . . . . . . . . . . . . . . . . . . . . . . . . . . 39 Section 13 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 13.1. Spendthrift Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 13.2. Legally Incompetent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 13.3. Benefits Supported Only by Trust Fund . . . . . . . . . . . . . . . . . . . . 40 13.4. Discrimination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 13.5. Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 13.6. Nonreversion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 13.7. Agent for Service of Process . . . . . . . . . . . . . . . . . . . . . . . . 41 13.8. Top Heavy Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 (a) Determination . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 (b) Special Top Heavy Plan Rules . . . . . . . . . . . . . . . . . . . . 42
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Page ---- 13.9. Qualified Domestic Relations Orders . . . . . . . . . . . . . . . . . . . . . 44 13.10. Income Tax Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 Exhibit A Attachment 1 to Exhibit A - Former Lanier Participants Attachment 2 to Exhibit A - Former Harris/DPI Participants Attachment 3 to Exhibit A - Former BSD Participants Attachment 4 to Exhibit A - Certain Terminated Participants
- vi - 8 LANIER WORLDWIDE, INC. PENSION PLAN AS EFFECTIVE AS OF JULY 1, 1994 Section 1 HISTORY AND EFFECTIVE DATE -------------------------- This Lanier Worldwide, Inc. Pension Plan (the "Plan"), which is effective July 1, 1994, amends and restates the Plan as most recently amended and restated effective as of August 2, 1991. The August 1, 1991 document amended and restated the Plan as adopted on April 30, 1990. The April 30, 1990 document amended, restated and renamed the Harris/3M Document Products, Inc. Pension Plan as originally effective as of January 1, 1986 and as last amended and restated effective as of July 1, 1987 ("Harris/DPI Plan"). The Harris/Lanier Retirement Plan and Trust ("Harris/LBP Plan") as originally effective as of July l, 1965 and as last amended and restated effective as of January 1, 1988, was merged into this Plan effective as of October 1, 1989. This Plan is intended to satisfy all applicable TRA 86 Requirements and all applicable requirements of subsequent legislation through June 30, 1994. The April 30, 1990 document was intended to satisfy all applicable TRA 86 Requirements effective as of July 1, 1989 for this Plan and January 1, 1989 for the Harris/LBP Plan or such earlier dates as required under either such plan by applicable TRA 86 Requirements. Except as expressly otherwise provided, the provisions of this Plan shall apply only to those persons who are employees of an Employer on or after July 1, 1994. The benefits, if any, of a person whose employment with an Employer terminated before July 1, 1994 and who is not reemployed by an Employer after such date shall, except as expressly provided otherwise in this Plan, be determined in accordance with the provisions of this Plan as in effect as of the date his employment so terminated or, if his termination occurred before October 1, 1989, the Harris/LBP Plan, if applicable, as amended to comply with applicable TRA 86 Requirements. For convenience, the substantive provisions of this Plan as in effect before August 1, 1991, the substantive provisions of the Harris/DPI Plan as in effect before July 1, 1989, and the substantive provisions of the Harris/LBP Plan are described in Exhibit A. 9 Section 2 CONSTRUCTION ------------ 2.1. CONTROLLING LAWS. To the extent such laws are not preempted by federal law, this Plan and the related Trust Agreement shall be construed and interpreted under the laws of the State of Georgia. 2.2. PLAN TYPES. The Plan Sponsor intends that this Plan and the related Trust Agreement satisfy the requirements for tax exempt status under Code Section 401(a), Code Section 501(a) and related Code sections as a defined benefit pension plan and that the provisions of this Plan and the Trust Agreement be construed and interpreted in accordance with the requirements of the Code and the regulations under the Code governing such plans. 2.3. CONSTRUCTION. The headings and subheadings in this Plan have been inserted for convenience of reference only and are to be ignored in the construction of its provisions. Wherever appropriate, the masculine shall be read as the feminine, the plural as the singular, and the singular as the plural. References in this Plan to a section (Section ) shall be to a section in this Plan unless otherwise indicated. References in this Plan to a section of the Code, ERISA or any other federal law shall also refer to the regulations issued under such section. Further, except as expressly stated otherwise, no provision of this Plan or the related Trust Agreement is intended to nor shall grant any rights to Participants or Beneficiaries or any interest in the Fund in addition to those minimum rights or interests required to be provided under ERISA and the Code and the regulations under ERISA and the Code. Section 3 DEFINITIONS ----------- The capitalized terms and phrases used in this Plan shall have the meanings set forth in this Section 3: 3.1. ACCRUED BENEFIT. (a) GENERAL. The term "Accrued Benefit" means, for each Participant as of any Determination Date, a monthly benefit payable to such Participant in - 2 - 10 the form of a single life annuity commencing as of his Normal Retirement Date. Such monthly benefit shall be determined in accordance with the formula in this Section 3.1 based on his Average Compensation, Benefit Service and Covered Compensation as of such Determination Date. Subject to Section 3.1(b), such monthly benefit shall be equal to the sum of (1) and (2), where: (1) equals 1.22% of the Participant's Average Compensation which does not exceed his Covered Compensation multiplied by the lesser of (i) his total years and fractional years of Benefit Service or (ii) 30, and (2) equals 1.55% of the Participant's Average Compensation which exceeds his Covered Compensation multiplied by the lesser of (i) his total years and fractional years of Benefit Service or (ii) 30. (b) GRANDFATHER RULE. The Accrued Benefit of each Participant shall not be less than his grandfathered accrued benefit, if any, as determined as of the earlier of his most recent termination date or June 30, 1989 under the formula set forth in Exhibit A, or, for an individual who was a participant in the Harris/LBP Plan prior to October 1, 1989, his grandfathered accrued benefit, if any, as determined as of the earlier of his most recent termination date or December 31, 1988 under the formula set forth in Exhibit A. 3.2. ACTUARIAL EQUIVALENT -- means a form of benefit payment having in the aggregate a present value equal to the present value of the aggregate amounts of benefits expected to be received under the single life annuity form of benefit payment described in Section 6.3(b), computed in accordance with the following assumptions: (a) The Unloaded 1983 Group Annuity Mortality Table for Males with a one year set back for a Participant and a 5-year set back for a Participant's Spouse or Beneficiary, and (b) An interest rate assumption equal to (1) or (2), whichever is applicable: (1) for benefits paid in a form other than a single sum, 7% per annum, compounded annually; and (2) for benefits paid in a single sum, the Pension Benefit Guaranty Corporation ("PBGC") interest rate (deferred or - 3 - 11 immediate, whichever is appropriate) that would be used by the PBGC (as of the first day of the Plan Year in which such benefit is paid) for purposes of determining the present value of a single sum distribution on a plan termination; provided, however, that the Actuarial Equivalent of the Accrued Benefit of a Participant shall not be less than the actuarial equivalent of his accrued benefit, if any, as determined as of the earlier of his most recent termination date or September 30, 1989 in accordance with the factors set forth in Exhibit A. 3.3. AFFILIATE -- means as of any date the Plan Sponsor and (a) any parent, subsidiary or brother-sister corporation which (as of such date) is a member of a controlled group of corporations (as defined in Code Section 1563(a), disregarding Code Section 1563(a)(4) and Code Section 1563(e)(3)(C)) of which the Plan Sponsor is a member; (b) any trade or business, whether or not incorporated, which (as of such date) is considered to be under common control with the Plan Sponsor under regulations prescribed by the Secretary of the Treasury pursuant to Code Section 414(c); (c) any person or organization which (as of such date) is a member of an affiliated service group (as defined in Code Section 414(m)) with the Plan Sponsor; and (d) any other organization which during such year is required to be aggregated with the Plan Sponsor under Code Section 414(o); provided, solely for purposes of Section 12.1, the phrase "more than 50 percent" shall be substituted for "at least 80 percent" each place that "at least 80 percent" appears in Code Section 1563(a)(1). 3.4. ANNUITY STARTING DATE -- means for each Participant, Spouse or Beneficiary the first day of the first period for which an amount is paid as an annuity under this Plan or such other date as described in regulations under Code Section 401. 3.5. AVERAGE COMPENSATION -- means for each Participant as of any Determination Date one-twelfth of the average of a Participant's Compensation during the 5 consecutive calendar year period in which such average is highest (or actual number of consecutive calendar years if less than 5) out of the 10 calendar year period (or actual number of such calendar years if less than 10) during which the Participant was an Employee and ending with the calendar year which includes the Determination Date. Notwithstanding the foregoing, the Average Compensation of any Participant shall not be less than his Average Compensation determined as of July 31, 1991 under the Plan as in effect on such date. See Exhibit A for the definition which applied to Participants who terminated employment before August 1, 1991. - 4 - 12 3.6. BENEFICIARY -- means either (a) the person or persons last designated in writing by a Participant on a properly completed beneficiary designation form delivered to the Plan Sponsor before his death to receive the benefits, if any, (other than the preretirement survivor annuity described in Section 7.1) payable under this Plan at his death or, if no such designation is made, or if no person so designated survives the Participant or, if after checking his last known mailing address, the whereabouts of the person so designated is unknown, (b) the person or persons, if any, expressly so designated by the Participant to receive the benefit payable as a result of his death under the group term life insurance program maintained by his Employer or, if no such designation was made, or if no such person so designated survives the Participant, or, if after checking his last known mailing address, the whereabouts of the person so designated is unknown, (c) the Participant's surviving spouse or, if there is no surviving spouse or the whereabouts of such surviving spouse are unknown, (d) the Participant's surviving children (natural and adopted) in equal shares or, if there are no such surviving children or if the whereabouts of such children are unknown, (e) the estate of the last survivor as between the Participant and his Beneficiary, if a personal representative of such deceased person has qualified within 12 months from the date of death or, if no personal representative has so qualified, (f) any heirs-at-law of the last survivor as between the Participant and his Beneficiary as determined by the Plan Sponsor under the laws of the State of Georgia whose whereabouts are known to the Plan Sponsor. 3.7. BENEFIT SERVICE -- means for each Participant as of any Determination Date such Participant's full and fractional Years of Service as described in Section 3.38(b) completed as a Participant in this Plan including any benefit service credited under a prior plan prior to October 1, 1989 which is described in Exhibit A. Notwithstanding the foregoing, a Participant's Benefit Service shall not include any service performed by such Participant with respect to which he has received (after July 31, 1991) a distribution of the present value of his nonforfeitable Accrued Benefit as a result of his termination of participation in this Plan except as provided in Section 13.8(b)(3). - 5 - 13 3.8. BOARD -- means the Board of Directors of the Plan Sponsor or the Pension and Retirement Committee of such Board of Directors. 3.9. BREAK IN SERVICE -- means for each Employee or former Employee, each 12 consecutive month period beginning on an Employee's Employment Termination Date or anniversary of such date during which an Employee or former Employee fails to complete an Hour of Service. 3.10. CODE -- means the Internal Revenue Code of 1986, as amended, or any successor statute, and, in the event an amendment to the Code renumbers a section of the Code referred to in this Plan, any such reference to such section automatically shall become a reference to such section as renumbered. 3.11. COMPENSATION -- means for each Employee the sum of (a) and (b) minus (c), where (a) equals the total compensation of an Employee for any calendar year or portion thereof from one or more Affiliates which is subject to income tax withholding under Code Section 3401(a) determined without regard to any limits under such Code section for the nature or location of such Participant's employment or the services performed by such Participant, (b) equals the elective deferrals made by an Affiliate on behalf of such Employee that are not includible in his gross income for federal income tax purposes for such period because they are contributed to a cash or deferred arrangement described in Code Section 401(k) or because they are excluded under Code Section 125, and (c) equals any payments made under a severance pay plan or program, any payment made in consideration of an Employee's release of claims in favor of an Affiliate, any payment attributable to foreign assignment differential and any payments made under Longer Term Incentive Plans. Notwithstanding the foregoing, Compensation shall not include any remuneration for services as a "leased employee" of an Affiliate and Compensation for any calendar year beginning after December 31, 1993 shall not include any amount in excess of the amount allowable under Code Section 401(a)(17), which is $150,000 for 1994. This definition shall apply for calendar years beginning after May 14, 1990, see Exhibit A for the definition which applies for calendar years beginning before May 14, 1990. 3.12. COVERED COMPENSATION -- means for each Participant as of any Determination Date, 1/12 of the average (without indexing) of the "taxable wage - 6 - 14 bases" in effect under the Social Security Act for each calendar year during the 35 year period ending with the last day of the calendar year in which he attains (or will attain) his "social security retirement age," determined by assuming that the "taxable wage base" for all future years shall be the same as the "taxable wage base" in effect as of the beginning of the Plan Year which includes the Determination Date. A Participant's Covered Compensation for a Plan Year after the 35 year period is the Participant's Covered Compensation for the Plan Year during which he attained "social security retirement age," and a Participant's Covered Compensation for a Plan Year before the 35 year period is the "taxable wage base" in effect as of the beginning of that Plan Year. For purposes of this definition, the term "taxable wage base" means for any Plan Year the contribution and benefit base in effect under Section 230 of the Social Security Act at the beginning of such Plan Year and the term "social security retirement age" means age 65 for a Participant born before January 1, 1938; age 66 for a Participant born after December 31, 1937; and age 67 for a Participant born after December 31, 1954. 3.13. DETERMINATION DATE -- means the date as of which a Participant's Accrued Benefit is determined under this Plan or, if earlier, the most recent date the Participant terminated employment as an Eligible Employee. 3.14. EARLY RETIREMENT DATE -- means (a) the first day of the calendar month coinciding with or next following the later of (1) the date on which the Participant reaches age 55 or (2) the date on which the Participant completes 10 full years of Vesting Service, provided the Participant is an Employee on such date, or (b) a Participant's early retirement date a set forth in Exhibit A. 3.15. ELIGIBLE EMPLOYEE -- means for each Plan Year each Employee of an Employer other than (a) an Employee who is treated as such solely by reason of the "leased employee" rules set forth in Code Section 414(n), (b) an Employee who is a member of (or who is represented by) a collective bargaining unit which has failed to reach an agreement with his Employer that he be eligible to participate in this Plan, (c) an Employee who is a non-resident alien and who receives no earned income from an Employer from sources within the United States (as described more fully in Code Section 410(b)(3)(C)), - 7 - 15 (d) an Employee (other than an Employee of Lanier Puerto Rico, Inc.) who works primarily outside the United States and who is paid under a payroll system which is not linked electronically to the payroll system for Employees who work primarily within the United States; and (e) an Employee who is classified on the personnel records of an Employer as employed in a temporary, summer, or casual part-time position for short-term workload, which employment is intended to terminate upon completion of such assignment. 3.16. EMPLOYEE -- means a person (a) who is employed and paid as a full-time, part-time, regular or temporary employee of an Affiliate or (b) who is treated as such under the "leased employee" rules set forth in Code Section 414(n). 3.17. EMPLOYER -- means the Plan Sponsor, Lanier Puerto Rico, Inc., and each other Affiliate which the Board designates in writing as such from time to time. 3.18. EMPLOYMENT COMMENCEMENT DATE -- means the first date on which an Employee first performs an Hour of Service or, if a former Employee is reemployed after he has a Break in Service, the first date on which the reemployed Employee first performs an Hour of Service after such Break in Service. 3.19. EMPLOYMENT TERMINATION DATE -- means for each Employee the earlier of (a) the date such Employee quits, retires, dies or is discharged in accordance with the personnel policy of an Affiliate or (b) the date on which a 12 consecutive month period ends during which he did not perform an Hour of Service. 3.20. ERISA -- means the Employee Retirement Income Security Act of 1974, as amended, or any successor statute and, in the event an amendment to ERISA renumbers a section of ERISA referred to in this Plan, any such reference to such section automatically shall become a reference to such section as renumbered. 3.21. HARRIS/LBP PLAN -- means the Harris/Lanier Retirement Plan and Trust Agreement as last amended and restated effective as of January 1, 1988. See Exhibit A for the substantive provisions of the Harris/LBP Plan which are effective for periods before October 1, 1989. 3.22. HOUR OF SERVICE -- means each hour for which an Employee is directly or indirectly paid or entitled to payment for the performance of duties as an Employee. 3.23. NAMED FIDUCIARY -- means the person or persons described in Section 9.1. - 8 - 16 3.24. NORMAL RETIREMENT AGE -- means except as set forth in Exhibit A, the date a Participant reaches age 65 and completes 5 Years of Service. 3.25. NORMAL RETIREMENT DATE -- means for each Participant the first day of the calendar month immediately following or coincident with the date he reaches Normal Retirement Age. 3.26. PARTICIPANT -- means an Eligible Employee who has become a participant in this Plan in accordance with Section 4 or a former Eligible Employee who is entitled to receive benefits under this Plan. 3.27. PARTICIPATION REQUIREMENT -- means the later of the completion of one Year of Service or the attainment of age 21. 3.28. PLAN -- means this Lanier Worldwide, Inc. Pension Plan as set forth in this document and all amendments to this document and, for periods prior to October 1, 1989, the Harris/3M Document Products, Inc. Pension Plan as last amended and restated effective as of July 1, 1987. 3.29. PLAN SPONSOR -- means Lanier Worldwide, Inc. and any successor to such corporation. 3.30. PLAN YEAR -- means the fiscal year ending June 30. See Exhibit A for the Plan Year of the Harris/LBP Plan prior to its merger into this Plan. 3.31. SPOUSE -- means the person who is the Participant's lawful spouse on the earlier of (a) his Annuity Starting Date or (b) his date of death. 3.32. TRA 86 REQUIREMENTS -- means all applicable requirements of the Tax Reform Act of 1986, the Omnibus Budget Reconciliation Act of 1986, the Omnibus Budget Reconciliation Act of 1987, the Technical and Miscellaneous Revenue Act of 1988 and those requirements treated by the IRS as subject to Section 1140 of the Tax Reform Act of 1986 as well as any technical corrections to those requirements contained in the Revenue Reconciliation Act of 1989. 3.33. TRUST AGREEMENT -- means the Harris Corporation Master Pension Trust Agreement, a copy of which is attached as Exhibit B, as may be amended from time to time. 3.34. TRUST FUND -- means the trust fund created in accordance with the Trust Agreement. 3.35. TRUSTEE -- means the person or persons acting from time to time as the trustee for the Trust Fund. - 9 - 17 3.36. VESTED DATE -- except as provided in Exhibit A, means for each Employee the earlier of the date on which he (a) completes 5 full years of Vesting Service, or (b) reaches Normal Retirement Age as an Employee. 3.37. VESTING SERVICE -- means for, each Employee as of any Determination Date, such Employee's Years of Service as described in Section 3.38(a) excluding any period of employment completed by an Employee before he reaches age 18. 3.38. YEAR OF SERVICE (a) VESTING AND PARTICIPATION. For vesting and participation purposes the term "Years of Service" is determined in accordance with this Section 3.38(a) (1) PERIOD OF EMPLOYMENT. An Employee's period of employment will be deemed to start on his Employment Commencement Date and will end on the first day of his first Break in Service following that Employment Commencement Date. An Employee will receive credit for one Year of Service for each 12 consecutive month period beginning on his Employment Commencement Date and on each anniversary thereof during which he is an Employee or has not begun a Break in Service. Thus, an Employee will receive credit for vesting and participation purposes for each day of employment and for each day of any separation from service due to an absence or termination of employment after his Employment Commencement Date and before the first day of his first Break in Service. (2) TERMINATION/REEMPLOYMENT. Except as provided in Section 3.38(a)(3), if an Employee terminates employment and is reemployed more than 12 months after such Employment Termination Date, his Years of Service shall be determined by aggregating the service completed in each period of employment in accordance with the following rules: (i) FULL YEARS -- First determine the number of completed 12 consecutive month periods completed in each period of employment. (ii) EXTRA MONTHS - Next determine the number of completed months of employment in each period of employment in excess of full years of employment in each - 10 - 18 such period and aggregate such months into additional full years of employment on the basis that each month taken into account shall be considered as 1/12 of a year. For this purpose employment from the anniversary of an Employment Commencement Date to the immediately preceding date in the next succeeding month will be treated as a completed month of employment. (iii) EXCESS DAYS - Next determine the number of days of employment in each period of employment in excess of completed months of employment and aggregate those additional days into additional months of employment on the basis that 30 days of such employment equals one month. (3) RULE OF PARITY FOR 6 BREAKS IN SERVICE -- Notwithstanding the rules set forth in Section 3.38(a)(2), if an Employee has a Break in Service, his employment in any period of employment completed before the Break in Service shall not be aggregated with employment completed after the Break in Service if (i) he terminated employment before his Vested Date and the number of his consecutive Breaks in Service exceeds the greater of (A) 6 or (B) his number of Years of Service completed before his most recent Break in Service, or (ii) he had at least two consecutive Breaks in Service (without regard to whether he terminated employment after his Vested Date) and he failed to complete at least one Year of Service following his reemployment. (4) SERVICE WITH OTHER ENTITIES -- Except as set forth in Exhibit A and Section 3.38(a)(5), no period of employment which an Employee completes as an employee of any other organization whatsoever shall be taken into account under this Plan unless such organization is an Affiliate. (5) SPECIAL RULE FOR HARRIS EMPLOYEES -- Each Employee shall receive credit for periods of employment with Harris Corporation or its affiliates to the extent that such Employee would have received credit for such employment if he had been so employed with the Plan Sponsor without regard to whether Harris Corporation or the affiliate was an Affiliate of the Plan Sponsor at the time such service was completed. However, this provision - 11 - 19 shall have absolutely no effect for employment in Plan Years beginning after June 30, 1992 to the extent it is not permissible under the regulations under Code Section 401(a)(4). (6) SPECIAL RULE FOR JULY 31, 1991 PARTICIPANTS -- Finally, notwithstanding the foregoing, each person who was a Participant on July 31, 1991 shall be deemed to have completed 5 Years of Service for purposes of Section 3.36 when he completes 4 full Years of Service and 11 additional months of employment and to have completed 10 Years of Service for purposes of Section 3.14, Section 5.3(b) and Section 6.3(b) when he completes 9 full Years of Service and 11 additional months of employment. For this purpose, 30 days of employment shall equal one month. (b) BENEFIT ACCRUAL. For benefit accrual purposes, the term "Years of Service" means a Participant's full and fractional years as a Participant and an Eligible Employee determined in accordance with this Section 3.38(b) (1) PERIOD OF EMPLOYMENT. A Participant will receive credit for one Year of Service for each 12 consecutive month period during which he is both a Participant and an Eligible Employee in any "period of employment" described in Section 3.38(a)(1) as modified by this Section 3.38(b)(1). A "period of employment" shall begin on the first day of the first full calendar month in which he is deemed to be a Participant and shall end with the last day of the last full calendar month in which he is deemed to be both a Participant and an Eligible Employee. An Eligible Employee will be deemed to be a Participant for a full calendar month at the end or beginning of a period of employment only if he is both a Participant and an Eligible Employee (or absent from employment as an Eligible Employee) on at least 15 consecutive days in such calendar month. An Eligible Employee will receive credit for benefit accrual purposes during a period of employment for all employment as an Eligible Employee and for any separation from service due to an absence from employment as an Eligible Employee provided he returns to employment as an Eligible Employee within 12 months of the first day of such absence. A Participant will receive credit for 1/12th of one Year of Service for each full calendar month of employment in excess of a full year of employment. - 12 - 20 (2) TERMINATION/REEMPLOYMENT. If a Participant terminates employment as an Eligible Employee and is thereafter reemployed as such, his Years of Service and fractional Years of Service shall be determined by aggregating the number of full years in each period determined, first, in accordance with Section 3.38(b)(1) and, second, by aggregating the additional months in each period (also determined in accordance with Section 3.38(b)(1)) converting those months into years on the basis that each month equals 1/12th of one Year of Service. (3) RULE OF PARITY FOR 6 BREAKS IN SERVICE. Notwithstanding the rules set forth in Section 3.38(b)(2), if an Employee has a Break in Service, his employment in any period of employment completed before the Break in Service shall not be aggregated with employment completed after his reemployment if (A) he terminated employment before his Vested Date and the number of his consecutive Breaks in Service exceeds the greater of (A) 6 or (B) his number of Years of Service completed before his most recent Break in Service, or (B) he had at least two consecutive Breaks in Service (without regard to whether he terminated employment after his Vested Date) and he failed to complete at least one Year of Service following his reemployment. Section 4 PARTICIPATION ------------- 4.1. GENERAL RULE. Each Eligible Employee shall become a Participant on the first day of the month which immediately follows or is coincident with the date he satisfies the Participation Requirement. 4.2. TRANSFERRED EMPLOYEE. Each individual who is transferred to the employment of an Employer from an Affiliate which is not an Employer pursuant to transfer policies as described in the personnel manuals of the Employer and the Affiliate shall become a Participant on the later of (a) the date of his transfer or (b) the first day of the month coincident with or next following his satisfaction of the Participation Requirement provided he is employed as an Eligible Employee on such date. - 13 - 21 4.3. REEMPLOYMENT RULE. (a) PRIOR SERVICE DISREGARDED. If a former Employee terminates employment before his Vested Date under circumstances such that his prior Years of Service are disregarded on his reemployment under the rules described in Section 3.38(a)(3), then such Employee shall be treated under Section 4.1 as a new Employee. (b) PRIOR SERVICE AGGREGATED. If a former Employee is reemployed under circumstances such that his prior Years of Service are aggregated with his Years of Service following reemployment under Section 3.38(a), then he shall begin to participate in accordance with this Section 4.3(b). (1) If he was a Participant prior to his most recent Employment Termination Date, he shall resume participation on the first date following his reemployment that he is an Eligible Employee. (2) If he was not a Participant before his most recent Employment Termination Date, he shall become a Participant on the later of (i) the date on which he becomes eligible to participate under Section 4.1. or (ii) the first date following such reemployment on which he is an Eligible Employee. 4.4. ABSENCE FROM SERVICE. If an Eligible Employee is absent from service during the period which includes the first date on which (but for such absence) he would have become a Participant under Section 4.1 and he subsequently resumes the performance of duties as an Eligible Employee within 12 months after the first date of such absence then he shall become a Participant upon his reemployment retroactive to the date on which he would have become a Participant under Section 4.1. 4.5. PLAN NOT AN EMPLOYMENT CONTRACT. This Plan is not a contract of employment and participation in this Plan shall not give any Employee the right to be retained in the employ of the Plan Sponsor or any Affiliate, nor, upon termination of his employment, to have any interest in the Trust Fund except as expressly provided in this Plan. 4.6. PRE-1988 AGE LIMITATION. See Exhibit A. - 14 - 22 Section 5 BENEFITS -------- 5.1. NORMAL RETIREMENT BENEFITS. Subject to Exhibit A, a Participant who terminates employment as an Employee on or after his Normal Retirement Age shall be entitled to receive a monthly benefit equal to the greater of (a) his "early retirement benefit" under this Plan determined in accordance with Code Section 411(a)(9) and the regulations under Code Section 411(a)(9); or (b) his Accrued Benefit determined as of the date he actually terminates employment. Any benefit determined under this Section 5.1 shall be paid to such Participant in accordance with Section 6 no earlier than his Normal Retirement Date. 5.2. EARLY RETIREMENT BENEFITS. (a) GENERAL. Subject to Exhibit A, a Participant who terminates employment as an Employee on or after his Early Retirement Date and before his Normal Retirement Date shall be entitled to receive a monthly benefit equal to his Accrued Benefit determined as of the date he terminates employment. Payment of such benefit shall be scheduled to commence in accordance with Section 6 as of his Normal Retirement Date, if he is then living. (b) EARLY COMMENCEMENT. A Participant who is eligible for a benefit under this Section 5.2 may elect to begin receiving his benefit under this Section 5.2 as of the first day of any calendar month before his Normal Retirement Date; provided (1) his employment actually terminates on or before such date and (2) a properly completed election to begin receiving benefits is filed with the Plan Sponsor within the 90-day period ending on such date. A Participant who has made an election under this Section 5.2 may revoke a previous election and make a new election prior to the date payments were scheduled to commence under the previous election subject to the conditions of the preceding sentence. (c) EARLY COMMENCEMENT REDUCTION FACTOR. If the payment of a Participant's benefit under this Section 5.2 begins before his Normal Retirement Date pursuant to an election under Section 5.2(b), then, subject to Exhibit A, such benefit shall be a percentage of the Accrued Benefit which otherwise - 15 - 23 would be payable to him at his Normal Retirement Date. The percentage shall be determined in accordance with the following table: EARLY COMMENCEMENT REDUCTION FACTOR -----------------------------------
PARTICIPANT'S ATTAINED PERCENTAGE OF ACCRUED AGE AT PAYABLE AT ANNUITY STARTING DATE NORMAL RETIREMENT DATE --------------------- ---------------------- 65 100% 64 99% 63 97% 62 92% 61 86% 60 80% 59 74% 58 68% 57 62% 56 56% 55 50%
