<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------
FORM 10/A
(AMENDMENT NO. 3)
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF
THE SECURITIES EXCHANGE ACT OF 1934
Lanier Worldwide, Inc.
- --------------------------------------------------------------------------------
(Exact name of Registrant as Specified in its Charter)
Delaware 59-2606737
- -------------------------------------------- ----------------------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
2300 Parklake Drive, Atlanta, Georgia 30345
- -------------------------------------------- ----------------------------------
(Address of Principal Executive Offices) (Zip code)
Registrant's telephone number, including area code (770) 621-1588
--------------------------
Securities to be registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which
to be so Registered Each Class is to be Registered
------------------- ------------------------------
Common Stock, par value $0.01 per share New York Stock Exchange, Inc.
Preferred Stock Purchase Rights New York Stock Exchange, Inc.
Securities to be registered pursuant to Section 12(g) of the Act:
None
- --------------------------------------------------------------------------------
(Title of Class)
EXPLANATORY NOTE
This Registration Statement has been prepared on a prospective basis on
the assumption that, among other things, the Distribution (as defined in the
Information Statement which is a part of this Registration Statement) and the
related transactions contemplated to occur prior to or contemporaneously with
the Distribution will be consummated as contemplated by the Information
Statement. There can be no assurance, however, that any or all of such
transactions will occur or will occur as so contemplated. Any significant
modifications or variations in the transactions contemplated will be reflected
in an amendment or supplement to this Registration Statement.
<PAGE> 2
CROSS REFERENCE
LANIER WORLDWIDE, INC.
I. INFORMATION INCLUDED IN INFORMATION STATEMENT AND INCORPORATED IN FORM
10 BY REFERENCE
CROSS-REFERENCE SHEET BETWEEN INFORMATION STATEMENT
AND ITEMS OF FORM 10
<TABLE>
<CAPTION>
Item
No. Item Caption Location in Information Statement
<S> <C> <C>
1. Business "SUMMARY;" "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF
OPERATIONS;" and "LANIER'S BUSINESS."
2. Financial Information "SUMMARY - LANIER WORLDWIDE,
INC. AND SUBSIDIARIES SUMMARY
HISTORICAL AND PRO FORMA
CONSOLIDATED FINANCIAL DATA;"
"LANIER WORLDWIDE, INC. AND
SUBSIDIARIES HISTORICAL AND
PRO FORMA CONSOLIDATED
CAPITALIZATION;" "LANIER
WORLDWIDE, INC. UNAUDITED PRO
FORMA CONSOLIDATED FINANCIAL
STATEMENTS;" "LANIER
WORLDWIDE, INC. SELECTED
FINANCIAL DATA;" "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND
RESULTS OF OPERATIONS;" and
"LANIER WORLDWIDE, INC. AND
SUBSIDIARIES CONSOLIDATED
FINANCIAL STATEMENTS."
3. Properties "LANIER'S BUSINESS - Properties"
4. Security Ownership of Certain "SECURITY OWNERSHIP OF CERTAIN
Beneficial Owners and BENEFICIAL OWNERS."
Management
5. Directors and Executive "LANIER'S MANAGEMENT."
Officers
6. Executive Compensation "LANIER'S MANAGEMENT."
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C>
7. Certain Relationships and "SUMMARY;" "THE DISTRIBUTION -
Related Transactions Relationship Between Harris And
Lanier Following The Distribution."
8. Legal Proceedings "LANIER'S BUSINESS - Legal Proceedings."
9. Market Price of and Dividends "SUMMARY;" and "THE DISTRIBUTION -
on the Registrant's Common Listing and Trading of the Lanier
Equity and Related Stockholder Shares" and "DIVIDEND POLICIES."
Matters
11. Description of Registrant's "DESCRIPTION OF LANIER'S CAPITAL
Securities to be Registered STOCK."
12. Indemnification of Officers and "LIABILITY AND INDEMNIFICATION OF
Directors DIRECTORS AND OFFICERS."
13. Financial Statements and "SUMMARY;" "LANIER WORLDWIDE, INC.
Supplementary Data UNAUDITED PRO FORMA CONSOLIDATED
FINANCIAL STATEMENTS," "LANIER
WORLDWIDE, INC. SELECTED FINANCIAL
DATA;" and "LANIER WORLDWIDE, INC.
AND SUBSIDIARIES CONSOLIDATED
FINANCIAL STATEMENTS."
</TABLE>
II. INFORMATION NOT INCLUDED IN INFORMATION STATEMENT
Item 10. Recent Sales of Unregistered Securities.
None.
Item 14. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
None.
Item 15. Financial Statements and Exhibits.
(a) List of Financial Statements. The following financial statements are
included in the Information statement:
Report of Independent Certified Public Accountants.
Lanier Worldwide, Inc. and Subsidiaries Consolidated Balance Sheets as of July
2, 1999, July 3, 1998, and June 27, 1997.
<PAGE> 4
Lanier Worldwide, Inc. and Subsidiaries Consolidated Statements of Income for
the Fiscal Years ended July 2, 1999, July 3, 1998 and June 27, 1997.
Lanier Worldwide, Inc. and Subsidiaries Consolidated Statements of Cash Flows
for the Fiscal Years ended July 2, 1999, July 3, 1998 and June 27, 1997.
Lanier Worldwide, Inc. and Subsidiaries Consolidated Statements of Changes in
Shareholder Equity for the Fiscal Years ended July 2, 1999, July 3, 1998 and
June 27, 1997.
(b) Exhibits. The following documents are filed as exhibits hereto:
Exhibit No.
- -----------
2.1 Form of Distribution Agreement.*
3.1 Form of Amended and Restated Certificate of Incorporation of Lanier
Worldwide, Inc.**
3.2 Form of By-Laws of Lanier Worldwide, Inc.**
4.1 Form of Stockholder Protection Rights Agreement.**
4.2 Form of Certificate of Designation and Terms of Registrant's
Participating Preferred Stock.**
4.3 Form of certificate representing Lanier common stock.
10.1 Form of Tax Disaffiliation Agreement.**
10.2A Commitment Letter with respect to Credit Agreement.
10.2B Credit Agreement.*
10.3 Form of Transition Services Agreement.**
10.4 Form of Distribution Agreement (filed as Exhibit 2.1).*
10.5 Form of Employee Benefits Compensation and Allocation Agreement.*
10.6 Form of Registration Rights Agreement.**
10.7 Form of Stock Incentive Plan.
10.8 Lanier Worldwide, Inc. Supplemental Retirement Savings Plan.**
10.9 Lanier Worldwide, Inc. Supplemental Executive Retirement Plan.**
10.10 Form of Indemnification Agreement.
10.11 Form of Employee Stock Purchase Plan.
10.12 Form of Amended and Restated Key Contributor Incentive Plan.
10.13 Form of Amended and Restated Long-term Incentive Plan for Key Employees.
10.14 Form of Executive Severance Agreement.
10.15 Pension Equity Plan.
10.16 Savings Incentive Plan.
12.1 Computation of Ratios of Earnings to Fixed Charges.**
21.1 List of Subsidiaries.*
23.1 Consent of Independent Certified Public Accountants.
27.1 Financial Data Schedule.**
- ------------
* To be filed by amendment
** Previously filed
<PAGE> 5
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this Amendment No. 3 to the
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized.
LANIER WORLDWIDE, INC.
By /s/ Wesley E. Cantrell
-----------------------
Name: Wesley E. Cantrell
Title: President and Chief
Executive Officer
Dated: October 20, 1999
<PAGE> 6
[HARRIS LOGO]
HARRIS CORPORATION
1025 West NASA Boulevard
Melbourne, Florida 32919
-, 1999
Dear Fellow Stockholder:
I am pleased to inform you that the Board of Directors of Harris
Corporation has approved a pro rata distribution to Harris stockholders of
approximately 90% of the outstanding shares of common stock of Lanier Worldwide,
Inc., a worldwide independent provider of office products and document
management solutions, which is currently a subsidiary of Harris. Harris will
retain approximately 10% of the Lanier shares.
The distribution will take place on -, 1999. Each Harris stockholder as of
- -, 1999 will receive one Lanier share for every Harris share held on that date.
The Lanier shares have been approved for listing on the New York Stock Exchange,
subject to official notice of issuance, under the symbol "LR."
We believe that the distribution will meaningfully enhance value for Harris
stockholders and will give Lanier the financial and operational flexibility to
take advantage of significant growth opportunities in the office products and
document management solutions business. We believe that separating the two
companies will enhance the ability of each of Lanier and Harris to focus on
strategic initiatives and new business opportunities, as well as to improve cost
structures and operating efficiencies and to design equity-based compensation
programs targeted to its own performance. In addition, we expect that the
transition to an independent company will heighten Lanier management's focus,
provide Lanier with greater access to capital, and allow the investment
community to better measure Lanier's performance relative to its peers.
The enclosed Information Statement describes the distribution and provides
important financial and other information about Lanier. Please read it
carefully.
You do not have to take any action to receive your Lanier shares. You will
not be required to pay anything or to surrender your Harris shares. Account
statements reflecting your ownership of Lanier shares will be mailed to record
holders of Harris stock shortly after -, 1999. If you are a participant in
Harris' dividend reinvestment program and are entitled to receive a fractional
Lanier share, you will receive a check for its cash value. If you are not a
record holder of Harris stock, your Lanier shares should be credited to your
account with your stockbroker or nominee on or about -, 1999. Following the
distribution, you may also request physical stock certificates if you wish.
Information for making that request will be furnished with your account
statement.
Sincerely,
/s/ Phillip W. Farmer
Phillip W. Farmer
Chairman and Chief Executive Officer
<PAGE> 7
[LANIER LETTERHEAD]
Lanier Worldwide, Inc.
2300 Parklake Drive, N.E.
Atlanta, Georgia
30345-2979
770/496-9500
-, 1999
Dear Stockholder:
We are very pleased that you will soon be a stockholder of Lanier
Worldwide, Inc. We are a worldwide independent provider of office products and
document management solutions, together with related services and support.
Lanier is truly a global company. In fact, we have over 1,600 sales and service
centers in over 100 countries around the world, through which we continually
seek to provide "best of breed" products to our customers.
As a subsidiary of Harris Corporation, Lanier has been known for its
customer focused strategy. As an independent company, our highest priority will
continue to be customer satisfaction. We continually train our sales people and
service force on new products, technologies and techniques, and we believe that
this training, coupled with our commitment to viewing business interactions
through the eyes of our customers, will allow us to maintain our coveted
reputation in our industry.
We believe that the separation of our business from the businesses of our
corporate parent, Harris Corporation, will enhance our ability to grow our
businesses aggressively, both internally and through selective acquisitions. For
the first time, we will have the ability to offer our employees incentive
opportunities linked to Lanier's performance as a stand-alone company, which we
believe will aid our efforts to enhance employee performance.
As an independent company, we can more effectively focus on our objectives,
support the capital needs of our company and thus bring value to you as a
stockholder.
The Lanier shares you are receiving have been approved for listing on the
New York Stock Exchange, subject to official notice of issuance, under the
symbol "LR."
Our board, management and employees are excited about our future as an
independent company and we look forward to your support and participation in our
success.
Sincerely,
/s/ Wesley E. Cantrell
Wesley E. Cantrell
President and Chief Executive Officer
<PAGE> 8
SUBJECT TO COMPLETION, DATED OCTOBER 18, 1999
INFORMATION STATEMENT RELATING TO THE SPINOFF OF
LANIER WORLDWIDE, INC.
FROM HARRIS CORPORATION
COMMON STOCK
(PAR VALUE $0.01 PER SHARE)
Harris Corporation is sending you this information statement to describe
the pro rata distribution to Harris stockholders of approximately 90% of the
outstanding common stock of Lanier Worldwide, Inc. In this distribution, you
will receive one share of Lanier common stock, together with an associated
preferred stock purchase right, for every share of Harris common stock that you
hold at the close of business on -, 1999. Harris will retain approximately 10%
of Lanier's common stock. See "The Distribution" beginning on page 14.
Lanier is currently a wholly owned subsidiary of Harris and is a worldwide
independent provider of office products and document management solutions,
related services and support, with over 1,600 sales and service centers in over
100 countries around the world. See "Lanier's Business" beginning on page 38.
The distribution of Lanier shares will be effected at 11:59 p.m., Eastern
Daylight Time, on -, 1999. You do not have to take any action to receive your
Lanier shares. You will not be required to pay anything or to surrender your
Harris shares. Harris intends to distribute the Lanier shares by book entry. The
number of Harris shares that you own will not change as a result of the
distribution.
There is no current public trading market for the Lanier shares, although a
"when-issued" trading market may develop prior to completion of the
distribution. The Lanier shares have been approved for listing on the New York
Stock Exchange, subject to official notice of issuance, under the symbol "LR."
See "The Distribution -- Listing and Trading of the Lanier Shares" beginning on
page 16.
------------------------
NO VOTE OF STOCKHOLDERS IS REQUIRED IN CONNECTION WITH THE DISTRIBUTION. WE
ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY OR
YOUR SHARE CERTIFICATES.
YOU SHOULD CAREFULLY CONSIDER THE RISK FACTORS DESCRIBED IN THIS
INFORMATION STATEMENT BEGINNING ON PAGE 7.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE SECURITIES TO BE ISSUED UNDER THIS
INFORMATION STATEMENT OR DETERMINED IF THIS INFORMATION STATEMENT IS TRUTHFUL OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THIS INFORMATION STATEMENT IS NOT AN OFFER TO SELL OR THE SOLICITATION
OF AN OFFER TO BUY ANY SECURITIES.
THE DATE OF THIS INFORMATION STATEMENT IS -, 1999.
<PAGE> 9
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-------
<S> <C>
QUESTIONS AND ANSWERS ABOUT THE DISTRIBUTION................ iii
SUMMARY..................................................... 1
RISK FACTORS................................................ 7
INTRODUCTION................................................ 14
THE DISTRIBUTION............................................ 14
RELATIONSHIP BETWEEN HARRIS AND LANIER FOLLOWING THE
DISTRIBUTION.............................................. 19
LANIER WORLDWIDE, INC. AND SUBSIDIARIES HISTORICAL AND PRO
FORMA CONSOLIDATED CAPITALIZATION......................... 22
DIVIDEND POLICIES........................................... 23
LANIER WORLDWIDE, INC. UNAUDITED PRO FORMA CONSOLIDATED
FINANCIAL STATEMENTS...................................... 24
LANIER WORLDWIDE, INC. SELECTED FINANCIAL DATA.............. 28
RECENT DEVELOPMENTS......................................... 29
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS................................. 30
LANIER'S BUSINESS........................................... 38
LANIER'S MANAGEMENT......................................... 45
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS............. 57
BENEFICIAL OWNERSHIP OF MANAGEMENT.......................... 58
DESCRIPTION OF LANIER'S CAPITAL STOCK....................... 58
CERTAIN ANTI-TAKEOVER PROVISIONS OF LANIER'S CERTIFICATE OF
INCORPORATION, BYLAWS AND RIGHTS AGREEMENT AND DELAWARE
LAW....................................................... 60
LIABILITY AND INDEMNIFICATION OF DIRECTORS AND OFFICERS..... 65
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS.................... 66
ADDITIONAL INFORMATION...................................... 66
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS.......... F-1
LANIER WORLDWIDE, INC. AND SUBSIDIARIES CONSOLIDATED
FINANCIAL STATEMENTS...................................... F-2
</TABLE>
ii
<PAGE> 10
QUESTIONS AND ANSWERS ABOUT THE DISTRIBUTION
The following section answers various questions that you may have with
respect to the pro rata distribution to Harris stockholders of approximately 90%
of the outstanding shares of Lanier common stock. We refer to this distribution
in this document as the "Distribution."
Q: WHY IS HARRIS EFFECTING THE DISTRIBUTION?
A: Harris' board of directors and management believe that the Distribution is
in the best interests of Harris, Lanier and Harris stockholders. Harris' board
of directors and management believe that separating Lanier from the rest of
Harris' businesses will allow both Lanier and Harris to focus on their
respective businesses and provide them with the flexibility to pursue different
strategies and react quickly to changing market environments. Lanier's business
is a distinct business with significant differences from Harris' other
operations with respect to its markets, products, capital needs and plans for
growth. Harris' board of directors and management believe that the Distribution
will enhance the ability of each of Lanier and Harris to focus on strategic
initiatives and new business opportunities, improve cost structures and
operating efficiencies and design equity-based compensation programs targeted to
its own performance. In addition, Harris' board of directors expects that the
transition to an independent company will heighten Lanier management's focus,
provide Lanier with greater access to capital, and allow the investment
community to measure Lanier's performance relative to its peers. For a more
detailed discussion of the reasons for the Distribution, see "The
Distribution -- Reasons for the Distribution" on page 14.
Q: WHY IS HARRIS RETAINING APPROXIMATELY 10% OF THE LANIER SHARES?
A: Harris will retain approximately 10% of the Lanier shares because the
contemplated future sale of these shares will provide Harris with a source of
cash following the Distribution. Harris intends to use this cash to make
acquisitions in the telecommunications equipment industry. See "The
Distribution -- Reasons for Harris' Retention of Lanier Shares" on page 15.
Q: WHEN WILL THE DISTRIBUTION OCCUR?
A: We currently anticipate completing the Distribution on -, 1999.
Q: WHAT BUSINESS WILL LANIER CONDUCT FOLLOWING THE DISTRIBUTION?
A: After the Distribution, Lanier will continue operating its current business.
See "Summary -- Lanier's Business" on page 1, "The Distribution -- Results of
the Distribution" beginning on page 15 and "Lanier's Business" beginning on page
38.
Q: WHAT WILL I RECEIVE AS A RESULT OF THE DISTRIBUTION?
A: For every share of Harris common stock that you own of record on -, 1999,
you will receive one share of Lanier common stock. For example, if you own 123
shares of Harris common stock on -, you will receive 123 shares of Lanier common
stock.
Harris currently intends to distribute the Lanier shares by book entry. If
you are a record holder of Harris stock, instead of physical stock certificates,
you will receive from Lanier's transfer agent shortly after -, 1999 a statement
of your book entry account for the Lanier shares distributed to you. Following
the Distribution, you may request physical stock certificates if you wish, and
instructions for making that request will be furnished with your account
statement. If you are a participant in Harris' dividend reinvestment plan and
are entitled to receive a fractional Lanier share, you will receive a check for
the cash value of the fractional Lanier share, which may be taxable to you. If
you are not a record holder of Harris stock because such shares are held on your
behalf by your stockbroker or other nominee, your Lanier shares should be
credited to your account with your stockbroker or nominee on or about -, 1999.
Associated with every share of Lanier common stock that you receive will be
one preferred stock purchase right. These rights are similar to the rights
associated with your existing shares of Harris common stock and may have certain
anti-takeover effects similar to Harris' current preferred stock purchase
rights. See "The Distribution -- Manner of Effecting the Distribution" on page
15, "Risk Factors -- Certain Provisions of Lanier's Restated Certificate of
Incorporation Bylaws and Rights Plan and the Tax Disaffiliaton Agreement May
iii
<PAGE> 11
Discourage Takeovers" beginning on page 11 and "Certain Anti-Takeover Provisions
of Lanier's Certificate of Incorporation, Bylaws and Rights Agreement and
Delaware Law" beginning on page 60.
Q: WHAT DO I HAVE TO DO TO RECEIVE MY LANIER SHARES?
A: Nothing. Your Lanier shares will be either reflected in an account statement
that Lanier's transfer agent will send to you shortly after -, 1999 or credited
to your account with your broker or nominee on or about -, 1999.
Q: WHEN WILL I RECEIVE MY LANIER SHARES?
A: If you hold your Harris shares in your own name, your account statement will
be mailed to you on or about -, 1999. You should allow several days for the mail
to reach you.
If you hold your Harris shares through your stockbroker, bank or other
nominee, you are probably not a stockholder of record and your receipt of Lanier
shares depends on your arrangements with the nominee that holds your Harris
shares for you. Harris anticipates that stockbrokers and banks generally will
credit their customers' accounts with Lanier shares on or about -, 1999, but you
should check with your stockbroker, bank or other nominee. See "The
Distribution -- Manner of Effecting the Distribution" on page 15.
Q: HOW WILL THE DISTRIBUTION AFFECT THE MARKET PRICE OF MY HARRIS SHARES?
A: Following the Distribution, Harris shares will continue to be listed and
traded on the New York Stock Exchange under the symbol "HRS." As a result of the
Distribution, the trading price of Harris shares immediately following the
Distribution will likely be lower than immediately prior to the Distribution.
Until the market has fully analyzed the operations of Harris without the
operations of Lanier, the price of Harris shares may fluctuate significantly.
See "The Distribution -- Listing and Trading of the Lanier Shares" beginning on
page 16.
Q: WHERE WILL MY LANIER SHARES BE TRADED?
A: The Lanier shares have been approved for listing on the New York Stock
Exchange, subject to official notice of issuance, under the symbol "LR." Trading
of the Lanier shares may commence on a when-issued basis after the record date.
See "The Distribution -- Listing and Trading of the Lanier Shares" beginning on
page 16.
Q: HOW WILL THE CASH PAYMENT FOR FRACTIONAL SHARES BE DETERMINED AND PAID?
A: If your account with Harris' dividend reinvestment plan is credited with a
fractional share of Harris stock as of -, 1999, you will receive cash in lieu of
the fractional Lanier share that you are entitled to receive. Your fractional
Lanier share will be aggregated with the fractional Lanier shares of other
stockholders and sold in the open market by Harris' distribution agent. You will
receive a check for your share of the net proceeds of such sale. See "The
Distribution -- Manner of Effecting the Distribution" on page 15.
Q: WHAT IF I WANT TO SELL MY HARRIS SHARES OR MY LANIER SHARES?
A: You should consult with your own financial advisors, such as your
stockbroker, bank or tax advisor. Harris does not make recommendations on the
purchase, retention or sale of Harris shares or Lanier shares.
If you do decide to sell any shares, you should make sure your stockbroker,
bank or other nominee understands whether you want to sell your Harris shares or
your Lanier shares, or both. The following information may be helpful in
discussions with your stockbroker, bank or other nominee.
Beginning about -, 1999 and continuing until -, 1999, New York Stock
Exchange practices should generally allow you to sell your Harris shares either
together with the right to receive the Lanier shares in the Distribution or
without the right to receive the Lanier shares. If you sell your Harris shares
with the right to receive the Lanier shares, you (or your broker or bank) will
be required to deliver to the buyer the Lanier shares you receive in the
Distribution. You should also be able to sell your right to receive the Lanier
shares without selling your Harris shares.
Sales of Harris shares with the right to receive the Lanier shares should
generally settle in the three business day settlement period. Sales of Harris
shares without the right to receive the Lanier shares and sales of the Lanier
shares without Harris shares are expected to settle four business days following
the date account statements for
iv
<PAGE> 12
the Lanier shares are mailed. Check with your stockbroker, bank or other
nominee. Beginning about -, 1999, you may only sell your Harris shares and
Lanier shares separately. Once again, check with your stockbroker, bank or other
nominee. See "The Distribution -- Listing and Trading of the Lanier Shares"
beginning on Page 16.
Q: HOW WILL THE DISTRIBUTION AFFECT THE DIVIDENDS I CURRENTLY RECEIVE ON MY
HARRIS SHARES?
A: Following the Distribution, Harris intends to pay quarterly dividends at an
initial annual rate expected to be substantially below Harris' current annual
dividend rate of $.96 per share. No determination has been made by Harris' board
of directors with respect to the initial dividend rate that will be paid
following the Distribution. The declaration and payment of dividends is at the
discretion of Harris' board of directors and will be subject to Harris'
financial results and the availability of surplus funds to pay dividends. The
declaration of dividends and the amount thereof will depend on a number of
factors, including Harris' financial condition, capital requirements, results of
operations, future business prospects and other factors Harris' board of
directors may deem relevant. No assurance can be given that Harris will pay any
dividends. See "Dividend Policies" on page 23.
Q: WILL LANIER PAY DIVIDENDS?
A: The declaration and payment of dividends is at the discretion of Lanier's
board of directors and will be subject to Lanier's financial results and the
availability of surplus funds to pay dividends. The amount of quarterly cash
dividends, if any, will depend on a number of factors, including Lanier's
financial condition, capital requirements, results of operations, future
business prospects and other factors Lanier's board of directors may deem
relevant, including restrictions on Lanier's ability to declare and pay
dividends on the Lanier shares contained in the revolving credit facility that
Lanier will enter into in connection with the Distribution. No assurance can be
given that Lanier will pay any dividends. See "Risk Factors -- Uncertainty of
Dividends" on page 11 and "Dividend Policies" on page 23 and "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Credit Facility" beginning on page 33.
Q: WILL LANIER HAVE A DIVIDEND REINVESTMENT OR STOCK PURCHASE PLAN?
A: Lanier intends to establish a direct stock purchase and dividend
reinvestment plan that will enable holders to purchase additional Lanier shares
and to reinvest dividends, if any, into additional Lanier shares. See "Dividend
Policies" on page 23.
Q: WILL I HAVE TO PAY TAXES ON THE LANIER SHARES THAT I RECEIVE?
A: Based upon the opinion of Sullivan & Cromwell, special counsel to Harris,
Harris anticipates that the Distribution will be tax-free to Harris stockholders
for U.S. federal income tax purposes, except for any tax payable because of any
cash stockholders may receive in lieu of fractional Lanier shares. (You will be
entitled to receive cash in lieu of a fractional Lanier share only if you are a
participant in Harris' dividend reinvestment plan and your account with such
plan is credited with a fractional share of Harris common stock as of -, 1999).
In addition, you may have to pay taxes if you sell your Lanier shares. If you
have any questions, please consult your tax advisor. See "Risk
Factors -- Failure to Qualify as a Tax-Free Transaction Could Result in
Substantial Liability" beginning on page 8 and "The Distribution -- Federal
Income Tax Consequences of the Distribution" beginning on page 17.
Q: WILL THERE BE ANY CHANGE IN THE UNITED STATES FEDERAL TAX BASIS OF MY HARRIS
SHARES AS A RESULT OF THE DISTRIBUTION?
A: Yes, your tax basis in your Harris shares will be reduced. If you are the
record holder of your Harris shares, you will receive information with your
account statement that will help you calculate the adjusted tax basis for your
Harris shares, as well as the tax basis for your Lanier shares. See "The
Distribution -- Federal Income Tax Consequences of the Distribution" beginning
on page 17.
v
<PAGE> 13
Q: WHERE CAN I GET MORE INFORMATION?
A: If you have any questions relating to the mechanics of the Distribution and
the delivery of account statements or the trading of Harris or Lanier shares
prior to the Distribution, you can contact the Distribution Agent:
ChaseMellon Shareholder Services, L.L.C.
85 Challenger Road
Ridgefield Park, NJ 07660
(201) 296-4040
For other questions related to the Distribution, Harris or Lanier, please
contact:
Georgeson Shareholder Communications, Inc.
17 State Street
New York, New York 10004
(800) 223-2064
After the Distribution, Lanier stockholders with inquiries relating to the
Distribution or their investment in Lanier should contact:
Lanier Worldwide, Inc.
2300 Parklake Drive, N.E.
Atlanta, Georgia 30345
Attention: Corporate Secretary
(770) 621-1588
After the Distribution, Harris stockholders with inquiries relating to the
Distribution or their investment in Harris should contact:
Harris Corporation
1025 West NASA Boulevard
Melbourne, Florida 32919
Attention: Corporate Secretary
(407) 727-9100
vi
<PAGE> 14
SUMMARY
This summary highlights selected information contained elsewhere in this
document. It is not complete and may not contain all of the information that is
important to you. To better understand the Distribution and Lanier, you should
read this entire document carefully, including the risks described beginning on
page 7 and the consolidated financial statements and the notes thereto beginning
on page F-1.
WHY WE SENT THIS DOCUMENT TO YOU
Harris Corporation ("Harris") sent you this document because you were an
owner of Harris common stock on -, 1999. This entitles you to receive a pro rata
distribution of one share of common stock of Lanier Worldwide, Inc. ("Lanier"),
which is currently a wholly owned subsidiary of Harris, for every Harris share
you owned on that date. We refer to this distribution in this document as the
"Distribution." No action is required on your part to participate in the
Distribution and you do not have to pay cash or other consideration to receive
your Lanier shares.
This document describes Lanier's business, the relationship between Harris
and Lanier, and how this transaction benefits Harris and its stockholders, and
provides other information to assist you in evaluating the benefits and risks of
holding or disposing of the Lanier shares that you will receive in the
Distribution. You should be aware of certain risks relating to the Distribution
and Lanier's business, which are described in this document beginning on page 7.
LANIER'S BUSINESS
Lanier is a worldwide independent supplier of copiers, facsimiles and other
related automated office imaging equipment. With over 1,600 sales and service
locations in more than 100 countries, Lanier markets these products and related
services, parts and supplies to customers both on a direct sales basis and
through a worldwide network of independent dealers. Lanier provides customers
with a wide array of customized document management solutions including black
and white digital and analog copiers, color copiers, facsimile machines,
multifunction devices, dictation equipment, computer based health care
information management systems, associated parts and supplies, and a variety of
related outsourcing services, including legal support services. Lanier sources
substantially all of these products from a variety of manufacturers, seeking out
the "best-of-breed." Selected products undergo rigorous testing by Lanier, and
upgrades are often recommended to the manufacturers in order to meet Lanier's
demanding standards.
Lanier derives its revenues from three primary sources: (i) sales and
rentals of equipment and related supplies; (ii) service of equipment under
maintenance agreements, consulting, facilities management and other professional
services; and (iii) finance income. Revenues from these three sources in fiscal
year 1999 were $808 million, $623 million and $38 million, respectively.
Lanier's revenues from these three sources in fiscal year 1998 were $722
million, $533 million and $33 million, respectively. Revenues from these three
sources in fiscal year 1997 were $704 million, $466 million and $30 million,
respectively. Lanier's revenues from the sale, servicing and financing of
copiers in fiscal years 1999, 1998 and 1997 was $1,036 million, $884 million and
$826 million, respectively. Lanier's revenues from the sale, servicing and
financing of facsimile machines in fiscal year 1999, 1998 and 1997 was $166
million, $150 million and $157 million, respectively. Lanier's revenues from the
sale, servicing and financing of dictation equipment in fiscal years 1999, 1998
and 1997 was $130 million, $131 million and $137 million, respectively. Lanier's
revenues from the sale, servicing and financing of other office equipment in
fiscal years 1999, 1998 and 1997 was $137 million, $123 million and $80 million,
respectively.
Lanier targets sales of its products to four primary markets: (i)
global/national or "key" accounts; (ii) major accounts; (iii) commercial users;
and (iv) specific vertical industries, such as the health care and legal
industries. Some of Lanier's national account customers include Abbott
Laboratories, Corning, Inc., CountryWide Home Loans, Federal Express, Merck &
Company, Inc., Minnesota Mining & Manufacturing Co. and the National Aeronautics
& Space Administration (NASA). No national account customer represents more than
1% of Lanier's total sales.
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<PAGE> 15
Lanier's goal is to become the leading global provider of document
management solutions and related services and support. In order to accomplish
this goal, Lanier intends to use the following strategies:
- continue to cultivate its "best of breed" sourcing and distribution
relationships;
- deliver integrated document management solutions to its customers;
- focus on customer satisfaction and retention;
- maintain and develop its effective marketing initiatives;
- attract, retain and incentivize its high caliber employees; and
- continue to add revenue and operating income through selective
acquisitions.
RECENT DEVELOPMENTS
Lanier reported lower revenue and earnings for the first quarter of fiscal
year 2000 compared to the same quarter of the prior fiscal year, primarily due
to the divestiture during the fourth quarter of fiscal year 1999 of Lanier's
direct sales operation in France and its U.S.-based medical transcription
business. Revenue declined to $318 million from $337 million in the fourth
quarter of fiscal year 1999. The strengthening of the dollar relative to
European currencies and pricing pressures associated with the industry
transition from analog technology to digital technology also contributed to
weaker sales.
Net income declined to $9.7 million from $13.5 million in the first quarter
of the prior fiscal year, reflecting the revenue decline as well as pricing
pressures. Cost reduction efforts underway at Lanier reduced overhead costs in
the first quarter to 31.0 percent of revenue. See "Recent Developments" on page
29.
THE DISTRIBUTION
DISTRIBUTING COMPANY....... Harris Corporation, a Delaware corporation.
DISTRIBUTED COMPANY........ Lanier Worldwide, Inc., a Delaware corporation.
PRIMARY PURPOSES OF
DISTRIBUTION............. Harris' board of directors believes that separating
Lanier from the rest of Harris' businesses will
allow both Lanier and Harris to focus on their
respective businesses and provide them with the
flexibility to pursue different strategies and
react quickly to changing market environments.
Lanier's business is a distinct business with
significant differences from Harris' other
operations with respect to its markets, products,
capital needs and plans for growth. Harris' board
of directors believes that separating the two
companies will enhance the ability of each of
Lanier and Harris to focus on strategic initiatives
and new business opportunities, improve cost
structures and operating efficiencies and design
equity-based compensation programs targeted to its
own performance. In addition, Harris' board of
directors believes that Lanier will have greater
access to capital as an independent company and
that the investment community will be better able
to measure Lanier's performance relative to its
peers. For a more detailed discussion of the
reasons for the Distribution, see "The
Distribution -- Reasons for the Distribution" on
page 14 and "-- Reasons for Harris' Retention of
Lanier Shares" on page 15.
LANIER SHARES TO BE
DISTRIBUTED................ We will distribute to Harris stockholders
approximately 79,150,272 shares of common stock,
par value $.01 per share, of Lanier (together with
the
2
<PAGE> 16
associated preferred stock purchase rights, the
"Lanier Shares"), based on approximately 79,150,272
Harris shares outstanding on October 15, 1999. The
Lanier Shares to be distributed will constitute
approximately 90% of the Lanier Shares outstanding
after the Distribution.
LANIER SHARES TO BE
RETAINED BY HARRIS......... Harris will retain approximately 8,794,474 of the
Lanier Shares, which represents approximately 10%
of the Lanier Shares outstanding following the
Distribution and Lanier will grant Harris certain
rights to cause Lanier to register these Lanier
Shares for sale under the securities laws. Harris
will retain such Lanier Shares because the
contemplated future sale of these shares will
provide Harris with a source of cash following the
Distribution. Harris has agreed not to sell its
Lanier Shares for six months following the
Distribution, but intends to sell its Lanier Shares
within two years following the Distribution. In
addition, Harris has agreed to vote its Lanier
Shares in proportion to votes cast by other Lanier
stockholders. See "Risk Factors -- The Possibility
of Substantial Sales May Have an Adverse Impact on
the Trading Price of the Lanier Shares" on page 8,
"The Distribution -- Reasons for Harris' Retention
of Lanier Shares" on page 15 and "The
Distribution -- Listing and Trading of the Lanier
Shares" beginning on page 16.
TRADING MARKET AND
SYMBOL..................... There is no current trading market for the Lanier
Shares, although a when-issued market may develop
prior to completion of the Distribution. The Lanier
Shares have been approved for listing on the New
York Stock Exchange, subject to official notice of
issuance, under the symbol "LR."
RECORD DATE................ If you owned Harris shares at the close of business
on -, 1999 (the "Record Date"), then you will
receive Lanier Shares in the Distribution.
DISTRIBUTION DATE.......... The Distribution will occur at 11:59 p.m., Eastern
Daylight Time, on -, 1999 (the "Distribution
Date"). If you are a record holder of Harris stock,
instead of physical stock certificates you will
receive from Lanier's transfer agent shortly after
-, 1999 a statement of your book entry account for
the Lanier Shares distributed to you. Following the
Distribution, you may request physical stock
certificates if you wish, and instructions for
making that request will be furnished with your
account statement. If you are not a record holder
of Harris stock because such shares are held on
your behalf by your stockbroker or other nominee,
your Lanier Shares should be credited to your
account with your stockbroker or other nominee on
or about -, 1999.
DISTRIBUTION RATIO......... You will receive one Lanier Share for every Harris
share you held on the Record Date.
DISTRIBUTION AGENT......... ChaseMellon Shareholder Services, L.L.C.
TRANSFER AGENT AND
REGISTRAR FOR THE LANIER
SHARES................... ChaseMellon Shareholder Services, L.L.C.
FRACTIONAL SHARE
INTERESTS.................. Fractional Lanier Shares will not be issued. You
will be entitled to receive a fractional Lanier
Share only if you are a participant in Harris'
dividend reinvestment plan and your account with
such plan is credited with a fractional share of
Harris common stock as of the Record Date. Your
fractional Lanier Share will be aggregated with the
fractional Lanier Shares of other stockholders and
sold in the open market by Harris' Distribution
Agent. You will receive a check for your pro rata
share of the net proceeds
3
<PAGE> 17
of such sale. See "The Distribution -- Manner of
Effecting the Distribution" on page 15.
TAX CONSEQUENCES........... Sullivan & Cromwell, special counsel to Harris,
will render an opinion to Harris that the
Distribution will be tax-free to you for U.S.
federal income tax purposes except to the extent of
any cash you receive in lieu of fractional Lanier
Shares. See "Risk Factors -- Failure to Qualify as
a Tax-Free Transaction Could Result in Substantial
Liability" beginning on page 8 and "The
Distribution -- Federal Income Tax Consequences of
the Distribution" beginning on page 17.
RELATIONSHIP WITH HARRIS
AFTER THE DISTRIBUTION..... Immediately prior to the Distribution Date, Harris
and Lanier will enter into agreements to transfer
to Lanier selected assets and liabilities of Harris
related to Lanier's business, to transfer to Harris
selected assets and liabilities of Lanier related
to Harris' business, to arrange for the continued
provision of certain services by each company to
the other, to make arrangements for the
Distribution and to define the ongoing
relationships between Harris and Lanier. In
addition, Lanier will grant Harris registration
rights with respect to the Lanier Shares which
Harris will continue to own. Harris and Lanier will
also enter into an agreement providing for the
sharing of taxes incurred by them prior to the
Distribution and providing certain indemnification
rights with respect to tax matters. After the
Distribution, Harris and Lanier will not have any
other material contracts or other arrangements
between them other than arrangements made on an
arm's length basis. See "Relationship Between
Harris and Lanier Following the Distribution"
beginning on page 19.
BOARD OF DIRECTORS OF
LANIER..................... After the Distribution, Lanier will have an initial
board of seven directors, classified into three
classes. After their initial term, directors of
each class will serve three-year terms. See
"Lanier's Management" beginning on page 45.
MANAGEMENT OF LANIER....... Lanier's current executive officers will continue
to serve as executive officers of Lanier after the
Distribution. See "Lanier's Management" beginning
on page 45.
CREDIT FACILITY............ Prior to the Distribution, Lanier will incur debt
under a credit facility to be entered into with
certain major financial institutions (the "Credit
Facility") in connection with a cash payment of
approximately $546 million by Lanier to Harris
immediately prior to the Distribution. As a result
of this incurrence of debt and the assumption by
Lanier of certain of Harris' indebtedness relating
to Lanier's business, Lanier will have
approximately $700 million of indebtedness net of
cash on the Distribution Date. The terms of the
Credit Facility will include customary affirmative
and negative covenants that will, among other
things, require Lanier to satisfy certain financial
tests and maintain certain financial ratios, and
will limit Lanier's ability to declare and pay
dividends on the Lanier Shares. Lanier may also
incur additional indebtedness from time to time,
for general corporate purposes, including working
capital requirements, capital expenditures and
future acquisitions. See "Management's Discussion
and Analysis of Financial Condition and Results of
Operations -- Credit Facility" beginning on page
33.
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<PAGE> 18
POST-DISTRIBUTION DIVIDEND
POLICIES................. Lanier. Following the Distribution, Lanier's
dividend policy will be set by Lanier's board of
directors. The declaration and payment of dividends
is at the discretion of Lanier's board of directors
and will be subject to Lanier's financial results
and the availability of surplus funds to pay
dividends. The amount of quarterly cash dividends,
if any, will depend on a number of factors,
including Lanier's financial condition, capital
requirements, results of operations, future
business prospects and other factors Lanier's board
of directors may deem relevant, including
restrictions on Lanier's ability to declare and pay
dividends and distributions on the Lanier Shares
contained in the Credit Facility. No assurance can
be given that Lanier will pay any dividends. See
"Risk Factors -- Uncertainty of Dividends" on page
11 and "Dividend Policies" on page 23 and
"Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Credit
Facility" on beginning page 33.
Harris. Following the Distribution, Harris intends
to pay quarterly dividends at an initial annual
rate expected to be substantially below Harris'
current annual dividend rate of $.96 per share. No
determination has been made by Harris' board of
directors with respect to the initial dividend rate
that will be paid following the Distribution. The
payment and level of dividends is at the discretion
of Harris' board of directors and will be subject
to Harris' financial results and the availability
of surplus funds to pay dividends. The declaration
of dividends and the amount thereof will depend on
a number of factors, including Harris' financial
condition, capital requirements, results of
operations, future business prospects and other
factors Harris' board of directors may deem
relevant. No assurance can be given that Harris
will pay any dividends. See "Dividend Policies" on
page 23.
CERTAIN ANTI-TAKEOVER
EFFECTS.................... Certain provisions of Lanier's restated certificate
of incorporation and bylaws may have the effect of
making the acquisition of control of Lanier in a
transaction not approved by Lanier's board of
directors more difficult. The stockholder
protection rights agreement that Lanier will enter
into in connection with the Distribution also would
make such a transaction more difficult. Moreover,
certain provisions of the agreement providing for
certain tax disaffiliation and other tax-related
matters that Lanier will enter into in connection
with the Distribution could discourage potential
acquisition proposals. See "Risk Factors -- Certain
Provisions of Lanier's Restated Certificate of
Incorporation, Bylaws and Rights Plan and the Tax
Disaffiliation Agreement May Discourage Takeovers"
beginning on page 11 and "Certain Anti-Takeover
Provisions of Lanier's Certificate of
Incorporation, Bylaws and Rights Agreement and
Delaware Law" beginning on page 60.
RISK FACTORS............... You should review the risks relating to the
Distribution and Lanier's business described in
"Risk Factors" beginning on page 7.
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<PAGE> 19
LANIER WORLDWIDE, INC. AND SUBSIDIARIES
SUMMARY HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL DATA
The summary historical and pro forma consolidated financial data of Lanier
set forth below is qualified in its entirety by, and should be read in
conjunction with, the Consolidated Financial Statements of Lanier, including the
Notes thereto, and "Management's Discussion and Analysis of Financial Condition
and Results of Operations" included elsewhere in this document. The income
statement data for each of the three fiscal years ended July 2, 1999 and the
balance sheet data as of July 2, 1999 and July 3, 1998 are derived from, and are
qualified by reference to, the consolidated financial statements included
elsewhere in this document that have been audited by Ernst & Young LLP, Lanier's
independent certified public accountants.
The summary pro forma consolidated financial data reflect adjustments to
the historical consolidated balance sheet of Lanier as if the Distribution had
occurred on July 2, 1999 and to the historical consolidated income statement of
Lanier as if the Distribution had occurred on July 4, 1998. The historical and
pro forma consolidated financial statements of Lanier do not necessarily reflect
the results of operations or financial position that Lanier would have had if
Lanier had been a separate, independent company for the periods indicated.
<TABLE>
<CAPTION>
HISTORICAL
------------------------------------------------------------------------------
FISCAL YEAR ENDED
------------------------------------------------------------------------------
PRO FORMA (A)
JUNE 30, JUNE 30, JUNE 30, JULY 3, JULY 2, JULY 2,
1995 1996 1997 1998 1999 1999
---------- ---------- ---------- ---------- ---------- -------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenue from sales,
rentals and
services............. $1,023,544 $1,115,962 $1,170,014 $1,254,777 $1,430,488 $1,430,488
Gross margin............ 414,101 448,075 488,267 495,908 533,111 533,111
Income before income
taxes................ 82,747 90,603 101,907 99,401 111,270 67,422
Income taxes............ 30,454 33,331 38,208 36,604 40,000 23,338
Net income.............. 52,293 57,272 63,699 62,797 71,270 44,084
PRO FORMA INCOME PER
SHARE................... $ 0.50(B)
BALANCE SHEET DATA (END OF
PERIOD):
Total assets............ $1,011,404 $1,056,814 $1,075,307 $1,123,296 $1,337,708 $ 143,578
Long-term debt.......... 4,192 4,103 3,990 3,660 4,622 545,616
Shareholder equity...... 635,113 689,240 750,157 803,657 882,738 147,614
</TABLE>
- ---------------
(A) The pro forma consolidated financial data reflect the allocation of
additional debt and related interest expense, pro forma income adjustments,
forgiveness of intercompany loans and a cash payment to be made by Lanier to
Harris immediately prior to the Distribution. The aggregate amount of such
cash payment will be approximately $546 million, which is the sum of: (i)
$700 million; plus (ii) cash and cash equivalents of Lanier as of October 1,
1999; less (iii) the amount of indebtedness for borrowed money of Lanier as
of such date; and less (iv) amounts owed by Lanier under Lanier's European
asset securitization facility as of such date. Using financial information
as of July 2, 1999, the amount of the cash payment would have been
approximately $541 million. See "Lanier Worldwide, Inc. Unaudited Pro Forma
Consolidated Financial Statements" beginning on page 24 and the Notes
thereto. Pro forma results do not reflect elimination of Harris' charge of
$25.0 million and inclusion of pro forma expenses of $7.0 million.
(B) Pro forma income per share for the fiscal year ended July 2, 1999 is
computed based on 88,857,000 shares, which represents the number of Lanier
Shares which would have been distributed in the Distribution if it had
occurred on July 2, 1999 based on the number of Harris shares outstanding as
of such date, the retention of Lanier Shares by Harris and the conversion of
performance share awards.
6
<PAGE> 20
RISK FACTORS
This document contains forward-looking statements that reflect Lanier's
current assumptions and estimates of future performance and economic conditions.
Harris and Lanier may make these statements directly in this document or
incorporate such statements into this document by reference to other documents.
Harris and Lanier may also include statements pertaining to periods following
the Distribution. You can find many of these statements by looking for words
such as "believes," "expects," "anticipates," "estimates" or similar
expressions. Any forward-looking statements are subject to risks and
uncertainties that may cause actual results and future trends to differ
materially from those projected, stated, or implied by the forward-looking
statements.
Lanier's results and the accuracy of the forward-looking statements could
be affected by, among other things, general economic conditions in the markets
in which Lanier operates; economic developments that have a particularly adverse
effect on one or more of the markets served by Lanier; the ability to execute
management's internal operating plans; stability of key markets for office
products and document management solutions; fluctuation in foreign currency
exchange rates and the effectiveness of Lanier's currency hedging program;
worldwide demand and product and service pricing for office products and
document management solutions; and the other risk factors discussed below.
Lanier disclaims any intention or obligation to update or revise any
forward-looking statements, whether as a result of new information, future
events, or otherwise.
In addition to the information contained elsewhere in this document, you
should carefully read the following risk factors related to the Distribution and
to Lanier.
RISKS RELATING TO THE DISTRIBUTION
THERE HAS NOT BEEN ANY PRIOR TRADING MARKET FOR THE LANIER SHARES
There is no current trading market for the Lanier Shares, although a
when-issued trading market may develop prior to completion of the Distribution.
The Lanier Shares have been approved for listing on the New York Stock Exchange,
subject to official notice of issuance, under the symbol "LR." See "The
Distribution -- Listing and Trading of the Lanier Shares" beginning on page 16.
There can be no assurance as to whether the Lanier Shares will be actively
traded or as to the prices at which the Lanier Shares will trade. Some of the
Harris stockholders who receive Lanier Shares may decide that they do not want
shares in an office products and document management solutions company, and may
sell their Lanier Shares following the Distribution. This may delay the
development of an orderly trading market in the Lanier Shares for a period of
time following the Distribution. Until the Lanier Shares are fully distributed
and an orderly market develops, the prices at which the Lanier Shares trade may
fluctuate significantly and may be lower or higher than the price that would be
expected for a fully distributed issue. Prices for Lanier Shares will be
determined in the marketplace and may be influenced by many factors, including
the depth and liquidity of the market for the shares, Lanier's results of
operations, what investors think of Lanier and the office products and document
management solutions industry, the amount of dividends that Lanier pays, changes
in economic conditions in the office products and document management solutions
industry and general economic and market conditions. In addition, the stock
market often experiences significant price fluctuations that are unrelated to
the operating performance of the specific companies whose stock is traded.
Market fluctuations could have a material adverse impact on the trading price of
the Lanier Shares. See "The Distribution -- Listing and Trading of the Lanier
Shares" beginning on page 16.
THE DISTRIBUTION MAY CAUSE FLUCTUATIONS IN TRADING PRICES OF HARRIS COMMON
STOCK
Following the Distribution, Harris common stock will continue to be listed
and traded on the New York Stock Exchange under the symbol "HRS." As a result of
the Distribution, the trading price of Harris common stock immediately following
the Distribution will likely be lower than the trading price of Harris common
stock immediately prior to the Distribution. The combined trading prices of
Harris common stock and the Lanier Shares after the Distribution may be less
than, equal to or greater than the trading prices of Harris common stock
immediately prior to the Distribution. Until the market has fully analyzed the
operations of Harris without the
7
<PAGE> 21
operations of Lanier, the prices at which Harris common stock trades may
fluctuate significantly. In addition, the stock market often experiences
significant price fluctuations that are unrelated to the operating performance
of the specific companies whose stock is traded. Market fluctuations could have
a material adverse effect on the trading price of Harris common stock. See "The
Distribution -- Listing and Trading of the Lanier Shares" beginning on page 16.
THE POSSIBILITY OF SUBSTANTIAL SALES MAY HAVE AN ADVERSE IMPACT ON THE TRADING
PRICE OF THE LANIER SHARES
Based on the number of shares of Harris common stock outstanding on October
15, 1999, Harris will distribute to its stockholders a total of approximately
79,150,272 Lanier Shares. Under the United States federal securities laws,
almost all of these shares may be resold immediately in the public market,
except for Lanier Shares held by affiliates of Lanier. Lanier cannot predict
whether stockholders will resell large numbers of Lanier Shares in the public
market following the Distribution or how quickly they may resell these Lanier
Shares. See "The Distribution -- Listing and Trading of the Lanier Shares"
beginning on page 16.
Harris will retain approximately 10% of the outstanding Lanier Shares and
Lanier will grant Harris certain rights entitling Harris to cause Lanier to
register its Lanier Shares under the securities laws. Harris has agreed not to
sell its Lanier Shares for six months following the Distribution, but intends to
sell these shares within two years after the Distribution. If Harris or Lanier
stockholders sell large numbers of Lanier Shares over a short period of time, or
if investors anticipate large sales of Lanier Shares over a short period of
time, this could adversely affect the trading price of the Lanier Shares. See
"The Distribution -- Listing and Trading of the Lanier Shares" beginning on page
16.
FAILURE TO QUALIFY AS A TAX-FREE TRANSACTION COULD RESULT IN SUBSTANTIAL
LIABILITY
Harris and Lanier intend for the Distribution generally to be tax-free for
federal income tax purposes. In connection with the Distribution, Sullivan &
Cromwell, special counsel to Harris, will render an opinion that the
Distribution will be tax-free to you for federal income tax purposes except to
the extent of any cash you receive in lieu of fractional Lanier Shares. This
opinion of counsel will not be binding on the Internal Revenue Service and, as a
result, we cannot assure you that the Distribution will qualify as a tax-free
transaction. Additionally, even though the Distribution is tax-free to Harris
stockholders, it is possible that the Distribution could be rendered taxable to
Harris as a result of a subsequent acquisition of Harris or Lanier.
If the Distribution were not to qualify for tax-free treatment, then, in
general, a substantial corporate tax would be payable by the consolidated group
of which Harris is the common parent based upon the difference between (1) the
aggregate fair market value of the Lanier Shares distributed in the Distribution
and (2) Harris' adjusted basis in the Lanier Shares. The corporate level tax
would be payable by Harris. However, under certain circumstances, Lanier has
agreed to indemnify Harris for all or a portion of this tax liability. See
"Relationship Between Harris and Lanier Following the Distribution -- Tax
Disaffiliation Agreement" beginning on page 20. This indemnification obligation,
if triggered, would have a material adverse effect on the results of operations
and financial position of Lanier. In addition, under the consolidated return
regulations, each member of Harris' consolidated group (including Lanier) is
severally liable for such tax liability.
Furthermore, if the Internal Revenue Service determines that the
Distribution does not qualify as tax-free for any reason other than a
post-Distribution acquisition of Harris or Lanier, each Harris stockholder who
receives Lanier Shares in the Distribution would generally be taxed as if he or
she received a dividend equal to the fair market value of his or her Lanier
Shares.
Harris would also incur a substantial corporate tax liability under Section
355(e) of the Internal Revenue Code of 1986, as amended (the "Code"), if Harris
or Lanier were to be acquired by a third party within two years after the
Distribution and Harris fails to prove that the subsequent acquisition of Harris
or Lanier and the Distribution were not made pursuant to a plan or a series of
related transactions. Lanier would be obligated to indemnify Harris for all or a
portion of this substantial corporate tax liability under the Tax Disaffiliation
Agreement under certain circumstances. This indemnification obligation would
have a material adverse effect on the results of operations and financial
position of Lanier. However, Harris stockholders would not recognize gain
8
<PAGE> 22
or loss under Section 355(e) of the Code solely because either Harris or Lanier
is acquired by a third party after the Distribution. See "The
Distribution -- Federal Income Tax Consequences of the Distribution" beginning
on page 17 and "Relationship Between Harris and Lanier Following the
Distribution -- Tax Disaffiliation Agreement" on page 20.
RISKS RELATING TO LANIER
LANIER HAS NO RECENT OPERATING HISTORY AS AN INDEPENDENT PUBLIC COMPANY
Lanier does not have a recent operating history as an independent public
company and since 1983 has relied on Harris for various financial,
administrative and managerial expertise in conducting its operations. Following
the Distribution, Lanier will maintain its own credit and banking relationships
and perform its own financial and investor relations functions. While Lanier has
been profitable as a subsidiary of Harris, there can be no assurance that as an
independent company profits will continue at the same level, if at all.
Additionally, there can be no assurance that Lanier will be able to put in place
successfully the financial, administrative and managerial structure necessary to
operate as an independent public company, or that the development of such
structure will not require a significant amount of management's time and other
resources.
HISTORICAL FINANCIAL INFORMATION MAY BE OF LIMITED RELEVANCE
The historical financial information included in this document does not
reflect the results of operations, financial position and cash flows of Lanier
in the future or the results of operations, financial position and cash flows of
Lanier had it operated as a separate stand-alone entity during the periods
presented. The financial information included herein does not reflect any
changes that may occur in the funding and operations of Lanier as a result of
the Distribution.
LANIER'S CREDIT FACILITY AND OTHER INDEBTEDNESS MAY RESTRICT CERTAIN
ACTIVITIES
Prior to the Distribution, Lanier will incur debt under the Credit Facility
in connection with a cash payment by Lanier to Harris immediately prior to the
Distribution and for general working capital purposes. The amount of such cash
payment is approximately $546 million, and was calculated based on the formula
described under "Relationship between Harris and Lanier Following the
Distribution -- Distribution Agreement" on page 19. Lanier will incur debt under
the Credit Facility of approximately the same amount. In addition to the debt to
be incurred under the Credit Facility, Lanier will assume or retain certain
indebtedness relating to Lanier's business. As a result of the incurrence of
debt under the Credit Facility and the assumption or retention by Lanier of this
indebtedness, Lanier will have approximately $700 million of indebtedness net of
cash on the Distribution Date. The terms of the Credit Facility will include
customary affirmative and negative covenants that will, among other things,
require Lanier to satisfy certain financial tests and maintain certain financial
ratios, and will limit Lanier's ability to declare and pay dividends on the
Lanier Shares. Lanier may also incur additional indebtedness from time to time
for general corporate purposes, including working capital requirements, capital
expenditures and future acquisitions. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations -- Credit Facility" beginning
on page 33.
ADVERSE ECONOMIC CONDITIONS COULD AFFECT LANIER'S ABILITY TO SERVICE DEBT
Lanier's ability to service its indebtedness will depend on its future
operating performance, which will be affected by prevailing economic conditions
and financial and other factors, certain of which Lanier cannot control. While
Lanier believes that future operating cash flow, together with financing
arrangements, will be sufficient to finance current operating requirements,
Lanier's leverage and debt service requirements may make Lanier more vulnerable
to economic downturns. If Lanier could not service its indebtedness, it would be
forced to pursue one or more alternative strategies such as reducing its capital
expenditures, selling assets, restructuring or refinancing its indebtedness or
seeking additional equity capital (which may substantially dilute the ownership
interest of holders of Lanier Shares). There can be no assurance that Lanier can
effect any of these strategies on
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satisfactory terms, if at all. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources" on page 33.
CHANGES IN LANIER'S CREDIT STANDING COULD REDUCE LANIER'S ABILITY TO FINANCE
CUSTOMER PURCHASES
A portion of Lanier's operating income arises from the financing of its
customers' purchases of Lanier products. On average, 46% of Lanier's aggregate
sales in the United States, Puerto Rico, Canada and Australia are financed
through leases that typically have a term of 3 years. In Europe, 16% of Lanier's
sales derive from rental arrangements that differ from leases primarily because
customers may terminate the rental agreement more quickly and easily. Lanier's
ability to provide financing at competitive rates and realize operating income
is highly dependent upon its own costs of borrowing, which in turn depends upon
Lanier's credit standing. Significant changes in such standing could reduce the
profitability of Lanier's financing business and/or make Lanier's financing less
attractive to customers. Lanier cannot be certain that it can maintain credit
standing sufficient to realize profits on the portion of revenues derived from
financing arrangements.
LANIER OPERATES IN HIGHLY COMPETITIVE MARKETS
Lanier's competitors include the distribution units of large office
equipment manufacturers and independent distributors, as well as office
superstores and consumer electronics chains. As digital and other new technology
develops, Lanier may find itself competing with new distribution channels,
including computer distributors and value added resellers, for products
containing new technology. While Lanier is a significant distributor in the
office products and document management solutions market, certain competitors,
principally the distribution units of large office equipment manufacturers, may
have greater total financial, purchasing and/or sourcing power than Lanier.
Lanier believes that the principal competitive factors in the office products
and document management solutions market are price and product capabilities;
quality and speed of post-sales service support; availability of equipment,
parts and supplies; speed of delivery; financing terms; and availability of
financing, leasing or rental programs. See "Lanier's Business -- Lanier Products
and Services" beginning on page 39 and "-- Competition" on page 44.
LANIER'S SUCCESS WILL DEPEND ON ITS ABILITY TO RESPOND TO TECHNOLOGICAL
DEVELOPMENTS
The document imaging and management industry is undergoing an evolution in
product, moving toward digital technology in a multi-functional office
environment. Lanier's success will partly depend on its ability to respond to
this rapidly changing environment. There can be no assurance that Lanier will be
able to anticipate which products or technologies will gain market acceptance or
that, even if Lanier does correctly anticipate market demand, Lanier's suppliers
will be willing or able to supply such products to Lanier at competitive prices.
Further, there can be no assurance that Lanier will be able to obtain any
manufacturer's authorization necessary to market any newly developed equipment.
Additionally, new products containing new technology may be sold through other
channels of distribution. While it is possible that technological advancements,
including the lowered per unit cost that often accompanies technological
improvements, may enhance unit sales, this trend may reduce Lanier's sales
revenues, and reliability improvements may result in reduced service revenues.
Lanier will also incur increased expenses for the training of its sales and
service personnel to familiarize them with such new technologies. See "Lanier's
Business -- Industry Overview" beginning on page 38.