5.3. VESTED BENEFITS. (a) GENERAL. Subject to Exhibit A, a Participant whose employment as an Employee terminates on or after his Vested Date but before his Early Retirement Date shall be entitled to receive a monthly benefit, which shall be equal to his Accrued Benefit determined as of the date on which his employment terminates. Payment of such benefit shall be scheduled to commence in accordance with Section 6 as of his Normal Retirement Date, if he is then living. Subject to Exhibit A, a Participant whose employment terminates before his Vested Date shall not be entitled to any benefit under this Plan. (b) EARLY COMMENCEMENT. A Participant who is eligible for a benefit under Section 5.3(a) and who has completed at least 10 years of Vesting Service may elect to begin receiving his benefit under this Section 5.3 reduced in accordance with Section 5.3(c) as of the first day of any month coinciding with or following the date on which he reaches age 55 and before his Normal Retirement Date; provided (1) his employment actually terminates on or before such date and (2) a properly completed election is filed with the Plan Sponsor within the 90-day period ending on such date. A Participant who has made an election under this Section 5.3(b) may revoke previous election - 16 - 24 and make a new election prior to the date payments were scheduled to commence under his previous election subject to the conditions of the preceding sentence. (c) EARLY COMMENCEMENT REDUCTION. If the payment of a Participant's benefit under this Section 5.3 begins before his Normal Retirement Date pursuant to an election under Section 5.3(b), then, subject to Exhibit A, such benefit shall be the Actuarial Equivalent of the Accrued Benefit which otherwise would be payable to him as of his Normal Retirement Date. 5.4. DISABILITY RETIREMENT BENEFIT. (a) AT NORMAL RETIREMENT DATE. A Participant who becomes totally and permanently disabled, as described in Section 5.4(b), while he is an Eligible Employee and on or after the date on which he completes 10 years of Vesting Service, shall be entitled to receive a monthly disability benefit, the payment of which shall be scheduled to commence in accordance with Section 6 as of his Normal Retirement Date, if he is then living and if such total and permanent disability has been continuous to his Normal Retirement Date. The amount of the monthly benefit under this Section 5.4 shall be equal to his Accrued Benefit determined as of his Normal Retirement Date based on the following assumptions: (1) his Covered Compensation determined as of the date his employment terminates by reason of disability, (2) the Benefit Service which he would have completed as of his Normal Retirement Date if his Benefit Service had continued to such date, and (3) the Average Compensation which he would have had at his Normal Retirement Date if he had continued to receive annual Compensation after his employment terminates by reason of disability and through his Normal Retirement Date equal to his actual Compensation (i) for the last calendar year before the date his employment terminates by reason of disability or (ii) for the calendar year in which his employment terminates by reason of disability, whichever is greater. (b) DEFINITION OF TOTAL AND PERMANENT DISABILITY. A Participant shall be considered to be totally and permanently disabled for purposes of this Plan if he suffers a physical or mental impairment which (1) qualifies him for a monthly disability insurance benefit under the Social Security Act, - 17 - 25 (2) wholly prevents him from holding any substantially gainful employment and (3) which can be expected to result in death or to be of long continued and indefinite duration. A Participant shall not be considered to be totally and permanently disabled for purposes of this Plan, however, if the Plan Sponsor determines that his disability is a result of any of the following: (i) injury or disease sustained by the Participant while willfully participating in acts of violence, riots, civil insurrections or while committing a felony; (ii) injury or disease sustained by the Participant while serving in any armed forces or as the result of warfare or any act of war, declared or undeclared unless the Plan Sponsor determines that such injury or disease was sustained while performing services as an Employee; (iii) injury or disease sustained by the Participant while working for a person other than an Affiliate and arising out of such work; or (iv) intentional, self-inflicted injury. (c) PROOF OF DISABILITY. The Participant shall provide evidence that he is eligible for disability benefits under the Social Security Act that such eligibility is retroactive to the date his employment terminates and that he continues to be eligible for such disability benefits through his Annuity Starting Date or his date of death, if earlier. Such proof must be provided as soon as practical after the Participant is determined eligible for Social Security disability benefits and prior to payment of any benefits under this Plan. The decision of the Plan Sponsor as to the existence and continuation of a total and permanent disability shall be final and binding. (d) EARLY COMMENCEMENT. A Participant who is eligible for a benefit under Section 5.4(a) and continues to be so disabled through the date which would have been his Early Retirement Date (if he had continued to be employed as an Employee) may elect in writing to begin receiving his benefit under this Section 5.4 as of the first day of any month coinciding with or following the date which would have been his Early Retirement Date and before his Normal Retirement Date; provided a properly completed election is filed with the Plan Sponsor within the 90-day period ending on such date. If a disabled Participant elects early commencement of his - 18 - 26 benefit under this Section 5.4(d), the amount of such benefit shall be based on the following: (1) his Covered Compensation determined as of the date his employment terminates by reason of disability, (2) the Benefit Service which he would completed as of his Annuity Starting Date under this Section 5.4(d) if his Benefit Service had continued to the date of early commencement, and (3) the Average Compensation which he would have had as of his Annuity Starting Date under this Section 5.4(d) if he had continued to receive annual Compensation after his employment terminates by reason of disability and through the date of early commencement equal to his actual Compensation (i) for the last calendar year before the date his employment terminates by reason of disability or (ii) for the calendar year in which his employment terminates by reason of disability, whichever is greater. If the payment of a Participant's benefit under this Section 5.4 begins before his Normal Retirement Date pursuant to an election under this Section 5.4(d), such benefit shall be subject to the applicable early commencement percentage reduction factor set forth in Section 5.2(c). (e) SURVIVOR BENEFITS. No survivor benefits shall be payable on behalf of a disabled Participant who dies prior to his Annuity Starting Date unless and to the extent preretirement survivor benefits are payable on behalf of such Participant under Section 7. (f) TERMINATION OF DISABILITY. If a Participant's total and permanent disability ceases prior to his Annuity Starting Date for any reason other than death, and if the Participant returns or offers to return to the employment of an Employer or an Affiliate within 90 days after his disability ceases, then, for purposes of determining his eligibility to receive benefits under the Plan upon his subsequent termination of employment and the amount of such benefits, the period during which he was totally and permanently disabled shall be included in his Benefit Service and he shall be treated as if he had received annual Compensation during such period equal to his actual Compensation (i) for the last calendar year before the date his employment terminates by reason of disability or (ii) for the calendar year in which his employment terminates by reason of disability, whichever is greater. - 19 - 27 If such Participant does not return or offer to return to the employment of an Employer or an Affiliate within such 90-day period, his eligibility to receive benefits and the amount of such benefits, if any, shall be determined as if his employment had terminated (on the date his employment terminated as a result of such disability) for reasons other than disability. 5.5. SUSPENSION OF BENEFITS. (a) REEMPLOYMENT. The payment of benefits to a Participant under this Plan (before or after the Participant's Normal Retirement Age) shall be suspended subject to the terms and conditions of this Section 5.5 if, and as of the date, the Participant is reemployed as a full-time Employee (as determined in accordance with the payroll records of the Employer). In the case of a Participant who was reemployed as a full-time Employee and whose benefits were temporarily suspended prior to August 1, 1991, the Committee shall provide written notice of such suspension as described in Section 5.5(c) to each such Participant during the month of August 1991 and the Committee shall make the adjustment provided in Section 5.5(d) for such Participant as of the date he actually retires for each calendar month in which the Participant's benefits were temporarily suspended. If the Participant is not classified on the payroll as a full-time Employee upon such reemployment, the benefit payable to the Participant shall continue to be paid uninterrupted as adjusted in accordance with Section 5.6(d). (b) CONTINUED EMPLOYMENT. If a Participant continues to work as a full-time Employee after the Participant's Normal Retirement Age, payment of the Participant's benefits under this Plan shall be suspended subject to the terms and conditions of this Section 5.5 while the Participant is so employed, and such suspension shall commence as of the Participant's Normal Retirement Date. In the case of a Participant who continued to work as a full-time Employee after his Normal Retirement Age and whose benefits were temporarily suspended prior to August 1, 1991, the Committee shall provide written notice of such suspension as described in Section 5.5(c) to each such Participant during the month of August 1991 and the Committee shall make the adjustment provided in Section 5.5(d) for such Participant as of the date he actually, retires for each calendar month in which the Participant's benefits were temporarily suspended. The benefit of each Participant who continues to work as an Employee after the Participant's Normal Retirement Age but who is not classified as a full-time Employee automatically shall be determined and payment shall commence to the Participant as of the Participant's Normal Retirement - 20 - 28 Date. Such benefit shall thereafter be adjusted in accordance with Section 5.6(d). If the employment status of a Participant who is receiving annuity benefits under this Plan and who is classified as other than a full-time Employee changes to that of a Participant who is classified as a full-time Employee, then notice shall be provided to such Participant as described in Section 5.5(c) and his benefits shall be suspended subject to the terms and conditions of this Section 5.5 while the Participant is so employed. Alternatively, if the employment status of a Participant who is classified as a full-time Employee and whose benefits are suspended under this Section 5.5 changes to that of an other than full-time Employee, then benefit payments shall commence to such Participant as soon as practicable after the Plan Sponsor receives notice of such change and such benefit shall thereafter be adjusted in accordance with Section 5.6(d). (c) SUSPENSION NOTICE. The Committee shall provide written notice to each Participant whose benefits are suspended under this Section 5.5 by personal delivery or by first class mail during the first calendar month in which such benefits are suspended. Such notice shall be based on the applicable requirements set forth in the Department of Labor regulations under ERISA Section 203. (d) ACTUARIAL ADJUSTMENT FOR CERTAIN MONTHS. (1) FOLLOWING RECEIPT OF SUSPENSION NOTICE. If a Participant's benefits are suspended for any month following receipt of suspension notice described in Section 5.5(c) and the Participant received compensation for employment on less than 8 days in such month, then the benefits payable to him when benefits commence or recommence shall be increased by the Actuarial Equivalent of the benefit which would have been payable to the Participant during such month as a result of his prior retirement or, if he continued in employment after his Normal Retirement Age, the benefit which would have been payable if he had begun receiving benefits on his Normal Retirement Date. No such adjustment shall be made for any Participant under this Section 5.5(d)(1) unless such Participant notifies the Plan Sponsor that an adjustment is due for such months and the Plan Sponsor actually receives such notice. (2) PRIOR TO RECEIPT OF SUSPENSION NOTICE. If a Participant's benefits are suspended in any month prior to his Normal - 21 - 29 Retirement Age and the Participant did not receive the suspension notice described in Section 5.5(c) during or prior to such month, then the benefits payable to him when benefits commence or recommence shall be increased by the Actuarial Equivalent of the benefits which otherwise would have been payable to him as a result of his prior retirement during the months prior to receipt of such notice and prior to his Normal Retirement Age. If a Participant's benefits are suspended in any month after his Normal Retirement Age and the Participant did not receive the notice described in Section 5.5(c) during or prior to such month, then the benefit payable to him when benefits commence or recommence shall be equal to the greater of (i) his Accrued Benefit determined as of such date (calculated in accordance with Section 5.6 if applicable) as adjusted in accordance with this Section 5.5(d) or (ii) his Accrued Benefit determined as of his Normal Retirement Date actuarially adjusted in accordance with the factors set forth in Section 5.5(d)(3) to the date such benefits first commence or recommence. (3) ACTUARIAL EQUIVALENCE. Actuarial Equivalence shall be determined as of the date as of which benefits commence or recommence following a suspension using the interest rate in Section 3.2(b)(1) and the mortality table described in Section 3.2(a). 5.6. CALCULATION OF ADDITIONAL ACCRUED BENEFIT FOLLOWING INITIAL COMMENCEMENT OF BENEFITS. (a) GENERAL. Except as provided in Section 5.6 below, the Accrued Benefit attributable to any period of employment following commencement of benefits shall be calculated by reducing (1) the Participant's Accrued Benefit attributable to his total Benefit Service and Average Compensation determined as of the date benefits are scheduled to recommence or the date as of which an adjustment to such benefit is made by (2) the Accrued Benefit determined as of the immediately preceding benefit commencement date. (b) ANNUITY-BENEFITS SUSPENDED. If the Accrued Benefit determined as of the immediately preceding benefit commencement date was paid in the form of an annuity, the Accrued Benefit payable upon recommencement shall be the sum of (1) the Accrued Benefit payable at the immediately preceding benefit commencement date reduced by any early commencement reduction factors applicable to such earlier commencement date, (2) the additional Accrued Benefit payable as a result of employment following such benefit commencement calculated in accordance with Section 5.6(a) reduced by applicable early commencement - 22 - 30 reduction factors as of the date of recommencement and (3) any adjustment required under Section 5.5(d). Such Accrued Benefit shall be paid upon his subsequent retirement or when benefits commence as a result of his employment as other than a full-time Employee or his reaching age 70 1/2. The form of benefit shall be determined in accordance with Section 6.1(a) unless the Participant elects, in accordance with the election procedures set forth in Section 6.2, to receive an optional form. (c) LUMP SUM - BENEFITS SUSPENDED. If the Accrued Benefit determined as of the immediately preceding benefit commencement date was paid in a lump sum before August 1, 1991 and such Participant was reemployed before August 1, 1991, then the Accrued Benefit payable on recommencement shall be the sum of (1) the additional Accrued Benefit calculated in accordance with Section 5.6(a) reduced by applicable early commencement reduction factors and (2) any adjustment required under Section 5.5(d). Such benefit shall be paid upon his subsequent retirement or when benefits commence as a result of his employment as other than a full-time Employee or his reaching age 70 1/2. The form of benefit shall be determined under Section 6.1(a) unless the Participant elects in accordance with the election procedures set forth in Section 6.2, to receive an optional form. (d) ADJUSTMENT WHERE BENEFITS NOT SUSPENDED. If a Participant is reemployed or continues in employment after his Normal Retirement Age and his benefits are not suspended, then his additional Accrued Benefit shall be calculated as of December 31 following his Normal Retirement Age in accordance with Section 5.6(a) to reflect any additional accruals since the date as of which his benefit was last determined. Such additional Accrued Benefit shall be paid or begin to be paid in January following such December 31. Such additional Accrued Benefit shall be paid in the same form as the benefit which was not suspended assuming the Participant's spouse properly consented to the form of the benefit currently being paid (or, in the case of a lump sum, which was previously paid before August 1, 1991 and such Participant was reemployed before August 1, 1991) to such Participant in accordance with the procedures set forth in Section 6.2, if applicable, on or after the Participant reached Normal Retirement Age. Otherwise, such adjustment shall be paid in accordance with Section 6.1(a) unless the Participant elects in accordance with the election procedures set forth in Section 6.2 to have the adjustment paid in the same form as the benefit which was not suspended. (e) CERTAIN LUMP SUM PAYMENTS. If a Participant received a lump sum distribution after July 31, 1991 as a result of his termination of - 23 - 31 employment and he is thereafter reemployed as an Eligible Employee or if a Participant received a lump sum distribution before August 1, 1991 as a result of his termination of employment but is reemployed as an Eligible Employee after July 31, 1991, then he shall be treated as a new Participant for purposes of determining his Accrued Benefit following his reemployment. Section 6 BENEFIT PAYMENT FORMS --------------------- 6.1. NORMAL PAYMENT FORMS. (a) ANNUITIES. Except as provided in Section 6.1(b) and unless a Participant otherwise elects in accordance with Section 6.2, a Participant's entire nonforfeitable benefit under the Plan attributable to employer and employee contributions shall be paid (1) in the form of a single life annuity option (as described in Section 6.3(b)(1)) to a Participant who does not have a Spouse on his Annuity Starting Date, or (2) subject to Exhibit A, in the form of a 50% joint and survivor annuity option (as described in Section 6.3(b)(3)) to the Participant if the Participant has a Spouse on his Annuity Starting Date. (b) LUMP SUM CASH OUT. If the Actuarial Equivalent single sum value of a Participant's entire nonforfeitable benefit under this Plan attributable to employer and employee contributions as determined either (1) as soon as practicable after he terminates employment and the Plan Sponsor receives all of the data necessary to make the calculation or (2) as of his Annuity Starting Date is $3500 or less, then, the Plan Sponsor shall direct the immediate payment of the Actuarial Equivalent single sum value of such benefit in a single sum in cash as soon as practicable after the date his employment terminates or, if applicable, as of his Annuity Starting Date in lieu of any other benefit under this Plan. If the Actuarial Equivalent lump sum value of a Participant's nonforfeitable benefit under the Plan attributable to employer and employee contributions is zero as of the date he terminates employment, - 24 - 32 he shall be deemed to have received a distribution of such nonforfeitable benefit when he terminates employment. If an individual is deemed to receive a distribution under this Section 6.1(b), his forfeited employer derived benefit automatically shall be restored if he is reemployed as an Eligible Employee before he incurs 6 consecutive Breaks in Service. (c) EMPLOYEE CONTRIBUTIONS. See Exhibit A. 6.2. ELECTION PROCEDURES AND TIMING. (a) GENERAL. Subject to Section 6.2(b), a Participant who is eligible for an annuity form of a benefit under Section 6.1(a) may elect on a properly completed form delivered to the Plan Sponsor at any time within the 90-day period ending on his Annuity Starting Date to have his benefit paid in one of the Actuarial Equivalent optional benefit payment forms described in Section 6.3 or, if applicable, Exhibit A. (b) PROCEDURES AND SPOUSAL CONSENT. The Plan Sponsor shall (consistent with the regulations under Code Section 417) furnish to each Participant no less than 30 days and no more than 90 days before his Annuity Starting Date such written explanation of the normal payment forms, the optional payment forms and the Participant's rights under Code Section 401(a)(11), Section 411(a)(11), and Section 417 as may be required under such sections. Any such election or revocation of an election under this Section 6.2 shall be made by delivering the properly completed form provided for this purpose to the Plan Sponsor, and the last properly completed form delivered to the Plan Sponsor before the end of the 90-day period described in Section 6.2(a) shall control, the payment of benefits under this Plan. A Spouse's properly executed and notarized consent to the payment of Plan benefits in one of the optional payment arrangements shall be irrevocable with respect to such Spouse under this Plan. (c) TIMING. The payment of a Participant's benefit shall be made as of his Normal Retirement Date unless the Participant properly elects early commencement of such benefit under Section 5 or Exhibit A. Actual payment of the Participant's benefit shall begin as soon as practicable after the Participant's Annuity Starting Date and in no event later than 60 days after the end of the Plan Year in which he or she reaches Normal Retirement Age provided he or she actually retired on or before such date. Payments which do not actually commence on the Participant's Annuity - 25 - 33 Starting Date shall be adjusted so that the first payment includes all amounts due through the date of such payment. If a Participant does not retire or terminate employment on or before his "required beginning date," actual payment of his or her benefits shall begin no later than his "required beginning date." (d) REQUIRED BEGINNING DATE. Except as otherwise provided in this Section 6.2(d), a Participant's "required beginning date" shall be the April 1 following the calendar year in which he reaches age 70 1/2. Notwithstanding the foregoing, if a Participant attained age 70 1/2 prior to January 1, 1988 and was not a "5%-owner" (as described in Code Section 416(i)) at any time during the Plan Year ending in the calendar year in which he reaches age 66 1/2 or any subsequent year, his "required beginning date" shall be the April 1 immediately following the end of the Plan Year in which he or she actually retires or first becomes a 5%-owner, whichever comes first. 6.3. DESCRIPTION OF OPTIONS. (a) ACTUARIAL EQUIVALENT AND OTHER SPECIAL RULES. (1) ACTUARIAL EQUIVALENT. The amount payable under an optional payment arrangement under this Section 6.3, shall be equal to the Actuarial Equivalent of the benefit to which the Participant otherwise would be entitled in the single life annuity form described in Section 6.3(b)(1). (2) MINIMUM INCIDENTAL DEATH BENEFIT RULE. No optional payment arrangement may be selected if the value of the payments to the Participant under such option (determined as of the Annuity Starting Date) would not comply with the minimum distribution requirements of Code Section 401(a)(9)(G) and the regulations under that section. (3) DEATH. A benefit shall be paid in accordance with the terms of any validly elected option, provided that an election under which the life expectancy of the Participant's designated Beneficiary is used to calculate the amount of the benefit shall be void, and the Participant shall be entitled to make another election, if his designated Beneficiary dies before the Participant's Annuity Starting Date. - 26 - 34 (4) RECOMPUTATION OF PERIOD CERTAIN. Any period certain shall be reduced to equal the life expectancy of the Participant (or, if greater, the joint life expectancy of the Participant and his designated Beneficiary) as determined in accordance with Code Section 401(a)(9) as of his Annuity Starting Date if such life expectancy or joint life expectancy is less than the period selected. (b) PAYMENT OPTIONS. The following optional payment forms are available to a Participant after Normal Retirement Age or after age 55 with at least 10 years of Vesting Service. (1) SINGLE LIFE ANNUITY OPTION -- means a monthly benefit payable only during the lifetime of the Participant. (2) 10 YEAR PERIOD CERTAIN AND CONTINUOUS ANNUITY OPTION -- means a reduced monthly benefit (relative to Section 6.3(b)(1)) which shall be payable during the lifetime of the Participant and shall, if the Participant dies within 10 years of his Annuity Starting Date, continue to be paid to his designated Beneficiary for the balance of such 10-year period. (3) JOINT AND SURVIVOR ANNUITY OPTION -- means a reduced monthly benefit (relative to Section 6.3(b)(1)) which shall be payable during the lifetime of the Participant and shall continue to be paid after the death of the Participant to the person designated as his Beneficiary, if such Beneficiary survives him, in an amount equal to 100% or 50% of the monthly benefit payable during the lifetime of the Participant, (as the Participant shall designate) for such Beneficiary's lifetime. Unless a married Participant and such Participant's Spouse elect otherwise in accordance with Section 6.2 and subject to Exhibit A, a married Participant's Beneficiary shall be such Participant's Spouse and the normal form of the benefit payable to such Participant automatically shall be the 50% survivor option. (4) LUMP SUM OPTION -- means a single sum distribution. (c) OTHER PAYMENT OPTIONS. See Exhibit A. (d) DIRECT ROLLOVER. Effective January 1, 1993, a Participant or "distributee" may elect at any time to have any portion of an "eligible rollover distribution" paid in a direct rollover to the trustee or custodian of an "eligible retirement plan" specified by the Participant or distributee, whichever is applicable. Payment of a direct rollover in the form of a - 27 - 35 check payable to the trustee or custodian of an eligible retirement plan, for the benefit of the Participant or distributee, may be mailed to the Participant or distributee. For purposes of this Section 6.3(d), the following terms shall have the following meanings: (1) "Distributee means a surviving spouse or a spouse or former spouse who is an alternative payee under a Qualified Domestic Relations Order defined in section 414(p) of the Code. (2) "Eligible retirement plan" means an individual retirement account described in section 408(a) of the Code, an individual retirement annuity described in section 408(b) of the Code, an annuity plan described in section 403(a) of the Code, or a qualified trust described in section 401(a) of the Code that accepts an eligible rollover distribution; provided that if the distributee is a surviving spouse, an eligible retirement plan means an individual retirement account or individual retirement annuity. (3) "Eligible rollover distribution" means any distribution of a Participant's nonforfeitable benefit in a lump sum payment. 6.4. BENEFICIARY. Subject to Section 6.2(b), each Participant shall, on a form provided for this purpose by the Plan Sponsor, (1) designate a person or persons as his Beneficiary to receive any benefits payable in the event of the death of the Participant under any optional form of benefit payment selected by the Participant and (2) designate a secondary Beneficiary to receive benefits, if any, payable under an optional payment form which provides a guaranteed period of payments. A Participant may, from time to time and subject to Section 6.2(b), change his Beneficiary by written notice to the Plan Sponsor, and upon receipt by the Plan Sponsor of such change the rights of all previously designated Beneficiaries to receive any benefits under this Plan shall cease; provided that if the optional form of payment provides a lifetime annuity to the surviving Beneficiary, such Beneficiary may not be changed after the Annuity Starting Date. If the Participant dies before his entire benefit has been distributed to him under a Period Certain Annuity, payments shall be made to his Beneficiary at least as rapidly as the method of distribution to the Participant. If a Participant dies before he has received his benefit attributable to his contributions, if any, under this Plan, the entire benefit payable to a Beneficiary shall be distributed by December 31 of the calendar year which includes the fifth anniversary of the Participant's death. 6.5. NO ESTOPPEL OF PLAN. No person is entitled to any benefit under this Plan except and to the extent expressly provided under this Plan. The fact that - 28 - 36 payments have been made from this Plan in connection with any claim for benefits under this Plan does not (i) establish the validity of the claim, (ii) provide any right to have such benefits continue for any period of time, or (iii) prevent the Plan from recovering the benefits paid to the extent that the Plan Sponsor determines that there was no right to payment of the benefits under this Plan or that there was a mistake in the calculation of benefits under this Plan. Thus, if a benefit is paid under this Plan and it is thereafter determined by the Plan Sponsor that such benefit should not have been paid, or that such benefit was overpaid (whether or not attributable to an error by the Participant, the Plan Sponsor or any other person), then the Plan Sponsor may take such action as the Plan Sponsor deems necessary or appropriate to remedy such situation, including, without limitation, deducting the amount of any overpayment theretofore made to or on behalf of such Participant from any succeeding payments to or on behalf of such Participant or from instituting legal action to recover such overpayments. Conversely, if a benefit is not paid under this Plan and it is thereafter determined by the Plan Sponsor that a benefit should have been paid, or if a benefit is underpaid under this Plan and it is thereafter determined by the Plan Sponsor that such benefit was underpaid, any succeeding benefits payable shall be adjusted to correct such underpayment. 6.6. CLAIMS FOR BENEFITS. Except as provided in Section 6.1(b) and Section 7.1(d), no benefit shall become payable under this Plan unless and until a claim for such benefit is submitted to the Plan Sponsor on a form provided for that purpose by the Participant, Spouse, or Beneficiary entitled to receive such benefit unless the Plan Sponsor determines that a delay might violate the distribution deadlines set forth in Code Section 401(a)(9) and the Plan Sponsor has sufficient information (in the judgment of the Plan Sponsor) to cause the payment of such benefit absent such claim. All claims shall be filed, reviewed and, if applicable, appealed in accordance with the summary plan description for this Plan as in effect from time to time. Section 7 SURVIVOR BENEFIT ---------------- 7.1. PRERETIREMENT SURVIVOR BENEFIT FOR MARRIED PARTICIPANTS. (a) GENERAL. If a Participant dies after his Vested Date but before his Annuity Starting Date, a monthly survivor benefit shall (subject to the terms and conditions of this Section 7.1) be payable on his behalf to the person, if any, who is his Spouse and who survives the Participant, provided such - 29 - 37 person has been legally married to the Participant for the 12-consecutive month period ending on his date of death and such person is not eligible for a benefit under Section 7.2. The benefit, if any, payable under this Section 7.1 shall equal the monthly survivor benefit which would have been payable to such Spouse as if such Participant had (1) retired or terminated his employment on the earlier of (A) his date of death or (B) except for a disabled Participant who remains totally and permanently disabled as described in Section 5.4 through his date of death, his most recent Employment Termination Date; (2) elected to commence receiving his benefit, as of the date payments are scheduled to commence to his Spouse under Section 7.1(c)(1) or, if such Spouse elects early commencement, the date so elected under Section 7.1(c)(2); (3) elected to have his benefits paid in the form of the 50% joint and survivor annuity option (as described in Section 6.3(b)(3)); and (4) died before his Annuity Starting Date. (b) EXCLUSIONS. No survivor benefit shall be payable under this Section 7.1 (1) on behalf of any Participant who dies before his Vested Date or after his Annuity Starting Date; or (2) to any person (i) who is not the Participant's Spouse on his date of death, (ii) who has not been legally married to the Participant for the 12-consecutive month period ending on his date of death, (iii) who is not living on the date as of which the payment is scheduled to commence under Section 7.1(c) or (iv) who is eligible for a benefit under Section 7.2. (c) COMMENCEMENT. (1) NORMAL. Subject to Section 6.6, if a Spouse is eligible for a survivor benefit under Section 7.1(a), payment of such benefit shall be scheduled to commence as of the later of (i) the date which would have been the deceased Participant's Normal Retirement Date (if he had survived) or (ii) the first day of the calendar month following his date of death. - 30 - 38 (2) EARLY. A Spouse who is eligible for a benefit under Section 7.1(a) may file with the Plan Sponsor a written request that payment of such benefit commence before the applicable date described in Section 7.1(c)(1). Payment to such Spouse may commence as of (i) the first date (following his death) as of which the deceased Participant would have been eligible (if he had survived), to begin receiving benefits under Section 5, or (ii) the first day of any calendar month thereafter. In order to elect early commencement, such Spouse must file an election under this Section 7.1(c)(2) within the 90-day period ending on the date as of which the spouse desires the Participant's survivor benefit to commence or, if the Participant died after age 55 and the Spouse elects to commence receiving benefits as of the earliest possible date, within a reasonable period of time (as determined by the Plan Sponsor) following the Participant's date of death. (d) LUMP SUM. If the Actuarial Equivalent single sum value of the survivor benefit payable to a surviving Spouse under Section 7.1(a) is $3500 or less, then payment of such survivor benefit automatically shall be paid to such Spouse in a single sum in cash as soon as practicable after the Participant's date of death. If the Actuarial Equivalent single sum value of a survivor benefit exceeds $3500, the surviving Spouse may file with the Plan Sponsor a written request (made in a manner which satisfies Code Section 417 and within the time period set forth in Section 7.1(c)(2)) that such benefit be paid in a single sum as of the earliest possible benefit commencement date under Section 7.1(c), and such benefit shall be paid to such Spouse in such a single sum as of such date. For purposes of this Section 7.1(d), the single sum value of the survivor benefit shall be determined as soon as practicable after the Participant's death and the Plan Sponsor receives all of the data necessary to make such calculation. 7.2. PRERETIREMENT SURVIVOR ANNUITY FOR PARTICIPANTS WHO TERMINATE EMPLOYMENT AFTER 55 OR ARE DISABLED. (a) GENERAL. If a Participant should die before his Annuity Starting Date either (1) while he is an Employee, but after his Early Retirement Date, or - 31 - 39 (2) while he is totally and permanently disabled as described in Section 5.4, but after his termination of employment by reason of such disability and after attaining age 55 then a monthly survivor benefit shall (subject to the terms and conditions of this Section 7.2) be payable on his behalf to the person, if any, who is his Spouse and who survives the participant; provided such Spouse has been legally married to the Participant throughout the 12-consecutive month period ending on his date of death. (b) AMOUNT. The monthly amount of the survivor annuity payable under this Section 7.2 shall be equal to the monthly survivor benefit which would have been payable to such Spouse under Section 7.1(a) if the Participant had elected the 100% Joint and Survivor Annuity Option under Section 6.3(b)(3) and designated his Spouse as his Beneficiary. (c) EXCLUSIONS. No survivor benefit shall be payable under this Section 7.2 (1) on behalf of any Participant who is not described in Section 7.2(a), or (2) to any person (i) who is not the Participant's Spouse on his date of death, (ii) who has not been legally married to the Participant for the 12-consecutive month period ending on his date of death or (iii) who is not living as of the date as of which payment is scheduled to commence under this Section 7.2. (d) COMMENCEMENT. Subject to Section 6.6, the benefit payable under this Section 7.2 shall be payable at the same time as the benefit payable under Section 7.1 and shall be subject to the single sum distribution rules of Section 7.1(d). 7.3. NO POST RETIREMENT SURVIVOR BENEFITS. No survivor benefit shall be payable under this Plan on behalf of a Participant if he dies after his Benefit Commencement Date unless such benefit is called for under the form of benefit payable to such Participant under Section 6 or Exhibit A as of his date of death. - 32 - 40 Section 8 PLAN FUNDING ------------ 8.1. CONTRIBUTIONS. During the continuation of this Plan and after 1982, the Employers shall pay all costs of this Plan in such amounts and at such times as may be recommended by the Plan's actuary in accordance with a funding method and policy established by the Plan Sponsor which (1) is consistent with the objectives of this Plan and (2) is designed to pay the normal costs of this Plan and to amortize the unfunded past service liability under this Plan over a period of time not longer than is permitted by law. Except as otherwise required under Title IV of ERISA, no Employer shall have any obligation whatsoever to make contributions or otherwise provide for unfunded benefits after this Plan has been terminated or contributions have been discontinued. Forfeitures arising under this Plan shall be applied to reduce the costs of this Plan and shall not operate to increase the benefits otherwise payable to Participants. 