LANIER IS DEPENDENT ON OUTSIDE SUPPLIERS
Lanier relies on outside suppliers to manufacture the products that it
distributes, including Ricoh, Toshiba, Canon, Sharp and Okidata. Although Lanier
has long-term relationships with its suppliers, there can be no assurance that
products from Lanier's suppliers will continue to be available in the future.
Although Lanier has no reason to believe that access to current sources of
products will become restricted, loss of such access could have a material
adverse effect on Lanier's business, financial condition and results of
operations. See "Lanier's Business -- Suppliers" on page 44.
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LANIER IS DEPENDENT ON CERTAIN KEY PERSONNEL
Lanier's success depends to a significant extent on the continued service
of certain key management personnel. The loss or interruption of the services of
Lanier's senior management personnel or the inability to attract and retain
other qualified management, sales, marketing and technical employees could also
have an adverse effect on Lanier. Lanier intends to use a variety of incentive
plans to attract and retain key management personnel, including a stock
incentive plan, annual bonus plans, a pension plan and a 401(k) plan. See
"Lanier's Management" beginning on page 45.
LANIER IS SUBJECT TO RISKS RELATED TO INTERNATIONAL OPERATIONS
Lanier operates a multinational business and, accordingly, is subject to
risks inherent in international operations. Non-U.S. operations generated
approximately 39.2% of Lanier's fiscal year 1999 revenues and approximately
29.2% of Lanier's fiscal 1998 revenues. Due to the significant amount of
non-U.S. revenues, fluctuations in the value of foreign currencies relative to
the U.S. dollar could increase the volatility of Lanier's U.S.
dollar-denominated operating results. Lanier's non-U.S. operations are also
subject to political, economic and other risks inherent in operating in
countries outside the United States, including possible adverse government
regulation, imposition of import and export duties and quotas, currency
restrictions, price controls, potentially burdensome taxation and/or other
restrictive government actions. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Market Risk" on page 35.
LANIER IS SUBJECT TO RISKS RELATED TO FOREIGN CURRENCIES
Lanier purchases and sells a significant portion of its products using
currencies other than U.S. dollars. Approximately 39.5% of Lanier's fiscal year
1999 and 28.4% of Lanier's fiscal year 1998 cost of goods sold were denominated
in foreign currencies. Approximately 36.9% of Lanier's fiscal year 1999 and
25.8% of Lanier's fiscal year 1998 revenues were denominated in foreign
currencies. Due to the significant portion of products purchased and sold by
Lanier in foreign currencies, fluctuations in the value of foreign currencies
relative to the U.S. dollar could have a material adverse effect on Lanier's
U.S. dollar-denominated operating results. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Impact of Foreign
Exchange" on page 34.
UNCERTAINTY OF DIVIDENDS
The payment of dividends is at the discretion of Lanier's board of
directors and will be subject to Lanier's financial results, the availability of
surplus funds to pay dividends and restrictions under the Credit Facility. No
assurance can be given that Lanier will pay any dividends. See "Dividend
Policies" on page 23 and 'Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Credit Facility" beginning on page 33.
CERTAIN PROVISIONS OF LANIER'S RESTATED CERTIFICATE OF INCORPORATION, BYLAWS
AND RIGHTS PLAN AND THE TAX DISAFFILIATION AGREEMENT MAY DISCOURAGE TAKEOVERS
Lanier's restated certificate of incorporation and bylaws contain
provisions that may make more difficult or expensive or that may discourage a
tender offer, change in control or takeover attempt that is opposed by Lanier's
board of directors. In particular, Lanier's restated certificate of
incorporation and bylaws:
(1) classify Lanier's board of directors into three groups, so that
stockholders elect only one-third of the board each year;
(2) permit stockholders to remove directors only for cause and only by
the affirmative vote of at least 80% of Lanier's voting shares;
(3) permit a special stockholders' meeting to be called only by a
majority of the board of directors;
(4) do not permit stockholders to take action except at an annual or
special meeting of stockholders;
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(5) require stockholders to give Lanier advance notice to nominate
candidates for election to Lanier's board of directors or to make
stockholder proposals at a stockholders' meeting;
(6) permit Lanier's board of directors to issue, without stockholder
approval, preferred stock with such terms as the board may determine; and
(7) require the vote of the holders of at least 80% of Lanier's voting
shares for stockholder amendments to Lanier's bylaws.
The preferred stock purchase rights attached to the Lanier Shares would, in
effect, prevent a person or group from acquiring more than 15% of the total
number of Lanier Shares outstanding at anytime after the Distribution without
approval from Lanier's board of directors. In addition, Delaware law generally
restricts mergers and other business combinations between Lanier and any holder
of 15% or more of the Lanier Shares, unless the transaction or the 15%
acquisition is approved in advance by Lanier's board of directors. See
"Description of Lanier's Capital Stock" beginning on page 58 and "Certain
Anti-Takeover Provisions of Lanier's Certificate of Incorporation, Bylaws and
Rights Agreement and Delaware Law" beginning on page 60.
These provisions of Lanier's restated certificate of incorporation and
bylaws, Delaware law and the preferred stock purchase rights could discourage
potential acquisition proposals and could delay or prevent a change in control
of Lanier, even though a majority of Lanier's stockholders may consider such
proposals, if effected, desirable. Such provisions could also make it more
difficult for third parties to remove and replace the members of Lanier's board
of directors. Moreover, these provisions could diminish the opportunities for
stockholders to participate in certain tender offers, including tender offers at
prices above the then-current market value of the Lanier Shares, and may also
inhibit increases in the trading price of the Lanier Shares that could result
from takeover attempts or speculation.
In connection with the Distribution, Lanier has agreed to indemnify Harris
for all taxes and liabilities incurred solely because (1) Lanier breaches a
representation or covenant given to Sullivan & Cromwell in connection with
rendering its tax opinion, which contributes to an Internal Revenue Service
determination that the Distribution was not tax-free or (2) Lanier or an
affiliate's post-Distribution action or omission contributes to an Internal
Revenue Service determination that the Distribution was not tax-free. Unless
Harris effectively rebuts the presumption that a change in control transaction
involving Lanier or disposition of Lanier occurring prior to the second
anniversary of the Distribution Date is pursuant to the same plan or series of
related transactions as the Distribution, the Internal Revenue Service might
determine that the Distribution was not tax-free, giving rise to Lanier's
indemnification obligation. These provisions of the Tax Disaffiliation Agreement
may have the effect of discouraging or preventing an acquisition of Lanier or a
disposition of Lanier's businesses, which may in turn depress the market price
for the Lanier Shares. See "Relationship Between Harris and Lanier Following the
Distribution -- Tax Disaffiliation Agreement" on page 20.
LANIER IS SUBJECT TO RISKS OF SIGNIFICANT EXPENSE AND BUSINESS DISRUPTION DUE
TO YEAR 2000 PROBLEMS
Many currently installed computer systems and software products are coded
to accept only two digit entries in the date code field. These date code fields
will need to accept four digit entries to distinguish 21st century dates from
20th century dates. As a result, prior to January 1, 2000, computer systems
and/or software used by many companies (including Lanier) will need to be
upgraded to comply with such "Year 2000" requirements. Significant uncertainty
exists in the software industry concerning the potential consequences of the
Year 2000 problem. Although Lanier has determined that it needs to replace or
modify several of its software systems and is in the process of replacing or
outsourcing many of its time sensitive software systems, there can be no
assurance that the costs of these programs will not be significantly greater
than expected, that compliance will be achieved in a timely manner, or that
Lanier's suppliers, customers or other third parties will bring their systems
into Year 2000 compliance in a timely manner. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Impact of Year
2000" beginning on page 35.
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EURO CONVERSION COULD ADVERSELY IMPACT LANIER'S SYSTEMS
On January 1, 1999, certain member nations of the European Economic and
Monetary Union ("EMU") adopted a common currency, the Euro. For a three-year
transition period, both the Euro and the individual countries' currencies will
remain in circulation. After January 1, 2002, the Euro will represent the sole
legal tender for EMU countries. The adoption of the Euro affects a multitude of
financial systems and business applications, as EMU countries begin to conduct
commerce in the Euro and in their existing national currencies.
For the fiscal year ended July 2, 1999, Lanier derived 20.7% of its
revenues from EMU countries. Lanier is currently addressing Euro-related issues
and their impact on Lanier's information systems, currency exchange rate risk,
taxation, contracts, competition and pricing. Action plans being implemented are
expected to result in compliance with all applicable laws and regulations.
However, there can be no certainty that Lanier's plans to address Euro-related
issues are adequate or that they will be successfully implemented or that
external factors will not have a material adverse effect upon Lanier's
operations or business in the EMU or elsewhere. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Euro Conversion"
beginning on page 36.
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INTRODUCTION
On -, 1999, Harris' board of directors declared a pro rata distribution
payable to the holders of record of Harris common stock at the close of business
on -, 1999 (the "Record Date"), of one share of common stock (the "Lanier Common
Stock") of Lanier, together with the associated preferred stock purchase right
(the shares of Lanier Common Stock and the associated preferred stock purchase
rights collectively, the "Lanier Shares"), for every share of Harris common
stock outstanding on the Record Date. The Distribution will be effected at 11:59
p.m., Eastern Daylight Time, on -, 1999 (the "Distribution Date"). As a result
of the Distribution, approximately 90% of the outstanding Lanier Shares will be
distributed to Harris stockholders, and Harris will retain ownership of
approximately 10% of the outstanding Lanier Shares. Harris intends to distribute
the Lanier Shares by book entry. Instead of stock certificates, each Harris
stockholder that is a record holder of Harris shares will receive a statement of
such stockholder's book entry account for the Lanier Shares distributed to such
stockholder. Account statements reflecting ownership of the Lanier Shares will
be mailed shortly after the Distribution Date. Lanier Shares should be credited
to accounts with stockbrokers, banks or nominees of Harris stockholders that are
not record holders on or about -, 1999.
Lanier was incorporated in 1985 as the successor to a business established
in 1935 and acquired by Harris in 1983. Lanier's principal executive offices are
located at 2300 Parklake Drive, N.E., Atlanta, Georgia 30345, and its telephone
number is (770) 496-9500.
The business of Lanier constitutes a significant part of the business of
Harris. Following the Distribution, which was first announced on April 13, 1999,
and following the unrelated sale of Harris' semiconductor business, which was
consummated on August 13, 1999, Harris will be a more focused organization with
five divisions, all focusing on communications. Harris will provide
communications equipment, systems and support services -- concentrating on the
wireless, broadcast, government systems and network support markets.
THE DISTRIBUTION
REASONS FOR THE DISTRIBUTION
The board of directors and management of Harris believe that the
Distribution is in the best interests of Harris, Lanier and Harris stockholders.
Harris believes that the Distribution will meaningfully enhance value for Harris
stockholders and give Lanier the financial and operational flexibility to take
advantage of significant growth opportunities in the office products and
document management solutions business. Lanier's business is a distinct business
with significant differences from Harris' other operations with respect to its
markets, products, capital needs and plans for growth. Harris' board of
directors and management believe that the Distribution will enhance the ability
of each of Lanier and Harris to focus on strategic initiatives and new business
opportunities, improve cost structures and operating efficiencies and design
equity-based compensation programs targeted to its own performance. In addition,
Harris' board of directors expects that the transition to an independent company
will heighten Lanier management's focus, provide Lanier with greater access to
capital, and allow the investment community to measure Lanier's performance
relative to its peers.
In addition, the Distribution will give Lanier direct access to capital
markets. As part of Harris, Lanier competed with Harris' other core business
groups for capital to finance expansion and growth opportunities. As a separate
entity, Lanier will be free of Harris' capital structure restrictions and should
be in a better position to fund the implementation of its business strategy. The
Distribution will also enable Lanier to provide its management and employees
incentive compensation in the form of equity ownership in Lanier, enhancing
Lanier's ability to attract, retain and motivate key employees.
The separation will also enable Harris management to concentrate its
attention on the remaining Harris businesses. Harris management strongly
believes that these businesses may be expanded more effectively if Lanier is no
longer controlled by Harris.
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REASONS FOR HARRIS' RETENTION OF LANIER SHARES
Harris will retain approximately 10% of the outstanding Lanier Shares
because the contemplated future sale of these Lanier Shares will provide Harris
with a source of cash following the Distribution. Harris intends to use this
cash to make acquisitions in the telecommunications equipment industry.
MANNER OF EFFECTING THE DISTRIBUTION
The general terms and conditions relating to the Distribution will be set
forth in an Agreement and Plan of Distribution (the "Distribution Agreement")
between Harris and Lanier. See "Relationship between Harris and Lanier Following
the Distribution -- Distribution Agreement" beginning on page 19.
The Distribution will be made on the basis of one Lanier Share for every
share of Harris common stock outstanding on the Record Date. The actual total
number of Lanier Shares to be distributed will depend on the number of Harris
shares outstanding on the Record Date. Based upon the number of Harris shares
outstanding on October 15, 1999, approximately 79,150,272 Lanier Shares will be
distributed to Harris stockholders. The Lanier Shares to be distributed will
constitute approximately 90% of the outstanding Lanier Shares. Harris will
retain approximately 8,794,474 of the Lanier Shares, which represents
approximately 10% of the Lanier Shares outstanding following the Distribution.
Options to purchase Harris shares ("Harris Options") held by Lanier employees or
Harris employees who will become Lanier employees will be replaced by options to
purchase Lanier Shares ("Lanier Options"). The option price and number of shares
subject to each option will be adjusted so that the aggregate difference between
the market price and the option price will be equal for the Harris Options and
the Lanier Options. See "Relationship Between Harris and Lanier Following the
Distribution -- Employee Benefits and Compensation Allocation Agreement"
beginning on page 20. Performance share awards of Harris shares previously
granted to Lanier employees under the Harris Stock Incentive Plan will be
canceled and replaced by Lanier performance shares granted under the Lanier
Stock Incentive Plan (the "Lanier Stock Plan"). The Lanier Shares will be fully
paid and non-assessable and the holders thereof will not be entitled to
preemptive rights. See "Description of Lanier's Capital Stock" beginning on page
58.
Harris intends to use a book entry system to distribute the Lanier Shares
in the Distribution unless the stockholder requests a stock certificate.
Following the Distribution, each record holder of Harris stock on the Record
Date will receive from ChaseMellon Shareholder Services, L.L.C. (the
"Distribution Agent") a statement of the Lanier Shares credited to the
stockholder's account. After the Distribution, stockholders may request stock
certificates from Lanier's transfer agent instead of participating in the book
entry system.
Fractional Lanier Shares will not be issued. If a stockholder's account
with Harris' dividend reinvestment program is credited with a fractional Harris
share as of the Record Date, the Distribution Agent will aggregate all
fractional Lanier Shares that would otherwise have been credited to a
stockholder's account into whole shares, and sell such whole shares in the open
market at then prevailing prices on behalf of all stockholders entitled to
receive fractional shares, who will receive cash in the amount of their pro rata
share of the total sale proceeds, net of brokerage commissions. Such sales are
expected to be made as soon as practicable after the mailing of the account
statements to Harris stockholders.
No Harris stockholder will be required to pay any cash or other
consideration for the Lanier Shares received in the Distribution, or to
surrender or exchange Harris shares in order to receive Lanier Shares. The
Distribution will not affect the number of, or the rights attaching to,
outstanding Harris shares. No vote of Harris stockholders is required or sought
in connection with the Distribution, and Harris stockholders will have no
appraisal rights in connection with the Distribution.
In order to receive Lanier Shares in the Distribution, Harris stockholders
must be stockholders at the close of business on the Record Date.
RESULTS OF THE DISTRIBUTION
After the Distribution, Lanier will be a separate public company operating
its current office products and document management solutions business.
Immediately after the Distribution, Lanier expects to have approximately 10,321
holders of record of Lanier Shares and approximately 87,944,746 Lanier Shares
outstanding,
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based on the number of stockholders of record and outstanding Harris shares on
October 15, 1999, the distribution ratio of one Lanier Share for every Harris
share and the retention by Harris of approximately 10% of the outstanding Lanier
Shares. Harris Options held by Lanier employees or Harris employees who will
become Lanier employees will be replaced by Lanier Options. Performance share
awards granted to Lanier employees under the Harris Stock Incentive Plan will be
canceled and replaced by Lanier performance shares granted under the Lanier
Stock Plan. See "Relationship Between Harris and Lanier Following the
Distribution -- Employee Benefits and Compensation Allocation Agreement"
beginning on page 20. The actual number of Lanier Shares to be distributed will
be determined as of the Record Date. The Distribution will not affect the number
of outstanding Harris shares or any rights of Harris stockholders.
LISTING AND TRADING OF THE LANIER SHARES
The Lanier Shares have been approved for listing on the New York Stock
Exchange, subject to official notice of issuance, under the symbol "LR." A
stockholder who decides to sell any Lanier Shares or Harris shares should make
sure that such stockholder's stockbroker, bank or other nominee understands
whether such stockholder wants to sell Harris shares, Lanier Shares, or both.
Beginning on or about -, 1999 and continuing until -, 1999, New York Stock
Exchange practices should generally allow sales of Harris shares either together
with the right to receive the Lanier Shares in the Distribution or without the
right to receive the Lanier Shares. A stockholder that sells Harris shares with
the right to receive the Lanier Shares will be required to deliver to the buyer
the Lanier Shares received in respect of such Harris shares in the Distribution.
Stockholders should also be able to sell their rights to receive Lanier Shares
without selling Harris shares.
Sales of Harris shares with the right to receive the Lanier Shares should
generally settle in the three business day settlement period. Sales of Harris
shares without the right to receive the Lanier Shares and sales of the Lanier
Shares without Harris shares are expected to settle four business days following
the date account statements for the Lanier Shares are mailed. Beginning about -,
1999, stockholders should only be able to sell Harris shares and Lanier Shares
separately. Stockholders should check with their brokers or banks.
The Lanier Shares distributed to Harris stockholders will be freely
transferable, except for Lanier Shares received by persons who may be deemed to
be "affiliates" of Lanier under the Securities Act. Persons who may be deemed to
be affiliates of Lanier after the Distribution generally include individuals or
entities that control, are controlled by, or are under common control with
Lanier and may include certain directors, officers and significant stockholders
of Lanier. Persons who are affiliates of Lanier will be permitted to sell their
Lanier Shares only pursuant to an effective registration statement under the
Securities Act or an exemption from the registration requirements of the
Securities Act, such as the exemptions afforded by Section 4(1) of the
Securities Act and the brokerage sales provisions of Rule 144 thereunder. It is
believed that persons who may be deemed to be affiliates of Lanier after the
Distribution will beneficially own approximately 312,819 Lanier Shares, or less
than 1% of the outstanding Lanier Shares.
Harris will retain approximately 10% of the outstanding Lanier Shares, and
Lanier will grant Harris certain rights entitling Harris to cause Lanier to
register Harris' Lanier Shares under the securities laws. Harris has agreed not
to sell its Lanier Shares for six months following the Distribution, but Harris
intends to sell its shares within two years after the Distribution. In addition,
Harris has agreed to vote its Lanier Shares in proportion to votes cast by other
Lanier stockholders. See "Relationship Between Harris and Lanier Following the
Distribution -- Registration Rights Agreement" on page 20.
There can be no assurance as to whether the Lanier Shares will be actively
traded or as to the prices at which Lanier Shares will trade. Some of the Harris
stockholders who receive Lanier Shares may decide that they do not want shares
in an office products and document management solutions company, and may sell
their Lanier Shares following the Distribution. This may delay the development
of an orderly trading market in the Lanier Shares for a period of time following
the Distribution. Until the Lanier Shares are fully distributed and an orderly
market develops, the prices at which the Lanier Shares trade may fluctuate
significantly and may be lower or higher than the price that would be expected
for a fully distributed issue. Prices for Lanier Shares will be determined in
the marketplace and may be influenced by many factors, including the depth and
liquidity of the market for the Lanier Shares, Lanier's results of operations,
what investors think of Lanier and the office products and document
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management solutions business, the amount of dividends that Lanier pays, changes
in economic conditions in the office products and document management solutions
business and general economic and market conditions.
Following the Distribution, Harris common stock will continue to be listed
and traded on the New York Stock Exchange under the symbol "HRS." As a result of
the Distribution, the trading price of Harris common stock immediately following
the Distribution will likely be lower than the trading price of Harris common
stock immediately prior to the Distribution. Until the market has fully analyzed
the operations of Harris without the operations of Lanier, the prices at which
Harris common stock trades may fluctuate significantly.
In addition, the stock market often experiences significant price
fluctuations that are unrelated to the operating performance of the specific
companies whose stock is traded. Market fluctuations could have a material
adverse impact on the trading price of the Lanier Shares and/or Harris common
stock.
FEDERAL INCOME TAX CONSEQUENCES OF THE DISTRIBUTION
The following summary of the material federal income tax consequences of
the Distribution is not a complete description of those consequences and, in
particular, may not address federal income tax considerations that affect the
treatment of a stockholder who acquired Harris stock pursuant to an employee
benefit plan. Each stockholder's individual circumstances may affect the tax
consequences of the Distribution to such stockholder. In addition, no
information is provided herein with respect to tax consequences under applicable
foreign, state or local laws. Consequently, each Harris stockholder is advised
to consult his or her own tax advisor as to the specific tax consequences of the
Distribution.
Neither Harris nor Lanier has requested an advance ruling from the Internal
Revenue Service as to the tax consequences of the Distribution.
GENERAL
Sullivan & Cromwell, special counsel to Harris, will render an opinion to
Harris and Lanier that the Distribution is a distribution described in Section
355 of the Code. As a consequence thereof, and assuming that Harris common stock
is a capital asset in the hands of a Harris stockholder:
- Except for any cash received in lieu of a fractional Lanier Share, a
Harris stockholder will not recognize any income, gain or loss as a
result of the receipt of Lanier Shares in the Distribution.
- A Harris stockholder's holding period for the Lanier Shares received in
the Distribution will include the period for which that stockholder's
Harris shares were held.
- A Harris stockholder's tax basis for Lanier Shares received in the
Distribution will be determined by allocating to the Lanier Shares, on
the basis of the relative fair market values of Harris shares and Lanier
Shares at the time of the Distribution, a portion of the stockholder's
basis in his or her Harris shares. The Harris stockholder's basis in his
or her Harris shares will be decreased by the portion allocated to the
Lanier Shares.
- The receipt of cash in lieu of a fractional Lanier Share will be treated
as a sale of the fractional Lanier Share, and a stockholder will
recognize gain or loss equal to the difference between the amount of cash
received and the stockholder's basis in the fractional Lanier Share, as
determined above. The gain or loss will be long-term capital gain or loss
if the holding period for the fractional Lanier Share, as determined
above, is more than one year.
- A Harris stockholder will not recognize any income, gain or loss as a
result of the receipt of the preferred stock purchase rights which are
attached to Lanier Common Stock in the Distribution, and the receipt of
such rights will have no effect on a stockholder's basis or holding
period in the Lanier Shares or the Harris shares. For federal income tax
purposes, the distribution of such rights will not occur unless and until
they become separately transferable.
- Neither Harris nor Lanier will recognize any gain or loss in the
Distribution other than deferred intercompany gains that may be triggered
as a result of the Distribution.
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Harris expects that the Distribution will trigger deferred gains resulting
in tax liabilities of less than $5 million that will be payable by Lanier under
the Tax Disaffiliation Agreement. Harris does not expect that the Distribution
will result in the recognition of any other deferred intercompany transactions
or excess loss accounts.
In rendering its opinion, Sullivan & Cromwell will rely upon analysis,
representations and future undertakings from Lanier and Harris and certain other
data, documentation and other materials that Sullivan & Cromwell deems necessary
for purposes of its opinion. The opinion of counsel will not be binding on the
Internal Revenue Service or the courts; accordingly, there can be no complete
assurance that the Distribution will qualify as a tax-free transaction to Harris
or Harris stockholders. In addition, the Distribution may become taxable to
Harris (but not Harris stockholders) if Harris or Lanier were to be acquired by
a third party within two years after the Distribution and Harris failed to prove
that the subsequent acquisition of Harris or Lanier and the Distribution were
not made pursuant to a plan or a series of related transactions.
INDEMNIFICATION
Lanier would be obligated to indemnify Harris under the Tax Disaffiliation
Agreement for the full amount of any liability of Harris incurred solely because
(1) Lanier breaches a representation or covenant given to Sullivan & Cromwell in
connection with rendering its tax opinion, which breach contributes to an
Internal Revenue Service determination that the Distribution was not tax-free,
or (2) Lanier or an affiliate's post-Distribution action or omission contributes
to an Internal Revenue Service determination that the Distribution was not
tax-free. Harris will indemnify Lanier for all taxes and liabilities incurred
solely because (1) Harris breaches a representation or covenant given to
Sullivan & Cromwell in connection with rendering its tax opinion, which breach
contributes to an Internal Revenue Service determination that the Distribution
was not tax-free, or (2) Harris or an affiliate's post-Distribution action or
omission contributes to an Internal Revenue Service determination that the
Distribution was not tax-free. If the Internal Revenue Service determines that
the Distribution was not tax-free for any other reason, Harris and Lanier will
indemnify each other against 50% of all taxes and liabilities. If triggered,
Lanier's indemnification obligation would have a material adverse effect on the
results of operations and financial position of Lanier.
Lanier will also indemnify Harris for any taxes resulting from any internal
realignment undertaken to facilitate the Distribution on or before the
Distribution Date. Any such taxes are not expected to be material.
For a description of the agreement pursuant to which Harris and Lanier have
provided for certain tax disaffiliation and other tax-related matters, see
"Relationship Between Harris and Lanier Following the Distribution -- Tax
Disaffiliation Agreement" on page 20.
INFORMATION REPORTING
Current Treasury regulations require each Harris stockholder who receives
Lanier Shares pursuant to the Distribution to attach to his or her federal
income tax return for the year in which the Distribution occurs a detailed
statement setting forth such data as may be appropriate in order to show the
applicability of Section 355 of the Code to the Distribution. Harris will
provide appropriate information to each holder of record of Harris common stock
as of the Record Date.
REASONS FOR FURNISHING THIS DOCUMENT
This document is being furnished solely to provide information to Harris
stockholders who will receive Lanier Shares in the Distribution. It is not, and
is not to be construed as, an inducement or encouragement to buy or sell any
securities of Harris or Lanier. Neither Harris nor Lanier will update the
information contained in this document except in the normal course of their
respective public disclosure practices. However, we will amend this document if
there is any material change in the terms of the Distribution or if Sullivan &
Cromwell will not render the opinion described above under "-- Federal Income
Tax Consequences of the Distribution."
18
<PAGE> 32
RELATIONSHIP BETWEEN HARRIS AND LANIER
FOLLOWING THE DISTRIBUTION
For purposes of governing certain of the ongoing relationships between
Harris and Lanier after the Distribution and to provide for an orderly
transition to the status of two independent companies, Harris and Lanier have
entered or will enter into the agreements described in this section. The forms
of agreements summarized in this section are included as exhibits to the
Registration Statement on Form 10 (including any amendments thereto, the
"Registration Statement") that Lanier has filed with the Securities and Exchange
Commission (the "Commission"), and the following summaries are qualified in
their entirety by reference to the agreements as so filed. See "Additional
Information" beginning on page 66.
DISTRIBUTION AGREEMENT
Prior to the Distribution Date, Harris and Lanier will enter into the
Distribution Agreement, which will provide for, among other things, the
principal corporate transactions required to effect the Distribution and certain
other agreements relating to the continuing relationship between Lanier and
Harris after the Distribution.
The Distribution Agreement will provide that on or prior to the
Distribution Date, Lanier will have issued to Harris a number of Lanier Shares
so that the total number of Lanier Shares owned by Harris immediately following
consummation of the Distribution will be one less than 10% of the outstanding
Lanier Shares. Harris will effect the Distribution by delivering a certificate
representing approximately 90% of such Lanier Shares to the Distribution Agent.
Although Harris and Lanier have generally held their assets separately,
Harris currently holds stock of business entities which are part of Lanier's
business, and Lanier currently holds stock of business entities which are a part
of Harris' business. Ownership of those entities will be transferred under the
Distribution Agreement so that their legal ownership reflects the way in which
they are reported financially. These transfers will have no accounting or
financial reporting impact upon either Harris or Lanier.
Under the Distribution Agreement and effective as of the Distribution Date,
Lanier will assume, and will agree to indemnify Harris against, all liabilities,
litigation and claims, including related insurance costs, arising out of
Lanier's business, and Harris will retain, and will agree to indemnify Lanier
against, all liabilities, litigation and claims, including related insurance
costs, arising out of Harris' businesses. The foregoing obligations will not
entitle an indemnified party to recovery to the extent any such liability is
covered by proceeds received by such party from any third party insurance
policy.
The Distribution Agreement will provide for a cash payment by Lanier to
Harris immediately prior to the Distribution and the assumption by Lanier of
certain of Harris' indebtedness relating to Lanier's business. The aggregate
amount of such cash payment will be approximately $546 million, which is the sum
of: (i) $700 million; plus (ii) cash and cash equivalents of Lanier as of
October 1, 1999; less (iii) the amount of indebtedness for borrowed money of
Lanier as of such date; and less (iv) amounts owed by Lanier under Lanier's
European asset securitization facility as of such date. Lanier will incur debt
under the Credit Facility of approximately the same amount. The amount of such
cash payment was determined based on Harris' goals of maximizing combined
stockholder value for Harris' present stockholders while providing Lanier with a
capital structure appropriate to its business. In addition to such cash payment,
pursuant to the Distribution Agreement Lanier will forgive domestic intercompany
accounts owed by Harris and settle certain intercompany accounts between Harris
and Lanier having an aggregate principal amount of approximately $194 million as
of July 2, 1999 and approximately $175 million as of October 1, 1999.
The Distribution Agreement will provide that each of Harris and Lanier
shall be granted access to certain records and information in the possession of
the other, and will require the retention by each of Harris and Lanier for a
period of eight years following the Distribution Date of all such information in
its possession.
TRANSITION SERVICES AGREEMENT
Harris and Lanier will enter into a Transition Services Agreement prior to
the Distribution Date under which, in exchange for the fees specified in such
agreement, Harris will agree to continue to provide certain
19
<PAGE> 33
administrative services to Lanier, including, information management services
and other services, and Lanier will agree to provide certain administrative
services to Harris. The Transition Services Agreement will provide that each of
Lanier and Harris will undertake to provide the same degree of care and
diligence as it uses in providing these services to itself and its subsidiaries.
Provision of services under the Transition Services Agreement will terminate no
later than one year following the Distribution Date. Lanier believes that the
terms and conditions of the Transition Services Agreement are as favorable to
Lanier as those available from unrelated parties for a comparable arrangement.
REGISTRATION RIGHTS AGREEMENT
Harris and Lanier will enter into a Registration Rights Agreement prior to
the Distribution Date in which Harris will agree not to offer, sell, contract to
sell or otherwise transfer or dispose of any of the Lanier Shares retained by
Harris during the period ending on the 180th calendar day following the
Distribution Date. The Registration Rights Agreement will provide that Harris
will vote its Lanier Shares on all matters in proportion to the way in which the
other Lanier stockholders vote their Lanier Shares. The Registration Rights
Agreement will also provide that at any time during the period commencing on the
120th calendar day after the Distribution Date and terminating upon the second
anniversary of the Distribution Date, Harris will have the right on two
occasions to require Lanier to file with the Commission a registration statement
under the Securities Act registering all or a portion of the Lanier Shares held
by Harris. On one of these occasions, Harris will be entitled to cause Lanier to
file with the Commission a "shelf" registration statement covering the resale of
the Lanier Shares retained by Harris. Lanier has agreed to use its reasonable
efforts to keep any such registration statement continuously effective for the
period of time terminating upon the earlier of the date that Harris no longer
holds any Lanier Shares or the second anniversary of the Distribution Date. The
Registration Rights Agreement will also provide that Lanier will take certain
actions to assist Harris in offering, marketing and selling the Lanier Shares
retained by Harris and pay certain expenses in connection therewith. In
addition, the Registration Rights Agreement will also provide that Lanier will
indemnify Harris against certain losses, claims, damages and liabilities,
including liabilities under the federal securities laws.
TAX DISAFFILIATION AGREEMENT
Harris and Lanier will enter into a Tax Disaffiliation Agreement (the "Tax
Disaffiliation Agreement") which sets out each party's rights and obligations
with respect to deficiencies and refunds, if any, of federal, state, local or
foreign taxes for periods before and after the Distribution and related matters
such as the filing of tax returns and the conduct of Internal Revenue Service
and other audits. Under the Tax Disaffiliation Agreement, Lanier will indemnify
Harris for any tax liability of Lanier or its affiliates for any period. Lanier
will also indemnify Harris for all taxes and liabilities incurred solely because
(1) Lanier breaches a representation or covenant given to Sullivan & Cromwell in
connection with rendering its tax opinion, which breach contributes to an
Internal Revenue Service determination that the Distribution was not tax-free or
(2) Lanier or an affiliate's post-Distribution action or omission contributes to
an Internal Revenue Service determination that the Distribution was not
tax-free. Harris will indemnify Lanier for all taxes and liabilities incurred
solely because (1) Harris breaches a representation or covenant given to
Sullivan & Cromwell in connection with rendering its tax opinion, which breach
contributes to an Internal Revenue Service determination that the Distribution
was not tax-free, or (2) Harris or an affiliate's post-Distribution action or
omission contributes to an Internal Revenue Service determination that the
Distribution was not tax-free. If the Internal Revenue Service determines that
the Distribution was not tax-free for any other reason, Harris and Lanier will
indemnify each other against 50% of all taxes and liabilities.
Lanier will also indemnify Harris for any taxes resulting from any internal
realignment undertaken to facilitate the Distribution on or before the
Distribution Date. Any such taxes are not expected to be material.
EMPLOYEE BENEFITS AND COMPENSATION ALLOCATION AGREEMENT
Prior to the Distribution, Harris and Lanier will enter into the Employee
Benefits and Compensation Allocation Agreement (the "Employee Benefits
Agreement"), which will contain certain provisions relating to employee
compensation, benefits and labor matters and the treatment of options to
purchase and awards with
20
<PAGE> 34
respect to Harris shares held by Lanier employees or Harris employees who will
become Lanier employees. The Employee Benefits Agreement will provide that
Harris Options held by Lanier employees or Harris employees who will become
Lanier employees will be replaced by Lanier Options. The option price and number
of shares subject to each option will be adjusted so that the aggregate
difference between the market price and the option price will be equal for the
Harris Options and the Lanier Options. The number of shares subject to each
Lanier Option will be determined by multiplying (i) the number of shares subject
to each Harris Option by (ii) a number equal to (A) the closing price of Harris
shares on the New York Stock Exchange on the Record Date, divided by (B) the
opening price of the Lanier Shares on the New York Stock Exchange on the day
following the Distribution Date (such result, the "Lanier Option Adjustment
Ratio"). Similarly, the price of each Lanier Option will be determined by
dividing the price of each Harris Option by the Lanier Option Adjustment Ratio.
Performance share awards granted to Lanier employees under Harris' Stock
Incentive Plan will be canceled and replacement performance shares will be
awarded under the Lanier Stock Plan by multiplying the number of performance
shares by the Lanier Option Adjustment Ratio.
21
<PAGE> 35
LANIER WORLDWIDE, INC. AND SUBSIDIARIES
HISTORICAL AND PRO FORMA CONSOLIDATED CAPITALIZATION
The following table sets forth the historical and pro forma consolidated
debt and capitalization of Lanier at July 2, 1999. This data should be read in
conjunction with the historical consolidated balance sheet of Lanier and the
unaudited pro forma consolidated balance sheet and the notes thereto, and the
introduction to the unaudited pro forma consolidated financial statements
appearing elsewhere in this document. The pro forma information set forth below
gives effect to the Distribution as if it had occurred on July 2, 1999. The pro
forma information may not necessarily reflect the debt and capitalization of
Lanier in the future or as it would have been had Lanier been a separate,
independent company at July 2, 1999 or had the Distribution actually been
effected on such date.
<TABLE>
<CAPTION>
JULY 2, 1999
----------------------------------------
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Short-term debt...................................... $ 138,011 -- $ 138,011
Current portion of long-term debt.................... 2,582 -- 2,582
Long-term debt....................................... 4,622 $ 540,994 (A) 545,616
Shareholder Equity:
Preferred stock, par value $1.00; authorized
1,000,000 shares; issued none................... -- -- --
Common stock, par value $1.00; authorized 1,000,000
shares; issued 41,893 shares.................... 42 847 (B) 889
Additional paid-in-capital......................... 329,679 (149,415)(C) 180,264
Retained earnings.................................. 586,556 (586,556)(C) --
Accumulated comprehensive loss..................... (33,539) -- (33,539)
---------- --------- ---------
Total shareholder equity............................. 882,738 (735,124) 147,614
---------- --------- ---------
Total capitalization................................. $1,027,953 $(194,130) $ 833,823
========== ========= =========
</TABLE>
NOTES TO PRO FORMA COMBINED CAPITALIZATION
The following adjustments were made to the balance sheet of Lanier as of July 2,
1999 to give effect to the Distribution as if it had occurred as of that date.
(A) To reflect additional debt of Lanier to be incurred on or prior to the
Distribution Date under the Credit Facility. Pro forma debt is subject to
change and the components may be revised prior to the Distribution Date.
(B) To reflect additional Lanier Shares to be distributed after giving effect to
the Distribution, Lanier Shares retained by Harris and the conversion of
performance share awards of Harris. Pro forma par value is $.01, 500,000,000
shares of Lanier Common Stock are assumed to be authorized, and 88,857,000
Lanier Shares are assumed to be outstanding.
(C) To reflect pro forma income adjustments, settlement of intercompany accounts
and a cash payment to be made by Lanier to Harris immediately prior to the
Distribution. The amount of such payment was calculated using the formula
described under "Relationship Between Harris and Lanier Following the
Distribution -- Distribution Agreement" on page 19 using financial
information as of July 2, 1999. See "Notes to Unaudited Pro Forma
Consolidated Income Statement" on page 27 and "Notes to Unaudited Pro Forma
Consolidated Balance Sheet" on page 26.
22
<PAGE> 36
DIVIDEND POLICIES
Following the Distribution, Lanier's dividend policy will be set by
Lanier's board of directors. The declaration and payment of dividends is at the
discretion of Lanier's board of directors and will be subject to Lanier's
financial results and the availability of surplus funds to pay dividends.
Delaware law prohibits Lanier from paying dividends or otherwise distributing
funds to its stockholders, except out of legally available funds. The amount of
quarterly cash dividends will depend on a number of factors, including Lanier's
financial condition, capital requirements, results of operations, future
business prospects and other factors the Lanier Board may deem relevant,
including restrictions on Lanier's ability to declare and pay dividends and
distributions on the Lanier Shares contained in the Credit Facility. No
assurance can be given that Lanier will pay any dividends. See "Risk
Factors -- Uncertainty of Dividends" on page 11 and "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Credit Facility"
beginning on page 33. Lanier intends to establish a direct stock purchase and
dividend reinvestment plan that will enable holders to purchase additional
Lanier Shares and to reinvest dividends, if any, into additional Lanier Shares.
Following the Distribution, Harris intends to pay quarterly dividends at an
initial annual rate substantially below Harris' current dividend rate of $.96
per share. No determination has been made by Harris' board of directors with
respect to the initial dividend rate that will be paid following the
Distribution. The payment and level of dividends is at the discretion of Harris'
board of directors and will be subject to Harris' financial results and the
availability of surplus funds to pay dividends. Delaware law prohibits Harris
from paying dividends or otherwise distributing funds to its stockholders,
except out of legally available funds. The declaration of dividends and the
amount thereof will depend on a number of factors, including Harris' financial
condition, capital requirements, results of operations, future business
prospects and other factors Harris' board of directors may deem relevant. No
assurance can be given that Harris will pay any dividends.
23
<PAGE> 37
LANIER WORLDWIDE, INC.
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
INTRODUCTION TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
Lanier was acquired by Harris in 1983 and has no recent operating history
as an independent company. The historical consolidated financial statements of
Lanier contained in this document reflect periods during which Lanier did not
operate as an independent company, and certain assumptions were made in
preparing such financial statements. Therefore, the historical consolidated
financial statements may not necessarily reflect the consolidated results of
operations or financial position that would have existed had Lanier been an
independent company.
The following unaudited pro forma consolidated financial statements of
Lanier make adjustments to the historical consolidated balance sheet at July 2,
1999 as if the Distribution had occurred on July 2, 1999, and the historical
consolidated income statements for the fiscal year ended July 2, 1999, as if the
Distribution had occurred on July 4, 1998.
The unaudited pro forma consolidated financial statements of Lanier should
be read in conjunction with the historical Consolidated Financial Statements of
Lanier and the Notes thereto contained elsewhere in this document. The pro forma
consolidated financial information is presented for informational purposes only
and may not necessarily reflect the future earnings, results of operations or
financial position of Lanier or what the earnings, results of operations or
financial position would have been had Lanier's businesses been operated as an
independent company for the periods indicated.
24
<PAGE> 38
LANIER WORLDWIDE, INC.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
JULY 2, 1999
<TABLE>
<CAPTION>
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ----------
(IN THOUSANDS EXCEPT SHARE AMOUNTS)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents........................... $ 18,209 -- $ 18,209
Trade receivables................................... 348,604 -- 348,604
Receivables from parent............................. 194,521 $(194,130)(A) 391
Inventories......................................... 166,404 -- 166,404
Prepaid expenses.................................... 17,107 -- 17,107
Deferred income taxes............................... 39,276 -- 39,276
---------- --------- ----------
TOTAL CURRENT ASSETS........................ 784,121 (194,130) 589,991
OTHER ASSETS
Rental equipment-net................................ 140,718 -- 140,718
Property, plant and equipment-net................... 42,755 -- 42,755
Notes receivables-net............................... 203,657 -- 203,657
Intangibles-net..................................... 125,504 -- 125,504
Other............................................... 40,953 -- 40,953
---------- ----------
TOTAL OTHER ASSETS.......................... 553,587 -- 553,587
---------- --------- ----------
TOTAL ASSETS.......................................... $1,337,708 $(194,130) $1,143,578
========== ========= ==========
LIABILITIES AND SHAREHOLDER EQUITY
CURRENT LIABILITIES
Notes payable....................................... $ 138,011 -- $ 138,011
Trade payables...................................... 86,815 -- 86,815
Retirement plan accounts............................ 38,964 -- 38,964
Accrued compensation................................ 39,066 -- 39,066
Accrued interest and sundry taxes................... 21,772 -- 21,772
Other accrued items................................. 33,610 -- 33,610
Unearned service income............................. 57,898 -- 57,898
Income taxes........................................ 15,460 -- 15,460
Long-term debt-current portion...................... 2,582 -- 2,582
---------- --------- ----------
TOTAL CURRENT LIABILITIES................... 434,178 -- 434,178
OTHER LIABILITIES
Deferred income taxes............................... 16,170 -- 16,170
Long-term debt...................................... 4,622 540,994 (C) 545,616
SHAREHOLDER EQUITY
Common Stock, $1.00 par value, 1,000,000 shares
authorized; issued and outstanding 41,893
shares........................................... 42 847 (D) 889
(194,130)(A)
27,186 (B)
(540,994)(C)
(847)(D)
Additional paid-in capital.......................... 329,679 559,370 (C) 180,264
(27,186)(B) --
Retained earnings................................... 586,556 (559,370)(C)
Accumulated comprehensive loss...................... (33,539) -- (33,539)
---------- --------- ----------
TOTAL SHAREHOLDER EQUITY.................... 882,738 (735,124) 147,614
---------- --------- ----------
TOTAL LIABILITIES AND SHAREHOLDER EQUITY.............. $1,337,708 $(194,130) $1,143,578
========== ========= ==========
</TABLE>
25
<PAGE> 39
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
The following adjustments were made to Lanier's July 2, 1999 historical
consolidated balance sheet to give effect to the Distribution as if it had
occurred on that date:
(A) Forgiveness of intercompany accounts between Harris and Lanier.
(B) Accruals for additional interest expense, elimination of interest income on
indebtedness loans to Harris and the related tax benefit resulting from
these expenses.
(C) To reflect additional new indebtedness of Lanier to be incurred on or prior
to the Distribution Date under the Credit Facility for the purpose of the
cash payment to Harris. The aggregate amount of such payment was calculated
using the formula described under "Relationship Between Harris and Lanier
Following the Distribution -- Distribution Agreement," using financial
information as of July 2, 1999. The pro forma effect of the cash payment is
as follows:
<TABLE>
<S> <C>
$700,000
Add: Cash retained or assumed............................. 18,209
Less:
Historical debt assumed or retained.................... 145,215
Asset securitization (off balance sheet)............... 32,000
--------
Cash Payment.............................................. $540,994
========
</TABLE>
The increment to long-term debt is equal to the cash payment to Harris.
(D) To reflect additional Lanier Shares to be distributed after giving effect to
the Distribution, Lanier Shares retained by Harris and the conversion of
performance share awards of Harris. Pro forma par value is $.01, 500,000,000
shares of Lanier Common Stock are assumed to be authorized, and 88,857,000
Lanier Shares are assumed to be outstanding.
26
<PAGE> 40
LANIER WORLDWIDE, INC.
UNAUDITED PRO FORMA CONSOLIDATED INCOME STATEMENT
FOR THE FISCAL YEAR ENDED JULY 2, 1999
<TABLE>
<CAPTION>
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ----------
(IN THOUSANDS, EXCEPT PER SHARE
AMOUNTS)
<S> <C> <C> <C>
REVENUE
Product sales and rentals......................... $ 807,468 -- $ 807,468
Service income.................................... 623,020 -- 623,020
Finance income.................................... 38,132 -- 38,132
---------- ----------
1,468,620 -- 1,468,620
COSTS AND EXPENSES
Cost of product sales and rentals................. 547,929 -- 547,929
Cost of service................................... 349,448 -- 349,448
Selling and administrative expenses............... 438,516(F) -- 438,516
Interest expenses................................. 22,692(A) 35,408 (B) 58,100
Other-net......................................... (1,235) 8,440 (C) 7,205
---------- -------- ----------
1,357,350 43,848 1,401,198
---------- -------- ----------
Income before income taxes........................ 111,270 (43,848) 67,422
Income taxes...................................... 40,000 (16,662)(D) 23,338
---------- -------- ----------
NET INCOME........................................ $ 71,270 $(27,186) $ 44,084
========== ======== ==========
Net income per share.............................. $ 0.50(E)
==========
</TABLE>
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED INCOME STATEMENT
The following adjustments were made to Lanier's historical consolidated income
statement for the fiscal year ended July 2, 1999.
(A) See discussion of "Other Income and Expense" on page 31.
(B) Adjustment to interest expense to reflect additional long-term debt of
Lanier using an annual estimated interest rate of 8.3% assuming $700 million
of indebtedness net of cash on July 4, 1998.
(C) Adjustment to eliminate interest income on loans from Lanier to Harris that
will be repaid to Lanier prior to the distribution date.
(D) Adjustment for income tax provision related to pretax adjustments.
(E) Net income per share is computed based on 88,857,000 shares, which
represents the number of Lanier Shares which would have been distributed in
the Distribution if it had occurred on July 2, 1999, based on the number of
Harris shares outstanding as of such date, the retention of Lanier Shares by
Harris and the conversion of Harris performance share awards.
(F) The pro forma statement does not include adjustments to administrative
expense to reflect the elimination of $25.0 million of costs charged to
Lanier by Harris or Lanier's estimate of $7.0 million for additional legal,
audit and other similar expenses that Lanier is expected to incur as a
publicly traded corporation. This charge by Harris was made based upon a
percentage of Lanier's net sales.
27
<PAGE> 41
LANIER WORLDWIDE, INC.
SELECTED FINANCIAL DATA
The selected historical consolidated financial data of Lanier set forth
below is qualified in its entirety by, and should be read in conjunction with,
the Consolidated Financial Statements of Lanier, including the Notes thereto,
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere in this document. The income statement data for
each of the three fiscal years ended July 2, 1999 and the balance sheet data as
of July 2, 1999 and July 3, 1998 are derived from, and are qualified by
reference to, the consolidated financial statements included elsewhere in this
document that have been audited by Ernst & Young LLP, Lanier's independent
certified public accountants.
<TABLE>
<CAPTION>
FISCAL YEARS ENDED
-----------------------------------------------------------------------------
JUNE 30, JUNE 30, JUNE 27, JULY 3, JULY 2, PROFORMA
1995 1996 1997 1998 1999 (A) JULY 2, 1999
---------- ---------- ---------- ---------- ---------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Revenue
Product sales and
rentals.............. $ 674,694 $ 719,803 $ 704,282 $ 721,791 $ 807,468 $ 807,468
Service income.......... 348,850 396,159 465,732 532,986 623,020 623,020
Finance income.......... 27,543 28,760 29,871 33,558 38,132 38,132
---------- ---------- ---------- ---------- ---------- ----------
1,051,087 1,144,722 1,199,885 1,288,335 1,468,620 1,468,620
Costs and Expenses
Cost of product sales
and rentals.......... 415,121 448,845 426,042 453,968 547,929 547,929
Cost of service......... 194,322 219,042 255,705 304,901 349,448 349,448
Selling and
administrative
expenses............. 349,840 370,004 399,470 410,452 438,516 438,516
Restructuring
expenses............. -- -- -- 8,500(B) -- --
Interest expenses....... 11,485 11,010 8,797 8,236 22,692 58,100
Other -- net............ (2,428) 5,218 7,964 2,877 (1,235) 7,205
---------- ---------- ---------- ---------- ---------- ----------
968,340 1,054,119 1,097,978 1,188,934 1,357,350 1,401,198
---------- ---------- ---------- ---------- ---------- ----------
Income before income
taxes................... 82,747 90,603 101,907 99,401 111,270 67,422
Income taxes.............. 30,454 33,331 38,208 36,604 40,000 23,338
---------- ---------- ---------- ---------- ---------- ----------
Net income................ $ 52,293 $ 57,272 $ 63,699 $ 62,797 $ 71,270 $ 44,084
========== ========== ========== ========== ========== ==========
Net income per share...... $ 0.50
==========
Financial Position (end of
period)
Total assets.............. $1,011,404 $1,056,814 $1,075,307 $1,123,296 $1,337,708 $1,143,578
Long-term debt............ 4,192 4,103 3,990 3,660 4,622 545,616
Shareholder equity........ 635,113 689,240 750,157 803,657 882,738 147,614
</TABLE>
- ---------------
(A) Includes the operations of the Copy System Division of Agfa-Gevaert Group
from the date of the July 9, 1998 acquisition.
(B) See "Fiscal Year ended July 3, 1998 Compared to Fiscal Year ended June 27,
1997 -- Restructuring Charge" on page 33.
28
<PAGE> 42
RECENT DEVELOPMENTS
Lanier reported lower revenue and earnings for the first quarter of fiscal
year 2000 compared to the same quarter of the prior fiscal year, primarily due
to the divestiture during the fourth quarter of fiscal year 1999 of Lanier's
direct sales operation in France and its U.S.-based medical transcription
business. Revenue declined to $318 million from $337 million in the fourth
quarter of fiscal year 1999. The strengthening of the dollar relative to
European currencies and pricing pressures associated with the industry
transition from analog technology to digital technology also contributed to
weaker sales.
Net income declined to $9.7 million from $13.5 million in the first quarter
of the prior fiscal year, reflecting the revenue decline as well as pricing
pressures. Cost reduction efforts underway at Lanier reduced overhead costs in
the first quarter to 31.0 percent of revenue. Stand-alone condensed consolidated
statement of income information for the first quarter of fiscal year 2000 and
the first quarter of fiscal year 1999 is set forth below.
LANIER WORLDWIDE, INC.
FY'00 FIRST QUARTER SUMMARY
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(IN MILLIONS)
<TABLE>
<CAPTION>
QUARTER ENDED
----------------------
OCTOBER 1 OCTOBER 2
1999 1998
--------- ---------
<S> <C> <C>
REVENUE
Revenue from sales, rentals and services.................... $307.6 $328.0
Finance income.............................................. 10.3 9.2
------ ------
317.9 337.2
COST AND EXPENSES
Cost of sales, rental and services.......................... 195.5 201.1
Selling and administrative expenses......................... 98.6 110.9
Interest expense............................................ 5.6 4.1
Other expense............................................... 2.5 --
------ ------
Income before income taxes.................................. 15.7 21.1
Income taxes................................................ 6.0 7.6
------ ------
Net income.................................................. $ 9.7 $ 13.5
====== ======
</TABLE>
29
<PAGE> 43
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with "Unaudited Pro
Forma Consolidated Financial Statements," "Selected Financial Data," the
Consolidated Financial Statements of Lanier, including the Notes thereto, and
the other financial information appearing elsewhere in this document. Except for
the historical information contained herein, the discussions in this document
contain forward-looking statements that involve risks and uncertainties.
Lanier's actual results could differ materially from those discussed herein.
Factors that could cause or contribute to such differences include, but are not
limited to, those discussed under "Risk Factors" beginning on page 7, as well as
those discussed elsewhere in this document.
GENERAL
Lanier is a worldwide supplier of office equipment and facilities
management services. On April 13, 1999 Lanier's parent company, Harris,
announced that it would spin Lanier off into a separate publicly traded company.
Harris intends to accomplish this transaction through a U.S. tax-free
distribution of Lanier stock to Harris stockholders.
Lanier and its subsidiaries form a worldwide independent supplier of
copiers, facsimiles and other related automated office imaging equipment. With
over 1,600 sales and service locations in more than 100 countries, Lanier
markets these products and related services, parts and supplies to customers
both on a direct sales basis and through a worldwide network of independent
dealers. Lanier's centralized sales and service organizations give it a
competitive advantage in the pursuit of national and global account business.
Lanier provides customers with a wide array of customized document management
solutions including black and white digital and analog copiers, color copiers,
facsimile machines, multi-function devices, dictation equipment, computer based
health care information management systems, associated parts and supplies, and a
variety of related outsourcing services, including legal support services.
Lanier sources substantially all of these products from a variety of
manufacturers, seeking out the "best-of-breed."
In March 1997, Lanier acquired Quorum Group, Inc., a litigation services
company (the "Quorum Acquisition"). In July 1998, Lanier acquired the Copying
Systems Division of Agfa-Gevaert Group ("Agfa") for $168.3 million (the "Agfa
Acquisition"). The sale of Agfa private label products has added $201.5 million
in revenues for the year ended July 2, 1999. The combined effect of these sales
and the additional sales force presence provided by the Agfa Acquisition has
effectively doubled Lanier's sales and market size in the European office
equipment market.
In May 1999, Lanier sold its electronic medical transcription services
business to MedQuist Transcriptions, Ltd. for approximately $34.0 million. The
sale resulted in a pre-tax gain of $21.5 million. In June 1999, Lanier sold its
direct sales operations in France which resulted in a $4.0 million pre-tax loss.
In connection with its internal audit reviews in early 1999, Lanier
detected accounting misstatements by a former employee at one of its foreign
subsidiaries. These misstatements resulted in an overstatement of earnings over
the past five fiscal years in an aggregate amount of $10.0 million before income
taxes. The financial statements included in this document reflect the correction
of such misstatements. Lanier management has completed its investigation of
these matters and believes that no further correction will be required.
COMPONENTS OF NET INCOME
Lanier derives its revenues from three primary sources: (i) sales of
equipment and related supplies and rental equipment under operating lease
agreements; (ii) service of equipment under maintenance agreements, consulting,
facilities management and other professional services; and (iii) finance income
associated with leases. Revenues generated by these areas depend upon a number
of factors, such as the technological competitiveness of its product line,
demand for and price of equipment, Lanier's reputation for providing timely and
reliable service, Lanier's competition in the industry and general economic
conditions.
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Net Sales. Net sales consists of revenue from product sales, rentals and
service revenue, net of any returns and finance income.
Cost of Goods Sold. Cost of goods sold consists primarily of the cost of
new equipment, cost of supplies and parts, labor costs to provide services,
rental equipment depreciation and other direct operating costs. Lanier
depreciates its rental equipment primarily over periods of three to five years
on a straight-line basis.
Operating Expenses. Operating expenses consist of selling, administrative,
engineering and general expenses, including salaries, wages and related expenses
paid to employees, advertising costs, employee training costs, occupancy of
leased space directly related to sales or service, and other selling expenses.
Operating expenses also include all overhead expenses related to Lanier's
corporate offices, such as salaries, taxes and benefits, occupancy of corporate
leased space, training and travel expenses.
Other Income and Expense. Other income and expense consists of provisions
for bad debts, interest expense, amortization of goodwill, royalties and other
miscellaneous items of income and expense.
RESULTS OF OPERATIONS
Operating expenses include charges by Harris to Lanier for Lanier's
proportionate share of legal, financial, and other administrative expenses.
Following the Distribution, Lanier plans to acquire these services independently
of Harris. Although it is not possible to predict accurately what relationship
the future expense will bear to the historic expense for these items, Lanier
does not expect that the acquisition of these services from sources independent
of Harris will have any material adverse effect.
Interest expense reflected in the historical financial statements is
related to currently outstanding debt. Future interest expense will be
significantly higher as a result of debt incurred related to the Distribution.
See "-- Credit Facility" beginning on page 33.
FISCAL YEAR ENDED JULY 2, 1999 COMPARED TO FISCAL YEAR ENDED JULY 3, 1998
Net Sales. Net sales increased 14.0% to $1,430.5 million in fiscal year
1999 from $1,254.8 million in fiscal year 1998. This increase is primarily
attributable to the Agfa Acquisition, which was completed at the beginning of
the first quarter.
Product sales and rental revenue increased 11.9% to $807.5 million for the
fiscal year compared to $721.8 million for the prior fiscal year. Increased
sales and rentals resulting from the Agfa Acquisition were $101.3 million for
the fiscal year. The increase in product sales and rental revenues from the Agfa
Acquisition was partially offset by increased competition and by the continued
market transition from analog to digital copier technology. This transition has
resulted in a market-wide excess supply of analog copiers, which is driving down
prices on used and re-manufactured equipment.
Service revenue increased 16.9% to $623.0 million for the fiscal year from
$533.0 for the prior fiscal year. This increase is primarily due to the Agfa
Acquisition, which contributed $100.2 million of service revenue for the fiscal
year.
Sales from Lanier's operations outside of the United States increased by
53.2% to $569.2 million for the fiscal year compared to $371.5 million for the
prior fiscal year. Sales from Agfa private label products and services in Europe
and the United Kingdom provided $201.5 million for the fiscal year. Sales in the
United States decreased 2.5% to $861.3 million for the fiscal year from $883.8
million for the prior fiscal year.
Gross Margin. Gross margin on product and rental revenue declined to 32.2%
of net sales for the fiscal year compared to 37.1% for the prior fiscal year.
This decline was primarily a result of increased price competition on analog
products coupled with lower overall margins on digital products. Margins were
also impacted by management's decision to record a pre-tax charge to cost of
product sales and rentals of $8.0 million in order to write down obsolete analog
and older generation digital product lines to their net realizable values. This
action was primarily a result of the fact that the shift in technology in the
document imaging industry from analog products to digital products has occurred
at a much more rapid rate than either the industry or Lanier's management had
anticipated, resulting in an excess supply of analog and older generation
digital products.
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Lanier's sales of used analog products decreased 33% in unit terms during fiscal
year 1999, while placements of digital products increased by over 300% in unit
terms during the same period. This trend has accelerated during the third and
fourth quarters of fiscal year 1999. In the month of April 1999, for the first
time, sales of Lanier's digital products exceeded sales of its analog products.
Additionally, in recent months, Lanier has observed a dramatic decline in demand
for analog products. Lanier also recorded a $2.0 million inventory charge
related to a discontinued product line which is described below under "Other
Income and Expense." Service margins increased to 43.9% compared to 42.8% of net
sales for the prior fiscal year. This increase was the result of reductions in
personnel and related compensation expenses following Lanier's restructuring
actions and cost containment programs, which were initiated in fiscal year 1998
and completed in fiscal year 1999.