8.2. TRUST FUND. The Employers shall pay all contributions to the Trustee, and the Trustee shall hold, invest, manage and distribute such contributions and the increment earnings thereon as the Trust Fund, in accordance with the Trust Agreement, for the exclusive benefit of Participants and their beneficiaries. All of the assets of the Trust Fund shall be available on an on-going basis to pay any of the liabilities of this Plan. 8.3. PROHIBITION AGAINST REVERSION (a) Except as provided in Section 8.3(b), no Employer shall have any present or prospective right, claim, or interest in the Trust Fund or in any contribution made to the Trustee prior to the satisfaction of all liabilities of this Plan with respect to Participants and Beneficiaries. Upon satisfaction of all liabilities to Participants and Beneficiaries, the Employers shall be entitled to a reversion as described in Section 11.3 if this Plan is terminated. For this purpose, the term "liabilities" shall mean benefits actually accrued as of the date of the termination. This Section 8.3 shall not be amended or revoked in any manner whatsoever to the end that any part of the corpus or income of the Trust Fund may be used for or converted for purposes other than for the exclusive benefit of such persons prior to the satisfaction of all liabilities with respect to such persons. (b) Upon direction of the Plan Sponsor, contributions by an Employer shall be returned by the Trustee, if and to the extent such a return is permitted by law, under the following circumstances: - 33 - 41 (1) A contribution which is made by an Employer by a mistake of fact shall be returned to the Employer within one year after the payment of such contribution. (2) A contribution shall be returned to the contributing Employer within one year after the date of denial of the initial qualification of this Plan, all such contributions being hereby conditioned upon continued qualification of this Plan under Code Section 401. (3) A contribution shall be returned to the contributing Employer to the extent that a deduction for such contribution is disallowed under Code Section 404, within one year after the disallowance, all such contributions being hereby conditioned upon being deductible under Code Section 404. An Employer entitled to the return of a contribution in accordance with this Section 8.3(b) may in its discretion waive such right by submitting written notice of such waiver to the Plan Sponsor. Section 9 NAMED FIDUCIARIES AND PLAN SPONSOR ---------------------------------- 9.1. NAMED FIDUCIARIES. The Plan Sponsor shall be the "named fiduciary" responsible for the control, management and administration of this Plan. 9.2. ALLOCATION AND DELEGATION BY NAMED FIDUCIARIES. The Plan Sponsor may by written instrument filed with the records of this Plan, designate a person who is not a Named Fiduciary to carry out any of its responsibilities under this Plan, other than the responsibilities of the Trustee in the management and control of the Trust Fund; provided, however, that no such allocation or designation shall be effective as to any other person until such other person has consented in writing to such designation. 9.3. ADVISERS. The Plan Sponsor, or a person designated by the Plan Sponsor to perform any responsibility of the Plan Sponsor pursuant to the procedure described in Section 9.2, may employ one or more persons to render advice with respect to any responsibility the Plan Sponsor has under this Plan or such person has by virtue of such designation. - 34 - 42 9.4. DUAL FIDUCIARY CAPACITIES. Any person may serve in more than one fiduciary capacity with respect to this Plan, and a fiduciary may be a Participant provided such person otherwise satisfies the requirements for participation under this Plan. 9.5. PLAN SPONSOR POWER AND DUTIES. (a) GENERAL. The Plan Sponsor or its delegate shall have the exclusive responsibility and complete discretionary authority to control the operation, management and administration of this Plan, with all powers necessary to enable it properly to carry out such responsibilities, including (but not limited to) the power to construe this Plan and the Trust Agreement, to determine eligibility for benefits, to resolve all interpretive, operational, equitable and other questions that arise under this Plan, to designate another person as the ERISA "plan administrator" for the Plan and to settle disputed claims. The decisions of the Plan Sponsor on all matters within the scope of its authority shall be final and binding upon all parties to this instrument, Participants, their Spouses and Beneficiaries. (b) RECORDS. All acts and determinations of the Plan Sponsor or its delegate shall be duly recorded and all such records, together with such other documents as may be necessary for the administration of this Plan, shall be preserved in the custody of the Plan Sponsor. (c) INFORMATION. Each Employer shall supply the Plan Sponsor with complete and timely information regarding employment data for each Employee and Participant including, but not limited to, his Compensation, date of death or other termination of employment and such other information as may be required by the Plan Sponsor. (d) RELIANCE. The officers and directors of each Employer shall be entitled to rely upon all information and data contained in any certificate or report or other material prepared by any accountant, attorney or other consultant or adviser selected by the Plan Sponsor to perform services on behalf of this Plan. (e) EXPENSES. All reasonable and proper expenses of this Plan and the Trust Fund, including investment advisory fees and the Trustee's fees as agreed upon by the Plan Sponsor and the Trustee, shall be paid from the Trust Fund by the Trustee unless (1) the payment of such expense would constitute a "prohibited transaction" within the meaning of ERISA Section 406 or Code Section 4975 or (2) the Plan Sponsor pays such expenses. The - 35 - 43 Plan Sponsor may seek reimbursement of any expense which is properly payable by the Trust Fund. Section 10 TRUST FUND AND TRUSTEE ---------------------- The Trust Fund shall be held, administered, controlled and invested by the Trustee subject to the terms of the Trust Agreement for the exclusive benefit of Participants and Beneficiaries. Section 11 TERMINATION, AMENDMENT AND ADOPTION ----------------------------------- 11.1. RIGHT TO TERMINATE. The Plan Sponsor expects this Plan to be continued indefinitely but, of necessity, reserves the right to terminate this Plan or to partially terminate this Plan at any time by action of the Board. Subject to the consent of the Plan Sponsor, an Employer at any time may terminate its participation in this Plan by action of its board of directors and thereby terminate the accrual of benefits under this Plan for its Employees. 11.2. FULL VESTING UPON TERMINATION. Should this Plan be terminated or partially terminated under this Section 11, the Accrued Benefit of each affected Participant who is an Employee on the effective date of such termination or partial termination shall immediately become fully vested and nonforfeitable, subject to the sufficiency of the assets of the Trust Fund to provide such benefits and subject to the provisions of Section 11.3 regarding the allocation of such assets among such benefits. 11.3. ALLOCATION OF ASSETS. Upon a complete termination of this Plan, the Plan Sponsor shall direct the Trustee to allocate the net assets of the Trust Fund among the affected participants and beneficiaries in accordance with ERISA Section 4044. After all the liabilities of this Plan to such Participants and Beneficiaries have been satisfied, any residual assets of the Trust Fund shall be distributed to the Plan Sponsor and the Plan Sponsor shall distribute such residual assets (less the - 36 - 44 amount of any excise tax on such residual assets) among the Employers in accordance with the Plan Sponsor's directions. For this purpose, the term "liabilities" shall mean benefits actually accrued as of the date of the termination. 11.4. MERGER, CONSOLIDATION AND TRANSFER OF ASSETS OR LIABILITIES. In the case of any merger or consolidation of this Plan with, or transfer of assets or liabilities of this Plan to, any other plan, each Participant shall, if such plan then terminated, be entitled to receive a benefit which immediately after the merger, consolidation, or transfer is equal to or greater than the benefit he would have been entitled to receive immediately before the merger, consolidation or transfer (if this Plan had then terminated). 11.5. AMENDMENT. The Plan Sponsor shall have the right at any time and from time to time to amend this Plan in any respect by action of its Board. However, no amendment shall be made which would divert any of the assets of the Trust Fund to any purpose other than the exclusive benefit of participants and beneficiaries and no amendment shall eliminate or reduce an early retirement subsidy or eliminate an optional form of benefit except to the extent permissible under Code Section 411(d)(6). Section 12 RESTRICTIONS ON CERTAIN BENEFITS -------------------------------- 12.1. LIMITATIONS ON ANNUAL BENEFIT. Effective for the 1987 Plan Year and thereafter, notwithstanding any provision of the Plan to the contrary, the annual benefit paid to or on behalf of a Participant shall not exceed the limitations under Code Section 415 as adjusted for the cost of living in accordance with Code Section 415(d) and the regulations under Code Section 415(d) as of January 1 of each limitation year for Participants who are Employees and retired and terminated Participants who are receiving benefits or who are entitled to receive benefits; provided, however, that the Code Section 415 limitations applicable to a benefit which is paid in a single sum shall be the limitations in effect on his Annuity Starting Date and no further benefits shall be payable to or on behalf of a Participant as a result of any cost of living adjustments subsequent to the payment of such single sum benefit. Notwithstanding the foregoing, if the Accrued Benefit of a Participant exceeds the limitations of this Section 12.1 but does not exceed the limitations of Code Section 415 as in effect on December 31, 1986 (including any special grandfather provisions applicable to benefits accrued as of December 31, 1982), then his Accrued Benefit under this Plan shall not be less than his "current accrued benefit" (as such term - 37 - 45 is defined in Section 1106(i)(3) of the Tax Reform Act of 1986) under such plan as of June 30, 1987 or, for a person who was a Participant in the Harris/LBP Plan, December 31, 1986. If a Participant participates in one or more defined contribution plans maintained by an Affiliate and the sum of the "defined benefit fraction" under this Plan and the "defined contribution plan fraction" under such defined contribution plan or plans (as such fractions are described in Code Section 415) is greater than one, his rate of benefit accrual under this Plan shall be frozen or reduced to the extent necessary to cause such sum not to exceed one. For purposes of determining whether the limitations under Code Section 415 have been exceeded with respect to any Participant, the Participant's "compensation," as defined in Code Section 415(c)(3), shall mean Compensation as defined in Section 3.11(a)(ii). 12.2. LIMIT ON BENEFITS OF HIGHEST-PAID EMPLOYEES. (a) RESTRICTED PARTICIPANTS. A Restricted Participant for any Plan Year is a Participant who is among the group of the 25 highly-compensated [within the meaning of Code Section 414(g)] employees or former employees of the Employer with the greatest compensation in the current or any prior Plan Year. (b) APPLICABILITY OF LIMIT. The annual benefit paid to a Restricted Participant will be subject to the limit described below, unless: (1) after the Plan distributes the entire benefit payable to the Restricted Participant, the value of the Plan assets equals or exceeds 110% of the value of current Plan liabilities; or (2) the value of the benefits payable to the Restricted Participant is less than 1% of the value of current Plan liabilities before the distribution; or (3) another exception applies under or with respect to the requirements of Regulations Section 1.401(a)(4)-5(b). (c) LIMIT. If a limit applies to benefits payable to a Restricted Participant, the amount of benefits paid without a security arrangement in any year on behalf of the Participant cannot exceed the amount payable under a straight-life annuity actuarially equivalent to all the Participant's benefits under the Plan, other than a social security supplement, plus the amount of any social security supplement payable in that year. - 38 - 46 (d) SECURITY ARRANGEMENT. To the extent permitted by applicable law, a distribution in excess of the limit may be made to a Restricted Participant if the Restricted Participant provides security for any payments in excess of the limit that is satisfactory to the Plan Administrator. (e) PLAN TERMINATION. In the event of termination of the Plan, the benefits payable to a Restricted Participant will be limited to an amount that satisfies the nondiscrimination requirements of Code Section 401(a)(4). (f) TRANSITION PERIOD. The provisions of paragraphs (a) through (e) above apply to distributions on and after January 1, 1993, provided, however, that any distribution made prior to the Plan Year beginning July 1, 1994 may be made in accordance with the limitations then in effect under Regulations Section 1.401-4(c), including any exceptions available thereunder, e.g., the expiration of restrictions ten years after the date of the establishment or favorable amendment of the Plan. Any security arrangement in effect with respect to a Restricted Participant pursuant to Regulations Section 1.401-4(c) shall continue to apply only if and to the extent required under Regulations Section 1.401(a)(4)-5(b). In particular, any security arrangement may be terminated on certification by the Plan Administrator that: (1) after the Plan distributes the entire benefit payable to the Restricted Participant, the value of the Plan assets equals or exceeds 110% of the value of current Plan liabilities; or (2) the value of the benefits payable to the Restricted Participant is less than 1% of the value of current Plan liabilities before the distribution; or (3) another exception applies under Regulations Section 1.401(a)(4)-5(b). - 39 - 47 Section 13 MISCELLANEOUS ------------- 13.1. SPENDTHRIFT CLAUSE. Except to the extent permitted by law, no benefit, payment or distribution under this Plan shall be subject to the claim of any creditor of a Participant, Spouse or Beneficiary, or to any legal process by any creditor of such person, and no Participant, Spouse or Beneficiary shall have any right to alienate, commute, anticipate, or assign all or any portion of any benefit, payment or distribution under this Plan except to the extent expressly provided in this Plan. This Section 13.1 shall not preclude the enforcement of a federal tax levy made pursuant to Code Section 6331 or the collection of an unpaid tax judgment. 13.2. LEGALLY INCOMPETENT. The Plan Sponsor may in its discretion direct payment (A) to an incompetent or disabled person, whether because of minority or mental or physical disability, (B) to the guardian or to the person having custody of such person or (C) to any person designated or authorized under any state statute to receive such payment on behalf of such incompetent or disabled person, without further liability either on the part of the Plan Sponsor or the Employers for the amount of such payment to the person on whose account such payment is made. 13.3. BENEFITS SUPPORTED ONLY BY TRUST FUND. Any person having any claim for any benefit under this Plan shall look solely to the assets of the Trust Fund and to the Pension Benefit Guaranty Corporation for the satisfaction of such claim. In no event will the Plan Sponsor, the Employers, or any of their officers, directors, or employees be liable in their individual capacities to any person whomsoever for the payment of benefits under the provisions of this Plan. 13.4. DISCRIMINATION. The Plan Sponsor shall administer the Plan in a manner which it deems equitable under the circumstances for all similarly situated Employees, Participants, Spouses and Beneficiaries, including adopting such administrative or other rules as the Plan Sponsor in its discretion deems appropriate for any such persons affected by circumstances such as a sale, acquisition, merger, reorganization, plant closing, layoff, work force reduction or other similar event or transaction; provided, however, the Plan Sponsor shall not permit any discrimination in favor of highly compensated Employees (within the meaning of Code Section 414(q)) which would be prohibited under Code Section 401(a). If for any Plan Year the Plan Sponsor determines that following the terms of the Plan would result in a failure to satisfy the nondiscrimination tests under Code Section 401(a)(4) or the coverage requirements under Code Section 410(b), the Plan Sponsor shall take such action, to the extent permitted under the Code, as it deems appropriate under the circumstances to prevent such failure. - 40 - 48 13.5. CLAIMS. Any payment to a Participant, Spouse or Beneficiary or to their legal representatives or heirs-at-law, made in accordance with the provisions of this Plan, shall to the extent thereof be in full satisfaction of all claims under this Plan against the Plan Sponsor and the Employers, any of whom may require such Participant, Spouse, Beneficiary, legal representative or heirs-at-law, as a condition precedent to such payment, to execute a receipt and release therefor in such form as shall be determined by the Plan Sponsor. 13.6. NONREVERSION. Except as provided in Section 8.3 and Section 11, no part of the Trust Fund shall ever be used for or be diverted to purposes other than for the exclusive benefit of participants and beneficiaries. 13.7. AGENT FOR SERVICE OF PROCESS. The agent for service of process for this Plan shall be the person currently listed in the records of the Secretary of State of Georgia as the agent for service of process for the Plan Sponsor. 13.8. TOP HEAVY PLAN. (a) DETERMINATION. If the Plan Sponsor as of each June 30 ("the determination date") determines that the sum of the present value of the accrued benefits of "key employees" (as defined in Code Section 416(i)) exceeds 60% of the sum of the present value of the accrued benefits of all employees as of such determination date in accordance with the rules set forth in Code Section 416(g), this Plan shall be "top heavy" for the Plan Year which begins on the immediately following July 1. For purposes of this Section 13.8, such present value shall be determined using the mortality table specified in Section 3.2(a) and an interest rate specified in Section 3.2(b)(1) and the present value of the accrued benefit of each Employee as of any determination date shall be equal to the sum of (1) and (2) where (1) equals the present value of such Employee's cumulative accrued benefit under this Plan (determined for this purpose as of the most recent valuation date used for computing plan cost under Code Section 412 which falls within the 12-month period ending on such determination date) plus the present value of any distributions made during the 5 year period ending on such determination date, and (2) equals the present value of his accrued benefit, if any, (determined as of the valuation date which coincides with or precedes the determination date for such plan) plus any distributions made from such plans during the 5 year period ending on such determination date under - 41 - 49 (i) each other qualified plan (as described in Code Section 401(a)) maintained by an Affiliate (A) in which a key employee is a participant or (B) which enables any plan described in subclause (A) to meet the requirements of Code Section 401(a)(4) or Section 410, and (ii) each other qualified plan maintained by an Affiliate (other than a plan described in clause (i)) which may be aggregated with this Plan and the plans described in clause (i), provided such aggregate group (including a plan described in this clause (ii)) continues to meet the requirements of Code Section 401(a)(4) and Section 410. Notwithstanding any contrary Plan provision, if an individual has not performed services for an Employer at any time during the 5 year period ending on the determination date, any accrued benefit for such individual shall not be taken into account for purposes of the top-heavy determination required under this Section 13.8(a). (b) SPECIAL TOP HEAVY PLAN RULES. If the Plan Sponsor determines that this Plan is "top heavy" for any Plan Year, the special rules set forth in this Section 13.8(b) shall apply notwithstanding any other rules to the contrary set forth elsewhere in this Plan. (1) The Accrued Benefit for each Participant who is not a key employee and who completes at least 1000 hours of Service during such Plan Year shall not, in the aggregate, be less than the product of (i) 2% of such Participant's average compensation (as defined under Code Section 415) for the 5 consecutive years during which such Participant had the highest aggregate compensation from an Affiliate (excluding compensation for years after the last year for which the Plan is "top heavy") and (ii) his total years of service, not to exceed 10 (excluding years in which the Plan is not "top-heavy"), and, further, accruals required under this Section 13.8(b)(1) by reason of this Plan being "top heavy" shall be offset by the Actuarial Equivalent value of the contributions and forfeitures, if any, allocated on behalf of such Participant under any defined contribution plan (which is taken into account under this Section 13.8) solely by reason of such plan being "top heavy" and no accruals shall be permitted under this Section 13.8 for any Plan Year in which the contributions and forfeitures allocated on behalf of such Participant under any such defined contribution plan equal at least 5% of such Participant's compensation. - 42 - 50 (2) A Participant's nonforfeitable interest in his Accrued Benefit under this Plan shall be determined under the following schedule:
Completed Years Nonforfeitable of Vesting Service Interest ------------------ -------------- Less than 2 0 2 20% 3 40% 4 60% 5 or more 100%
However, the vesting schedule set forth in this Section 13.8(b)(2) shall not apply to any Participant who does not have an Hour of Service after the date as of which this Plan becomes "top heavy". In the event that this Plan later ceases to be "top heavy," the vesting rules in Section 3.36 shall once again apply; provided, however, that (A) the nonforfeitable portion of a Participant's accrued benefit shall not thereafter be less than the nonforfeitable portion of his accrued benefit before the Plan ceases to be "top heavy," (B) the nonforfeitable portion of the accrued benefit of any Participant who has completed at least 3 years of Vesting Service with an Affiliate on the date the Plan ceases to be "top heavy" shall continue to be determined under the vesting schedule set forth in this Section 13.8(b)(2) if such vesting schedule is more favorable to the Participant, and (C) solely for purposes of Section 3.38(b) and Section 7.1, "2 full Years of Vesting Service" shall replace the language in Section 3.36(a). (3) If a Participant receives his Accrued Benefit in a lump sum (after July 31, 1991) and such Participant's vested Accrued Benefit is less than 100% upon his termination of participation in this Plan as a result of this Plan being top-heavy in any year of his employment, such Participant may upon his reemployment, - 43 - 51 provided he is reemployed before incurring 6 Breaks in Service, have his Accrued Benefit calculated in accordance with Section 3.7 but without regard to the last sentence in Section 3.7 if he repays to the Plan an amount equal to the dollar amount of his lump sum distribution plus interest on such distribution in accordance with Code Section 411(a)(7). (4) The Plan Sponsor shall take such action as necessary to satisfy the requirements of Code Section 415(e) and Section 416(h) if the Plan Sponsor (following the procedure set forth in Section 13.8(a)) determines that this Plan fails to meet the requirements set forth in Code Section 416(h)(2)(B). 13.9. QUALIFIED DOMESTIC RELATIONS ORDERS. Notwithstanding Section 13.1, this Plan shall provide for payment of benefits in accordance with the applicable requirements of a "qualified domestic relations order" as that term is defined in Code Section 414(p). The Plan Sponsor, in accordance with a uniform and nondiscriminatory procedures established by the Plan Sponsor, shall (a) promptly notify the Participant and any alternate payee (as that term is defined in Code Section 414(p)(8)) of the receipt of a domestic relations order and this Plan's procedures for determining the qualified status of such order, (b) determine the qualified status of such order and (c) administer any distributions under this Plan pursuant to such order in accordance with the rules set forth in Code Section 414(p) and any such determination or payment shall be final and binding on all parties. To the extent necessary or appropriate and in accordance with the rules set forth in Code Section 414(p) the Plan Sponsor may direct the Trustee to separately account for any amounts payable pursuant to a qualified domestic relations order. If the order so provides, the Plan shall make an immediate lump sum payment to the alternate payee without regard to whether the Participant could (if he terminated employment) receive a lump sum. For purposes of determining the present value of any benefits payable pursuant to a qualified domestic relations order before a Participant's separation from service, the interest rate shall be the interest rate described in Section 3.2(b)(2). 13.10. INCOME TAX WITHHOLDING. The amount of any distribution to a Participant (or Beneficiary) shall be reduced to the extent necessary to comply with Federal, state and local income tax withholding requirements. - 44 - 52 IN WITNESS WHEREOF, Lanier Worldwide, Inc. has caused this Plan to be executed and its seal to be affixed and attested by its duly authorized officers this /s/ 24 day of June, 1994. LANIER WORLDWIDE, INC. By:/s/ Wesley E. Cantrell --------------------------- Title:/s/ President and CEO ------------------------ (SEAL) ATTEST: By:./s/ Michael Kelly ------------------------------------------------ Title:/s/ VP, General Counsel --------------------------------------------- 1034140 - 45 - 53 ATTACHMENT 1 TO EXHIBIT A TO THE LANIER WORLDWIDE, INC. PENSION PLAN FORMER LANIER PARTICIPANTS APPLICATION This Attachment 1 shall apply only to those Participants who are Former LBP Participants. Section 1.2. DEFINITIONS The terms in this Section 1-2 shall have the meanings set forth opposite such terms for purposes of this Attachment 1 and this Plan. Except as provided in this Section 1-2, a capitalized term shall have the meaning set forth in the Plan. 1-2-1 ACCRUED BENEFIT - means the minimum accrued benefit for each Former LBP Participant which is a monthly benefit determined for such Participant as of the earlier of his most recent termination date or December 31, 1988 which is payable in the form of a single life annuity commencing as of his Normal Retirement Dare (if he is then living). Such monthly benefit shall equal the greater of (a) or (b), where: (a) equals the sum of (1) the monthly amount of the Former LBP Participant's benefits accrued as of December 31, 1981 under the terms of the Harris/LBP Plan as then in effect plus (2) the excess of 1.667% of the Former LBP Participant's Final Average Compensation as of the earlier of his most recent termination date or December 31, 1988 over 1.667% of his Primary Social Security Benefit as of the earlier of his most recent termination date or December 31, 1988 multiplied by his total years and fractional years of Benefit Service as of the earlier of his most recent termination date or December 31, 1988 completed after December 31, 1981; and (b) equals the product of (1) and (2), where (1) equals the excess of 1.667% of the Participant's Final Average Compensation as of the earlier of his most recent termination date or December 31, 1988 over 1.667% of his Primary Social Security Benefit as of the earlier of his most recent 54 termination date or December 31, 1988, and where (2) equals the lesser of (i) his total years and fractional years of Benefit Service as of the earlier of his most recent termination date or December 31, 1988 or (ii) 30. 1-2-2 ACTUARIAL EQUIVALENT - means for each Former LBP Participant a benefit of equivalent value computed in accordance with accepted actuarial principles which shall not be less than the equivalent value of the Participant's Accrued Benefit determined under Section 1-2-1 as of the earlier of his most recent termination date or September 30, 1989 based on (i) the 1971 Group Annuity Mortality Table for Males projected to 1990 with a one year set back for a Participant and a 5 year set back for a Participant's Spouse or Beneficiary, (ii) a 7% per annum compounded interest rate assumption for any form of benefit except a single sum benefit, and (iii) for benefits paid in a single sum in Plan Years beginning on or after January 1, 1987, the Pension Benefit Guaranty Corporation ("PBGC") interest rate (deferred or immediate, whichever is appropriate) that would be used by the PBGC (as of the earlier of the date of distribution or December 31, 1988) for purposes of determining the present value of a single sum distribution on a plan termination. However, for Plan Years beginning after December 31, 1984 and before January 1, 1987, the interest rate for single sum benefits shall equal the interest rate applied by the PBGC for the valuation of immediate annuities in connection with a pension plan termination as in effect for the first day of the Plan Year which included the Participant's Annuity Starting Date. 1-2-3 BENEFIT SERVICE - means for each Former LBP Participant as of any Determination Date his full and fractional Years of Service (as determined in accordance with Section 3.40) completed as a Participant under Harris/LBP Plan prior to October 1, 1989 except (a) periods of service completed under the Harris/LBP Plan prior to 1982 for which such Former LBP Participant withdraws his contributions under the Harris/LBP Plan unless he (i) has reached his Vested Date or has attained age Normal Retirement at the time of such withdrawal or (ii) he repays his contributions with interest in the manner provided in Section 1-4-4; (b) periods of service prior to 1982 during which the Participant was eligible to participate in the Plan as then in effect but declined to make the contributions then required under the Plan; and - 2 - 55 (c) periods of service for which such Participant received a single sum benefit under the Harris/LBP Plan of $3500 or less. 1-2-4 COMPENSATION - means for a Former LBP Participant who was not employed as an Employee after December 31, 1988, the total cash compensation of an Eligible Employee for any Plan Year or portion thereof as reported by a Participating LBP Company on Internal Revenue Service Form W-2 (or any successor form) for such Participant for such Plan Year or portion thereof, (or which would be reported on Form W-2 but for the operation of Code Section 401(k) or Code Section 125) excluding severance pay, reimbursed expenses, payments for moving expenses and educational benefits, payments for group insurance, payments under the Harris/LBP Plan and other forms of indirect compensation; provided, that (a) Compensation in the case of salesmen whose sales expenses are not paid by the LBP as a participating affiliate shall, for purposes of the Harris/LBP Plan, be 90% percent of the gross commissions paid to such salesmen and (b) Compensation for an employee of Harris Technical Services Corporation shall not include any portion of his cash compensation which is attributable to a "special allowance" paid by Harris Technical Services Corporation. 1-2-5 ELIGIBLE EMPLOYEE - means for periods before October 1, 1989, an Employee who is employed by a Participating LBP Company other than (i) an Employee who was not employed by LBP in its Lanier Management Company Division or Lanier Business Products Division during any period when the plan sponsor of the Harris/LBP was Oxford Industries, Inc., (ii) an Employee who is classified on the personnel records of any Participating LBP Company as employed on a temporary, summer, or casual part-time position for short term work load, which employment is intended to terminate upon completion of the assignment for which he was employed, (iii) an Employee who is treated as such solely by reason of the "leased employee" rules set forth in Code Section 414(n), (iv) an Employee who is a member of (or who is represented by) a collective bargaining unit which has failed to reach an agreement with his Participating LBP Company that he be eligible to participate in this Plan, (v) an Employee who is a non-resident alien and who receives no earned income from a Participating LBP Company from sources within the United States (as described more fully in Code Section 410(b)(3)(C)), and - 3 - 56 (vi) an Employee who works primarily outside the United States and who is paid under a payroll system which is not linked electronically to the payroll system for LBP Employees who work primarily within the United States. 1-2-6 EMPLOYEE - means for periods before October 1, 1989 a person who was an employee of LBP or an entity which would be considered a single employer with LBP under Code Section 414. 1-2-7 FINAL AVERAGE COMPENSATION - means for a Former LBP Participant for purposes of determining his Accrued Benefit as of the earlier of his most recent termination date or December 31, 1988 one twelfth of the average of the Compensation of such Participant during the 5 consecutive calendar years in which such average is the highest (or actual number of consecutive calendar years if less than 5) out of the last 10 calendar years during which the Participant was an LBP Employee including the calendar year which includes his Employment Termination Date, or, if earlier, his Normal Retirement Date (or actual number of such calendar years if less than 10); provided that for purposes of determining such average, such Participant's Compensation for the calendar year which includes his most recent Employment Termination Date, or if earlier, his Normal Retirement Date shall (if he actually received Compensation for less than 12 months in such calendar year) be deemed to be the Compensation he would have received for the entire calendar year if he had continued to earn compensation at the same rate he was earning Compensation on his Employment Termination Date, or if earlier, his Normal Retirement Date. Notwithstanding any Plan provision to the contrary, the Accrued Benefit of each Former LBP Participant after February 28, 1987 shall not be less than his Accrued Benefit as determined as of February 28, 1987 and the "Normal Retirement Date" limitation in this Section 1-2-7 shall not apply for Plan Years beginning on or after January 1, 1988 to a Participant who completes an Hour of Service on or after that date. 1-2-8 FORMER LBP PARTICIPANT - means a person who was a participant in the Harris/LBP Plan before October 1, 1989. 1-2-9 LBP - means Lanier Business Products, Inc. 1-2-10 NORMAL RETIREMENT AGE - means for each Former LBP Participant who became a participant in the Harris/LBP Plan on or before June 30, 1988, the date such participant reaches age 65. 1-2-11 PARTICIPATING LBP COMPANY - means LBP and any entity which would be considered a single employer with LBP under Code Section 414 which participated in the Harris/LBP Plan with the permission of LBP's Board of Directors. - 4 - 57 1-2-12 PRIMARY SOCIAL SECURITY BENEFIT - means for a Former LBP Participant for purposes of determining his Accrued Benefit as of the earlier of his most recent termination date or December 31, 1988, the benefit which would be available to such Participant as a monthly old age benefit, exclusive of benefits for a spouse or other relative or dependent, under the Social Security Act as in effect on the earlier of such Participant's Normal Retirement Date, the date his employment terminates or December 31, 1988. The Plan Sponsor shall calculate a Former LBP Participant's Primary Social Security Benefit in accordance with uniform and nondiscriminatory rules and based upon the following assumptions: (1) A Former LBP Participant's wages earned through the earlier of his most recent termination date or December 31, 1988 under this Plan shall be determined in accordance with one of the following methods: (i) such Former LBP Participant's actual wage history for all years of employment ending on the earlier of his most recent termination date or December 31, 1988, provided such Former LBP Participant furnishes such actual wage history as reported by the Social Security Administration in a form satisfactory to the Plan Sponsor on or before the later of 60 days after (A) the date his employment terminates and (B) the date the Former LBP Participant is notified of his benefits under the Plan, or (ii) absent such actual wage history, such Former LBP Participant's estimated wage history for all years of employment ending on the earlier of his most recent termination date or December 31, 1988, provided such wage history is estimated by applying a salary scale, projected backwards, to the Former LBP Participant's compensation (as defined in Section 3.03 of Revenue Ruling 71-446) as of the earlier of the date his most recent termination date or December 31, 1988 and such salary scale is either (A) that actual change in the average wages from year to year as determined by the Social Security Administration or (B) a level percentage per year that is not less than 6% per annum, and the Plan shall provide written notice to each Former, LBP Participant of the Former LBP Participant's right to supply such Former LBP Participant's actual wage history, the financial consequence of failing to supply such actual wage history and that such history may be obtained from the Social Security Administration. (2) The Former LBP Participant's post-termination wages for each Plan Year beginning after the earlier of the date his employment terminates or December 31, 1988 through his Normal Retirement Date shall equal the - 5 - 58 Former LBP Participant's compensation as reported on Form W-2 for the earlier of the year in which his employment terminates or 1988. (3) A Former LBP Participant's monthly primary insurance amount shall be determined under this Section 1-2-12 without regard to any delay, suspension or forfeiture of such payment for any reason whatsoever, including a failure to apply for such benefit or because the Participant continues to work. 1-2-12 VESTED DATE - means for each Former LBP Participant who does not complete at least one Hour of Service after December 31, 1988, the earlier of the date he completes 10 full years of Vesting Service or reaches Normal Retirement Age as an Employee. Section 1.3. ELIGIBILITY TO PARTICIPATE A Former LBP Employee whose most recent employment commencement date was on or after his 60th birthday shall not become a Participant in this Plan; however, this limitation shall not apply for Plan Years beginning after December 31, 1987 to an Employee who completes an Hour of Service after that date. Section 1.4. RETIREMENT AND TERMINATION BENEFITS 1-4-1 DEFERRED RETIREMENT BENEFITS. For Plan Years beginning before January 1, 1988, if a Participant remains an Employee after his Normal Retirement Date, such Participant's benefit under the Harris/LBP Plan shall equal dollar for dollar the monthly amount of the benefit which he would have received had he retired on his Normal Retirement Date and shall not be increased on account of any compensation, service, or by any actuarial adjustment, after such date. This limitation shall not apply to Plan Years beginning on or after January 1, 1988 for Participants who complete an Hour of Service on or after such date. 1-4-2 VESTED BENEFITS. (a) RETURN OF EMPLOYEE CONTRIBUTIONS. If a Former LBP Participant's employment terminates before his Vested Date, he shall not be entitled to any benefit under the Plan other than a return of his own contributions made prior to 1982, if any, with interest as described in Section 1-4-4. - 6 - 59 (b) MILNER BUSINESS PRODUCTS, INC. The term "Milner Employee" shall mean each former LBP Employee (1) who terminated employment during the 1987 calendar year at the request of LBP and immediately after such termination became an employee of Milner Business Products, Inc. ("Milner") as a result of the sale of certain assets of LBP to Milner effective as of April 27, 1987 and (2) who as of the date of such termination and employment by Milner ("Milner Date") had not completed 10 years of Vesting Service. The nonforfeitable benefit, if any, payable to or on behalf of a Milner Employee under this Plan shall be determined as follows: (i) Solely, for purposes of determining a Milner Employee's nonforfeitable interest in his Accrued Benefit as determined as of his Milner Date, his years of Vesting Service with respect to such Accrued Benefit shall be determined as if his continuous employment with Milner from his Milner Date until the date he first terminates employment with Milner is employment as an Employee under this Plan. (ii) Such Accrued Benefit shall be payable to him as of his Normal Retirement Date or as of the first day of any month coinciding with or following the date on which he reaches age 55 and completes 10 years of Vesting Service (as determined in accordance with this Section 1- 4-2(b)) and, if he dies after he has completed 10 years of Vesting Service but before his Annuity Starting Date, any survivor benefit attributable to such Accrued Benefit shall be payable to his Spouse in accordance with the terms of Section 7.1. (iii) No benefit shall be payable under this Plan to any Milner Employee who terminates employment with Milner before he completes 10 years of Vesting Service or, for Plan Years beginning on or after January 1, 1989 for a Milner Employee working for Milner on or after that date, 5 years of Vesting Service (as determined in accordance with this Section 1-4-2(b)) except to the extent a benefit is payable to such individual as a result of reemployment as an Eligible Employee after his Milner Date. (iv) If a Milner Employee is reemployed as an Eligible Employee after his Milner Date, his nonforfeitable interest in that portion of his Accrued Benefit, if any, accrued after his - 7 - 60 reemployment shall be determined solely with respect to his actual years of Vesting Service (as determined without regard to the special rules of this Section 1-4-2(b)) and no such individual shall receive credit (for vesting or benefit accrual purposes) for employment with Milner with respect to any benefits accrued under this Plan after his Milner Date. 1-4-3 DISABILITY RETIREMENT BENEFITS. (a) MINIMUM BENEFIT. If a Former LBP Participant becomes totally and permanently disabled, as defined in Section 5.4 of the Plan while he is an Eligible Employee after he completes 10 years of Vesting Service but prior to January 1, 1989, his disability benefit under Section 5.4 of the Plan shall not be less than the Accrued Benefit he would have been entitled to receive under Section 1-2-1 at his Normal Retirement Date or his Early Retirement Date, if applicable, if he is then living and if such disability has been continuous to such date based on the Primary Social Security Benefit, the Benefit Service and the Final Average Compensation which such Former LBP Participant would have had on December 31, 1988 assuming (1) his Benefit Service had continued from his termination date to December 31, 1988 and (2) he had continued to receive annual Compensation from his termination date to December 31, 1988 equal to the annualized amount of his Compensation in the last calendar year prior to his disability. (b) TERMINATION OF DISABILITY. If a Former LBP Participant's total and permanent disability ceases prior to his Annuity Starting Date for any reason other than death, such Participant is described in Section 1-4-3(a) and such Participant returns or offers to return to the employment of an Affiliate within 90 days after his disability ceases, then, for purposes of determining his eligibility to receive benefits under the Plan upon his subsequent termination of employment and the amount of such benefits, he shall be treated as if he had received annual Compensation during his period of disability and prior to January 1, 1989 equal to the annualized amount of his Compensation in the last calendar year prior to his disability. 1-4-4 BENEFITS ATTRIBUTABLE TO MANDATORY PARTICIPANT CONTRIBUTIONS. (a) INVOLUNTARY CASHOUT. If a Former LBP Participant terminates employment prior to his Vested Date and the Actuarially Equivalent single sum value of his Accrued Benefit attributable to his contributions contributed to the Plan prior to 1982 as determined in accordance with Code Section 411(c) is $3500 or less, such participant shall receive a lump sum distribution of his entire accrued benefit attributable to such employee contributions and the nonvested portion of his Accrued Benefit shall be treated as a - 8 - 61 forfeiture unless he repays such distribution with interest as described in Section 1-4-4(e). (b) RIGHT OF IN SERVICE WITHDRAWAL. At any time prior to his termination of employment, a Former LBP Participant who contributed to the Plan prior to 1982 may request a withdrawal of his contributions which shall be paid in the normal annuity form described in Section 6.1 of the Plan. Notwithstanding the foregoing, a Former LBP Participant may request (subject to the spousal consent rules of Section 6.2 of the Plan unless his nonforfeitable benefit was attributable entirely to the employee contributions and the distribution was made before October 22, 1986) to receive a single sum distribution of his contributions to the Plan prior to 1982. A Participant who withdraws his contributions under this Section 1-4-4 at any time on or after January 1, 1982 and who thereafter repays the amount refunded with interest as provided in Section 1-4-4(d) below shall not be entitled to withdraw his contributions again prior to his Annuity Starting Date. (c) VOLUNTARY WITHDRAWAL ON TERMINATION. If a Former LBP Participant terminates employment and the Actuarial Equivalent single sum value of his nonforfeitable Accrued Benefit attributable to employer and employee contributions exceeds $3500, such Participant's Accrued Benefit shall be paid in the normal annuity form described in Section 6.1 of the Plan. Notwithstanding the foregoing, a Former LBP Participant may request (subject to the spousal consent rules of Section 6.2 of the Plan unless his nonforfeitable benefit was attributable entirely to employee contributions and the distribution was made before October 22, 1986) to receive a single sum distribution of his entire Accrued Benefit attributable to his employee contributions. If he does not repay such distribution with interest as described in Section 1-4-4(d), then any benefit to which such Participant (or the spouse of such Participant) may become entitled under the Plan shall be recomputed by excluding an amount equal to his accrued benefit derived from employee contributions as determined in accordance with Code Section 411(c). (d) INTEREST. Interest referred to in this Section 1-4-4 shall be computed at an annual rate of 3%, compounded annually, for periods prior to January 1, 1976, at an annual rate of 5%, compounded annually, for periods after 1975 but prior to January 1, 1988 and at an annual rate of 120% of the Federal mid-term rate (as in effect under Code Section 1274 for the first month of the Plan Year), compounded annually from January 1, 1988 until such Determination Date or repayment date, if applicable. The interest rate under this Section 1-4-4(d) shall be adjusted from time to time in accordance with regulations under Code Section 411(c). - 9 - 62 (e) REPAYMENT. Repayment described in this Section 1-4-4 means repayment to the Plan by the Former LBP Participant of the amount of the distribution together with interest at the rates provided in Section 1-4-4(d) in cash before (i) in the case of a distribution on account of a separation from service, the earlier of 5 years after the first date on which the Participant resumes employment as an Eligible Employee or the close of 6 consecutive Breaks in Service following the distribution or (ii) in the case of any other withdrawal, 5 years after the date of the withdrawal. Section 1.5. OPTIONAL FORMS OF BENEFITS 1-5-1 DESCRIPTION OF OPTIONS. Subject to Section 6.2 of the Plan each Former LBP Participant may elect to have the following optional payment forms at his Annuity Starting Date in addition to the optional payment forms described in Section 6.3 of the Plan: OPTION A: A Participant who contributed to the Plan prior to 1982 also may elect to have his contributions with interest refunded to him under Section 1-4-4 at the time his first monthly benefit payment is made notwithstanding that he may already have withdrawn and repaid such contributions after 1981. In the event a Participant elects to have his contributions with interest refunded to him, his Accrued Benefit shall be recomputed by excluding an amount equal to the Accrued Benefit derived from employee contributions (determined in accordance with Code Section 411) and the Actuarial Equivalent of the remaining Accrued Benefit which would be payable to the Participant in a single life annuity may be paid in any optional form under Section 6.3. OPTION B: A single sum cash distribution of the portion of his benefit accrued under the Harris/LBP Plan as of December 31, 1981, and a monthly benefit payable under any optional form described in Section 6.3 of the Plan for that portion of his benefit accrued under the Plan after December 31, 1981. OPTION C: A Former LBP Participant who participated in the Harris/LBP Plan at any time after December 31, 1985 and before October 1, 1989 shall be eligible, subject to the spousal consent rules of Section 6.2 of the Plan, to elect an immediate single sum - 10 - 63 payment or an immediate annuity benefit (single life only, for a Participant who does not have a Spouse on his Annuity Starting Date, 50% joint and survivor annuity for a Participant who does have a Spouse on his Annuity Starting Date). Such immediate benefit shall be equal to the Actuarial Equivalent of his Accrued Benefit, if any, accrued under the Harris/LBP Plan prior to October 1, 1989 and under this Plan after September 30, 1989 and through April 30, 1990. The remainder of his Accrued Benefit, if any, shall be payable in any optional form described in Section 6.3, as of his Normal Retirement Date unless he is eligible to receive it earlier under Section 5. 1-5-2 SURVIVOR BENEFITS. (a) SURVIVING SPOUSE. For distributions made on or after October 22, 1986, if a Former LBP Participant made contributions to this Plan and such Participant dies before his Vested Date, such Participant shall be treated as dying after his Vested Date for purposes of Section 7.1 and any survivor benefit payable to his surviving spouse under Section 7.1 shall be based on his Accrued Benefit attributable to his employee contributions then remaining in the Plan. (b) OTHER. If a Participant dies prior to his Annuity Starting Date under this Plan and a survivor annuity benefit is not payable to such Participant's surviving Spouse under Section 7.1 or Section 7.2 of the Plan, then his Beneficiary shall be entitled to a survivor benefit equal to the amount, if any, of the Participant's contributions under the Plan prior to 1982, less withdrawals, with interest thereon computed at the rate described in Section 1-4-4, compounded annually, to the date of the Participant's death. If a Participant dies after his Annuity Starting Date, and if no survivor annuity benefit is payable to his surviving Spouse and if no benefit is payable to a Beneficiary under an optional form of benefit, then his Beneficiary shall be entitled only to the excess, if any, of (1) the Participant's contributions under the Plan prior to 1982, less withdrawals, with interest thereon computed at the rates described in Section 1-4-4, compounded annually, to his benefit commencement date, over (2) the aggregate of payments made under the Plan to such Participant. The survivor benefit payable under this Section 1-5-2(b), if any, shall be paid in a single sum in cash. - 11 - 64 ATTACHMENT 2 TO EXHIBIT A TO THE LANIER WORLDWIDE, INC. PENSION PLAN FORMER HARRIS/DPI PARTICIPANTS Section 2-1 APPLICATION This Attachment 2 shall apply only to those Participants who are Former Harris/DPI Participants. Section 2-2 DEFINITIONS The terms in this Section 2-2 shall have the meanings set forth opposite such terms for purposes of this Attachment 2 and this Plan. Except as provided in this Section 2-2, a capitalized term shall have the meaning set forth in the Plan. 2-2-1 ACCRUED BENEFIT - (a) MINIMUM BENEFIT means the minimum accrued benefit for each Former Harris/DPI Participant which is a monthly benefit determined for such Participant as of the earlier of his most recent termination date or June 30, 1989 which is payable in the form of a single life annuity commencing as of his Normal Retirement Date (if he is then living). Such monthly benefit shall be determined in accordance with the applicable formula set forth in this Section 2-2-1. (1) For each Former Harris/DPI Participant other than a Former LBP Participant or Former 3M Participant, the monthly benefit shall equal the product of (i) and (ii), where (i) equals the excess of 1.667% of the Participant's Average Compensation as of the earlier of his most recent termination date or June 30, 1989 over 1.667% of his Primary Social Security Benefit as of the earlier of his most recent termination date or June 30, 1989, and - 1 - 65 (ii) equals the lesser of (A) his total years and fractional years of Benefit Service as of the earlier of his most recent termination date or June 30, 1989 or (B) 30. (2) For each Former Harris/DPI Participant who is also a Former LBP Participant, the minimum monthly benefit shall equal the greater of the benefit under Section 2-2-1(a)(1) above or the sum of (i) and (ii) below where (i) equals the monthly amount of the Former LBP Participant's benefits accrued as of December 31, 1981 under the terms of the Harris/LBP Plan as then in effect, and (ii) equals the excess of 1.667% of the Former LBP Participant's Final Average Compensation as of the earlier of his most recent termination date or June 30, 1989 over 1.667% of his Primary Social Security Benefit as of the earlier of his most recent termination date or June 30, 1989 multiplied by his total years and fractional years of Benefit Service completed after December 31, 1981 and before the earlier of his most recent termination date or July 1, 1989. (3) For any Former Harris/DPI Participant who also is a Former 3M Participant, the minimum monthly benefit shall equal such Former 3M Participant's benefit as determined under Section 2-2-1(a) based on his Average Compensation (as determined under Section 2-2-3 as of the earlier of his most recent termination date or June 30, 1989), his Benefit Service (as determined under Section 3.7 of the Plan as of the earlier of his most recent termination date or June 30, 1989) and his Social Security Benefit (as determined in accordance with Section 2- 2-16 as of the earlier of his most recent termination date or June 30, 1989). (b) ALTERNATIVE MINIMUM FOR FORMER 3M PARTICIPANTS. Notwithstanding any contrary provision, the Accrued Benefit of a Former Harris/DPI Participant who also is a Former 3M Participant as shall be the greater of his Accrued Benefit determined in accordance with Section 3.1 (taking into account the minimum benefit under Section 2-2-1(a)(3)) or the product of (1), (2) and (3) where (1) equals 1%, (2) equals his Average Compensation determined as of the earlier of his most recent termination date or June 30, 1989 (as determined under Section 3.5) by substituting the numeral "4" in lieu of the numeral "5" wherever that numeral appears in and by limiting such Average Compensation to $1,667), and 66 (3) equals his Benefit Service determined as of the earlier of his most recent termination date or June 30, 1989. 2-2-2 ACTUARIAL EQUIVALENT - means for each Former Harris/DPI Participant a benefit of equivalent value computed in accordance with accepted actuarial principles which shall not be less than the equivalent value of the Participant's Accrued Benefit determined under Section 2-2-1 as of the earlier of his most recent termination date or September 30, 1989 based on (i) The 1971 Group Annuity Mortality Table for Males projected to 1990 with a one year set, back for a Participant and a 5 year set back for a Participant's Spouse or Beneficiary, (ii) a 7% per annum compounded interest rate assumption for any form of benefit except a single sum benefit, and (iii) for benefits paid in a single sum in Plan Years beginning on or after July 1, 1987, the Pension Benefit Guaranty Corporation ("PBGC") interest rate (deferred or immediate, whichever is appropriate) that would be used by the PBGC (as of the first day of the Plan Year in which such benefit is paid) for purposes of determining the present value of a single sum distribution on a plan termination. However, for Plan Years beginning after December 31, 1984 and before January 1, 1987, the interest rate for single sum benefits shall equal the interest rate applied by the PBGC for the valuation of immediate annuities in connection with a pension plan termination as in effect for the first day of the Plan year which included the Participant's Annuity Starting Date. 2-2-3 AVERAGE COMPENSATION - means for a Former Harris/DPI Participant for purposes of determining his Accrued Benefit as of the earlier of his most recent termination date or June 30, 1989, one-twelfth of the average of the Compensation of such Participant during the 5 consecutive calendar years in which such average is highest (or actual number of consecutive calendar years if less than 5) out of the last 10 calendar years during which the Participant was a Harris/DPI Employee ending before the calendar year which includes his Employment Termination Date, or, for a Participant who does not complete an Hour of Service after June 30, 1989, his Normal Retirement Date if that date is earlier than his Employment Termination Date (or actual number of such calendar years if less than 10). 2-2-4 BENEFIT SERVICE - includes for each Former Harris/DPI Participant with respect to whom assets and liabilities were transferred from the Harris/LBP Plan or the 3M Plan his years of service for benefit accrual completed under the Harris/LBP Plan or under the 3M Plan prior to his transfer to Harris/DPI. - 3 - 67 2-2-5 COMPENSATION - means for a Former Harris/DPI Participant who was not employed as an Employee after June 30, 1989, the total cash compensation of an Eligible Employee for any Plan Year or portion thereof as reported by Harris/DPI on Internal Revenue Service Form W-2 (or any successor form) for such Eligible Employee for such Plan Year or portion thereof or which would be reported on Form W-2 but for the operation of Code Section 401(k), excluding severance pay, reimbursed expenses, payments for moving expenses and educational benefits, payments for group insurance income attributable to the exercise of stock options, payments under this Plan and other forms of indirect compensation; provided, that Compensation in the case of salesmen whose sales expenses are not paid by an Employer shall, for purposes of the Harris/DPI Plan, be 90% percent of the gross commissions paid to such salesmen. 2-2-6 ELIGIBLE EMPLOYEE - means for each Plan Year before July 1, 1989 each Employee of Harris/DPI who has completed one Year of Service and reached age 21 other than (a) an Employee who is treated as such solely by reason of the "leased employee" rules set forth in Code Section 414(n), (b) an Employee who is a member of (or who is represented by) a collective bargaining unit which has failed to reach an agreement with his Employer that he be eligible to participate in this Plan, (c) an Employee who is a non-resident alien and who receives no earned income from an Employer from sources within the United States (as described more fully in Code Section 410(b)(3)(C)), and (d) an Employee (other than an Employee who is employed by the Plan Sponsor at the Puerto Rico branch) who works primarily outside the United States and who is paid under a payroll system which is not linked electronically to the payroll system for Employees who work primarily within the United States. 2-2-7 FORMER HARRIS/DPI PARTICIPANT - means a person who was a participant in the Harris/DPI Plan before October 1, 1989. 2-2-8 FORMER 3M PARTICIPANT - means each Former Harris/DPI Participant who transferred from 3M or its affiliates to the employ of Harris/DPI before June 30, 1986 in accordance with the DPI Agreement and each Former Harris/DPI Participant who transferred from 3M Puerto Rico, Inc. to Harris/DPI after January 31, 1987 but before August 1, 1987 in accordance with the agreement between Harris/DPI and 3M and with respect to whom assets and liabilities were transferred to the Harris/DPI Plan from the 3M Plan. - 4 - 68 2-2-9 FORMER LBP PARTICIPANT - means each Former Harris/DPI Participant who transferred from LBP to Harris/DPI before June 30, 1986 in accordance with the DPI Agreement and with respect to whom assets were transferred to the Harris/DPI Plan from the 3M Plan. 2-2-10 HARRIS/DPI - means Harris/3M Document Products, Inc. 2-2-11 LBP - means Lanier Business Products, Inc. 2-2-12 3M - means Minnesota Mining & Manufacturing Company. 2-2-13 3M PLAN - means the Employee Retirement Income Plan of Minnesota Mining and Manufacturing Company as in effect from time to time prior to June 30, 1986. 2-2-14 NORMAL RETIREMENT AGE - means for each Former Harris/DPI Participant who became a participant in the Harris/DPI Plan on or before August 31, 1988, the date such participant reaches age 65. 2-2-15 SOCIAL SECURITY BENEFIT - means (a) for a Former Harris/DPI Participant for purposes of determining his Accrued Benefit as of the earlier of his most recent termination date or June 30, 1989, the benefit which would be available to such Participant as a monthly old age benefit, exclusive of benefits for a spouse or other relative or dependent, under the Social Security Act as in effect on the earlier of his Normal Retirement Date, the date his employment terminates or June 30, 1989. The Plan Sponsor shall calculate a Former Harris/DPI Participant's Social Security Benefit in accordance with uniform and nondiscriminatory rules and based upon the following assumptions (1) A Former Harris/DPI Participant's wages earned through the earlier of his most recent termination date or June 30, 1989 under this Plan shall be determined in accordance with one of the following methods: (i) such Former Harris/DPI Participant's actual wage history for all years of employment ending on the earlier of his most recent termination date or June 30, 1989 provided such Former Harris/DPI Participant furnishes such actual wage history as reported by the Social Security Administration in a form satisfactory to the Plan Sponsor on or before the later of 60 days after (A) the date his employment terminates and (B) the date the Former Harris/DPI Participant is notified of his benefits under the Plan or (ii) absent such actual wage history, such Former Harris/DPI Participant's estimated wage history for all years of employment - 5 - 69 ending on the earlier of his most recent termination date or June 30, 1989, provided such wage history is estimated by applying a salary scale, projected backwards, to the Former Harris/DPI Participant's compensation (as defined in Section 3.03 of Revenue Ruling 71-446) as of the earlier of his most recent termination date or June 30, 1989 and such salary scale is either (A) that actual change in the average wages from year to year as determined by the Social Security Administration (B) a level percentage per year that is not less than 6% per annum, and the Plan shall provide written notice to each Former Harris/DPI Participant of the Former Harris/DPI Participant's right to supply such Former Harris/DPI Participant's actual wage history, the financial consequence of failing to supply such actual wage his and that such history may be obtained from the Social Security Administration. (2) The Former Harris/DPI Participant's post-termination for each Plan Year beginning after June 30, 1989 through his Normal Retirement Date shall equal the Former Harris/DPI Participant's compensation as reported on Form W-2 for the earlier of the calendar year in which his employment terminates or 1988. (3) A Former Harris/DPI Participant's monthly primary insurance amount shall be determined under this Section 2-2-15 without regard to any delay, suspension or forfeiture of such payment for any reason whatsoever, including a failure to apply for such benefit or because the Participant continues to work. (b) Notwithstanding the foregoing, for each Former 3M Participant, the term "Social Security Benefit" means the monthly primary insurance amount ("PIA") which would be payable (1) for each such Participant who is not employed as an Employee on or after the earlier of age 55 or June 30, 1989, in accordance with Section 2-2-15(a) and (2) for each such Participant (other than a Participant described in Section 2-2-15(b)(1)), in accordance with (i) the Social Security Act as in effect on the earlier of the date his employment terminates or June 30, 1989, (ii) the assumptions set forth in Section 2-2-15(a)(1) and (3) and (iii) the special assumptions set forth below in Section 2-2-15(b)(3). (3) PIA shall be determined: - 6 - 70 (A) For a Former 3M Participant who finally terminates employment as an Employee before age 62 or, if his employment had not terminated before June 30, 1989, who on June 30, 1989 had not reached age 62, by assuming that (i) he is age 62 on the earlier of the date his employment finally terminates or June 30, 1989, (ii) his post-termination wages from the earlier of the date his employment finally terminates or June 30, 1989 through his retirement age under the Social Security Act shall equal zero, and (iii) his PIA would be payable at age 62. (B) For a Former 3M Participant who finally terminates employment as an Employee on or after age 62 or, if his employment had not terminated before June 30, 1989, who on June 30, 1989 was at least age 62, by assuming that (i) his post-termination wages from the earlier of the date his employment finally terminates or June 30, 1989 through his retirement age under the Social Security Act shall equal zero and (ii) his PIA would be payable on the earlier of the date his employment finally terminates or June 30, 1989. 2-2-16 VESTED DATE - means for each Participant who does not complete at least one Hour of Service after June 30, 1989, the earlier of the date he completes 10 years of Vesting Service or reaches Normal Retirement Age as an Employee. 2-2-17 VESTING SERVICE - includes for each Former Harris/DPI Participant, his years of service for vesting purposes as determined under the 3M Plan as of December 2, 1985. Section 2-3 ELIGIBILITY TO PARTICIPATE An Employee whose most recent employment commencement date was on or after his 60th birthday shall not become a Participant in this Plan; however, this - 7 - 71 limitation shall not apply for Plan Years beginning after June 30, 1988 to an Employee who completes an Hour of Service on or after that date. Section 2-4 RETIREMENT AND TERMINATION BENEFITS 2-4-1 DEFERRED RETIREMENT BENEFITS. For Plan Years beginning before July 1, 1988, if a Participant remains an Employee after his Normal Retirement Date, such Participant's benefit under the Harris/DPI Plan shall equal dollar for dollar the monthly amount of the benefit which he would have received had he retired on his Normal Retirement Date and shall not be increased on account of any compensation, service, or by any actuarial adjustment, after such date. This limitation shall not apply to Plan Years beginning on or after July 1, 1988 for Participants who complete an Hour of Service on or after such date. 2-4-2 EARLY RETIREMENT BENEFITS. (a) EARLY UNREDUCED RETIREMENT DATE PROVISIONS. (1) EUR DATE. Notwithstanding any contrary Plan provision, the term "EUR Date" means for each Former 3M Participant the first day of the month coinciding with or next following the date such Participant meets (or would have met if he had continued in employment as an Employee) the age and service criteria set forth below:
ATTAINED AGE AT BENEFIT COMPLETED YEARS OF COMMENCEMENT DATE BENEFIT SERVICE ----------------- ---------------------- 62 to 65 28 61 29 60 30 59 32 58 34
Such age and service criteria shall be adjusted, for any Annuity Starting Date which is not on a Participant's birthday in accordance with the following rules: - 8 - 72 (i) The number of completed years of Benefit Service for a Participant whose Annuity Starting Date is between his 58th and 60th birthdates shall be equal to (A) the completed years of Benefit Service for his "attained age" at his last birthday reduced by (B) the product of 1/6 and the number of months by which his "attained age" at his Annuity Starting Date exceeds his "attained age" at his last birthday. (ii) The number of completed years of Benefit Service for a Participant whose Annuity Starting Date is between his 60th and 62th birthdates shall be equal to (A) the completed years of Benefit Service for his "attained age" at his last birthday reduced by (B) the product of 1/12 and the number of months by which his "attained age" at his Annuity Starting Date exceeds his "attained age" at his last birthday. (2) UNREDUCED BENEFIT. A Former 3M Participant who actually terminates employment as an Employee on or after his EUR Date shall be entitled to receive a monthly benefit equal to his Accrued Benefit determined as of the date his employment as an Employee terminates and the payment of such benefit be scheduled to commence as of his Normal Retirement Date, if he is then living, or, if such Participant elects in writing, as of his EUR Date or the first day of any month after his EUR Date and before his Normal Retirement Date. (3) SOCIAL SECURITY SUPPLEMENT. If a Former 3M Participant who terminates employment as an Employee on or after his EUR Date and begins receiving a benefit on or after his EUR Date but before age 62, such Participant's monthly benefit payable under this Plan (without regard to the form of the benefit) shall be increased each month beginning with the month which includes his Annuity Starting Date and ending with the month in which he reaches age 62 or his date of death, if earlier, by an amount which shall equal the amount of his Social Security Benefit (as determined under Section 2-2-15(b)(3)(A); However, if payment of the supplement described in this Section 2-4-2(a)(3) commenced after June 30, 1989 but before April 30, 1990, then his Social Security Benefit shall be calculated as of his most recent termination date without regard to the June 30, 1989 limitation contained in Section 2-2-15(b(3)(A). (4) MCCARTHY ENTERPRISES, INC. (i) GENERAL. Solely for purposes of determining whether an Eligible McCarthy Employee is eligible for the early unreduced retirement provisions of this Section 2-4-2(a) with - 9 - 73 respect to his Accrued Benefit as determined as of December 31, 1986, his continuous employment with McCarthy (as defined in Section 2-4-3) from December 31, 1986 until the date he first terminates employment with McCarthy shall be deemed to be employment as an Employee under this Plan. If an Eligible McCarthy Employee is reemployed as an Employee after December 31, 1986, his eligibility for the early unreduced retirement provisions with respect to that portion of his Accrued Benefit, if any, accrued after December 31, 1986 shall be determined without regard to the special rules of this Section 2-4-2(a)(4). Except as provided in Section 2-4-3 and this Section 2-4-2(a)(4), no individual shall receive service credit for employment with McCarthy for any purpose under this Plan. (ii) ELIGIBLE MCCARTHY EMPLOYEE. The term "Eligible McCarthy Employee" shall mean each Former 3M Participant who is a McCarthy Employee described in Section 2-4-3, and whose projected EUR Date as determined as of December 31, 1986 was on or before January 1, 2002. (5) THE MILNER COMPANY. (i) GENERAL. Solely for purposes of determining whether an Eligible Milner Employee is eligible for the early unreduced retirement provisions of this Section 2-4-2 with respect to his Accrued Benefit as determined as of April 26, 1987, his continuous employment with Milner (as defined in Section 2-4-3) from April 26, 1987 until the date he first terminates employment with Milner shall be deemed to be employment as an Employee under this Plan. Except as provided in Section 2-4-3 and this Section 2-4-2(a)(5) no individual shall receive service credit for employment with Milner for any purpose under this Plan. (ii) ELIGIBLE MILNER EMPLOYEE. The term "Eligible Milner Employee" shall mean each Former 3M Participant who is a Milner Employee described in Section 2-4-3, and whose projected EUR Date as determined as of April 26, 1987 was on or before May 1, 2002. (b) EARLY RETIREMENT TIMING AND AMOUNT. (1) TIMING. Each Former 3M Participant who terminates employment as an Employee as of the first day of the month coincident with or next following the date he reaches age 55 shall be fully vested in his Accrued Benefit (without regard to his completed Years of Service) and such Participant shall be entitled to begin receiving his Accrued Benefit as of such date or as of the first day of - 10 - 74 any calendar month before his Normal Retirement Date; provided (1) his employment actually terminates on or before such date and (2) his properly completed election is filed with the Plan Sponsor within the 90-day period ending on such date. (2) AMOUNT. If a Former 3M Participant terminates employment as an Employee in accordance with Section 2-4-2(b)(1) before his EUR Date if he has an EUR Date or if he does not have an EUR Date, then his benefit shall be the greater of (A) or (B) where (A) equals the greater of (i) or (ii) where (i) equals his Accrued Benefit as determined under Section 3.1 of the Plan taking into account the minimum benefit in accordance with Section 2-2-1(a)(3) as reduced in accordance with Section 5.2(c) as if such Former 3M Participant had elected to begin receiving his benefit as of the date his employment actually terminates and (ii) equals his Accrued Benefit as determined under Section 3.1 of the Plan taking into account the minimum benefit in accordance with Section 2-2-1(a)(3) as reduced by the product of 5% and 1/12th of the number of months by which his Annuity Starting Date precedes the earlier of his Normal Retirement Date or his EUR Date, if any and (B) equals his Accrued Benefit as determined in accordance with Section 2-2-1(b) as reduced by the product of 5% and 1/12th of the number of months by which his Annuity Starting Date precedes the earlier of his 62nd birthday or his EUR Date, if any. If such Participant terminates employment on or after his EUR Date, his benefit shall be determined in accordance with Section 2-4-2(a). (c) NORMAL BENEFIT FORM - FULLY SUBSIDIZED JOINT AND 50% SURVIVOR ANNUITY. Notwithstanding Section 6.1(a)(2), each Former 3M Participant who finally terminates employment as an Employee on or after age 55 shall be entitled to receive retirement benefits (exclusive of any supplement described in Section 2-4-2(a)(3)) in the form of a fully subsidized (as described in Code Section 417) joint and 50% survivor annuity payable to the Participant if the Participant has a Spouse on his Benefit Commencement Date and the monthly benefit payable to the Participant during his lifetime shall be equal to the monthly benefit payable to such Participant in the single life form of - 11 - 75 annuity described in Section 6.3(b) and after the Participant's death a monthly benefit equal to 50% of the benefit payable to the Participant shall be payable to his surviving Spouse for such Spouse's lifetime. 