Operating Expenses. Selling and administrative expenses increased 6.8% to
$438.5 million for the fiscal year compared to $410.5 million for the prior
fiscal year. Selling and marketing expenses increased by $19.9 million in total
dollars as a result of the Agfa Acquisition, but decreased from 16.8% to 16.1%
of net sales. General and administrative expenses increased by $10.3 million in
total dollars as a result of the Agfa Acquisition, but decreased from 14.3% to
13.3% of net sales. This increase included $5.0 million of non-recurring
integration costs related to the Agfa Acquisition.
Other Income and Expense. Finance income increased $4.6 million for the
fiscal year over the prior fiscal year due to increased customer leasing.
Interest expense increased to $22.7 million as compared to $8.2 million during
the prior fiscal year primarily due to borrowings used to fund the Agfa
Acquisition. Other-net expense decreased $4.1 million for the fiscal year over
the prior fiscal year due primarily to the gain from sale of Lanier's electronic
medical transcription services to Medquist, offset by an increased provision for
doubtful accounts, loss from the sale of Lanier's direct sales operations in
France, and write-off of its investment in a technology-related company.
Lanier's management determined that its investment in this technology-related
company had been significantly impaired due to developments related to this
company and Lanier's decision to discontinue the product line which utilized the
software sold by the company. Lanier therefore recorded an impairment charge of
relating to these assets in 1999, which is described in Note R to the
accompanying financial statements.
Net Income. Net income increased 13.5% to $71.3 million for the fiscal year
compared to $62.8 million in the prior fiscal year. Net income for domestic
operations declined 8.1% to $48.7 million as compared to $53.0 million during
the prior fiscal year. Net income from international operations increased 130.6%
to $22.6 million from $9.8 million during the prior fiscal year. This increase
primarily resulted from the income generated by European operations from the
sale of Agfa products and services.
FISCAL YEAR ENDED JULY 3, 1998 COMPARED TO FISCAL YEAR ENDED JUNE 27, 1997
Net Sales. Net sales increased 7.2% to $1,254.8 million in fiscal year 1998
from $1,170.0 million in fiscal year 1997. Product sales and rental revenue in
Lanier's core business increased by $17.5 million. Of this amount, $8.6 million
resulted from the acquisition of six copy and dictation companies. The remainder
of the increase resulted from internal growth.
Service related revenue increased by $67.3 million, or 14.4%, to $533.0
million. The facilities management product line contributed $36.2 million of
this increase, primarily as a result of having a full year of revenue in fiscal
year 1998 as a result of the Quorum Acquisition. The incremental fiscal year
1998 revenue over fiscal year 1997 revenue resulting from the Quorum
Acquisition, which was completed during the third quarter of fiscal year 1997,
was $20.5 million. Lanier also acquired two other facilities management
companies in fiscal year 1998 which resulted in $6.6 million of incremental
revenue for the period. The remainder of the service revenue increase was a
result of growth in equipment service revenue and transcription services.
Lanier's sales outside the United States increased 2.6% to $371.5 million
in fiscal 1998 compared to $362.2 million in fiscal year 1997. Lanier's European
operation experienced a $12.8 million decrease, while sales in the Latin
American region increased $11.8 million. Lanier's operations in Australia,
Canada and the United Kingdom contributed to a smaller increase.
Gross Margin. Gross Margin decreased from 41.7% of net sales in fiscal year
1997 to 39.5% of net sales in fiscal year 1998. Gross margins were lower in
fiscal year 1998 as a result of increasing price competition
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throughout the copier industry. Margin pressure has also resulted from the lower
margin outsourcing and service based businesses becoming a larger portion of
Lanier's revenue.
Operating Expenses. Selling, administrative and general expenses for fiscal
year 1998 remained relatively constant in absolute dollars but decreased as a
percentage of net sales from 34.1% in fiscal year 1997 to 32.7% in fiscal year
1998. Selling, administrative and general expenses all contributed to reduced
operating expenses as a percentage of net sales.
Restructuring Charge. In fiscal year 1998, Lanier recorded a charge to
income of $8.5 million ($5.3 million after tax) related to the restructuring of
the organization. Of the total amount, approximately $3.0 million was used in
the U.S. operations and approximately $5.5 million was used in the European
operations. These cash charges reflect the costs of severance payments and
outplacement services for approximately 350 terminated employees. These
employees were from the general/administrative and service groups.
Other Income and Expense. Finance income increased $3.7 million in fiscal
year 1998 due to increased customer leasing. Interest expense decreased by $0.6
million from fiscal year 1997 due to a favorable average interest rate of 8.4%
in 1998 as compared to 9.2% in 1997. Other-net expense decreased $5.1 million in
fiscal year 1998 due primarily to lower provisions for doubtful accounts and
prior year expenses associated with acquisitions of new businesses.
Net Income. Net income for fiscal year 1998 decreased 1.4% to $62.8 million
from $63.7 million in fiscal year 1997. Fiscal year 1998 net income attributable
to domestic operations increased 0.6% to $53.0 million from $52.7 million in the
prior year. Net income attributable to international operations in 1998
decreased 10.9% to $9.8 million compared to $11.0 million in fiscal 1997.
LIQUIDITY AND CAPITAL RESOURCES
Lanier's net cash flow provided by operating activities was $57.6 million,
$146.4 million and $106.1 million in fiscal years 1999, 1998 and 1997,
respectively. The decrease in fiscal year 1999 operating cash flows was
primarily due to cash transfers and repayment of intercompany loans to Harris
offset by a $61.9 million reduction in inventory levels during the period.
Lanier used $222.1 million, $98.4 million and $107.5 million net cash in
investing activities during fiscal years 1999, 1998 and 1997, respectively.
During fiscal year 1999, Lanier used $171.1 million for acquiring new
businesses, $168.3 million of which related to the Agfa Acquisition.
Cash provided by financing activities was $90.1 million for the fiscal year
ended July 2, 1999, consisting of financing used in the Agfa Acquisition, net of
positive cash flows during the remainder of the fiscal year.
Lanier has no material commitments other than its supply agreements with
its vendors. Lanier will continue to make additional investment in facilities,
equipment and computer equipment in order to support its revenue growth.
Lanier's cash flow from operations, together with anticipated borrowing
arrangements, is expected to adequately finance its operating cash requirements
and capital expenditures for the next fiscal year. Lanier expects to fund future
acquisitions and long-term growth primarily with cash flows from operations,
borrowings under the Credit Facility and possible future sales of additional
equity or debt securities.
Capital expenditures for plant and equipment were $21.6 million for fiscal
year 1999, up $2.6 million from the total fiscal year 1998 expenditures. For
fiscal year 1999, $63.5 million was invested in equipment for rental to
customers, which is slightly less than the amount invested for fiscal year 1998.
CREDIT FACILITY
Prior to the Distribution, Lanier will incur debt under the Credit Facility
in connection with the payment of a cash payment of approximately $546 million
by Lanier to Harris immediately prior to the Distribution. As a result of this
incurrence of debt and the assumption or retention by Lanier of certain
indebtedness relating to Lanier's business, Lanier will have approximately $700
million of indebtedness net of cash on the Distribution Date.
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Lanier has executed a commitment letter with ABN AMRO Bank N.V., SunTrust
Bank, Atlanta and SunTrust Equitable Securities Corporation, Wachovia
Securities, Inc. and Wachovia Bank N.A. and expects to have definitive loan
documents in place prior to the Distribution.
Lanier anticipates that the Credit Facility will contain financial
covenants. In particular, Lanier expects that the Credit Facility will require
(i) a covenant regarding maintenance of a leverage ratio, which will be defined
as total debt divided by EBITDA (earnings before interest, taxes, depreciation
and amortization), (ii) an interest coverage covenant, which will be defined as
EBITDAR (earnings before interest, taxes, depreciation, amortization and rental
expense) divided by interest and rental expense and (iii) a minimum net worth
covenant. The Credit Facility will restrict the ability of Lanier and its
subsidiaries to pay dividends or make other distributions and to redeem,
purchase or otherwise acquire shares of its capital stock, and will prohibit any
such dividend, distribution, redemption, purchase or other acquisition during
the existence of a default or event of default thereunder.
Additionally, Lanier anticipates that the Credit Facility will contain
covenants which, among other things, will require production of financial
statements, notice of material litigation and material governmental and
environmental proceedings, compliance with laws and contractual obligations,
payment of taxes, maintenance of insurance and Year 2000 compliance and will
limit the incurrence of additional indebtedness, mergers, consolidations and
sales of assets, dividends, stock redemptions and the prepayment of other debt,
investments and acquisitions, capital expenditures, sales and leaseback
transactions and transactions with affiliates. The Credit Facility also will
contain customary events of default, including payment defaults, inaccuracies of
representations and warranties, violation of covenants and cross defaults to
other indebtedness of Lanier.
Lanier's indebtedness under the Credit Facility will be guaranteed by
Lanier's domestic subsidiaries.
Lanier may also incur additional indebtedness under the Credit Facility
from time to time for general corporate purposes, including working capital,
capital expenditures and future acquisitions.
In the fourth quarter of fiscal year 1999, Lanier sold receivables totaling
$36.5 million under its European asset securitization agreement. This
transaction is treated as a sale of receivables and therefore is not reflected
on the balance sheet. This amount is included in determining indebtedness as
stipulated in the dividend formula described in "Relationship Between Harris and
Lanier Following the Distribution -- Distribution Agreement" beginning on page
19.
IMPACT OF FOREIGN EXCHANGE
Lanier's international business is transacted in local currency. The impact
of translating the assets and liabilities of these operations to U.S. dollars is
included as a component of shareholder equity. At July 2, 1999 the cumulative
translation adjustment reduced shareholder equity by $33.5 million compared to a
reduction of $31.0 million at July 3, 1998.
Lanier utilizes exchange rate agreements with suppliers and foreign
currency hedging instruments to minimize the risks of international
transactions. Gains and losses resulting from currency rate fluctuations did not
have a material effect on Lanier's results in fiscal years 1999, 1998 or 1997.
SEASONALITY AND INFLATION
Lanier's management does not believe that Lanier's business is subject to
significant fluctuations based on seasonal effects.
Lanier's management does not believe that the rate of inflation has had a
material effect on the operating results of Lanier because, to the extent
feasible, Lanier has consistently followed a practice of adjusting its prices to
reflect the impact of inflation on wages and salaries for employees and costs of
purchased materials and services.
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MARKET RISK
Impact of Foreign Exchange. Lanier's international sales are generally
denominated in the currency of the customer, which exposes Lanier to
fluctuations in foreign currency exchange rates and to other material risks
associated with international operations. Lanier has not in the past suffered a
material adverse impact from currency fluctuations for any of the periods under
consideration. Lanier's risk from such activities has been reduced because
Lanier has been able to pay the expenses of its international operations in
local currencies, which has lessened the need for conversion into U.S. dollars.
In addition, Lanier utilizes exchange rate agreements which provided limited
protection against currency exchange risks. Factors that could impact the
effectiveness of Lanier's hedging program include volatility of currency markets
and the cost and availability of hedging instruments. A ten percent adverse
change in currency exchange rates for Lanier's foreign currency derivatives held
at July 2, 1999 would have an impact of approximately $15.7 million on the fair
value of such instruments. This quantification of exposure to the market risk
associated with foreign exchange financial instruments does not take into
account the offsetting impact of changes in the fair value of Lanier's foreign
denominated assets, liabilities, and firm commitments.
Gains and losses resulting from currency rate fluctuations did not have a
material effect on Lanier's results of operations in fiscal years 1999, 1998 or
1997, but Lanier's risk in this area may increase in this regard as Lanier's
international sales increase in volume and geographic distribution. The impact
of translating the assets and liabilities of those operations into U.S. dollars
is included as a component of Shareholder Equity.
Interest Rate Risk. The financial statements included in this document were
prepared based upon Lanier's current financing structure. Under this structure,
Harris provides financing to Lanier via its own lines of credit. Following the
Distribution, Lanier will arrange its own capital structure independent of
Harris. Although it is not possible to predict accurately the exact nature of
this capital structure or its related expense, Lanier does not expect an adverse
effect from this change.
IMPACT OF YEAR 2000
The Year 2000 statements set forth below are designated as "Year 2000
Readiness Disclosures" pursuant to the Year 2000 Information and Readiness
Disclosure Act.
Certain software and hardware systems are time sensitive. Older
time-sensitive systems often use a two-digit dating convention (e.g., "00"
rather than "2000") that could result in system failure and disruption of
operations as the Year 2000 approaches. The Year 2000 problem will impact
Lanier, its vendors and suppliers, customers, and other third parties that
interface with Lanier.
With regard to the Year 2000 problem, more than 40 project initiatives of
varying magnitudes have been identified throughout Lanier and its various
business operations. These initiatives relate to four basic aspects of Lanier
and its various business operations: internal information technology ("IT")
systems, including sales order processing, contract management, financial
systems and service management; internal non-IT systems, including office
equipment and test equipment; products; and material third-party relationships.
Each project has been assigned a leader and prioritized based on the size
of the task and the perceived business risk. Lanier has established a Year 2000
Task Force to manage Lanier's overall internal readiness and its business
continuity planning efforts, and has created a web site at www.lanier.com, on
which it provides detailed information and updates concerning Year 2000 issues,
Lanier's efforts to address such issues, and the Year 2000 compliance of its
products and internal systems. Lanier has substantially completed all of its
Year 2000 initiatives.
Internal IT Systems. Lanier has determined it needs to replace or modify
several of its software systems and is in the process of replacing or
outsourcing many of its time-sensitive software systems. In addition, Lanier has
programs for reprogramming other time-sensitive software and equipment. For
example, Lanier has replaced its accounts receivable and payable systems and its
internal purchasing system. Lanier has upgraded its general ledger system to be
Year 2000 compliant and has modified its sales order processing system, billing
system and its contract management system to be Year 2000 compliant. In October
1999, Lanier will transfer the compliant
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service system software to a new Year 2000 compliant Unix platform. As a result,
Lanier believes that it will be substantially complete with its internal IT
systems by October 31, 1999.
Internal Non-IT Systems. Lanier believes that a limited number of its
non-IT systems, such as office equipment and test equipment with date-sensitive
software and embedded microprocessors, may be affected. Lanier believes that its
exposure related to non-IT systems is minimal and that a disruption of any of
these systems will not materially inhibit its ability to conduct business
operations.
Products. Lanier has initiated formal programs to advise and work with
customers to resolve Year 2000 problems. Lanier's current product offerings are
Year 2000 compliant, with limited exceptions. Customers who own older generation
products which are not Year 2000 compliant have been notified of the issue and,
wherever possible, been given suggestions for manual overrides of the particular
product. However, Lanier believes it has no material exposure to contingencies
related to the Year 2000 issue for the products it has sold. Lanier has Year
2000 exposure in its operating systems and business systems; including
engineering, order fulfillment, program management, financial and administrative
functions. It is Lanier's belief that the greatest potential risk from the Year
2000 issue could be its inability to meet commitment dates on delivery of
product and has focused the majority of Lanier's effort and dedicated resources
to address this issue. In addition, Lanier believes that a limited number of the
non-information technology systems, such as office equipment and test equipment
with date-sensitive software and embedded microprocessors may be affected, and
evaluation and remediation are underway.
Material Third-Party Relationships. Lanier has also initiated
communications with significant suppliers, customers, and other relevant third
parties to identify and minimize disruptions to Lanier's operations and to
assist in resolving Year 2000 issues. Lanier has identified 40 key suppliers and
performed an in-depth analysis of the product lines provided to Lanier in order
to ensure that such products are Year 2000 compliant. Additionally, Lanier has
identified critical parts and components necessary to support its existing
product lines and is building safety stocks of these items prior to the end of
the calendar year 1999. However, there can be no certainty that the systems and
products of other companies on which Lanier relies will not have an adverse
effect on Lanier's operations.
The estimated cost for resolving Year 2000 issues was approximately $11.5
million with an approximate remaining balance of $0.4 million planned for fiscal
year 2000. These costs are generally not incremental to existing information
technology budgets; internal resources were re-deployed and timetables for
implementation of replacement systems were accelerated. The largest portion of
this expenditure is being used to replace existing software and hardware.
Approximately $5.2 million of the above total is related to investments in
hardware or other capitalizable costs or operating leases which will be
amortized in current or future periods. Estimates of the Year 2000 related costs
are based on numerous assumptions and there is no certainty that estimates will
be achieved and actual costs could be materially greater than anticipated.
Specific factors that might cause such differences include, but are not limited
to, the continuing availability of personnel trained in this area, the ability
to timely identify and correct all relevant computer programs, and similar
uncertainties.
Lanier is working to identify and analyze the most likely worst-case
scenarios, any of which could have a material adverse effect on Lanier's ability
to provide products and services to its customers. These possible scenarios
include the failure of water and power supplies, the failure of communications
and financial systems, major transportation disruptions, and lack of Year 2000
readiness of third-party vendors and customers. Lanier continues to develop
contingency plans to address potential Year 2000 problems relating to the
infrastructure and Lanier's business partners as potential problems are
identified. Despite such efforts, an infrastructure problem or combination of
the above-mentioned Year 2000 problems not within Lanier's control could have a
material adverse impact on Lanier's business and its results of operations.
EURO CONVERSION
On January 1, 1999, certain member nations of the EMU adopted a common
currency, the Euro. For a three-year transition period, both the Euro and
individual participants' currencies will remain in circulation. After January 1,
2002, the Euro will be the sole legal tender for EMU countries. The adoption of
the Euro affects a multitude of financial systems and business applications as
the commerce of these nations will be transacted in
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the Euro and the existing national currency. For fiscal year 1999, approximately
20.7% of Lanier's revenues were derived from EMU countries.
Lanier is currently addressing Euro-related issues and its impact on
information systems, currency exchange rate risk, taxation, contracts,
competition, and pricing. For fiscal year 1999, Lanier did not experience an
adverse impact or material expense related to the adoption of the Euro. All cost
associated with the adoption of the Euro has been expensed by Lanier as
incurred. Lanier has completed the Euro-related information systems conversion
for all information systems except for its European financial systems. Lanier
has implemented the Euro-compliant version of its European financial systems;
however, several program inefficiencies remain which can be resolved only by the
financial systems' vendor. Lanier's management expects that these inefficiencies
will be corrected by the vendor so that Lanier's first customer conversion will
occur before November 30, 1999.
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LANIER'S BUSINESS
GENERAL
Lanier is a worldwide independent supplier of copiers, facsimiles and other
related automated office imaging equipment. With over 1,600 sales and service
locations in more than 100 countries, Lanier markets these products and related
services, parts and supplies to customers both on a direct sales basis and
through a worldwide network of independent dealers. Lanier provides customers
with a wide array of customized document management solutions including black
and white digital and analog copiers, color copiers, facsimile machines,
multi-function devices, dictation equipment, computer based health care
information management systems, associated parts and supplies, and a variety of
related outsourcing services, including legal support services. Lanier sources
substantially all of these products from a variety of manufacturers, seeking out
the "best-of-breed." Selected products undergo rigorous testing by Lanier, and
upgrades are often recommended to the manufacturers in order to meet Lanier's
demanding standards.
Lanier derives its revenues from three primary sources: (i) sales and
rentals of equipment and related supplies; (ii) service of equipment under
maintenance agreements, consulting, facilities management and other professional
services; and (iii) finance income. Revenues from these three sources in fiscal
year 1999 were $808 million, $623 million and $38 million, respectively.
Lanier's revenues from these three sources in fiscal year 1998 were $722
million, $533 million and $33 million, respectively. Revenues from these three
sources in fiscal year 1997 were $704 million, $466 million and $30 million,
respectively. Lanier's revenues from the sale, servicing and financing of
copiers in fiscal years 1999, 1998 and 1997 were $1,036 million, $884 million
and $826 million, respectively. Lanier's revenues from the sale, servicing and
financing of facsimile machines in fiscal years 1999, 1998 and 1997 were $166
million, $150 million and $157 million, respectively. Lanier's revenues from the
sale, servicing and financing of dictation equipment in fiscal years 1999, 1998
and 1997 were $130 million, $131 million and $137 million, respectively.
Lanier's revenues from the sale, servicing and financing of other office
equipment in fiscal years 1999, 1998 and 1997 were $137 million, $123 million,
and $80 million respectively.
Lanier targets sales of its products to four primary markets: (i)
global/national or "key" accounts; (ii) major accounts; (iii) commercial users;
and (iv) specific vertical industries, such as the health care and legal
industries. Some of Lanier's national account customers include Abbott
Laboratories, Corning, Inc., CountryWide Home Loans, Federal Express, Merck &
Company, Inc., Minnesota Mining & Manufacturing Co. and the National Aeronautics
& Space Administration (NASA). No national account customer represents more than
1% of Lanier's total sales.
Lanier, headquartered in Atlanta, Georgia, was founded in 1934 as The
Lanier Company, a Southeastern distributor of "Ediphone" dictation machines.
Lanier entered the copier business in 1955 as an independent distributor of 3M
"Thermofax" dry process copiers. In 1977, Lanier was spun-off as a separate
public company from its then-parent corporation, Oxford Industries. Lanier, then
known as Lanier Business Products, was subsequently acquired by Harris in 1983.
In 1985, Lanier was incorporated in Delaware as Harris/3M Document Products,
Inc., a joint enterprise between Lanier Business Products, Inc., a subsidiary of
Harris, and the Minnesota Mining and Manufacturing Co. Harris purchased 3M's
interest in that venture in 1989 and changed the name of the company to Lanier
Worldwide, Inc.
INDUSTRY OVERVIEW
The document imaging and management industry consists of the production and
supply of various imaging products and supplies, as well as the provision of
pre-sale consulting services and after-market product services. Lanier's
competitors include the distribution units of large office equipment
manufacturers and other independent distributors. According to industry sources,
the total global market for its document imaging and management products and
services will grow from approximately $75 billion in 1999 to approximately $97
billion in 2002.
Companies in the document imaging industry sell products primarily through
three channels of distribution: (i) direct customer sales; (ii) dealer sales;
and (iii) retail sales. Direct customer sales include sales calls by sales force
personnel, sales through telephone marketing and internet sales. Dealer sales
result from customer calls
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performed by independent or company-owned dealer outlets. Retail sales include
sales of low-end products, typically through national retail outlets or local
smaller retailers.
Traditionally, the products offered by companies in the document imaging
industry have used analog technology. Lanier's management believes, however,
that customers' increasing use of digital technology will eventually lead to the
replacement of analog products with digital products. According to industry
sources, approximately 378,000 digital copiers were sold in the United States in
1998 (or approximately 19.6% of new copiers shipped in 1998), an increase of
1,114% since the end of 1996. Industry sources predict that, by the end of 2003,
approximately 87% of all new copier placements will be digital machines. Digital
products, unlike analog products, can connect and communicate with other office
imaging equipment, enabling customers to more efficiently connect and utilize
their document management solutions over a wide array of configurations. Digital
products may also offer a wider array of more useful features, such as higher
quality copies, color capability, finishing capability and multi-function
capability. The market trend toward digital technology has also led document
management companies to include training for sales, service, maintenance and
help desk personnel with respect to the new digital products.
As document imaging products and services have become more complex and
service-intensive, customers have begun to seek outsourcing services, such as
facilities management services, and professional services that require expertise
in document imaging and management, such as consulting services and systems
integration services.
The document imaging industry as a whole remains highly fragmented, with
only a few large companies. Many customers purchase products through independent
dealers that operate only in a particular geographic area. As digital technology
replaces analog technology, many of these independent dealers may not have the
training to sell or service the new technology. Further, as customers
consolidate their accounts in order to integrate their document management
solutions, they may seek providers that have a larger geographic scope. Thus,
smaller independent dealers may determine to sell to larger companies in the
industry who have more training capability and cover a larger geographic area.
Further, the fragmented nature of the industry allows for consolidation in order
to achieve economies of scale and lower operating expenses on a company-wide
basis.
LANIER PRODUCTS AND SERVICES
Lanier offers its customers a comprehensive solution to their document
management needs through products and services that take advantage of
technological advancements and Lanier's experience in the document imaging and
management industry.
PRODUCTS
Lanier offers a full range of document copiers, from desktop units to high
speed and high volume systems. Within this range, Lanier offers both color
copiers and black and white copiers, as well as both analog and digital copiers.
Lanier offers several devices that perform more than one traditional function
that can print multiple original copies direct from the customer's networked
systems as a finished (i.e., stapled, collated, etc.) document product.
Lanier also offers a full range of facsimile machines. Lanier offers
multi-function products that can meet customers' facsimile needs, as well as
traditional stand-alone machines.
Finally, Lanier offers a range of both digital and analog dictation
products.
SERVICES
Product Support. Lanier's service force provides a range of product-support
services from traditional on-site repairs to after-market supplies such as toner
and paper products. Lanier supports many of its customers with around the clock,
seven days a week on-site service, and supports all of its customers' service
and help needs with a sophisticated logistics, call reception/dispatch and
multi-level help desk and hotline. Additionally, Lanier provides customer
application training and support if needed by the customer.
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Lanier has a worldwide service force of approximately 2,900 employees.
Lanier continually trains its sales force on new products, technologies, and
sales techniques. Because of the industry trend toward digital technology and
new systems, Lanier's management believes that its training and instruction
services, as well as its help desk and hotline, provide Lanier with an advantage
over its competitors.
Outsourcing Services. Lanier provides its customers with a wide range of
consulting and professional services, such as facilities management, systems
integration and other consulting services.
Through its facilities management services, Lanier can equip, staff and
manage most aspects of a customer's reprographic and document management needs
at the customer's facility. In addition to copying and printing, Lanier provides
file room maintenance, decentralized copier management, facility mail and
courier services and address list maintenance. Lanier seeks to work with the
customer to identify methods in which Lanier can help meet all of the customer's
document management needs, whether by implementation of new products or by
systems integration.
Lanier's systems integration services offer customers the ability to
leverage Lanier's substantial experience in the areas of connectivity and
efficiency of document management networks. Lanier helps customers enhance the
performance of their network by either adding new or enhanced technology
products or increasing the efficiency of the current system. As an example,
Lanier offers its health care clients a system that allows its customers to
connect a digital dictation station with the hospital database containing
patient records in order to enable doctors to view a patient's information while
at the same time dictating a diagnosis or prescription for the patient.
DOCutivity(TM) Approach. Lanier has implemented its DOCutivity(TM) approach
in order to improve its customers' document management productivity by
strategically integrating Lanier's products and services. DOCutivity(TM)
streamlines the process for customers and allows Lanier to provide each customer
with customized document analysis that will allow the customer to improve its
document productivity and efficiency. Each member of the Lanier sales force is
trained in the DOCutivity(TM) approach and analysis.
Through the DOCutivity(TM) approach, Lanier assesses the customer's
document management challenges and goals, while extensively analyzing the
customer's existing capabilities. Lanier's sales personnel examine the
customer's office and workgroup functions and determine the financial impact of
implementing a new, more productive and efficient document management solution
for the customer. Lanier's sales personnel then offer solutions to the customer
based on Lanier's extensive industry knowledge and experience, for an improved
document management strategy.
For example, one recent oil refinery customer sought to replace its analog
copiers supplied by multiple vendors on a cost-effective basis. Lanier sales
personnel used the DOCutivity(TM) analysis to implement a strategy to: (i)
reduce the customer's high cost of copying and print cartridges associated with
multiple vendors; (ii) improve efficiency by eliminating manual distribution of
documents; and (iii) eliminate redundancy in the document management cycle.
Lanier proposed an all-digital, multi-function device configuration connected to
the customer's Local Area Network. Through this configuration, Lanier helped the
customer (i) reduce costs by capturing original prints and their corresponding
replication and (ii) eliminate redundancy by combining the creation of originals
with both duplication and distribution. Overall, Lanier estimated that the
DOCutivity(TM) approach saved the customer approximately $144,000 per year in
excess costs.
PRODUCT FINANCING
A portion of Lanier's operating income arises from the financing of its
customers' purchases of Lanier products. On average, 46% of Lanier's aggregate
sales in the United States, Puerto Rico, Canada and Australia are financed
through leases that typically have a term of 3 years. In Europe, 16% of Lanier's
sales derive from rental arrangements that differ from leases primarily because
customers may terminate the rental agreement more quickly and easily. Lanier's
ability to provide financing at competitive rates and realize operating income
is highly dependent upon its own costs of borrowing, which, in turn, depend upon
Lanier's credit standing. Significant changes in such standing could reduce the
profitability of Lanier's financing business and/or make
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Lanier's financing less attractive to customers. Lanier cannot be certain that
it can maintain credit standing sufficient to realize profits on the portion of
its revenues derived from financing arrangements.
LANIER'S TARGET MARKETS
Lanier targets four primary markets: (i) global/national or "key" accounts;
(ii) major accounts; (iii) commercial accounts; and (iv) specific vertical
industry markets, such as the health care and legal industry.
National or "key" accounts are large corporations that tend to require full
document imaging and management throughout the customer's entire organization,
whether that organization is regional, national or global. Lanier management has
targeted these accounts with multiple sales and service entries as a growth
vehicle for Lanier because these accounts tend to generate substantial and
recurring revenues over longer-term contracts.
Some of Lanier's national or "key" accounts include Abbott Laboratories,
Corning, Inc., Countrywide Home Loans, Federal Express, Merck & Company, Inc.,
Minnesota Mining & Manufacturing Co. and the National Aeronautics & Space
Administration (NASA). No national account customer represents more than 1% of
Lanier's total sales.
Lanier has set specific criteria to define major accounts and identified a
list of these accounts in each district. Management is then focused on these
accounts utilizing major account representatives and the DOCutivity(TM)
methodology.
Lanier has also targeted commercial accounts, which are local or small
businesses. Sales to commercial accounts typically consist of the sale of Lanier
products, coupled with a maintenance and supply agreement.
Lanier also targets specific vertical industries that tend to involve more
intensive use of Lanier's products, such as the health care and legal
industries. Because of its heavy use of documents, Lanier sales and service
personnel target the legal market for the full range of Lanier products and
services. Lanier management believes that Lanier has a reputation for quality
products and superior after-sales service and support within the legal market.
Because of the legal market's use of multiple products that Lanier sells and
services, Lanier management believes that the legal market represents a
significant source for cross-selling opportunities.
Similarly, Lanier targets the health care industry because Lanier's
management believes it offers continued growth opportunities. Over 50% of the
hospitals in the United States use Lanier digital dictation systems, often in
multiple areas of the hospital. As digital systems become more accepted in other
areas of Lanier products (particularly copiers), management believes that Lanier
can leverage its reputation for digital dictation systems with these hospitals
in order to become the provider of choice for other products. In addition, the
increased complexity and connective nature of these products will allow Lanier
to offer to its health care customers its expertise in systems integration and
other consulting services.
STRATEGY
Lanier's goal is to become the leading global provider of document imaging
products and related services and support. In order to accomplish this goal,
Lanier intends to use the following strategies:
- continue to cultivate its "best of breed" sourcing and distribution
relationships;
- deliver integrated document management solutions to its customers;
- focus on customer satisfaction and retention;
- maintain and develop its effective marketing initiatives;
- attract, retain and incentivize its employees; and
- continue to add revenue and operating income through selective
acquisitions.
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Cultivate Sourcing and Distribution Relationships
Lanier has historically sought out the "best of breed" in its products by
sourcing products from a variety of manufacturers. Selected products undergo
rigorous testing by Lanier, and Lanier often recommends upgrades to its
suppliers. Lanier intends to continue to seek the best products available
throughout the world in order to offer the best possible products to its
customers. In particular, in order to maintain pace with the industry-wide shift
to digital products, Lanier intends to expand its offering of digital document
imaging products. Lanier believes that its current supplier relationships will
allow it to offer high-quality document imaging products in each segment of the
digital market. Lanier also intends to explore new relationships as
manufacturers develop new multi-function digital machines.
Deliver Integrated Document Management Solutions
Lanier sales personnel have been trained to approach every sales
opportunity using the DOCutivity(TM) sales method. Lanier seeks to offer its
customers a full range of products and services and to address its customers'
document production and management needs through an integrated document
solution. Management believes that this integrated DOCutivity(TM) approach
enables Lanier to be more successful in securing larger, national customers that
seek such comprehensive document solutions and generate substantial and
recurring revenues over longer term contracts. Management also believes that its
DOCutivity(TM) approach allows Lanier to cross sell its products and services,
as they comprise components of an integrated solution. Additionally, management
believes that as document management technology grows more complex, many
customers, particularly legal and other professional service providers, will
seek to outsource more of their document management functions. Lanier seeks to
continue to grow its facilities management business in order to meet the growth
in this document outsourcing market.
Focus on Customer Satisfaction
Lanier focuses on customer satisfaction as an opportunity to grow its
business through continuing and expanding its sales with existing customers.
Lanier analyzes its clients' document production and management needs and
challenges through the eyes of its customers, an approach Lanier refers to as
Customer Vision(TM). Management believes that this perspective allows Lanier to
align its business practices and processes with the way that its customers wish
to do business, build customer loyalty and foster long term customer
relationships. Lanier provides the Performance Promise(TM), which Lanier
believes is the document management industry's first and most comprehensive
product guarantee that covers all product lines and guarantees product
performance with 99% uptime, as well as a service availability guarantee. Lanier
also offers a 24 hour, seven day a week help desk to provide customer service
support by highly trained personnel that management believes helps contribute to
its reputation as a leading service provider in the industry. Lanier believes
that it has achieved customer satisfaction levels exceeding 90% in each of its
target markets in each of the last two fiscal years and has received customer
satisfaction awards from several of its customers, including Abbott
Laboratories, DuPont, Kinko's and Pacific Bell.
Maintain and Develop Effective Marketing Initiatives
Lanier believes that it has a high quality sales force that is trained in
effective sales techniques, sophisticated document imaging products, such as
digital and multi-function machines, and Lanier's DOCutivity(TM) sales approach.
Lanier seeks to capitalize on its trained sales force by cross selling its
products and services to its customers through the integrated DOCutivity(TM)
approach. Management also seeks to grow its business by marketing its global
presence to multi-national customers that seek a worldwide product and service
provider. Lanier is also expanding its low cost telemarketing initiative, which
currently accounts for a majority of the sales of its supplies and lower end
products. Lanier is also seeking to develop marketing and sales of its products
over the Internet.
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Attract, Retain and Incentivize Employees
Management believes that Lanier can stimulate internal growth by continuing
to attract and retain high quality employees. Management also believes that
Lanier can increase the productivity of its sales personnel through the use of
performance benchmarks and other incentive opportunities. Lanier management
believes that the ability to offer equity incentives to its employees that match
Lanier's performance as a stand-alone company will aid its efforts to increase
its employees' productivity.
Grow through Selective Acquisitions
Lanier will actively seek strategic acquisitions that complement its
existing businesses, either in Lanier's existing markets or in new markets.
Lanier seeks acquisition targets that embody a similar culture to Lanier's and
that management believes it can successfully integrate into Lanier's existing
businesses. Lanier seeks to make acquisitions that will enable Lanier to
leverage cost saving opportunities and increase revenue and operating income.
During the last three fiscal years, Lanier has acquired 18 businesses, including
the Copying Systems Division of Agfa in July 1998. The Agfa Acquisition added
$201.5 million in revenues for the fiscal year ended July 2, 1999, and doubled
Lanier's sales and market size in the European office equipment market.
EMPLOYEES
Lanier employs approximately 8,700 individuals throughout the world,
including 2,100 sales personnel. None of Lanier's United States employees is
covered by a collective bargaining agreement. Management believes that Lanier
has good relations with its employees.
SALES AND MARKETING
Lanier distributes its sales personnel both geographically and by target
market. Lanier operates domestically from 106 district offices in the United
States and operates internationally through subsidiaries and branches located in
27 countries throughout the world. Lanier is represented through independent
distributors in over 80 additional countries. Overall, Lanier operates over
1,600 sales and service locations throughout the world. Lanier's Global Accounts
Program enables its international customers to make supplier and equipment
selections on a worldwide basis through one agreement in order to improve the
customer's purchasing power, office productivity and operating efficiency.
Lanier has separate sales groups focused on each of its target markets, with
sales personnel dedicated to each of the global/national, major, commercial,
health care and legal target markets.
INTERNATIONAL OPERATIONS
Net sales from international operations were $569.2 million, or 39.8% of
Lanier's total net sales for fiscal year 1999 compared with $371.5 million, or
29.6%, for fiscal year 1998. Foreign operations represented 50.4% of long-lived
assets as of July 2, 1999, compared to 23.0% of long-lived assets as of July 3,
1998. Lanier's products are primarily produced in Asia.
The particular economic, social and political conditions for business
conducted outside of the United States differ from those encountered by domestic
operations. Management of Lanier believes that the composite business risk for
Lanier's international operations as a whole is somewhat greater than that faced
by its domestic operations as a whole. Lanier's international operations are
subject to political, economic and other risks inherent in operating in
countries outside the United States, including possible adverse government
regulation, imposition of import and export duties and quotas, currency
restrictions, price controls, potentially burdensome taxation and/or other
restrictive government actions. See "Risk Factors -- Lanier is Subject to Risks
Related to International Operations" on page 11. Nevertheless, Lanier's
management believes that these risks are offset by the diversification of
Lanier's international operations.
Financial information regarding Lanier's domestic and international
operations is contained in Note O to Lanier's Consolidated Financial Statements.
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SUPPLIERS
Lanier sources its products from multiple suppliers throughout the world,
including Ricoh, Toshiba, Canon, Sharp and Okidata. Although Lanier has
contractual relationships with many of its suppliers, Lanier continually seeks
the best products to offer to its customers and does not enter into exclusive
arrangements with any of its suppliers. Management does not believe that Lanier
depends on any one particular supplier.
TRADEMARKS AND LICENSES
Lanier distributes its products principally under the Lanier trademark.
Lanier expects to begin selling and servicing Hewlett-Packard's Mopier line of
products under the Hewlett-Packard trademark, in addition to products sold under
the Lanier trademark.
COMPETITION
Lanier operates in highly competitive markets. Lanier's competitors include
the distribution units of large office equipment manufacturers and independent
distributors, as well as office superstores and consumer electronics chains. As
digital and other new technology develops, Lanier may find itself competing with
new distribution channels, including computer distributors and value added
resellers, for products containing new technology. Principal areas of
competition in these markets include price and product capabilities, quality and
speed of post-sales service support, availability of equipment, parts and
supplies, speed of delivery, financing terms and availability of financing,
leasing or rental programs.
PROPERTIES
Lanier generally leases its business properties, with the exception of two
facilities that consist of a total of approximately 200,000 square feet located
in Wilmington, Delaware and Tucker, Georgia, neither of which are material to
the operations of Lanier as a whole. Lanier leases a total of approximately 1.6
million square feet of space for its business operations in the United States.
Management of Lanier believes that the properties Lanier occupies are, in
general, suitable and adequate for the purpose for which Lanier utilizes them.
LEGAL PROCEEDINGS
From time to time, as a normal incident of the nature and kind of business
in which Lanier is engaged, various claims or charges may be asserted and
litigation commenced against Lanier. In the opinion of Lanier's management, no
current claim or litigation would result in a material adverse effect on
Lanier's results of operations or financial condition.
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LANIER'S MANAGEMENT
BOARD OF DIRECTORS
The following table sets forth information as to the persons who are
expected to serve as directors of Lanier following the Distribution. As provided
in Lanier's restated certificate of incorporation, Lanier's board of directors
will be divided into three classes. The table sets forth the names of the
directors of each class and their original terms. Directors in each class
initially will serve until the annual meeting of stockholders held in the year
in which the term for such class expires and will serve thereafter for
three-year terms. Lanier initially intends to have a board of directors that
will consist of seven directors, two of whom are officers of Lanier. Information
concerning directors is set forth below:
<TABLE>
<CAPTION>
TERM POSITION WITH LANIER AND PRINCIPAL
NAME AGE EXPIRES POSITION BUSINESS AFFILIATIONS DURING PAST FIVE YEARS
---- --- ------- -------- --------------------------------------------
<S> <C> <C> <C> <C>
Wesley E. Cantrell............. 64 2002 Chairman of the Chief Executive Officer since March, 1987.
Board and Chief President, Lanier Business Products, 1977 to
Executive Officer 1987. Executive Vice President and National
Sales Manager, 1972 to 1977. Vice President,
1966 to 1972. Employed by Lanier since 1955.
Member of the board of directors of Ann
Taylor Stores Corp., Environmental Design
International Ltd. and Impact Ministries, a
not-for-profit organization, and member of
the advisory board of First Union National
Bank of Atlanta.
C. Lance Herrin................ 58 2001 President and Chief Chief Operating Officer since July, 1998.
Operating Officer Executive Vice President and General
Manager - U.S. Operations, 1993 to 1998.
Executive Vice President and General
Manager - Imaging Systems Division, 1987 to
1993. Executive Vice President, Lanier
Business Products, 1982 to 1987. Senior Vice
President, 1981 to 1982. Vice President,
1977 to 1981. Employed by Lanier since 1967.
Sidney E. Harris............... 49 2000 Director Dean, J. Mack Robinson College of Business,
Georgia State University since 1997. From
1987 through July 1997, Professor of
Management at the Peter F. Drucker Graduate
Management Center at the Claremont Graduate
School, Claremont, California. Director of
TransAmerica Investors, Inc., ServiceMaster
Company and Amresco, Inc.
David H. Hughes................ 55 2001 Director Chairman and Chief Executive Officer of
Hughes Supply, Inc. since November 1986.
Director of SunTrust Bank, Inc. and Brown &
Brown, Inc.
</TABLE>
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<TABLE>
<CAPTION>
TERM POSITION WITH LANIER AND PRINCIPAL
NAME AGE EXPIRES POSITION BUSINESS AFFILIATIONS DURING PAST FIVE YEARS
---- --- ------- -------- --------------------------------------------
<S> <C> <C> <C> <C>
Amos R. McMullian.............. 61 2000 Director Chairman and Chief Executive Officer of
Flowers Industries, Inc. Employed by Flowers
Industries, Inc. (or its predecessors) since
1963. Director of Keebler Foods Company.
Clarence B. Rogers, Jr......... 69 2002 Director Chairman of the Executive Committee of the
Board of Directors of Equifax, Inc. Director
of Sears Roebuck & Co., Morgan Stanley Dean
Witter & Co., Briggs & Stratton Corporation,
Oxford Industries, Inc. and ChoicePoint Inc.
John F. Ward................... 56 2002 Director Chairman, President and Chief Executive
Officer of Russell Corp. since April 1998.
President of J.F. Ward Group from September
1996 to April 1998. Chief Executive Officer
of Hanes Group and Senior Vice President of
Sara Lee Corp. from 1993 to September 1996.
</TABLE>
COMMITTEES OF THE BOARD OF DIRECTORS
Lanier's board of directors will establish three standing committees to
assist in the discharge of its responsibilities. The principal functions of each
committee are described below.
AUDIT COMMITTEE
The Audit Committee will assist the board of directors in ensuring that
Lanier's financial, auditing and reporting practices, procedures and controls
are within acceptable limits of sound practice and in accordance with applicable
laws and regulations. The Audit Committee will meet periodically with the
independent auditors, together with representatives of management, as
appropriate, for the purpose of reviewing the scope and results of the annual
audit of the financial statements and the recommendations of the auditors. The
Audit Committee will also evaluate the professional competency of the financial
staff and internal auditors, review the scope of the internal audit program,
review the nature and extent of non-audit professional services performed by the
auditors and annually recommend to the board of directors the firm of
independent public accountants to be selected as auditors of Lanier. From time
to time the Audit Committee may also undertake special projects, such as
reviewing Lanier's environmental policies.
NOMINATING AND COMPENSATION COMMITTEE
The Nominating and Compensation Committee will review and evaluate plans
for the development, training and utilization of Lanier's management resources;
review Lanier's compensation philosophy and will establish the compensation of
officers of Lanier other than the chief executive officer and president, whose
compensation will be recommended by the Nominating and Compensation Committee
and approved by all of the outside directors; and administer Lanier's stock
incentive and stock based compensation plans and other incentive plans. The
Nominating and Compensation Committee will also oversee the financial
administration and operation of Lanier's various retirement and pension plans,
including the selection and review of the performance of the investment funds
and the independent investment advisors for the plans.
The Nominating and Compensation Committee will manage succession at the
executive officer level and identify and promote candidates for and to executive
positions; identify, evaluate and recommend director nominees to the board of
directors to fill vacancies and to be elected at the annual meeting of the
stockholders; recommend directors' compensation and benefit plans to the board
of directors; recommend committees of the
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board of directors and committee members; set meeting schedules for the board of
directors and recommend meeting schedules for the committees; and facilitate the
board of directors' evaluation of its effectiveness. The committee will consider
suggestions for director nominees from all sources, including stockholders. Any
stockholder suggestion, together with an appropriate biographical summary,
should be sent to the Secretary of Lanier. In addition, Lanier's bylaws
establish certain requirements concerning stockholder nominations for election
of directors, including that notice of such nominations be delivered to the
Secretary of Lanier not less than 90 nor more than 120 days prior to the date of
the annual meeting of stockholders. Each notice of nomination is required to
contain the name and address of the stockholder who intends to make the
nomination; the name, address and written consent of the nominee and such other
nominee information as would be required to be disclosed in a proxy
solicitation.
EXECUTIVE COMMITTEE
The Executive Committee will be authorized to evaluate and review Lanier's
financial position, capital structure, significant capital asset transactions,
major acquisitions and divestitures, and during the intervals between the
meetings of the board of directors, to the extent permitted by law, to exercise
all of the powers of the board of directors (except for certain matters reserved
for the board of directors) in the management of the business of Lanier.
DIRECTORS' COMPENSATION
Non-employee directors will receive an annual retainer fee of $30,000. In
addition, non-employee directors who serve on the standing committees will
receive an additional annual fee of $1,500 for their services on each committee,
or $3,000 if serving as chairperson of a committee.
Each non-employee director will also receive $1,000 for attendance at each
board meeting. In addition, each non-employee director will receive $800 for
attendance at each committee meeting and for participation in a telephonic or
video conference meeting. Each non-employee director will also be reimbursed for
out-of-pocket expenses incurred in connection with attendance at board and
committee meetings. In addition, each non-employee director will be provided
travel, accident and disability insurance in the event that the director is
involved in an accident while traveling on business relating to Lanier.
Under the Lanier Stock Plan, which will be adopted in connection with the
Distribution, each non-employee director will be granted an option to purchase
10,000 Lanier Shares on the later of the Distribution Date or the date such
director joins Lanier's board of directors and thereafter, beginning in 2000,
will automatically be granted an option to purchase 2,000 Lanier Shares on the
first business day of the month following the month in which the annual meeting
is held. The options will be non-statutory options for tax purposes and will be
priced at 100% of the fair market value on the date of grant. Fifty percent of
the options will become exercisable on the first anniversary of the date of
grant and 25% on each of the next two succeeding anniversary dates; however, any
options outstanding for more than one year at the time a Change in Control (as
defined in the Lanier Stock Plan) of Lanier occurs will become immediately
exercisable. In the event of a director's retirement, vested options may be
exercised for three years thereafter; in the event of a director's termination
of service on the board of directors upon expiration of the director's term on
the board prior to retirement, vested options may be exercised for three months
thereafter; and in the event of a director's death or disability, vested options
may be exercised for twelve months thereafter. In no event may such options be
exercisable more than ten years after the date of grant. Neither Lanier's board
of directors nor any committee of the board of directors has any discretion with
respect to options granted to non-employee directors.
Under the Lanier Directors Deferred Compensation Plan (the "Directors'
Plan"), which will be adopted in connection with the Distribution, each
non-employee director may also elect to defer all or a portion of his or her
fees. A director's account will be credited with a number of units of Lanier
common stock equivalents based upon the fair market value of the Lanier Shares
on the date the fees otherwise would be paid. Once amounts are deferred they are
only payable following a director's resignation, retirement or death. Each
Lanier common stock unit will be credited with dividend equivalents, which are
deemed reinvested in additional Lanier common stock units on the dividend
payment date. Amounts deferred under the Directors Plan will be paid in whole
shares of
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Lanier common stock and in cash for any factional shares as soon as practicable
following resignation, retirement or death. Within ninety days following a
Change in Control (as defined in the Directors' Plan), Lanier shall pay to each
director (or former director) a cash lump sum payment equal to the then
remaining balance in each such director's account.
In connection with the Distribution, each of the directors and executive
officers (including those named in the Summary Compensation Table below) will
enter into an indemnification agreement with Lanier pursuant to which each
director and executive officer shall be indemnified against expenses (including
attorneys' fees, judgments, fines, and amounts paid in settlement) actually and
reasonably incurred in connection with any threatened, pending, or completed
action, suit, or proceeding, whether civil, criminal or administrative or
investigative, to which he or she was, is, or is threatened to be made a party
by reason of being or having been such a director or officer, to the full extent
allowable under Delaware law.
Lanier has adopted a policy that directors retire from the board of
directors effective at the end of the month in which they reach age seventy-two.
In addition, a director is expected to automatically tender his or her
resignation in the event of retirement or other significant change in status
from the positions held at the time of election to the board of directors,
although the board of directors may opt to have such director continue to serve
on the board of directors.
EXECUTIVE OFFICERS
Listed below is certain information concerning individuals who are expected
to serve as executive officers of Lanier following the Distribution. These
individuals are currently responsible for the management of Lanier's business as
conducted in its capacity as a subsidiary of Harris.
<TABLE>
<CAPTION>
POSITION WITH LANIER AND PRINCIPAL
NAME AGE CURRENT POSITION BUSINESS AFFILIATIONS DURING PAST FIVE YEARS
---- --- ---------------- --------------------------------------------
<S> <C> <C> <C>
Wesley E. Cantrell.......... 64 Chairman of the Board and Chief Executive Officer since March, 1987.
Chief Executive Officer President, Lanier Business Products, 1977 to
1987. Executive Vice President and National
Sales Manager, 1972 to 1977. Vice President,
1966 to 1972. Employed by Lanier since 1955.
Member of the board of directors of Ann
Taylor Stores Corp., Environmental Design
International Ltd. and Impact Ministries, a
not-for-profit organization, and member of
the advisory board of First Union National
Bank of Atlanta.
C. Lance Herrin............. 58 President and Chief Chief Operating Officer since July, 1998.
Operating Officer Executive Vice President and General
Manager -- U.S. Operations, 1993 to 1998.
Executive Vice President and General
Manager -- Imaging Systems Division, 1987 to
1993. Executive Vice President, Lanier
Business Products, 1982 to 1987. Senior Vice
President, 1981 to 1982. Vice President,
1977 to 1981. Employed by Lanier since 1967.
</TABLE>
48
<PAGE> 62
<TABLE>
<CAPTION>
POSITION WITH LANIER AND PRINCIPAL
NAME AGE CURRENT POSITION BUSINESS AFFILIATIONS DURING PAST FIVE YEARS
---- --- ---------------- --------------------------------------------
<S> <C> <C> <C>
James A. MacLennan.......... 40 Executive Vice President and Executive Vice President and Chief Financial
Chief Financial Officer Officer since November, 1998. Vice
President, Finance, 1997 to 1998. Vice
President, Accounting, Noble Drilling Corp.,
1995 to 1997. Director-Risk/Audit, Noble
Drilling Corp., 1993 to 1995. Financial
Reporting Manager, Esso Australia, Ltd.,
1990 to 1993. Affiliate Advisor, Exxon Co.,
Intl., 1987 to 1990. Financial Analyst, Esso
UK, 1985 to 1987.
David J. Marini............. 45 Executive Vice President and General Manager, Worldwide Field Operations,
General Manager, Worldwide since July, 1998. Executive Vice President
Field Operations since 1991. Vice President, Scientific
Calculations Division of Harris Corporation,
1983 to 1991.
Paul M. Anderson............ 51 Vice President-Worldwide Vice President, Worldwide Marketing since
Marketing July, 1998. Vice President since 1989.
Employed by Lanier since 1972.
Vera M. Arthur.............. 44 Vice President-Human Vice President, Human Resources since April,
Resources 1999. Vice President, Marketing, 1993 to
1999. Various management positions, 1986 to
1993. International Marketing Services
Manager, Sangamo Weston, 1984 to 1986.
Export Operations Manager, Lanier Business
Products, 1979 to 1984.
Brian R. Bergin............. 52 Vice President-Worldwide Vice President, Worldwide Sourcing and
Sourcing and Development Development since November, 1998. Vice
President since 1992. Employed by Lanier
since 1976.
J. Michael Kelly............ 52 Vice President, General Corporate Secretary since January, 1999,
Counsel and Secretary Vice President since 1989. General Counsel
since 1987. Counsel, Harris Corporation,
1980 to 1987.
Timothy A. Vellek........... 44 Vice President-Worldwide Vice President, Worldwide Service since
Service August, 1998. Vice President since 1991.
Employed by Lanier since 1978.
</TABLE>
There is no family relationship between any of Lanier's executive officers
or directors and there are no arrangements or understandings between any of
Lanier's executive officers or directors and any other person pursuant to which
any of them was elected an officer or director, other than arrangements or
understandings with directors or officers of Lanier acting solely in their
capacities as such. Generally, following the Distribution, Lanier's executive
officers will be elected annually and will serve at the pleasure of Lanier's
board of directors.
Lanier has established suggested stock ownership guidelines for its
Chairman and Chief Executive Officer, President and Chief Operating Officer and
certain vice presidents. Target ownership levels are based on the officer's base
salary (three times base salary for the Chairman and Chief Executive Officer,
two and one half times base salary for the President and Chief Operating
Officer, two times base salary for executive vice presidents and up to one times
base salary for certain vice presidents). Attainment of the target levels may be
spread over a five-year period and the suggested ownership level is 25% of
target after two years and an additional 25% each year thereafter. All shares
owned (or beneficially owned) by the officer will be counted towards the target,
including, for example, shares owned for the officer's account under a qualified
retirement plan.
49
<PAGE> 63
HISTORICAL COMPENSATION OF LANIER EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
annual and long-term compensation for services to Lanier for Lanier's chief
executive officer and the other four most highly compensated executives of
Lanier. During the fiscal years ended July 2, 1999, July 3, 1998 and June 27,
1997, the individuals were compensated in accordance with Harris' plans and
policies. All references in the following tables to stock and stock options
relate to awards of stock and stock options granted by Harris. Harris has not
granted stock appreciation rights. Such amounts do not reflect the compensation
such persons will receive following the Distribution. All share data have been
adjusted to reflect a two-for-one stock split effected by Harris in September
1997. Harris options held by Lanier employees will be replaced by Lanier
Options. The option price and number of shares subject to each Lanier Option
will be adjusted so that the aggregate difference between the market price and
the option price will be equal for the Harris Options and the Lanier Options.
The number of Lanier Shares subject to each Lanier Option will be determined by
multiplying the number of shares subject to each Harris Option by the Lanier
Option Adjustment Ratio, and the option price of each Lanier Option will be
determined by dividing the price of each Harris Option by the Lanier Option
Adjustment Ratio.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
-------------------------
AWARDS PAYOUT
---------- ------------
ANNUAL COMPENSATION UNDERLYING
-------------------------------------- OPTIONS/ LTIP ALL OTHER
NAME AND PRINCIPAL FISCAL OTHER ANNUAL SARS PAYOUT(2)(3) COMPENSATION(4)
POSITION YEAR SALARY($) BONUS($) COMPENSATION(1) (#) ($) ($)
------------------ ------ --------- -------- --------------- ---------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Wesley E. Cantrell....... 1999 337,886 182,600 24,000 25,000 315,000 27,879
Chairman and 1998 312,115 352,501 26,400 25,986 407,100 26,386
Chief Executive Officer 1997 300,000 403,100 15,200 25,988 302,500 25,411
C. Lance Herrin.......... 1999 228,077 243,180 9,600 10,000 126,000 20,412
President and Chief 1998 218,077 255,585 10,560 8,000 159,300 20,046
Operating Officer 1997 206,154 292,320 6,080 8,000 176,000 7,677
James A. MacLennan(5).... 1999 165,385 44,886 0 1,800 0 8,281
Executive Vice 1998 152,462 48,921 0 0 0 1,968
President and 1997 43,269 12,499 0 0 0 132
Chief Financial Officer
David J. Marini.......... 1999 182,115 124,948 7,200 8,000 94,500 11,793
Executive Vice
President and 1998 169,038 181,070 7,920 13,658 119,475 11,538
General Manager, 1997 161,539 174,825 4,560 11,040 137,500 3,451
Worldwide Field
Operations
Paul M. Anderson......... 1999 124,615 101,700 1,920 3,300 31,500 10,382
Vice President -- 1998 88,654 122,283 2,640 2,000 39,825 7,443
Worldwide Marketing 1997 81,200 123,468 1,520 2,000 63,800 4,141
</TABLE>
- ---------------
(1) None of the executive officers named in the Summary Compensation Table
received personal benefits in excess of the lesser of $50,000 or 10% of
annual salary and bonus for fiscal 1999, 1998, or 1997; the amounts reported
represent dividend equivalent payments on outstanding performance shares
granted under the Harris Stock Incentive Plan for which the performance
period had not expired.
(2) The value of performance shares earned for the three-year performance period
ended July 2, 1999 (Mr. Cantrell -- 8,000 shares; Mr. Herrin -- 3,200
shares; Mr. Marini -- 2,400 shares; and Mr. Anderson -- 800 shares) is based
upon the closing price of Harris common stock on July 1, 1999 (the last
trading day of fiscal year 1999).
(3) Payouts for fiscal 1997 and 1998 were made pursuant to grants under the
Lanier Long Term Incentive Plan for key employees. The payments reflected in
the table for fiscal years 1997 and 1998 are for performance during the
three-year performance periods ended June 27, 1997 and July 3, 1998,
respectively.
50
<PAGE> 64
(4) Amounts reported include:
(i) Contributions to the Lanier Savings Incentive Plan for fiscal year
1999: Mr. Cantrell -- $5,209; Mr. Herrin -- $5,258, Mr.
MacLennan -- $3,863, Mr. Marini -- $4,931 and Mr. Anderson -- $5,194; for
fiscal year 1998: Mr. Cantrell -- $5,935, Mr. Herrin -- $7,415, Mr.
MacLennan -- $847, Mr. Marini -- $6,403 and Mr. Anderson -- $6,034; for
fiscal year 1997: Mr. Cantrell -- $4,500, Mr. Herrin -- $4,500, Mr.
MacLennan -- $132, Mr. Marini -- $2,729 and Mr. Anderson -- $3,247.
(ii) Contributions to the Lanier Supplemental Executive Retirement
Savings Plan for fiscal year 1999: Mr. Cantrell -- $17,686, Mr.
Herrin -- $11,509, Mr. MacLennan -- $3,939, Mr. Marini -- $5,737 and Mr.
Anderson -- $3,529; for fiscal year 1998: Mr. Cantrell -- $15,537, Mr.
Herrin -- $7,681, Mr. MacLennan -- $920, Mr. Marini -- $4,398, and Mr.
Anderson -- $363.
(iii) The taxable portion of premiums on life insurance provided for
fiscal year 1999: Mr. Cantrell -- $4,984, Mr. Herrin -- $3,645, Mr.
MacLennan -- $479, Mr. Marini -- $1,125 and Mr. Anderson -- $1,659; for
fiscal year 1998: Mr. Cantrell -- $4,914, Mr. Herrin -- $4,950, Mr.
MacLennan -- $201, Mr. Marini -- $737, and Mr. Anderson -- $1,046; for
fiscal year 1997: Mr. Cantrell -- $4,914, Mr. Herrin -- $3,177, and Mr.
Anderson -- $894.
(5) Mr. MacLennan commenced employment with Lanier in March 1997; the amounts
reported for fiscal year 1997 reflect less than a full year of employment.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Shown below is additional information on grants of stock options made under
the Harris Stock Incentive Plan during Harris' fiscal year 1999. The amounts
shown for potential realizable values are based upon assumed annualized rates of
Harris stock price appreciation of five percent and ten percent over the full
ten year term (or shorter term) of the options, as required by the Commission,
and are not intended to represent or forecast possible future appreciation, if
any, of the price of Harris common stock.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE
------------------------------------------------------ AT ASSUMED ANNUAL
NUMBER OF % OF TOTAL RATES OF STOCK
SECURITIES OPTIONS/SARS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION --------------------------
NAME GRANTED(1) FISCAL YEAR ($/SHARE) DATE 5%($) 10%($)
---- ------------ ------------ ----------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Wesley E. Cantrell...... 25,000 3.23 34.06 8/28/08 535,543 1,357,171
C. Lance Herrin......... 10,000 1.29 34.06 8/28/08 214,217 542,869
James A. MacLennan...... 1,800 0.23 38.56 11/24/08 43,653 110,626
David J. Marini......... 8,000 1.03 34.06 8/28/08 171,374 434,295
Paul M. Anderson........ 3,300 0.43 34.06 8/28/08 70,692 179,147
</TABLE>
- ---------------
(1) All stock option grants were made under the Harris Stock Incentive Plan. The
term of each stock option is generally ten years and is exercisable in
installments of 50% after one year, 75% after two years, and 100% after
three years. The exercise price is the closing price of a share of Harris
common stock on the date of the grant. The exercise price may be paid in
cash and/or shares of Harris common stock, or "cashless exercise" procedures
may be used. If shares of Harris common stock are delivered in payment of
the exercise price, a Restoration Stock Option ("RSO") is granted equal to
the number of shares used to exercise the stock option. The expiration date
of these options is the same as the expiration date of the underlying
options. RSO grants are non-qualified, and are exercisable commencing six
months after the date of grant at the market value on the grant date. In the
event of a change of control, outstanding options become immediately
exercisable.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
Shown below is information with respect to the number of Harris shares
acquired upon exercise of stock options and the aggregate gains realized on
exercises during fiscal year 1999 for those executive officers of Lanier
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<PAGE> 65
named in the Summary Compensation Table. The table also sets forth the number of
shares covered by exercisable and unexercisable options held by such executives
on July 2, 1999 and the aggregate gains that would have been realized had these
options been exercised on July 2, 1999, even though these options were not
exercised, and the unexercisable options could not have been exercised on July
2, 1999. These options were granted under the Harris Stock Incentive Plan.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
HARRIS SHARES VALUE FISCAL YEAR-END (#) FISCAL YEAR-END(2)($)
ACQUIRED ON REALIZED --------------------------- ---------------------------
NAME EXERCISE(#) (1)($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Wesley E. Cantrell.... 0 0 107,070 40,000 1,210,345 176,250
C. Lance Herrin....... 0 0 30,000 16,000 403,810 70,500
James A. MacLennan.... 0 0 0 1,800 0 1,463
David J. Marini....... 0 0 16,170 12,500 28,125 55,531
Paul M. Anderson...... 0 0 4,500 4,800 33,156 21,875
</TABLE>
- ---------------
(1) Market value on the date of exercise of Harris shares covered by exercised
options, less option exercise price.
(2) Market value of Harris shares underlying in-the-money options on July 2,
1999, less option exercise price. The market value is based on the July 2,
1999 closing price of $39.38 per share of the Harris common stock reported
as New York Exchange Composite Transactions.
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
Shown below is information with respect to awards of performance shares
granted under the Harris Stock Incentive Plan during Harris fiscal year 1999 to
those Lanier executive officers named in the Summary Compensation Table.
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUT UNDER
PERFORMANCE OR NON-STOCK PRICE-BASED PLANS
OTHER PERIOD ------------------------------------------
UNTIL THRESHOLD MAXIMUM
NUMBER OF MATURATION HARRIS TARGET HARRIS
NAME HARRIS SHARES OR PAYOUT SHARES(#) HARRIS SHARES(#) SHARES(#)
---- ------------- -------------- --------- ---------------- ---------
<S> <C> <C> <C> <C> <C>
Wesley E. Cantrell......... 5,000 6/30/01 0 5,000 10,000
C. Lance Herrin............ 2,000 6/30/01 0 2,000 4,000
James A. MacLennan......... 0 -- 0 0 0
David J. Marini............ 1,500 6/30/01 0 1,500 3,000
Paul M. Anderson........... 0 -- 0 0 0
</TABLE>
Awards of performance shares under the Harris Stock Incentive Plan to
participants are made at the beginning of each performance period and are earned
based on the performance of Lanier, Harris or some combination thereof. The
Harris Stock Incentive Plan is designed to motivate key employees to maximize
stockholder value by aligning their interests with stockholder interests. For
Lanier executives the payout is determined by the Management Development and
Compensation Committee of Harris' board of directors based upon financial
performance compared with strategic plan objectives. Performance criteria
include Lanier's net income and return on capital during the three-year
strategic plan cycle. Share payouts are made following the determination of the
committee and range from zero to a maximum of 200% of the original shares
awarded. Participants receive quarterly cash payments on the performance share
awards in an amount equal to dividends paid to stockholders on the Harris
shares.
LANIER DEFINED BENEFIT RETIREMENT PLANS
Lanier's domestic defined benefit retirement program consists of (i) a
tax-qualified, funded pension plan, the Lanier Pension Equity Plan (the "PEP"),
which is available to substantially all of the United States employees of
52
<PAGE> 66
Lanier and its participating subsidiaries and affiliated companies, and (ii) for
executive officers and other key employees, one non-qualified, unfunded Lanier
Supplemental Executive Retirement Plan (the "SERP") that provides benefits
which, but for certain limits imposed by the Internal Revenue Code on
tax-qualified plans, would be provided under the PEP. The PEP is a defined
benefit plan. The PEP and the SERP are fully paid by Lanier, and employees
become vested upon the completion of five years of service.
In July 1997, the PEP was amended to provide for a lump-sum retirement
benefit calculated by reference to a formula based upon final average pay, age
and years of service. However, if the determination of benefits payable to
individuals currently eligible for retirement or nearing retirement under the
revised PEP, including Mr. Cantrell and Mr. Herrin, would result in a reduction
of future benefit accruals under the PEP as in effect prior to the July 1997
amendment, the benefits payable to such a person would be as calculated under
the PEP without giving effect to the July 1997 amendment. Such employees will
receive annual pension benefits determined by adding (a) 1.22% of the average of
the employee's five highest consecutive years' compensation in the last ten
calendar years before retirement ("five-year average compensation") multiplied
by the lesser of the employee's years of service or 30 and (b) 0.33% of that
part of the employee's five-year average compensation in excess of a certain
amount, multiplied by the lesser of the employee's years of service or 30 (the
"Pre-July 1997 Formula"). Benefits are computed as a straight life annuity, but
may be converted to a lump sum or other form.
The pension benefits for Mr. MacLennan, Mr. Marini and Mr. Anderson under
the PEP is based on the July 1997 amendment and is stated as a lump sum benefit.
The formula for the lump sum benefit is the product of the employee's PEP
credits times the employee's five-year average compensation plus 50% of the
five-year average compensation in excess of a certain amount. PEP credits are
awarded for age and service performed on or after July 1, 1997 and for the
frozen accrued benefit calculated under the Pre-July 1997 Formula described
above determined as of June 30, 1997. Benefits are computed as a lump sum but
may be converted to a straight life annuity or other form.
The following table sets forth the estimated annual benefits under the PEP
and the SERP for Mr. Cantrell and Mr. Herrin calculating annual benefits under
the terms of the PEP (as in effect prior to the July 1997 amendment) and the
SERP payable at age 65 or older.
<TABLE>
<CAPTION>
ESTIMATED ANNUAL RETIREMENT BENEFITS
HIGHEST CONSECUTIVE FOR CREDITED YEARS OF SERVICE
5-YEAR AVERAGE --------------------------------------------
COMPENSATION 15 20 25 30
------------------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
$ 250,000...................................... $ 56,600 $ 75,400 $ 94,300 $113,200
500,000...................................... 114,700 152,900 191,200 229,400
750,000...................................... 172,800 230,400 288,100 345,700
1,000,000...................................... 231,000 307,900 384,900 461,900
1,250,000...................................... 289,100 385,400 481,800 578,200
</TABLE>
The following table sets forth the estimated annual benefits under the PEP
and the SERP for Mr. MacLennan, Mr. Marini and Mr. Anderson, calculating
benefits under the terms of the PEP (as in effect after the July 1997 amendment)
and the SERP payable at age 65 or older:
<TABLE>
<CAPTION>
ESTIMATED ANNUAL RETIREMENT BENEFITS FOR
HIGHEST CONSECUTIVE CREDITED YEARS OF SERVICE
5-YEAR AVERAGE --------------------------------------------
COMPENSATION 15 20 25 30
------------------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
$ 250,000...................................... $ 51,260 $ 60,580 $ 69,900 $ 76,114
500,000...................................... 104,884 123,954 143,024 155,737
750,000...................................... 158,508 187,328 216,148 235,361
1,000,000...................................... 212,132 250,702 289,271 314,984
1,250,000...................................... 265,756 314,075 362,395 394,608
</TABLE>
Executives have estimated credited years of service under the PEP and the
SERP as follows:
Wesley E. Cantrell -- 30 years
C. Lance Herrin -- 28 years
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<PAGE> 67
James A. MacLennan -- 2 years
David J. Marini -- 7 years
Paul M. Anderson -- 29 years
Executives have estimated five-year average compensation under the PEP and
the SERP as follows:
<TABLE>
<S> <C>
Wesley E. Cantrell.......................................... $880,962
C. Lance Herrin............................................. $509,811
James A. MacLennan.......................................... $207,817
David J. Marini............................................. $391,592
Paul M. Anderson............................................ $208,048
</TABLE>
Compensation as in effect prior to the July 1997 amendment consists of base
salary, bonuses and sales commissions and, for periods prior to 1998, income
recognized upon the exercise of Harris stock options. Compensation as in effect
after the July 1997 amendment consists of gross income, including salary,
bonuses, sales commissions, vacation pay, compensation received while on an
authorized leave of absence, and short-term disability payments, but excluding
severance pay, payments made in consideration of a release of employment with
Lanier, payments attributable to domestic or foreign assignment differential,
any contest payments, any expense-related reimbursement, and payments made under
any long-term incentive plan, including income for the exercise of stock options
or the value of life insurance includible in the participant's gross income. For
periods prior to 1998, income recognized upon the exercise of Harris stock
options is included. Base salary includes certain deferred amounts.
Benefits under the PEP and the SERP are not subject to any deduction for
Social Security or other offset amounts.
LONG-TERM COMPENSATION
Equity-based incentive compensation for Lanier executives will be provided
under the Lanier Stock Plan, which will be adopted by Harris as the sole
stockholder of Lanier prior to the Distribution. The Lanier Stock Plan will
permit the granting of (1) stock based on performance criteria, (2) restricted
stock, (3) stock options, including incentive stock options, (4) stock
appreciation rights (freestanding or in tandem with stock options) and (5) other
awards valued by reference to, or otherwise based on, Lanier Common Stock, as
determined and approved by a committee comprised solely of at least two outside
directors (the "Committee").
Stock options provide value to the executives only when the price of Lanier
Shares increases above the option grant price.
In connection with the Distribution, stock options granted to Lanier
employees under the Harris Stock Incentive Plan will be replaced by Lanier
Options. The option price and number of shares subject to each Lanier Option
will be adjusted so that the aggregate difference between the market price and
the option price will be equal for the Harris Options and the Lanier Options.
The number of Lanier Shares subject to each Lanier Option will be determined by
multiplying the number of shares subject to each Harris Option by the Lanier
Option Adjustment Ratio and the option price of each Lanier Option will be
determined by dividing the price of each Harris Option by the Lanier Option
Adjustment Ratio.
Incentives may also be awarded in the form of performance share awards. The
Lanier Stock Plan will provide for the Committee to determine the applicable
performance goals utilizing one or more of the performance criteria set forth in
the Lanier Stock Plan, Lanier's strategic planning process and a period of time
(generally, three fiscal years) during which Lanier's performance is to be
measured. The Committee then will assign to each participant a number of
performance shares and establish a mechanism for computing the number of
performance shares that can be earned during the period based on Lanier's
performance. If the performance goals are satisfied the participant will receive
a number of Lanier Shares equal to the number of performance shares.
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<PAGE> 68
In connection with the Distribution, performance share awards granted to
Lanier employees under the Harris Stock Incentive Plan will be canceled and
replacement performance shares will be awarded under the Lanier Stock Plan by
multiplying the number of performance shares by the Lanier Option Adjustment
Ratio.
Cash-based long-term incentive compensation for Lanier executives will be
provided under the Lanier Long-Term Incentive Plan (the "LTIP"). The LTIP will
permit the granting of cash awards based on performance criteria. Awards granted
pursuant to the LTIP will be determined and approved by the Committee.
The LTIP will provide for the Committee to determine the applicable
performance criteria utilizing Lanier's strategic planning process and a period
of time (generally, three fiscal years) during which Lanier's performance is to
be measured. The Committee then will assign to each participant a cash award
target and establish a mechanism for computing the amount of the cash award that
can be earned during the period based on Lanier's performance.
The maximum amount that may be awarded to a participant each year is 200%
of such target award based on the degree of achievement of the performance
goals. The maximum incentive award payable to any executive officer in any year
will be $2,000,000. Upon the occurrence of a Change in Control (as defined in
the LTIP), Lanier will pay an amount not less than the target award for the
performance period. An employee may elect to defer all or a portion of any award
until normal retirement age. Interest will be paid on the amount deferred based
on the average long-term treasury bill rate. Stock options and performance share
awards made under the Lanier Stock Plan or cash awards paid under the LTIP may,
but are not required to, satisfy the exemption for performance-based
compensation under Section 162(m) of the Internal Revenue Code.
EMPLOYEE STOCK PURCHASE PLAN
The Lanier Employee Stock Purchase Plan (the "Stock Purchase Plan") will
permit eligible employees of Lanier, Lanier Professional Services, Inc. and
other subsidiaries of Lanier designated by the Chief Executive Officer and the
Chief Operating Officer, to periodically purchase Lanier Shares at a discount.
All employees of Lanier and designated subsidiaries may participate in the Stock
Purchase Plan, except those employees who have been employed for less than one
year and those employees whose customary employment is for no more than 20 hours
per week or no more than five months in any calendar year. In addition, a holder
of 5% or more of the Lanier Shares outstanding may not participate in the Stock
Purchase Plan, and an eligible employee may not purchase Lanier Shares at a rate
that exceeds $25,000 of Lanier Shares a year. Under the Stock Purchase Plan,
Lanier will offer Lanier Shares for purchase during the first and last six
months of each fiscal year. An eligible employee may elect to have from 1% to
15% of his or her compensation withheld (on an after-tax basis) during the
purchase period and Lanier Shares are purchased on the last day of such period.
The purchase price will be 85% of the fair market value of a Lanier Share on the
first day of the purchase period or on the last day of the purchase period,
whichever is less. For each six-month purchase period, an employee may not
purchase more than the number of whole Lanier Shares determined by dividing
$12,500 by the fair market value of a Lanier Share on the first day of the
purchase period. Employees may not sell Lanier Shares purchased under the Stock
Purchase Plan for one year after the date of purchase. The Stock Purchase Plan
is intended to satisfy the requirements of Section 423 of the Internal Revenue
Code.
LANIER DEFINED CONTRIBUTION RETIREMENT PLANS
Lanier's defined contribution retirement program consists of (i) a
tax-qualified funded defined contribution plan, the Lanier Savings Incentive
Plan (the "SIP"), which is available to substantially all of the United States
employees of Lanier and its participating subsidiaries and affiliated companies
and (ii) for executive officers and other key employees the non-qualified
unfunded Lanier Supplemental Executive Retirement Savings Plan (the "SIP SERP")
that provides benefits, which, but for certain limits imposed by the Internal
Revenue Code on tax-qualified plans, would be provided under the SIP. The SIP
will be funded by employee contributions and matching contributions (with
certain limitations) by Lanier, which may be made in cash or Lanier common
stock. An employee's interest in Lanier's matching contributions will vest based
on the employee's years of service and a five-year vesting schedule.
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<PAGE> 69
Benefits payable to an employee upon retirement will be based on the
contributions made by the employee, the contributions made by Lanier, if any,
and the performance of the employee's chosen investments. Therefore, Lanier
cannot estimate the annual benefits which will be payable to participate in the
SIP and the SIP SERP upon retirement at normal retirement age.
KEY CONTRIBUTOR PLAN
Lanier's Key Contributor Incentive Plan (the "Key Contributor Plan") links
a portion of total compensation for certain key employees to the attainment of
corporate financial objectives as approved by the plan administrator. Under the
Key Contributor Plan, a target annual incentive award is established for each
participant with quarterly targets. The maximum incentive amount that may be
awarded to a participant each year is 150% of such target annual award based on
the degree of achievement of pre-established performance goals, which may
include any combination of the following: Lanier's revenue, earnings per share
of common stock, net income, return on equity, return on capital, return on
assets, total shareholder return, return on sales or cash flow. The maximum
annual incentive award payable to any executive officer of Lanier is $2,000,000.
The awards are paid quarterly dependent upon attainment of quarterly performance
targets or the annual performance targets. Upon the occurrence of a Change in
Control (as defined in the Key Contributor Plan), Lanier will pay any annual
incentive awards to participants as soon as practicable in an amount not less
than the target annual incentive award as approved for the fiscal year. Annual
awards made under the Key Contributor Plan may, but are not required to, satisfy
the exemption for performance-based compensation under Section 162(m) of the
Internal Revenue Code.
SEVERANCE AND CHANGE IN CONTROL AGREEMENTS
In connection with the Distribution, the executive officers of Lanier will
enter into Executive Severance Agreements (each, a "Severance Agreement") which
will provide certain officers of Lanier with severance benefits in the event the
officer's employment is terminated by Lanier without Cause or by the executive
for Good Reason within two years following a Change in Control (all terms as
defined in the Severance Agreement). Under the Severance Agreement, the
executive agrees not to voluntarily terminate his or her employment with Lanier
during the six-month period following a Change in Control. The lump sum
severance benefit payable under the Severance Agreement equals the sum of (a)
the executive's unpaid base salary through date of termination, a pro rata
annual bonus (as determined under the Severance Agreement) and any compensation
deferred by the executive other than under a tax-qualified plan; and (b) three
times the executive's highest annual rate of base salary during the 12-month
period prior to the date of termination and three times the greater of the
executive's highest annual bonus in the last three years, the executive's target
bonus for the year during which the Change in Control occurred, or the
executive's target bonus for the year in which the executive's employment is
terminated. In addition, the executive receives for a period of two years
following termination the same level of medical, dental, accident, disability,
life insurance and any similar benefits or the cash equivalent to the value of
such benefits if the executive is prevented from participating in the plans. The
executive also receives reimbursement for any relocation expense related to
pursuit of other business opportunities incurred within two years following the
date of termination, for recruitment or placement services of up to $4,000 and
for professional financial or tax planning services of up to $5,000. The
Severance Agreement also provides for a tax gross-up payment to the executive in
the event that payment of any severance benefits are subject to excise tax
imposed under Section 4999 of the Internal Revenue Code. In addition, Lanier
shall reimburse the executive for any legal fees and costs with respect to any
dispute arising under the Severance Agreement.
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<PAGE> 70
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
All of the outstanding Lanier Shares are, and prior to the Distribution
will be, held beneficially and of record by Harris. After the Distribution,
Harris will retain approximately 10% of the outstanding Lanier Shares. The
following table sets forth each person or entity that is expected to own
beneficially more than 5% of the Lanier Shares outstanding immediately following
the Distribution, based on the ownership of Harris common stock as known to
Lanier.
<TABLE>
<CAPTION>
AMOUNT AND
NAME AND ADDRESS NATURE OF PERCENT
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS(1)
------------------- -------------------- -----------
<S> <C> <C>
Harris Corporation...................................... 8,794,474(1) 9.99%
1025 West NASA Boulevard
Melbourne, FL 32919
The Prudential Insurance Company of America............. 7,965,692(2) 9.04%
751 Broad Street
Newark, NJ 07102-3777
J.P. Morgan & Co. Incorporated.......................... 4,971,371(3) 5.64%
60 Wall Street
New York, NY 10260
</TABLE>
- ---------------
(1) Based on the number of Lanier Shares outstanding on October 15, 1999.
(2) The information is based on an Amended Schedule 13G with respect to Harris
common stock filed by The Prudential Insurance Company of America
("Prudential") with the Commission on May 7, 1999 in which Prudential states
that it has sole dispositive and voting power with respect to 1,095,000 of
the Harris shares, shared dispositive power with respect to 6,867,693 of the
Harris shares and shares voting power with respect to 6,843,035 of the
Harris shares.
(3) The information is based on a Schedule 13G with respect to Harris common
stock filed by J.P. Morgan & Co. Incorporated ("J.P. Morgan") with the
Commission on February 22, 1999 in which J.P. Morgan states that it has sole
dispositive power with respect to 4,717,071 of the Harris shares, sole
voting power with respect to 3,509,011 of the Harris shares, shared
dispositive power with respect to 209,700 of the Harris shares and shared
voting power with respect to 99,300 of the Harris shares.
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<PAGE> 71
BENEFICIAL OWNERSHIP OF MANAGEMENT
All of the outstanding Lanier Shares are, and prior to the Distribution
will be, held beneficially and of record by Harris and no director or executive
of Lanier owns any Lanier Shares. The following table sets forth information
concerning the Lanier Shares that are projected to be beneficially owned after
the Distribution by each of the directors and each of the executive officers
named in the Summary Compensation Table and by all directors and executive
officers as a group. Unless otherwise indicated, the projections are based on
the number of Harris shares held by such persons as of September 28, 1999 and
reflect the Distribution Ratio of one Lanier Share for every share of common
stock of Harris held on the Record Date.
<TABLE>
<CAPTION>
NUMBER OF OPTIONS
SHARES DEFERRED EXERCISABLE
BENEFICIALLY STOCK WITHIN PERCENT
NAME OF BENEFICIAL OWNER OWNED(1)(2) UNITS(3) 60 DAYS(4) OF CLASS(5)
------------------------ ------------- --------- ----------- -----------
<S> <C> <C> <C> <C>
Wesley E. Cantrell..................... 69,861 498 106,084 *
C. Lance Herrin........................ 12,262 318 30,000 *
Sidney E. Harris....................... 0 0 0 *
David H. Hughes........................ 0 0 0 *
Amos R. McMullian...................... 0 0 0 *
Clarence B. Rogers, Jr................. 0 0 0 *
John F. Ward........................... 0 0 0 *
James A. MacLennan..................... 148 109 0 *
David J. Marini........................ 18,783 55 16,902 *
Paul M. Anderson....................... 2,475 120 5,000 *
All executive officers and directors
as a group (14 persons).............. 108,005 1,121 166,841 *
</TABLE>
- ---------------
* Less than 1%.
(1) Unless otherwise indicated, and subject to community property laws where
applicable, Lanier believes that each of the persons named in the table has
sole voting and investment power with respect to the Lanier Shares indicated
as beneficially owned. The information is based on information supplied by
the directors and executive officers.
(2) The Lanier Shares reported include performance shares expected to be awarded
under Lanier's Stock Plan to be adopted in connection with the Distribution,
as discussed above under "Long-Term Compensation," and assumes a Lanier
Option Adjustment Ratio of 1:1. Under the Lanier's Stock Plan, the named
individuals would have sole voting power but no investment power, as
follows: Mr. Cantrell -- 15,000; Mr. Herrin -- 6,000; Mr. Marini -- 4,500;
and Mr. Anderson -- 1,000. The Lanier Shares reported also include shares
expected, based on data as of September 25, 1999, to be owned under Lanier's
SIP to be adopted in connection with the Distribution, as follows: Mr.
Cantrell -- 612; Mr. Herrin -- 95; Mr. MacLennan -- 148; Mr. Marini -- 39;
and Mr. Anderson -- 363.
(3) The Lanier Shares reported are amounts, as of September 25, 1999, deferred
in the form of stock equivalent units under the Lanier Supplemental
Executive Retirement Savings Plan, as discussed above under "Lanier Defined
Contribution Retirement Plans." The deferred stock equivalent units are
settled in cash following, or under certain circumstances prior to,
retirement, and may not be voted or transferred.
(4) The Lanier Shares reported relate to Lanier Options expected to be awarded
under Lanier's Stock Plan, as discussed above under "Long-Term
Compensation," and assumes a Lanier Option Adjustment Ratio of 1:1. The
Lanier Shares reported can be acquired through exercise of such Lanier
Options on or prior to November 27, 1999.
(5) Based on the number of Lanier Shares expected to be outstanding on the
Distribution Date.
DESCRIPTION OF LANIER'S CAPITAL STOCK
AUTHORIZED CAPITAL STOCK
Under Lanier's restated certificate of incorporation, the total number of
shares of all classes of stock that Lanier has authority to issue is
525,000,000, of which 25,000,000 are shares of preferred stock, without par
value, and 500,000,000 are shares of common stock, par value $0.01 per share.
Based on the number of Harris shares outstanding on October 15, 1999, 79,150,272
Lanier Shares, constituting approximately 90% of the Lanier Shares outstanding
as of such date, will be issued to stockholders of Harris on the Distribution
Date. Based on such number, Harris would retain 8,794,474 Lanier Shares, or
approximately 10% of the Lanier Shares. All of the Lanier Shares to be
distributed to Harris stockholders in the Distribution will be fully paid and
non-assessable.
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<PAGE> 72
Eight million Lanier Shares have been reserved for issuance under Lanier's Stock
Plan. No shares of preferred stock have been issued, although shares of
preferred stock have been reserved for issuance under the Rights Agreement (as
defined below). The Lanier Shares reported also include shares expected, based
on data as of September 25, 1999, under Lanier's SIP to be adopted in connection
with the Distribution as follows: Mr. Cantrell -- 612; Mr. Herrin -- 95; Mr.
MacLennan -- 148; Mr. Marini -- 39; and Mr. Anderson -- 363.
The following summary of certain terms of Lanier's capital stock describes
material provisions of, but does not purport to be complete and is subject to,
and qualified in its entirety by, Lanier's restated certificate of incorporation
and Lanier's bylaws, the forms of which are included as exhibits to the
Registration Statement, and by applicable provisions of law.
COMMON STOCK
The holders of the Lanier Shares will be entitled to one vote for each
share on all matters voted on by stockholders, and the holders of such shares
will possess all voting power, except as otherwise required by law or provided
in any resolution adopted by Lanier's board of directors with respect to any
series of preferred stock of Lanier. There are no cumulative voting rights.
Accordingly, the holders of a majority of the Lanier Shares voting for the
election of directors can elect all of the directors, if they choose to do so,
subject to any rights of the holders of preferred stock to elect directors.
Subject to any preferential or other rights of any outstanding series of
preferred stock of Lanier that may be designated by Lanier's board of directors,
the holders of the Lanier Shares will be entitled to such dividends as may be
declared from time to time by Lanier's board of directors from funds available
therefor, and upon liquidation will be entitled to receive pro rata all assets
of Lanier available for distribution to such holders. See "Risk
Factors -- Uncertainty of Dividends" on page 11 and "Dividend Policies" on page
23.
PREFERRED STOCK
Lanier's board of directors is authorized without further stockholder
approval (except as may be required by applicable law or New York Stock Exchange
regulations) to provide for the issuance of shares of preferred stock, in one or
more series, and to fix for each such series such voting powers, designations,
preferences and relative, participating, optional and other special rights, and
such qualifications, limitations or restrictions, as are stated in the
resolution adopted by Lanier's board of directors providing for the issuance of
such series and as are permitted by the Delaware General Corporation Law. See
"Certain Anti-Takeover Provisions of Lanier's Certificate of Incorporation,
Bylaws and Rights Agreement and Delaware Law -- Preferred Stock" on page 62.
Should Lanier's board of directors elect to exercise this authority, the rights
and privileges of holders of the Lanier Shares could be made subject to the
rights and privileges of any such series of preferred stock. Presently, Lanier
has no plans to issue any preferred stock, except that Lanier's Stockholder
Protection Rights Agreement (the "Rights Agreement") provides for the issuance
of shares of participating preferred stock under the circumstances specified in
the Rights Agreement, upon exercise or exchange of rights (the "Rights") issued
thereunder. See "Certain Anti-Takeover Provisions of Lanier's Certificate of
Incorporation, Bylaws and Rights Agreement and Delaware Law -- Stockholder
Protection Rights Agreement" beginning on page 62.
NO PREEMPTIVE RIGHTS
No holder of any stock of Lanier of any class authorized at the
Distribution Date will have any preemptive right to subscribe to any securities
of Lanier of any kind or class.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for Lanier immediately following the
Distribution will be ChaseMellon Shareholder Services, L.L.C.
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<PAGE> 73
CERTAIN ANTI-TAKEOVER PROVISIONS
OF LANIER'S CERTIFICATE OF INCORPORATION, BYLAWS AND
RIGHTS AGREEMENT AND DELAWARE LAW
GENERAL
Lanier's restated certificate of incorporation, Lanier's bylaws, the Rights
Agreement and the Delaware General Corporation Law contain certain provisions
that could delay or make more difficult an acquisition of control of Lanier not
approved by Lanier's board of directors, whether by means of a tender offer,
open market purchases, a proxy contest or otherwise. These provisions have been
implemented to enable Lanier, particularly (but not exclusively) in the initial
years of its existence as an independent, publicly owned company, to develop its
business in a manner which will foster its long-term growth without disruption
caused by the threat of a takeover not deemed by Lanier's board of directors to
be in the best interests of Lanier and its stockholders. See also
"-- Stockholder Protection Rights Agreement" beginning on page 62. These
provisions could have the effect of discouraging third parties from making
proposals involving an acquisition or change of control of Lanier, although such
a proposal, if made, might be considered desirable by a majority of Lanier's
stockholders. These provisions may also have the effect of making it more
difficult for third parties to cause the replacement of the current management
of Lanier without the concurrence of Lanier's board of directors. In addition,
certain provisions of the Tax Disaffiliation Agreement to be entered into by
Harris and Lanier may also have the effect of discouraging third parties from
making proposals involving an acquisition or change of control of Lanier prior
to the second anniversary of the Distribution Date. See "Relationship Between
Harris and Lanier Following the Distribution -- Tax Disaffiliation Agreement"
beginning on page 20. Set forth below is a description of the provisions
contained in Lanier's restated certificate of incorporation and bylaws, the
Rights Agreement and the Delaware General Corporation Law that could impede or
delay an acquisition of control of Lanier that Lanier's board of directors has
not approved. This description is intended as a summary only and is qualified in
its entirety by reference to Lanier's restated certificate of incorporation,
Lanier's bylaws and the Rights Agreement, the forms of which are included as
exhibits to the Registration Statement, as well as the Delaware General
Corporation Law.
CLASSIFIED BOARD OF DIRECTORS
Lanier's restated certificate of incorporation provides for Lanier's board
of directors to be divided into three classes of directors serving staggered
three-year terms. As a result, approximately one-third of Lanier's board of
directors will be elected each year. The first class of directors will initially
serve a one-year term, and the second class of directors will initially serve a
two-year term. Thereafter, each class of directors will be elected for a
three-year term. See "Lanier's Management -- Board of Directors" beginning on
page 45.
This provision could prevent a party who acquires control of a majority of
the outstanding voting stock from obtaining control of Lanier's board of
directors until the second annual stockholders meeting following the date on
which the acquiror obtains the controlling stock interest and could have the
effect of discouraging a potential acquiror from making a tender offer or
otherwise attempting to obtain control of Lanier and could thus increase the
likelihood that incumbent directors will retain their positions.
NUMBER OF DIRECTORS; REMOVAL; FILLING VACANCIES
Lanier's restated certificate of incorporation and bylaws provide that the
number of directors shall be fixed only by resolution at Lanier's board of
directors from time to time. Lanier's restated certificate of incorporation
provides that the directors may be removed by stockholders only both for cause
and by the affirmative vote of at least 80% of the shares entitled to vote.
Lanier's restated certificate of incorporation and bylaws provide that
vacancies on the board of directors may be filled only by a majority vote of the
remaining directors or by the sole remaining director.
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<PAGE> 74
STOCKHOLDER ACTION
Lanier's restated certificate of incorporation provides that stockholder
action may be taken only at an annual or special meeting of stockholders and
that stockholders may not act by written consent. Lanier's restated certificate
of incorporation and bylaws provide that special meetings of stockholders may be
called only by Lanier's board of directors. Stockholders are not permitted to
call a special meeting or to require Lanier's board of directors to call a
special meeting of stockholders.
ADVANCE NOTICE FOR STOCKHOLDER PROPOSALS OR NOMINATIONS AT MEETINGS
Lanier's bylaws establish an advance notice procedure for stockholder
proposals to be brought before any annual or special meeting of stockholders and
for nominations by stockholders of candidates for election as directors at an
annual meeting or a special meeting at which directors are to be elected.
Subject to any other applicable requirements, including, without limitation,
Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), only such business may be conducted at a meeting of stockholders as has
been brought before the meeting by, or at the direction of, Lanier's board of
directors, or by a stockholder who has given Lanier's Secretary timely written
notice, in proper form, of the stockholder's intention to bring that business
before the meeting. The presiding officer at such meeting has the authority to
make such determinations. Only persons who are nominated by, or at the direction
of, Lanier's board of directors, or who are nominated by a stockholder who has
given timely written notice, in proper form, to Lanier's Secretary prior to a
meeting at which directors are to be elected will be eligible for election as
directors of Lanier.
To be timely, notice of nominations or other business to be brought before
any meeting must be delivered to Lanier's Secretary not less than 90 days nor
more than 120 days prior to the first anniversary date of the annual meeting for
the preceding year; provided, however, that if the annual meeting is not
scheduled to be held within a period that commences 30 days before and ends 30
days after such anniversary date, such advance notice shall be given by the
later of (i) the close of business on the date 90 days prior to the date of the
annual meeting or (ii) the close of business on the tenth day following the date
that the meeting date is first publicly announced or disclosed.
Any stockholder who gives notice of a proposal must provide the text of the
proposal to be presented, a brief written statement of the reasons why he or she
favors the proposal, the stockholder's name and address, the number and class of
all shares of each class of Lanier stock owned, any material interest the
stockholder may have in the proposal (other than as a Lanier stockholder) and,
in the case of any person that holds Lanier stock through a nominee or "street
name" holder of record of such stock, evidence establishing such person's
indirect ownership of Lanier stock and entitlement to vote on the matter
proposed at the annual meeting.
The notice of any nomination for election as a director must set forth the
name of the nominee, the number and class of all shares of each class of Lanier
capital stock beneficially owned by the nominee, the information regarding the
nominee required by paragraphs (a), (e) and (f) of Item 401 of Regulation S-K
adopted by the Commission, the signed consent of each nominee to serve as a
director if elected, the nominating stockholder's name and address, the number
and class of shares of Lanier stock owned by such nominating stockholder and, in
the case of any person that holds Lanier stock through a nominee or "street
name" holder of record of such stock, evidence establishing such person's
indirect ownership of Lanier stock and entitlement to vote on the matter
proposed at the annual meeting.
AMENDMENTS TO BYLAWS
Lanier's restated certificate of incorporation provides that only Lanier's
board of directors or the holders of 80% of the shares of Lanier's capital stock
entitled to vote at an annual or special meeting of stockholders have the power
to amend or repeal Lanier's bylaws.
AMENDMENT OF THE CERTIFICATE OF INCORPORATION
Any proposal to amend, alter, change or repeal any provision of Lanier's
restated certificate of incorporation requires approval by the affirmative vote
of a majority of the voting power of all of the shares of Lanier's capital
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<PAGE> 75
stock entitled to vote on such matters, with the exception of certain provisions
of Lanier's restated certificate of incorporation which require a vote of 80% or
more of such voting power.
PREFERRED STOCK
Lanier's restated certificate of incorporation authorizes Lanier's board of
directors by resolution to issue one or more series of Preferred Stock and to
determine, with respect to any series of preferred stock, the terms and rights
of such series.
Lanier believes that the availability of the preferred stock will provide
Lanier with increased flexibility in structuring possible future financing and
acquisitions and in meeting other corporate needs which might arise. Having such
authorized shares available for issuance will allow Lanier to issue shares of
preferred stock without the expense and delay of a special stockholders'
meeting. The authorized shares of preferred stock, as well as Lanier Shares,
will be available for issuance without further action by Lanier's stockholders,
unless such action is required by applicable law or the rules of the New York
Stock Exchange or any other stock exchange on which Lanier's securities may be
listed. Although Lanier's board of directors has no intention at the present
time of doing so, it would have the power (subject to applicable law) to issue a
series of preferred stock that could, depending on the terms of such series,
impede the completion of a merger, tender offer or other takeover attempt. For
instance, subject to applicable law, such series of preferred stock might impede
a business combination by including class voting rights which would enable the
holder to block such a transaction. See "-- Stockholder Protection Rights
Agreement" below.
STOCKHOLDER PROTECTION RIGHTS AGREEMENT
Each share of Lanier Common Stock has attached to it one right (a "Right").
Each Right entitles its registered holder to purchase from Lanier, on or after
the Separation Time (as hereinafter defined), one one-hundredth of a share of
Participating Preferred Stock, no par value (the "Participating Preferred"), for
$- (the "Exercise Price"), subject to adjustment. The Rights will not trade
separately from the Lanier Common Stock until the Separation Time.
The Rights will be evidenced by common stock certificates until the earlier
of (either, the "Separation Time") (i) the close of business on the tenth
business day (or such later date as Lanier's board of directors may from time to
time fix by resolution adopted prior to the Separation Time that would otherwise
have occurred) after the date on which any Person (as defined in the Rights
Agreement) commences a tender or exchange offer which, if consummated, would
result in such Person's becoming an Acquiring Person (as defined below) and (ii)
the first date (the "Stock Acquisition Date") of public announcement by Lanier
(by any means) that a Person has become an Acquiring Person; provided that if a
tender or exchange offer referred to in clause (i) is canceled, terminated or
otherwise withdrawn prior to the Separation Time without the purchase of any
shares of stock pursuant thereto, such offer shall be deemed never to have been
made. An Acquiring Person is any Person who is or becomes the Beneficial Owner
(as defined in the Rights Agreement) of 15% or more of the outstanding Lanier
Shares after the Distribution Date, excluding (i) Lanier, any majority-owned
subsidiary of Lanier or any employee stock ownership or other employee benefit
plan of Lanier or a subsidiary of Lanier (or any entity or trustee holding
shares of Lanier Common Stock pursuant to the terms of any such plan or for the
purpose of funding any such plan or funding other employee benefits for
employees of Lanier or any subsidiary of Lanier), (ii) any Person who is the
beneficial owner of 15% or more of the outstanding shares of Lanier Common Stock
on the date of the Rights Agreement or any Person who became the Beneficial
Owner of 15% or more of the outstanding Lanier Shares solely as a result of an
acquisition of Lanier Shares by Lanier, until such time as such Person acquires
additional Lanier Shares other than through a dividend or stock split, (iii) any
Person who becomes an Acquiring Person without any plan or intent to seek or
affect control of Lanier if such Person, upon notice by Lanier, promptly divests
sufficient securities to reduce its Beneficial Ownership below 15% or (iv) any
Person who Beneficially Owns Lanier Shares that were solely (A) acquired upon
exercise of an option granted by Lanier in connection with an agreement to merge
with, or acquire, Lanier entered into prior to a Stock Acquisition Date, (B)
owned by such Person and its Affiliates and Associates (as defined in the Rights
Agreement) at the time of such grant or (C) amounting to less than 1% of the
outstanding Lanier Shares, acquired by Affiliates and Associates of such Person
after the time of such grant.
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<PAGE> 76
The Rights Agreement provides that, until the Separation Time, the Rights
will be transferred with and only with the Lanier common stock. Lanier Share
certificates issued after the Record Time but prior to the Separation Time shall
evidence one Right for each share of Lanier common stock represented thereby and
shall contain a legend incorporating by reference the terms of the Rights
Agreement (as it may be amended from time to time). Promptly following the
Separation Time, separate certificates evidencing the Rights ("Rights
Certificates") will be mailed to holders of record of Lanier Shares at the
Separation Time.
The Rights will not be exercisable until the Separation Time. The Rights
will expire on the earliest of (i) the Exchange Time (as defined below), (ii)
the close of business on the tenth anniversary of the Record Time, unless
extended by action of Lanier's board of directors, (iii) the date on which the
Rights are redeemed as described below and (iv) immediately prior to the
effective time of a consolidation, merger or share exchange of Lanier (A) into
another corporation or (B) with another corporation where Lanier is the
surviving corporation but Lanier Shares are converted into cash or securities of
another corporation, in either case pursuant to an agreement that Lanier entered
into prior to a Stock Acquisition Date (in any such case, the "Expiration
Time").
The Exercise Price and the number of Rights outstanding, or in certain
circumstances the securities purchasable upon exercise of the Rights, may be
adjusted from time to time to prevent dilution in the event of a common stock
dividend on, or a subdivision or a combination into a smaller number of shares
of, Lanier Common Stock, or the issuance or distribution of any securities or
assets in respect of, in lieu of or in exchange for Lanier Common Stock.
In the event that prior to the Expiration Time a Flip-in Date (as defined
below) occurs, each Right (other than Rights Beneficially Owned by the Acquiring
Person or any affiliate or associate thereof, which Rights shall become void)
shall constitute the right to purchase from Lanier, upon the exercise thereof in
accordance with the terms of the Rights Agreement, that number of shares of
Lanier Common Stock having an aggregate market price (as defined in the Rights
Agreement), on the Stock Acquisition Date equal to twice the Exercise Price for
an amount in cash equal to the then current Exercise Price. In addition,
Lanier's board of directors may, at its option, at any time after a Flip-in Date
and prior to the time that an Acquiring Person becomes the Beneficial Owner of
more than 50% of the outstanding shares of Lanier Common Stock, elect to
exchange all (but not less than all) the then outstanding Rights (other than
Rights Beneficially Owned by the Acquiring Person or its Affiliates or
Associates, which Rights become void) for shares of Lanier Common Stock at an
exchange ratio of one share of Lanier Common Stock per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date of the Separation Time (the "Exchange Ratio").
Immediately upon such action by Lanier's board of directors (the "Exchange
Time"), the right to exercise the Rights will terminate and each Right will
thereafter represent only the right to receive a number of shares of Lanier
Common Stock equal to the Exchange Ratio. A "Flip-In Date" is defined in the
Rights Agreement as any Stock Acquisition Date or such later date as Lanier's
board of directors may from time to time fix by resolution adopted prior to the
Flip-In Date that would otherwise have occurred.
Whenever Lanier becomes obligated under the preceding paragraph to issue
shares of Lanier Common Stock upon exercise of or in exchange for Rights,
Lanier, at its option, may substitute shares of participating preferred stock
for shares of Lanier Common Stock, at a ratio of one one-hundredth of a share of
the Participating Preferred for each share of Lanier Common Stock.
In the event that prior to the Expiration Time Lanier enters into,
consummates or permits to occur a transaction or series of transactions after
the time an Acquiring Person has become such in which, directly or indirectly,
(i) Lanier shall consolidate, merge or participate in a statutory share exchange
with any other Person if, at the time of the consolidation, merger or statutory
share exchange or at the time Lanier enters into any agreement with respect to a
consolidation, merger or share exchange, the Acquiring Person is the Beneficial
Owner of 90% or more of the outstanding shares of Lanier Common Stock or
controls Lanier's board of directors and either (A) any term of or arrangement
concerning the treatment of shares of Lanier Common Stock in such consolidation,
merger or statutory share exchange relating to the Acquiring Person is not
identical to the terms and arrangements relating to other holders of Lanier
Common Stock or (B) the person with whom the transaction or transactions occur
is the Acquiring Person or an affiliate or associate of the Acquiring Person or
(ii) Lanier or one or more of its subsidiaries sells or otherwise transfers
assets (A) aggregating more than 50% of the assets
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<PAGE> 77
(measured by either book value or fair market value) or (B) generating more than
50% of the operating income or cash flow of Lanier and its subsidiaries taken as
a whole to any other Person (other than Lanier or one or more of its wholly
owned subsidiaries) or to two or more such Persons which are affiliated or
otherwise acting in concert, if, at the time of such sale or transfer of assets
or at the time Lanier (or any such subsidiary) enters into an agreement with
respect to such sale or transfer, the Acquiring Person controls Lanier's board
of directors (a "Flip-over Transaction or Event"), Lanier shall take such action
as shall be necessary to ensure, and shall not enter into, consummate or permit
to occur such Flip-over Transaction or Event until it shall have entered into a
supplemental agreement with the Person engaging in such Flip-over Transaction or
Event or the parent corporation thereof (the "Flip-over Entity"), for the
benefit of the holders of the Rights, provided that upon consummation or
occurrence of the Flip-over Transaction or Event (i) each Right shall thereafter
constitute the right to purchase from the Flip-over Entity, upon exercise
thereof in accordance with the terms of the Rights Agreement, that number of
shares of common stock of the Flip-over Entity having an aggregate market price
on the date of consummation or occurrence of such Flip-over Transaction or Event
equal to twice the Exercise Price for an amount in cash equal to the then
current Exercise Price and (ii) the Flip-over Entity shall thereafter be liable
for, and shall assume, by virtue of such Flip-over Transaction or Event and such
supplemental agreement, all the obligations and duties of Lanier pursuant to the
Rights Agreement.
Lanier's board of directors may, at its option, at any time prior to the
Flip-in Date, redeem all (but not less than all) the then outstanding Rights at
a redemption price of $.01 per Right. Immediately upon the action of Lanier's
board of directors to redeem the Rights, without any further action and without
any notice, the right to exercise the Rights will terminate and each Right will
thereafter represent only the right to receive the redemption price in cash or
securities of Lanier.
The holders of Rights will, solely by reason of their ownership of Rights,
have no rights as stockholders of Lanier, including the right to vote or to
receive dividends.
Lanier and the Rights Agent may from time to time supplement or amend the
Rights Agreement without the approval of any holders of Rights (i) prior to the
Flip-In Date, in any respect and (ii) on or after the Flip-In Date, to make any
changes that Lanier may deem necessary or desirable and which shall not
materially adversely affect the interests of the holders of Rights generally or
in order to cure any ambiguity or correct or supplement any inconsistent or
defective provision contained therein.
The Rights will not prevent a takeover of Lanier. However, the Rights may
cause substantial dilution to a person or group that acquires 15% or more of the
Lanier Shares unless the Rights are first redeemed by Lanier's board of
directors. Nevertheless, the rights should not interfere with a transaction that
is in the best interests of Lanier and its stockholders because the Rights can
be terminated on or prior to the Flip-in Date and before the transaction is
consummated.
As long as the rights are attached to Lanier Common Stock, Lanier will
issue one Right with each new share of Lanier Common Stock so that all shares
will have Rights attached. Lanier's board of directors has reserved - shares of
participating preferred stock for issuance upon exercise of the Rights.
The Rights Agreement (which includes as Exhibit A the forms of Rights
Certificate and Election to Exercise and as Exhibit B the form of Certificate of
Designation and Terms of the Participating Preferred Stock) is filed as an
exhibit to the Registration Statement. The foregoing description of the Rights
is qualified in its entirety by reference to the Rights Agreement and such
exhibits.
DELAWARE LAW
Under Section 203 of the Delaware General Corporation Law ("Section 203"),
which will be applicable to Lanier after the Distribution, certain "business
combinations" (defined generally to include mergers or consolidations between
the Delaware corporation and an interested stockholder and transactions with an
interested stockholder involving the assets or stock of the corporation or its
majority-owned subsidiaries and transactions which increase the interested
stockholder's percentage ownership of stock) between a publicly held Delaware
corporation and an "interested stockholder" (defined generally as those
stockholders who become beneficial owners of 15% or more of a Delaware
corporation's voting stock or their affiliates) are prohibited for a
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<PAGE> 78
three-year period following the date that such stockholder became an interested
stockholder, unless (i) the corporation has elected in its certificate of
incorporation not to be so governed, (ii) either the business combination or the
proposed acquisition of stock resulting in the person becoming an interested
stockholder was approved by the board of directors of the corporation before the
other party to the business combination became an interested stockholder, (iii)
upon consummation of the transaction that made it an interested stockholder, the
interested stockholder owned at least 85% of the voting stock of the corporation
outstanding at the commencement of the transaction (excluding voting stock owned
by officers who are also directors or held in employee benefit plans in which
the employees do not have a confidential right to tender or vote stock held by
the plan) or (iv) the business combination was approved by the board of
directors of the corporation and also ratified by two-thirds of the voting stock
which the interested stockholder did not own.
Under certain circumstances, Section 203 makes it more difficult for a
person who would be an interested stockholder to effect various business
combinations with a corporation for a three-year period, although the
stockholders may elect to exclude a corporation from the restrictions imposed
thereunder. Lanier's restated certificate of incorporation does not exclude
Lanier from restrictions imposed under Section 203. The provisions of Section
203 may encourage companies interested in acquiring Lanier to negotiate in
advance with Lanier's board of directors, since the stockholder approval
requirement would be avoided if a majority of the directors then in office
approved either the business combination or the transaction which results in the
stockholder becoming an interested stockholder. Such provisions also may have
the effect of preventing changes in the management of Lanier. It is possible
that such provisions could make it more difficult to accomplish transactions
which stockholders may otherwise deem to be in their best interests.
LIABILITY AND INDEMNIFICATION OF DIRECTORS AND OFFICERS
LIMITATION ON LIABILITY OF DIRECTORS
Pursuant to authority conferred by Section 102 of the Delaware General
Corporation Law, Article Eleventh of Lanier's restated certificate of
incorporation ("Article Eleventh") eliminates the personal liability of Lanier's
directors to Lanier or its stockholders for monetary damages for breach of
fiduciary duty as a director, except to the extent that such exemption from
liability or limitation thereof is not permitted under the Delaware General
Corporation Law as currently in effect or as it may hereafter be amended. Under
the Delaware General Corporation Law as in effect on the date hereof, Lanier's
directors remain liable for (i) any breach of the duty of loyalty to Lanier or
its stockholders, (ii) any act or omission not in good faith or which involves
intentional misconduct or a knowing violation of law, (iii) any violation of
Section 174 of the Delaware General Corporation Law, which proscribes the
payment of dividends and stock purchases or redemptions under certain
circumstances and (iv) any transaction from which directors derive an improper
personal benefit.
Article Eleventh provides that any future repeal or amendment of its terms
(including any amendment or repeal of Article Eleventh made by virtue of any
change in the Delaware General Corporation Law) will not adversely affect any
rights of directors existing thereunder with respect to acts or omissions
occurring prior to such repeal or amendment.
INDEMNIFICATION
Lanier's bylaws and Section 145 of the Delaware General Corporation Law,
which allows, and in some cases requires, the indemnification of directors and
officers under certain circumstances, grant Lanier's directors and officers a
right to indemnification to the fullest extent permitted by law for all expenses
relating to civil, criminal, administrative or investigative procedures to which
they are a party (i) by reason of the fact that they are or were directors or
officers of Lanier or (ii) by reason of the fact that, while they are or were
directors or officers of Lanier, they are or were serving at the request of
Lanier as a director, officer or employee of another enterprise. Lanier's bylaws
further provide that an advancement for any such expenses shall only be made
upon delivery to Lanier by the indemnitee of an undertaking to repay all amounts
so advanced if it is ultimately determined that such indemnitee is not entitled
to be indemnified by Lanier.
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<PAGE> 79
INDEMNIFICATION AGREEMENTS
In connection with the Distribution, Lanier will enter into indemnification
agreements with certain of its directors and officers. These agreements will
require Lanier to indemnify these directors and officers with respect to their
activities as directors or officers of Lanier or when serving at Lanier's
request as a director, officer or trustee of another corporation, trust or other
enterprise against expenses (including attorneys' fees, judgments, fines and
amounts paid in settlement) actually and reasonably incurred by them in any
threatened, pending or completed suit or proceeding to which they are, or are
threatened to be made, parties as a result of their service to Lanier. Lanier
will agree to indemnify each indemnitee for any one or a combination of the
following, whichever is most advantageous to the indemnitee: (i) the benefits
provided by Lanier's restated certificate of incorporation and bylaws in effect
on the date of the indemnification agreement; (ii) the benefits provided by
Lanier's restated certificate of incorporation and bylaws at the time expenses
are incurred by the indemnitee; (iii) the benefits allowable under Delaware law
in effect on the date of the indemnification agreement; (iv) the benefits
allowable under the law of the jurisdiction under which Lanier exists at the
time expenses are incurred by the indemnitee; (v) the benefits available under
liability insurance obtained by Lanier; and (vi) such other benefits as may be
otherwise available to indemnitee under Lanier's existing practices. Under the
indemnification agreements, each indemnitee will continue to be indemnified even
after ceasing to occupy a position as an officer, director, employee or agent of
Lanier with respect to suits or proceedings arising out of acts or omissions
during his or her service to Lanier.
Each indemnitee will agree to notify Lanier promptly of any proceeding
brought or threatened and not to make any admission or settlement without
Lanier's consent, unless the indemnitee determines to undertake his or her own
defense and waives the benefits of the indemnification agreement.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The consolidated financial statements of Lanier Worldwide, Inc. and its
subsidiaries at July 2, 1999 and July 3, 1998, and for each of the three years
in the period ended July 2, 1999, appearing in this Registration Statement have
been audited by Ernst & Young LLP, independent auditors, as set forth in their
report thereon appearing elsewhere herein, and are included in reliance upon
such report given on the authority of such firm as experts in accounting and
auditing.
ADDITIONAL INFORMATION
Lanier has filed with the Commission the Registration Statement under the
Exchange Act, with respect to the Lanier Common Stock and the preferred stock
purchase rights associated with each share of Lanier Common Stock. This document
does not contain all of the information set forth in the Registration Statement
and the exhibits and schedules thereto, to which reference is hereby made.
Statements made in this document as to the contents of any contract, agreement
or other document referred to herein are not necessarily complete. With respect
to each such contract, agreement or other document filed as an exhibit to the
Registration Statement, reference is made to such exhibit for a more complete
description of the matter involved, and each such statement shall be deemed
qualified in its entirety by such reference.
The Registration Statement and the exhibits thereto filed by Lanier with
the Commission may be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, as well as at the Regional Offices of the Securities and Exchange
Commission at Seven World Trade Center, Thirteenth Floor, New York, New York
10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such information can be obtained by mail from the
Public Reference Branch of the Securities and Exchange Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549 at prescribed rates. The Commission
maintains a website that contains reports, proxy and information statements and
other information regarding statements regarding registrants that file
electronically with the Commission. The address of the Commission's website is
http://www.sec.gov. The address of Lanier's website is http://www.lanier.com.
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<PAGE> 80
After the Distribution, Lanier will be required to comply with the
reporting requirements of the Exchange Act and to file with the Commission
reports, proxy statements and other information as required by the Exchange Act.
Additionally, Lanier will be required to provide annual reports containing
audited financial statements to its stockholders in connection with its annual
meetings of stockholders. After the Distribution, these reports, proxy
statements and other information will be available to be inspected and copied at
the public reference facilities of the Commission or obtained by mail or over
the Internet from the Commission, as described above. After the Distribution,
the Lanier Shares will be listed on the New York Stock Exchange. When the Lanier
Shares commence trading on the New York Stock Exchange, such reports, proxy
statements and other information will be available for inspection at the offices
of the New York Stock Exchange, 20 Broad Street, New York, New York 10005.
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<PAGE> 81
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Shareholder
Lanier Worldwide, Inc.
We have audited the accompanying consolidated balance sheets of Lanier
Worldwide, Inc. and subsidiaries as of July 2, 1999 and July 3, 1998, and the
related consolidated statements of income, changes in shareholder equity and
cash flows for each of the three fiscal years in the period ended July 2, 1999.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements 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 financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Lanier
Worldwide, Inc. and subsidiaries as of July 2, 1999 and July 3, 1998, and the
related consolidated statements of their operations and their cash flows for
each of the three fiscal years in the period ended July 2, 1999, in conformity
with generally accepted accounting principles.