2-4-3 VESTED BENEFITS. (a) RETURN OF EMPLOYEE CONTRIBUTIONS. If a Former LBP Participant's employment terminates before his Vested Date, he shall not be entitled to any benefit under the Plan other than a return of his own contributions made prior to 1982, if any, with interest as described in Section 2-4-4. (b) MCCARTHY ENTERPRISES, INC. The term "McCarthy Employee" shall mean each individual (1) who is an Eligible Employee at the Columbus, Ohio District Office or the Cincinnati, Ohio District Office on December 31, 1986, (2) who as of such date has not reached his Vested Date and (3) who as of the close of business on such date becomes an employee of McCarthy Enterprises, Inc. ("McCarthy") as a result of the sale of certain assets of the Plan Sponsor to McCarthy on such date the benefit, if any, payable to or on behalf of a McCarthy Employee shall be determined as follows: (1) Solely for purposes of determining a McCarthy Employee's nonforfeitable interest in his Accrued Benefit as of December 31, 1986, his years of Vesting Service and his Vested Date with respect to such Accrued Benefit shall be determined as if his continuous employment with McCarthy from December 31, 1986 until the date he first terminates employment with McCarthy is employment as an Employee under this Plan. (2) Such Accrued Benefit shall be payable to him as of his Normal Retirement Date or as of the first day of any month coinciding with or following the date on which he reaches age 55 and completes 10 years of Vesting Service (as determined in accordance with this Section 2-4-3(b)) and any survivor benefit under Section 7 attributable to such Accrued Benefit shall be payable to his Spouse. (3) No benefit shall be payable under this Plan to any McCarthy Employee who terminates employment with McCarthy before he completes 10 years of Vesting Service or, if he is an employee of McCarthy on July 1, 1989, 5 years of Vesting Service except to the extent a benefit is payable to such individual as a result of reemployment as an Eligible Employee after December 31, 1986. (4) If a McCarthy Employee is reemployed as an Eligible Employee after December 31, 1986, his nonforfeitable interest in that portion of - 12 - 76 his Accrued Benefit, if any, accrued after such date shall be determined solely with respect to his years of Vesting Service under this Plan without regard to the special rules of this Section 2-4-3(b) and no such individual shall receive service credit (for vesting or benefit purposes) for employment with McCarthy with respect to any benefits accrued under this Plan after December 31, 1986. (c) THE MILNER COMPANY. The term "Milner Employee" shall mean each individual (1) who is an Eligible Employee at the Headquarters Office of Harris/DPI in Atlanta, Georgia, an Atlanta Region Office or a Fort Lauderdale Region Office on April 26, 1987, (2) who as of such date has not reached his Vested Date and (3) who as of April 27, 1987 becomes an employee of The Milner Company ("Milner") as a result of the sale of certain assets of the Plan Sponsor to Milner on such date. The nonforfeitable benefit, if any, payable to or on behalf of a Milner Employee shall be determined as follows (1) Solely for purposes of determining a Milner Employee's nonforfeitable interest in his Accrued Benefit as of April 26, 1987, his years of Vesting Service and his Vested Date with respect to such Accrued Benefit shall be determined as if his continuous employment with Milner from April 26, 1987 until the date he first terminates employment with Milner is employment as an Employee under this Plan. (2) Such Accrued Benefit shall be payable to him as of his Normal Retirement Date or as of the first day of any month coinciding with or following the date on which he reaches age 55 and completes 10 years of Vesting Service (as determined in accordance with this Section 2-4-3(c)) and any survivor benefit under Section 7 attributable to such Accrued Benefit shall be payable to his Spouse. (3) No benefit shall be payable under this Plan to any Milner Employee who terminates employment with Milner before he completes 10 years of Vesting Service, or, if he is an Employee of Milner on July 1, 1989, 5 years of Vesting Service (as determined in accordance with this Section 2-4-3(c)) except to the extent a benefit is payable to such individual as a result of reemployment as an Eligible Employee after April 26, 1987. (4) If a Milner Employee is reemployed as an Eligible Employee after April 26, 1987, his nonforfeitable interest in that portion of his Accrued Benefit, if any, accrued after April 26, 1987 shall be determined solely with respect to his years of Vesting Service under - 13 - 77 this Plan without regard to the special rules of this Section 2-4-3(c) and no such individual shall receive service credit (for vesting or benefit purposes) for employment with Milner with respect to any benefits accrued under this Plan after April 26, 1987. 2-4-4 BENEFITS ATTRIBUTABLE TO MANDATORY PARTICIPANT CONTRIBUTIONS. (a) INVOLUNTARY CASHOUT. If a Former LBP Participant terminates employment prior to his Vested Date and the Actuarial Equivalent single sum value of his accrued benefit attributable to his contributions contributed to the Plan prior to 1982 as determined in accordance with Code Section 411(c) is $3500 or less, such participant shall receive a single sum distribution of his entire accrued benefit attributable to such employee contributions and the nonvested portion of his Accrued Benefit shall be treated as a forfeiture unless he repays such distribution with interest as described in Section 2-4-4(e). (b) RIGHT OF IN SERVICE WITHDRAWAL. At any time prior to his termination of employment, a Former LBP Participant who contributed to the Plan prior to 1982 may request a withdrawal of his contributions which shall be paid in the normal annuity form described in Section 6.1 of the Plan. Notwithstanding the foregoing, a Former LBP Participant may request (subject to the spousal consent rules of Section 6.2 of the Plan unless his nonforfeitable benefit was attributable entirely to the employee contributions and the distribution was made before October 22, 1986) to receive a single sum distribution of his contributions to the Plan prior to 1982. A Participant who withdraws his contributions under this Section 2-4-4 at any time on or after January 1, 1982 and who thereafter repays the amount refunded with interest as provided in Section 2-4-4(d) below shall not be entitled to withdraw his contributions again prior to his Annuity Starting Date. (c) VOLUNTARY WITHDRAWAL ON TERMINATION. If a Former LBP Participant terminates employment and the Actuarial Equivalent single sum value of his vested Accrued Benefit attributable to employer and employee contributions exceeds $3500, such Participant's Accrued Benefit shall be paid in the normal annuity form described in accordance with Section 6.1 of the Plan. Notwithstanding the foregoing, such Participant may request (subject to the spousal consent rules of Section 6.2 of the Plan unless his nonforfeitable benefit was attributable entirely to employee contributions and the distribution was made before October 22, 1986) to receive a single sum distribution of his entire Accrued Benefit attributable to his employee contributions. If he does not repay such distribution with interest as described in Section 2-4-4(d), then any benefit to which such Participant (or the spouse of such Participant) may become entitled under the Plan shall be - 14 - 78 recomputed by excluding an amount equal to his accrued benefit derived from employee contributions as determined in accordance with Code Section 411(c). (d) INTEREST. Interest referred to in this Section 2-4-4 shall be computed at an annual rate of 3%, compounded annually, for periods prior to January 1, 1976, at an annual rate of 5%, compounded annually, for periods after 1975 but prior to July 1, 1988 and at an annual rate of 120% of the Federal mid-term rate (as in effect under Code Section 1274 for the first month of the Plan Year), compounded annually from July 1, 1988 until such Determination Date or repayment date, if applicable. The interest rate shall be adjusted from time to time in accordance with regulations under Code Section 411(c). (e) REPAYMENT. Repayment described in this Section 2-4-4 means repayment to the Plan of the amount of the distribution together with interest at the rates provided in Section 2-4-4(d) in cash before (i) in the case of a distribution on account of a separation from service, the earlier of 5 years after the first date on which the Participant resumes employment as an Eligible Employee or the close of 6 consecutive Breaks in Service following the distribution or (ii) in the case of any other withdrawal, 5 years after the date of the distribution. Section 2-5 OPTIONAL FORMS OF BENEFITS 2-5-1 FORMER LBP PARTICIPANTS. Subject to Section 6.2 of the Plan each Former LBP Participant may elect to have the following optional payment forms at his Annuity Starting Date in addition to the optional payment forms described in Section 6.3 of the Plan: OPTION A: A Participant who contributed to the Plan prior to 1982 also may elect to have his contributions with interest refunded to him under Section 2-4-4 at the time his first monthly benefit payment is made notwithstanding that he may already have withdrawn and repaid such contributions after 1981. In the event a Participant elects to have his contributions with interest refunded to him, his Accrued Benefit the amount of his benefits shall be recomputed by excluding from the annual amount of such benefit an amount equal to the accrued benefit derived from and the Actuarial Equivalent of the remaining benefit which would be payable to the Participant in a Straight Life Annuity may be paid in any optional form under Section 6.3. - 15 - 79 OPTION B: A single sum cash distribution of the portion of his benefit accrued under the Harris/LBP Plan as of December 31, 1981, and a monthly benefit payable under any optional form described in Section 6.3 of the Plan for that portion of his benefit accrued under the Plan after December 31, 1981. 2-5-2 FORMER 3M PARTICIPANTS. (1) GENERAL. Subject to Section 6.2 and to the limitations in this Section 2-5-2, each Former 3M Participant may elect to have that portion of his Accrued Benefit which does not exceed such Participant's benefit accrued under the 3M Plan as of his transfer date ("3M Benefit") paid in accordance with the terms of one of the options set forth in this Section 2-5-2 as of his Annuity Starting Date in an amount equal to the Actuarial Equivalent of the 3M Benefit to which the Participant otherwise would be entitled under Section 6.3(b). The excess, if any, of such Participant's Accrued Benefit under this Plan over his 3M Benefit shall be payable under one of the options set forth in Section 6.3. A benefit paid under this Section 2-5-2 shall be paid subject to the special rules set forth in Section 6.3(a)(2) through Section 6.3(a)(4). (2) 5 OR 15 YEAR PERIOD CERTAIN AND CONTINUOUS ANNUITY OPTION - means a monthly benefit which shall be payable during the lifetime of the Participant and shall, if the Participant dies within 5 or 15 years of his Annuity Stating Date, as elected by the participant, continue to be paid to his designated Beneficiary for the balance of such 5 or 15 year period. Section 2-6 OTHER SURVIVOR BENEFITS 2-6-1 SURVIVING SPOUSE. For distributions made on or after October 22, 1986, if a Former LBP Participant made contributions to this Plan and such Participant dies before his Vested Date, such Participant shall be treated as dying after his Vested Date for purposes of Section 7.1 and any survivor benefit payable to his surviving spouse under Section 7.1 shall be based on his Accrued Benefit attributable to his employee contributions then remaining in the Plan. 2-6-2 OTHER. If a Participant dies prior to his Annuity Starting Date under this Plan and a survivor annuity benefit is not payable to such Participant's surviving spouse under Section 7.1 or Section 7.2 of the Plan, then his Beneficiary shall be entitled to a survivor benefit equal to the amount, if any, of the Participant's contributions under the Plan prior to 1982, less withdrawals, with interest thereon computed at - 16 - 80 the rate described in Section 2-4-4, compounded annually, to the date of the Participant's death. If a Participant dies after his Annuity Starting Date, and if no survivor annuity benefit is payable to his surviving Spouse and if no benefit is payable to a Beneficiary under an optional form of benefit, then his Beneficiary shall be entitled only to the excess, if any, of (1) the Participant's contributions under the Plan prior to 1982, less withdrawals, with interest thereon computed at the rates described in Section 2-4-4, compounded annually, to his benefit commencement date, over (2) the aggregate of payments made under the Plan to such Participant. The survivor benefit payable under this Section 2-6-2, if any, shall be paid in a lump sum in cash. - 17 - 81 ATTACHMENT 3 TO EXHIBIT A TO THE LANIER WORLDWIDE, INC. PENSION PLAN FORMER BSD PARTICIPANTS Section 3-1 APPLICATION This Attachment 3 shall apply only to those Participants who are Former BSD Participants. Section 3-2 DEFINITIONS The terms in this Section 3-2 shall have the meanings set forth opposite such terms for purposes of this Attachment 3 and this Plan. Except as provided in this Section 3-2, a capitalized term shall have the meaning set forth in the Plan. 3-2-1 FORMER BSD PARTICIPANT - means a person who was a Former Lanier Participant as described in Attachment 1 to Exhibit A who was employed in the Business Systems Division and whose employment was involuntarily terminated after January 10, 1990 or who transferred to Syntrex, Inc. after January 26, 1990 but before March 1, 1990 as a result of the sale of assets between Harris Corporation and Syntrex, Inc. Section 3-3 TERMINATION BENEFITS 3-3-1 FULL VESTING. Each Former BSD Participant shall be fully vested in his Accrued Benefit determined as of the date he terminated employment or transferred to Syntrex, Inc. If a Former BSD Participant is reemployed as an Eligible Employee, he shall not receive credit (for vesting or benefit accrual purposes) for employment with Syntrex, Inc. with respect to any benefits accrued under this Plan. 3-3-2 IMMEDIATE BENEFIT. If a Former BSD Participant is transferred to Syntrex, Inc., such Participant shall be eligible, subject to the spousal consent rules of Section 6.2 - 1 - 82 of the Plan, to elect by filing with the Plan Sponsor a properly completed election form an immediate lump sum benefit or an immediate annuity benefit (life only annuity for a Participant who does not have a spouse on his Annuity Starting Date, joint and 50% survivor annuity for a Participant who does have a spouse on his Annuity Starting Date). Such immediate benefit shall be equal to the Actuarial Equivalent of the benefit which otherwise would be payable to such Participant in a life only annuity beginning at his Normal Retirement Date based on his Accrued Benefit determined immediately before he transferred to Syntrex, Inc. 83 ATTACHMENT 4 TO EXHIBIT A TO THE LANIER WORLDWIDE, INC. PENSION PLAN CERTAIN ADDITIONAL PROVISIONS Section 4-1 DEFINITIONS The following definitions were in effect for periods before August 1, 1991. 4-1-1 AVERAGE COMPENSATION - means as of any Determination Date for those Participants who were employed as an Employee on or after July 1, 1989 or, for Former LBP Participants, January 1, 1989, and who terminated employment before August 1, 1991, one-twelfth of the average of a Participant's Compensation during the 5 consecutive calendar year period in which such average is highest (or actual number of consecutive calendar years if less than 5) out of the 10 calendar year period (or actual number of such calendar years if less than 10) during which the Participant was an Employee ending immediately before the calendar year which includes such Determination Date. Notwithstanding the foregoing, if the Determination Date is a December 31 which occurs on or after the Participant's earliest Early Retirement Date or his Normal Retirement Age and the Participant actually terminates employment on such Determination Date, then the 10 calendar year period shall include the calendar year which ends with such Determination Date. See Attachments 1 through 3 of this Exhibit A for the definition which applied to Participants who were not employed as an Employee after June 30, 1989 or, for Former LBP Participants, after December 31, 1988. 4-1-2 COMPENSATION - means for each Employee the sum of (a) and (b) minus (c), where (a) equals (i) the total compensation of an Employee for any calendar year or portion thereof reported by one or more Affiliates on Internal Revenue Service Form W-2 (or any successor form) for such Employee for such period which is includible in his gross income for federal income tax purposes or (ii) for Plan Years beginning after June 30, 1990, compensation as defined in Section 3.11(a) of the Plan, (b) equals the elective deferrals made by an Affiliate on behalf of such Employee that are not includible in his gross income for federal income tax purposes for such period because they are contributed to a cash or deferred - 1 - 84 arrangement described in Code Section 401(k) or because they are excluded under Code Section 125, and (c) equals any payments made under a severance pay plan or program, any payment made in consideration of an Employee's release of claims in favor of an Affiliate, any payment attributable to foreign assignment differential and any payments made under Longer Term Incentive Plans. Notwithstanding the foregoing, Compensation shall not include any remuneration for services as a "leased employee" of an Affiliate and Compensation for any calendar year beginning after December 31, 1988 shall not include any amount in excess of $200,000 as adjusted for changes in the cost of living as provided in Code Section 415(d). This definition shall apply for calendar years beginning after June 30, 1989 or, for Former LBP Participants, after December 31, 1988, and before May 14, 1990. See Attachments 1 through 3 of this Exhibit A for the definition which applied to Participants who were not employed as an Employee after June 30, 1989 or, for Former LBP Participants, after December 31, 1988. 4-1-3 EMPLOYER - means for periods on or after October 1, 1989 and before January 2, 1991, the Plan Sponsor, the Executive Conference Center; Lanier Financial Services, Inc., and for the period from October 1, 1989 through October 30, 1989, Harris Technical Services Corporation; and each other affiliate which the Board designates in writing as such from time to time. Section 4-2 LANIER PLAZA EMPLOYEES The term "Plaza Employee" shall mean each individual (who was an Eligible Employee with the Executive Conference Center, Inc. before January 1, 1991 and who as of the close of business on January 1, 1991 became an employee of Hotel Management Services, Inc.). No Plaza Employee shall accrue any additional benefits under the Plan after January 1, 1991. Solely for purposes of determining a Plaza Employee's nonforfeitable interest in his Accrued Benefit as of January 1, 1991, his years of Vesting Service and his Vested Date with respect to such Accrued Benefit shall be determined as if his employment with Hotel Management Services, Inc. is employment as an Employee under this Plan as long as such Plaza Employee is treated as a "leased employee" of an Affiliate under Code Section 414. His Accrued Benefit shall be payable to him in accordance with Section 6; however, a Plaza Employee shall not be treated as having terminated employment until such time as he is no longer treated as a "leased employee" under this Plan or such earlier time as distribution is permissible under the Code and consistent with the timing rules of Section 6. EX-10.J 6 FORM 10-K EXHIBIT 10(J) 1 Exhibit 10(j) LANIER WORLDWIDE, INC. SAVINGS INCENTIVE PLAN (Amended and Restated June /s/ 28, 1994) 2 TABLE OF CONTENTS ARTICLE I HISTORY AND EFFECTIVE DATE ARTICLE II CONSTRUCTION PAGE ---- 2.1 Controlling Laws . . . . . . . . . . . . . . . . . . . . . . 2 2.2 Type of Plan . . . . . . . . . . . . . . . . . . . . . . . . 2 2.3 Construction . . . . . . . . . . . . . . . . . . . . . . . . 2 ARTICLE III DEFINITIONS 3.1 Account . . . . . . . . . . . . . . . . . . . . . . . . . . 3 3.2 Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . 3 3.3 Average Contribution Percentage . . . . . . . . . . . . . . 3 3.4 Average Deferral Percentage . . . . . . . . . . . . . . . . 3 3.5 Before-Tax Account . . . . . . . . . . . . . . . . . . . . . 3 3.6 Before-Tax Contributions . . . . . . . . . . . . . . . . . . 3 3.7 Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . 4 3.8 Board . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 3.9 Break in Service . . . . . . . . . . . . . . . . . . . . . . 5 3.10 Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 - i - 3 Page ---- 3.11 Compensation . . . . . . . . . . . . . . . . . . . . . . . . 5 3.12 Contribution Percentage . . . . . . . . . . . . . . . . . . 6 3.13 Deferral Percentage . . . . . . . . . . . . . . . . . . . . 6 3.14 Earnings and Profits . . . . . . . . . . . . . . . . . . . . 6 3.15 Election Form . . . . . . . . . . . . . . . . . . . . . . . 7 3.16 Elective Deferrals . . . . . . . . . . . . . . . . . . . . . 7 3.17 Eligible Employee . . . . . . . . . . . . . . . . . . . . . 7 3.18 Employee . . . . . . . . . . . . . . . . . . . . . . . . . . 7 3.19 Employer . . . . . . . . . . . . . . . . . . . . . . . . . . 7 3.20 Employment Commencement Date . . . . . . . . . . . . . . . . 7 3.21 Employment Termination Date . . . . . . . . . . . . . . . . 8 3.22 Entry Date . . . . . . . . . . . . . . . . . . . . . . . . . 8 3.23 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 3.24 Excess Aggregate Contributions . . . . . . . . . . . . . . . 8 3.25 Excess Contributions . . . . . . . . . . . . . . . . . . . . 8 3.26 Excess Deferrals . . . . . . . . . . . . . . . . . . . . . . 9 3.27 Family Member . . . . . . . . . . . . . . . . . . . . . . . 9 3.28 Forfeiture . . . . . . . . . . . . . . . . . . . . . . . . . 9 3.29 Harris/LBP Plan . . . . . . . . . . . . . . . . . . . . . . 9 3.30 Highly Compensated Participant . . . . . . . . . . . . . . . 9 3.31 Hour of Service . . . . . . . . . . . . . . . . . . . . . . 9 - ii - 4 Page ---- 3.32 Matching Account . . . . . . . . . . . . . . . . . . . . . . 9 3.33 Matching Contributions . . . . . . . . . . . . . . . . . . . 9 3.34 Matched Deferrals . . . . . . . . . . . . . . . . . . . . . 9 3.35 Maximum Deferral Percentage . . . . . . . . . . . . . . . . 10 3.36 Nonhighly Compensated Participant . . . . . . . . . . . . . 10 3.37 Normal Retirement Age . . . . . . . . . . . . . . . . . . . 10 3.38 Participant . . . . . . . . . . . . . . . . . . . . . . . . 10 3.39 Participation Requirement . . . . . . . . . . . . . . . . . 10 3.40 Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 3.41 Plan Quarter . . . . . . . . . . . . . . . . . . . . . . . . 10 3.42 Plan Sponsor . . . . . . . . . . . . . . . . . . . . . . . . 10 3.43 Plan Year . . . . . . . . . . . . . . . . . . . . . . . . . 10 3.44 Rollover Account . . . . . . . . . . . . . . . . . . . . . . 10 3.45 TRA 86 Requirements . . . . . . . . . . . . . . . . . . . . 10 3.46 Trust Agreement . . . . . . . . . . . . . . . . . . . . . . 11 3.47 Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . 11 3.48 Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . 11 3.49 Valuation Date . . . . . . . . . . . . . . . . . . . . . . . 11 3.50 Year of Service . . . . . . . . . . . . . . . . . . . . . . 11 - iii - 5 Page ---- ARTICLE IV PARTICIPATION 4.1 General Rule . . . . . . . . . . . . . . . . . . . . . . . . 13 4.2 Pre-Merger Plan . . . . . . . . . . . . . . . . . . . . . . 13 4.3 Reemployment Rule . . . . . . . . . . . . . . . . . . . . . 13 4.4 Absence from Service, Change in Status . . . . . . . . . . . 13 4.5 Plan Not An Employment Contract . . . . . . . . . . . . . . 13 4.6 Information . . . . . . . . . . . . . . . . . . . . . . . . 14 ARTICLE V CONTRIBUTIONS AND ACCOUNTS 5.1 Before-Tax Contributions . . . . . . . . . . . . . . . . . . 15 (a) Percentage . . . . . . . . . . . . . . . . . . . . . 15 (b) Payroll Deductions . . . . . . . . . . . . . . . . . 15 (c) Account Credits and Vesting . . . . . . . . . . . . 15 (d) Investment Gains and Losses . . . . . . . . . . . . 15 5.2 Election Rules (a) Initial Election . . . . . . . . . . . . . . . . . . 15 (b) Revised Election . . . . . . . . . . . . . . . . . . 16 (c) Termination of Election . . . . . . . . . . . . . . 16 (d) Resumption After Termination . . . . . . . . . . . . 16 (e) Timeliness and Election Procedures . . . . . . . . . 16 - iv - 6 Page ---- (f) Plan Sponsor Action . . . . . . . . . . . . . . . . 16 5.3 Matching Contributions and Forfeitures . . . . . . . . . . . 16 (a) Amount . . . . . . . . . . . . . . . . . . . . . . . 16 (b) Forfeitures . . . . . . . . . . . . . . . . . . . . 17 (c) Timing . . . . . . . . . . . . . . . . . . . . . . 17 (d) Insufficient Earnings and Profits . . . . . . . . . 17 (e) Account Credits and Vesting . . . . . . . . . . . . 17 (f) Investment Gains and Losses . . . . . . . . . . . . 17 5.4 Limitations on Allocations . . . . . . . . . . . . . . . . . 17 (a) General Rule . . . . . . . . . . . . . . . . . . . . 17 (b) Section 415 Limitations . . . . . . . . . . . . . . 17 (1) General Rule . . . . . . . . . . . . . . . 17 (2) Coordination . . . . . . . . . . . . . . . 18 (3) Corrections . . . . . . . . . . . . . . . . 18 (c) Individual Dollar Limit . . . . . . . . . . . . . . 19 (1) This Plan . . . . . . . . . . . . . . . . . 19 (2) Other Plans . . . . . . . . . . . . . . . . 19 (3) Claim . . . . . . . . . . . . . . . . . . . 19 (4) Determination of Investment Gain or Loss . . . . . . . . . . . . . . . . . . 20 (5) Distribution of Excess Deferrals . . . . . 20 (6) Forfeiture of Related Match . . . . . . . . 20 - v - 7 Page ---- (d) Limitations on Before-Tax Contributions for Highly Compensated Participants . . . . . . . . 20 (1) General . . . . . . . . . . . . . . . . . . 20 (2) Special Rules . . . . . . . . . . . . . . . 20 (A) Other Plan or Arrangements . . . . 20 (B) Other Requirements . . . . . . . . 21 (3) Distribution of Excess Contributions . . . . . . . . . . . . . . . 21 (4) Determination of Investment Gains or Losses . . . . . . . . . . . . . . . . . 21 (5) Forfeiture of Related Match . . . . . . . . 21 (6) Qualified Matching Contribution . . . . . 21 (e) Limitations on Matching Contributions for Highly Compensated Participants . . . . . . . . 22 (1) General . . . . . . . . . . . . . . . . . . 22 (2) Special Rules . . . . . . . . . . . . . . . 22 (A) Other Plan or Arrangements . . . . 22 (B) Other Requirements . . . . . . . . 23 (3) Distribution of Excess Aggregate Contributions . . . . . . . . . . 23 (f) Multiple Use Limitation . . . . . . . . . . . . . . 23 (g) Limitations on Deductibility . . . . . . . . . . . . 23 (h) Withholding Obligations and Account Balance . . . . 23 (i) Allocation Corrections . . . . . . . . . . . . . . . 24 - vi - 8 Page ---- 5.5 Rollover Accounts . . . . . . . . . . . . . . . . . . . . . 24 5.6 Account Investments . . . . . . . . . . . . . . . . . . . . 24 5.7 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 25 ARTICLE VI PLAN BENEFITS 6.1 Retirement Benefit . . . . . . . . . . . . . . . . . . . . . 26 6.2 Disability Benefit . . . . . . . . . . . . . . . . . . . . . 26 (a) Full Vesting . . . . . . . . . . . . . . . . . . . . 26 (b) Definition . . . . . . . . . . . . . . . . . . . . . 26 (c) Determination . . . . . . . . . . . . . . . . . . . 27 6.3 Death Benefit . . . . . . . . . . . . . . . . . . . . . . . 27 6.4 Vested Benefit . . . . . . . . . . . . . . . . . . . . . . . 27 (a) General Rule . . . . . . . . . . . . . . . . . . . . 27 (b) Vesting Schedule . . . . . . . . . . . . . . . . . . 27 (c) Reemployment . . . . . . . . . . . . . . . . . . . . 28 6.5 Forfeiture of Benefit of Missing Claimant . . . . . . . . . 28 6.6 Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 (a) Request . . . . . . . . . . . . . . . . . . . . . . 29 (b) Administration . . . . . . . . . . . . . . . . . . . 29 (c) Limitations and Security . . . . . . . . . . . . . . 29 (d) Interest Rate . . . . . . . . . . . . . . . . . . . 30 - vii - 9 Page ---- (e) Repayment and Default . . . . . . . . . . . . . . . 30 (f) Mechanics . . . . . . . . . . . . . . . . . . . . . 31 (g) Special Powers . . . . . . . . . . . . . . . . . . . 32 6.7 No In-Service Withdrawals . . . . . . . . . . . . . . . . . 32 ARTICLE VII BENEFIT DISTRIBUTION 7.1 Method . . . . . . . . . . . . . . . . . . . . . . . . . . 33 7.2 Distribution Deadlines . . . . . . . . . . . . . . . . . . . 33 (a) General Rule . . . . . . . . . . . . . . . . . . . . 33 (b) $3500 or Less . . . . . . . . . . . . . . . . . . . 33 (c) More than $3500 . . . . . . . . . . . . . . . . . . 33 (d) Statutory Deadlines . . . . . . . . . . . . . . . . 33 (1) Participant . . . . . . . . . . . . . . . . 33 (i) Initial Distribution . . . . . . . 33 (ii) Required Beginning Date . . . . . . 34 (2) Beneficiary . . . . . . . . . . . . . . . . 34 7.3 Direct Rollover . . . . . . . . . . . . . . . . . . . . . . 34 7.4 Claim for Benefit . . . . . . . . . . . . . . . . . . . . . 35 7.5 Mistakes . . . . . . . . . . . . . . . . . . . . . . . . . . 35 - viii - 10 Page ---- ARTICLE VIII NAMED FIDUCIARIES AND PLAN SPONSOR 8.1 Named Fiduciaries . . . . . . . . . . . . . . . . . . . . . 36 8.2 Allocation and Delegation by Named Fiduciaries . . . . . . . . . . . . . . . . . . . . . . . . 36 8.3 Advisers . . . . . . . . . . . . . . . . . . . . . . . . . . 36 8.4 Dual Fiduciary Capacities . . . . . . . . . . . . . . . . . 36 8.5 Plan Sponsor Power and Duties . . . . . . . . . . . . . . . 36 (a) General . . . . . . . . . . . . . . . . . . . . . . 36 (b) Records . . . . . . . . . . . . . . . . . . . . . . 36 (c) Information . . . . . . . . . . . . . . . . . . . . 37 (d) Reliance . . . . . . . . . . . . . . . . . . . . . . 37 (e) Expenses . . . . . . . . . . . . . . . . . . . . . . 37 ARTICLE IX TRUST FUND AND TRUSTEE ARTICLE X AMENDMENT AND TERMINATION 10.1 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . 39 10.2 Termination . . . . . . . . . . . . . . . . . . . . . . . . 39 - ix - 11 Page ---- ARTICLE XI MISCELLANEOUS 11.1 Spendthrift Clause . . . . . . . . . . . . . . . . . . . . . 40 11.2 Legally Incompetent . . . . . . . . . . . . . . . . . . . . 40 11.3 Benefits Supported Only by Trust Fund . . . . . . . . . . . 40 11.4 Discrimination . . . . . . . . . . . . . . . . . . . . . . . 40 11.5 Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 11.6 Nonreversion . . . . . . . . . . . . . . . . . . . . . . . . 41 11.7 Merger or Consolidation . . . . . . . . . . . . . . . . . . 41 11.8 Reporting and Disclosure . . . . . . . . . . . . . . . . . 42 11.9 Top Heavy Plan . . . . . . . . . . . . . . . . . . . . . . . 42 (a) Determination . . . . . . . . . . . . . . . . . . . 42 (b) Special Top Heavy Plan Rules . . . . . . . . . . . . 43 11.10 Qualified Domestic Relations Order . . . . . . . . . . . . . 43 Exhibit A - x - 12 LANIER WORLDWIDE, INC. SAVINGS INCENTIVE PLAN ARTICLE I HISTORY AND EFFECTIVE DATE This Lanier Worldwide, Inc. Savings Incentive Plan amends, restates and renames the Harris/3M Document Products, Inc. Savings Incentive Plan as originally effective as of April 1, 1986. That Plan was last amended and restated effective as of July 1, 1987. This amendment and restatement is intended to satisfy all applicable TRA 86 Requirements effective as of July 1, 1989 and any earlier dates required by applicable TRA 86 Requirements. The name of this Plan was changed, effective as of October 1, 1989, as a result of the merger of the Harris/Lanier Advantage Plan ("Harris/LBP Plan") into this Plan, effective as of October 1, 1989. The Harris/LBP Plan was originally effective as of October 1, 1986. This Plan also is intended to amend the Harris/LBP Plan to the extent necessary to satisfy applicable TRA 86 Requirements. This Plan was amended and restated on April 30, 1990. This amendment and restatement is effective June 30, 1992. This Plan was further amended on June/S/ 28, 1994, to satisfy all applicable TRA 86 Requirements and the requirements of subsequent legislation that are effective after July 1, 1989. 13 ARTICLE II CONSTRUCTION 2.1 CONTROLLING LAWS. To the extent state laws are not preempted by federal law, this Plan and the related Trust Agreement shall be construed and interpreted under the laws of the State of Maryland. 2.2 TYPE OF PLAN. The Plan Sponsor intends that this Plan and the related Trust Agreement satisfy the requirements for tax exempt status under Code Section 401 (including Code Section 401(k) and Section 401(m)), Code Section 501(a) and related Code sections as a "profit sharing plan" which includes a cash or deferred arrangement. The provisions of this Plan and the Trust Agreement shall be construed and interpreted in accordance with the requirements of the Code, ERISA, and the applicable regulations. 2.3 CONSTRUCTION. The headings and subheadings in this Plan have been inserted for convenience of reference only and are to be ignored in the construction of its provisions. Wherever appropriate, the masculine shall be read as the feminine, the plural as the singular, and the singular as the plural. References in this Plan to a section (Section ) shall be to a section in this Plan unless otherwise indicated. References in this Plan to a section of the Code, ERISA or any other federal law shall also refer to the regulations issued under such section. Further, except as expressly stated otherwise, no provision of this Plan or the related Trust Agreement is intended to nor shall grant any rights to Participants or Beneficiaries or any interest in the Fund in addition to those minimum rights or interests required to be provided under ERISA and the Code. - 2 - Savings Incentive Plan 14 ARTICLE III DEFINITIONS The capitalized terms and phrases used in this Plan shall have the meanings set forth in this Article 3: 3.1 ACCOUNT -- means the balance to the credit of a Participant under this Plan. When amounts in a Participant's Account are described in terms of their origin, the Account may be divided into the Before-Tax Account, the Matching Account, and the Rollover Account, if any. 3.2 AFFILIATE -- means for any Plan Year the Plan Sponsor and any trade or business, whether or not incorporated, which (during such year) is a single employer with the Plan Sponsor under Code Section 414(b), (c), (m) or (o); provided, solely for purposes of Section 5.4(b) (Section 415 Limitations), the phrase "more than 50 percent" shall be substituted for "at least 80 percent" each place that "at least 80 percent" appears in Code Section 1563(a)(1). 3.3 AVERAGE CONTRIBUTION PERCENTAGE -- means for each Plan Year the average (expressed as a percentage) of the Contribution Percentages computed separately (a) for the group of Highly Compensated Participants during such Plan Year and (b) for the group of Nonhighly Compensated Participants during such Plan Year. 3.4 AVERAGE DEFERRAL PERCENTAGE -- means for each Plan Year the average (expressed as a percentage) of the Deferral Percentages computed separately (a) for the group of Highly Compensated Participants during such Plan Year and (b) for the group of Nonhighly Compensated Participants during such Plan Year. 3.5 BEFORE-TAX ACCOUNT -- means the portion of a Participant's Account attributable to the Before-Tax Contributions made on his behalf under this Plan. 3.6 BEFORE-TAX CONTRIBUTIONS -- means (a) that part of a Participant's Compensation (as described in Section 3.11(a)) which he elects to defer into this Plan and which is intended to be excluded from his gross income for federal income tax purposes solely by reason of the application of Code Section 401(k) and Code Section 402(a)(8) and (b) any additional contribution made by the Plan Sponsor under Section 5.4(d). - 3 - Savings Incentive Plan 15 Article III: Definiations 3.7 BENEFICIARY -- means either (a) if a Participant is married, the person who is his spouse on his date of death, unless such spouse consents (or consented) on an Election Form signed before a notary public to the specific Beneficiary designation made by the Participant, or such spouse's consent is not required under federal law, (b) the person or persons so designated in writing by a Participant on a properly completed Election Form which he delivers to the Plan Sponsor before his death or, if no such designation is made, or if no person so designated survives the Participant or, if after checking his last known mailing address, the whereabouts of the person so designated is unknown, (c) the person or persons, if any, expressly so designated by the Participant to receive the death benefit payable under the group term life insurance program maintained by his Employer or, if no such designation was made, or if no such person so designated survives the Participant, or, if after checking his last known mailing address, the whereabouts of the person so designated is unknown, (d) the Participant's surviving children (natural and adopted) in equal shares or, if there are no such surviving children, (e) the estate of the last survivor as between the Participant and his Beneficiary, if a personal representative of such person has qualified within 12 months from the date of such person's death or, if no personal representative has so qualified, (f) any heirs-at-law of the Participant and his Beneficiary, as determined by the Plan Sponsor under the laws of the State of Georgia, whose whereabouts are known to the Plan Sponsor. The determination of whether a person is the spouse of a deceased Participant shall be made by the Plan Sponsor from the Employer's records or from evidence timely furnished to the Plan Sponsor by the person claiming to be such spouse. 3.8 BOARD -- means the Board of Directors of the Plan Sponsor, or any committee of the Board authorized to act for the Board under applicable law. - 4 - Savings Incentive Plan 16 Article III: Definitions 3.9 BREAK IN SERVICE -- means any 12 consecutive month period which begins on an Employment Termination Date or anniversary of such date during which an Employee or former Employee fails to complete an Hour of Service. 3.10 CODE -- means the Internal Revenue Code of 1986, as amended, or any successor statute, and, in the event an amendment to the Code renumbers a section of the Code referred to in this Plan, any such reference to such section automatically shall become a reference to such section as renumbered. 3.11 COMPENSATION -- means for each Participant for any applicable period, (a) For purposes of determining the amount of Elective Deferrals and the Matching Contribution, the regular salary or wages, overtime, bonuses, commissions, and regional and supplemental differential premiums paid to such Participant during such period by one or more Employers, but does not include long term incentive awards, severance payments, or foreign supplemental allowances. (b) For purposes of determining the Code Section 415 limitations described in Section 5.4 for Plan Years beginning after June 30, 1990, compensation as defined in Code Section 415(c)(3). The Plan Sponsor may compute the Code Section 415 limitations with respect to a Plan Year using any allowable definition of compensation. (c) For purposes of computing a Participant's Average Contribution Percentage and Average Deferral Percentage, and for any other testing purpose with respect to a Plan Year, the Plan Sponsor may use any allowable definition of compensation. The Elective Deferrals made by an Employer on behalf of such Participant that are not includible in his gross income for federal income tax purposes for such period because they are contributed to a cash or deferred arrangement described in Code Section 401(k) or because they are excluded under Code Section 125 shall be included as Compensation for all purposes except for determining the Code Section 415 limitations. Compensation shall not include any amounts paid to or on behalf of an Employee for any period when such Employee is not eligible to make Before-Tax Contributions under this Plan unless the inability to make Before-Tax Contributions is due to a suspension under Section 5.2(d) or (f) or the application of the Code Section 415 limitations described in Section 5.4. For purposes of this Plan, Compensation shall not include any amount received from an Affiliate with - 5 - Savings Incentive Plan 17 Article III: Definitions respect to services rendered while the Affiliate was not an Employer. Compensation for any Plan Year beginning on or after July 1, 1994 shall not include any amount in excess of $150,000, adjusted for changes in the cost of living as provided under Code Section 415(d). 3.12 CONTRIBUTION PERCENTAGE -- means with respect to all Highly Compensated Participants and all Nonhighly Compensated Participants for each Plan Year, the ratio, calculated separately for each Participant in each such group, of (a) the amount of the Matching Contributions, if any, to be credited for such Plan Year to his Matching Account to (b) his Compensation for such Plan Year. For purposes of determining the Contribution Percentages of each Highly Compensated Participant who is a 5-percent owner or one of the ten most highly-paid Highly Compensated Participants, the Matching Contributions and Compensation of his "family members" (as described in Code Section 414(q)(6)) shall be treated solely as the Matching Contributions and Compensation of such Highly Compensated Participant. 3.13 DEFERRAL PERCENTAGE -- means with respect to all Highly Compensated Participants and all Nonhighly Compensated Participants for each Plan Year, the ratio, calculated separately for each Eligible Employee in each such group, of (a) the amount of his Before-Tax Contributions, if any, to be credited for such Plan Year to his Before-Tax Employee Account to (b) his Compensation for such Plan Year. For purposes of determining the Deferral Percentage of each Highly Compensated Participant who is a 5-percent owner or one of the ten most highly-paid Highly Compensated Participants, the Before-Tax Contributions and Compensation of any Family Member shall be treated solely as the Before-Tax Contributions and Compensation of such Highly Compensated Participant. 3.14 EARNINGS AND PROFITS -- the net income of an Employer as determined for each Plan Quarter by the Employer for financial accounting purposes after excluding start-up expenses. - 6 - Savings Incentive Plan 18 Article III: Definitions 3.15 ELECTION FORM -- means the form provided by the Plan Sponsor for making the elections and designations called for under this Plan and no such form shall be effective unless properly completed and timely delivered in accordance with such rules as the Plan Sponsor shall adopt from time to time. 3.16 ELECTIVE DEFERRALS -- means for each Participant for each calendar year, any elective contribution made on behalf of such Participant under this Plan pursuant to such Participant's election under Section 5.1. 3.17 ELIGIBLE EMPLOYEE -- means for each Plan Year each Employee of an Employer other than (a) an Employee who is treated as such solely by reason of the "leased employee" rules set forth in Code Section 414(n), (b) an Employee who is a member of (or who is represented by) collective bargaining unit which has failed to reach an agreement with his Employer that he be eligible to participate in this Plan, (c) an Employee who receives no earned income from an Employer under the Employer's United States payroll system, (d) an Employee who is employed by the Plan Sponsor at the Puerto Rico branch, (e) an Employee who is classified on the personnel records of an Employer as employed in a temporary, summer, or casual part-time position for short-term work load, which employment is intended to terminate upon completion of such assignment. 3.18 EMPLOYEE -- means a person who is employed and paid as a full-time, part-time, regular or temporary employee of an Affiliate or who is treated as such under the "leased employee" rules set forth in Code Section 414(n). 3.19 EMPLOYER -- means the Plan Sponsor; for periods before December 31, 1990, the Executive Conference Center, Inc.; Lanier Financial Services, Inc.; and each other Affiliate which the Plan Sponsor designates in writing as such from time to time. 3.20 EMPLOYMENT COMMENCEMENT DATE -- means the first date on which an Employee first performs an Hour of Service or, if a former Employee is - 7 - Savings Incentive Plan 19 Article III: Definitions reemployed after he has a Break in Service, the first date on which the reemployed Employee performs an Hour of Service after such Break in Service. 3.21 EMPLOYMENT TERMINATION DATE -- means as to each period of employment for each Employee the first to occur of (a) the date on which he quits, retires, is discharged or dies or (b) the date on which a 12 consecutive month period ends during which he did not perform an Hour of Service. 3.22 ENTRY DATE -- means (1) for periods beginning before October 1, 1989, the first day in the first payroll period in each calendar month; (2) for periods beginning after September 30, 1989 the first day in the first payroll period beginning in each Plan Quarter; (3) for periods beginning after June 30, 1992, the first day of the bi-weekly payroll period beginning on or after the date on which an Eligible Employee satisfies the Participation Requirements; and (4) for purposes of Section 5.2(b) hereof, the first day in the first payroll period beginning after May 1, 1992. 3.23 ERISA -- means the Employee Retirement Income Security Act of 1974, as amended, or any successor statute and, in the event an amendment to ERISA renumbers a section of ERISA referred to in this Plan, any such reference to such section automatically shall become reference to such section as renumbered. 3.24 EXCESS AGGREGATE CONTRIBUTIONS -- means the excess of (a) the Matching Contributions actually made on behalf of Highly Compensated Participants for a Plan Year over (b) the maximum amount of such contributions permitted for such Plan Year under Code Section 401(m)(2)(A). Such maximum amount shall be determined by reducing Matching Contributions made on behalf of such Highly Compensated Participants in order of their actual Contribution Percentages, beginning with the highest of such percentages. 3.25 EXCESS CONTRIBUTIONS -- means the excess of (a) the Before-Tax Contributions actually made on behalf of Highly Compensated Participants for a Plan Year over (b) the maximum amount of such contributions permissible for such Plan Year under Code Section 401(k)(3)(A). Such maximum amount shall be determined by reducing Before-Tax Contributions made on behalf of such Highly Compensated Participants in order of their actual Deferral Percentages, beginning with the highest of such percentages. In the case of a Highly Compensated Participant whose actual Deferral Percentage is determined under the family aggregation rules, the amount of excess contributions shall be determined in accordance with the leveling method of Treasury Regulations Section 1.401(k)-1(f)(2) and Excess - 8 - Savings Incentive Plan 20 Article III: Definitions Contributions shall be allocated among the Family Members in proportion to their respective contributions. 3.26 EXCESS DEFERRALS -- means for each Participant for each Plan Year the Before-Tax Contributions for such Plan Year that the Participant designates as exceeding the $7,000.00 limit set forth in Code Section 402(g), as such limit is adjusted for cost of living increases in accordance with Code Section 402(g), pursuant to the procedure set forth in Section 5.4(c). 3.27 FAMILY MEMBER -- means an individual described in Code Section 414(q)(6). 3.28 FORFEITURE -- the dollar amount deducted from a Participant's Matching Account and forfeited in accordance with this Plan. 3.29 HARRIS/LBP PLAN - means the Harris/Lanier Advantage Plan as amended from time to time. 3.30 HIGHLY COMPENSATED PARTICIPANT -- means each Participant who is a "highly compensated employee" within the meaning of Code Section 414(q) as determined by the Plan Sponsor in accordance with reasonable and nondiscriminatory rules established by the Plan Sponsor, uniformly and consistently applied. 3.31 HOUR OF SERVICE -- means each hour for which an Employee is paid, or entitled to payment, for the performance of duties as an Employee during any period of employment as such. 3.32 MATCHING ACCOUNT -- means the bookkeeping subaccount maintained as part of a Participant's Account to show his vested interest in the Trust Fund attributable to the Matching Contributions made on his behalf under this Plan. 3.33 MATCHING CONTRIBUTIONS -- means the contributions made by the Plan Sponsor in accordance with Section 5.3. 3.34 MATCHED DEFERRALS - means for each pay period that portion of the Before-Tax Contributions contributed on behalf of a Participant for such pay period which do not exceed 3% of his Compensation for such pay period. - 9 - Savings Incentive Plan 21 Article III: Definitions 3.35 MAXIMUM DEFERRAL PERCENTAGE -- means (a) for each Nonhighly Compensated Participant, 15%, and (b) for each Highly Compensated Participant, 6%, or such other percentage within limitations established by the Internal Revenue Service, not to exceed 15%. 3.36 NONHIGHLY COMPENSATED PARTICIPANT -- means for each Plan Year each Participant other than a Highly Compensated Participant. 3.37 NORMAL RETIREMENT AGE -- means age 65. 3.38 PARTICIPANT -- means for any Plan Year an Eligible Employee who has satisfied the Participation Requirement and has become eligible to make Before-Tax Contributions under this Plan in accordance with Article 4. 3.39 PARTICIPATION REQUIREMENT -- means the later of the completion of one Year of Service or the attainment of age 21. 3.40 PLAN -- means this Lanier Worldwide, Inc. Savings Incentive Plan as set forth in this document, and as amended from time to time, and, for periods prior to October 1, 1989, the Harris/3M Document Products, Inc. Savings Incentive Plan, as amended from time to time. 3.41 PLAN QUARTER -- means each calendar quarter in each Plan Year. 3.42 PLAN SPONSOR -- means Lanier Worldwide, Inc. and any successor to such corporation and, for periods before October 1, 1989, Harris/3M Document Products, Inc. 3.43 PLAN YEAR -- means the fiscal year ending each June 30. 3.44 ROLLOVER ACCOUNT -- means the portion of a Participant's Account consisting of funds transferred from another qualified plan pursuant to the provisions of Section 5.5, together with any earnings, and reduced by any investment losses, thereon. 3.45 TRA 86 REQUIREMENTS -- means all applicable requirements of the Tax Reform Act of 1986, the Omnibus Budget Reconciliation Act of 1986, the Omnibus Budget Reconciliation Act of 1987, the Technical and Miscellaneous Revenue Act of 1988 and those requirements treated by the IRS as subject to Section 1140 of the Tax - 10 - Savings Incentive Plan 22 Article III: Definitions Reform Act of 1986 as well as any technical corrections to those requirements contained in the Revenue Reconciliation Act of 1989. 3.46 TRUST AGREEMENT -- means the Harris Corporation Trust Agreement established as part of this Plan, as amended from time to time. 3.47 TRUST FUND -- means the assets held by the Trustee in accordance with the Trust Agreement. 3.48 TRUSTEE -- means the person or persons acting as the trustee from time to time under the Trust Agreement. 3.49 VALUATION DATE -- means such date or dates within a Plan Year as may be so designated by the Plan Sponsor and shall occur at least monthly. 3.50 YEAR OF SERVICE -- means each year of employment completed in any "period of employment" as an Employee. (a) CONTINUOUS EMPLOYMENT. A "period of employment" for this purpose will be deemed to start on an Employee's Employment Commencement Date and end on that Employment Termination Date which coincides with the first day of his first Break in Service following that Employment Commencement Date. Thus, an Employee will receive credit for each day of employment and for each day of any separation from service due to an absence or termination of employment if the absence or termination is less than 12 consecutive months long. (b) TERMINATION/REEMPLOYMENT. Except as provided in Section 3.50(c) and (d), if an Employee terminates employment and is reemployed more than 12 months after such Employment Termination Date, his Years of Service shall be determined by aggregating the service completed in each period of employment in accordance with the following rules: (1) FULL YEARS - First, aggregate the full years of employment completed in each period of employment. (2) EXTRA MONTHS - Next, aggregate the number of his completed months of employment in each period of employment in excess of his full years of employment in each such period into additional full years of employment on the basis that each month taken into account shall be considered as 1/12 of a year. - 11 - Savings Incentive Plan 23 Article III: Definitions (3) EXCESS DAYS - Finally, aggregate the number of days of employment in each period of employment in excess of completed months of employment into additional months of employment on the basis that 30 days of such employment equals one month. (c) Except as expressly provided in this Plan prior to this amendment and restatement for certain transferred employees, no period of employment completed by an Employee before he reaches age 18 shall be taken into account in calculating his Years of Service for purposes of Section 6.4. (d) Except as otherwise provided, no period of employment which an Employee completes as an employee of any other organization whatsoever shall be taken into account under this Plan unless such organization is an Affiliate. (e) Each Employee shall receive credit for periods of employment with Harris Corporation or its affiliates to the extent that such Employee would have received credit for such employment if he had been so employed with the Plan Sponsor without regard to whether Harris Corporation or the affiliate was an Affiliate of the Plan Sponsor at the time such service was completed or to whether the Code or ERISA requires that he receive such credit. - 12 - Savings Incentive Plan 24 ARTICLE IV PARTICIPATION 4.1 GENERAL RULE. Each Eligible Employee shall become a Participant on the first Entry Date which immediately follows or is coincident with the date he satisfies the Participation Requirement. Each Participant who is an Eligible Employee shall be eligible (but shall not be required) to make Before-Tax Contributions in accordance with Article 5. 4.2 PRE-MERGER PLAN. Each person who was a Participant in the Harris/LBP Plan on September 30, 1989 and who is an Eligible Employee on October 1, 1989 shall continue to be a Participant in this Plan. 4.3 REEMPLOYMENT RULE. If an Employee terminates employment before he satisfies the Participation Requirement and he is thereafter reemployed, he shall be subject to the general participation rule of Section 4.1. If an Employee terminates employment after he satisfies the Participation Requirement but before he becomes a Participant and he is thereafter reemployed, he shall become a Participant on the later of (a) the date on which he becomes eligible to participate under Section 4.1 or (b) the first day of the first pay period beginning after his reemployment, provided he is an Eligible Employee on such date. If a Participant terminates employment and he is thereafter reemployed, he shall resume participation on the first day of the first pay period beginning after his reemployment on which he is an Eligible Employee, provided that he completes a new enrollment and designation of beneficiary form. 4.4 ABSENCE FROM SERVICE, CHANGE IN STATUS. If an Employee fails to become a Participant on an Entry Date solely because he was absent from service or was not employed as an Eligible Employee on such Entry Date and he is reemployed as an Eligible Employee, he shall become a Participant on the first day of the first pay period beginning after he resumes employment as an Eligible Employee. 4.5 PLAN NOT AN EMPLOYMENT CONTRACT. This Plan is not a contract of employment and participation in this Plan shall not give any Employee the right to be retained in the employ of the Plan Sponsor or any Affiliate, nor, upon termination of his employment, to have any interest in the Trust Fund except as expressly provided in this Plan. - 13 - Savings Incentive Plan 25 Article IV: Participation 4.6 INFORMATION. Each Eligible Employee shall complete and deliver an Election Form to the Plan Sponsor which sets forth such information as the Plan Sponsor deems necessary for the orderly administration of this Plan. - 14 - Savings Incentive Plan 26 ARTICLE V CONTRIBUTIONS AND ACCOUNTS 5.1 BEFORE-TAX CONTRIBUTIONS. (a) PERCENTAGE. Subject to the rules set forth in this Section 5.1, in Section 5.2 (Election Rules) and in Section 5.4 (Limitations on Allocations), each Participant who is an Eligible Employee may elect to defer Compensation into this Plan in 1% increments, up to the Maximum Deferral Percentage. (b) PAYROLL DEDUCTIONS. All contributions described in Section 5.1(a) shall be made exclusively through payroll withholding, and such contributions shall be transferred by the Employer to the Trustee as soon as practicable after the end of the calendar month which includes the end of the payroll period from which such contributions are withheld. (c) ACCOUNT CREDITS AND VESTING. Subject to the limitations under Section 5.4, any Before-Tax Contributions made on behalf of each Participant since the immediately preceding Valuation Date shall be credited to his Before-Tax Account as of each Valuation Date. Subject to investment gains and losses, a Participant's interest in contributions which are credited to his Before-Tax Account shall be fully vested. (d) INVESTMENT GAINS AND LOSSES. The investment gains and losses (whether realized or unrealized) for each investment fund within the Trust Fund shall be determined by, or at the direction of, the Plan Sponsor as of each Valuation Date, and such investment gains and losses shall be credited to each Before-Tax Account as of such Valuation Date in the same proportion that the balance to such account in such fund as of such Valuation Date bears to the balance of all Before-Tax Accounts in such fund as of such Valuation Date. For purposes of crediting investment gains and losses as of any Valuation Date, the balance of a Before-Tax Account shall be determined before crediting any Before-Tax Contributions credited to such account as of such Valuation Date. 5.2 ELECTION RULES. (a) INITIAL ELECTION. A Participant's initial election under Section 5.1 for any period of employment shall be effective as of the first pay day which occurs on or after the Entry Date on or after which (1) he timely delivers a properly completed Election Form to the Plan Sponsor and (2) he satisfies the Participation Requirements. An election shall remain in effect until revised or terminated. No Participant shall be required to make an election, and no benefits (other than the - 15 - Savings Incentive Plan 27 Article V: Contributions and Accounts benefits from Before-Tax Account and a Matching Account) shall be conditioned on a Participant making such an election. (b) REVISED ELECTION. An election, once effective, only can be revised by a Participant once per calendar quarter, effective for the first pay period beginning on or immediately following the date on which he timely delivers a properly completed Election Form to the Plan Sponsor. (c) TERMINATION OF ELECTION. A Participant shall have the right to terminate an election to make Before-Tax Contributions at any time during a Plan Year, and any such termination shall become effective as soon as practicable after the Participant properly completes and delivers the related Election Form to the Plan Sponsor. (d) RESUMPTION AFTER TERMINATION. An Eligible Employee who has terminated an election to make Before-Tax Contributions may elect to resume making Before-Tax Contributions in accordance with Section 5.1 effective for the first pay period which begins at least 90 days after the date his termination became effective, provided he timely delivers a properly completed Election Form to the Plan Sponsor before the immediately preceding Entry Date. (e) TIMELINESS AND ELECTION PROCEDURES. The Plan Sponsor from time to time shall establish and shall communicate in writing to Participants such reasonable deadlines, rules and procedures for making the elections described in this Plan as the Plan Sponsor in its absolute discretion deems appropriate under the circumstances for the proper administration of this Plan. (f) PLAN SPONSOR ACTION. The Plan Sponsor shall have the right at any time unilaterally to reduce the contribution which an Eligible Employee elected be made on his behalf if the Plan Sponsor acting in its absolute discretion determines that such reduction might be necessary to satisfy the limitations of Section 5.4. 5.3 MATCHING CONTRIBUTIONS AND FORFEITURES. (a) AMOUNT. Subject to the rules set forth in this Section 5.3 and Section 5.4 (Limitations on Allocations), the Plan Sponsor on behalf of each Employer shall make a Matching Contribution from the current Earnings and Profits of all Employers for each Plan Quarter on behalf of each Participant who is employed as an Eligible Employee on the last day of such Plan Quarter. Such Matching Contribution shall equal the sum of 50% of the Matched Deferrals contributed on his behalf for each pay period during such Plan Quarter. - 16 - Savings Incentive Plan 28 Article V: Contributions and Accounts (b) FORFEITURES. Forfeitures shall be treated as part of the Matching Contributions described in Section 5.3(a). (c) TIMING. The Matching Contribution for any Plan Year shall be made on or before the due date for filing the Plan Sponsor's federal income tax return for the fiscal year which ends with or within such Plan Year. (d) INSUFFICIENT EARNINGS AND PROFITS. If the Employers have insufficient current Earnings and Profits and Forfeitures to make the full contribution called for under Section 5.3(a), the Plan Sponsor may make a smaller contribution for that plan Quarter or no contribution. (e) ACCOUNT CREDITS AND VESTING. The Matching Contributions made on behalf of each Participant shall be credited by, or at the direction of, the Plan Sponsor to his Matching Account as of the date as of which such contribution is made. A Participant's vested interest in the Matching Contributions (and in the investment gains and losses allocable to such contributions) credited to his Matching Account shall be determined under Section 6.4. (f) INVESTMENT GAINS AND LOSSES. The investment gains and losses (whether realized or unrealized) for each investment fund within the Trust Fund shall be determined by, or at the direction of, the Plan Sponsor as of such Valuation Date, and such investment gains and losses shall (after deductions for expenses, if any) be credited to each Matching Account as of such Valuation Date in the same proportion that the balance to each such account in such fund as of such Valuation Date bears to the balance of all Matching Accounts in such fund as of such Valuation Date. For purposes of crediting investment gains and losses as of any Valuation Date, the balance to a Matching Account shall be determined before crediting any Matching Contributions which are credited as of such Valuation Date. 5.4 LIMITATIONS ON ALLOCATIONS. (a) GENERAL RULE. The contributions made under Section 5.1 and Section 5.3 and the crediting of such contributions to a Participant's Account shall be subject to limitations, applied in the following order: (b) SECTION 415 LIMITATIONS. (1) GENERAL RULE. The Plan Year shall be the "limitation year." For any Plan Year, the sum of the amounts (including any Forfeitures) which are allocated to a Participant's Account for such Plan Year as Matching - 17 - Savings Incentive Plan 29 Article V: Contributions and Accounts Contributions and as Before-Tax Contributions, when added to the contributions which are treated under Section 5.4(b)(2) as made on behalf of such Participant under this Plan shall not exceed the lesser of (i), (ii) or (iii), where (i) equals 25% of the Participant's Compensation for such Plan Year, (ii) equals $30,000, as adjusted as of the first day of each Plan Year to equal the inflation adjusted figure, if any, as set by the Internal Revenue Service for the calendar year which includes the last day of such Plan Year, and (iii) equals such amount as the Plan Sponsor deems necessary or appropriate to satisfy the requirements of Code Section 415 (including any applicable transition rules) taking into account the coordination rules of Section 5.4(b)(2) and the correction provisions of Section 5.4(b)(3). (2) COORDINATION. (i) If for any Plan Year a contribution is made on behalf of a Participant for such year under any other defined contribution plan maintained by an Affiliate, such contribution shall be treated under this Section 5.4(b) as made under this Plan. (ii) If a defined benefit plan is adopted or maintained by an Affiliate under which a benefit is accrued on behalf of a Participant, any adjustment required to satisfy the requirements of Code Section 415 as a result of his participation in such plan and in this Plan shall be made exclusively in such defined benefit plan. (iii) Contributions allocated to an "individual medical benefit account" described in Code Section 415(1) and contributions credited under a welfare benefit fund maintained by any Affiliate for any year to a reserve for post-retirement medical benefits for a Participant who is a "key employee" within the meaning of Code Section 416(i) shall be treated as a Matching Contribution made on his behalf under this Plan when, and to the extent, required under Code Section 415 or Section 419A(d). (3) CORRECTIONS. If the Plan Sponsor determines that the contributions credited to a Participant's Account (subject to this Section 5.4) will exceed the limitations set forth in this Section 5.4(b), the Plan Sponsor shall transfer such excess from his Account to a special suspense account. Such transfer shall be - 18 - Savings Incentive Plan 30 Article V: Contributions and Accounts made first from the Participant's Matching Contributions and thereafter from his Before-Tax Contributions. Transfers of Matching Contributions to such suspense account shall be applied to offset the Matching Contribution for all Participants in the next Plan Year (and in each succeeding Plan Year if necessary). No additional Matching Contributions shall be made by the Plan Sponsor while there is a balance credited to such suspense account. Any suspense account established under this Section 5.4(b) shall not be subject to adjustment for investment gains or losses and the balance of an such account shall be returned to the Plan Sponsor in the event this Plan is terminated before the date such account has been so applied in its entirety. Transfers of Before-Tax Contributions to such suspense accounts may be credited to the Participant in the next limitation year, or may be returned to the Participant, in the sole discretion of the Plan Sponsor or its delegate. (c) INDIVIDUAL DOLLAR LIMIT. (1) THIS PLAN. The sum of a Participant's Before-Tax Contributions under this Plan and his Elective Deferrals under any plan maintained by an Affiliate shall not exceed $7,000 (as adjusted in accordance with Code Section 402(g)(5) to account for increases in the cost of living) in any calendar year beginning after 1986. (2) OTHER PLANS. If a Participant's aggregate Before-Tax Contributions under this Plan and his "elective deferrals" (within the meaning of Code Section 402(g)), if any, made under other plans or contracts exceeds the individual dollar limit described in Section 5.4(c)(1) in any calendar year, such Participant may designate all or a portion of his Before-Tax Contributions made during such calendar year as Excess Deferrals. (3) CLAIM. A Participant may request a refund of his Excess Deferrals by filing a written claim with the Plan Sponsor on or before March 1 of the immediately following calendar year in accordance with Code Section 402(g) and such reasonable administrative rules as may be established by the Plan Sponsor from time to time. A Participant's claim must specify the dollar amount of Participant's Excess Deferrals for the preceding calendar year and shall include his certification that if such amounts are not distributed to him, such Excess Deferrals, when added to his elective deferrals made under other plans or contracts will exceed the individual dollar limit for the calendar year for which the Before-Tax Contributions were made. - 19 - Savings Incentive Plan 31 Article V: Contributions and Accounts (4) DETERMINATION OF INVESTMENT GAIN OR LOSS. Excess Deferrals shall be adjusted for investment gain or loss as determined by the Plan Sponsor in accordance with Code Section 402(g) and the related regulations. (5) DISTRIBUTION OF EXCESS DEFERRALS. Notwithstanding any other provision of this Plan, Excess Deferrals, plus any investment gain and minus any investment loss allocable to such Excess Deferrals, shall be distributed no later than April 15 of any calendar year to those Participants who request a refund in accordance with the claims procedure set forth in this Section 5.4(c) In no event shall a Participant receive from the Plan a distribution which exceeds either the Participant's total Before-Tax Contributions made under the Plan for the calendar year to which such Excess Deferrals relate or the balance credited to his Before-Tax Account as of the Valuation Date immediately preceding such April 15. (6) FORFEITURE OF RELATED MATCH. A Participant shall not be entitled to any Matching Contributions attributable to Before-Tax Contributions refunded as Excess Deferrals and any such Matching Contributions credited to his Account shall be treated as a Forfeiture as of the date of such distribution without regard to whether his interest in his Matching Account otherwise was nonforfeitable. (d) LIMITATIONS ON BEFORE-TAX CONTRIBUTIONS FOR HIGHLY COMPENSATED PARTICIPANTS. (1) GENERAL. The Average Deferral Percentage for Highly Compensated Participants for any Plan Year shall not exceed the greater of (A) the Average Deferral Percentage for Nonhighly Compensated Participants for such Plan Year multiplied by 1.25, or (B) the lesser of (i) the Average Deferral Percentage for Nonhighly Compensated Participants for such Plan Year multiplied by 2, or (ii) the Average Deferral Percentage for Nonhighly Compensated Participants plus 2 percentage points, or such smaller number of percentage points as may be prescribed by the Secretary of the Treasury. (2) SPECIAL RULES. (A) OTHER PLAN OR ARRANGEMENTS. For purposes of this Section 5.4(d), the Deferral Percentage for any Highly Compensated Participant for the Plan Year who is eligible to have Elective Deferrals allocated to his account under two or more plans or arrangements described in Code Section 401(k) that are - 20 - Savings Incentive Plan 32 Article V: Contributions and Accounts maintained by an Affiliate shall be determined as if all such contributions were made under this Plan. Further, if this Plan satisfies the requirements of Code Section 401(a)(4) or Section 410(b) only if aggregated with one or more other plans, or if one or more other plans satisfy the requirements of Code Section 401(a)(4) or Section 410(b) only if aggregated with this Plan, then this Section 5.4(d) shall be applied by determining the Deferral Percentage of each Participant as if all such plans were a single plan. (B) OTHER REQUIREMENTS AS MAY BE PRESCRIBED. The determination and treatment of the Before-Tax Contributions and the Deferral Percentage of any Participant shall satisfy such other requirements a may be prescribed by the Secretary of the Treasury. (3) DISTRIBUTION OF EXCESS CONTRIBUTIONS. If the Plan Sponsor determines that Excess Contributions have been made for any Plan Year, such Excess Contributions (together with any investment gains or losses) shall be distributed to affected Highly Compensated Participants on or before the last day of the Plan Year immediately following the Plan Year for which such Excess Contributions are made. Such distributions shall be made to such affected Highly Compensated Participants on the basis of the portion of the Excess Contributions which is attributable under Code Section 401(k) to such Participant. The amount of Excess Contributions which are to be distributed under this Section 5.4(d)(3 with respect to a Highly Compensated Participant for any Plan Year shall be reduced by any Excess Deferrals previously distributed to such Participant for the calendar year ending with or within such Plan Year. (4) DETERMINATION OF INVESTMENT GAINS OR LOSSES. Excess Contributions shall be adjusted for investment gain or loss as determined by the Plan Sponsor in accordance with Code Section 401(k) and the related regulations. (5) FORFEITURE OF RELATED MATCH. A Participant shall not be entitled to any Matching Contribution attributable to Before-Tax Contributions distributed as Excess Contributions and the portion of each affected Highly Compensated Participant's Matching Contribution which is attributable to such distribution shall be treated as a Forfeiture as of the date of such distribution. (6) QUALIFIED MATCHING CONTRIBUTION. If the Plan Sponsor in lieu of distributing Excess Contributions (or in lieu of distributing any part of such Excess Contributions) so elects in the exercise of its absolute discretion, the Plan Sponsor shall make an additional contribution on behalf of all eligible Nonhighly Compensated Participants in an amount which will result in satisfying the - 21 - Savings Incentive Plan 33 Article V: Contributions and Accounts requirements of Section 5.4(d)(1) for such Plan Year (to the extent such requirements are not satisfied through the distribution of Excess Contributions to Highly Compensated Participants). Such additional contribution shall be a "qualified matching contribution" within the meaning of Code Section 401(k), shall be allocated and credited as of such date in equal parts among the Before-Tax Accounts of all such Nonhighly Compensated Participants and shall be used only to satisfy the limitations of this Section 5.4(d). A Nonhighly Compensated Participant shall be eligible for a qualified matching contribution under this Section 5.4(d) if such Participant elected that Before-Tax Contributions be made to his Account during the last Plan Quarter of such Plan Year and was an Eligible Employee on the last day of such Plan Year. (e) LIMITATIONS ON MATCHING CONTRIBUTIONS FOR HIGHLY COMPENSATED PARTICIPANTS. (1) GENERAL. The Average Contribution Percentage for Highly Compensated Participants for any Plan Year shall not exceed the greater of (i) the Average Contribution Percentage for Nonhighly Compensated Participants for such Plan Year multiplied by 1.25, or (ii) the lesser of (A) the Average Contribution Percentage for Nonhighly Compensated Participants for such Plan Year multiplied by 2, or (B) the Average Contribution Percentage for Nonhighly Compensated Participants plus 2 percentage points, or such smaller number of percentage points as prescribed by the Secretary of the Treasury. (2) SPECIAL RULES. (A) OTHER PLAN OR ARRANGEMENTS. For purposes of this Section 5.4(e), the Contribution Percentage for any Highly Compensated Participant for the Plan Year who is eligible to have "employee contributions" (within the meaning of Code Section 401(m)), or "matching contributions" (as described in Code Section 401(m)(4)) allocated to his account under two or more plans or arrangements described in Code Section 401(a) or Section 401(k) that are maintained by an Affiliate shall be determined as if all such contributions were made under this Plan. Further, if this Plan satisfies the requirements of Code Section 401(a)(4) and Section 410(b) only if aggregated with one or more other plans, or if one or more other plans satisfy the requirements of Code Section 401(a)(4) and Section 410(b) only if aggregated - 22 - Savings Incentive Plan 34 Article V: Contributions and Accounts with this Plan, then this Section 5.4(e) shall be applied by determining the Contribution Percentages of each Participant as if all such plans were a single plan. (B) OTHER REQUIREMENTS. The determination and treatment of the Matching Contributions and the Contribution Percentage of any Participant shall satisfy such other requirements as may be prescribed by the Secretary of the Treasury. (3) DISTRIBUTION OF EXCESS AGGREGATE CONTRIBUTIONS. If the Plan Sponsor determines that Excess Aggregate Contributions have been made for any Plan Year, such Excess Aggregate Contributions (together with any investment gains or losses) shall be forfeited (if otherwise forfeitable under Section 6.4) or distributed (if not so forfeitable) on or before the last day of the Plan Year immediately following the Plan Year for which such Excess Aggregate Contributions were made. Any amounts which are forfeited under this Section 5.4(e) shall be treated as a Forfeiture as of the date of such distribution and such Forfeitures shall not be allocated to any Participant whose contributions were reduced under this Section 5.4(e) if such allocation would be inconsistent with Code Section 401(m). The portion of such Excess Aggregate Contribution distributed to or forfeited by each affected Highly Compensated Participant shall be determined in accordance with the regulations under Code Section 401(m). (f) MULTIPLE USE LIMITATION. For Plan Years beginning on or after July 1, 1989, the Plan Sponsor shall take whatever action is required to prevent the multiple use of the alternative test described in Section 5.4(d)(1)(ii) for Before-Tax Contributions and in Section 5.4(e)(1)(ii) for Matching Contributions in the same Plan Year to the extent required under Code Section 401(m) and the regulations issued under that section. The Plan Sponsor shall reduce the Contribution Percentages of Highly Compensated Participants (beginning with the highest of such percentages) so that the multiple use limit is not exceeded. Any such reduction shall be treated as an Excess Aggregate Contribution. (g) LIMITATIONS ON DEDUCTIBILITY. The sum of the Matching Contributions and Before-Tax Contributions allocated to Participants' Accounts for any taxable year shall not exceed the amount allowable as a deduction for such taxable year for federal income tax purposes for contributions to this Plan. (h) WITHHOLDING OBLIGATIONS AND ACCOUNT BALANCE. Any distributions to a Participant from his Before-Tax Employee Account or Matching Account which are required under this Section 5.4 shall not exceed the value (as of the date of such distribution) of such subaccount and the amount of any such distributions shall be reduced as the Plan Sponsor deems necessary or appropriate - 23 - Savings Incentive Plan 35 Article V: Contributions and Accounts to satisfy any applicable tax withholding requirements with respect to such distributions. (i) ALLOCATION CORRECTIONS. If an error or omission is discovered in any Account, the Plan Sponsor shall make an appropriate equitable adjustment in order to remedy such error or omission as of the Plan Year in which the error or omission is discovered. 