/s/ ERNST & YOUNG LLP
Orlando, Florida
July 27, 1999
F-1
<PAGE> 82
LANIER WORLDWIDE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
JULY 2, JULY 3,
1999 1998
---------- ----------
(IN THOUSANDS)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents................................. $ 18,209 $ 87,096
Trade receivables......................................... 348,604 319,048
Receivables from parent................................... 194,521 14,327
Inventories............................................... 166,404 201,642
Prepaid expenses.......................................... 17,107 8,899
Deferred income taxes..................................... 39,276 36,243
---------- ----------
TOTAL CURRENT ASSETS.............................. 784,121 667,255
OTHER ASSETS
Rental equipment, less allowance for depreciation
($205,232 in 1999 and $158,792 in 1998)................ 140,718 109,567
Property, plant and equipment, less allowance for
depreciation ($76,053 in 1999 and $65,830 in 1998)..... 42,755 45,839
Notes receivables-net..................................... 203,657 179,989
Intangibles, less accumulated amortization ($38,610 in
1999 and $28,241 in 1998).............................. 125,504 100,452
Other..................................................... 40,953 20,194
---------- ----------
TOTAL OTHER ASSETS................................ 553,587 456,041
---------- ----------
TOTAL ASSETS................................................ $1,337,708 $1,123,296
========== ==========
LIABILITIES AND SHAREHOLDER EQUITY
CURRENT LIABILITIES
Notes payable............................................. $ 138,011 $ 52,918
Trade payables............................................ 86,815 44,606
Retirement plan accounts.................................. 38,964 32,833
Accrued compensation...................................... 39,066 27,187
Accrued interest and sundry taxes......................... 21,772 13,681
Other accrued items....................................... 33,610 31,833
Unearned service income................................... 57,898 67,004
Income taxes.............................................. 15,460 5,659
Long-term debt-current portion............................ 2,582 2,192
---------- ----------
TOTAL CURRENT LIABILITIES......................... 434,178 277,913
OTHER LIABILITIES
Deferred income taxes..................................... 16,170 38,066
Long-term debt............................................ 4,622 3,660
SHAREHOLDER EQUITY
Preferred Stock, without par value: authorized 1,000,000
shares, issued-none.................................... -- --
Common Stock, $1.00 par value, 1,000,000 shares
authorized; issued and outstanding 41,893 shares in
1999 and 1998.......................................... 42 42
Additional paid-in capital................................ 329,679 313,054
Retained earnings......................................... 586,556 521,578
Accumulated other comprehensive loss...................... (33,539) (31,017)
---------- ----------
TOTAL SHAREHOLDER EQUITY.......................... 882,738 803,657
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDER EQUITY.................... $1,337,708 $1,123,296
========== ==========
</TABLE>
See Notes to Consolidated Financial Statements
F-2
<PAGE> 83
LANIER WORLDWIDE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
------------------------------------
JULY 2, JULY 3, JUNE 27,
1999 1998 1997
---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
REVENUE
Product sales and rentals................................ $ 807,468 $ 721,791 $ 704,282
Service income........................................... 623,020 532,986 465,732
Finance income........................................... 38,132 33,558 29,871
---------- ---------- ----------
1,468,620 1,288,335 1,199,885
COST AND EXPENSES
Cost of product sales and rentals........................ 547,929 453,968 426,042
Cost of service.......................................... 349,448 304,901 255,705
Selling and administrative expenses...................... 438,516 410,452 399,470
Restructuring expenses................................... -- 8,500 --
Interest expense......................................... 22,692 8,236 8,797
Other-net................................................ (1,235) 2,877 7,964
---------- ---------- ----------
1,357,350 1,188,934 1,097,978
---------- ---------- ----------
Income before income taxes............................... 111,270 99,401 101,907
Income taxes............................................. 40,000 36,604 38,208
---------- ---------- ----------
NET INCOME................................................. $ 71,270 $ 62,797 $ 63,699
========== ========== ==========
</TABLE>
See Notes to Consolidated Financial Statements
F-3
<PAGE> 84
LANIER WORLDWIDE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
----------------------------------
JULY 2, JULY 3, JUNE 27,
1999 1998 1997
--------- -------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net Income................................................ $ 71,270 $ 62,797 $ 63,699
Adjustments to Net Income:
Gain on sale of business................................ (21,532) -- --
Depreciation............................................ 109,832 72,838 62,641
Amortization............................................ 9,910 6,326 5,571
Non-current deferred income taxes....................... (21,896) 5,270 3,970
Changes in assets and liabilities:
Trade receivables....................................... 31,749 8,730 (78,421)
Receivable from parent.................................. (180,194) 54,637 97,109
Inventories............................................. 61,897 3,151 (51,799)
Prepaid expenses........................................ (8,345) (1,077) (1,743)
Trade payables and accrued liabilities.................. (12,387) (13,559) 13,372
Unearned service income................................. (42,199) (19,194) 843
Income taxes............................................ 25,775 (11,574) (1,006)
Other................................................... 33,689 (21,985) (8,147)
--------- -------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES................. 57,569 146,360 106,089
INVESTING ACTIVITIES
Proceeds from sale of business............................ 34,030 -- --
Capital expenditures:
Cash paid for acquired business......................... (171,117) (13,966) (12,459)
Plant and equipment..................................... (21,557) (15,837) (34,527)
Rental equipment........................................ (63,466) (68,622) (60,529)
--------- -------- ---------
NET CASH USED IN INVESTING ACTIVITIES..................... (222,110) (98,425) (107,515)
FINANCING ACTIVITIES
Proceeds from borrowings.................................. 108,026 62,596 101,149
Payments of borrowings.................................... (17,963) (46,856) (91,469)
--------- -------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES................. 90,063 15,740 9,680
Effect of exchange rates on cash and cash equivalents..... 5,591 4,774 (1,263)
--------- -------- ---------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS.......... (68,887) 68,449 6,991
Cash and cash equivalents at beginning of year............ 87,096 18,647 11,656
--------- -------- ---------
CASH AND CASH EQUIVALENTS AT END OF YEAR.................. $ 18,209 $ 87,096 $ 18,647
========= ======== =========
</TABLE>
See Notes to Consolidated Financial Statements
F-4
<PAGE> 85
LANIER WORLDWIDE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDER EQUITY
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
------------------------------------------------------------
JULY 2, JULY 3, JUNE 27,
1999 1998 1997
------------------ ------------------ ------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
COMMON STOCK
Balance at beginning of year........ $ 42 $ 42 $ 41
Shares issued to affiliates (1,000
shares in 1997).................. -- -- 1
-------- -------- --------
Balance at end of year.............. 42 42 42
ADDITIONAL PAID IN CAPITAL
Balance at beginning of year........ 313,054 313,054 306,658
Capital contribution from parent.... 16,625 -- 6,396
-------- -------- --------
Balance at end of year.............. 329,679 313,054 313,054
RETAINED EARNINGS
Balance at beginning of year........ 521,578 458,781 395,082
Net income.......................... 71,270 $71,270 62,797 $62,797 63,699 $63,699
Dividend paid to parent............. (6,292) -- --
-------- -------- --------
Balance at end of year.............. 586,556 521,578 458,781
ACCUMULATED OTHER COMPREHENSIVE LOSS
Balance at beginning of year........ (31,017) (21,720) (12,541)
Change in cumulative translation
adjustments...................... (2,522) (2,522) (9,297) (9,297) (9,179) (9,179)
------- ------- -------
Total comprehensive income.......... $68,748 $53,500 $54,520
-------- ======= -------- ======= -------- =======
Balance at end of year.............. (33,539) (31,017) (21,720)
-------- -------- --------
Total Shareholder Equity.............. $882,738 $803,657 $750,157
======== ======== ========
</TABLE>
See Notes to Consolidated Financial Statements
F-5
<PAGE> 86
LANIER WORLDWIDE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JULY 2, 1999
NOTE A -- SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION -- The consolidated financial statements include the
accounts of Lanier Worldwide, Inc. and Subsidiaries ("Lanier"), including
certain subsidiaries partially or wholly owned by Harris that will be
transferred to Lanier prior to the distribution to shareholders. Lanier is a
wholly owned subsidiary of Harris Corporation ("Harris") that sells and leases
office equipment products and provides related services to this marketplace.
These statements have been prepared in conformity with generally accepted
accounting principles and require management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. Significant intercompany
transactions and accounts have been eliminated.
Corporate expense allocations charged by Harris are based on a percentage of
Lanier's net sales. These amounts were $25.0 million in 1999, $22.6 million in
1998 and $21.1 million in 1997. Lanier's management estimates that its cost to
perform these services on a stand-alone basis will be approximately $7.0
million. Estimated charges include administration expenses such as legal and
audit services, risk management, investor relations and board of director
charges. Interest expense is provided on direct borrowings of Lanier. Interest
expense of Harris has not been allocated to Lanier. It is not practicable to
estimate what shareholder equity would have been if Lanier had operated as an
unaffiliated entity. In the opinion of management, the allocation methods used
are reasonable.
Lanier sells products to other affiliated operations of Harris. Sales to these
operations were not material.
FISCAL YEAR -- Fiscal years end on the Friday nearest June 30. The 1999 and 1997
fiscal years included 52 weeks while 1998 fiscal year included 53 weeks.
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.
CREDIT POLICY -- Lanier performs periodic credit evaluations of its customers'
financial positions and generally does not require collateral, except in the
case of certain leases in which Lanier maintains a security interest in the
leased equipment.
INVENTORIES -- Inventories are carried at the lower of cost, determined by the
First-In-First-Out (FIFO) method, or market.
RENTAL EQUIPMENT -- Rental equipment and service parts are carried on the basis
of cost. Depreciation is computed by the straight-line method using estimated
useful lives of up to five years.
BUILDINGS, MACHINERY AND EQUIPMENT -- Buildings, machinery and equipment are
carried on the basis of cost. Depreciation is computed by the straight-line
method using the estimated useful lives of the assets.
REVENUE RECOGNITION -- Revenue is recognized from sales when a product is
shipped, from rentals as they accrue, and from services and maintenance when
performed. Unearned income on service contracts is amortized by the
straight-line method over the term of the contracts.
ADVERTISING -- Advertising and promotional costs are expensed when incurred.
Advertising expense was $15.6 million in 1999, $13.5 million in 1998 and $15.5
million in 1997.
INCOME TAXES -- Lanier follows the liability method of accounting for income
taxes and is included with its parent, Harris, in a consolidated federal income
tax return. Harris requires each of its businesses to provide taxes on financial
statement pre-tax income or loss at applicable statutory tax rates. Amounts
receivable or payable for current and prior years' income taxes are treated as
intercompany transactions in accordance with Harris policy. Deferred income
taxes resulting from temporary differences between the financial statements and
the tax basis of assets and liabilities are separately classified on the balance
sheets.
F-6
<PAGE> 87
ASSET IMPAIRMENT -- Lanier accounts for long-lived asset impairment under
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of."
This Statement requires that long-lived assets and certain identifiable
intangibles to be held and used be reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. In performing the review for recoverability, Lanier estimates
the future cash flows expected to result from the use of the asset. If the sum
of the estimated expected cash flows is less than the carrying amount of the
asset, an impairment loss is recognized. Measurement of an impairment loss is
based on the estimated fair value of the asset. Long-lived assets to be disposed
of are recorded at the lower of their carrying amount or estimated fair value
less cost to sell.
INTANGIBLES -- Intangibles resulting from acquisitions are being amortized by
the straight-line method principally over periods between 15 and 40 years.
NEW ACCOUNTING STANDARDS -- In June 1998, the Financial Accounting Standards
Board issued FAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities." The statement establishes standards for recording derivative
financial instruments and the recognition of gains or losses resulting from
changes in the fair values of those instruments. Lanier plans to adopt the new
standard in fiscal 2000, however, Lanier has not determined the anticipated
impact of FAS No. 133.
FUTURES AND FORWARD CONTRACTS -- When Lanier sells products outside the United
States or enters into purchase commitments, transactions are frequently
denominated in currencies other than U.S. dollars. To minimize the impact on
revenue and cost from currency fluctuations, Lanier enters into currency
exchange agreements that qualify for hedge accounting treatment. It is Lanier's
policy not to speculate in foreign currencies. Currency exchange agreements are
designated as, and are effective as, hedges of foreign currency commitments. In
addition, these agreements are consistent with the designated currency of the
underlying transaction and mature on or before the underlying transaction. Gains
and losses on currency exchange agreements that qualify as hedges are deferred
and recognized as an adjustment of the carrying amount of the hedged asset,
liability or commitment. Gains and losses on currency exchange agreements that
do not qualify as hedges are recognized in income based on changes in the fair
market value of the currency exchange agreement.
FOREIGN CURRENCY TRANSLATION -- The functional currency for international
subsidiaries is the local currency. Assets and liabilities are translated at
current rates of exchange, and income and expense items are translated at the
weighted average exchange rate for the year. The resulting translation
adjustments are recorded as a separate component of accumulated other
comprehensive loss.
NOTE B -- ACQUISITION
On July 9, 1998, Lanier acquired the Copying Systems Division of the
Agfa-Gevaert Group which is a member of the Bayer Group, Leverkusen, Germany
(the "Agfa Acquisition"). The transaction was accounted for as a purchase. The
purchase price, which is subject to adjustment, was $168.3 million in cash. The
purchase price exceeded the fair value of net assets acquired by approximately
$46.0 million, which is being amortized on a straight-line basis over 20 years.
The results of the Agfa Acquisition are included in the accompanying
consolidated financial statements from the date of acquisition.
In connection with the Agfa Acquisition, Lanier accrued as a cost of the
purchase approximately $8.6 million in connection with the planned termination
of approximately 160 employees of Agfa, principally sales and technical
personnel. Lanier paid approximately $6.6 million in 1999 related to such
terminations.
The following summarized unaudited pro forma combined financial information
assumes the acquisition had occurred at the beginning of each period:
<TABLE>
<CAPTION>
FISCAL YEAR FISCAL YEAR
ENDED ENDED
JULY 2, 1999 JULY 3, 1998
------------ ------------
(IN THOUSANDS)
<S> <C> <C>
Net sales................................................... $1,430,448 $1,519,754
Net income.................................................. $ 71,270 $ 66,021
</TABLE>
F-7
<PAGE> 88
Pro forma results include the effects of purchase accounting adjustments and
additional interest expense as if the debt incurred in connection with the
acquisition had been outstanding from the beginning of each period. The pro
forma financial information is not necessarily indicative of either the results
of operations that would have occurred had the acquisition taken place at the
beginning of the periods presented or of future results of combined operations.
NOTE C -- SALE OF BUSINESS
In May 1999, Lanier sold its electronic medical transcription services business
for approximately $34 million. The resulting pre-tax gain of $21.5 million is
reflected in Other Income in the accompanying Consolidated Statement of Income.
NOTE D -- RESTRUCTURING
In 1998, Lanier recorded a $8.5 million charge ($5.3 million after income tax)
for the restructuring of its operations. Restructuring provisions are for the
reduction of approximately 350 employees, primarily service and administrative.
All employee terminations occurred and costs totaling $8.5 million were paid
during fiscal 1999.
NOTE E -- RECEIVABLES
Receivables are summarized below:
<TABLE>
<CAPTION>
1999 1998
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Accounts receivable......................................... $280,749 $245,120
Notes receivable due within one year-net.................... 89,075 83,038
-------- --------
369,824 328,158
Less allowances for collection losses....................... 21,220 9,110
-------- --------
$348,604 $319,048
======== ========
</TABLE>
In May 1999, Lanier entered into an asset-backed securitization program with a
bank which provides for the sale of up to $100 million of eligible trade
receivables of designated European subsidiaries. Lanier accounts for the sale of
receivables under this securitization program in accordance with Statement of
Financial Accounting Standards No. 125, "Accounting for Transfers and Servicing
of Financial Assets and Extinguishments of Liabilities." Receivables sold under
this program are excluded from accounts receivable in the Consolidated Balance
Sheet. As of July 2, 1999, Lanier had sold approximately $36.5 million of trade
accounts receivable, without recourse, to a third party. Amounts received from
the sale of those receivables are net of applicable interest and an allowance
for credit losses. To the extent that actual credit losses are less than the
allowance for credit losses, the remaining amount will be paid to Lanier. Lanier
has retained the responsibility for servicing accounts receivable sold.
NOTE F -- INVENTORIES
Inventories are summarized below:
<TABLE>
<CAPTION>
1999 1998
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Finished products........................................... $109,082 $152,980
Parts....................................................... 53,766 47,223
Raw materials and supplies.................................. 3,556 1,439
-------- --------
$166,404 $201,642
======== ========
</TABLE>
At July 2, 1999, Lanier was committed to purchase $3.4 million of inventory from
suppliers. Management believes the cost of this inventory approximates current
market value.
F-8
<PAGE> 89
NOTE G -- PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are summarized below:
<TABLE>
<CAPTION>
1999 1998
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Land........................................................ $ 854 $ 854
Buildings................................................... 20,073 18,982
Machinery and equipment..................................... 97,881 91,833
-------- --------
118,808 111,669
Less allowances for depreciation............................ 76,053 65,830
-------- --------
$ 42,755 $ 45,839
======== ========
</TABLE>
NOTE H -- CREDIT ARRANGEMENTS
Lanier has lines of credit for short-term borrowings aggregating $198.7 million
from various U.S. and foreign banks, of which $60.7 million was available on
July 2, 1999. These arrangements provide for borrowing at various interest
rates, are reviewed annually for renewal, and may be used on such terms as
Lanier and the banks mutually agree. These lines do not require compensating
balances. Short-term debt outstanding under these lines on July 2, 1999 was
$138.0 million. The weighted average interest rate for short-term debt was 5.1
percent at July 2, 1999 and 8.4 percent at July 3, 1998.
NOTE I -- LONG-TERM DEBT
Long-term debt includes the following:
<TABLE>
<CAPTION>
1999 1998
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Bank notes.................................................. $ 919 $ 870
Other notes................................................. 2,094 1,624
Capital leases.............................................. 1,309 766
Revenue bonds............................................... 300 400
-------- --------
$ 4,622 $ 3,660
======== ========
</TABLE>
The weighted average interest rate for long-term debt was 7.4 percent at July 2,
1999 and 7.8 percent at July 3, 1998. Maturities of long-term debt for the five
years following 1999 are: $2.6 million in 2000, $2.2 million in 2001, $0.9
million in 2002, $0.6 million in 2003 and $0.1 million in 2004.
NOTE J -- INTEREST EXPENSE
Total interest expense was $22.7 million in 1999, $8.2 million in 1998 and $8.8
million in 1997. Interest paid was $22.4 million in 1999, $8.2 million in 1998
and $8.5 million in 1997.
NOTE K -- LEASE COMMITMENTS
Total rental expense amounted to $45.8 million in 1999, $40.9 million in 1998
and $33.2 million in 1997. Future minimum rental commitments under
non-cancelable operating leases, primarily used for land and buildings, amounted
to approximately $89.7 million at July 2, 1999. These commitments for the years
following 1999 are: 2000 -- $37.2 million, 2001 -- $21.0 million, 2002 -- $15.1
million, 2003 -- $10.2 million, 2004 -- $3.7 million and $2.5 million
thereafter.
F-9
<PAGE> 90
NOTE L -- CUSTOMER LEASING
Lanier's net investment in sales-type leases is as follows:
<TABLE>
<CAPTION>
1999 1998
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Total minimum lease payments receivables.................... $347,759 $316,717
Residual value of equipment................................. 11,967 5,700
Less unearned finance income................................ 63,146 57,258
-------- --------
Present value of minimum lease payments receivable.......... 296,580 265,159
Less allowance for collection losses........................ 3,848 2,132
Less current portion........................................ 89,075 83,038
-------- --------
$203,657 $179,989
======== ========
</TABLE>
The amount of minimum rental payments receivable for sales-type leases for each
of the next five years are: 2000 -- $110.2 million, 2001 -- $108.6 million,
2002 -- $73.2 million, 2003 -- $36.3 million, and 2004 -- $19.5 million.
NOTE M -- RETIREMENT BENEFITS
Lanier has noncontributory defined benefit pension plans which cover employees
in the United States. Pension benefits are based principally on an employee's
years of service and compensation near retirement. Lanier's pension funding
policy is to deposit with an independent trustee amounts at least equal to those
required by law. A trust fund is maintained to provide pension benefits to plan
participants and beneficiaries.
F-10
<PAGE> 91
The projected benefit obligations, fair value of plan assets and net periodic
pension cost of Lanier's domestic pension plan include the following components
(in thousands):
<TABLE>
<CAPTION>
DOMESTIC FOREIGN
------------------- -------------------
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
CHANGE IN BENEFIT OBLIGATION
BENEFIT OBLIGATION AT THE BEGINNING OF
YEAR................................. $106,667 $ 94,692 $ 24,669 $ 24,126
Service cost........................... 5,365 3,903 1,678 1,129
Interest cost.......................... 7,544 7,391 1,908 1,474
Actuarial gain......................... 795 6,875 541 (570)
Benefits paid.......................... (577) (6,194) (1,146) (500)
Settlements............................ (17,057) -- (397) --
Acquisition............................ -- -- 10,132 --
Foreign currency exchange rate
changes.............................. -- -- (1,665) (990)
-------- -------- -------- --------
BENEFIT OBLIGATION AT THE END OF
YEAR................................. $102,737 $106,667 $ 35,720 $ 24,669
======== ======== ======== ========
CHANGE IN PLAN ASSETS
Fair value of plan assets at beginning
of year.............................. $111,334 $ 86,981 $ 21,812 $ 19,317
Actual return on plan assets........... 6,811 26,032 1,160 3,059
Employer contribution.................. -- 4,515 1,549 619
Benefits paid.......................... (577) (6,194) (476) (490)
Settlements............................ (17,057) -- 234 113
Acquisition............................ -- -- 6,009 --
Foreign currency exchange rate
changes.............................. -- -- (1,351) (806)
-------- -------- -------- --------
FAIR VALUE OF PLAN ASSETS AT END OF
YEAR................................. $100,511 $111,334 $ 28,937 $ 21,812
======== ======== ======== ========
Funded status.......................... $ (2,226) $ 4,667 $ (6,783) $ (2,857)
Unamortized prior service cost......... (96) (106) (2) (41)
Unrecognized net actuarial loss........ (12,092) (16,973) (4,374) (5,581)
Unrecognized transition obligation..... (1,092) (1,367) -- --
-------- -------- -------- --------
PREPAID (ACCRUED) BENEFIT COST......... $(15,506) $(13,779) $(11,159) $ (8,479)
======== ======== ======== ========
DOMESTIC FOREIGN
------------------------------ ------------------------------
1999 1998 1997 1999 1998 1997
-------- -------- -------- -------- -------- --------
COMPONENTS OF NET PERIODIC BENEFIT COST
Service cost........................... $ 5,365 $ 3,903 $ 5,265 $ 1,678 $ 1,129 $ 1,109
Interest cost.......................... 7,544 7,391 6,843 1,908 1,474 1,690
Expected return on plan assets......... (8,707) (7,552) (6,177) (1,535) (1,366) (1,137)
Amortization of unrecognized transition
obligation........................... (275) (275) (275) 2 2 9
Prior service cost recognized.......... (10) (10) (10) (278) (59) (185)
Gain due to settlement................. (2,189) -- -- -- -- --
Net periodic pension cost.............. $ 1,728 $ 3,457 $ 5,646 $ 1,775 $ 1,180 $ 1,486
======== ======== ======== ======== ======== ========
</TABLE>
F-11
<PAGE> 92
The significant weighted-average assumptions used in determining the actuarial
present value of projected benefit obligations and the net pension expense are
as follows:
<TABLE>
<CAPTION>
DOMESTIC
--------------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Discount Rate............................................. 7.3% 8.0% 7.8%
Expected increase in compensation levels.................. 4.0% 4.0% 4.5%
Expected long-term rate of return of assets............... 10.0% 10.0% 9.0%
</TABLE>
<TABLE>
<CAPTION>
FOREIGN
--------------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Discount Rate............................................. 6.2% 4.5% 6.9%
Expected increase in compensation levels.................. 3.8% 3.0% 4.7%
Expected long-term rate of return of assets............... 6.7% 4.9% 7.2%
</TABLE>
The accumulated benefit obligation and the fair value of plan assets for foreign
pension plans with accumulated benefit obligations in excess of plan assets were
$14.7 million and $11.1 million, respectively, as of July 2, 1999 and $8.8
million and $7.1 million, respectively, as of July 3, 1998.
The projected benefit obligation and the fair value of plan assets for foreign
pension plans with projected benefit obligations in excess of plan assets were
$34.0 million and $26.9 million, respectively, as of July 2, 1999 and $19.5
million and $15.9 million, respectively, as of July 3, 1998.
Lanier is subject to statutory employee termination, retirement and death
indemnity obligations in certain foreign locations. This unfunded obligation was
approximately $6.6 million and $3.9 million at July 2, 1999 and July 3, 1998,
respectively. Lanier expensed approximately $1.0 million, $0.6 million, and $0.5
million associated with these obligations in the years ended July 2, 1999, July
3, 1998, and June 30, 1997, respectively.
Lanier has a Supplemental Executive Retirement Plan ("SERP") which provides
unfunded supplemental retirement benefits to certain executives. The SERP
provides for incremental pension payments partially to offset the reduction in
the amounts that would have been payable from Lanier's principal pension plan if
it were not for limitations imposed by federal income tax regulations. Expenses
of $1.0 million, $0.7 million, and $0.9 million were recognized in the fiscal
years ended July 2, 1999, July 3, 1998, and June 27, 1997, respectively. Amounts
accrued as of July 2, 1999 and July 3, 1998 related to the plan were $4.1
million and $3.0 million, respectively.
Retirement benefits include a fully funded savings plan for U.S. employees.
Employees may participate in the savings plan by contributing a portion of their
compensation. During the fiscal year ended June 27, 1997, Lanier matched 50% of
employee contributions up to 3 percent of each participating employee's
compensation. In fiscal year 1998, Lanier began matching 50 percent of employee
contributions up to 6 percent of each participating employee's compensation.
Matching contributions for the fiscal years ended July 2, 1999, July 3, 1998,
and June 27, 1997 were $4.9 million, $4.0 million, and $1.8 million,
respectively.
Retirement benefits also include an unfunded limited healthcare plan for
U.S.-based retirees and employees. Lanier accrues the estimated cost of these
medical benefits during an employee's active service life. Benefit obligations
and cost under this plan are not material.
F-12
<PAGE> 93
NOTE N -- INCOME TAXES
The provisions for income taxes are summarized below:
<TABLE>
<CAPTION>
1999 1998 1997
-------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Current:
United States...................................... $ 33,007 $22,516 $25,115
International...................................... 23,969 3,039 5,548
State and local.................................... 7,952 4,418 5,478
-------- ------- -------
64,928 29,973 36,141
-------- ------- -------
Deferred:
United States...................................... (12,575) 3,571 989
International...................................... (9,864) 2,159 1,092
State and local.................................... (2,489) 901 (14)
-------- ------- -------
(24,928) 6,631 2,067
-------- ------- -------
$ 40,000 $36,604 $38,208
======== ======= =======
</TABLE>
The components of deferred income tax assets (liabilities) are as follows:
<TABLE>
<CAPTION>
1999 1998
---------------------- ----------------------
CURRENT NON-CURRENT CURRENT NON-CURRENT
------- ----------- ------- -----------
(IN THOUSANDS)
--------------
<S> <C> <C> <C> <C>
Inventory valuations.......................... $23,118 $ -- $14,850 $ --
Accruals...................................... 8,160 1,325 15,680 1,091
Depreciation.................................. -- 13,247 -- (37,915)
Leases........................................ (656) 8,873 (2,926) (12,595)
International tax loss carryforwards.......... -- 21,595 -- 6,501
All other-net............................... 8,654 (45,341) 8,639 11,353
------- -------- ------- --------
39,276 301 36,243 (31,565)
Valuation allowance........................... -- (15,869) -- (6,501)
------- -------- ------- --------
$39,276 $(16,170) $36,243 $(38,066)
======= ======== ======= ========
</TABLE>
A reconciliation of the statutory United States income tax rate to the effective
income tax rate follows:
<TABLE>
<CAPTION>
1999 1998 1997
----- ----- -----
<S> <C> <C> <C>
Statutory U.S. income tax rate.............................. 35.0% 35.0% 35.0%
State taxes................................................. 3.2 3.5 3.5
Foreign Income.............................................. (1.5) (2.0) --
Other items................................................. (0.8) 0.3 (1.0)
----- ----- -----
Effective income tax rate................................... 35.9% 36.8% 37.5%
----- ----- -----
</TABLE>
United States income taxes have not been provided on $163.0 million of
undistributed earnings of international subsidiaries because of the Lanier'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.
At July 2, 1999, Lanier had net international income tax loss carryforwards of
approximately $57.0 million. Loss carryforwards of $29.1 million will expire
between the years 2000 and 2009. The remaining $27.9 million of loss
carryforwards available for an indefinite period of time.
F-13
<PAGE> 94
Pretax income of international subsidiaries was $24.8 million in 1999, $21.4
million in 1998 and $20.5 million in 1997.
Income taxes paid were $39.0 million in 1999, $43.0 million in 1998 and $35.4
million in 1997.
NOTE O -- GEOGRAPHIC INFORMATION
Lanier operates exclusively in the office equipment industry. Substantially all
revenues result from the sale and rental of office equipment and related
services. All intercompany revenues are eliminated in computing revenues.
A summary of Lanier's operations by geographic area is summarized below:
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
(IN THOUSANDS)
--------------
<S> <C> <C> <C>
United States Operations
Net sales.............................................. $875,532 $902,034 $823,947
Long-lived assets...................................... $173,749 $212,461 $194,686
International
Net sales.............................................. $554,956 $352,743 $346,067
Long-lived assets...................................... $176,181 $ 63,591 $ 57,588
</TABLE>
Export sales included in U.S. Operations were $14.2 million in 1999, $18.3
million in 1998, and $16.1 million in 1997.
NOTE P -- FINANCIAL INSTRUMENTS
The carrying values of cash equivalents, accounts receivable, notes receivable,
accounts payable, short-term debt and long-term debt approximate fair value.
Lanier uses foreign exchange contracts and options to hedge intercompany
accounts and off-balance-sheet foreign currency commitments. Specifically, these
foreign exchange contracts offset foreign currency denominated inventory and
purchase commitments from suppliers, accounts receivable from and future
committed sales to customers. Management believes the use of foreign currency
financial instruments should reduce the risks that arise from doing business in
international markets. Contracts are generally one year or less. At July 2,
1999, open foreign exchange contracts were $163.1 million (as described below),
of which $7.4 million were to hedge off-balance-sheet commitments. Additionally,
for the year ended July 2, 1999, Lanier purchased and sold $814.4 million of
foreign exchange forward and option contracts.
Deferred gains and losses are included on a net basis in the Consolidated
Balance Sheet as other assets and are recorded in income as part of the
underlying transaction when it is recognized.
At July 2, 1999, Lanier had $5.0 million in open option contracts. Total open
foreign exchange contracts at July 2, 1999, are described in the table below:
COMMITMENTS TO BUY FOREIGN CURRENCIES
(in millions)
<TABLE>
<CAPTION>
CONTRACT AMOUNT
--------------------- DEFERRED
FOREIGN GAINS MATURITIES
CURRENCY CURRENCY U.S. AND (LOSSES) (IN MONTHS)
-------- --------- -------- ------------ -----------
<S> <C> <C> <C> <C>
Canadian Dollar............................... 1.4 0.9 -- 6
Swiss Franc................................... 40.5 27.5 (1.3) 3
Euro.......................................... 26.9 30.0 (2.1) 10
French Franc.................................. 1.0 0.2 -- 3
Italian Lira.................................. 10,123.0 5.4 -- 3
Japanese Yen.................................. 604.8 4.9 -- 1-3
Norwegian Krone............................... 13.3 1.7 -- 6
</TABLE>
F-14
<PAGE> 95
COMMITMENTS TO SELL FOREIGN CURRENCIES
(in millions)
<TABLE>
<CAPTION>
CONTRACT AMOUNT
--------------------- DEFERRED
FOREIGN GAINS MATURITIES
CURRENCY CURRENCY U.S. AND (LOSSES) (IN MONTHS)
-------- --------- -------- ------------ -----------
<S> <C> <C> <C> <C>
Austrian Schilling............................ 57.0 4.3 -- 3
Australian Dollar............................. 0.5 0.4 -- 12
Canadian Dollar............................... 25.7 16.8 (0.6) 1-6
Swiss Franc................................... 84.7 61.3 6.7 3
Czech Republic Koruna......................... 27.5 0.9 0.1 6
Danish Krone.................................. 19.2 2.9 0.2 10
Euro.......................................... 3.8 4.0 0.1 10
French Franc.................................. 3.7 0.6 -- 3
Swedish Krona................................. 10.7 1.3 -- 12
</TABLE>
NOTE Q -- DISTRIBUTION OF LANIER STOCK
On April 13, 1999, Harris announced that it would spin Lanier off as a separate
publicly traded company. Harris intends to accomplish this transaction through a
distribution of Lanier stock to Harris shareholders that is expected to be tax
free to such shareholders for U.S. federal income tax purposes. The transaction
is expected to take place in the first quarter of fiscal year 2000.
NOTE R -- IMPAIRMENT CHARGES
In the fourth quarter of fiscal year 1999, Lanier recorded a $7.7 million
impairment charge related to its investment in a technology-related company.
The investment in the technology-related company (the "investee") was divided
into three components: (i) a $4.0 million equity investment; (ii) a $1.7 million
licensing agreement; and (iii) $2.0 million in inventory of a product line which
utilized software developed by the investee. In the fourth quarter of fiscal
year 1999, Lanier management decided to exit this product line because a
competitor's software technology had become the industry standard, the
investee's product technology had become obsolete, and Lanier's product line was
no longer marketable, rendering Lanier's equity investment not marketable. On
the basis of APB No. 18. paragraph 6, Lanier concluded that the decline in the
fair value of the equity investment was permanent, and accordingly wrote off the
investment to other expense in the fourth quarter of fiscal year 1999.
Additionally, Lanier expensed the unamortized portion of the licensing agreement
to selling and administrative expenses and wrote off the remaining inventory
less scrap value, to cost of product sales in connection with the decision to
exit the product line.
F-15
<PAGE> 96
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------
EXHIBITS TO FORM 10
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF
THE SECURITIES EXCHANGE ACT OF 1934
---------------------------
LANIER WORLDWIDE, INC.
EXHIBIT INDEX
-------------
Exhibit No.
- -----------
2.1 Form of Distribution Agreement.*
3.1 Form of Amended and Restated Certificate of Incorporation of
Lanier Worldwide, Inc.**
3.2 Form of By-Laws of Lanier Worldwide, Inc.**
4.1 Form of Stockholder Protection Rights Agreement.**
4.2 Form of Certificate of Designation and Terms of Registrant's
Participating Preferred Stock.**
4.3 Form of certificate representing Lanier common stock**
10.1 Form of Tax Disaffiliation Agreement.**
10.2A Commitment Letter with respect to Credit Agreement.
10.2B Credit Agreement.*
10.3 Form of Transition Services Agreement.**
10.4 Form of Distribution Agreement (filed as Exhibit 2.1).*
10.5 Form of Employee Benefits Compensation and Allocation
Agreement.*
10.6 Form of Registration Rights Agreement.**
10.7 Form of Stock Incentive Plan.
10.8 Lanier Worldwide, Inc. Supplemental Retirement Savings Plan.**
10.9 Lanier Worldwide, Inc. Supplemental Executive Retirement Plan.**
10.10 Form of Indemnification Agreement
10.11 Form of Employee Stock Purchase Plan.
10.12 Form of Amended and Restated Key Contributor Incentive Plan.
10.13 Form of Amended and Restated Long-term Incentive Plan for Key
Employees.
10.14 Form of Executive Severance Agreement.
10.15 Pension Equity Plan.
10.16 Savings Incentive Plan.
12.1 Computation of Ratios of Earnings to Fixed Charges.**
21.1 List of Subsidiaries.*
23.1 Consent of Independent Certified Public Accountants.
27.1 Financial Data Schedule.**
- -------------
* To be filed by Amendment
** Previously filed.
<PAGE> 1
EXHIBIT 10.2A
October 7, 1999
Lanier Worldwide, Inc.
2300 Parklake Drive
Atlanta, Georgia 30345
Attention: Rich Cleys
Vice President and Treasurer
Re: Commitment Letter for $900,000,000 Senior Credit Facilities
-----------------------------------------------------------
Dear Rich:
Lanier Worldwide, Inc. ("Lanier" and, together with certain of its
principal subsidiaries to be agreed upon, the "Borrowers") has advised ABN AMRO
Bank N.V. ("ABN"), SunTrust Bank, Atlanta and SunTrust Equitable Securities
Corporation (together, "SunTrust") and Wachovia Securities, Inc. and Wachovia
Bank N.A. (together, "Wachovia") that the parent of Lanier, Harris Corporation
("Harris"), intends to distribute approximately 90% of the shares of Lanier's
capital stock to the stockholders of Harris (the "Spin-off"). You have further
advised us that up to $900,000,000 in senior debt financing will be required in
connection with the Spin-off to: (a) refinance approximately $150,000,000 of
existing indebtedness of the Borrowers; (b) finance a cash dividend of
approximately $550,000,000 (the "Dividend") to be paid by Lanier to Harris on
the date of the Spin-off (the "Spin-off Date"); (c) pay fees and expenses
incurred in connection with the Spin-off; and (d) provide for working capital
and other general corporate purposes of the Borrowers (the Spin-off and
financing contemplated hereby are jointly referred to as the "Transaction").
ABN, SunTrust and Wachovia (jointly, the "Arrangers") are pleased to
offer their several commitments to each lend one-third of $900,000,000 of senior
credit facilities (the "Senior Credit Facilities") upon and subject to the terms
and conditions of this letter and the Summary of Terms and Conditions attached
hereto (the "Summary of Terms and Conditions").
Upon acceptance of this letter, the Arrangers intend to commence
syndication efforts promptly, and you agree to actively assist the Arrangers in
achieving a syndication of the Senior Credit Facilities that is satisfactory to
the Arrangers. Such assistance shall include (a) you providing and causing your
advisors (including Harris) to provide the Arrangers, the Administrative Agent
(as defined in the Summary of Terms and Conditions) and the Lenders upon request
with all information reasonably deemed necessary by them to complete the
syndication, including, but not limited to, information and evaluations prepared
by you and your advisors, or on their behalf, relating to the Transaction; (b)
assistance in the preparation of an Information Memorandum to be used in
connection with the syndication; (c) your and Harris' using commercially
reasonable efforts to ensure that the syndication efforts benefit materially
from your respective existing lending relationships; and (d) otherwise assisting
the Arrangers in their syndication efforts, including by making senior
management and advisors of the Borrowers and Harris available from time to time
to attend and make presentations regarding the business and prospects of the
Borrowers at one or more meetings of prospective Lenders.
It is understood and agreed that the Administrative Agent and the
Arrangers, after consultation with you, will manage and control all aspects of
the syndication, including decisions as to the selection of proposed Lenders and
any titles offered to proposed Lenders, when commitments will be accepted, the
tiering of commitments among the Lenders and the fees paid on those tiers, and
the final allocations of the commitments among the Lenders. It is understood
that no Lender participating in the Senior Credit
<PAGE> 2
Lanier Worldwide, Inc.
October 7, 1999
Page 2
Facilities will receive compensation from you in order to obtain its commitment,
except on the terms contained herein and in the Summary of Terms and Conditions.
It is also understood and agreed that the amount and distribution of the fees
among the Lenders will be at the sole discretion of the Arrangers and that any
syndication prior to execution of the definitive documentation for the Senior
Credit Facilities will ratably reduce the commitment of ABN, SunTrust and
Wachovia.
The commitments of ABN, SunTrust and Wachovia hereunder and the
agreement of the Arrangers to provide the services described herein are subject
to the agreement in the preceding paragraph and the satisfaction of each of the
conditions precedent set forth below: (a) satisfaction of each of the terms and
conditions set forth herein and in the Summary of Terms and Conditions; (b) the
absence of a material breach of any representation, warranty or agreement of the
Borrowers set forth herein; (c) the satisfaction of the Arrangers that prior to
and during the syndication of the Senior Credit Facilities there shall be no
competing offering, placement or arrangement of any debt securities or bank
financing by or on behalf of the Borrowers (except for the potential syndication
of Lanier's European accounts receivable securitization program in an amount not
to exceed the foreign currency equivalent of US$100,000,000); (d) the
negotiation, execution and delivery of definitive documentation for the Senior
Credit Facilities consistent herewith and with the Summary of Terms and
Conditions and otherwise satisfactory to the Arrangers; (e) there shall not have
occurred and be continuing any material adverse change in or material disruption
of conditions in the financial, banking or capital markets which any of the
Arrangers, in their reasonable discretion, deem material in connection with the
syndication of the Senior Credit Facilities; and (f) the Arrangers' not becoming
aware after the date hereof of any information with respect to the business,
conditions (financing and otherwise), operations, performance and prospects of
Lanier and its subsidiaries or any other matter which in their reasonable
judgment is inconsistent in a material and adverse manner with any information
or other matter disclosed to the Arrangers prior to the date hereof (in which
case the Arrangers may, in their sole discretion, suggest alternative financing
amounts or structures that ensure adequate protection for the Lenders (in which
case Lanier shall have the right to terminate this letter without further
obligation except as specifically set forth herein or in the Fee Letters (as
defined below)) or terminate this letter and any commitment or undertaking
hereunder).
You hereby represent, warrant and covenant that (a) all information,
other than the Projections (defined below), which has been or is hereafter made
available to the Arrangers or the Lenders by you or any of your representatives
in connection with the Transactions contemplated hereby (the "Information") is
and will be complete and correct in all material respects and does not and will
not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements contained therein not misleading, and (b)
all financial projections concerning the Borrowers that have been or are
hereafter made available to the Arrangers or the Lenders by you or any of your
representatives (the "Projections") have been or will be prepared in good faith
based upon assumptions you believe to be reasonable. You agree to furnish the
Arrangers with such Information and Projections as they may reasonably request
and to supplement the Information and the Projections from time to time until
the closing date for the Senior Credit Facilities so that the representation,
warranty and covenant in the preceding sentence is correct on such closing date.
You understand that in arranging and syndicating the Senior Credit Facilities,
the Administrative Agent and the Arrangers will be using and relying on the
Information and the Projections without independent verification thereof.
By acceptance of this offer, you agree to pay all reasonable
out-of-pocket fees and expenses (including reasonable attorneys' fees and
expenses of the Administrative Agent and the due diligence and syndication
expenses of the Arrangers) incurred before or after the date hereof by the
Arrangers and the Administrative Agent in connection with the Senior Credit
Facilities, the syndication thereof and the other transactions contemplated
hereby.
You agree to indemnify and hold harmless the Administrative Agent, each
Arranger, each Lender and each of their affiliates and their directors,
officers, employees, advisors and agents (each, an "Indemnified Party") from and
against (and will reimburse each Indemnified Party as the same are incurred) any
and all losses, claims, damages, liabilities, and expenses (including, without
limitation, the reasonable fees and expenses of counsel and the allocated cost
of internal counsel) that may be incurred by or asserted or awarded against any
Indemnified Party, in each case arising out of or in connection with
<PAGE> 3
Lanier Worldwide, Inc.
October 7, 1999
Page 3
or by reason of (including, without limitation, in connection with any
investigation, litigation or proceeding or preparation of a defense in
connection therewith) (a) the Transaction or any similar transaction and any of
the other transactions contemplated thereby, or (b) the Senior Credit Facilities
or any other financings, or any use made or proposed to be made with the
proceeds thereof unless and only to the extent that, as to any Indemnified
Party, it shall be determined in a final, nonappealable judgment by a court of
competent jurisdiction that such losses, claims, damages, liabilities or
expenses resulted primarily from the gross negligence or willful misconduct of
such Indemnified Party. In the case of any investigation, litigation or
proceeding to which the indemnity in this paragraph applies, such indemnity
shall be effective whether or not such investigation, litigation or proceeding
is brought by you, your shareholders or creditors or an Indemnified Party and
whether or not the Transaction is consummated. You agree that no Indemnified
Party shall have any liability to you or your subsidiaries or affiliates or to
your or their respective security holders or creditors for any special,
indirect, consequential or punitive damages arising out of, related to or in
connection with the Transaction.
The terms of this letter, the Summary of Terms and Conditions, the fee
letter among you and the Arrangers (the "Fee Letter") and the fee letter between
you and the Administrative Agent (the "Administrative Agent Fee Letter" and
together with the Fee Letter, the "Fee Letters") are confidential and, except
for disclosure on a confidential basis to Harris and your accountants, attorneys
and other professional advisors retained by you in connection with the Senior
Credit Facilities or as may be required by law, may not be disclosed in whole or
in part to any other person or entity without the prior written consent of the
Arrangers and the Administrative Agent.
The provisions of the immediately preceding three paragraphs shall
remain in full force and effect regardless of whether any definitive
documentation for the Senior Credit Facilities shall be executed and
notwithstanding the termination of this letter or any commitment or undertaking
hereunder.
This letter and the Fee Letters shall be governed by laws of the State
of New York. Each of the Arrangers and you hereby irrevocably waives all right
to trial by jury in any action, proceeding or counterclaim (whether based on
contract, tort or otherwise) arising out of or relating to this letter, the
Summary of Terms and Conditions, the transactions contemplated hereby and
thereby or the actions of the Administrative Agent or the Arrangers in the
negotiation, performance or enforcement hereof.
This letter, together with the Summary of Terms and Conditions and the
Fee Letters, are the only agreements that have been entered into among the
parties hereto with respect to the Senior Credit Facilities (other than the
engagement letter dated July 12, 1999, the Commitment Letter, Summary of Terms
and Conditions and the Fee Letters, all dated September 3, 1999, which are
superseded hereby) and set forth the entire understanding of the parties with
respect thereto. This letter may be modified or amended only by the written
agreement of all of us. This letter is not assignable by you without the prior
written consent of the Arrangers and is intended to be solely for the benefit of
the parties hereto and the Indemnified Parties.
This offer will expire at 5:00 p.m. Central Daylight Time on October 8,
1999 unless you execute this letter and the Fee Letters and return them to Paul
Widuch at ABN prior to that time (which may be by facsimile transmission),
whereupon this letter and the Fee Letters (each of which may be signed in one or
more counterparts) shall become binding agreements. Thereafter, this undertaking
and commitment will expire on the earliest to occur of (a) the closing of the
Spin-off without the use of the Senior Credit Facilities and (b) the close of
business on November 15, 1999, unless definitive documentation for the Senior
Credit Facilities is executed and delivered on or prior to such date.
We are pleased to have the opportunity to work with you in connection
with this important financing.
Very truly yours,
<PAGE> 4
Lanier Worldwide, Inc.
October 7, 1999
Page 4
ABN AMRO BANK N.V.
By:
------------------------------
Title:
By:
------------------------------
Title:
SUNTRUST BANK, ATLANTA
By:
------------------------------
Title:
SUNTRUST EQUITABLE
SECURITIES CORPORATION
By:
------------------------------
Title:
WACHOVIA SECURITIES, INC.
By:
------------------------------
Title:
WACHOVIA BANK N.A.
By:
------------------------------
Title:
Accepted and Agreed to
as of October 8, 1999:
LANIER WORLDWIDE, INC.
By:
------------------------------
Title:
<PAGE> 5
SUMMARY OF TERMS AND CONDITIONS
LANIER WORLDWIDE, INC.
$900,000,000 SENIOR CREDIT FACILITIES
BORROWERS: Lanier Worldwide, Inc. ("Lanier") and certain of its
principal subsidiaries to be agreed upon (each a
"Borrower" and, together with Lanier, the
"Borrowers").
GUARANTORS: The Facilities shall be cross-guaranteed by the
Borrowers and by existing and future direct and
indirect subsidiaries of Lanier to be agreed upon
(collectively, the "Guarantors") so long as, with
respect to the provision of a guarantee by any
foreign subsidiaries, no material adverse tax
consequences would result.
LEAD ARRANGER,
BOOK RUNNER AND
ADMINISTRATIVE AGENT: ABN AMRO Bank N.V. ("ABN" and, in its capacity as
administrative agent, the "Administrative Agent").
LEAD ARRANGER,
BOOK RUNNER AND
SYNDICATION AGENT: SunTrust Bank, Atlanta and SunTrust Equitable
Securities Corporation (collectively, "SunTrust").
CO-LEAD ARRANGER AND
DOCUMENTATION AGENT: Wachovia Securities, Inc. and Wachovia Bank N.A.
(collectively, "Wachovia" and together with the
Administrative Agent and SunTrust, collectively,
the "Agents").
LENDERS: A syndicate of financial institutions acceptable to
the Borrowers and the Administrative Agent
(collectively, the "Lenders").
SENIOR CREDIT FACILITIES: An aggregate principal amount of up to $900,000,000
in senior unsecured credit facilities will be made
available under the 364 Day Facility, the Term
Facility and the 5 Year Facility described below
(collectively, the "Facilities") upon the terms and
conditions hereinafter set forth:
A. 364-Day Revolving
Credit Facility Amount: The 364 Day Revolving Credit Facility (the
"364 Day Facility") will be in the amount of
$200,000,000.
Maturity: The 364 Day Facility will mature on the
date (the "364 Day Facility Maturity Date") which is
364 days after the date of execution and delivery of
loan documentation for the Facilities (the "Closing
Date").
Availability: The 364 Day Facility shall be available
for borrowings in U.S. dollars on a revolving basis
for the period commencing on the Closing Date and
ending on the 364 Day Facility Maturity Date.
Use of Proceeds: The proceeds of the 364 Day Facility
shall be used: (i) to refinance approximately
$150,000,000 of existing indebtedness of the
Borrowers; (ii) to finance in part a cash dividend
Page 1
<PAGE> 6
of approximately $550,000,000 (the "Dividend") to be
paid by Lanier to Harris Corporation ("Harris") in
connection with the spin-off of Lanier from Harris on
the date (the "Spin-off Date") on which approximately
90% of the shares of capital stock of Lanier are
distributed by Harris to its stockholders (the
"Spin-off"); (iii) to pay fees and expenses incurred
in connection with the Spin-off; and (iv) to provide
for working capital and other general corporate
purposes of the Borrowers.
B. Two Year Term
Loan Facility Amount: The Two Year Term Loan Facility (the "Term
Facility") will be in the amount of $250,000,000.
Amortization: None.
Maturity: The Term Facility will be payable in full
on the two year anniversary of the Closing Date.
Use of Proceeds: Same as the 364 Day Facility.
Mandatory Prepayment: The first $250,000,000 in
proceeds from a permitted securitization of the
Borrowers' U.S. domestic receivables and 100% of the
net cash proceeds from any debt issuance greater than
$50,000,000 (excluding a securitization of the
Borrowers' European receivables) shall be applied to
interest and principal under the Term Facility.
C. 5 Year Revolving
Credit Facility Amount: The 5 Year Revolving Credit Facility (the "5
Year Facility") will be in the amount of
$450,000,000.
Maturity: The 5 Year Facility will mature on the five
year anniversary of the Closing Date (the "5 Year
Facility Maturity Date").
Availability: The 5 Year Facility shall be available
for borrowings in U.S. dollars on a revolving basis
for the period commencing on the Closing Date and
ending on the 5 Year Facility Maturity Date.
Use of Proceeds: Same as the 364 Day Facility.
Letters of Credit: The 5 Year Facility will contain a
sub-facility for the issuance of up to the U.S.
dollar equivalent of $25,000,000 in standby letters
of credit (the "Letters of Credit") issued by an
Agent (the "Issuer") under terms and conditions to be
determined. Usage of the letter of credit
sub-facility will reduce availability under the 5
Year Facility. No Letter of Credit shall have an
expiry date later than one year after the date of
issuance, provided that any Letter of Credit with a
one-year tenor may provide for the renewal thereof
for additional one-year periods. Immediately upon the
issuance of each Letter of Credit, each Lender under
the 5 Year Facility (each, a "5 Year Facility
Lender") shall be deemed to have automatically and
unconditionally purchased and received from the
Issuer an undivided interest and participation in and
to such Letter of Credit, the obligations of the
Borrowers in respect thereof, and the liability of
the Issuer thereunder, in an amount equal to the face
amount of such Letter of Credit multiplied by such 5
Year Facility Lender's commitment percentage under
the 5 Year Facility.
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<PAGE> 7
Swingline Loans: Up to $25,000,000 of the 5 Year
Facility shall be available from ABN (the "Swingline
Lender") under the 5 Year Facility for swingline
loans (the "Swingline Loans"). The Swingline Loans
will reduce availability under the 5 Year Facility,
and the Swingline Lender shall never be required to
fund in excess of its commitment. All Swingline Loans
shall be repaid with interest not later than the 7th
business day after the date such Swingline Loan is
made. All Swingline Loans shall bear interest at the
Alternate Base Rate plus the Base Rate Applicable
Margin (as determined and set forth in Addendum I).
If the Swingline Lender is not repaid by the
Borrowers on the date when due, each 5 Year Facility
Lender will make a revolving credit loan the proceeds
of which will be used to repay the Swingline Loan or,
if any such revolving credit loan may not be made,
irrevocably purchase from the Swingline Lender,
without recourse or warranty, such participation in
the Swingline Loan as shall be necessary to cause
each such 5 Year Facility Lender to share ratably in
such Swingline Loan.
Competitive Bid Rate Option: The Borrowers may
request (the "Bid Request") the Administrative Agent
to solicit competitive bids from the 5 Year Facility
Lenders at a margin over or under LIBOR or at an
absolute rate. LIBOR bids may be requested for
interest periods of one, two, three or six months and
absolute rate bids may be requested for interest
periods of 7 to 180 days. The Bid Request shall
specify whether or not such competitive bid loans
shall be subject to prepayment. Each 5 Year Facility
Lender may bid at its own discretion for amounts up
to the unused portion of the aggregate commitments
under the 5 Year Facility and the Borrowers will be
under no obligation to accept any of the bids.
However, each 5 Year Facility Lender's advance shall
not reduce such 5 Year Facility Lender's obligation
to lend its pro rata share of the remaining undrawn
commitment. The aggregate amount of outstanding
competitive bid loans shall not exceed $50,000,000.
For purposes of availability, outstanding competitive
bid loans will be deemed usage under the 5 Year
Facility. The Borrowers will determine the aggregate
amount of bids, if any, they will accept. Bids will
be accepted in order of the lowest to the highest bid
rates (the "Bid Rates"). If two or more 5 Year
Facility Lenders bid at the same Bid Rate and the
amount of such bids accepted is less than the
aggregate amount of such bids, then the amount to be
borrowed at such Bid Rate will be allocated among
such 5 Year Facility Lenders in proportion to the
amount for which each 5 Year Facility Lender bid at
such Bid Rate. If the bids are either unacceptably
high to the Borrowers or insufficient in amount, the
Borrowers may cancel the auction.
Multicurrency Loans: The 5 Year Facility will contain
a sub-facility (the "Multicurrency Sub-Facility")
pursuant to which the Borrowers shall have the option
to borrow up to the U.S. dollar equivalent of
$150,000,000 in various European currencies
acceptable to the Administrative Agent. If fronting
arrangements are required with respect to the
Multicurrency Sub-Facility, the Borrowers shall pay
fronting fees to be agreed upon. Usage of the
Multicurrency Sub-Facility will reduce availability
under the 5 Year Facility.
Multicurrency Swingline Loans: Up to $25,000,000 of
the Multicurrency Sub-Facility shall be available
from ABN (the "Multicurrency Swingline Lender") for
swingline loans (the "Multicurrency Swingline
Loans"). The Multicurrency Swingline
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<PAGE> 8
Loans will reduce availability under the
Multicurrency Sub-Facility, and the Multicurrency
Swingline Lender shall never be required to fund in
excess of its commitment. All Multicurrency Swingline
Loans shall be repaid with interest not later than
the 7th business day after the date such
Multicurrency Swingline Loan is made. All
Multicurrency Swingline Loans shall bear interest at
the local currency equivalent of the Alternate Base
Rate plus the Base Rate Applicable Margin (as
determined and set forth in Addendum I). If the
Multicurrency Swingline Lender is not repaid by the
Borrowers on the date when due, each Lender under the
Multicurrency Sub-Facility (each, a "Multicurrency
Sub-Facility Lender") will make a revolving credit
loan the proceeds of which will be used to repay the
Multicurrency Swingline Loan or, if any such
revolving credit loan may not be made, irrevocably
purchase from the Multicurrency Swingline Lender,
without recourse or warranty, such participation in
the Multicurrency Swingline Loan as shall be
necessary to cause each such Multicurrency
Sub-Facility Lender to share ratably in such
Multicurrency Swingline Loan.
D. Other Each Lender will participate ratably in each of the
Facilities.
CLOSING: The execution of definitive loan documentation and
simultaneous funding of the Facilities to occur on
the Spin-off Date, which shall be on or before
November 15, 1999.
PRICING, FEES AND
EXPENSES: As set forth in Addendum I.
OPTIONAL PREPAYMENTS
AND COMMITMENT
REDUCTIONS: The Borrowers may repay the Facilities in whole or in
part at any time without penalty, subject to
reimbursement of the Lenders' breakage and
redeployment costs. Lanier may voluntarily reduce the
commitments under the Facilities at any time in
increments to be agreed upon.
REPRESENTATIONS
AND WARRANTIES: Usual and customary for similar financings and for
this transaction in particular, including, but not
limited to, the following: (i) corporate existence
and status; (ii) corporate power and authority/
enforceability; (iii) no violation of law or
contracts or organizational documents; (iv) no
material litigation; (v) correctness of specified
financial statements, annual budget, forecasts and
other information; (vi) no material adverse change;
(vii) no required governmental or third party
approvals; (viii) use of proceeds/compliance with
margin regulations; (ix) status under Investment
Company Act; (x) ERISA matters; (xi) environmental
matters; (xii) payment of taxes; (xiii) accuracy of
disclosure; (xiv) Year 2000 preparedness; and (xv)
consummation of the Spin-off.
CONDITIONS PRECEDENT
TO CLOSING: The closing (and the initial funding) of the
Facilities will be subject to the satisfaction of
customary conditions precedent for similar financings
and for this transaction in particular, including,
but not limited to, the following:
(i) The Spin-off documentation, including a
transition agreement (collectively, the
"Spin-off Materials") shall be in form and
substance reasonably satisfactory to the
Agents and shall be
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<PAGE> 9
in full force and effect, all conditions
precedent thereunder to the consummation of
the Spin-off shall have been satisfied (and
not waived), and any amendment to the
Spin-off Materials shall be satisfactory in
form and substance to the Agents.
Arrangements reasonably satisfactory to the
Agents shall exist for the consummation of
the Spin-off immediately following the
closing of the Facilities and the payment of
the Dividend.
(ii) The structure of the Spin-off and the
corporate capital and ownership structure
(including certificate of incorporation and
by-laws), shareholders agreements and
management of the Borrowers and the
subsidiaries of Lanier (after giving effect
to the Spin-off) shall be reasonably
satisfactory in form and substance to the
Agents.
(iii) The Agents shall have received and, in each
case, approved the financial statements of
Lanier and its subsidiaries for the fiscal
years ended June 30, 1996, 1997, 1998 and
1999, the Form 10 related to the Spin-off,
and such other information relating to the
Spin-off as any Agent may request.
(iv) The Agents shall have received certification
as to the financial condition and solvency
(after giving effect to the Spin-off, the
Dividend and the incurrence of indebtedness
related thereto) of Lanier on a consolidated
basis, from an officer of Lanier.
(v) The Agents shall have received a
satisfactory business plan for Lanier,
including a projected consolidated balance
sheet, consolidated statements of income,
retained earnings and cash flow, said
materials to be prepared in good faith based
upon assumptions Lanier believes to be
reasonable.
(vi) The negotiation, execution and delivery of
definitive loan agreements and other loan
documentation for the Facilities
satisfactory in form and substance to the
Agents and the Lenders.
(vii) All governmental, shareholder and third
party consents and approvals necessary in
connection with the Spin-off and the other
transactions contemplated hereby shall have
been obtained; all such consents and
approvals shall be in force and effect; and
all applicable waiting periods shall have
expired without any action being taken by
any authority that could restrain, prevent
or impose any material adverse conditions on
the Spin-off or such other transactions or
that could seek or threaten any of the
foregoing, and no law or regulation shall be
applicable which in the reasonable judgment
of any of the Agents could have such effect.
(viii) There shall not exist (a) any order, decree,
judgment, ruling or injunction which
restrains the consummation of the Spin-off
in the manner contemplated by the Spin-off
Materials or of the other transactions
contemplated hereby, and (b) any pending or
threatened action, suit, investigation or
proceeding, which, if adversely determined,
could materially and adversely affect any
Borrower or any material subsidiary of
Lanier, any transaction contemplated hereby
or the ability of any Borrower or any
Guarantor to perform its obligations under
the
Page 5
<PAGE> 10
documentation for the Facilities or the
ability of the Lenders to exercise their
rights thereunder.
(ix) There shall not have occurred a material
adverse change since June 30, 1999 in the
business, assets, liabilities (actual or
contingent), operations, or condition
(financial or otherwise) or prospects of
Lanier and its subsidiaries, taken as a
whole, or in the facts and information
regarding such entities as represented to
date.
(x) Each of the Agents shall be satisfied as to
the results of its due diligence review of
the Spin-off and the business, conditions
(financing and otherwise), operations,
performance and prospects of Lanier and its
subsidiaries.
(xi) The Agents, Lenders and/or their affiliates
shall have received all fees and expenses,
including reasonable fees and expenses of
Winston & Strawn, required to be paid on or
before the Closing Date.
(xii) Receipt and review, with results
satisfactory to the Agents and the Lenders,
of information relating to potential impact
of the "Year 2000 problem" on Lanier and its
subsidiaries.
(xiii) All loans under the Facilities shall be in
compliance with all requirements of
Regulations T, U and X of the Board of
Governors of the Federal Reserve System.
CONDITIONS PRECEDENT
TO ALL LOANS: Usual and customary for similar financings,
including, but not limited to, the following:
accuracy of all representations and warranties on and
as of the date of borrowing with the same effect as
if made on such date (except to the extent such
representations and warranties expressly refer to an
earlier date), no material adverse change, no
existing default or event of default and proper
notice to the Administrative Agent of such loan
request.
COVENANTS: Usual and customary for similar financings and for
this transaction in particular, including, but not
limited to, the following: (i) delivery of financial
statements and other reports; (ii) delivery of
notices of default, material litigation and material
governmental and environmental proceedings; (iii)
compliance with laws (including environmental laws
and ERISA matters) and material contractual
obligations; (iv) payment of taxes; (v) maintenance
of insurance; (vi) limitation on liens and negative
pledges; (vii) limitation on mergers, consolidations
and sales of assets; (viii) limitation on incurrence
of debt (the Company will be allowed to incur (a) up
to $250,000,000 of debt or a securitization of the
Borrowers' U.S. domestic receivables used to retire
the Term Facility, (b) up to $100,000,000 of debt
from a securitization of the Borrowers' European
receivables and (c) up to $150,000,000 of other
indebtedness); (ix) limitation on dividends (25% of
trailing four-quarter net income), stock redemptions
and the redemption and/or prepayment of other debt;
(x) limitation on investments (including loans and
advances) and acquisitions ( aggregate acquisitions
in excess of $150,000,000 in any 12 month fiscal year
will necessitate Required Lenders approval, provided
that once the Term Facility is repaid and cancelled,
this basket will increase to $250,000,000, provided
further that once the Term Facility is repaid and
cancelled and the Company receives a senior
Page 6
<PAGE> 11
unsecured debt rating from S&P or Moody's of "BBB" or
better this basket will increased to $350,000,000);
(xi) limitation on capital expenditures; (xii)
limitation on sales and leaseback transactions,
(xiii) limitation on transactions with affiliates;
and (xiv) Year 2000 compliance.
Financial covenants to include (but not be limited
to):
- Maintenance at all times of a Minimum Net
Worth. equal to 85% of day one book equity
plus 50% of net income (if positive),
adjusted for currency translation
adjustments (from day one, on a cumulative
basis).
- Maintenance on a rolling four quarter basis
of a Maximum Leverage Ratio (debt/EBITDA).
Fiscal 2000 3.25
Fiscal 2001 3.00
Fiscal 2002 2.75
Fiscal 2003 2.50
Fiscal 2004 2.25
Fiscal 2005 2.00
- Maintenance on a rolling four quarter basis
of a Minimum Coverage Ratio (EBITDAR divided
by the sum of interest plus rentals).
Fiscal 2000 2.75
Fiscal 2001 2.75
Fiscal 2002 3.00
Fiscal 2003 3.25
Fiscal 2004 3.50
Fiscal 2005 3.75
For purposes of determining the Leverage Ratio and
the Coverage Ratio, EBITDA and EBITDAR shall be
determined using historical reported data, adjusted
for (i) the addback of all professional fees and
expenses associated with the Spin-off, which shall in
no event exceed $15,000,000, (ii) the addback of
special charges taken in the fourth quarter of 1999
totaling $18,700,000, and (iii) the pro forma
adjustments to eliminate the Harris management fee
and reflect standalone company administrative costs
as described in note (A) of the Unaudited Pro-Forma
Consolidated Income Statement of Lanier set forth in
Lanier's Form 10.
EVENTS OF DEFAULT: Usual and customary for similar financings,
including, but not limited to, the following (subject
to such notice and cure provisions as shall be
negotiated between the parties): (i) nonpayment of
principal, interest, fees or other amounts, (ii)
violation of covenants, (iii) inaccuracy of
representations and warranties, (iv) cross-default to
other material agreements and indebtedness, (v)
bankruptcy and other insolvency events, (vi) material
judgments, (vii) certain tax events, (viii) ERISA
matters, (ix) actual or asserted invalidity of any
loan documentation and (x) change of control.
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<PAGE> 12
ASSIGNMENTS AND
PARTICIPATIONS: Each Lender will be permitted to make assignments to
other financial institutions approved by Lanier (so
long as no event of default under the Facilities or
incipient default has occurred and is continuing) and
the Administrative Agent, which approval shall not be
unreasonably withheld; subject to a minimum retention
of $10,000,000; provided that neither Lanier nor
Administrative Agent approval shall be required for
assignments to affiliates. Lenders will be permitted
to sell participations with voting rights limited to
significant matters such as changes in amount, rate
or maturity date and releases of the Guarantors. An
assignment fee of $3,500 shall be payable by the
Lender to the Administrative Agent upon the
effectiveness of any such assignment (including, but
not limited to, an assignment by a Lender to another
Lender).
WAIVERS AND AMENDMENTS: Amendments and waivers of the provisions of the loan
agreement and other definitive credit documentation
will require the approval of Lenders holding loans
and commitments representing more than 51% of the
aggregate amount of loans and commitments under the
Facilities, except that the consent of all of the
Lenders affected thereby shall be required with
respect to (a) increases in the commitment of such
Lenders, (b) reductions of principal, interest, or
fees, (c) extensions of scheduled maturities or times
for payment, and (d) releases of the Guarantors.
INDEMNIFICATION: Each Borrower shall indemnify the Agents and the
Lenders and their respective affiliates, and their
directors, officers, employees, advisors and agents,
from and against all losses, liabilities, claims,
damages or expenses arising out of or relating to the
Spin-off, the Facilities, the Borrowers' use of loan
proceeds or the commitments, including, but not
limited to, reasonable attorneys' fees (including the
allocated cost of internal counsel) and settlement
costs. This indemnification shall survive and
continue for the benefit of the indemnitees at all
times after the Borrowers' acceptance of the Lenders'
commitments for the Facilities, notwithstanding any
failure of the Facilities to close.
EXPENSES: The Borrowers will pay all reasonable costs and
expenses associated with the preparation, due
diligence, administration, syndication and
enforcement of all documentation executed in
connection with the Facilities, including, without
limitation, the reasonable legal fees of Winston &
Strawn, regardless of whether or not the Facilities
are closed. The Borrowers will also pay the
reasonable expenses of each Lender in connection with
the enforcement of any loan documentation for the
Facilities.
CLEAR MARKET PROVISION: From the date of acceptance of the commitment until
the Closing Date, there shall be no competing
offering, placement or arrangement of any debt
securities or bank financing by or on behalf of any
Borrower.
GOVERNING LAW: New York.
OTHER: This Summary of Terms is intended as an outline of
certain of the material terms of the Facilities and
does not purport to summarize all of the conditions,
covenants, representations warranties and other
provisions which would be contained in definitive
documentation for the Facilities.
Page 8
<PAGE> 13
ADDENDUM I
PRICING, FEES AND EXPENSES
COMMITMENT FEE: Lanier will pay a fee (the "Commitment Fee"),
determined in accordance with the attached pricing
grid on the unused portion of the 364 Day Facility
and the 5 Year Facility. The Commitment Fee is
payable quarterly.
INTEREST RATES AND
LETTER OF CREDIT FEES: The Facilities shall bear interest, at the election
of the Borrowers, at a rate equal to (a) LIBOR for
the applicable currency plus the Applicable Margin or
(b) the Alternate Base Rate (to be defined as the
higher of (i) the ABN prime rate and (ii) the Federal
Funds rate plus 0.50% (or the local currency
equivalent thereof)) plus the Applicable Margin. The
Applicable Margin in each case shall be determined in
accordance with the attached pricing grid, based on a
rolling Leverage Ratio (debt/EBITDA).
A default rate shall apply on all loans in the event
of a default under the Facilities at a rate per annum
of 2% above the applicable interest rate.
Lanier shall pay letter of credit fees equal to the
then Applicable Margin over LIBOR under the 5 Year
Facility on the aggregate face amount of Letters of
Credit issued under the 5 Year Facility to each 5
Year Lender quarterly in proportion to such 5 Year
Lender's commitment. In addition, Lanier shall pay
the Issuer a fronting fee of 25 basis points, payable
quarterly, on the aggregate face amount of such
Letters of Credit.
CALCULATION OF
INTEREST AND FEES: Other than calculations in respect of interest at the
Alternate Base Rate (which shall be made on the basis
of actual number of days elapsed in a 365/366 day
year), all calculations of interest and fees shall be
made on the basis of actual number of days elapsed in
a 360 day year.
COST AND YIELD
PROTECTION: Customary for transactions and facilities of this
type, including, without limitation, in respect of
breakage or redeployment costs incurred in connection
with prepayments, changes in capital adequacy and
capital requirements or their interpretation,
illegality, unavailability, reserves without
proration or offset and payments free and clear of
withholding or other taxes.
OTHER: Lanier will pay to the Agents such other fees
(including arrangement, administrative, bid auction
and fronting fees) as may be separately agreed to.
Page 9
<PAGE> 14
<TABLE>
<CAPTION>
PRICING SCHEDULE
- ---------------------------------------------------------------------------------------------------------------------
Level Leverage Ratio* Commitment Fee LIBOR Applicable Base Rate Applicable
Margin Margin
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
I Less than 1.50 0.300% 1.25% 0.25%
- ---------------------------------------------------------------------------------------------------------------------
II 1.50 to 1.99 0.375% 1.50% 0.50%
- ---------------------------------------------------------------------------------------------------------------------
III 2.00 to 2.49 0.450% 1.75% 0.75%
- ---------------------------------------------------------------------------------------------------------------------
IV 2.50 to 2.99 0.500% 2.00% 1.00%
- ---------------------------------------------------------------------------------------------------------------------
V 3.00 or greater 0.500% 2.25% 1.25%
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
"Financials" means the consolidated annual or quarterly financial
statements of Lanier
The Commitment Fee and Applicable Margin shall be determined in
accordance with the above pricing grid based on Lanier's rolling four quarter
Leverage Ratio as reflected in the then most recent Financials. Level IV pricing
shall apply until the Administrative Agent has received the Company's "earnings
release" (with sufficient detail to calculate the Company's Leverage Ratio) for
the fiscal quarter ending on or about September 30, 2000, unless Lanier's
rolling four quarter Leverage Ratio as reflected in the then most recent
Financials is 3.00 or greater, in which case Level V pricing shall apply. At all
times after the first anniversary of the Closing Date until all obligations
under the Term Facility have been repaid and the commitments under the Term
Facility have been irrevocably terminated, the Applicable Margin shall be
increased by 25 basis points. Adjustments, if any, to the Commitment Fee and
Applicable Margin shall be effective five business days after the Administrative
Agent has received the Financials. If Lanier fails to deliver the Financials to
the Administrative Agent at the time required and during the pendency of any
event of default under the Senior Credit Facilities, then the Commitment Fee and
Applicable Margin shall be the highest Commitment Fee and Applicable Margin set
forth in the foregoing table until five days after such Financials are so
delivered or such Event of Default is cured and waived, as applicable.
*To be determined as described on page 7.
Page 10
<PAGE> 1
Exhibit 10.7
FORM OF
LANIER WORLDWIDE, INC.
STOCK INCENTIVE PLAN
EFFECTIVE AS OF OCTOBER 11, 1999
1. PURPOSE
The purpose of the Lanier Worldwide, Inc. Stock Incentive Plan (the
"Plan") is to promote the long-term growth and performance of Lanier Worldwide,
Inc. (the "Corporation") and its Affiliates and to attract and retain
outstanding individuals by awarding directors and 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:
2.1 "Affiliate" means any entity controlling, controlled by or under
common control with the Corporation, through ownership, directly or indirectly,
of a 50% or more interest in voting rights or profits.
2.2 "Award" means the grant of Options, Performance Shares, Restricted
Stock, Stock Appreciation Rights or other share-based awards under the Plan.
2.3 "Board" means the Board of Directors of the Corporation.
2.4 "Change in Control" means "change in control" as defined in Section
12.
2.5 "Code" means the Internal Revenue Code of 1986, as amended.
2.6 "Commission" means the Securities and Exchange Commission.
2.7 "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 be comprised solely of two or more Outside Directors and which shall
satisfy any applicable legal requirements, including the requirements of Rule
16b-3 promulgated by the Commission under the 1934 Act, or under any successor
rule adopted by the Commission, and Section 162(m) of the Code and the
regulations promulgated thereunder.
<PAGE> 2
2.8 "Distribution Date" has the meaning given to such term in the
Registration Statement on Form 10 and any amendments thereto filed by the
Corporation with the Commission.
2.9 "Fair Market Value" means as of any date that the New York Stock
Exchange is open for business, the closing price of a share of Stock on a
particular day as such price is reported in THE WALL STREET JOURNAL or in any
successor to THE WALL STREET JOURNAL or, if there is no such successor, any
similar trade publication selected by the Committee; PROVIDED if the New York
Stock Exchange is not open for business or if no such price is so reported for
such day, Fair Market Value means on such day the closing price of a share of
Stock that was so reported on the immediately preceding business day and if no
such price is so reported for such preceding business day, Fair Market Value on
such day shall be determined in good faith by the Committee.
2.10 "Grant Date" means the date on which the grant of an Option or an
SAR becomes effective pursuant to the terms of the Stock Option Agreement or SAR
Agreement, as the case may be, relating thereto.
2.11 "1933 Act" means the Securities Act of 1933, as amended.
2.12 "1934 Act" means the Securities Exchange Act of 1934, as amended.
2.13 "Non-employee Director" means a member of the Board who is not an
employee of the Corporation or any Affiliate thereof.
2.14 "Non-employee Director Stock Option Agreement" means an agreement
described in Section 10.1 which evidences the grant of an Option to a
Non-employee Director.
2.15 "Option" means an option to purchase shares of Stock granted under
this Plan.
2.16 "Option Price" means the purchase price of each share of Stock
under an Option.
2.17 "Outside Director" means a member of the Board who is not an
employee of the Corporation or any Affiliate thereof and who qualifies as (a) a
"non-employee director" under Rule 16b-3(b)(3) under the 1934 Act, as amended
from time to time, and (b) an "outside director" under Section 162(m) of the
Code and the regulations promulgated thereunder.
2.18 "Participant" means any employee of the Corporation or its
Affiliates designated by the Committee to receive an Award under the Plan.
2.19 "Performance Goal" means any of the following measurements: the
Corporation's revenue, earnings per share of common stock, net income, return on
equity, return on capital, return on assets, total shareholder return, return on
sales or cash flow, or any combination thereof.
2
<PAGE> 3
2.20 "Performance Period" means the period of time established by the
Committee for achievement of certain objectives as described in the agreement or
other documentation of an Award.
2.21 "Performance Share Award Agreement" means an agreement described
in Section 6.1 which evidences the grant of a Performance Share Award.
2.22 "Performance Shares" means shares subject to the attainment of
certain Performance Goals during the Performance Period as described in Section
6.
2.23 "Permitted Non-employee Director Transferees" means "Permitted
Non-employee Director Transferees" as described in Section 10.2.
2.24 "Permitted Transferees" means "Permitted Transferees" as described
in Section 5.4.
2.25 "Restricted Stock" means Shares awarded subject to restrictions as
described in Section 7.
2.26 "Restricted Stock Award Agreement" means an agreement described in
Section 7.1 which evidences the grant of a Restricted Stock Award.
2.27 "Restriction Period" means the period of time established by the
Committee during which certain restrictions as to vesting and the sale or other
disposition of Shares awarded under the Plan remain in effect.
2.28 "Retirement" means retirement of a Non-employee Director from the
Board at the end of the month in which he or she reaches age 72, in accordance
with the Board retirement policy of the Corporation.
2.29 "Shares" means shares of Stock, subject to adjustments made under
Section 3.2 or operation of law.
2.30 "Stock" means the common stock of the Corporation, together with
the associated preferred stock purchase rights.
2.31 "Stock Appreciation Rights" or "SARs" means the right to receive a
payment from the Corporation equal to the excess of the fair market value of a
stated number of Shares at the exercise date over a fixed price for such Shares.
2.32 "Stock Appreciation Rights Agreement" means an agreement described
in Section 8.1 which evidences the grant of Stock Appreciation Rights.
2.33 "Stock Option Agreement" means an agreement described in Section
5.1 which evidences the grant of an Option.
3
<PAGE> 4
2.34 "Units" means units under an Award that is payable solely in
cash, and the value of a Unit shall be equal to the value of one
Share.
3. SHARES SUBJECT TO PLAN
3.1 IN GENERAL.
(a) SHARES RESERVED UNDER THE PLAN. Under the Plan, there shall be
8,000,000 Shares which may be awarded, or by which Awards may be valued or
otherwise based. Shares to be issued pursuant to the Plan may be authorized and
unissued Shares, treasury Shares, or any combination thereof.
(b) REISSUE OF SHARES AND UNITS. If any Shares or Units subject to an
Award hereunder are forfeited or any such Award otherwise terminates without the
issuance of such Shares or payment of the value of Units to a Participant, or if
any Shares are surrendered by a Participant in full or partial payment of the
Option Price of an Option, such Shares, and the Shares with respect to which
such Units were awarded, shall again be available for Awards under the Plan to
the extent of any such forfeiture, termination or surrender.
3.2 ADJUSTMENTS. Subject to Section 13 hereof, the aggregate number or
class of Shares which may be awarded under the Plan and the number, class and
price of Shares subject to outstanding Awards shall be adjusted by the 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 Non-employee 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 COMMITTEE. The Plan shall be administered by
the Committee. The 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. Notwithstanding the foregoing, neither the Board nor the Committee
shall have any discretion with respect to Options granted to Non-employee
Directors pursuant to Section 10 hereof.
4.2 DESIGNATION OF PARTICIPANTS. Participants shall be selected, from
time to time, by the Committee from those employees of the Corporation and its
Affiliates who, in the opinion of the Committee, have the capacity to contribute
materially to the continued growth and successful performance of the
Corporation.
4
<PAGE> 5
5. STOCK OPTIONS
5.1 GRANTS. Options (including incentive stock options within the
meaning of Section 422 of the Code) may be granted, from time to time, to such
Participants as may be selected by the Committee; PROVIDED, HOWEVER, that
incentive stock options may be granted only to those Participants who are
employees of the Corporation or an Affiliate that is "subsidiary" of the
Corporation within the meaning of Section 424(f) of the Code or a "parent" of
the Corporation within the meaning of Section 424(e) of the Code. The Option
Price shall be determined by the 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 on the Grant Date. Notwithstanding
the foregoing, Options granted under this Plan in substitution for stock options
canceled as a result of a recapitalization, reorganization, merger,
consolidation, combination, exchange of shares, spin-off, spin-out or other
transaction may have an Option Price less than one hundred percent (100%) of the
Fair Market Value on the Grant Date. The number of Shares subject to each Option
granted to each Participant, the term of each Option, and any other terms and
conditions of an Option granted hereunder shall be determined by the 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 to which the
Option pertains, the conditions upon which the Option becomes exercisable and
such other terms and conditions as the Committee shall determine.
5.2 PAYMENT OF OPTION PRICE. No Shares shall be issued upon the
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
having a Fair Market Value equal to the Option Price, or in any combination
thereof.
5.3 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.
5.4 TRANSFERABILITY OF OPTIONS. Except as permitted by this Section
5.4, Options granted under the Plan may not be sold, transferred, pledged,
assigned, hypothecated or otherwise disposed of other than by will or by the
laws of descent and distribution, and all Options granted to a Participant under
the Plan shall be exercisable during the lifetime of such Participant only by
such Participant; however, the person or persons to whom an Option is
transferred by will or by the laws of descent and distribution thereafter shall
be treated as the Participant under this Plan. The Committee may, in its
discretion, authorize all or a portion of the Options to be granted to a
Participant (other than incentive stock options (within the meaning of Section
422 of the Code)) to be on terms which permit transfer by such Participant by
gift or under a domestic relations order to (a) family members of the
Participant or to a trust, corporation, foundation, partnership or limited
liability company, PROVIDED the transfer of such Options to such transferee
would not adversely affect the qualification of the Options or the underlying
Shares for registration on a Registration Statement on Form S-8, and (b) to
other transferees permitted by the Committee in its discretion (such transferees
of a Participant are
5
<PAGE> 6
referred to as "Permitted Transferees"); PROVIDED that (x) the Stock Option
Agreement shall specifically provide for transferability in a manner consistent
with this Section and (y) subsequent transfers of transferred Options shall be
prohibited except by gift or under a domestic relations order to the Participant
or a Permitted Transferee of the Participant. Following transfer, Options shall
continue to be subject to the same terms and conditions as were applicable
immediately prior to transfer; the Participant shall remain subject to
applicable tax withholding; the events of termination of employment of a
Participant shall continue to be applied with respect to the Permitted
Transferee; and all other terms of the Option shall remain unchanged.
5.5 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.
5.6 INDIVIDUAL SHARE LIMITATION. The number of Shares for which Options
may be granted to any Participant shall not exceed 250,000 Shares in any one
fiscal year. In addition, the number of Shares for which Options may be granted
to any Participant upon exercise by such Participant of an Option for which the
Option Price is paid in whole or in part in Shares shall not exceed 250,000
Shares in any one fiscal year.
6. PERFORMANCE SHARE AWARDS
6.1 AWARDS. Awards of Shares may be made, from time to time, to such
employees of the Corporation and its Affiliates as may be selected by the
Committee. The release of such Shares to the Participant shall be contingent
upon (a) the degree of attainment, as determined by the Committee, of the
applicable Performance Goals during the Performance Period, and (b) the
expiration of the Performance Period. Except as provided in Section 12 hereof
and the Performance Share Award Agreement between the Participant and the
Corporation, Shares subject to such Awards under this Section 6.1 shall be
released to the Participant only after the expiration of the relevant
Performance Period. Each Award under this Section 6.1 shall be evidenced by a
Performance Share Award Agreement between the Participant and the Corporation
which shall specify the applicable Performance Goals, the Performance Period,
any forfeiture conditions and such other terms and conditions as the Committee
shall determine.
6.2 PAYOUTS. Upon expiration of the Performance Period, the Corporation
shall, at its option, cause such Shares as to which a Participant is entitled
either (a) to be issued by a certificate registered in the name of the
Participant or the Participant's designee evidencing the Shares to which the
Participant is entitled and released to the custody of the Participant or (b) to
be credited to an account for the benefit of the Participant maintained by the
Corporation's stock transfer agent or its designee.
6.3 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 6.1 hereof and shall be
entitled to receive cash dividends paid with respect to those Shares. A
Participant's right to receive stock dividends or any other distributions with
respect to
6
<PAGE> 7
Shares subject to a Performance Share Award shall be contingent upon the
Participant's receipt of the underlying Shares.
6.4 TRANSFERABILITY OF SHARES. Shares awarded under Performance Share
Awards shall not be sold, exchanged, assigned, transferred, pledged,
hypothecated or otherwise disposed of until the expiration of the Performance
Period.
6.5 TERMINATION OF EMPLOYMENT. If a Participant ceases to be an
employee of either the Corporation or one of its Affiliates, the number of
Shares subject to 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.
6.6 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, the Committee may, in its sole
discretion, adjust the number of Shares the Participant is eligible to receive
based upon such factors as the Committee may deem appropriate.
6.7 INDIVIDUAL SHARE LIMITATION. The number of Shares for which
Performance Share Awards may be granted to any Participant shall not exceed
250,000 Shares in any one fiscal year.
7. RESTRICTED STOCK AWARDS
7.1 AWARDS. Awards of Shares, subject to such restrictions as to
vesting and otherwise as the Committee shall determine, may be made, from time
to time, to employees of the Corporation and its Affiliates as may be selected
by the Committee. The Committee may in its sole discretion at the time an Award
is made 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
7.1 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 Committee shall determine.
7.2 PAYOUTS. Upon expiration of the Restriction Period, the Corporation
shall at its option, cause such Shares as to which a Participant is entitled
either (a) to be issued by a stock certificate registered in the name of the
Participant or the Participant's designee and released to the custody of the
Participant or (b) to be credited to an account for the benefit of the
Participant maintained by the Corporation's stock transfer agent or its
designee.
7.3 RIGHTS AS SHAREHOLDERS. During the Restriction Period, Participants
may exercise full voting rights with respect to all Shares awarded thereto under
Section 7.1 hereof and shall be entitled to receive cash dividends paid with
respect to those Shares. A Participant's right to receive stock dividends or any
other distributions with respect to Shares awarded under a Restricted Stock
Award shall be contingent upon vesting and expiration of such other restrictions
otherwise applicable to the Award.
7
<PAGE> 8
7.4 TRANSFERABILITY OF SHARES. Shares awarded under Restricted Stock
Awards shall not be sold, exchanged, assigned, transferred, pledged,
hypothecated or otherwise disposed of until the expiration of the Restriction
Period.
7.5 TERMINATION OF EMPLOYMENT. If a Participant ceases to be an
employee of either the Corporation or any of its Affiliates, the number of
Shares subject to 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 Committee.
7.6 INDIVIDUAL SHARE LIMITATION. The number of Shares of Restricted
Stock which may be granted to any Participant shall not exceed 250,000 Shares in
any one fiscal year.
8. STOCK APPRECIATION RIGHTS
8.1 GRANTS. Stock Appreciation Rights may be granted, from time to
time, to such employees of the Corporation and its Affiliates as may be selected
by the Committee. SARs may be granted at the discretion of the Committee either
(a) in connection with an Option or (b) independent of an Option. The price from
which appreciation shall be computed shall be established by the 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 subject
to the grant on the Grant Date. In the event a SAR is granted in connection with
an Option, the fixed price from which appreciation shall be computed shall be
the Option Price. Notwithstanding the foregoing, SARs granted under the Plan in
substitution for SARs canceled as a result of a recapitalization,
reorganization, merger, consolidation, combination, exchange of shares,
spin-off, spin-out or other transaction may have a fixed price less than one
hundred percent (100%) of the Fair Market Value on the Grant Date. 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 Committee shall determine.
8.2 EXERCISE OF SARS. SARs may be exercised upon such terms and
conditions as the 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. 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 automatically be canceled to the extent of the number
of Shares subject to the exercise. Conversely, if the related Option is
exercised as to some or all of the Shares subject to such Award, the related SAR
shall automatically be canceled to the extent of the number of Shares subject to
the exercise.
8.3 PAYMENT UPON EXERCISE. Upon exercise of a SAR, the holder shall be
paid in cash, in Shares, or in any combination thereof, the excess of the Fair
Market Value of the number of Shares subject to the exercise over the fixed
price.
8
<PAGE> 9
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. Except as permitted by this Section 8.5,
SARs granted under the Plan may not be sold, transferred, pledged, assigned,
hypothecated or otherwise disposed of other than by will or by the laws of
descent and distribution, and all SARs granted to a Participant under the Plan
shall be exercisable during the lifetime of such Participant only by such
Participant; however, the person or persons to whom an SAR is transferred by
will or by the laws of descent and distribution thereafter shall be treated as
the Participant under this Plan. The Committee may, in its discretion, authorize
all or a portion of the SARs to be granted to a Participant to be on terms which
permit transfer by such Participant by gift or under a domestic relations order
to Permitted Transferees; PROVIDED that (a) the Stock Appreciation Rights
Agreement shall specifically provide for transferability in a manner consistent
with this Section 8.5 and (b) subsequent transfers of transferred SARs shall be
prohibited except by gift or under a domestic relations order to the Participant
or a Permitted Transferee of the Participant. Following transfer, SARs shall
continue to be subject to the same terms and conditions as were applicable
immediately prior to transfer; the Participant shall remain subject to
applicable tax withholding; the events of termination of employment of a
Participant shall continue to be applied with respect to the Permitted
Transferee; and all other terms of the SARs shall remain unchanged.
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.
8.7 INDIVIDUAL SHARE LIMITATION. The number of Shares for which SARs
may be granted to any Participant shall not exceed 250,000 Shares in any one
fiscal year.
9. OTHER SHARE-BASED AWARDS
Awards of Shares, Units and other Awards that are valued by reference
to, or are otherwise based on, Shares or Units (including, but not limited to
phantom stock performance units, bonus stock or similar securities or rights)
may be made, from time to time, to employees of the Corporation and its
Affiliates as may be selected by the Committee. Such Awards may be made alone or
in addition to or in connection with any other Award hereunder. The 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 or Units subject to the
Award, any consideration therefor, any vesting or performance requirements and
such other terms and conditions as the Committee shall determine. The number of
Shares or Units subject to any Awards under this Section 9 which may be granted
to a Participant shall not exceed 250,000 Shares or Units, as the case may be,
in any one fiscal year.
9
<PAGE> 10
10. NON-EMPLOYEE DIRECTORS' OPTIONS
10.1 GRANTS. Each Non-employee Director shall automatically be granted
an Option to purchase 10,000 Shares on the later of the Distribution Date or the
date such Non-employee Director joins the Board. Effective the first business
day of the month following the annual meeting of shareholders in the year 2000
and each annual meeting of shareholders thereafter, each Non-employee Director
shall automatically be granted an Option to purchase 2,000 Shares. 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 on the Grant Date.
Each Option shall be evidenced by a Non-employee Director Stock Option Agreement
between the Participant and the Corporation.
10.2 TRANSFERABILITY OF OPTIONS. Except as permitted by this Section
10.2, Options granted under the Plan to Non-employee Directors may not be sold,
transferred, pledged, assigned, hypothecated or otherwise disposed of other than
by will or by the laws of descent and distribution, and all Options granted to a
Non-employee Director under the Plan shall be exercisable during the lifetime of
such Non-employee Director only by such Non-employee Director; however, the
person or persons to whom an Option is transferred by will or by the laws of
descent and distribution thereafter shall be treated as the Non-employee
Director under this Plan. Notwithstanding the foregoing, an Option granted to a
Non-employee Director shall permit transfer by such Participant by gift or under
a domestic relations order to family members of the Non-employee Director or to
a trust, PROVIDED the transfer of such Option to such transferee would not
adversely affect the qualification of such Options or the underlying Shares for
registration on a Registration Statement on Form S-8 (such transferees of a
Non-employee Director are referred to as "Permitted Non-employee Director
Transferees"), and PROVIDED FURTHER that subsequent transfers of transferred
Options shall be prohibited except by gift or under a domestic relations order
to the Non-employee Director or a Permitted Non-employee Director Transferee of
the Non-employee Director. Following transfer, Options shall continue to be
subject to the same terms and conditions as were applicable immediately prior to
transfer; the Non-employee Director shall remain subject to applicable tax
withholding; the events of death and Retirement shall continue to be applied
with respect to the Non-employee Director; and all other terms of the Option
shall remain unchanged.
10.3 EXERCISE OF OPTIONS. Except as set forth in this Section 10, fifty
percent (50%) of the total number of Shares subject of an Option granted to a
Non-employee Director shall become exercisable on the first anniversary of the
Grant Date and twenty-five percent (25%) on the second and third anniversary of
the Grant Date. 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 a Non-employee Director that has been outstanding for more than one
(1) year shall immediately become exercisable in the event of a Change in
Control, as hereinafter defined. The Option may be exercised by the Non-employee
Director during the period that the Non-employee Director remains a member of
the Board and for a period of three (3) years following Retirement, or for a
period of three (3) months following termination of service on the Board upon
expiration of the Non-employee Director's term on the Board prior to Retirement,
PROVIDED that only those Options exercisable at the date of the Non-employee
Director's Retirement, or the Non-employee Director's termination of service on
the Board upon expiration of his or her term
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<PAGE> 11
on the Board prior to Retirement, may be exercised during the period following
Retirement, or termination of service on the Board upon expiration of the
Non-employee Director's term on the Board prior to Retirement, and PROVIDED
FURTHER that in no event shall the Option be exercisable more than ten (10)
years after the Grant Date.
In the event of the death of a Non-employee Director, the Option shall
be exercisable only within the twelve (12) months next succeeding the date of
death, and then only (a) by the executor or administrator of the Non-employee
Director's estate or by the person or persons to whom the Non-employee
Director's rights under the Option shall pass by the Non-employee Director's
will or the laws of descent and distribution, and (b) if and to the extent that
the Non-employee Director was entitled to exercise the Option at the date of the
Non-employee Director's death, PROVIDED that in no event shall the Option be
exercisable more than ten (10) years after the Grant Date.
10.4 PAYMENT OF OPTION PRICE. No Shares shall be issued upon exercise
of an Option until full payment of the Option Price therefor by the Non-employee
Director. Payment for the Shares may be paid in cash, in Shares having a Fair
Market Value equal to the Option Price, or any combination thereof.
10.5 ADJUSTMENTS. In case there shall be a merger, reorganization,
consolidation, recapitalization, stock dividend or other change in corporate
structure such that the Shares 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 Non-employee Directors and the number of Shares
subject to Options to be granted to Non-employee 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 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 in the case of an increase in the number of Shares, shall be
proportionately reduced, and in the case of a decrease in the number of Shares,
shall be proportionately increased.
11. AWARDS TO FOREIGN NATIONALS OR OTHER EMPLOYEES OUTSIDE UNITED STATES
The Committee shall have authority 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 Committee, be necessary or desirable to
further the purpose of the Plan or to comply with foreign legal or regulatory
requirements. Each such Award shall be evidenced by an agreement between the
Participant and the Corporation which shall specify the number of Shares or
Units subject to the Award, any consideration therefor, any vesting or
performance requirements and such other terms and conditions as the Committee
shall determine. The number of Shares or Units subject to any Awards under this
Section 11 which may be granted to a Participant shall not exceed 250,000 Shares
or Units, as the case may be, in any one fiscal year.
11
<PAGE> 12
12. CHANGE IN CONTROL
12.1 DEFINITION OF CHANGE IN CONTROL. For purposes hereof, a "change in
control" shall be deemed to have occurred if:
(i) any "person" (as such term is defined in Section 3(a)(9) of the
Securities Exchange Act of 1934 (the "Exchange Act") and as used in Sections
13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes a "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Corporation representing 20% or more of the combined voting
power of the Corporation's then outstanding securities eligible to vote for the
election of the Board (the "Corporation Voting Securities"); PROVIDED, however,
that the event described in this paragraph (i) shall not be deemed to be a
Change in Control by virtue of any of the following acquisitions: (a) by the
Corporation or any subsidiary, (b) by any employee benefit plan sponsored or
maintained by the Corporation or any subsidiary, (c) by any underwriter
temporarily holding securities pursuant to an offering of such securities, (d)
pursuant to a Non-Control Transaction (as defined in paragraph (iii)), or (e) by
a corporate officer of the Corporation or by any group of persons including a
corporate officer or acting in concert with a corporate officer;
(ii) individuals who, on the Distribution Date, constitute the Board
(the "Incumbent Directors") cease for any reason to constitute at least a
majority of the Board, PROVIDED that any person becoming a director subsequent
to the Distribution Date, whose election or nomination for election was approved
by a vote of at least two-thirds of the Incumbent Directors who remain on the
Board (either by a specific vote or by approval of the proxy statement of the
Corporation in which such person is named as a nominee for director, without
objection to such nomination), shall also be deemed to be an Incumbent Director;
PROVIDED, HOWEVER, that no such individual initially elected or nominated as a
director of the Corporation as a result of an actual or threatened election
contest with respect to directors or any other actual or threatened solicitation
of proxies or consents by or on behalf of any person other than the Board shall
be deemed to be an Incumbent Director;
(iii) the consummation of a merger, consolidation, share exchange or
similar form of corporate reorganization of the Corporation or any such type of
transaction involving the Corporation or any of its subsidiaries that requires
the approval of the Corporation's shareholders (whether for such transaction or
the issuance of securities in the transaction or otherwise) (a "Business
Combination"), unless immediately following such Business Combination: (a) more
than 66 2/3% of the total voting power of the company resulting from such
Business Combination (including, without limitation, any company which directly
or indirectly has beneficial ownership of 100% of the Corporation Voting
Securities) eligible to elect directors of such company is represented by shares
that were Corporation Voting Securities immediately prior to such Business
Combination (either by remaining outstanding or being converted), and such
voting power is in substantially the same proportion as the voting power of such
Corporation Voting Securities immediately prior to the Business Combination, (b)
no person (other than any publicly traded holding company resulting from such
Business Combination, any employee benefit plan sponsored or maintained by the
Corporation (or the company resulting from such Business Combination)) becomes
the beneficial owner, directly or indirectly, of 20% or more of
12
<PAGE> 13
the total voting power of the outstanding voting securities eligible to elect
directors of the company resulting from such Business Combination, and (c) at
least a majority of the members of the board of directors of the company
resulting from such Business Combination were Incumbent Directors at the time of
the Board's approval of the execution of the initial agreement providing for
such Business Combination (any Business Combination which satisfies the
conditions specified in (a), (b) and (c) shall be deemed to be a "Non-Control
Transaction"); or
(iv) the shareholders of the Corporation approve a plan of complete
liquidation or dissolution of the Corporation or the direct or indirect sale or
other disposition of all or substantially all of the assets of the Corporation
and its subsidiaries.
Notwithstanding the foregoing, a "change in control" of the Corporation
shall not be deemed to occur solely because any person acquires beneficial
ownership of more than 20% of the Corporation Voting Securities as a result of
the acquisition of Corporation Voting Securities by the Corporation which
reduces the number of Corporation Voting Securities outstanding; PROVIDED that
if after such acquisition by the Corporation such person becomes the beneficial
owner of additional Corporation Voting Securities that increases the percentage
of outstanding Corporation Voting Securities beneficially owned by such person,
a "change in control" of the Corporation shall then occur.
12.2 ACCELERATION OF BENEFITS. In the event of a Change in Control, all
outstanding Awards shall be paid in such manner and in such amounts as
determined by the Committee in its sole discretion at the time such Awards are
made.
13. AMENDMENT OR TERMINATION OF PLAN
Until such time as a Change in Control shall have occurred, the Board
or the 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 a Participant to whom an Award has been made without the consent of
said Participant, and PROVIDED FURTHER that neither the Board nor the Committee
may make any alteration or amendment to the Plan which would 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. After a Change in Control, the Board or the Committee shall no
longer have the power to amend, suspend or terminate the Plan or any part
thereof, except to comply with changes to the Code, the 1933 Act, the 1934 Act,
or other applicable law or stock exchange rules.
14. MISCELLANEOUS
14.1 RIGHTS OF EMPLOYEES. Nothing in the Plan shall interfere with or
limit in any way the right of the Corporation or any of its Affiliates to
terminate any Participant's employment at any time, nor confer upon any
Participant any right to continued employment with the Corporation or any of its
Affiliates.
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<PAGE> 14
14.2 WITHHOLDING FOR TAXES. 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 local tax or 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
(a) delivering to the Corporation Shares held by such Participant having a Fair
Market Value equal to the amount of the tax or (b) directing the Corporation to
retain Shares otherwise issuable to the Participant under the Plan.
14.3 STATUS OF AWARDS. Awards hereunder shall not be deemed
compensation for purposes of computing benefits under any retirement plan of the
Corporation or an 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.
14.4 WAIVER OF RESTRICTIONS. The Committee may, in its sole discretion,
based on such factors as the Committee may deem appropriate, waive in whole or
in part any remaining restrictions or vesting requirements in connection with
any Award hereunder.
14.5 DELEGATION TO MANAGEMENT. The 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 and to cancel or suspend Awards to employees who are not officers or
directors of the Corporation.
14.6 ADJUSTMENT OF AWARDS. Subject to Section 13, the Committee shall
be authorized to make adjustments in the method of calculating attainment of
Performance Goals for Performance Share Awards 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 to the extent an Award is intended to come
within the exception for performance-based compensation under Section 162(m) of
the Code, no such adjustments shall impair the rights of any Participant without
his or her consent and any such adjustments shall be made in a manner consistent
with such Code section and the regulations promulgated thereunder. Subject to
Section 10 in the case of Options granted to Non-employee Directors, the
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 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. The Committee shall have the right to amend any Award or
to withhold or otherwise restrict the transfer of any Shares or cash under this
Plan to a Participant as the Committee deems appropriate in order to satisfy any
condition or requirement under Rule 16b-3 to the extent Section 16 of the 1934
Act might be applicable to such grant or transfer.
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<PAGE> 15
14.7 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.
14.8 DEFERRAL. Notwithstanding anything contained herein to the
contrary, in the event that any Award shall be ineligible for treatment as
"other performance-based compensation" under Section 162(m) of the Code, the
Committee, in its sole discretion, shall have the right with respect to any
Participant who is in the year any Award hereunder becomes deductible by the
Corporation a "covered employee" under Section 162(m) of the Code, to defer, in
whole or in part, such Participant's receipt of such Award until the Participant
is no longer a "covered employee" or until such time as shall be determined by
the Committee, PROVIDED that the Committee may effect such a deferral only in a
situation where the Corporation would be prohibited a deduction under Section
162(m) of the Code and such deferral shall be limited to the portion of the
Award that is not deductible.
Approved by the Board this 11th day of October, 1999, which shall be
the effective date of the Plan.
Attested:
_________________________________
Secretary
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<PAGE> 1
Exhibit 10.10
INDEMNIFICATION AGREEMENT
This Agreement made as of ___________, 1999, between Lanier Worldwide,
Inc., a Delaware corporation (the "Company") and ____________________, a
director, officer, employee or agent of the Company (the "Indemnitee");
WHEREAS, the Company and the Indemnitee are each aware of conditions in
the insurance industry that have affected and may continue to affect the
Company's ability to obtain appropriate directors' and officers' liability
insurance on an economically acceptable basis;
WHEREAS, the Company and the Indemnitee are also aware of the exposure
to litigation of officers, directors, employees and agents of corporations as
such persons exercise their duties to the Company;
WHEREAS, the Company desires to continue to benefit from the services
of highly qualified and experienced persons such as the Indemnitee;
WHEREAS, the Indemnitee desires to serve or to continue to serve the
Company as a director, officer, employee or agent, including service at the
request of the Company as a director, officer or trustee of another corporation,
joint venture, trust or other enterprise, for so long as the Company continues
to provide on an acceptable basis indemnification against certain liabilities
and expenses which may be incurred by the Indemnitee.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants herein contained, the parties hereto agree as follows:
1. INDEMNIFICATION. The Company shall indemnify the Indemnitee with
respect to his activities as a director, officer or employee of the Company or
as a person who is serving or has served at the request of the Company ("Agent")
as a director, officer or trustee of another corporation, joint venture, trust
or other enterprise against expenses (including attorneys' fees, judgments,
fines, and amounts paid in settlement) actually and reasonably incurred by him
("Expenses") in connection with any threatened, pending, or completed action,
suit, or proceeding, whether civil, criminal, administrative or investigative (a
"Proceeding"), to which he was, is, or is threatened to be made a party by
reason of facts which include his being or having been such a director, officer,
employee or agent to the extent of the highest and most advantageous to the
Indemnitee, as determined by the Indemnitee, of one or any combination of the
following:
(a) The benefits provided by the Company's Certificate of Incorporation
or By-Laws in effect on the date hereof, a copy of the relevant portions of
which are attached hereto as Exhibit I;
(b) The benefits provided by the Company's Certificate of Incorporation
or By-Laws or their equivalent in effect at the time Expenses are incurred by
Indemnitee;
<PAGE> 2
(c) The benefits allowable under Delaware law in effect at the date
hereof;
(d) The benefits allowable under the law of the jurisdiction under
which the Company exists at the time Expenses are incurred by the Indemnitee;
(e) The benefits available under liability insurance obtained by the
Company; and
(f) Such other benefits as may be otherwise available to Indemnitee
under then existing practices of the Company.
A combination of two or more of the benefits provided by (a) through
(f) shall be available only to the extent that the Applicable Document, as
hereafter defined, does not require that the benefits provided therein must be
exclusive of other benefits. The document or law providing for the benefits
listed in items (a) through (f) above is called the "Applicable Document" in
this Agreement. The Company hereby undertakes to assist Indemnitee, in all
proper and legal ways, to obtain the benefits selected by Indemnitee under items
(a) through (f) above.
2. INSURANCE. The Company shall maintain directors' and officers'
liability insurance for so long as Indemnitee's services are covered hereunder,
provided and to the extent that such insurance is available on a commercially
reasonable basis. In the event the Company maintains directors' and officers'
liability insurance, Indemnitee shall be named as an insured in such manner as
to provide Indemnitee the same rights and benefits as are accorded to the most
favorably insured of the Company's officers or directors. However, the Company
agrees that the provisions hereof shall remain in effect regardless of whether
liability or other insurance coverage is at any time obtained or retained by the
Company; except that any payments made under an insurance policy shall reduce
the obligations of the Company hereunder.
3. PAYMENT OF EXPENSES. At Indemnitee's request, the Company shall pay
the Expenses when incurred by Indemnitee upon receipt of an undertaking in the
form of Exhibit II attached hereto by or on behalf of Indemnitee to repay such
amounts so paid on his behalf if it shall ultimately be determined under the
Applicable Document that he is not entitled to be indemnified by the Company for
such Expenses. That portion of Expenses which represents attorneys' fees and
other costs incurred in defending any Proceeding shall be paid by the Company
within thirty (30) days of its receipt of such request, together with such
reasonable documentation evidencing the amount and nature of such Expenses as
the Company shall require, subject to its also receiving such undertaking.
4. ADDITIONAL RIGHTS. The indemnification provided in this Agreement
shall not be deemed exclusive of any other indemnification or rights to which
Indemnitee may be entitled and shall continue after Indemnitee has ceased to
occupy a position as an officer, director, employee or agent as described in
Paragraph 1 above with respect to Proceedings relating to or arising out of
Indemnitee's acts or omissions during his service in such position.
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<PAGE> 3
5. NOTICE TO COMPANY. Indemnitee shall provide to the Company prompt
written notice of any proceeding brought, threatened, asserted or commenced
against Indemnitee with respect to which Indemnitee may assert a right to
indemnification hereunder. Indemnitee shall not make any admission or effect any
settlement without the Company's written consent unless Indemnitee shall have
determined to undertake his own defense in such matter and has waived the
benefits of this Agreement. The Company shall not settle any Proceeding to which
Indemnitee is a party in any manner which would impose any penalty on Indemnitee
without his written consent. Neither Indemnitee nor the Company will
unreasonably withhold consent to any proposed settlement. Indemnitee shall
cooperate to the extent reasonably possible with the Company and/or its
insurers, in attempts to defend and/or settle such Proceeding.
6. ASSUMPTION OF DEFENSE. Except as otherwise provided below, to the
extent that it may wish, the Company jointly with any other indemnifying party
similarly notified will be entitled to assume Indemnitee's defense in any
Proceeding, with counsel mutually satisfactory to Indemnitee and the Company.
After notice from the Company to Indemnitee of the Company's election so to
assume such defense, the Company will not be liable to Indemnitee under this
Agreement for Expenses subsequently incurred by Indemnitee in connection with
the defense thereof other than reasonable costs of investigation or as otherwise
provided below. Indemnitee shall have the right to employ counsel in such
Proceeding, but the fees and expenses of such counsel incurred after notice from
the Company of its assumption of the defense thereof shall be at Indemnitee's
expense unless:
(a) The employment of counsel by Indemnitee has been authorized by the
Company;
(b) Indemnitee shall have reasonably concluded that there may be a
conflict of interest between Indemnitee and the Company in the conduct of the
defense of such Proceeding; or
(c) The Company shall not in fact have employed counsel to assume the
defense of such Proceeding, in each of which cases the fees and expenses of
counsel shall be at the expense of the Company. The Company shall not be
entitled to assume the defense of Indemnitee in any Proceeding brought by or on
behalf of the Company or as to which Indemnitee shall have made the conclusion
provided for in clause (b) above.
7. ARBITRATION AND ENFORCEMENT.
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<PAGE> 4
(a) In the event that any dispute or controversy shall arise between
Indemnitee and the Company with respect to whether the Indemnitee is entitled to
indemnification in connection with any Proceeding or with respect to the amount
of Expenses incurred, such dispute or controversy shall be submitted by the
parties to binding arbitration before a single arbitrator at Atlanta, Georgia.
If the parties cannot agree on a designated arbitrator fifteen (15) days after
arbitration is requested in writing by either of them, the arbitration shall
proceed before an arbitrator appointed by, and in accordance with the rules then
in effect of, one of the following bodies, which shall be chosen by the
initiator of such arbitration:
(i) the American Arbitration Association;
(ii) the CPR Institute for Dispute Resolution; or
(iii) Judicial Arbitration and Mediation Services, Inc.
The award shall be rendered in such form that judgment may be entered
thereon in any court having jurisdiction thereof.
(b) Reasonable expenses incurred by Indemnitee in connection with his
request for indemnification hereunder shall be borne by the Company, unless
Indemnitee is determined according to the preceding paragraph of this Section 7
not to be entitled to indemnification for any liability or expense hereunder. In
the event that Indemnitee is a party to or intervenes in any proceeding in which
the validity of this Agreement is at issue or seeks an award in arbitration
pursuant to the preceding paragraph of this Section 7 to enforce his rights
under, or to recover damages for breach of, this Agreement, Indemnitee, if he
prevails in whole or in part in such action, shall be entitled to recover from
the Company and shall be indemnified by the Company against any expenses
actually and reasonably incurred by him.
(c) In any proceeding in which the validity or enforceability of this
Agreement is at issue, or in which Indemnitee seeks an award in arbitration to
enforce his rights hereunder, the Company shall have the burden of proving that
Indemnitee is not entitled to indemnification hereunder.
8. EXCLUSIONS. No indemnification, reimbursement or payment shall be
required of the Company hereunder:
(a) With respect to any claim as to which Indemnitee shall have been
adjudged by a court of competent jurisdiction to have acted with bad faith,
willful misfeasance, or willful disregard of his duties, except to the extent
that such court shall determine upon application that, despite the adjudication
of liability, but in view of all the circumstances of the case, Indemnitee is
fairly and reasonably entitled to indemnify for such expenses as the court shall
deem proper; or
(b) With respect to any obligation of Indemnitee under Section 16(b) of
the Exchange Act.
9. EXTRAORDINARY TRANSACTIONS The Company covenants and agrees that, in
the event of any merger, consolidation or reorganization in which the Company is
not the surviving entity, any sale of all or substantially all of the assets of
the Company or any liquidation of the
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<PAGE> 5
Company (each such event is hereinafter referred to as an "extraordinary
transaction"), the Company shall use its best efforts to:
(a) Obtain insurance in Indemnitee's favor from a reputable insurance
carrier in reasonable amounts (if such insurance is available at commercially
reasonable rates) for a period of not less than one (1) year from the date of
such extraordinary transaction against any liability to which the
indemnification provided in this Agreement relates;
(b) Have the obligations of the Company under this Agreement expressly
assumed by the survivor, purchaser or successor, as the case may be, in such
extraordinary transaction; or
(c) Otherwise adequately provide for the satisfaction of the Company's
obligations under this Agreement, in a manner acceptable to Indemnitee.
10. NO PERSONAL LIABILITY. Indemnitee agrees that neither the
Directors, nor any officer, employee, representative or agent of the Company
shall be personally liable for the satisfaction of the Company's obligations
under this Agreement, and Indemnitee shall look solely to the assets of the
Company for satisfaction of any claims hereunder.
11. SEVERABILITY. If any provision, phrase, or other portion of this
Agreement should be determined by any court of competent jurisdiction to be
invalid, illegal or unenforceable, in whole or in part, and such determination
should become final, such provision, phrase or other portion shall be deemed to
be severed or limited, but only to the extent required to render the remaining
provisions and portions of the Agreement enforceable, and the Agreement as thus
amended shall be enforced to give effect to the intention of the parties insofar
as that is possible.
12. GOVERNING LAW. The parties hereto agree that this Agreement shall
be construed and enforced in accordance with and governed by the laws of the
State of Delaware.
13. NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be considered to have been duly given if
delivered by hand and receipted for by the party to whom the notice, request,
demand or other communication shall have been directed, or mailed by registered
mail with postage prepaid:
(a) If to the Company, to:
Lanier Worldwide, Inc.
2150 North Park Lake Drive
Tucker, GA 30084
Attention: Secretary
(b) If to Indemnitee, to:
_________________________
_________________________
_________________________
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<PAGE> 6
14. TERMINATION. This Agreement may be terminated by either party upon
not less than sixty (60) days prior written notice delivered to the other party,
but such termination shall not in any way diminish the obligations of Company
hereunder with respect to Indemnitee's activities prior to the effective date of
termination. Indemnitee's right to indemnification and advancement of expenses
pursuant to this Agreement shall continue regardless of whether Indemnitee has
ceased for any reason to be a director of the Company and shall inure to the
benefit of the heirs of Indemnitee and the executors and administrators of
Indemnitee's estate.
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<PAGE> 7
This Agreement is and shall be binding upon and shall inure to the
benefits of the parties hereto and their respective heirs, executors,
administrators, successors and assigns.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
INDEMNITEE LANIER WORLDWIDE, INC.
_______________________ _____________________________
Name: Chairman, President and
Title: Chief Executive Officer
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<PAGE> 1
Exhibit 10.11
FORM OF
LANIER WORLDWIDE, INC.
EMPLOYEE STOCK PURCHASE PLAN
<PAGE> 2
TABLE OF CONTENTS
Section Page
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sec. 1. Purpose............................................................1
sec. 2. Effective Date.....................................................1
sec. 3. Definitions........................................................1
3.1 Account...................................................1
3.2 Authorization.............................................1
3.3 Board.....................................................1
3.4 Code......................................................1
3.5 Eligible Employee.........................................1
3.6 Exercise Date.............................................2
3.7 Lanier....................................................2
3.8 Offering Period...........................................2
3.9 Option Price..............................................2
3.10 Participant...............................................2
3.11 Participating Employer....................................2
3.12 Plan......................................................2
3.13 Purchase Period...........................................2
3.14 Share Limit...............................................2
3.15 Stock.....................................................2
3.16 Stock Sales Price.........................................3
3.17 Subsidiary................................................3
sec. 4. Offerings..........................................................3
sec. 5. Stock Available for Options........................................3
sec. 6. Administration.....................................................4
sec. 7. Participation......................................................4
sec. 8. Payroll Deductions.................................................4
(a) Initial Authorization.....................................4
(b) Amended Authorization.....................................5
(c) Voluntary Account Withdrawal..............................5
(d) Termination of Employment.................................5
(e) Account Credits, General Assets and Taxes.................5
(f) No Cash Payments..........................................6
sec. 9. Granting of Option.................................................6
(a) General Rule..............................................6
(b) Statutory Limitations.....................................6
(c) Available Shares of Stock.................................6
<PAGE> 3
sec. 10. Exercise of Option.................................................7
(a) General Rule..............................................7
(b) Automatic Refund..........................................7
sec. 11. Delivery...........................................................7
sec. 12. Transferability....................................................8
sec. 13. Adjustment.........................................................8
sec. 14. Securities Registration............................................8
sec. 15. Amendment or Termination...........................................9
sec. 16. Notices............................................................9
sec. 17. Employment.........................................................9
sec. 18. Withholding........................................................9
sec. 19. Headings, References and Construction.............................10
ii
<PAGE> 4
LANIER WORLDWIDE, INC.
EMPLOYEE STOCK PURCHASE PLAN
sec. 1. PURPOSE.
The primary purpose of this Plan is to encourage Stock ownership by
each Eligible Employee of Lanier and each Subsidiary in the belief that such
ownership will increase his or her interest in the success of Lanier and will
provide an additional incentive for him or her to remain in the employ of Lanier
or such Subsidiary. Lanier intends that this Plan constitute an "employee stock
purchase plan" within the meaning of Code sec. 423 and, further, intends that
any ambiguity in this Plan or any related offering be resolved to effect such
intent.
sec. 2. EFFECTIVE DATE.
This Plan shall be effective as of the date of its adoption by the
Board.
sec. 3. DEFINITIONS.
The following definitions are applicable to the Plan:
3.1 ACCOUNT means the separate bookkeeping account that shall be
established and maintained by Lanier for each Participant for each Purchase
Period to record the payroll deductions made on his or her behalf to purchase
Stock under this Plan.
3.2 AUTHORIZATION means the participation election and payroll
deduction authorization form that an Eligible Employee shall be required to
properly complete and timely file with Lanier before the end of an Offering
Period in order to participate in this Plan for the related Purchase Period.
3.3 BOARD means the Board of Directors of Lanier.
3.4 CODE means the Internal Revenue Code of 1986, as amended.
3.5 ELIGIBLE EMPLOYEE means each employee of Lanier or a Subsidiary
except
(a) an employee who has been employed less than 1 year (within the
meaning of Code sec. 423(b)(4)(A)) by Lanier or such Subsidiary,
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<PAGE> 5
(b) an employee who customarily is employed (within the meaning of Code
sec. 423(b)(4)(B)) 20 hours or less per week by Lanier or such Subsidiary,
(c) an employee who customarily is employed (within the meaning of Code
sec. 423(b)(4)(C)) for not more than 5 months in any calendar year by Lanier or
such Subsidiary, and
(d) an employee prohibited under applicable foreign or commonwealth law
from participating in this Plan.
3.6 EXERCISE DATE means for each Purchase Period the last day of such
Purchase Period.
3.7 LANIER means Lanier Worldwide, Inc., a corporation incorporated
under the laws of the State of Delaware, and any successor to Lanier Worldwide,
Inc.
3.8 OFFERING PERIOD means (a) the 30-day period that comes before a
related Purchase Period or (b) such other period as may be set by Lanier that
comes before the related Purchase Period and continues for no more than 30 days.
3.9 OPTION PRICE means for each Purchase Period the lesser of 85% of
the Stock Sales Price on the first day of such Purchase Period or 85% of the
Stock Sales Price on the last day of such Purchase Period.
3.10 PARTICIPANT means for each Purchase Period an Eligible Employee
who has satisfied the requirements set forth in sec. 7 for such Purchase Period.
3.11 PARTICIPATING EMPLOYER means Lanier or a Subsidiary.
3.12 PLAN means this Lanier Worldwide, Inc. Employee Stock Purchase
Plan, as amended from time to time.
3.13 PURCHASE PERIOD means a 6-month period beginning on the first day
of the fiscal year or the first day of the seventh month of the fiscal year as
specified by Lanier; provided, however, that Lanier may specify an initial
purchase period of less than 6 months.
3.14 SHARE LIMIT means for each Purchase Period a number of whole
shares of Stock (rounding fractions downward) determined by Lanier by dividing
$12,500.00 by the Stock Sales Price on the first day of such Purchase Period;
provided, however, if the initial Purchase Period is less than 6 months, the
Share Limit for such initial Purchase Period shall be the quotient obtained by
dividing (a) the product of the number of calendar months in such Purchase
Period and $2083.00 by (b) the Stock Sales Price on the first day of the initial
Purchase Period.
3.15 STOCK means the common stock of Lanier, together with the
associated preferred stock purchase rights.
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<PAGE> 6
3.16 STOCK SALES PRICE means the closing price of a share of Stock on a
particular day as such price is reported in THE WALL STREET JOURNAL or in any
successor to THE WALL STREET JOURNAL or, if there is no such successor, any
similar trade publication selected by Lanier; provided, if no such price is so
reported for such day, the closing price on such day shall be deemed to be the
closing price of a share of Stock that was so reported on the immediately
preceding business day and, if no such price is so reported for such preceding
business day, the closing price on such day shall be determined in good faith by
Lanier.
3.17 SUBSIDIARY means Lanier Professional Services, Inc. and each other
corporation (a) that is in an unbroken chain of corporations beginning with
Lanier in which each corporation in such chain (except for the last corporation
in such chain) owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in such chain and
(b) that has been designated as eligible to participate in this Plan jointly by
the Chief Executive Officer and the Chief Operating Officer of Lanier.
sec. 4. OFFERINGS.
Options to purchase shares of Stock shall be offered to Participants in
accordance with this Plan from time to time at the discretion of Lanier;
provided, however, there shall be no more than one Offering Period in effect at
any time and no more than one Purchase Period in effect at any time.
sec. 5. STOCK AVAILABLE FOR OPTIONS.
There shall be 500,000 shares of Stock available under this Plan, which
shares of Stock may be reserved to the extent that Lanier deems appropriate from
authorized but unissued shares of Stock, and from shares of Stock that have been
reacquired by Lanier (treasury shares), or may be purchased by Lanier on the
open market. Such shares of Stock shall be available for purchase from Lanier
upon the exercise of options granted under sec. 9, and any shares of Stock that
are subject to options granted as of the first day of a Purchase Period but
which are not purchased on the related Exercise Date shall again become
available under this Plan.
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<PAGE> 7
sec. 6. ADMINISTRATION.
Lanier shall be responsible for the administration of this Plan and
shall have the power in connection with such administration to interpret this
Plan and to take such other action in connection with such administration as
Lanier deems necessary or equitable under the circumstances. Lanier also shall
have the power to delegate to a third party administrator, or to any other
person or entity, the duty to perform such administrative functions as Lanier
deems appropriate under the circumstances. Any person to whom the duty to
perform an administrative function is delegated shall act on behalf of and shall
be responsible to Lanier for such function. Any action or inaction by or on
behalf of Lanier under this Plan shall be final and binding on each Eligible
Employee, each Participant and on each other person who makes a claim under this
Plan based on the rights, if any, of any such Eligible Employee or Participant
under this Plan.
sec. 7. PARTICIPATION.