5.5 ROLLOVER ACCOUNTS. On or after his Entry Date, a Participant may establish a Rollover Account, with the consent of the Plan Sponsor or its delegate. Amounts that may be used to establish a Rollover Account include only (1) funds transferred directly from another plan that is tax qualified within the meaning of Code Section 401; and (2) funds distributed from a tax qualified plan or a conduit individual retirement account that are eligible for rollover treatment and are transferred to this Plan within 60 days of the Participant's receipt thereof. A Participant may be required to establish that the transfer of amounts into a Rollover Account will not create adverse consequences for the Plan or Trust. Amounts in a Rollover Account shall be held by the Trustee and invested and distributed in accordance with the provisions of this Plan. A Participant's Rollover Account is fully vested at all times and subject to investment direction by the Participant. 5.6 ACCOUNT INVESTMENTS. The Trustee at the direction of the Plan Sponsor shall establish at least four separate investment funds within the Trust Fund, and such funds as in effect from time to time shall be described in the summary plan description for this Plan or in such other materials as the Plan Sponsor furnishes from time to time to Participants. Each Participant shall have the right to provide investment directives with respect to how (1) his Account as of the preceding Valuation Date and (2) contributions to his Account after such Valuation Date shall be invested as between such funds in accordance with the following rules: (a) Each such election shall be made on a properly completed Election Form or otherwise in accordance with the applicable procedures of the record keeper or Trustee. (b) One change of election may be made in each Plan Quarter with respect to each of (1) and (2) above, e.g., one change with respect to a Participant's current Account and one change with respect to the Participant's future Elective Deferrals. - 24 - Savings Incentive Plan 36 Article V: Contributions and Accounts (c) A Participant's election with respect to his Account balance as the preceding Valuation Date may be made in any increments of such balance. A Participant's election with respect to contributions to his Account after such Valuation Date shall be made in ten percent increments of the contribution. (d) An election shall be effective on the same day if received before 1:00 p.m., Eastern Standard Time or Eastern Daylight Time, as the case may be, on a business day, and otherwise shall be effective on the next business day. 5.7 EXPENSES. Expenses allocable to each Account shall be deducted quarterly, and such deduction shall be shown separately on the statement of a Participant's Account. - 25 - Savings Incentive Plan 37 ARTICLE VI PLAN BENEFITS 6.1 RETIREMENT BENEFIT. The Account of a Participant who is an Employee on the date he reaches Normal Retirement Age shall become fully vested no later than such date and, if he retires as an Employee on such date, shall be paid to him in accordance with Section 7. A Participant who remains an Employee after he reaches Normal Retirement Age shall remain eligible to continue to participate in this Plan until the date of his actual retirement and his Account shall be paid in accordance with Section 7. 6.2 DISABILITY BENEFIT. (a) FULL VESTING. The Matching Account of a Participant whose employment with an Employer or an Affiliate is terminated by reason of his being disabled under this Section 6.2 shall become fully vested on the date his employment is so terminated and shall be paid to him in accordance with Section 7. If such individual recovers from his disability and is reemployed as an Employee, such Employee shall participate in accordance with Section 4.1 and he shall vest in any Matching Contributions credited to his Account after his reemployment based on his actual Years of Service in accordance with the vesting schedule set forth in Section 6.4(b). (b) DEFINITION. A Participant shall be treated as disabled for purposes of this Section 6.2 if he suffers a total and permanent physical or mental impairment which (1) qualifies him for a monthly disability insurance benefit under the United States Social Security Act and (2) which wholly prevents him from holding any substantially gainful employment and (3) which can be expected to result in death or to be of long continued and indefinite duration. An Eligible Employee shall not be treated as disabled for purposes of this Plan, however, if the Plan Sponsor determines that his disability is a result of any of the following: (i) any injury or disease sustained by him while willfully participating in acts of violence, riots, civil insurrections or while committing a felony; (ii) any injury or disease sustained by him while serving in any armed forces of any country or as the result of warfare or any act of war, declared or undeclared; (iii) any injury or disease sustained by him while working for a person other than an Employer or any Affiliate and arising out of such work; or - 26 - Savings Incentive Plan 38 Article VI: Plan Benefits (iv) any intentional, self-inflicted injury. (c) DETERMINATION. The Plan Sponsor shall have exclusive responsibility for determining whether a Participant is disabled. It may consider whether a Participant is disabled upon its own motion or upon the written request of such Participant. Any determination made by the Plan Sponsor for purposes of this Section 6.2 Plan shall be final and conclusive. 6.3 DEATH BENEFIT. If a Participant dies, his Account shall be changed to the name of his Beneficiary and the vested portion of his Account shall be paid to such Beneficiary in accordance with Section 7 and, further, if the Participant was an Employee on his date of death, his Account also shall become fully vested as of such date. 6.4 VESTED BENEFIT. (a) GENERAL RULE. A Participant shall be eligible for the payment of his Before-Tax Account and the vested portion of his Matching Account after the date of his separation from service (within the meaning of Code Section 401(k)(2)(B)), or, if sooner, upon the disposition of substantially all the assets used in a trade or business of the Participant's Employer, or of an Affiliate's interest in a subsidiary that was the Participant's Employer (within the meaning of Code Section 401(k)(10)). Payment of such amounts shall be made in accordance with Article 7. (b) VESTING SCHEDULE. The Plan Sponsor shall determine the vested portion of a Participant's Matching Account in accordance with the vesting schedule set forth in this subsection. The vested portion of a Participant's Matching Account shall be maintained as a separate Matching Account until distributed in accordance with Section 7. The balance, or nonvested portion, of a Participant's Matching Account shall be treated as a Forfeiture as of the first Valuation Date following the earlier of the date such Participant's Matching Account is distributed to him in accordance with Section 7 or the date on which such Participant incurs six consecutive Breaks in Service. - 27 - Savings Incentive Plan 39 Article VI: Plan Benefits
Vested Portion Full of Years of Service Matching Account ---------------- ---------------- Less than 1 0% 1 20% 2 40% 3 60% 4 80% 5 or more 100%
(c) REEMPLOYMENT. If a former Employee is reemployed as an Employee before he has 6 consecutive Breaks in Service and any portion of his Matching Account had been treated as a Forfeiture under Section 6.4(b), the Forfeiture shall be restored to his Matching Account as of the last day of the Plan Year in which he is reemployed if the Employee repays to the Plan an amount equal to the amount of his distribution from his Matching Account before the earlier of (a) five years after the first date on which the former Employee is reemployed by an Affiliate or (b) the date the Employee incurs six consecutive Breaks in Service following the date of distribution. 6.5 FORFEITURE OF BENEFIT OF MISSING CLAIMANT. If the Account of a Participant becomes payable under this Article 6 by reason other than his death and the Plan Sponsor is unable to locate such Participant or if no Beneficiary of a deceased Participant is identified and located by the Plan Sponsor, then the Plan Sponsor, in its discretion, may treat the Account of such Participant as a Forfeiture as of the last day of the Plan Year which includes the anniversary of the date the Account of such Participant first became payable or as of the last day of any subsequent Plan Year. However, if such missing Beneficiary or Participant files a written claim with the Plan Sponsor for his Account while this Plan remains in effect and proves his identity as the person then entitled to such benefit under the terms of this Plan to the satisfaction of the Plan Sponsor, the Plan Sponsor promptly shall make an additional contribution to this Plan sufficient to restore his Account which was so treated as a Forfeiture (without regard to any allocation of any investment gains or losses) and such restored Account shall be paid to such person immediately thereafter in a lump sum. If this Plan is terminated and the Plan Sponsor (after taking the action described in this Section 6.5) cannot locate a Participant or Beneficiary, then such person shall be presumed dead and, if there is no Beneficiary for such person or such Beneficiary cannot be located, all the remaining Participants in this Plan on - 28 - Savings Incentive Plan 40 Article VI: Plan Benefits the date of such termination shall be treated as such person's Beneficiary and such Account shall be divided equally among such Participants. 6.6 LOANS. (a) REQUEST. Each "eligible person" may request that a loan be made to him under this Plan from his Account by properly completing and delivering a related Election Form to the Plan Sponsor, and all such requests shall be granted on a reasonably equivalent basis (within the meaning of Code Section 4975(d)(1)(A) and ERISA Section 408(b)(1)(A)) subject to the conditions set forth in Section 6.6(a). For purposes of this Section 6.6, the term "eligible person" means, for loans made before October 19, 1989, each Participant who is an Eligible Employee and, for loans made after October 18, 1989, each Participant and Beneficiary who is a "party in interest" (as defined in ERISA Section 3(14)) with respect to this Plan. (b) ADMINISTRATION. The Plan Sponsor shall be the "named fiduciary" responsible for administering the loan program through its Human Resources Department. The procedures for applying for a loan and the basis on which loans will be approved or denied shall be described in the summary plan description for the Plan or in other documents prepared by or at the direction of the Plan Sponsor for this purpose and such additional documents hereby are expressly incorporated by reference to the extent required by the Department of Labor. (c) LIMITATIONS AND SECURITY. (1) The principal amount of a loan made under this Plan to any person together with the outstanding principal amount of any other loan made to such person under any other plan maintained by an Affiliate which satisfies the requirements of Code Section 401 shall not exceed the lesser of (i) or (ii), where (i) equals 50% of the vested portion of his accounts and (ii) equals $50,000 reduced by the excess (if any) of the highest outstanding balance of any previous loans from the Plan and any other plan maintained by an Affiliate during the one-year period ending immediately before the date on which such current loan is made over the outstanding balance of such previous loans on the date on which such current loan is made. - 29 - Savings Incentive Plan 41 Article VI: Plan Benefits For loans made before October 19, 1989, the principal amount of the loan shall not exceed the greater of (i) the limitation determined under the preceding sentence or (ii) the lesser of 80% of the vested portion of his Account or $8,000. (2) No loan shall be made under this Plan to an eligible person who is an Employee of an Affiliate which is not an Employer unless such eligible person borrows first from the plan of the Affiliate which employs him. (3) No loan shall be made for a period which exceeds four years. There is no minimum period for a loan. (4) Any loan made under this Plan shall be secured by 50% of his total vested interest in his Account but, for loans made before October 19, 1989, loans shall be secured by a Participant's total vested interest in his Account. (5) No more than one loan shall be made under this Plan to an eligible person at any one time, except that a loan made to an eligible person under the Harris/LBP Plan before September 29, 1989 and a loan under this Plan made before September 29, 1989 shall be treated as a single loan for purposes of this Section 6.6. (6) The principal amount of a loan made under this Plan shall not be less than $500. (d) INTEREST RATE. The interest rate for a loan made under this Plan shall be set by the Plan Sponsor at a rate which the Plan Sponsor deems reasonable at the time the loan is made for a fully secured loan and which is consistent with Department of Labor regulations. (e) REPAYMENT AND DEFAULT. (1) A loan made under this Plan shall require that repayment be made in substantially level installments (not less frequently than quarterly) through payroll withholding while an eligible person is an active Employee and through such other means as the Plan Sponsor deems appropriate for an eligible person who is not an active Employee. (2) The events of default shall be set forth in the promissory note and security agreement which evidences the loan. Such events may include the following: - 30 - Savings Incentive Plan 42 Article VI: Plan Benefits (i) an eligible person's employment as an Employee terminates for any reason whatsoever unless, for loans made after October 18, 1989, such person remains a "party in interest" with respect to this Plan following his termination of employment, (ii) the Trustee concludes that the eligible person no longer is a good credit risk, or (iii) to the extent permissible under federal law, the eligible person's obligation to repay the loan has been discharged through a bankruptcy or any other legal process or action which did not actually result in payment in full. Upon the existence or occurrence of an event of default, the loan may become due and payable in full and, if such loan is not actually repaid in full, shall be cancelled on the books and records of the Plan and the amount otherwise distributable to such eligible person under this Plan shall be reduced as of the date his Account otherwise becomes distributable by the principal amount of the loan then due plus any accrued but unpaid interest. Such principal and interest shall be determined without regard to whether the loan had been discharged through a bankruptcy or any other legal process or action which did not actually result in payment in full; however, interest shall continue to accrue on such loan only to the extent permitted under applicable law. Notwithstanding the foregoing, cancellation of the amount distributable to a person under this Section 6.6(e)(2) shall not occur until a distributable event occurs under the Plan. In the event a default occurs before a distributable event, the Plan Sponsor shall take such other steps to cure the default as it deems appropriate under the circumstances to preserve Plan assets. (3) Any loan made under this Plan shall be subject to such other terms and conditions as the Plan Sponsor from time to time shall deem necessary or appropriate, including the condition that the eligible person execute an applicable financing statement and the condition that he reimburse this Plan for the reasonable expenses which this Plan incurs to make and service such loan. (4) The terms and conditions of each loan shall be set forth in the promissory note and security agreement evidencing such loan. (f) MECHANICS. A loan to an eligible person under this Plan shall be made from his Account as of any date acceptable to the Plan Sponsor and the Trustee. The individual may specify, under procedures prescribed by the Plan Sponsor, the Account investments from which the loan proceeds shall be - 31 - Savings Incentive Plan 43 Article VI: Plan Benefits withdrawn. If the Account investments so specified by the individual are less than the principal amount of the loan, the balance of the loan proceeds may be withdrawn from other Account investments, in accordance with the Plan Sponsor's administrative policy. Solely to the extent required for record-keeping purposes, the loan proceeds shall be debited first from his Rollover Account, second from the portion of his Before-Tax Account that was subject to a Matching Contribution, third from the portion of his Before-Tax Account that was not subject to a Matching Contribution, and finally from his Matching Account; repayments shall be credited to those Accounts in the reverse order. Such loan shall be an asset of his Account and the interest paid on such loan shall be credited to such Account. (g) SPECIAL POWERS. The Plan Sponsor shall have the power to take such action as the Plan Sponsor deems necessary or appropriate to stop the payment of an Account to or on behalf of an eligible person who fails to repay a loan (without regard to whether his obligation to repay such loan had been discharged through a bankruptcy or any other legal process or action) until his Account has been reduced by the principal due (without regard to such discharge) on such loan or to distribute the note which evidences such loan in full satisfaction of any interest in such Account which is attributable to the unpaid balance of such loan. 6.7 NO IN-SERVICE WITHDRAWALS. No Participant shall have the right to withdraw (by reason of hardship or otherwise) all or any portion of his Account before an event specified in Section 6.4(a). - 32 - Savings Incentive Plan 44 ARTICLE VII BENEFIT DISTRIBUTION 7.1 METHOD. The vested portion of a Participant's Account shall be paid in a single sum to him or, in the case of his death, to his Beneficiary, and such payment may (pursuant to Section 6.6(g)) include distribution of the Participant's note which evidences a loan under Section 6.6. 7.2 DISTRIBUTION DEADLINES. (a) GENERAL RULE. The vested portion of a Participant's Account shall be payable to him as soon as practicable after the first Valuation Date which follows the event specified in Section 6.4(a). (b) $3500 OR LESS. If the vested portion of a Participant's Account is $3500 or less and has not exceeded $3,500 at the time of any prior distributions, such vested portion automatically shall be paid to such Participant as of the earliest date permitted under Section 7.2(a). (c) MORE THAN $3500. If the vested portion of a Participant's Account exceeds (or at the time of any prior distribution exceeded) $3500, distribution of such Account at any time before the Participant reaches Normal Retirement Age shall be subject to the Participant's consent. A failure to consent to payment at the earliest date payment is permitted under Section 7.2(a) shall result in the postponement of such payment until the Participant dies, reaches Normal Retirement Age or terminates employment as an Employee, whichever occurs last. If a Participant has terminated employment as an Employee on or before his Normal Retirement Age, the payment of the vested portion of his Account shall be made to him no later than 60 days after the end of the Plan Year which includes the date he reaches Normal Retirement Age. (d) STATUTORY DEADLINES. (1) PARTICIPANT. (i) INITIAL DISTRIBUTION. Notwithstanding Section 7.2(c), the entire vested portion of a Participant's Account shall be paid to him in a single sum on or before his "required beginning date." For purposes of determining the amount of the initial distribution under this Section 7.2(d)(1), a Participant's Account shall be determined as of the most recent Valuation Date for which valuations have been completed preceding the "required beginning date." - 33 - Savings Incentive Plan 45 Article VII: Benefit Distribution (ii) REQUIRED BEGINNING DATE. Except as otherwise provided in this Section 7.2(d)(1)(ii), a Participant's "required beginning date" shall be the April 1 following the calendar year in which he reaches age 70 1/2. If a Participant continues in employment after his "required beginning date," any additional amounts credited to his Account shall be paid to him each calendar year thereafter in a single sum on or before December 31 of such year. (2) BENEFICIARY. Upon the death of a Participant, the entire vested portion of his Account shall (regardless of any request made by the Beneficiary) be paid to his Beneficiary in a single sum before the date which is the first anniversary of the Participant's date of death. 7.3 DIRECT ROLLOVER. (a) Effective January 1, 1993, a Participant or "distributee" may elect at any time to have any portion of an "eligible rollover distribution" paid in a direct rollover to the trustee or custodian of an "eligible retirement plan" specified by the Participant or distributee, whichever is applicable. Payment of a direct rollover in the form of a check payable to the trustee or custodian of an eligible retirement plan, for the benefit of the Participant or distributee, may be mailed to the Participant or distributee. (b) For purposes of this Section 7.3, the following terms shall have the following meanings: (1) "Distributee" means a surviving spouse or a spouse or former spouse who is an alternate payee under a Qualified Domestic Relations Order defined in section 414(p) of the Code. (2) "Eligible retirement plan" means an individual retirement account described in section 408(a) of the Code, an individual retirement annuity described in section 408(b) of the Code, an annuity plan described in section 403(a) of the Code, or a qualified trust described in section 401(a) of the Code that accepts an eligible rollover distribution; provided that if the distributee is a surviving spouse, an eligible retirement plan means an individual retirement account or individual retirement annuity. (3) "Eligible rollover distribution" means any distribution of all or a portion of the Participant's Account, but does not include a distribution to the extent it is required under section 401(a)(9) of the Code. - 34 - Savings Incentive Plan 46 Article VII: Benefit Distribution 7.4 CLAIM FOR BENEFIT. Subject to Section 7.2(b), as a condition to the payment of any benefit under this Plan, a claim for such benefit must be filed with the Plan Sponsor on the related Election Form, and all such claims (and any other claims by a Participant, former Participant or Beneficiary) shall be processed in accordance with the claims procedure set forth in the summary plan description for this Plan. 7.5 MISTAKES. If a mistake is made in favor of a Participant or a Beneficiary in the payment of an Account, the Plan Sponsor or the Trustee (acting at the Plan Sponsor's direction and on behalf of the Plan) shall take such action against the Participant or Beneficiary to remedy such mistake and to make the Plan whole as the Plan Sponsor deems proper and appropriate under the circumstances, and any mistake made in favor of the Plan shall promptly be corrected by, or at the direction of, the Plan Sponsor. - 35 - Savings Incentive Plan 47 ARTICLE VIII NAMED FIDUCIARIES AND PLAN SPONSOR 8.1 NAMED FIDUCIARIES. The Plan Sponsor shall be the "named fiduciary" responsible for the control, management and administration of this Plan. 8.2 ALLOCATION AND DELEGATION BY NAMED FIDUCIARIES. The Plan Sponsor may by written instrument filed with the records of this Plan designate a person who is not a Named Fiduciary to carry out any of its responsibilities under this Plan, other than the responsibilities of the Trustee in the management and control of the Trust Fund; provided, however, that no such allocation or designation shall be effective until such person has consented to such designation. 8.3 ADVISERS. The Plan Sponsor, or a person designated by the Plan Sponsor to perform any responsibility of the Plan Sponsor pursuant to the procedure described in Section 8.2, may employ one or more persons to render advice with respect to any responsibility the Plan Sponsor has under this Plan or such person has by virtue of such designation. 8.4 DUAL FIDUCIARY CAPACITIES. Any person may serve in more than one fiduciary capacity with respect to this Plan, and a fiduciary may be a Participant provided such person otherwise satisfies the requirements for participation under this Plan. 8.5 PLAN SPONSOR POWER AND DUTIES. (a) GENERAL. The Plan Sponsor or its delegate shall have the exclusive responsibility and complete discretionary authority to control the operation, management and administration of this Plan, with all powers necessary to enable it properly to carry out such responsibilities, including (but not limited to) the power to construe this Plan and the Trust Agreement, to determine eligibility for benefits, to resolve all interpretive, operational, equitable and other questions that arise under this Plan and to settle disputed claims. The decisions of the Plan Sponsor on all matters within the scope of its authority shall be final and binding upon all parties to this instrument, participants, their spouses and beneficiaries. (b) RECORDS. All acts and determinations of the Plan Sponsor or its delegate shall be duly recorded and all such records, together with such other documents as may be necessary for the administration of this Plan, shall be preserved in the custody of the Plan Sponsor. - 36 - Savings Incentive Plan 48 Article VIII: Named Fiduciaries and Plan Sponsor (c) INFORMATION. Each Employer shall supply the Plan Sponsor with complete and timely information regarding employment data for each Employee and Participant including, but not limited to, his Compensation, date of death or other termination of employment and such other information as may be required by the Plan Sponsor. (d) RELIANCE. The officers and directors of each Employer shall be entitled to rely upon all information and data contained in any certificate or report or other material prepared by any accountant, attorney or other consultant or adviser selected by the Plan Sponsor to perform services on behalf of this Plan. (e) EXPENSES. All reasonable and proper expenses of this Plan and the Trust Fund, including investment advisory fees and the Trustee's fees as agreed upon by the Plan Sponsor and the Trustee, shall be paid from the Trust Fund by the Trustee unless the Plan Sponsor elects (in accordance with such procedures as agreed upon by the Plan Sponsor and the Trustee) to pay such expenses. The Plan Sponsor may seek reimbursement of any expense which is properly payable by the Trust Fund. - 37 - Savings Incentive Plan 49 ARTICLE IX TRUST FUND AND TRUSTEE The Trust Fund shall be held, administered, controlled and invested by the Trustee subject to the terms of the Trust Agreement for the exclusive benefit of Participants and Beneficiaries. - 38 - Savings Incentive Plan 50 ARTICLE X AMENDMENT AND TERMINATION 10.1 AMENDMENT. The Plan Sponsor shall have the right at any time and from time to time to amend this Plan in any respect by action of its Board, provided that no amendment shall be made which would divert any of the assets of the Trust Fund to any purpose other than the exclusive benefit of Participants and Beneficiaries, except that this Plan may be amended retroactively to affect the Accounts maintained for any person if necessary to cause this Plan and the Trust Fund to be exempt from income taxes under the Code. 10.2 TERMINATION. The Plan Sponsor reserves the right to terminate or to partially terminate this Plan or to declare a discontinuance of contributions to this Plan at any time by action of its Board, and the Plan Sponsor reserves the right to terminate or to partially terminate the participation in this Plan by any Employer by action of its Board. Furthermore, an Employer's participation in this Plan automatically shall terminate if, and at such time as, its status as an Employer terminates for any reason whatsoever (other than through a merger or consolidation into another Employer). If there is a termination or partial termination of this Plan or a declaration of a discontinuance of contributions to this Plan, the Accounts of all affected Participants who are Employees as of the date of such termination, partial termination or declaration shall become fully vested. In the case of any such termination, partial termination, or declaration, the Plan Sponsor shall cause all unallocated amounts to be allocated to the appropriate Accounts of the affected Participants and Beneficiaries and shall direct the Trustee to distribute such Accounts to such Participants and Beneficiaries in accordance with uniform rules established by the Plan Sponsor at such time as permissible under Code Section 401(k), and the Trustee shall follow such directions. - 39 - Savings Incentive Plan 51 ARTICLE XI MISCELLANEOUS 11.1 SPENDTHRIFT CLAUSE. Subject to Section 11.10, no Account, benefit, payment or distribution under this Plan shall (except to the extent permitted by law) be subject to the claim of any creditor of a Participant or Beneficiary, or to any legal process by any creditor of such person, and no Participant or Beneficiary shall have any right to alienate, commute, anticipate, or assign all or any portion of his Account, benefit, payment or distribution under this Plan except under Section 6.6 (Loans). 11.2 LEGALLY INCOMPETENT. The Plan Sponsor may in its discretion direct that payment be made directly to (a) a person who is incompetent or disabled, whether because of minority or mental or physical disability, (b) to the guardian of such person, or to the person having custody of such person or (c) to any person designated or authorized under any state statute to receive such payment on behalf of such incompetent or disabled person, without further liability either on the part of the Plan Sponsor, or an Employer for the amount of such payment to the person on whose account such payment is made. 11.3 BENEFITS SUPPORTED ONLY BY TRUST FUND. Any person having any claim for any benefit under this Plan shall look solely to the assets of the Trust Fund for the satisfaction of such claim. In no event will the Plan Sponsor, or an Employer, or any of their employees, officers, or directors, be liable in their individual capacities to any person whomsoever for the payment of benefits under this Plan. 11.4 DISCRIMINATION. The Plan Sponsor shall administer this Plan in a uniform and consistent manner with respect to all similarly situated Employees, Participants, spouses and Beneficiaries, including adopting such administrative or other rules as the Plan Sponsor in its discretion deems appropriate for any such persons affected by circumstances such as a sale, acquisition, merger, reorganization, facility closing, layoff, work force reduction or other similar event or transaction; provided, however, the Plan Sponsor shall not permit any discrimination in favor of highly compensated employees (within the meaning of Code Section 414(q)) which would be prohibited under Code Section 401(a). If for any Plan Year the Plan Sponsor determines that following the terms of the Plan would result in a failure to coverage requirements under Code Section 410(b), the Plan Sponsor shall take such action as it deems appropriate under the circumstances to prevent such failure. - 40 - Savings Incentive Plan 52 Article XI: Miscellaneous 11.5 CLAIMS. Any payment to a Participant or Beneficiary or to their legal representative, or heirs at law, made in accordance with the provisions of this Plan shall to the extent thereof be in full satisfaction of all claims under this Plan against the Plan Sponsor and the Employers, any of whom may require such person, his legal representative or heirs at law, as a condition precedent to such payment, to execute a receipt and release therefor in such form as shall be satisfactory to the Plan Sponsor or any Employer, as the case may be. 11.6 NONREVERSION. No part of the Trust Fund shall ever be used for or be diverted to purposes other than for the exclusive benefit of Participants and Beneficiaries except (a) as expressly provided otherwise in Section 5.4(b)(3) with respect to a Section 415 suspense account; (b) a contribution which is made by the Plan Sponsor by a mistake of fact upon direction of the Plan Sponsor shall be refunded by the Trustee to the Plan Sponsor within one year after the payment of such contribution; (c) if the Internal Revenue Service determines that this Plan initially fails to satisfy the requirements of Code Section 401(a) and related sections, all contributions made to this Plan, plus any investment gains and less any such losses, shall be refunded to the Plan Sponsor or, as for contributions made under Section 5.1, to the Participant on whose behalf the contribution was made; and (d) a contribution for which the Internal Revenue Service denies an income tax deduction to the Plan Sponsor or an Employer shall be refunded by the Trustee to the Plan Sponsor within one year after the denial of such deduction upon the Plan Sponsor's direction, all such contributions being made expressly on the condition that such contributions are deductible in full for federal income tax purposes. 