Each person who is an Eligible Employee on the first day of an Offering
Period shall satisfy the requirements to be a Participant in this Plan for the
related Purchase Period if
(a) he or she properly completes and files an Authorization
with Lanier on or before the last day of such Offering Period to
purchase shares of Stock pursuant to the option granted under sec. 9,
and
(b) his or her employment as an Eligible Employee continues
throughout the period that begins on the first day of such Offering
Period and ends on the first day of the related Purchase Period.
Employment as an Eligible Employee shall not be treated as interrupted by a
transfer directly between Lanier and any Subsidiary or between one Subsidiary
and another Subsidiary. An Authorization shall require an Eligible Employee to
provide such information and to take such action as Lanier in its discretion
deems necessary or helpful to the orderly administration of this Plan, including
specifying (in accordance with sec. 9) his or her payroll deductions to purchase
shares of Stock pursuant to the option granted under sec. 9. An Authorization
shall remain in effect for subsequent Purchase Periods until amended or revoked.
sec. 8. PAYROLL DEDUCTIONS.
(a) INITIAL AUTHORIZATION. Each Participant's Authorization made under sec. 7
shall specify a percentage of from 1 to 15% (or such other uniform maximum
contribution percentage designated by Lanier prior to an Offering Period), in
whole number percentage increments only, of the Participant's compensation from
his or her Participating Employer that he or she authorizes his or her
Participating Employer to deduct from his or her compensation each pay period
during the Purchase Period for which such Authorization is in effect to purchase
shares of
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<PAGE> 8
Stock pursuant to the option granted under sec. 9. For purposes of this sec. 8,
"compensation" means base salary and wages paid by the Participant's
Participating Employer and other amounts paid by the Participating Employer in
cash or cash equivalents that are includible in the Participant's gross income,
including overtime payments, commission payments, annual bonuses, and regional
and shift differentials, and also includes elective deferrals made by a
Participating Employer on behalf of the Participant that are not includible in
his or her gross income for federal income tax purposes for such period because
they are contributed to a cash or deferred arrangement described in Code sec.
401(k), or because they are contributed to a cafeteria plan described in Code
sec. 125, but excludes any payment made under a severance pay plan or program,
any payment made in consideration of the Participant's release of claims in
favor of a Participating Employer or an affiliate, any foreign or domestic
assignment allowance, any contest payments, any expense-related reimbursements
(including reimbursements commonly referred to as "Runzheimer" payments), any
signing bonuses, any payment made under any long-term incentive plan,
compensation received while on an authorized leave of absence, short-term
disability payments, and the value of life insurance includible in the
Participant's gross income. For purposes of this sec. 8, the "pay period" of a
Participant shall be determined in accordance with his or her Participating
Employer's standard payroll policies and practices.
(b) AMENDED AUTHORIZATION. A Participant shall have the right once
during any Purchase Period to reduce or cease the payroll deductions that he or
she previously had authorized, and such reduction or cessation shall be
effective as soon as practicable after Lanier actually receives an amended
Authorization to such effect.
(c) VOLUNTARY ACCOUNT WITHDRAWAL. A Participant may elect to withdraw
the entire balance credited to his or her Account for a Purchase Period by
completing in writing and filing an amended Authorization with Lanier on or
before the Exercise Date for such period. If a Participant makes such a
withdrawal election, such balance shall be paid to him or her in cash (without
interest) as soon as practicable after such amended Authorization is filed, and
no further payroll deductions shall be made on his or her behalf for the
remainder of such Purchase Period. If a Participant dies on or before an
Exercise Date and Lanier has timely notice of his or her death, Lanier shall
deem such Participant to have elected to withdraw the entire balance credited to
his or her Account under this sec. 8(c).
(d) TERMINATION OF EMPLOYMENT. If a Participant's employment as an
Eligible Employee terminates on or before the Exercise Date for a Purchase
Period for any reason whatsoever, his or her Account shall be distributed as
soon as practicable as if he or she had elected to withdraw his or her Account
under sec. 8(c) immediately before the date his or her employment had so
terminated. In this connection, however, a Participant's change to part-time
status subsequent to the commencement of a Purchase Period shall not terminate
the Participant's status as an Eligible Employee for such Purchase Period.
(e) ACCOUNT CREDITS, GENERAL ASSETS AND TAXES. All payroll deductions
made for a Participant shall be credited to his or her Account. All payroll
deductions shall be held by Lanier, by Lanier's agent or by one, or more than
one, Subsidiary (as determined by Lanier) as part of the general assets of
Lanier or any such Subsidiary, and each Participant's right to the payroll
deductions credited to his or her Account shall be those of a general and
unsecured
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<PAGE> 9
creditor. Lanier, Lanier's agent or such Subsidiary shall have the right to
withhold on payroll deductions to the extent such person deems necessary or
appropriate to satisfy applicable tax laws.
(f) NO CASH PAYMENTS. A Participant may not make any contribution to
his or her Account except through payroll deductions made in accordance with
this sec. 8 unless the Participant is prohibited under applicable foreign or
commonwealth law (as determined by Lanier) from participating in this Plan via
payroll deduction. If a Participant is so prohibited, the Participant's
Authorization under sec. 8(a) shall specify a percentage of from 1 to 15% (in
whole number percentage increments only) of his or her compensation from his or
her Participating Employer that he or she shall pay directly to his or her
Participating Employer during the Purchase Period for which such Authorization
is in effect to purchase shares of Stock pursuant to the option granted under
sec. 9.
sec. 9. GRANTING OF OPTION.
(a) GENERAL RULE. Subject to sec. 9(b) and sec. 9(c), each person who
is a Participant for a Purchase Period automatically shall be granted an option
as of the first day of such Purchase Period to purchase the number of shares of
Stock equal to the Share Limit as determined by Lanier for such Purchase Period.
(b) STATUTORY LIMITATIONS. No option granted by operation of this Plan
to any Eligible Employee under sec. 9(a) shall permit his or her rights to
purchase shares of Stock under this Plan or under any other employee stock
purchase plan (within the meaning of Code sec. 423) or any other shares of stock
of Lanier and any of its subsidiaries (within the meaning of Code sec. 424(f))
under any other employee stock purchase plans (within the meaning of Code sec.
423) to accrue (within the meaning of Code sec. 423(b)(8)) at a rate which
exceeds $25,000 of the fair market value of such stock for any calendar year.
Such fair market value shall be determined as of the first day of the Purchase
Period for which the option is granted. In addition, no option may be granted by
operation of this Plan to any Eligible Employee under sec. 9(a) if he or she
would own (immediately after the grant of such option) stock possessing 5% or
more of the total combined voting power or value of all classes of stock of
Lanier based on the rules set forth in Code sec. 423(b)(3) and Code sec. 424.
(c) AVAILABLE SHARES OF STOCK. If the number of shares of Stock
available for purchase for any Purchase Period is insufficient to cover the
number of shares that Participants have elected to purchase through effective
Authorizations, then each Participant's option to purchase shares of Stock for
such Purchase Period shall be reduced proportionately (rounding fractional
shares downward) based on the ratio of the number of shares of Stock for which
such Participant would have been granted an option under sec. 9(a) if sufficient
shares were available to the total number of shares of Stock for which options
would have been granted to all Participants under sec. 9(a) if sufficient shares
were available.
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<PAGE> 10
sec. 10. EXERCISE OF OPTION.
(a) GENERAL RULE. Unless a Participant files an amended Authorization
under sec. 8(c) on or before the Exercise Date for a Purchase Period, his or her
option shall be exercised automatically on such Exercise Date for the purchase
of as many whole shares of Stock (rounding fractions downward) subject to such
option as the balance credited to his or her Account as of that date will
purchase at the Option Price for such shares of Stock.
(b) AUTOMATIC REFUND. If a Participant's Account has a balance
remaining after his or her option has been exercised, such balance automatically
shall be refunded to the Participant in cash (without interest) as soon as
practicable following such Exercise Date (unless such balance only represents
the value of a fractional share of Stock, in which case it shall be carried
forward in the Participant's Account to the next Purchase Period).
sec. 11. DELIVERY.
Stock purchased upon the exercise of a Participant's option shall be
registered (a) in the Participant's name or, if permissible under applicable
law, (b) in the names of the Participant and one such other person as may be
designated by the Participant as joint tenants with rights of survivorship (if
the Participant so directs on his or her effective Authorization). No stock
certificates, however, shall be issued until requested by a Participant or upon
termination of employment. If pursuant to sec. 6, Lanier appoints a third party
administrator to maintain a bookkeeping account to record the shares of Stock
purchased for a Participant under this Plan, and such third party administrator
also provides brokerage services, the Participant may request that the third
party administrator arrange for the sale (subject to the 1-year limitation on
disposition set forth in sec. 12) of any shares of Stock registered to him or
her under this Plan; provided, all transaction costs of such sale shall be paid
by the Participant. No Participant (or any person who makes a claim through a
Participant) shall have any interest in any shares of Stock subject to an
option until such option has been exercised and the related shares of Stock
actually have been registered. All cash dividends declared and payable with
respect to shares of Stock registered pursuant to this sec. 11 automatically
shall be reinvested in Stock, at prevailing market prices and with transaction
costs of such reinvestment paid by Lanier, unless stock certificates previously
have been issued with respect to such registered Stock.
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<PAGE> 11
sec. 12. TRANSFERABILITY.
Neither the balance credited to a Participant's Account nor any rights
to the exercise of an option or to receive shares of Stock under this Plan may
be assigned, encumbered, alienated, transferred, pledged, or otherwise disposed
of in any way, by a Participant during his or her lifetime or by any other
person during his or her lifetime, and any attempt to do so shall be without
effect; provided, however, that Lanier in its absolute discretion may treat any
such action as an election by a Participant to withdraw the balance credited to
his or her Account in accordance with sec. 8(c). In addition, no shares of Stock
acquired by a Participant upon the exercise of an option under this Plan may be
assigned, encumbered, alienated, transferred, pledged, or otherwise disposed of
in any way, for a period of 1 year following such acquisition by the Participant
(other than by will or the laws of descent and distribution) and any attempt to
do so shall be without effect.
sec. 13. ADJUSTMENT.
The number of shares of Stock covered by outstanding options granted
pursuant to this Plan and the related Option Price and the number of shares of
Stock available under this Plan shall be adjusted by Lanier in an equitable
manner (rounding fractional shares downward) to reflect any increase or decrease
in the number of issued and outstanding shares of Stock resulting from a
subdivision or consolidation of shares of Stock or the payment of dividends in
the form of Stock (but only such a payment with respect to Stock) or any other
increase or decrease in the number of shares of Stock effected without receipt
of consideration by Lanier. Furthermore, Lanier shall adjust (in a manner that
satisfies the requirements of Code sec. 424(a)) the number of shares of Stock
available under this Plan and the number of shares of Stock covered by options
granted under this Plan (rounding fractional shares downward) and the related
Option Price in the event of any corporate transaction described in Code sec.
424(a). An adjustment made under this sec. 13 by Lanier shall be conclusive and
binding on all affected persons.
sec. 14. SECURITIES REGISTRATION.
If Lanier deems it necessary to register under the Securities Act of
1933, as amended, or any other applicable statutes any shares of Stock with
respect to which an option shall have been exercised under this Plan or to
qualify any such shares of Stock for an exemption from any such statutes, Lanier
shall take such action at its own expense before delivery of the certificate
representing such shares of Stock. If shares of Stock are listed on any national
stock exchange at the time an option to purchase shares of Stock is exercised
under this Plan, Lanier whenever required shall register shares of Stock for
which such option is exercised under the Securities Act of 1933, as amended, and
shall make prompt application for the listing on such national stock exchange of
such shares, all at the expense of Lanier.
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<PAGE> 12
sec. 15. AMENDMENT OR TERMINATION.
This Plan may be amended by action taken jointly by the Chief Executive
Officer and Chief Operating Officer of Lanier from time to time to the extent
that such officers deem necessary or appropriate in light of, and consistent
with, Code sec. 423 and the laws of the State of Delaware, and any such
amendment shall be subject to the approval of Lanier's shareholders to the
extent such approval is required under Code sec. 423, the laws of the State of
Delaware, applicable stock exchange requirements, or other applicable law. The
Board may terminate this Plan or any offering made under this Plan at any time;
provided, however, the Board shall not have the right to modify, amend or
cancel any option outstanding after the beginning of a Purchase Period unless
(a) each Participant consents in writing to such modification, amendment or
cancellation, (b) such modification or amendment only accelerates the Exercise
Date for the related Purchase Period or (c) the Board acting in good faith
deems that such action is required under applicable law.
sec. 16. NOTICES.
All Authorizations and other communications from a Participant to
Lanier under, or in connection with, this Plan shall be deemed to have been
filed with Lanier when actually received in the form specified by Lanier at the
location, or by the person, designated by Lanier for the receipt of such
Authorizations and communications.
sec. 17. EMPLOYMENT.
No offer under this Plan shall constitute an offer of employment, and
no acceptance of an offer under this Plan shall constitute an employment
agreement. Any such offer or acceptance shall have no bearing whatsoever on the
employment relationship between any Eligible Employee and Lanier or any
subsidiary of Lanier, including a Subsidiary. Finally, no Eligible Employee
shall be induced to participate in this Plan by the expectation of employment or
continued employment.
sec. 18. WITHHOLDING.
A Participating Employer shall be entitled to take whatever action it
deems appropriate to satisfy the federal and state tax withholding requirements,
if any, which such Participating Employer deems applicable to the disposition of
Stock by a Participant prior to the expiration of the holding periods required
under Code sec. 423.
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sec. 19. HEADINGS, REFERENCES AND CONSTRUCTION.
The headings to sections in this Plan have been included for
convenience of reference only. Except as otherwise expressly indicated, all
references to sections (sec.) in this Plan shall be to sections (sec.) of this
Plan. This Plan shall be interpreted and construed in accordance with the laws
of the State of Georgia.
<PAGE> 1
Exhibit 10.12
FORM OF
LANIER WORLDWIDE, INC.
KEY CONTRIBUTOR INCENTIVE PLAN
EFFECTIVE AS OF OCTOBER 11, 1999
1. PURPOSE. The purpose of the Lanier Worldwide, Inc. Key Contributor
Incentive Plan (the "Plan") is to promote the growth and performance of Lanier
Worldwide, Inc. (the "Corporation") by linking a portion of the total
compensation for certain key employees to attainment of such corporate, sector
and division financial objectives as shall be approved by the applicable Plan
Administrator for each Plan Year.
2. DEFINITIONS. The following definitions are applicable to the Plan:
"Affiliate" means any entity controlling, controlled by or under common
control with the Corporation, through ownership, directly or indirectly, of a
50% or more interest in voting rights or profits.
"Board" means the Board of Directors of the Corporation.
"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 consist solely
of two or more members of the Board who are not employees of the Corporation or
any Affiliate thereof and who qualify as "outside directors" under Section
162(m) of the Internal Revenue Code, as amended from time to time, and the
regulations promulgated thereunder.
"Executive Officer" means the Chief Executive Officer of the
Corporation and each other individual the Board has designated as an executive
officer of the Corporation for purposes of reporting under Section 16 of the
Securities Exchange Act of 1934, as amended from time to time, or any successor
thereto.
"Participant" means any salaried employee of the Corporation and its
subsidiaries and Affiliates designated by the Plan Administrator to participate
in the Plan.
"Plan Administrator" means with respect to any Participant, the person
or group designated to administer the Plan with respect to such Participant as
provided in Section 3.
"Plan Year" means the fiscal year of the Corporation.
3. ADMINISTRATION OF PLAN. With respect to participation in the Plan by
the Chief Executive Officer of the Corporation and each other Executive Officer,
the Plan shall be administered by the Committee. With respect to participation
in the Plan by Participants who are
<PAGE> 2
not Executive Officers, the Plan shall be administered by the Board, the
Committee, or the Chief Executive Officer, in accordance with the Corporation's
compensation practices.
4. DESIGNATION OF PARTICIPANTS. Participants in the Plan shall be
selected by the Plan Administrator on an annual basis from among the salaried
employees of the Corporation and its subsidiaries and Affiliates.
5. ANNUAL INCENTIVE AWARDS.
(a) Each Participant in the Plan shall be eligible to receive such
annual incentive award, if any, for each Plan Year as may be payable pursuant to
the satisfaction of the performance criteria described below. The Plan
Administrator shall, on an annual basis, establish a "target annual incentive
award" for each Participant, and the maximum amount of an annual incentive award
that may be awarded to a Participant for a Plan Year shall be 150% thereof.
(b) Participants shall have their annual incentive awards, if any,
determined on the basis of the degree of achievement of performance goals that
shall be established by the Plan Administrator in writing and that shall be
stated in terms of the attainment of specified levels of, or percentage changes
(as compared to a prior measurement period) in, any one or more of the following
measurements: the Corporation's revenue, earnings per share of common stock of
the Corporation, net income, return on equity, return on capital, return on
assets, total shareholder return, return on sales or cash flow, or any
combination thereof. The Plan Administrator shall, for each Plan Year, establish
the performance goal or goals from among the foregoing to apply to each
Participant and a formula or matrix prescribing the extent to which such
Participant's annual incentive award shall be earned based upon the degree of
achievement of such performance goal or goals. The Plan Administrator may
determine that the annual incentive award payable to any Participant shall be
based upon the attainment of performance goals comparable to those specified
above but in whole or in part applied to the results of a subsidiary, Affiliate,
division or sector of the Corporation for which such Participant has substantial
management responsibility. Subject to Section 8, each Participant's period of
performance will be the Plan Year.
(c) A Participant's target annual incentive award or performance goals
may be changed by the Plan Administrator during the Plan Year to reflect a
change in responsibilities, PROVIDED that to the extent an award is intended to
come within the exception for performance-based compensation under Section
162(m) of the Internal Revenue Code, as amended from time to time, any such
change shall be made in a manner consistent with such Internal Revenue Code
section and the regulations promulgated thereunder.
(d) Except with respect to Executive Officers as provided in Section 6,
the Plan Administrator may, in its sole discretion, (i) award or increase the
amount of an annual incentive award payable to a Participant even though not
earned in accordance with the performance goals established pursuant to this
Section 5, or (ii) decrease the amount of an annual incentive award otherwise
payable to a Participant even though earned in accordance with the performance
goals established pursuant to this Section 5.
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<PAGE> 3
6. PARTICIPATION BY EXECUTIVE OFFICERS. Notwithstanding any other
provisions of the Plan to the contrary, the following provisions shall be
applicable to participation in the Plan by Executive Officers:
(a) Each such Participant's annual incentive award under the Plan for a
Plan Year shall be based solely on achievement of one or more of the performance
goals as established by the Plan Administrator pursuant to Section 5, and the
Plan Administrator shall not have the discretion provided in Section 5(d) to
increase the amount of the award.
(b) With respect to each such Participant, no annual incentive award
shall be payable hereunder except upon written certification by the Plan
Administrator that the performance goals have been satisfied to a particular
extent and that any other material terms and conditions precedent to payment of
an annual incentive award pursuant to the Plan have been satisfied.
(c) The maximum annual incentive award payable to any such Participant
for any Plan Year shall be $2,000,000.
7. PAYMENT OF ANNUAL INCENTIVE AWARD. Payment of any amount to be paid
to a Participant based upon the degree of attainment of the applicable
performance goals shall be made, in cash, (i) following each quarter of the Plan
Year, based on the degree of attainment in the quarter of the applicable
performance goals, and (ii) following the Plan Year, based on the degree of
attainment in the Plan Year of the applicable performance goals. Quarterly bonus
payment potential as a percent of the target annual incentive award is as
follows:
First Quarter 15%
Second Quarter 25%
Third Quarter 20%
Fourth Quarter 40%
Payment of any amount to a Participant based on the degree of attainment in the
Plan Year of the applicable performance goals shall be reduced by payments made
to the Participant based on quarterly attainment of such goals in such Plan
Year. Payments are made quarterly approximately six weeks following the end of
each of the first three quarters of the Plan Year. The final year-end payment is
made following the formal audit certification for the year. If the maximum
quarterly bonus opportunity is not achieved in any of the first three quarters,
the deficiency can be eliminated based on total year performance as of the end
of the year. A Participant may earn in excess of the target annual incentive
award for exceeding the applicable performance goals by year end. This preceding
sentence does not apply to quarterly calculations.
8. SPECIAL PROVISIONS.
(a) A Participant's initial period of performance will be prorated
according to his or her selection for participation in the Plan. The initial
period of performance for an employee who begins participation prior to or on
the 15th day of a calendar month will begin on
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<PAGE> 4
the first day of the calendar month in which he or she first becomes a
Participant. The initial period of performance for an employee who begins
participation on or after the 16th day of a calendar month will begin on the
first day of the immediately following calendar month. The initial period of
performance will end on the last day of the Plan Year in which participation
begins.
(b) A Participant must be actively employed on the last day of a
quarter to qualify for a payment calculated for that time frame.
(c) In the event that a Participant retires or dies during the Plan
Year, the Participant (or his or her estate) will be eligible for prorated bonus
payments following the end of the last quarter worked and the end of the Plan
Year, PROVIDED the applicable performance goals are attained.
(d) A Participant's performance period shall not include any period
while he or she is on a leave of absence and he or she will not be eligible for
an award for the period beginning the first day of the calendar month following
the last day of active employment and ending when the performance period
recommences following his or her return to work. The performance period shall
recommence on the first day of the calendar month in which the Participant
returns to work, if he or she returns to work on or before the 15th day of such
calendar month. If such Participant returns to work on or after the 16th day of
a calendar month, his or her performance period will recommence on the first day
of the calendar month following his or her return to work.
(e) In the event a Participant is demoted or transferred to a position
not eligible to participate in this Plan, participation for the quarter in which
the demotion or transfer takes place will be prorated, PROVIDED the Participant
is actively employed by the Corporation or a subsidiary or Affiliate on the last
day of the quarter. The same criteria applied to determine the beginning of the
Performance Period in paragraph (a) will be applied to determine eligibility for
the calendar month in which a Participant's position changes. If a Participant
is demoted or transferred to a position qualifying to participate in the Plan at
a lesser award level, participation in the Plan will continue for the Plan Year
of the demotion or transfer with appropriate prorations based on the same
criteria as described in paragraph (a) above.
(f) When a Participant's performance period is less than the entire
Plan Year as a result of leaving or entering the Plan after the beginning of the
Plan Year, the target award for such Participant shall be adjusted. For
Participants leaving the Plan, this adjustment shall be made at the end of the
Plan Year based on the final year-end results. An adjusted payment shall be made
to provide total incentive payments that are proportional to total year results,
prorated for the number of months of participation in the Plan. For new
Participants, this adjustment shall be made by reducing the stand-alone fourth
quarter potential to 25% and applying a total Plan Year adjustment comparable to
that used for Participants who are transferred out of the Plan.
9. PARTICIPANT'S INTERESTS. A Participant's interest in any annual
incentive awards hereunder shall at all times be reflected on the Corporation's
books as a general unsecured and unfunded obligation of the Corporation subject
to the terms and conditions of the Plan. The Plan
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<PAGE> 5
shall not give any person any right or security interest in any asset of the
Corporation or any fund in which any deferred payment is deemed invested.
Neither the Corporation, the Board, nor the Plan Administrator shall be
responsible for the adequacy of the general assets of the Corporation to
discharge the payment of its obligations hereunder nor shall the Corporation be
required to reserve or set aside funds therefor.
10. NON-ALIENATION OF BENEFITS; BENEFICIARY DESIGNATION. All rights and
benefits under the Plan are personal to the Participant and neither the Plan nor
any right or interest of a Participant or any other person arising under the
Plan is subject to voluntary or involuntary alienation, sale, transfer, or
assignment without the Corporation's consent. Subject to the foregoing, the
Corporation shall establish such procedures as it deems necessary for a
Participant to designate one or more beneficiaries to whom any payment the Plan
Administrator determines to make would be payable in the event of the
Participant's death.
11. WITHHOLDING FOR TAXES. Notwithstanding any other provisions of this
Plan, the Corporation may withhold from any payment made by it under the Plan
such amount or amounts as may be required for purposes of complying with any
federal, state and local tax or withholding requirements.
12. RIGHTS OF EMPLOYEES. Nothing in the Plan shall interfere with or
limit in any way the right of the Corporation or any of its subsidiaries or
Affiliates to terminate a Participant's employment at any time, or confer upon
any Participant any right to continued employment with the Corporation or any of
its subsidiaries or Affiliates.
13. DETERMINATIONS FINAL. Each determination provided for in the Plan
shall be made by the Plan Administrator under such procedures as may from time
to time be prescribed by the Plan Administrator and shall be made in the sole
discretion of the Plan Administrator. Any such determination shall be
conclusive.
14. CHANGE IN CONTROL.
(a) Notwithstanding anything to the contrary provided elsewhere herein,
in the event of a "change in control" of the Corporation, as defined in Section
14(b) below, then the Corporation shall as promptly as practicable pay any
annual incentive awards awarded to Participants. The payment to each Participant
shall be an amount not less than the target annual incentive award as originally
approved for the Plan Year (net of any quarterly payments previously made for
the Plan Year under Section 7), notwithstanding actual results or any changes or
modifications occurring after any such change in control.
(b) "Change in control" means the occurrence of any one of the
following events:
(i) any "person" (as such term is defined in Section 3(a)(9) of
the Securities Exchange Act of 1934 (the "Exchange Act") and as used
in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes a
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Corporation representing
20%
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or more of the combined voting power of the Corporation's then
outstanding securities eligible to vote for the election of the Board
(the "Corporation Voting Securities"); PROVIDED, however, that
the event described in this paragraph (i) shall not be deemed to be a
Change in Control by virtue of any of the following acquisitions: (a)
by the Corporation or any subsidiary, (b) by any employee benefit plan
sponsored or maintained by the Corporation or any subsidiary, (c) by
any underwriter temporarily holding securities pursuant to an offering
of such securities, (d) pursuant to a Non-Control Transaction (as
defined in paragraph (iii)), or (e) with respect to any Participant,
by such Participant or by any group of persons including such
Participant or acting in concert with such Participant;
(ii) individuals who, on the "Distribution Date" as defined in
the Registration Statement on Form 10 and any amendments thereto filed
by the Corporation with the Securities and Exchange Commission,
constitute the Board (the "Incumbent Directors") cease for any reason
to constitute at least a majority of the Board, PROVIDED that any
person becoming a director subsequent to the Distribution Date, whose
election or nomination for election was approved by a vote of at least
two-thirds of the Incumbent Directors who remain on the Board (either
by a specific vote or by approval of the proxy statement of the
Corporation in which such person is named as a nominee for director,
without objection to such nomination), shall also be deemed to be an
Incumbent Director; PROVIDED, HOWEVER, that no such individual
initially elected or nominated as a director of the Corporation as a
result of an actual or threatened election contest with respect to
directors or any other actual or threatened solicitation of proxies or
consents by or on behalf of any person other than the Board shall be
deemed to be an Incumbent Director;
(iii) the consummation of a merger, consolidation, share
exchange or similar form of corporate reorganization of the
Corporation or any such type of transaction involving the Corporation
or any of its subsidiaries that requires the approval of the
Corporation's shareholders (whether for such transaction or the
issuance of securities in the transaction or otherwise) (a "Business
Combination"), unless immediately following such Business Combination:
(a) more than 66 2/3% of the total voting power of the company
resulting from such Business Combination (including, without
limitation, any company which directly or indirectly has beneficial
ownership of 100% of the Corporation Voting Securities) eligible to
elect directors of such company is represented by shares that were
Corporation Voting Securities immediately prior to such Business
Combination (either by remaining outstanding or being converted), and
such voting power is in substantially the same proportion as the
voting power of such Corporation Voting Securities immediately prior
to the Business Combination, (b) no person (other than any publicly
traded holding company resulting from such Business Combination, any
employee benefit plan sponsored or maintained by the Corporation (or
the company resulting from such Business Combination)) becomes the
beneficial owner, directly or indirectly, of 20% or more of the total
voting power of the outstanding voting securities eligible to elect
directors of the company resulting from such Business Combination, and
(c) at least a majority of the members of the board of directors of
the company resulting from such Business Combination were Incumbent
Directors at the time of the Board's approval of the execution of the
initial agreement providing for such Business Combination (any
Business Combination which satisfies the foregoing conditions
specified in (a), (b) and (c) shall be deemed to be a "Non-Control
Transaction"); or
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<PAGE> 7
(iv) the shareholders of the Corporation approve a plan of
complete liquidation or dissolution of the Corporation or the direct
or indirect sale or other disposition of all or substantially all of
the assets of the Corporation and its subsidiaries.
Notwithstanding the forgoing, a "change in control" of the Corporation shall not
be deemed to occur solely because any person acquires beneficial ownership of
more than 20% of the Corporation Voting Securities as a result of the
acquisition of Corporation Voting Securities by the Corporation which reduces
the number of Corporation Voting Securities outstanding; PROVIDED that if after
such acquisition by the Corporation such person becomes the beneficial owner of
additional Corporation Voting Securities that increases the percentage of
outstanding Corporation Voting Securities beneficially owned by such person, a
"change in control" of the Corporation shall then occur.
15. ADJUSTMENT OF AWARDS. The Plan Administrator shall be authorized to
make adjustments in the method of calculating attainment of performance goals 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 to the extent an award is intended to come
within the exception for performance-based compensation under Section 162(m) of
the Internal Revenue Code of 1986, as amended from time to time, any such
adjustments shall be made in a manner consistent with such Internal Revenue Code
section and the regulations promulgated thereunder. The Plan Administrator may
correct any defect, supply any omission or reconcile any inconsistency in the
Plan or any annual incentive award in the manner and to the extent it shall be
deemed 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 Plan Administrator may, in its discretion, make such
adjustments in the terms of annual incentive awards under the Plan as it shall
deem appropriate.
16. DEFERRAL. Notwithstanding anything contained herein to the
contrary, in the event that an annual incentive award shall be ineligible for
treatment as "other performance-based compensation" under Section 162(m) of the
Internal Revenue Code of 1986, as amended from time to time, the Plan
Administrator, in its sole discretion, shall have the right, with respect to any
Executive Officer who is a "covered employee" under Section 162(m) of the
Internal Revenue Code of 1986, as amended from time to time, to defer, in whole
or in part, such Executive Officer's receipt of his or her annual incentive
award until the Executive Officer is no longer a "covered employee" or until
such time as shall be determined by the Plan Administrator, PROVIDED that the
Plan Administrator may effect such a deferral only in a situation where the
Corporation would be prohibited a deduction under Section 162(m) and such
deferral shall be limited to the portion of the award that is not deductible.
17. AMENDMENT OR TERMINATION. Until such time as a "change in control"
shall have occurred, the Board or the Committee may, in its sole discretion,
amend, suspend or terminate the Plan from time to time. No such amendment,
suspension or termination shall alter a Participant's right to receive a
distribution as previously earned, as to which this Plan shall remain in effect
following its termination until all such amounts have been paid, except as the
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Corporation may otherwise determine. After a "change in control," the Board or
the Committee shall no longer have the power to amend, suspend or terminate the
Plan, except to comply with changes to the Internal Revenue Code of 1986, as
amended from time to time, or other applicable law.
Approved by the Board this 11th day of October, 1999, which shall be
the effective date of the Plan.
ATTESTED:
__________________________________
Secretary
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<PAGE> 1
Exhibit 10.13
FORM OF
LANIER WORLDWIDE, INC.
LONG-TERM INCENTIVE PLAN FOR KEY EMPLOYEES
EFFECTIVE AS OF OCTOBER 11, 1999
1. PURPOSE. The purpose of the Lanier Worldwide, Inc. Long-term
Incentive Plan for Key Employees (the "Plan") is to promote the growth and
performance of Lanier Worldwide, Inc. (the "Corporation") by linking a portion
of the total compensation for certain key employees to attainment of such
corporate, sector and division financial objectives as shall be approved by the
Committee, as appropriate, for long-term cycles of at least three (3) years.
2. DEFINITIONS. The following definitions are applicable to the Plan:
"Affiliate" means any entity controlling, controlled by or under common
control with the Corporation, through ownership, directly or indirectly, of a
50% or more interest in voting rights or profits.
"Board" means the Board of Directors of the Corporation.
"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 consist solely
of two or more members of the Board who are not employees of the Corporation or
any Affiliate thereof and who qualify as "outside directors" under Section
162(m) of the Internal Revenue Code, as amended from time to time, and the
regulations promulgated thereunder.
"Executive Officer" means the Chief Executive Officer of the
Corporation and each other individual the Board has designated as an executive
officer of the Corporation for purposes of reporting under Section 16 of the
Securities Exchange Act of 1934, as amended from time to time, or any successor
thereto.
"Participant" means any salaried employee of the Corporation and its
subsidiaries and Affiliates designated by the Committee to participate in the
Plan for a Performance Period.
"Performance Period" means a period of three (3) or more consecutive
fiscal years of the Corporation established by the Committee for measurement of
achievement of the established performance goal or goals described in Section
5(b).
3. ADMINISTRATION OF PLAN. The Plan shall be administered by the
Committee.
4. DESIGNATION OF PARTICIPANTS. Each Performance Period, Participants,
if any, in the Plan shall be selected by the Committee from among the salaried
employees of the Corporation
<PAGE> 2
and its subsidiaries and Affiliates recommended to the Committee by the Chief
Executive Officer.
5. INCENTIVE AWARDS.
(a) Each Participant in the Plan for a Performance Period shall be
eligible to receive such incentive award, if any, for the Performance Period as
may be payable pursuant to the performance criteria described below. The
Committee shall establish a "target incentive award" for each Participant for
the Performance Period, and the maximum amount of an incentive award that may be
awarded to the Participant for the Performance Period shall be 200% thereof.
(b) Participants shall have their incentive awards, if any, determined
on the basis of the degree of achievement of performance goals that shall be
established by the Committee in writing and that shall be stated in terms of the
attainment of specified levels of, or percentage changes (as compared to a prior
measurement period) in, any one or more of the following measurements: the
Corporation's revenue, earnings per share of common stock of the Corporation,
net income, return on equity, return on capital, return on assets, total
shareholder return, return on sales or cash flow, or any combination thereof.
Percentage payments of each award shall range from 0% to 200%, in increments of
10%. The Committee shall, for each Performance Period, establish the performance
goal or goals from among the foregoing to apply to each Participant and a
formula or matrix prescribing the extent to which such Participant's incentive
award shall be earned based upon the degree of achievement of such performance
goal or goals. The Committee may determine that the incentive award payable to
any Participant shall be based upon the attainment of performance goals
comparable to those specified above but in whole or in part applied to the
results of a subsidiary, Affiliate, division or sector of the Corporation for
which such Participant has substantial management responsibility.
(c) Awards shall be expressed in U.S. dollar amounts. For Participants
ordinarily paid in currency other than U.S. dollars, the dollar amount of the
award that is earned at the conclusion of the performance period shall be
translated into the currency in which the Participant is ordinarily paid. The
translation from the dollar amount to the local currency shall be based on a
single average of the currency exchange rates at the end of each calendar
quarter, as published in the WALL STREET JOURNAL, for the twelve quarters that
comprise the performance period. The result of this calculation shall be used
for the actual award payment.
(d) A Participant's target incentive award or performance goals may be
changed by the Committee during the Performance Period to reflect a change in
responsibilities, PROVIDED that to the extent an award is intended to come
within the exception for performance-based compensation under Section 162(m) of
the Internal Revenue Code, as amended from time to time, any such change shall
be made in a manner consistent with such Internal Revenue Code section and the
regulations promulgated thereunder.
(e) Subject to Section 6 below, the Committee may, in its sole
discretion, (i) award or increase the amount of an incentive award payable to a
Participant even though not earned in accordance with the performance goals
established pursuant to this Section 5, or
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<PAGE> 3
(ii) decrease the amount of an incentive award otherwise payable to a
Participant even though earned in accordance with the performance goals
established pursuant to this Section 5.
6. PARTICIPATION BY EXECUTIVE OFFICERS. Notwithstanding any other
provisions of the Plan to the contrary, the following provisions shall be
applicable to participation in the Plan by Executive Officers:
(a) Each such Participant's incentive award under the Plan for
a Performance Period shall be based solely on achievement of one or
more of the performance goals as established by the Committee pursuant
to Section 5, and the Committee shall not have the discretion provided
in Section 5(e) to increase the amount of the award.
(b) With respect to each such Participant, no incentive award
shall be payable hereunder except upon written certification by the
Committee that the performance goals have been satisfied to a
particular extent and that any other material terms and conditions
precedent to payment of an incentive award pursuant to the Plan have
been satisfied.
(c) The maximum incentive award payable to any such Participant
for any Performance Period shall be two million U.S. dollars
($2,000,000 U.S.).
7. PAYMENT OF INCENTIVE AWARD.
(a) Payment of any amount to be paid to a Participant based
upon the degree of attainment of the applicable performance goals
shall be made at such time(s) as the Committee may in its discretion
determine.
(b) A Participant may elect to defer all or a portion of his or
her award until a specified future date or event, but not later than
age 65, by giving written notification of his or her intent to make
such a voluntary deferral election. The election to defer part or all
of the award must be made prior to the end of the second year of the
performance period. During the voluntary deferral period, the deferred
amounts shall accumulate interest based on the average long-term
Treasury bill rate. However, Participants shall have no security
interest in the deferred amounts, and the rights to these deferred
awards shall be the same as those of general creditors of the
Corporation. Deferred awards are payable in a lump sum or installments
as elected by a Participant.
In consideration of overseas assignments, the Corporation may agree to
defer payments until completion of the assignment.
8. TERMINATION OF EMPLOYMENT. If the Participant ceases to be an
employee of the Corporation and its Affiliates prior to the expiration of the
Performance Period: (i) for any reason other than death, disability or
retirement pursuant to an established retirement plan or policy of the
Corporation or of its applicable Affiliates, all awards to the Participant
hereunder shall be forfeited; or (ii) due to death, disability or retirement
pursuant to an established retirement plan or policy of the Corporation or of
its Affiliates, the Participant (or his or her beneficiary) shall be eligible to
receive a pro-rata portion of the amount which would have been
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<PAGE> 4
paid to him or her under any outstanding awards at the end of the Performance
Period within a reasonable period after the end of such Performance Period, such
pro-rata proportion to be measured by a fraction of which the numerator is the
number of months of the Performance Period during which the Participant's
employment continued, and the denominator is the full number of months of the
Performance Period. For purposes hereof, employment for any period of a month
shall be deemed employment for a full month and employment is deemed
discontinued on the day following the last day of active employment prior to
termination.
9. PARTICIPANT'S INTERESTS. A Participant's interest in any incentive
awards hereunder shall at all times be reflected on the Corporation's books as a
general unsecured and unfunded obligation of the Corporation subject to the
terms and conditions of the Plan. The Plan shall not give any person any right
or security interest in any asset of the Corporation or any fund in which any
deferred payment is deemed invested. Neither the Corporation, the Board, nor the
Committee shall be responsible for the adequacy of the general assets of the
Corporation to discharge the payment of its obligations hereunder nor shall the
Corporation be required to reserve or set aside funds therefor.
10. NON-ALIENATION OF BENEFITS; BENEFICIARY DESIGNATION. All rights and
benefits under the Plan are personal to the Participant and neither the Plan nor
any right or interest of a Participant or any other person arising under the
Plan is subject to voluntary or involuntary alienation, sale, transfer, or
assignment without the Corporation's consent. In the event of a Participant's
death or incapacity, the Committee may authorize the payment of an award to the
Participant's designated beneficiary or guardian, or, in the absence of such
written designation, to the person specified by will or by the applicable laws
of descent and distribution. Any such beneficiary designation may be revoked and
new beneficiaries appointed by the Participant by written instrument delivered
to the Committee. Subject to the foregoing, the Corporation shall establish such
procedures as it deems necessary for a Participant to designate one or more
beneficiaries to whom any payment the Committee determines to make would be
payable in the event of the Participant's death.
11. WITHHOLDING FOR TAXES. Notwithstanding any other provisions of this
Plan, the Corporation may withhold from any payment made by it under the Plan
such amount or amounts as may be required for purposes of complying with any
federal, state and local tax or withholding requirements.
12. RIGHTS OF EMPLOYEES. Nothing in the Plan shall interfere with or
limit in any way the right of the Corporation or any of its subsidiaries or
Affiliates to terminate a Participant's employment at any time, or confer upon
any Participant any right to continued employment with the Corporation or any of
its subsidiaries or Affiliates.
13. DETERMINATIONS FINAL. Each determination provided for in the Plan
shall be made by the Committee under such procedures as may from time to time be
prescribed by the Committee and shall be made in the sole discretion of the
Committee. Any such determination shall be conclusive.
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14. CHANGE IN CONTROL.
(a) Notwithstanding anything to the contrary provided elsewhere
herein, in the event of a "change in control" of the Corporation, as
defined in Section 14(b) below, then the Corporation shall as promptly
as practicable pay any incentive awards awarded to Participants. The
payment to each Participant shall be an amount not less than the
target incentive award as originally approved for the Performance
Period, notwithstanding actual results or any changes or modifications
occurring after any such change in control.
(b) "Change in control" means the occurrence of any one of the
following events:
(i) any "person" (as such term is defined in Section 3(a)(9)
of the Securities Exchange Act of 1934 (the "Exchange Act") and as
used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or
becomes a "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the
Corporation representing 20% or more of the combined voting power
of the Corporation's then outstanding securities eligible to vote
for the election of the Board (the "Corporation Voting
Securities"); PROVIDED, however, that the event described in this
paragraph (i) shall not be deemed to be a Change in Control by
virtue of any of the following acquisitions: (a) by the
Corporation or any subsidiary, (b) by any employee benefit plan
sponsored or maintained by the Corporation or any subsidiary, (c)
by any underwriter temporarily holding securities pursuant to an
offering of such securities, (d) pursuant to a Non-Control
Transaction (as defined in paragraph (iii)), or (e) with respect
to any Participant, by such Participant or by any group of persons
including such Participant or acting in concert with such
Participant;
(ii) individuals who, on the "Distribution Date" as defined in
the Registration Statement on Form 10 and any amendments thereto
filed by the Corporation with the Securities and Exchange
Commission, constitute the Board (the "Incumbent Directors") cease
for any reason to constitute at least a majority of the Board,
PROVIDED that any person becoming a director subsequent to the
Distribution Date, whose election or nomination for election was
approved by a vote of at least two-thirds of the Incumbent
Directors who remain on the Board (either by a specific vote or by
approval of the proxy statement of the Corporation in which such
person is named as a nominee for director, without objection to
such nomination), shall also be deemed to be an Incumbent
Director; PROVIDED, HOWEVER, that no such individual initially
elected or nominated as a director of the Corporation as a result
of an actual or threatened election contest with respect to
directors or any other actual or threatened solicitation of
proxies or consents by or on behalf of any person other than the
Board shall be deemed to be an Incumbent Director;
(iii) the consummation of a merger, consolidation, share
exchange or similar form of corporate reorganization of the
Corporation or any such type of transaction involving the
Corporation or any of its subsidiaries that requires the approval
of the Corporation's shareholders (whether for such transaction or
the issuance of securities in the transaction or otherwise) (a
"Business Combination"), unless immediately following such
Business Combination: (a) more than 66 2/3% of the total voting
power of the company resulting
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from such Business Combination (including, without limitation, any company which
directly or indirectly has beneficial ownership of 100% of the Corporation
Voting Securities) eligible to elect directors of such company is represented by
shares that were Corporation Voting Securities immediately prior to such
Business Combination (either by remaining outstanding or being converted), and
such voting power is in substantially the same proportion as the voting power of
such Corporation Voting Securities immediately prior to the Business
Combination, (b) no person (other than any publicly traded holding company
resulting from such Business Combination, any employee benefit plan sponsored or
maintained by the Corporation (or the company resulting from such Business
Combination)) becomes the beneficial owner, directly or indirectly, of 20% or
more of the total voting power of the outstanding voting securities eligible to
elect directors of the company resulting from such Business Combination, and (c)
at least a majority of the members of the board of directors of the company
resulting from such Business Combination were Incumbent Directors at the time of
the Board's approval of the execution of the initial agreement providing for
such Business Combination (any Business Combination which satisfies the
foregoing conditions specified in (a), (b) and (c) shall be deemed to be a
"Non-Control Transaction"); or
(iv) the shareholders of the Corporation approve a plan of
complete liquidation or dissolution of the Corporation or the direct or indirect
sale or other disposition of all or substantially all of the assets of the
Corporation and its subsidiaries.
Notwithstanding the forgoing, a "change in control" of the Corporation shall not
be deemed to occur solely because any person acquires beneficial ownership of
more than 20% of the Corporation Voting Securities as a result of the
acquisition of Corporation Voting Securities by the Corporation which reduces
the number of Corporation Voting Securities outstanding; PROVIDED that if after
such acquisition by the Corporation such person becomes the beneficial owner of
additional Corporation Voting Securities that increases the percentage of
outstanding Corporation Voting Securities beneficially owned by such person, a
"change in control" of the Corporation shall then occur.
15. ADJUSTMENT OF AWARDS. The Committee shall be authorized to make
adjustments in the method of calculating attainment of performance goals 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 to the extent an award is intended to come
within the exception for performance-based compensation under Section 162(m) of
the Internal Revenue Code of 1986, as amended from time to time, any such
adjustments shall be made in a manner consistent with such Internal Revenue Code
section and the regulations promulgated thereunder. The Committee may correct
any defect, supply any omission or reconcile any inconsistency in the Plan or
any incentive award in the manner and to the extent it shall be deemed 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
Committee may, in its discretion, make such adjustments in the terms of
incentive awards under the Plan as it shall deem appropriate.
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16. DEFERRAL. Notwithstanding anything contained herein to the
contrary, in the event that an incentive award shall be ineligible for treatment
as "other performance-based compensation" under Section 162(m) of the Internal
Revenue Code of 1986, as amended from time to time, the Committee, in its sole
discretion, shall have the right, with respect to any Executive Officer who is a
"covered employee" under Section 162(m) of the Internal Revenue Code of 1986, as
amended from time to time, to defer, in whole or in part, such Executive
Officer's receipt of his or her incentive award until the Executive Officer is
no longer a "covered employee" or until such time as shall be determined by the
Committee, PROVIDED that the Committee may effect such a deferral only in a
situation where the Corporation would be prohibited a deduction under Section
162(m) and such deferral shall be limited to the portion of the award that is
not deductible.
17. AMENDMENT OR TERMINATION. Until such time as a "change in control"
shall have occurred, the Board or the Committee may, in its sole discretion,
amend, suspend or terminate the Plan from time to time. No such amendment,
suspension or termination shall alter a Participant's right to receive a
distribution as previously earned, as to which this Plan shall remain in effect
following its termination until all such amounts have been paid, except as the
Corporation may otherwise determine. After a "change in control," the Board or
the Committee shall no longer have the power to amend, suspend or terminate the
Plan, except to comply with changes to the Internal Revenue Code of 1986, as
amended from time to time, or other applicable law.
Approved by the Board this 11th day of October, 1999, which shall be
the effective date of the Plan.
ATTESTED:
___________________________________
Secretary
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Exhibit 10.14
FORM OF
EXECUTIVE SEVERANCE AGREEMENT
THIS AGREEMENT is entered into as of the 1st day of October, 1999 by
and between Lanier Worldwide, Inc., a Delaware corporation (the "Company"), and
___________________ ("Executive").
WITNESSETH
WHEREAS, the Company considers the establishment and maintenance of a
sound and vital management to be essential to protecting and enhancing the best
interests of the Company and its stockholders; and
WHEREAS, the Company recognizes that, as is the case with many publicly
held corporations, the possibility of a change in control may arise and that
such possibility, and the uncertainty and questions which it may raise among
management, may result in the departure or distraction of management personnel
to the detriment of the Company and its stockholders; and
WHEREAS, Executive currently serves as an officer of the Company; and
WHEREAS, the Board (as defined in Section 1) has determined that it is
in the best interests of the Company and its stockholders to secure Executive's
continued services and to ensure Executive's continued and undivided dedication
to his duties in the event of any threat or occurrence of, or negotiation or
other action that could lead to, or create the possibility of, a Change in
Control (as defined in Section 1) of the Company, without being influenced by
the Executive's uncertainty of the Executive's own situation; and
WHEREAS, the Board has authorized the Company to enter into this
Agreement.
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants and agreements herein contained, the Company and Executive hereby
agree as follows:
1. DEFINITIONS. As used in this Agreement, the following terms shall
have the respective meanings set forth below:
(a) "Board" means the Board of Directors of the Company.
(b) "Cause" means as determined by the Board in good faith: (1) a
material breach by Executive of the duties and responsibilities of Executive or
any written policies or directives of the Company (other than as a result of
incapacity due to physical or mental illness) which is (i) willful or involves
gross negligence, and (ii) not remedied within fifteen (15) days after receipt
of written notice from the Company which specifically identifies the manner in
which such breach has occurred; (2) Executive commits any felony or any
misdemeanor involving willful misconduct; (3) Executive engages in a fraudulent
or dishonest act that
<PAGE> 2
damages or adversely prejudices the Company or any affiliate of the Company or
engages in other conduct or activities damaging to the property, business or
reputation of the Company or an affiliate of the Company; (4) Executive engages
in habitual insobriety or substance abuse that materially damages or adversely
prejudices the Company or any affiliate of the Company; or (5) Executive diverts
any business opportunity from the Company or any affiliate of the Company
(except with prior written consent of the Board). Any act, or failure to act,
based upon authority given pursuant to a resolution duly adopted by the Board or
based upon the advice of counsel for the Company shall be conclusively presumed
to be done, or omitted to be done, by Executive in good faith and in the best
interests of the Company. Cause shall not exist unless and until the Company has
delivered to Executive a copy of a resolution duly adopted by three-quarters
(3/4) of the entire Board at a meeting of the Board called and held for such
purpose, finding that in the good faith opinion of the Board an event set forth
in clauses (1) through (5) has occurred and specifying the particulars thereof
in detail. The Company must notify Executive of any event constituting Cause
within ninety (90) days following the Company's knowledge of its existence or
such event shall not constitute Cause under this Agreement.
(c) "Change in Control" means the occurrence of any one of the
following events:
(1) any "person" (as such term is defined in Section 3(a)(9)
of the Securities Exchange Act of 1934 (the "Exchange Act") and as used
in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes a
"beneficial owner" (as defined in Rule 13(d)(3) under the Exchange
Act), directly or indirectly, of securities of the Company representing
20% or more of the combined voting power of the Company's then
outstanding securities eligible to vote for the election of the Board
(the "Company Voting Securities"); PROVIDED, HOWEVER, that the event
described in this paragraph (1) shall not be deemed to be a Change in
Control by virtue of any of the following acquisitions: (i) by the
Company or any Subsidiary, (ii) by any employee benefit plan sponsored
or maintained by the Company or any Subsidiary, (iii) by any
underwriter temporarily holding securities pursuant to an offering of
such securities, (iv) pursuant to a Non-Control Transaction (as defined
in paragraph (3)), or (v) pursuant to any acquisition by Executive or
by any group of persons including Executive or acting in concert with
Executive;
(2) individuals who, on the "Distribution Date" as defined in
the Registration Statement on Form 10 and any amendments thereto filed
by the Company with the Securities and Exchange Commission, constitute
the Board (the "Incumbent Directors") cease for any reason to
constitute at least a majority of the Board, provided that any person
becoming a director subsequent to the Distribution Date, whose election
or nomination for election was approved by a vote of at least
two-thirds (2/3) of the Incumbent Directors who remain on the Board
(either by a specific vote or by approval of the proxy statement of the
Company in which such person is named as a nominee for director,
without objection to such nomination) shall also be deemed to be an
Incumbent Director; PROVIDED, HOWEVER, that no such individual
initially elected or nominated as a director of the Company as a result
of an actual or threatened election contest with respect to directors
or any other actual or threatened solicitation of proxies or consents
by
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<PAGE> 3
or on behalf of any person other than the Board of Directors shall be
deemed to be an Incumbent Director;
(3) the consummation of a merger, consolidation, share
exchange or similar form of corporate reorganization of the Company or
any such type of transaction involving the Company or any of its
Subsidiaries that requires the approval of the Company's stockholders
(whether for such transaction or the issuance of securities in the
transaction or otherwise) (a "Business Combination"), unless
immediately following such Business Combination: (i) more than 66 2/3%
of the total voting power of the company resulting from such Business
Combination (including, without limitation, any company which directly
or indirectly has beneficial ownership of 100% of the Company Voting
Securities) eligible to elect directors of such company is represented
by shares that were Company Voting Securities immediately prior to such
Business Combination (either by remaining outstanding or being
converted), and such voting power is in substantially the same
proportion as the voting power of such Company Voting Securities
immediately prior to the Business Combination, (ii) no person (other
than any publicly traded holding company resulting from such Business
Combination, any employee benefit plan sponsored or maintained by the
Company (or the company resulting from such Business Combination))
becomes the beneficial owner, directly or indirectly, of 20% or more of
the total voting power of the outstanding voting securities eligible to
elect directors of the company resulting from such Business
Combination, and (iii) at least a majority of the members of the board
of directors of the company resulting from such Business Combination
were Incumbent Directors at the time of the Board's approval of the
execution of the initial agreement providing for such Business
Combination (any Business Combination which satisfies the foregoing
conditions specified in (i), (ii) and (iii) shall be deemed to be a
"Non-Control Transaction"); or
(4) the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company or the direct or indirect
sale or other disposition of all or substantially all of the assets of
the Company and its Subsidiaries.
Notwithstanding the foregoing, a Change in Control of the
Company shall not be deemed to occur solely because any person acquires
beneficial ownership of more than 20% of the Company Voting Securities as a
result of the acquisition of Company Voting Securities by the Company which
reduces the number of Company Voting Securities outstanding; provided, that if
after such acquisition by the Company such person becomes the beneficial owner
of additional Company Voting Securities that increases the percentage of
outstanding Company Voting Securities beneficially owned by such person, a
Change in Control of the Company shall then occur.
Notwithstanding anything in this Agreement to the contrary, if
Executive's employment is terminated prior to a Change in Control, and Executive
reasonably demonstrates that such termination was at the request or suggestion
of a third party who has indicated an intention or taken steps reasonably
calculated to effect a Change in Control (a "Third Party") and a Change in
Control involving such Third Party occurs, then for all purposes of this
Agreement,
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<PAGE> 4
the date of a Change in Control shall mean the date immediately prior to the
date of such termination of employment.
(d) "Date of Termination" means (1) the effective date on which
Executive's employment by the Company terminates as specified in a prior written
notice by the Company or Executive, as the case may be, to the other, delivered
pursuant to Section 10, or (2) if Executive's employment by the Company
terminates by reason of death, the date of death of Executive.
(e) "Good Reason" means, without Executive's express written consent,
the occurrence of any of the following events after a Change in Control:
(1) (i) the assignment to Executive of any duties or
responsibilities inconsistent in any material adverse respect with
Executive's position(s), duties, responsibilities or status with the
Company immediately prior to such Change in Control (including any
material adverse diminution of such duties or responsibilities) or (ii)
a material adverse change in Executive's reporting responsibilities,
titles or offices with the Company as in effect immediately prior to
such Change in Control;
(2) a reduction by the Company in Executive's rate of annual
base salary or annual target bonus (including any material adverse
change in the formula for such annual bonus target) as in effect
immediately prior to such Change in Control or as the same may be
increased from time to time thereafter;
(3) any requirement of the Company that Executive (i) be based
anywhere more than fifty (50) miles from the facility where Executive
is located at the time of the Change in Control or (ii) travel on
Company business to an extent substantially greater than the travel
obligations of Executive immediately prior to such Change in Control;
(4) the failure of the Company to (i) continue in effect any
employee benefit plan or compensation plan in which Executive is
participating immediately prior to such Change in Control, unless
Executive is permitted to participate in the most favorable employee
benefit plans, practices, programs and policies of the Company in
effect for all other executives of the company and its affiliated
companies, or the taking of any action by the Company which would
adversely affect Executive's participation in or reduce Executive's
benefits under any such plan except such action or reduction as is
uniformly applied to all other executives of the Company, (ii) provide
Executive and Executive's dependents with welfare benefits in
accordance with the most favorable plans, practices, programs and
policies of the Company and its affiliated companies in effect for
Executive and Executive's dependents immediately prior to such Change
in Control or provide substantially comparable benefits at a
substantially comparable cost to Executive, unless Executive and
Executive's dependents are provided with the most favorable welfare
benefit plans, practices, programs and policies in effect for all other
executives of the Company and its affiliated Company, (iii) provide
fringe benefits in accordance with the most favorable plans, practices,
programs and policies of the
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<PAGE> 5
Company and its affiliated companies in effect for Executive
immediately prior to such Change in Control, or provide substantially
comparable fringe benefits, unless Executive is provided with the most
favorable fringe benefit plans, practices, programs and policies in
effect for all other executives of the Company and its affiliated
Companies, or (iv) provide Executive with paid vacation in accordance
with the most favorable plans, policies, programs and practices of the
Company and its affiliated companies as in effect for Executive
immediately prior to such Change in Control; or
(5) the failure of the Company to obtain the assumption
agreement from any successor as contemplated in Section 9(b); or
(6) any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted hereby.
Any event or condition described in this Section 1(e)(1)
through (6) which occurs prior to a Change in Control, but was at the request or
suggestion of a Third Party who effectuates a Change in Control, shall
constitute Good Reason following a Change in Control for purposes of this
Agreement notwithstanding that it occurred prior to the Change in Control. An
isolated, insubstantial and inadvertent action taken in good faith and which is
remedied by the Company within fifteen (15) days after receipt of notice thereof
given by Executive shall not constitute Good Reason. Executive must provide
notice of termination of employment within ninety (90) days of Executive's
knowledge of an event constituting Good Reason or such event shall not
constitute Good Reason under this Agreement.
(f) "Nonqualifying Termination" means a termination of
Executive's employment (1) by the Company for Cause, (2) by Executive for any
reason other than Good Reason, (3) as a result of Executive s death, (4) by the
Company due to Executive's absence from Executive's duties with the Company on a
full-time basis for at least one hundred eighty (180) consecutive days as a
result of Executive's incapacity due to physical or mental illness, or (5) as a
result of Executive's mandatory retirement (not including any mandatory early
retirement) in accordance with the Company's retirement policy generally
applicable to its salaried employees, as in effect immediately prior to the
Change in Control, or in accordance with any retirement arrangement established
with respect to Executive with Executive's written consent.
(g) "Subsidiary" means any corporation or other entity in
which the Company has a direct or indirect ownership interest of more than 50%
of the total combined voting power of the then outstanding securities of such
corporation or other entity entitled to vote generally in the election of
directors or in which the Company has the right to receive more than 50% of the
distribution of profits or of the assets on liquidation or dissolution.
(h) "Termination Period" means the period of time beginning
with a Change in Control and ending two (2) years following such Change in
Control.
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<PAGE> 6
2. OBLIGATIONS OF EXECUTIVE.
(a) EMPLOYMENT WITH THE COMPANY. Executive agrees that if a Change in
Control shall occur, Executive shall not voluntarily leave the employ of the
Company without Good Reason for a period of six (6) months following the Change
in Control.
(b) TRADE SECRETS. Executive shall hold in confidence all Trade Secrets
of the Company, and/or any of its Subsidiaries or affiliated companies, that
came into Executive's knowledge during Executive's employment by the Company or
any of its Subsidiaries or affiliated companies, and shall not disclose, publish
or make use of at any time after the date of this Agreement such Trade Secrets
without the prior written consent of the Company for so long as the information
remains a Trade Secret. "Trade Secret" means information, without regard to
form, including, but not limited to, technical or nontechnical data, a formula,
a pattern, a compilation, a program, a device, a method, a technique, a drawing,
a process, financial data, financial plans, product plans, or a list of actual
or potential customers or suppliers, which is not commonly known by or available
to the public and which information: (1) derives economic value, actual or
potential, from not being generally known to, and not being readily
ascertainable by proper means by, other persons who can obtain economic value
from its disclosure or use, and (2) is the subject of efforts that are
reasonable under the circumstances to maintain its secrecy.