11.7 MERGER OR CONSOLIDATION. In the case of any merger or consolidation of this Plan with, or transfer of assets or liabilities of this Plan to, any other employee benefit plan, each person for whom an Account is maintained shall be entitled to receive a benefit from such plan, if it is then terminated, which is equal to or greater than the benefit he would have been entitled to receive immediately before the merger, consolidation or transfer, if this Plan had been terminated; provided, no assets shall be transferred directly to this Plan which are attributable to contributions which are subject to the joint and survivor annuity requirements of Code Section 417. - 41 - Savings Incentive Plan 53 Article XI: Miscellaneous 11.8 REPORTING AND DISCLOSURE. The Plan Administrator shall satisfy any reporting and disclosure requirements applicable to this Plan under the Code or ERISA. 11.9 TOP HEAVY PLAN. (a) DETERMINATION. The Plan Sponsor as of each June 30 shall determine the sum of the present value of the accrued benefits of "key employees" (as defined in Code Section 416(i)(1)) and the sum of the present value of the accrued benefits of all other employees in accordance with the rules set forth in Code Section 416(g) or shall take such other action as the Plan Sponsor deems appropriate to conclude that no such determination is necessary under the circumstances. If the sum of the present value of the accrued benefits of such key employees exceeds 60% of the sum of the present value of the accrued benefits of all employees as of any June 30, this Plan shall be "top heavy" for the Plan Year which begins on the immediately following July 1. For purposes of this Section 11.9 the present value of the accrued benefit of each employee shall be equal to the sum of (1) and (2), where (1) equals the balance of his Account under this Plan (determined for this purpose as of each June 30), including the value of any distributions made during the 5 year period ending on such date and any contributions due but as yet unpaid as of such date and (2) equals the present value of his accrued benefit, if any, (determined as of the valuation date which coincides with or precedes the determination date for such plan) under (A) each qualified plan (as described in Code Section 401(a)) maintained by an Affiliate (i) in which a key employee is a participant or (ii) which enables any plan described in subclause (i) to meet the requirements of Code Section 401(a)(4) or Section 410, and (B) each other qualified plan maintained by an Affiliate (other than plan described in clause (A)) which may be aggregated with this Plan and the plans described in clause (A), provided such aggregation group (including a plan described in this clause (B)) continues to meet the requirements of Code Section 401(a)(4) and Section 410; including the value of any distributions made from such plans during the 5 year period ending on such determination date and the value of any contributions due under such plans but as yet unpaid as of such valuation date. However, the accrued benefit of any individual shall be disregarded if such individual has not performed any services for any Employer at any time during the 5 year period ending on the date as of which such determination is made. - 42 - Savings Incentive Plan 54 Article XI: Miscellaneous (b) SPECIAL TOP HEAVY PLAN RULES. If the Plan Sponsor determines that this Plan is "top heavy" for any Plan Year, the special rules set forth in this Section 11.10 shall apply notwithstanding any other rules to the contrary set forth elsewhere in this Plan. (1) A contribution shall be made for such Plan Year for each Employee who is an Eligible Employee on the last day of such year which is equal to the lesser of (A) 4% of his "compensation" (as defined for purposes of Section 5.4(b)) for such year or (B) the percentage at which contributions are made (or are required to be made) for such year to the key employee for whom such percentage is the highest. For Plan Years beginning before 1989, the contribution actually, credited for such Plan Year to such Participant's Before-Tax Employee Account and his Matching Account shall be treated as an employer contribution for purposes of satisfying the minimum contribution under Code Section 416. (2) The Plan Sponsor shall take such action as necessary to satisfy the requirements of Code Section 415(e) and Code Section 416(h) if it (following the procedure set forth in this Section 11.9) determines that this Plan fails to meet the requirements set forth in Code Section 416(h)(2)(B). 11.10 QUALIFIED DOMESTIC RELATIONS ORDER. In accordance with uniform and nondiscriminatory procedures established by the Plan Sponsor from time to time, the Plan Sponsor upon the receipt of a domestic relations order which seeks to require the distribution of a Participant's Account in whole or in part to an "alternate payee" (as that term is defined in Code Section 414(p)(8)) shall (1) promptly notify the Participant and such "alternate payee" of the receipt of such order and of the procedure which the Plan Sponsor will follow to determine whether such order constitutes a "qualified domestic relations order" within the meaning of Code Section 414(p), (2) determine whether such order constitutes a "qualified domestic relations order" and notify the Participant and the "alternate payee" of the results of such determination and, (3) if the Plan Sponsor determines that such order does constitute a "qualified domestic relations order", distribute to such "alternate payee" called for under the terms of such order the amount called for under the order in a single sum within 60 days of the date such order is determined to constitute a qualified domestic relations order without regard to whether a distribution would be permissible to the Participant at such time under this Plan. - 43 - Savings Incentive Plan 55 Article XI: Miscellaneous The determinations and the distribution made by, or at the direction of, the Plan Sponsor under this Section 11.10 shall be final and binding on the Participant and on all other persons interested in such order. An "alternate payee" under this Section 11.10 shall not be an eligible person for purposes of obtaining a loan pending the distribution of such alternate payee's entire interest under this Plan. IN WITNESS WHEREOF, Lanier Worldwide, Inc. has caused its duly authorized officers to execute and affix its seal to this Plan this /S/ 28 day of June, 1994. LANIER WORLDWIDE, INC. By: /s/ WESLEY E. CANTRELL ------------------------- Title: President and Chief Executive Officer (CORPORATE SEAL) ATTEST: /s/ MICHAEL KELLY ------------------- - 44 - Savings Incentive Plan 56 EXHIBIT A 57 ATTACHMENT 1- TO EXHIBIT A TO THE LANIER WORLDWIDE, INC. SAVINGS INCENTIVE PLAN FORMER LBP PARTICIPANTS ----------------------- ARTICLE I APPLICATION ----------- This Attachment 1 shall apply only to those Participants who are Former LBP Participants and shall describe the provisions of the Harris/LBP Plan for periods before October 1, 1989. ARTICLE II DEFINITIONS ----------- The terms in this Section 1-2 shall have the meanings set forth opposite such terms for purposes of this Attachment 1 and this Plan. Except as provided in this Section 1-2, a capitalized term shall have the meaning set forth in the Plan. (a) ELIGIBLE EMPLOYEE - means for periods before October 1, 1989, an Employee who is employed by a Participating LBP Company other than (i) an Employee who is classified on the personnel records of any Participating LBP Company as employed on a temporary, summer, or casual part-time position for short term work load, which employment is intended to terminate upon completion of the assignment for which he was employed, (ii) an Employee who is treated as such solely by reason of the "leased employee" rules set forth in Code Section 414(n), (iii) an Employee who is a member of (or who is represented by) a collective bargaining unit which has failed to reach an agreement with his Participating LBP Company that he be eligible to participate in this Plan, (iv) an Employee who is a non-resident alien and who receives no earned income from a Participating LBP Company from sources within the United States (as described more fully in Code Section 410(b)(3)(C)), and 58 (v) an Employee who works primarily outside the United States and who is paid under a payroll system which is not linked electronically to the payroll system for LBP Employees who work primarily within the United States. (b) EMPLOYEE - means for periods before October 1, 1989 a person who was an employee of LBP or an entity which would be considered a single employer with LBP under Code Section 414. (c) FORMER LBP PARTICIPANT - means a person who was a participant in the Harris/LBP Plan before October 1, 1989. (d) LBP - means Lanier Business Products, Inc. (e) MAXIMUM DEFERRAL PERCENTAGE - means for each Former LBP Participant for periods before October 1, 1989, 10%. (f) PARTICIPATING LBP COMPANY - means LBP, the Executive Conference Center, Inc. and Lanier Financial Services, Inc. (g) YEARS OF SERVICE - means for an Employee's "years of service" as determined under Section 3.48 of the Plan as if all employment with LBP or an entity which would have been would have been considered a single employer with LBP under Code Section 414 before October 1, 1989 was employment as an Employee under the Plan. ARTICLE III MATCHING CONTRIBUTION Subject to the limitations of Section 5.4 (Limitations on Allocations), LBP on behalf of each Participating LBP Company shall (as soon as practicable after the end of each Plan Quarter) make a Matching Contribution from the current or accumulated Earnings and Profits of all Participating LBP Companies for the Plan Quarter ending September 30, 1989 on behalf of each Former LBP Participant who is an Eligible Employee on that date and on whose behalf contributions were credited as of such date to his Before-Tax Account. Such Matching Contribution shall not exceed 25% of the Before-Tax Contributions contributed for such Plan Quarter and credited to his Before-Tax Account as of such date which do not exceed 6% of his Compensation (as defined in Section 3.11(a)) for such Plan Quarter. - 2 - 59 ATTACHMENT 2 TO EXHIBIT A TO THE LANIER WORLDWIDE, INC. SAVINGS INCENTIVE PLAN FORMER BSD PARTICIPANTS Section 2-1. APPLICATION ----------- This Attachment 1 shall apply only to those Participants who are Former BSD Participants. Section 2-2. DEFINITIONS ----------- The terms in this Section 2-2 shall have the meanings set forth opposite such terms for purposes of this Attachment 1 and this Plan. Except as provided in this Section 2-2, a capitalized term shall have the meaning set forth in the Plan. 1-1.1. FORMER BSD PARTICIPANT - means a person who was a Former LBP Participant as described in Attachment 1 to Exhibit A who was employed in the Business Systems Division and whose employment was involuntarily terminated after January 1, 1990 or who transferred to Syntrex, Inc. after January 26, 1990 but before March 1, 1990 as a result of the sale of assets between Harris Corporation and Syntrex, Inc. Section 2-3. TERMINATION BENEFITS -------------------- 2-3-1 FULL VESTING. Each Former BSD Participant shall be fully vested in his Matching Account. If a Former BSD Participant is reemployed as an Eligible Employee, he shall not receive credit (for vesting purposes) for employment with Syntrex, Inc. with respect to any contributions allocated to his Matching Account under this Plan after his reemployment. 2-3-2 DISTRIBUTION/TRANSFER. If a Former BSD Participant is transferred to Syntrex, Inc., such Participant shall be eligible to elect an immediate lump sum 60 benefit by filing with the Plan Sponsor a properly completed election form on or before February 10, 1990. If a Participant fails to elect an immediate benefit on or before February 10, 1990, such Participant's Account shall be transferred to the Syntrex Employee Savings Plan which shall assume all liabilities of this Plan with respect to such Participant. - 2 - EX-10.K 7 FORM 10-K EXHIBIT 10(K) 1 Exhibit 10 (k) LANIER WORLDWIDE, INC. SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN (Formerly known as Harris/3M Document Products, Inc. Supplemental Executive Retirement Plan) 2 LANIER WORLDWIDE, INC. SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN (Formerly known as Harris/3M Document Products, Inc. Supplemental Executive Retirement Plan) WHEREAS, the Harris/3M Document Products, Inc. Pension Plan, the Harris/3M Document Products, Inc. Supplemental Executive Retirement Plan, the Lanier Business Products, Inc. Supplemental Executive Retirement Plan and the Harris/Lanier Retirement Plan and Trust were previously established by Lanier Worldwide, Inc. or its predecessor; and WHEREAS, the Harris/3M Document Products, Inc. Pension Plan and the Harris/Lanier Retirement Plan and Trust were merged, effective as of October 1, 1989, the merged plan being known as the Lanier Worldwide, Inc. Pension Plan (hereinafter referred to as the "Pension Plan"); and WHEREAS, Lanier Worldwide, Inc. (hereinafter referred to as the "Corporation") amended and restated the Harris/3M Document Products, Inc. Supplemental Executive Retirement Plan (hereinafter referred to as the "Prior SERP") to be consistent with the Pension Plan and to reflect certain recent changes in federal tax law, particularly the new Section 401(a)(17) of the Internal Revenue Code, effective as of October 1, 1989, and renamed such restated plan as the Lanier Worldwide, Inc. Supplemental Executive Retirement Plan (hereinafter referred to as the "SERP"); and WHEREAS, Lanier Worldwide, Inc. desires to amend and restate the SERP to authorize payment of certain expenses from a trust fund that may be 3 established by the Corporation to provide a source of payments for the Corporation's obligations under the SERP; NOW, THEREFORE, effective as of December __, 1992, the Corporation hereby amends section 7.5 of the SERP, and restates the SERP in its entirety, in order to provide benefits in excess of the limits now applicable to the Pension Plan and for other purposes hereinafter set forth. ARTICLE 1. DEFINITIONS 1.1 DEFINITIONS. Except as otherwise required by the context, the terms used in the SERP shall have the meaning hereinafter set forth. (a) "BENEFICIARY". The term "Beneficiary" means a person, trust or tax-exempt organization which, by the terms of a designation of beneficiary executed by a Participant in accordance with the provisions of Article 5, is entitled to receive the death benefit provided hereunder in the event of the death of such Participant. (b) "CODE"; "INTERNAL REVENUE CODE". The terms "Code" and "Internal Revenue Code" mean the Internal Revenue Code of 1986, as amended from time to time. Reference to a section of the Code includes such section and any comparable sections of any future legislation that amends, supplements, or supersedes such section. - 2 - 4 (c) "COMMITTEE". The term "Committee" means the administrative committee that administers the SERP as set forth in Article 6. (d) "CORPORATION". The term "Corporation" means Lanier Worldwide, Inc. and any successor to such corporation. (e) "ERISA". The term "ERISA" means the Employee Retirement Income Security Act of 1974 (Public Law 93-406), as amended from time to time. Reference to a section of ERISA includes such section and any comparable sections of any further legislation that amends, supplements, or supersedes such section. (f) "PARTICIPANT". The term "Participant" means any person who has fulfilled the eligibility requirements contained in Article 2 hereof and whose beneficial interest in the SERP has not been distributed in full. (g) "PENSION PLAN". The term "Pension Plan" means the Lanier Worldwide, Inc. Pension Plan. (h) "PRIOR SERP". The term "Prior SERP" means the Harris/3M Document Products, Inc. Supplemental Executive Retirement Plan. (i) "SERP". The term "SERP" means this Lanier Worldwide, Inc. Supplemental Executive Retirement Plan, as in effect on October 1, 1989, and as amended from time to time thereafter. 1.2 CONSTRUCTION. Where necessary or appropriate to the meaning hereof, the singular shall be deemed to include the plural, the plural to include the singular, the masculine to include the feminine, and the feminine to include the masculine. - 3 - 5 ARTICLE 2. PARTICIPATION Any select management and highly compensated employee of the Corporation covered by the Pension Plan who retires or otherwise incurs a termination of employment thereunder on or after October 1, 1989 and becomes entitled to receive a retirement benefit thereunder, and whose retirement benefits are limited under the Pension Plan by the provisions of Section 401(a)(17) or 415 of the Code shall become a Participant in the SERP automatically upon such limitation of participation. ARTICLE 3. AMOUNT OF BENEFITS The amount of the benefit payable hereunder shall be the excess of (a) the amount of the retirement benefit that would have been payable under the Pension Plan to such Participant but for the limitations contained in the Pension Plan to effect compliance with Sections 401(a)(17) and 415 of the Code, over (b) the amount of the retirement benefit that is actually payable under the provisions of the Pension Plan to such Participant. - 4 - 6 ARTICLE 4. BENEFIT PAYMENTS The supplemental benefits calculated under Article 3 shall be paid to a Participant or his Beneficiary, if applicable, in the same manner and form as, and coincident with, the payment of the retirement benefits of such Participant, or Beneficiary, under the Pension Plan. Any factors or conditions applicable to a Participant's or a Beneficiary's benefit under the Pension Plan shall be applicable to such benefits under the SERP. ARTICLE 5. BENEFICIARIES In the event a Participant dies before his interest under the SERP has been distributed to him in full, any remaining interest shall be distributed pursuant to Article 5 to his Beneficiary who shall be the person designated as his beneficiary under the Pension Plan. ARTICLE 6. ADMINISTRATION OF THE SERP 6.1 IN GENERAL. The Corporation is the administrator of this SERP. However, the Corporation Administrative Committee under the Pension Plan shall discharge those administrative duties and exercise those administrative powers which are specifically imposed or conferred upon the Committee by the SERP. - 5 - 7 6.2 POWERS AND DUTIES. The Committee shall have full Power and authority to interpret, construe and administer the SERP and its interpretations and construction hereof, and actions hereunder, including the timing, form, amount, or recipient of any payment to be made hereunder, shall be binding and conclusive on all persons for all purposes. The Committee may delegate any of its powers, authorities, or responsibilities for the operation and administration of the SERP to any person or committee so designated in writing by it and may employ such attorneys, agents, and accountants as it may deem necessary or advisable to assist it in carrying out its duties hereunder. No member of the Committee shall be liable to any person for any action taken or omitted in connection with the interpretation and administration of the SERP unless attributable to his own willful misconduct or lack of good faith. Members of the Committee shall not participate in any action or determination regarding their own benefits, if any, payable under the SERP. 6.3 RULES, REGULATIONS AND PROCEDURES. The Committee may from time to time adopt such rules, regulations and procedures, not inconsistent with the declared purposes of this SERP, as it may deem necessary to enable it to administer the SERP and to carry out the provisions of this SERP. 6.4 IMMUNITIES OF THE COMMITTEE. Except as otherwise provided by law, no member of the Committee shall be liable to a participating employer or to any Participant or his Beneficiary by reason of the exercise in good faith of any power or discretion vested in him by the terms of this SERP, and all decisions and - 6 - 8 directions made by the Committee in the exercise of its powers and duties hereunder shall be final and binding upon all parties concerned. ARTICLE 7. MISCELLANEOUS PROVISIONS 7.1 AMENDMENT AND TERMINATION. The Corporation reserves the right to terminate, modify or amend this SERP at any time in whole or in part. 7.2 SPENDTHRIFT CLAUSE. No benefit of a Participant or Beneficiary under this SERP shall be subject to alienation, sale, transfer, assignment, pledge, attachment or encumbrance of any kind, either before or after his retirement. Except as otherwise provided, if any such pensioner or Beneficiary shall attempt to or shall alienate, sell, transfer, assign, pledge or otherwise encumber his benefits under this SERP, or any part thereof, or if by reason of bankruptcy or other event his benefits would devolve upon anyone else or would not be enjoyed by him, his spouse or beneficiary, then the Committee, in its sole discretion, may cause the interest of the pensioner or Beneficiary in any such benefit to be terminated and to be held or applied to or for the benefit of such person or persons and in such manner as the Committee may deem proper. 7.3 NOT A CONTRACT OF CONTINUING EMPLOYMENT. Under no circumstances shall this SERP or the participation in the SERP by an employee constitute a contract of continuing employment or in any manner obligate an employer to continue or discontinue the service of an employee. - 7 - 9 7.4 PAYMENT OF BENEFITS TO OTHERS. If any Participant or Beneficiary to whom a retirement benefit is payable is unable to care for his affairs because of illness or accident, any payment due (unless prior claim therefor shall have been made by a duly qualified guardian or other legal representative) may be paid to the spouse, parent, brother, or sister, or any other individual deemed by the Committee to be maintaining or responsible for the maintenance of such person. Any payment made in accordance with the provisions of this Section 7.4 shall be a complete discharge of any liability of the SERP with respect to the benefit so paid. 7.5 OBLIGATION UNSECURED. The obligation of the Corporation to pay benefits provided hereunder shall be unfunded and unsecured and benefits shall be paid by the Corporation out of its general treasury funds. In order to provide a source of payment for its obligations under this SERP, the Corporation may establish or continue to maintain a trust fund and contribute funds and property thereto. If such a trust fund is established, the Corporation may, in its sole discretion, direct the trustee to make disbursements from trust assets in payment of expenses reasonably related to the establishment, operation, or administration of the trust, including but not limited to payments to attorneys, agents, accountants, and financial advisers or institutions. These disbursements may take the form of reimbursement of the Corporation or its parent corporation for such expenses paid by the Corporation or its parent corporation, provided that the request for reimbursement includes documentation of the expense that is reasonably acceptable to the trustee. Subject to the provisions of the trust - 8 - 10 agreement governing any such trust fund, however, the obligation of the Corporation under the SERP to provide a Participant or a Beneficiary with a benefit shall nonetheless constitute the unsecured promise of the Corporation to make payments as provided herein, and no person shall have any interest in, or a lien or prior claim upon, any property of the Corporation. 7.6 CONTROLLING STATUS. No Participant shall be eligible for a supplemental retirement benefit under the SERP unless such Participant is a Participant on the date of his retirement, death, or other termination of employment. 7.7 CLAIMS OF OTHER PERSONS. The provisions of the SERP shall in no event be construed as giving any person, firm or corporation any legal or equitable right as against the Corporation, its officers, employees, or directors, except any such rights as are specifically provided for in the SERP or are hereafter created in accordance with the terms and provisions of the SERP. 7.8 SEVERABILITY. The invalidity or unenforceability of any particular provision of the SERP shall not affect any other provision hereof, and the SERP shall be construed in all respects as if such invalid or unenforceable provision were omitted herefrom. 7.9 CONSTRUCTION OF SERP. The provisions of the SERP shall be governed and construed in accordance with the laws of the State of Georgia. - 9 - 11 EXECUTED at Atlanta, Georgia, this ____ day of December, 1992. LANIER WORLDWIDE, INC. By /S/ WESLEY E. CANTRELL ------------------------------- And /S/ JOE PAYNE ------------------------------- 1035054 - 10 - EX-11 8 FORM 10-K EXHIBIT 11 1 EXHIBIT 11 COMPUTATION OF NET INCOME PER SHARE (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
YEARS ENDED JUNE 30, --------------------------------- 1994 1993 1992 -------- -------- ------- Primary: Average shares outstanding.......................... 39,720 39,444 39,057 ======== ======== ======= Income from continuing operations before extraordinary item and cumulative effect of change in accounting principle................... $121,880 $111,079 $87,489 Discontinued operations............................. -- -- (9,300) Extraordinary loss.................................. -- -- (3,020) Cumulative effect of change in accounting principle........................................ (10,063) -- -- -------- -------- ------- Net Income.......................................... $111,817 $111,079 $75,169 ======== ======== ======= Per share amounts: Continuing operations before extraordinary item and cumulative effect of change in accounting principle...................................... $3.07 $2.82 $2.24 Discontinued operations.......................... -- -- (.24) Extraordinary loss............................... -- -- (.08) Cumulative effect of change in accounting principle...................................... (.25) -- -- -------- -------- ------- Total............................................ $2.82 $2.82 $1.92 ======== ======== ======= Fully diluted: Total primary average shares outstanding............ 39,720 39,444 39,057 Dilutive stock options and employee stock purchase plan shares -- based on treasury stock method using the greater of year-end market price or average market price............................. 154 217 67 -------- -------- ------- Total fully diluted average shares outstanding...... 39,874 39,661 39,124 ======== ======== ======= Per share amounts: Continuing operations before extraordinary item and cumulative effect of change in accounting principle...................................... $3.05 $2.80 $2.24 Discontinued operations.......................... -- -- (.24) Extraordinary loss............................... -- -- (.08) Cumulative effect of change in accounting principle...................................... (.25) -- -- -------- -------- ------- Total............................................ $2.80 $2.80 $1.92 ======== ======== =======
43 EX-21 9 FORM 10-K EXHIBIT 21 1 EXHIBIT 21 SUBSIDIARIES OF THE REGISTRANT Each of the below listed subsidiaries is 100% directly or indirectly owned by Harris Corporation except as otherwise indicated, and all are included in the consolidated financial statements.
STATE OR OTHER JURISDICTION NAME OF SUBSIDIARY OF INCORPORATION - ---------------------------------------------------------------------------------------------- Harris A.B. ............................................................. Sweden Harris GmbH.............................................................. Germany Harris K.K. ............................................................. Japan Harris S.A. ............................................................. Belgium Harris S.A. de C.V. ..................................................... Mexico Harris Srl............................................................... Italy Harris Advanced Technology (Malaysia) Sdn. Bhd. ......................... Malaysia Harris Australia Pty. Ltd. .............................................. Australia Harris Broadcast Systems (Nigeria) Limited (40% of voting securities owned)................................................................. Nigeria Harris Canada, Inc....................................................... Canada Harris Communications Honduras, S.A. de C.V. ............................ Honduras Harris Computer Systems Corporation ..................................... Florida Harris Controls Australia Limited........................................ Australia Harris Data Services Corporation......................................... Delaware Harris do Brazil Limitada................................................ Brazil Harris Far East Limited.................................................. Delaware Harris Foreign Sales Corporation, Inc. .................................. Virgin Islands Harris International Sales Corporation................................... Delaware Harris Investments of Delaware, Inc. .................................... Delaware Harris Ireland Ltd....................................................... Ireland Harris Italiana, Inc. ................................................... Delaware Harris Network Support Products, Inc..................................... Texas Harris Pension Management Limited........................................ England Harris Publishing Systems Corporation.................................... Delaware Harris Semiconducteurs Sarl.............................................. France Harris Semiconductor B.V. ............................................... Netherlands Harris Semiconductor GmbH................................................ Germany Harris Semiconductor Limited............................................. England Harris Semiconductor HK, Ltd. ........................................... Hong Kong Harris Semiconductor Y.H. ............................................... Korea Harris Semiconductor, Inc. .............................................. Delaware Harris Semiconductor (Florida), Inc. .................................... Delaware Harris Semiconductor (Malaysia) Sdn. Bhd. ............................... Malaysia Harris Semiconductor (Ohio), Inc. ....................................... Delaware Harris Semiconductor Patents, Inc. ...................................... Delaware Harris Semiconductor (Pennsylvania), Inc. ............................... Delaware Harris Semiconductor Pte. Ltd. .......................................... Singapore Harris Semiconductor (Taiwan) Ltd. ...................................... Taiwan Harris Solid-State (Malaysia) Sdn. Bhd. ................................. Malaysia Harris Southwest Properties, Inc. ....................................... Delaware Harris Space Systems Corporation......................................... Delaware Harris Systemes Electroniques S.A. ...................................... France Harris Systems Limited................................................... England
44 2
STATE OR OTHER JURISDICTION NAME OF SUBSIDIARY OF INCORPORATION - ---------------------------------------------------------------------------------------------- Harris Technical Services Corporation.................................... Delaware Harris Video Communication Systems, Inc. ................................ Delaware Allied Broadcast Equipment Canada, Ltd. ................................. Canada Baseview Products, Inc. ................................................. Michigan Communication & Information Processing Harris S.A........................ Argentina ECCO Parent Limited...................................................... Ireland Executive Conference Center, Inc. ....................................... Georgia Lanier (Australia) Pty. Ltd. ............................................ Australia Lanier Business Products, Inc. .......................................... Georgia Lanier Financial Services, Inc. ......................................... Georgia Lanier Holdings Pty. Ltd. ............................................... Australia Lanier Holdings, Inc. ................................................... Delaware Lanier International, Inc. .............................................. Delaware Lanier Pacific Pty. Ltd. ................................................ Australia Lanier Professional Services, Inc. ...................................... Delaware Lanier Worldwide, Inc. .................................................. Delaware Lanier Leasing, Inc. .................................................... Delaware Lanier Europe, B.V. ..................................................... Netherlands Lanier United Kingdom Ltd. .............................................. England Lanier de Argentina...................................................... Argentina Lanier Canada, Inc. ..................................................... Canada Lanier de Chile, S.A. ................................................... Chile Lanier S.A. ............................................................. Colombia Lanier de El Salvador, S.A. de C.V. ..................................... El Salvador Lanier de Guatemala, S.A. ............................................... Guatemala Lanier de Dominicana, S.A. .............................................. Dominican Republic Lanier de Panama, S.A. .................................................. Panama Lanier Puerto Rico, Inc. ................................................ Puerto Rico Lanier de Costa Rica S.A. ............................................... Costa Rica Lanier France S.A. ...................................................... France Lanier Espana S.A. ...................................................... Spain Lanier Belgium S.A. ..................................................... Belgium Lanier Danmark A/S....................................................... Denmark Lanier Deutschland GmbH.................................................. Germany Lanier Italia S.p.A. .................................................... Italy Lanier Hellas AEBE....................................................... Greece Lanier Nederland B.V. ................................................... Netherlands Lanier Holdings A.G. .................................................... Switzerland Lanier Finance A.G....................................................... Switzerland Lanier (Schweiz) A.G. ................................................... Switzerland Lanier Singapore Pte. Ltd. .............................................. Singapore Lanier Norge A/S ........................................................ Norway RF Communications, Inc. ................................................. Delaware RF Communications, Inc. ................................................. New York Scientific Calculations, Inc. ........................................... New York Scientific Calculations Ltd. ............................................ England Trident Copiers Ltd. .................................................... England
45 3
STATE OR OTHER JURISDICTION NAME OF SUBSIDIARY OF INCORPORATION - ---------------------------------------------------------------------------------------------- Westronic Sales Corporation.............................................. Washington WSL Telecontrol Corporation.............................................. Washington
46 EX-23 10 FORM 10-K EXHIBIT 23 1 EXHIBIT 23 CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS We consent to the incorporation by reference in the following registration statements of Harris Corporation and in each related Prospectus of our report dated August 2, 1994, with respect to the consolidated financial statements and schedules of Harris Corporation and subsidiaries included in this Annual Report (Form 10-K) for the year ended June 30, 1994: Form S-8 No. 2-74551 Harris Corporation 1981 Stock Option Plan for Key Employees Form S-8 No. 33-50169 Harris Corporation Retirement Plan Form S-8 No. 33-50167 Harris Corporation Union Retirement Plan Form S-8 Nos. 33-37969; Harris Corporation Stock Incentive Plan 33-51171 Form S-3 No. 33-35315 Harris Corporation Medium-Term Notes ERNST & YOUNG LLP Orlando, Florida September 23, 1994
47 EX-27 11 FORM 10-K EXHIBIT 27
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 1994 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000,000 YEAR JUN-30-1994 JUN-30-1994 139 0 677 30 463 1698 1719 1168 2677 805 662 39 0 0 1149 2677 3336 3369 2275 2275 816 9 58 194 72 122 0 0 (10) 112 2.82 2.80
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