(c) CONFIDENTIAL INFORMATION. Executive hereby agrees that, during the
period beginning on the date of this Agreement and ending two (2) years after
the date Executive's employment with the Company, or any of its Subsidiaries or
affiliated companies, ends or is terminated for any reason (the "Nondisclosure
Period"), Executive will hold in confidence all Confidential Information of the
Company, or any of its Subsidiaries or affiliated companies, that came into
Executive's knowledge during Executive's employment by the Company or any of its
Subsidiaries or affiliated companies, and will not disclose, publish or make use
of such Confidential Information without the prior written consent of the
Company. "Confidential Information" means any data or information, other than
Trade Secrets, that is valuable to the Company or any of its Subsidiaries or
affiliated companies and is not generally known to the public or to competitors
of the Company or any of its Subsidiaries or affiliated companies.
(d) RETURN OF MATERIALS. Upon the request of the Company and, in any
event, upon the termination of Executive's employment with the Company or any of
its Subsidiaries or affiliated companies, Executive shall deliver to the Company
all memoranda, notes, records, manuals or other documents (including, but not
limited to, written instruments, voice or data recordings, or computer tapes,
disks or files of any nature), including all copies of such materials and all
documentation prepared or produced in connection therewith, pertaining to the
performance of Executive's services for the Company or any of its Subsidiaries
or affiliated companies, the business of the Company or any of its Subsidiaries
or affiliated companies, or containing Trade Secrets or Confidential Information
regarding the business of the Company or of any of its Subsidiaries or
affiliated companies' business, whether made or compiled by Executive or
furnished to Executive by virtue of his employment with the Company or any of
its Subsidiaries or affiliated companies.
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<PAGE> 7
(e) OTHER NONDISCLOSURE OBLIGATIONS. During the Nondisclosure Period,
Executive will not without the prior written consent of the Company, publish any
opinion, fact, or material, deliver any lecture or address, participate in the
making of any film, radio broadcast or television transmission, or communicate
with any representative of the media or any third party relating to the business
or affairs of the Company or any of its Subsidiaries or affiliated companies.
(f) INTERPRETATION. The restrictions stated in this Section 2 are in
addition to and not in lieu of protections afforded to trade secrets and
confidential information under applicable law. Nothing in this Agreement is
intended to or shall be interpreted as diminishing or otherwise limiting the
right of the Company or any of its Subsidiaries or affiliated companies under
applicable law to protect its trade secrets and confidential information.
3. PAYMENTS UPON TERMINATION OF EMPLOYMENT.
(a) If during the Termination Period the employment of Executive shall
terminate, other than by reason of a Nonqualifying Termination, and Executive
agrees upon such termination to execute such release as may be prepared by the
Company with respect to all tort and contract claims as well as claims brought
under all applicable federal, state or local statutes, laws, regulations or
ordinances, including those specified in Section 12(b), then the Company shall
pay to Executive (or Executive's beneficiary or estate) within thirty (30) days
following the Date of Termination, as compensation for services rendered to the
Company a lump-sum cash amount equal to the sum of:
(1) Executive's base salary through the Date of Termination,
to the extent not theretofore paid;
(2) A PRO RATA portion of Executive's annual bonus in an
amount at least equal to: (i) the greatest of (A) not less than
Executive's target bonus for the fiscal year in which the Change in
Control occurs, (B) not less than Executive's target bonus for the
fiscal year in which Executive's Date of Termination occurs, and (C)
Executive's actual bonus payout for the fiscal year in which
Executive's Date of Termination occurs, multiplied by (ii) a fraction,
the numerator of which is the number of days in the fiscal year in
which the Date of Termination occurs through the Date of Termination
and the denominator of which is three hundred sixty-five (365);
(3) Any compensation previously deferred by Executive other
than pursuant to a tax-qualified plan (together with any interest and
earnings thereon) and any accrued vacation pay, in each case to the
extent not theretofore paid;
(4) Three times Executive's highest annual rate of base salary
during the 12-month period prior to the Date of Termination; plus
(5) Three times the greatest of: (i) the highest bonus earned
by Executive in respect of the three (3) fiscal years of the Company
immediately preceding the fiscal year in which the Change in Control
occurs, (ii) Executive's target bonus for
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<PAGE> 8
the fiscal year in which the Change in Control occurs, and (iii)
Executive's target bonus for the fiscal year in which Executive's Date
of Termination occurs.
Any amount paid pursuant to Sections 3(a)(4) and 3(a)(5) shall be in
lieu of any other amount of severance relating to salary or bonus continuation
to be received by Executive upon termination of employment of Executive under
any severance plan or policy of the Company.
(b) If during the Termination Period the employment of
Executive shall terminate, other than by reason of a Nonqualifying Termination,
the Company shall continue to provide, for a period of two (2) years following
the Date of Termination but in no event after Executive's attainment of age 65,
Executive (and Executive's dependents if applicable) with the same level of
medical, dental, accident, disability, life insurance and any other similar
benefits in place as of the Date of Termination upon substantially the same
terms and conditions (including contributions required by the Executive for such
benefits) as existed immediately prior to Executive's Date of Termination (or,
if more favorable to Executive, as such benefits and terms and conditions
existed immediately prior to the Change in Control); PROVIDED, THAT if Executive
cannot continue to participate in the Company plans providing such benefits, the
Company shall otherwise provide such benefits on the same after-tax basis as if
continued participation had been permitted or shall pay Executive a lump sum in
cash equal to the then present value of such benefits. Notwithstanding the
foregoing, in the event Executive becomes employed with another employer and
becomes eligible to receive welfare benefits from such employer, the welfare
benefits described herein shall be secondary to the benefits provided by the
other employer during the period of Executive's eligibility, but only to the
extent that the Company reimburses Executive for any increased cost and provides
any additional benefits necessary to give Executive the benefits provided
hereunder.
Should the terminated Executive move his residence in order to
pursue other business opportunities within two (2) years of the Date of
Termination, the Company agrees to reimburse such Executive for any reasonable
expenses incurred in that relocation (including taxes payable on the
reimbursement) which are not reimbursed by another employer. Reimbursement shall
include assistance in selling the Executive's home which was customarily
provided by the Company to transferred executives prior to the Change in
Control. The Executive shall be promptly reimbursed by the Company for up to
$4,000 of fees and expenses charged to Executive by any executive recruiting,
counseling or placement firms incurred in seeking new employment following the
Date of Termination. The Company shall also pay to the Executive on demand in
cash an "additional amount" such that the federal, state and local taxes on the
aggregate of such reimbursements and the "additional amount" equal said
"additional amount." The Company will also pay to the Executive on demand in
cash up to $5,000 to provide the Executive with professional financial and tax
planning assistance. If immediately prior to the Date of Termination the Company
provided the Executive with any club memberships, the Executive will be entitled
to continue such memberships at Executive's sole expense.
(c) If during the Termination Period the employment of
Executive shall terminate by reason of a Nonqualifying Termination, then the
Company shall pay to Executive within thirty (30) days following the Date of
Termination, a cash amount equal to the sum of
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<PAGE> 9
(1) Executive's base salary through the Date of Termination, to the extent not
theretofore paid, (2) any benefits or awards which have been earned or become
payable pursuant to the terms of any compensation plan but which have not yet
been paid to the Executive, and (3) any compensation previously deferred by
Executive other than pursuant to a tax-qualified plan (together with any
interest and earnings thereon) and any accrued vacation pay, in each case to the
extent not theretofore paid. The Company may make such additional payments, and
provide such additional benefits, to Executive as the Company and Executive may
agree in writing.
4. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
(a) If the Company or the Company's accountants determine that the
payments called for under this Agreement or any other payments or benefits made
available to the Executive by the Company or an affiliate of the Company will
result in the Executive being subject to an excise tax under Section 4999 of the
Code ("Excise Tax") or if an Excise Tax is assessed against the Executive as a
result of such payments or other benefits, the Company shall make a Gross-Up
Payment (as defined in this Section 4(a)) to or on behalf of the Executive as
and when such determination(s) and assessment(s), as appropriate, are made,
subject to the conditions of this Section 4(a). A "Gross-Up Payment" shall mean
a payment to or on behalf of the Executive that shall be sufficient to pay (1)
any Excise Tax in full, (2) any federal, state and local income tax and Social
Security or other employment tax on the payment made to pay such Excise Tax as
well as any additional Excise Tax on the Gross-Up Payment, and (3) any interest
or penalties assessed by the Internal Revenue Service on the Executive if such
interest or penalties are attributable to the Company's failure to comply with
its obligations under this Section 4(a) or applicable law. Any determination
under this Section 4(a) by the Company or the Company's accountants shall be
made in accordance with Section 280G of the Code and any applicable related
regulations (whether proposed, temporary or final) and any related Internal
Revenue Service rulings and any related case law. The Executive shall take such
action (other than waiving Executive's right to any payments or benefits) as the
Company reasonably requests under the circumstances to mitigate or challenge
such tax. If the Company reasonably requests that the Executive take action to
mitigate or challenge, or to mitigate and challenge, any such tax or assessment
and the Executive complies with such request, the Company shall provide the
Executive with such information and such expert advice and assistance from the
Company's accountants, lawyers and other advisors as the Executive may
reasonably request and shall pay for all expenses incurred in effecting such
compliance and any related fines, penalties, interest and other assessments.
(b) Subject to the provisions of Section 4(a), all determinations
required to be made under this Section 4, including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determination, shall be made by the public
accounting firm that is retained by the Company as of the date immediately prior
to the Change in Control (the"Accounting Firm") which shall provide detailed
supporting calculations both to the Company and Executive within thirty (30)
business days of the receipt of notice from the Company or the Executive that
there has been a payment that could trigger a Gross-Up Payment, or such earlier
time as is requested by the Company (collectively, the "Determination"). In the
event that the Accounting Firm is serving as accountant or auditor for the
individual, entity or group effecting the Change in Control, Executive may
appoint another nationally recognized public accounting firm to make the
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determinations required hereunder (which accounting firm shall then be referred
to as the Accounting Firm hereunder). All fees and expenses of the Accounting
Firm shall be born solely by the Company and the Company shall enter into any
agreement requested by the Accounting Firm in connection with the performance of
the services hereunder. The Gross-Up Payment under this Section 4 with respect
to any Payments shall be made no later than sixty (60) days following such
Payments. If the Accounting Firm determines that no Excise Tax is payable by
Executive, it shall furnish Executive with a written opinion to such effect, and
to the effect that failure to report the Excise Tax, if any, on Executive's
applicable federal income tax return will not result in the imposition of a
negligence or similar penalty. The Determination by the Accounting Firm shall be
binding upon the Company and Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the Determination, it is
possible that Gross-Up Payments which will not have been made by the Company
should have been made ("Underpayment") or Gross-Up Payments are made by the
Company which should not have been made ("Overpayment"), consistent with the
calculations required to be made hereunder. In the event that the Executive
thereafter is required to make payment of any additional Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that has occurred
and any such Underpayment (together with interest at the rate provided in
Section 1274(b)(2)(B) of the Code) shall be promptly paid by the Company to or
for the benefit of Executive. In the event the amount of the Gross-Up Payment
exceeds the amount necessary to reimburse the Executive for his Excise Tax, the
Accounting Firm shall determine the amount of the Overpayment that has been made
and any such Overpayment (together with interest at the rate provided in Section
1274(b)(2) of the Code) shall be promptly paid by Executive to or for the
benefit of the Company. Executive shall cooperate, to the extent Executive's
expenses are reimbursed by the Company, with any reasonable requests by the
Company in connection with any contests or disputes with the Internal Revenue
Service in connection with the Excise Tax.
5. WITHHOLDING TAXES. The Company may withhold from all payments due to
Executive (or his beneficiary or estate) hereunder all taxes which, by
applicable federal, state, local or other law, the Company is required to
withhold therefrom.
6. TERM OF AGREEMENT. This Agreement shall be effective on the date
hereof and shall continue in effect until the Company shall have given
three-year written notice of cancellation; provided, that, notwithstanding the
delivery of any such notice, this Agreement shall continue in effect for a
period of twenty-four (24) months after a Change in Control, if such Change in
Control shall have occurred during the term of this Agreement. Notwithstanding
anything in this Section 6 to the contrary, this Agreement shall terminate if
Executive or the Company terminates Executive's employment prior to a Change in
Control, except as provided in the last paragraph of Section 1(c) or the last
paragraph of Section 1(e).
7. TERMINATION OF AGREEMENT. This Agreement shall be effective on the
date hereof and shall continue until the first to occur of (a) termination of
Executive's employment with the Company prior to a Change in Control (except as
otherwise provided hereunder), (b) a Nonqualifying Termination, (c) the end of
the Termination Period, or (d) expiration in accordance with Section 6.
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<PAGE> 11
8. SCOPE OF AGREEMENT. Nothing in this Agreement shall be deemed to
entitle Executive to continued employment with the Company or its Subsidiaries,
and if Executive's employment with the Company shall terminate prior to a Change
in Control, Executive shall have no further rights under this Agreement (except
as otherwise provided hereunder); PROVIDED, HOWEVER, that any termination of
Executive's employment during the Termination Period shall be subject to all of
the provisions of this Agreement.
9. SUCCESSORS; BINDING AGREEMENT.
(a) This Agreement shall not be terminated by any Business
Combination. In the event of any Business Combination, the provisions of this
Agreement shall be binding upon the surviving or resulting corporation or the
person or entity to which such assets are transferred (the "Surviving Company")
and such Surviving Company shall be treated as the Company hereunder.
(b) The Company agrees that concurrently with any Business
Combination that does not constitute a Non-Control Transaction, it will cause
any successor or transferee unconditionally to assume, by written instrument
delivered to Executive (or his beneficiary or estate), all of the obligations
of the Company hereunder. Failure of the Company to obtain such assumption
prior to the effectiveness of any such Business Combination, shall be a breach
of this Agreement and shall constitute Good Reason hereunder and shall entitle
Executive to compensation and other benefits from the Company in the same
amount and on the same terms as Executive would be entitled hereunder if
Executive's employment were terminated following a Change in Control other than
by reason of a Nonqualifying Termination. For purposes of implementing the
foregoing, the date on which any such Business Combination becomes effective
shall be deemed the date Good Reason occurs, and shall be the Date of
Termination if requested by Executive.
(c) This Agreement shall inure to the benefit of and be enforceable
by Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributee, devisees and legatees. If Executive shall die
while any amounts would be payable to Executive hereunder had Executive
continued to live, all such amounts, unless otherwise provided herein, shall
be paid in accordance with the terms of this Agreement to such person or
persons appointed in writing by Executive to receive such amounts or, if no
person is so appointed, to Executive's estate.
10. NOTICE.
(a) For purposes of this Agreement, all notices and other
communications required or permitted hereunder shall be in writing and shall
be deemed to have been duly given when delivered or five (5) days after
deposit in the United States mail, certified and return receipt requested,
postage prepaid, addressed as follows:
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<PAGE> 12
If to the Executive: At the last known address shown in the Company's
records.
If to the Company: Lanier Worldwide, Inc.
2300 Parklake Drive, N.E.
Atlanta, Georgia 30345
ATTN: Corporate Secretary
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
(b) A written notice of Executive's Date of Termination by
the Company or Executive, as the case may be, to the other, shall (1) indicate
the specific termination provision in this Agreement relied upon, (2) to the
extent applicable, set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of Executive's employment under the
provision so indicated and (3) specify the termination date (which date shall
be not less than fifteen (15) nor more than sixty (60) days after the giving
of such notice). The failure by Executive or the Company to set forth in such
notice any fact or circumstance which contributes to a showing of Good Reason
or Cause shall not waive any right of Executive or the Company hereunder or
preclude Executive or the Company from asserting such fact or circumstance in
enforcing Executive's or the Company's rights hereunder.
11. FULL SETTLEMENT. The Company's obligation to make payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall be in lieu and in full settlement of all other payments to
Executive under any previous severance or employment agreement between the
Executive and the Company. The Company's obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim,
right or action which the Company may have against Executive or others. In no
event shall Executive be obligated to seek other employment or take other
action by way of mitigation of the amounts payable to Executive under any of
the provisions of this Agreement and, except as provided in Section 3(b), such
amounts shall not be reduced whether or not Executive obtains other
employment.
12. RESOLUTION OF DISPUTES.
(a) If a legally cognizable dispute arises out of or relates of this
Agreement or the breach, termination, or validity thereof, or the
compensation, promotion, demotion, discipline, discharge or terms and
conditions of employment of the Executive, and if said dispute cannot be
settled through direct discussions, the parties agree to resolve the dispute
by binding arbitration before the American Arbitration Association ("AAA"),
Center for Public Resources, Judicial Arbitration and Mediation Services, or
the President of the State Bar Association of the state (or the President's
designee) where the arbitration shall be held. Arbitration proceedings shall
be held in Atlanta, Georgia, or at such other place as may be selected by the
mutual agreement of the parties. The arbitration shall proceed in accordance
with the Employment Dispute Resolution Rules of the AAA in effect on the date
of this Agreement, and judgment upon the award rendered by the arbitrator may
be entered in any court having jurisdiction
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<PAGE> 13
thereof; provided, however, that claims or disputes involving the breach or
alleged breach by Executive of any of the covenants or obligations set forth
in Sections 2(b) through 2(e) of this Agreement may, at the Company's
discretion, be settled by any court having jurisdiction thereof or decided by
arbitration pursuant to this section.
(b) Disputes subject to binding arbitration pursuant to this section
include all tort and contract claims as well as claims brought under all
applicable federal, state or local statutes, laws, regulations or ordinances,
including but not limited to, Title VII of the Civil Rights Act of 1964, as
amended, the Family and Medical Leave Act; the Americans with Disabilities
Act, the Rehabilitation Act of 1973, as amended; the Fair Labor Standards Act
of 1938, as amended; the Age Discrimination in Employment Act, as amended; the
Equal Pay Act; the Civil Rights of 1866, as amended; and the Employee
Retirement Income Security Act of 1974. Disputes subject to binding
arbitration pursuant to this section also include claims against the Company's
parent and subsidiaries, and affiliated and successor companies, and claims
against the Company that include claims against the Company's agents and
employees, in their capacity as such and otherwise.
(c) The arbitration award shall be in writing and shall specify the
factual and legal bases for the award. In rendering the award, the arbitrator
shall determine the respective rights and obligations of the parties according
to the laws of the State of Georgia or, if applicable, federal law. The
arbitrator shall have the authority to award any remedy or relief that a
federal or state court within the State of Georgia could order or grant,
including without limitation, specific performance of any obligation created
under this Agreement; an award of punitive, exemplary, statutory, or
compensatory damages; the issuance of an injunction or other provisional
relief; or the imposition of sanctions for abuse or frustration of the
arbitration process.
(d) Each party shall pay for its own fees and expenses of arbitration
including the expense of its own counsel, experts, witnesses and preparation
and presentation of evidence except that the cost of the arbitrator and any
filing fee exceeding the applicable filing fee in federal court shall be paid
by the Company; provided, however, that all reasonable costs and fees
necessarily incurred by any party are subject to reimbursement from the other
party at the discretion of the arbitrator.
(e) By initialing below, Executive and the Company acknowledge that
each has read the provisions of this Section 12 and agree to arbitration as
provided herein. (A duly authorized officer of the Company shall provide his
or her initials on behalf of the Company.)
LANIER WORLDWIDE, INC. EXECUTIVE:
By: ___________________________ ____________________________
Title: _________________________
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<PAGE> 14
13. EMPLOYMENT WITH SUBSIDIARIES. Employment with the Company for
purposes of this Agreement shall include employment with any Subsidiary.
14. GOVERNING LAW, VALIDITY. THE INTERPRETATION, CONSTRUCTION AND
PERFORMANCE OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED
IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF GEORGIA WITHOUT REGARD TO
THE PRINCIPLE OF CONFLICTS OF LAWS. THE INVALIDITY OR UNENFORCEABILITY OF ANY
PROVISION OF THIS AGREEMENT SHALL NOT AFFECT THE VALIDITY OR ENFORCEABILITY OF
ANY OTHER PROVISION OF THIS AGREEMENT, WHICH OTHER PROVISIONS SHALL REMAIN IN
FULL FORCE AND EFFECT.
15. COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original and all of which together
shall constitute one and the same instrument.
16. MISCELLANEOUS. No provision of this Agreement may be modified or
waived unless such modification or waiver is agreed to in writing and signed
by Executive and by a duly authorized officer of the Company. No waiver by
either party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed
by such other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time.
Failure by Executive or the Company to insist upon strict compliance with any
provision of this Agreement or to assert any right Executive or the Company
may have hereunder, including without limitation, the right of Executive to
terminate employment for Good Reason, shall not be deemed to be a waiver of
such provision or right or any other provision or right of this Agreement.
Except as otherwise specifically provided herein, the rights of, and benefits
payable to, Executive, Executive's estate or Executive's beneficiaries
pursuant to this Agreement are in addition to any rights of, or benefits
payable to, Executive, Executive's estate or Executive's beneficiaries under
any other employee benefit plan or compensation program of the Company.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by a duly authorized officer of the Company and Executive has
executed this Agreement as of the day and year first above written.
LANIER WORLDWIDE, INC. EXECUTIVE:
By:_________________________ ____________________________
Title:______________________
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<PAGE> 1
Exhibit 10.15
LANIER WORLDWIDE, INC.
PENSION EQUITY PLAN
(as amended and restated as of July 1, 1997)
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE ONE HISTORY AND EFFECTIVE DATE............................................................................1
ARTICLE TWO CONSTRUCTION..........................................................................................1
2.1 Controlling Laws.........................................................................................1
2.2 Construction.............................................................................................1
ARTICLE THREE DEFINITIONS.........................................................................................2
3.1 Accrued Benefit..........................................................................................2
3.2 Accrued Benefit Percentage...............................................................................2
3.3 Actuarial Equivalent.....................................................................................2
3.4 Affiliate................................................................................................3
3.5 Authorized Leave of Absence..............................................................................3
3.6 Annuity Starting Date....................................................................................3
3.7 Average Compensation.....................................................................................3
3.8 Beneficiary..............................................................................................3
3.9 Board....................................................................................................3
3.10 Break in Service......................................................................................3
3.11 Code..................................................................................................4
3.12 Committee.............................................................................................4
3.13 Compensation..........................................................................................4
3.14 Covered Compensation..................................................................................5
3.15 Determination Date....................................................................................5
3.16 Early Retirement Date.................................................................................5
3.17 Eligible Employee.....................................................................................5
3.18 Employee..............................................................................................6
3.19 Employer..............................................................................................6
3.20 Employment Commencement Date..........................................................................6
3.21 Employment Termination Date...........................................................................6
3.22 ERISA.................................................................................................6
3.23 Hour of Service.......................................................................................6
3.24 Lump Sum Benefit......................................................................................7
3.25 Named Fiduciary.......................................................................................7
3.26 Normal Retirement Age.................................................................................7
3.27 Normal Retirement Date................................................................................7
3.28 Participant...........................................................................................7
3.29 Plan..................................................................................................7
3.30 Plan Sponsor..........................................................................................7
3.31 Plan Year.............................................................................................7
3.32 Prior Plan Accrued Benefit............................................................................8
3.33 Reemployment Commencement Date........................................................................8
3.34 Spouse................................................................................................8
3.35 Trust Agreement.......................................................................................8
3.36 Trust Fund............................................................................................8
3.37 Trustee...............................................................................................8
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
3.38 Vested Date...........................................................................................8
3.39 Year of Service.......................................................................................8
ARTICLE FOUR PARTICIPATION.......................................................................................11
4.1 General Rule............................................................................................11
4.2 Change in Employment Status or Transfer From An Affiliate...............................................11
4.3 Reemployment Rule.......................................................................................11
4.4 Leased Employees........................................................................................12
ARTICLE FIVE BENEFITS............................................................................................12
5.1 Accrued Benefit.........................................................................................12
5.2 Lump Sum Benefit Formula................................................................................12
5.3 Vested Benefits Upon Termination of Employment..........................................................18
5.4 Disability Retirement Benefit...........................................................................18
5.5 Suspension of Benefits..................................................................................20
5.6 Calculation of Additional Accrued Benefit-Following Initial Payment of Benefits.........................22
ARTICLE SIX BENEFIT PAYMENT FORMS................................................................................23
6.1 Normal Payment Forms....................................................................................23
6.2 Election Procedures and Timing..........................................................................24
6.3 Description of Options..................................................................................26
6.4 Beneficiary.............................................................................................27
6.5 No Estoppel.............................................................................................27
6.6 Claims for Benefits.....................................................................................28
ARTICLE SEVEN SURVIVOR BENEFIT...................................................................................29
7.1 Preretirement Survivor Benefit..........................................................................29
7.2 No Post Retirement Survivor Benefits....................................................................30
ARTICLE EIGHT PLAN FUNDING.......................................................................................30
8.1 Contributions...........................................................................................30
8.2 Trust Fund..............................................................................................30
8.3 Prohibition Against Reversion...........................................................................30
ARTICLE NINE NAMED FIDUCIARIES AND PLAN SPONSOR..................................................................31
9.1 Named Fiduciaries.......................................................................................31
9.2 Allocation and Delegation by Named Fiduciaries..........................................................31
9.3 Advisers................................................................................................32
9.4 Dual Fiduciary Capacities...............................................................................32
9.5 Committee Power and Duties..............................................................................32
ARTICLE TEN TRUST FUND AND TRUSTEE...............................................................................34
ARTICLE ELEVEN TERMINATION, AMENDMENT AND TRANSFERS..............................................................34
11.1 Right to Terminate...................................................................................34
11.2 Full Vesting Upon Termination........................................................................34
11.3 Allocation of Assets.................................................................................34
11.4 Merger, Consolidation and Transfer of Assets or Liabilities..........................................35
11.5 Amendment............................................................................................35
ARTICLE TWELVE RESTRICTIONS ON CERTAIN BENEFITS..................................................................35
12.1 Limitations on Annual Benefit........................................................................35
12.2 Limit on Benefits of Highest-Paid Employees in the Event of Plan Termination.........................36
</TABLE>
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<PAGE> 4
<TABLE>
<S> <C> <C>
ARTICLE THIRTEEN MISCELLANEOUS...................................................................................37
13.1 Spendthrift Clause...................................................................................37
13.2 Legally Incompetent..................................................................................37
13.3 Benefits Supported Only By Trust Fund................................................................37
13.4 Discrimination.......................................................................................37
13.5 Plan Not an Employment Contract......................................................................38
13.6 Claims...............................................................................................38
13.7 Nonreversion.........................................................................................38
13.8 Agent for Service of Process.........................................................................38
13.9 Top Heavy Plan.......................................................................................38
13.10 Qualified Domestic Relations Orders..................................................................40
13.11 Income Tax Withholding...............................................................................40
EXHIBIT A.........................................................................................................1
ARTICLE ONE.......................................................................................................1
</TABLE>
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<PAGE> 5
LANIER WORLDWIDE, INC.
PENSION EQUITY PLAN
(as amended and restated as of July 1, 1997)
ARTICLE ONE
HISTORY AND EFFECTIVE DATE
The Lanier Worldwide, Inc. Pension Equity Plan (the "Plan") is an amendment and
restatement of the Lanier Worldwide, Inc. Pension Plan in effect as of July 1,
1994, as last amended as of June 28, 1994. The Plan in effect as of July 1, 1994
was an amendment and restatement of the Plan effective as of August 1, 1991. The
Plan in effect as of August 1, 1991 was an amendment and restatement of the Plan
effective as of April 30, 1990. The Plan in effect as of April 30, 1990 was an
amendment and restatement of 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 1, 1965
and as last amended and restated effective as of January 1, 1988, was merged
into the Plan effective as of October 1, 1989.
Except as expressly provided otherwise, the provisions of the Plan as amended
and restated as of July 1, 1997 shall apply only to those individuals who are
employees of an Employer on or after July 1, 1997. Any benefits of an individual
whose employment with an Employer terminated before July 1, 1997 and who is not
reemployed by an Employer after such date shall, except as expressly provided
otherwise in the Plan, be determined solely in accordance with the provisions of
the relevant prior Plan document (or documents).
ARTICLE TWO
CONSTRUCTION
------------
2.1 CONTROLLING LAWS. The Plan and its related Trust Agreement shall be
construed and interpreted under the laws of the State of Georgia, without regard
to its principles of conflicts of laws, to the extent such laws are not
preempted by ERISA.
2.2 CONSTRUCTION. Plan headings and subheadings are for convenience of reference
only and are not to be construed to alter the terms of the Plan. Wherever used
in the Plan, terms expressed in the masculine gender shall be deemed to include
the feminine gender, and unless the context otherwise requires, terms in the
plural shall include the singular, and terms in the singular shall include the
plural. References in the Plan to "Sec." shall be to a section in the Plan
unless otherwise indicated.
Pension Equity Plan
<PAGE> 6
ARTICLE THREE
DEFINITIONS
-----------
The following capitalized terms and phrases shall have the following respective
meanings unless the context clearly indicates otherwise:
3.1 ACCRUED BENEFIT. A Participant's benefit under the Plan as described in Sec.
5. 1.
3.2 ACCRUED BENEFIT PERCENTAGE. The percentage determined in accordance with
Sec. 5.2(b).
3.3 ACTUARIAL EQUIVALENT. A form of benefit equivalent to the value of the form
of benefit being replaced, computed as follows:
(a) For purposes of calculating (i) a Participant's Accrued Benefit
based on his Lump Sum Benefit and (ii) benefit forms other than an
annuity form:
(1) Except as provided in clause (2) below, the applicable
mortality table is the 1983 Group Annuity Mortality Table
using 50% of the male mortality rates and 50% of the female
mortality rates, as published by the Secretary of the Treasury
or such other mortality table designated by the Secretary of
the Treasury under section 417(e) of the Code, and the annual
interest rate on 30-year Treasury securities for the May prior
to the Plan Year which contains the Participant's Annuity
Starting Date;
(2) In the case of an Annuity Starting Date occurring before
July 1, 2000 for a Participant employed on July 1, 1997 who
will attain his Early Retirement Date on or before July 1,
2002, the unloaded 1983 Group Annuity Mortality Table for
males with a one year set-back for a Participant and a five
year set-back for a Participant's Spouse or Beneficiary, and
an interest rate equal 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 which contains the Annuity
Start Date for purposes of determining the present value of a
single sum distribution on a plan termination.
(b) For purposes of calculating any annuity form of benefit other than
the Participant's Accrued Benefit:
(1) The unloaded 1983 Group Annuity Mortality Table for males
with a one year set-back for a Participant and a five year
set-back for a Participant's Spouse or Beneficiary, and
Pension Equity Plan
2
<PAGE> 7
(2) An interest rate assumption equal to 7% per annum,
compounded annually.
3.4 AFFILIATE. Any entity that is (a) a member of a controlled group of
corporations (as defined in section 414(b) of the Code) of which an Employer is
a member, (b) a trade or business, whether or not incorporated, that is under
"common control" (as defined in section 414(c) of the Code) with an Employer,
(c) an organization that is a member of an affiliated service group (as defined
in section 414(m) of the Code) with an Employer, a corporation described in
clause (a) of this subdivision or a trade or business described in clause (b) of
this subdivision; or (d) an organization which is required to be aggregated with
an Employer (under section 414(o) of the Code).
3.5 AUTHORIZED LEAVE OF ABSENCE. Any period of absence authorized by an Employer
under its standard personnel practices, including as required by the Family and
Medical Leave Act of 1993, provided that the Employee returns to the employ of
the Employer by the end of such period, except as may be otherwise required by
the Family and Medical Leave Act of 1993.
3.6 ANNUITY STARTING DATE. The first day of the first month for which an amount
is payable as a benefit under the Plan.
3.7 AVERAGE COMPENSATION. As of any Determination Date, the average of a
Participant's Compensation during the five consecutive calendar year period
during which the Participant was an Employee (or actual number of consecutive
calendar years the Employee was an Employee for less than five) in which such
average is highest out of the ten consecutive calendar year period during which
the Participant was an Employee or if such period is less than ten consecutive
years, the duration of such period. 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.
3.8 BENEFICIARY. A person last designated by a Participant to receive all or a
portion of the Participant's interest under the Plan in the event of the
Participant's death, subject to the provisions of Secs. 6.4 and 7. 1.
3.9 BOARD. The board of directors of the Plan Sponsor.
3.10 BREAK IN SERVICE. Any 12 consecutive month period beginning on an
Employee's Employment Termination Date or anniversary of such date during which
the Employee has not completed an Hour of Service for an Employer. For purposes
of this definition, an Employee shall be credited with an Hour of Service for
any period in which the Employee (i) is on an Authorized Leave of Absence for
reasons other than those identified in subsection (ii); (ii) is on an Authorized
Leave of Absence for up to 24 consecutive months because of (A) the Employee's
pregnancy, (B) the birth of the Employee's child, (C) the placement of a child
with the Employee in connection with the Employee's adoption of such child, or
(D) the need to care for such child
Pension Equity Plan
3
<PAGE> 8
for a period beginning immediately following such birth or adoption; or (iii) is
absent from work due to qualified military service (as such term is defined in
the Uniformed Services Employment and Reemployment Act of 1994) and is entitled
to reemployment under such Act. Notwithstanding the foregoing, clause (ii) shall
not be applicable unless the Employee furnishes to the Committee such legal
documentation as it may be reasonably require to establish to the Committee's
satisfaction that the absence is for reasons set forth in such clause and to
verify the duration of such absence.
3.11 CODE. The Internal Revenue Code of 1986, as amended.
3.12 COMMITTEE. The Pension and Retirement Committee of the Board.
3.13 COMPENSATION. For each Participant, the sum of (a) and (b), minus (c),
where
"(a)" equals the Participant's base salary and wages paid by the
Participant's Employer, and other amounts paid by the Employer that are
includible in the Participant's gross income, but excluding payments
described in (c) below, including overtime payments, commission
payments, annual bonuses, regional and shift differentials, vacation
pay, compensation received while on an Authorized Leave of Absence, and
short-term disability payments;
"(b)" equals the elective deferrals made by an Employer on behalf of
such Participant that are not includible in the Participant's gross
income for federal income tax purposes for such period because either
(i) such deferrals are contributed to a cash or deferred arrangement
described in section 401(k) of the Code or (ii) they are excluded under
section 125 of the Code; and
"(c)" equals any payment made under a severance pay plan or program,
any payment made in consideration of the Participant's release of
claims in favor of an Employer or an Affiliate, any foreign or domestic
assignment allowance, any contest payments, any expense-related
reimbursements (including reimbursements commonly referred to as
"Runzheimer" payments), any signing bonuses, any payment made under any
long-term incentive plan and the value of life insurance includible in
the Participant's gross income.
For purposes of the Plan and to the extent required by section 414(u) of the
Code and the Uniformed Service Employment and Reemployment Rights Act of 1994,
the Participant's Compensation during a period of qualified military service
shall be deemed to equal the Compensation the Participant would have received
during the period of qualified military service but for his absence due to
qualified military service. If the Compensation the Participant would have
received during such period is not reasonably certain, the Participant's
Compensation for his period of qualified military service shall be based on the
Participant's Compensation during the 12-month period (or, if shorter, the
period of employment) immediately preceding the qualified military service.
Pension Equity Plan
4
<PAGE> 9
The amount of an Employee's Compensation that may be taken into account for any
purpose of the Plan shall not exceed (i) for the Plan Year commencing on July 1,
1997, $160,000 and (ii) for each subsequent Plan Year, the amount prescribed by
Section 4017(a)(17) of the Code (as adjusted for increases in the cost-of-living
pursuant to section 401(a)(17)(B) of the Code).
3.14 COVERED COMPENSATION. For each Participant, as of any Determination Date,
the average of the taxable wage bases (as defined in the last sentence hereof)
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 such
Participant attains (or will attain) social security retirement age (as defined
in the last sentence hereof) determined by assuming that the taxable wage bases
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 such 35-year period is
the Participant's Covered Compensation for the Plan Year during which he
attained social security retirement age. 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 before January 1, 1955; and age 67 for a Participant born
after December 31, 1954.
3.15 DETERMINATION DATE. The earlier of (i) the date as of which a Participant's
Accrued Benefit is determined under the Plan and (ii) the most recent date the
Participant terminated employment as an Eligible Employee.
3.16 EARLY RETIREMENT DATE. The first day of the calendar month coinciding with
or next following the later of (i) the date on which the Participant reaches age
55 and (ii) the date on which the Participant completes 10 full Years of
Service, provided that Participant is an Employee on such date and the
Participant has not attained age 65. Notwithstanding the foregoing sentence, the
Early Retirement Date of a Participant who is a Former 3M Participant (as
defined in Exhibit A) shall be determined as set forth in Exhibit A.
3.17 ELIGIBLE EMPLOYEE. An Employee of an Employer, other than any Employee
described below:
(a) an Employee who is included in a unit of employees covered by a
collective bargaining agreement which does not provide that such
Employee be eligible to participate in the Plan;
(b) an Employee who is a nonresident alien and who receives no earned
income from an Employer from sources within the United States; or
Pension Equity Plan
5
<PAGE> 10
(c) 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.
3.18 EMPLOYEE. An individual whose relationship with an Employer is, under
common law, that of an Employee. Notwithstanding the foregoing, no individual
who renders services for an Employer shall be considered an Employee for
purposes of the Plan if such Employee renders such services pursuant to either
(i) an agreement providing that such services are to rendered by the individual
as an independent contractor or (ii) an agreement with an entity, including a
leasing organization within the meaning of section 414(n)(2) of the Code, that
is not an Employer or Affiliate.
3.19 EMPLOYER. The Plan Sponsor, Lanier Puerto Rico, Inc., and any other entity
which (i) adopts the Plan and (ii) the Board designates in writing from time to
time as an Employer under the Plan.
3.20 EMPLOYMENT COMMENCEMENT DATE. The first date on which an Employee first
performs an Hour of Service for an Employer.
3.21 EMPLOYMENT TERMINATION DATE. The earlier of (a) and (b) below:
(a) the date the Employee quits, retires, dies or is discharged in
accordance with the personnel policy of his Employer; and
(b) the first anniversary of the first day of an Employee's absence
from service for any other reason (e.g., disability, leave of absence,
layoff, etc.), except as provided in Sec. 3.39(d), provided that an
Employee who fails to return to employment at the expiration of a leave
of absence shall be deemed to have terminated employment on the earlier
of (i) the date on which his leave of absence expires and (ii) the
first anniversary of the first day of his absence (except as provided
in Sec. 3.10(iii)).
3.22 ERISA. The Employee Retirement Income Security Act of 1974, as amended.
3.23 HOUR OF SERVICE. Each hour for which:
(a) an Employee is paid, or entitled to payment, for the performance of
duties as an Employee;
(b) an Employee is paid, or entitled to payment, by an Employer on
account of a period of time during which no duties are performed
(irrespective of whether the employment relationship has terminated)
due to vacation, holiday, illness, incapacity (including disability),
lay-off, jury duty, military duty or leave of absence. No more than
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501 Hours of Service will be credited under this paragraph (b) for any
single continuous period (regardless of whether such period occurs in a
single computation period);
(c) back pay is awarded or agreed to by the Employer or an Affiliate.
Such hours shall be credited to the Plan Years to which the award,
agreement or payment pertains rather than the Plan Year in which the
award, agreement or payment is made.
For purposes of paragraphs (b) and (c) above, an Hour of Service shall be
calculated in accordance with Department of Labor Regulation Sec. 2530.200b-2,
which provides that (i) if a payment is based upon hours, days, weeks or other
unit of time, the number of Hours of Service credited shall be the number of
regularly scheduled working hours for such Employee for such unit of time, and
(ii) if the payment due is not based upon units of time, the number of Hours of
Service credited shall be equal to the amount of the payment divided by the
Employee's most recent hourly rate of compensation. For payments made to an
Employee without a regular work schedule, the number of hours credited shall be
calculated on a reasonable basis which reflects the average hours worked by the
Employee, or by other employees in the same job classification, over a
representative period of time and which is consistently applied with respect to
all employees within the same job classifications. In order to avoid double
counting, the same Hours of Service shall not be credited both under paragraph
(a) or paragraph (b), as applicable, and under paragraph (c).
3.24 LUMP SUM BENEFIT. As of any Determination Date, a lump sum payment,
determined in accordance with Sec. 5.2, payable to a Participant.
3.25 NAMED FIDUCIARY. The person or persons described in Sec. 9.1.
3.26 NORMAL RETIREMENT AGE. The date a Participant reaches age 65 and completes
five years of Service.
3.27 NORMAL RETIREMENT DATE. For each Participant the first day of the calendar
month coincident with or immediately following the date he reaches Normal
Retirement Age.
3.28 PARTICIPANT. An Eligible Employee who has become a participant in the Plan
in accordance with Article Four or a former Eligible Employee who is entitled to
receive benefits under the Plan.
3.29 PLAN. The Lanier Worldwide, Inc. Pension Equity Plan as set forth in this
document, as may be amended in accordance with Article Eleven.
3.30 PLAN SPONSOR. Lanier Worldwide, Inc. and any successor to such corporation.
3.31 PLAN YEAR. The fiscal year ending June 30.
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3.32 PRIOR PLAN ACCRUED BENEFIT. For each Participant employed by Lanier Puerto
Rico, Inc. in the Plan on July 15, 1997, and for each other Participant in the
Plan on June 30, 1997, his Accrued Benefit determined in accordance with the
terms of the Plan in effect as of June 30, 1997.
3.33 REEMPLOYMENT COMMENCEMENT DATE. The first date on which a former Employee
is reemployed by an Employer after a Break in Service and first performs an Hour
of Service for an Employer.
3.34 SPOUSE. The individual who is the Participant's lawful spouse on the
earlier of (a) his Annuity Starting Date and (b) his date of death.
3.35 TRUST AGREEMENT. The Harris Corporation Master Pension Trust Agreement, as
may be amended from time to time.
3.36 TRUST FUND. The trust fund created in accordance with the Trust Agreement.
3.37 TRUSTEE. The person or persons acting from time to time as the trustee of
the Trust fund.
3.38 VESTED DATE. For each Employee, the earlier of the date on which he (a)
completes five full Years of Service and (b) reaches Normal Retirement Age as an
Employee.
3.39 YEAR OF SERVICE. (a) PARTICIPATION AND VESTING. For participation and
vesting purposes, the term "Year of Service" shall mean a period of employment
determined in accordance with this subsection, provided that any period of
employment completed by an Employee before he reaches age 18 shall be excluded.
(1) PERIOD OF EMPLOYMENT. An Employee's period of employment
will be deemed to start on his Employment Commencement Date
(or Reemployment Commencement Date, as the case may be) and
will end on the Employee's next following Employment
Termination Date. In addition, an Employee shall receive
credit for vesting and participation purposes for each period
of employment and for each period of separation from service
due to an absence or termination of employment after his
Employment Commencement Date (or Reemployment Commencement
Date, as the case may be) if such separation is less than 12
consecutive months in duration.
(2) TERMINATION/REEMPLOYMENT. If an Employee terminates
employment and is reemployed less than 12 months after his
Employment Termination Date, the Employee's Years of Service
shall be determined by including the period of time between
his Employment Termination Date and his Reemployment
Commencement Date. Except as provided in Sec. 3.39(c), if an
Employee terminates employment and is reemployed more than 12
months after his
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Employment Termination Date, his Years of Service shall be
determined by aggregating the service completed in each period
of employment in accordance with the rules set forth below.
(i) FULL YEARS - First, determine the number of
completed 12 consecutive month periods within 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 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) SERVICE WITH OTHER ENTITIES. Except as set forth in
Exhibit A and Secs. 3.39(d) and 4.4, no period of employment
which an Employee completes as an employee of any organization
other than an Employer whatsoever shall be taken into account
under the Plan unless such organization is an Affiliate,
provided, that service with an organization prior to the time
the organization became an Affiliate or after the organization
ceases to be an Affiliate may be recognized if the corporate
documents governing the acquisition or disposition of stock or
assets of such organization provide for such recognition.
Employment by an Affiliate which is not an Employer shall be
taken into account solely for purposes of (i) determining such
Employee's Years of Service and eligibility to participate in
the Plan and (ii) determining when such person has retired or
otherwise terminated his employment to the same extent it
would have had such service been as an Employee of an
Employer.
(4) SPECIAL RULE FOR JULY 31, 1991 PARTICIPANTS.
Notwithstanding the foregoing provisions of this Sec. 3.39(a),
each Participant who was a Participant on July 31, 1991 shall
be deemed to have completed five Years of Service for purposes
of this Sec. 3.39(a) when he completes four full Years of
Service and 11 additional months of employment and to have
completed 10 Years of Service for purposes of Secs. 3.16, 5.3
and 6.3(a) when he completes nine full Years of Service
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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 "Year of
Service" means a Participant's full and fractional years as a
Participant and an Eligible Employee determined in accordance with this
subsection.
(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". A "period of employment" shall
begin on the date the Eligible Employee becomes a Participant
and shall end on the last day of the calendar month in which
his Employment Termination Date occurs. A Participant will
receive credit for 1/12 of a Year of Service for each full
calendar month during a period of employment. An Eligible
Employee will be deemed to be a Participant for a full
calendar month at the beginning or at the end of a period of
employment only if he is both a Participant and an Eligible
Employee on at least 15 consecutive days in such calendar
month.
An Eligible Employee will receive credit for benefit accrual
purposes for his period of absence from employment as an
Eligible Employee, provided that he returns to employment as
an Eligible Employee within 12 months of the first day of such
absence.
(2) TERMINATION/REEMPLOYMENT. If a Participant terminates
employment as on Eligible Employee and is thereafter
reemployed as such, his Years of Service and fractional Years
of Service shall be determined by first aggregating the number
of full years in each period determined in accordance with
Sec. 3.39(b)(1) and, second, by aggregating the additional
months in each period (also determined in accordance with Sec.
3.39(b)(1)) and converting those months into years on the
basis that each month equals 1/12th of one Year of Service.
Notwithstanding the foregoing, a Participant's Years of
Service shall not include any service performed by such
Participant with respect to which he has received a lump sum
distribution of his nonforfeitable Accrued Benefit, except as
provided in Sec. 13.9(b)(3).
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(c) RULE OF PARITY FOR 5 BREAKS IN SERVICE. Notwithstanding the rules
set forth in Sec. 3.39(a) and (b), if an Employee who has not reached
his Vested Date or has not become vested in any portion of his Accrued
Benefit under the terms of Article 13 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 the number of his consecutive Breaks in Service is
less than the greater of (i) five years and (ii) his Years of Service
before his Break in Service.
(d) QUALIFIED MILITARY SERVICE. A Participant who is absent from
employment on account of qualified military service (as defined in
section 414(u)(5) of the Code) and who is entitled to reemployment
rights under the Uniformed Service Employment and Reemployment Rights
Act of 1994 shall be credited with Years of Service for vesting and
participation purposes under the Plan for the period of his qualified
military service. In addition, such a Participant shall be credited
with Years of Service for purposes of benefit accrual to the extent
required by section 414(u) of the Code and the Uniformed Service
Employment and Reemployment Rights Act of 1994.
ARTICLE FOUR
PARTICIPATION
4.1 GENERAL RULE. Each Eligible Employee who is not classified as a temporary,
summer or casual part-time employee shall become a Participant on the first day
of the month which immediately follows or coincident with the later of the date
on which (i) he completes one Year of Service as determined under Sec. 3.39(a),
and (ii) he attains age 21. An Eligible Employee who is classified as a
temporary, summer or casual part-time employee shall become a Participant the
first day of the month immediately following or coincident with the earlier of
(i) the date on which he is no longer classified as a temporary, summer or
casual part-time employee, and (ii) the last day of the 12 consecutive month
period beginning on such Eligible Employee's Employment Commencement Date (or
any subsequent 12-month period beginning on any anniversary of such Employment
Commencement Date) during which such Eligible Employee completes at least 1,000
Hours of Service.
4.2 CHANGE IN EMPLOYMENT STATUS OR TRANSFER FROM AN AFFILIATE. If an individual
who is not a Participant shall become an Eligible Employee because of a change
in his employment status or because of his transfer of employment to an Employer
from an Affiliate which is not an Employer, such individual shall become a
Participant on the later of (i) the date of such change or transfer and (ii) the
first day of the month coincident with or next following his satisfaction of the
participation requirement set forth in Sec. 4.1.
4.3 REEMPLOYMENT RULE.
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(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 Sec. 3.39(c), then such Employee shall be treated
under Sec. 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 Sec. 3.39(c), then he
shall begin to participate in accordance with this Sec. 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 date on which he becomes eligible to participate under
Sec. 4.1.
4.4 LEASED EMPLOYEES. If an individual who performed services as a leased
employee (within the meaning of section 414(n)(2) of the Code) of an Employer or
an Affiliate becomes an Employee, or if an Employee becomes such a leased
employee, then any period during which the individual performed services as a
leased employee of an Employer or Affiliate shall be taken into account solely
for the purposes of (i) measuring such individual's Years of Service for
participation and vesting purposes and (ii) determining whether such individual
has retired or otherwise terminated employment for purposes of Articles Five and
Six to the same extent such period would have been taken into account had such
services been performed as an Employee. Notwithstanding the foregoing sentence,
this Sec. 4.4 shall not apply to any period of service during which such a
leased employee was covered by a plan described in section 414(n)(5) of the
Code.
ARTICLE FIVE
BENEFITS
5.1 ACCRUED BENEFIT. Subject to Exhibit A, a Participant's Accrued Benefit under
the Plan shall be the Actuarial Equivalent of the Participant's Lump Sum Benefit
determined under Sec. 5.2, and expressed as an annual benefit in the form of a
single life annuity commencing at the Participant's Normal Retirement Date. A
Participant's Accrued Benefit shall be adjusted for any period of his qualified
military service (as defined in section 414(u)(5) of the Code) to the extent
required by section 414(u) of the Code and the Uniformed Service Employment and
Reemployment Rights Act of 1994.
5.2 LUMP SUM BENEFIT FORMULA.
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(a) GENERAL. A Participant's Lump Sum Benefit shall be equal to the sum
of (1) and (2) where:
"(1)" is the product of (i) a Participant's Accrued Benefit
Percentage (as determined under Sec. 5.2(b) below, and (ii)
his Average Compensation; and
"(2)" is the product of (i) one-half of a Participant's
Accrued Benefit Percentage (as determined under Sec. 5.2(b)
below), and (ii) his Average Compensation in excess of his
Covered Compensation.
(b) ACCRUED BENEFIT PERCENTAGE. Except as provided in Sec. 5.2(c), (d),
(e) and (f), a Participant's Accrued Benefit Percentage shall be equal
to the sum of the following applicable percentages:
(i) 2% for each Year of Service before the Participant attains
age 35;
(ii) 4% for the Year of Service in which the Participant
attains age 35, as provided in clause (vii), and for each Year
of Service thereafter before the Participant attains age 40;
(iii) 6% for the Year of Service in which the Participant
attains age 40, as provided in clause (vii), and for each Year
of Service thereafter before the Participant attains age 50;
(iv) 10% for the Year of Service in which the Participant
attains age 50, as provided in clause (vii), and for each Year
of Service thereafter before the Participant attains age 55;
(v) 11% for the Year of Service in which the Participant
attains age 55, as provided in clause (vii), and for each Year
of Service thereafter before the Participant attains age 60;
(vi) 12% for the Year of Service in which the Participant
attains age 60, as provided in clause (vii), and for each Year
of Service thereafter; and
(vii) for the each Year of Service in which the Participant
attains age 35, 40, 50, 55 or 60, the relevant applicable
percentage shall be the sum of pro-rata portions of each of
the percentages applicable before and after the Participant
attains the relevant age. Such pro-rata portions shall be
determined as follows:
(1) THE PRE-ATTAINED AGE PORTION. The product of 2%,
4%, 6% 10% or 11%, as applicable, multiplied-by a
fraction, the numerator of which
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shall be the number of full months during such year
up to, but not including, the month in which the
Participant attained the relevant age and the
denominator of which shall be 12.
(2) THE POST-ATTAINED AGE PORTION. The product of 4%,
6%, 10%, 11% or 12%, as applicable, multiplied by a
fraction, the numerator of which shall be the number
of full months during such year beginning with the
month in which the Participant attained the relevant
age and the denominator of which shall be 12.
(viii) For the year in which a Participant terminates
employment, the relevant percentage shall be determined by
multiplying the applicable percentage under clauses (i)
through (vii) above by a fraction, the numerator of which is
the number of full months during which the Participant is
employed by an Employer and the denominator of which is 12.
(c) ACCRUED BENEFIT PERCENTAGES OF PARTICIPANTS ON JUNE 30, 1997.
Except as provided in Sec. 5.2(e) and (f) for Participants employed by
Lanier Puerto Rico, Inc., the Accrued Benefit Percentage of a
Participant with an Accrued Benefit on June 30, 1997 shall be equal to
the greater of the following:
(1) the Participant's Accrued Benefit Percentage under Sec.
5.2(b), except that if the Participant had attained age 40 and
had at least five Years of Service on June 30, 1997, the
Participant's Accrued Benefit Percentage shall be increased by
1% for each year of the Participant's full Years of Service
prior to such date; and
(2) the sum of (A) and (B) where:
"(A)" is the Participant's Accrued Benefit Percentage
under Sec. 5.2(b) for Years of Service after June 30,
1997;
"(B)" is the percentage which is equal to (I) divided
by (II), where:
"(I)" is the lump sum Actuarial Equivalent
of the Participant's Prior Plan Accrued
Benefit on June 30, 1997 determined in
accordance with Sec. 3.3(a), provided that
for this purpose only the interest rate
shall be the rate in effect one month prior
to the month identified in Sec. 3.3(a); and
"(II)" is 150% of the Participant's Average
Compensation as of June 30, 1997 (determined
in accordance with the terms of the Plan in
effect on such date), minus the lesser of
(I) 50% of his Average Compensation as of
June 30, 1997 (determined in accordance with
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<PAGE> 19
the terms of the Plan in effect on such
date) and (II) 50% of his Covered
Compensation as of June 30, 1997 (determined
in accordance with the terms of the Plan in
effect on such date).
(d) ALTERNATIVE BENEFIT DETERMINATION FOR CERTAIN PLAN PARTICIPANTS
WITH A PRIOR PLAN ACCRUED BENEFIT. If a Participant satisfies the
requirements of (i) or (ii) below, then such Participant's benefit
payable under the Plan shall be the greater of (a) his Accrued Benefit
determined as of his Employment Termination Date and (b) his Prior Plan
Accrued Benefit. In the case of a Participant who satisfies the
requirements of clause (i) below, the Average Compensation and Years of
Service used in determining his Prior Plan Accrued Benefit shall be
determined as of his Employment Termination Date. In the case of a
Participant who satisfies the requirements of clause (ii) below, the
Years of Service used in determining his Prior Plan Accrued Benefits
shall be determined as of his Employment Termination Date and the
Average Compensation used in determining his Prior Plan Accrued Benefit
shall be determined as of December 31, 1997.
(i) The Participant had attained his Early Retirement Date or
his Normal Retirement Age as of July 1, 1997, or in the case
of a Participant employed by Lanier Puerto Rico, Inc., as of
July 15, 1997; or
(ii) The Participant's Early Retirement Date was within five
years of July 1, 1997 (or in the case of a Participant
employed by Lanier Puerto Rico, Inc., as of July 15, 1997)
provided the Participant remained employed by an Employer
during that period, or the Participant is a Former 3M
Participant (as defined in Exhibit A) who is eligible for an
early unreduced retirement benefit in accordance with Sec. 3.4
of Exhibit A.
For purposes of this Sec. 5.2(d), the Prior Plan Accrued Benefit will
be expressed in the form of a lump sum payment (a lump sum Actuarial
Equivalent) and will be reduced by 1.5% of the Participant's Average
Compensation (determined as of the Participant's Employment Termination
Date or December 31, 1997 as provided above) multiplied by the
Participant's Years of Service for purposes of benefit accrual since
July 1, 1997.
(e) ACCRUED BENEFIT PERCENTAGES OF EMPLOYEES OF LANIER PUERTO RICO,
INC. Except as provided in Sec. 5.2(f), the Accrued Benefit Percentage
of a Participant who is an employee of Lanier Puerto Rico, Inc. shall
be equal to the sum (1) plus (2) where:
"(1)" is the sum of the following applicable percentages based
on the Participant's age:
(i) 1.5% for each Year of Service before the
Participant attains age 35;
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(ii) 4% for the Year of Service in which the
Participant attains age 35, as provided in clause
(vii), and for each Year of Service thereafter before
the Participant attains age 40;
(iii) 6% for each Year of Service in which the
Participant attains age 40, as provided in clause
(vii), and for each Year of Service thereafter before
the Participant attains age 50;
(iv) 10% for each Year of Service in which the
Participant attains age 50, as provided in clause
(vii), and for each Year of Service thereafter before
the Participant attains age 55;
(v) 12% for each year of Service in which the
Participant attains age 55, as provided in clause
(vii), and for each Year of Service thereafter before
the Participant attains age 60;
(vi) 13% for each Year of Service in which the
Participant attains age 60, as provided in clause
(vii), and for each Year of Service thereafter.
(vii) for each Year of Service in which the
Participant attains age 35, 40, 50, 55 or 60, the
relevant applicable percentage shall be the sum of
pro-rata portions of each of the percentages
applicable before and after the Participant attains
the relevant age. Such pro-rata portions shall be
determined as follows:
(1) THE PRE-ATTAINED AGE PORTION. The
product of 1.5%, 4%, 6%, 10%, or 12%, as
applicable, multiplied by a fraction, the
numerator of which shall be the number of
full months during such year up to, but not
including, the month in which the
Participant attained the relevant age and
the denominator of which shall be 12.
(2) THE POST-ATTAINED AGE PORTION. The
product of 4%, 6%, 10%, 12% or 13%, as
applicable, multiplied by a fraction, the
numerator of which shall be the number of
full months during such year beginning with
the month in which the Participant attained
the relevant age and the denominator of
which shall be 12.
(viii) For the year in which a Participant terminates
employment, the relevant percentage shall be
determined by multiplying the applicable percentage
by a fraction, the numerator of which is the number
of full months during which the Participant is
employed by an Employer and the denominator of which
is 12:
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"(2)" is the sum of the following applicable percentages based
on the Participant's Years of Service.
(i) 1% for each Year of Service up to and including
the Participant's 20th Year of Service;
(ii) 2% for each year of Service commencing with the
Participant's 21st Year of Service and up to and
including the Participant's 25th Year of Service;
(iii) 3% for each Year of Service commencing with the
Participant's 26th Year of Service.
Notwithstanding anything in the Plan to the contrary, the benefits of a
Participant who is an employee of Lanier Puerto Rico, Inc. and who
terminates employment with Lanier Puerto Rico, Inc. prior to July 15,
1997 shall be determined in accordance with the terms of the Plan in
effect on June 30, 1997.
(f) ACCRUED BENEFIT PERCENTAGES OF PARTICIPANT'S EMPLOYED BY LANIER
PUERTO RICO, INC. ON JULY 15, 1997. The Accrued Benefit Percentage of a
Participant employed by Lanier Puerto Rico, Inc. with an Accrued
Benefit on July 15, 1997 shall be equal to the greater of the
following:
(1) the Participant's Accrued Benefit Percentage under Sec.
5.2(e), except that if the Participant had attained age 40 and
had at least five Years of Service on July 15, 1997, the
Participant's Accrued Benefit Percentage shall be increased by
1% for each year of the Participant's full Years of Service
prior to such date; and
(2) the sum of (A) and (B) where:
"(A)" is the Participant's Accrued Benefit Percentage
under Sec. 5.2(e) for Years of Service after July 15,
1997;
"(B)" is the percentage which is equal to (I) divided
by (II), where:
"(I)" is the lump sum Actuarial Equivalent
of the Participant's Prior Plan Accrued
Benefit on July 15, 1997 determined in
accordance with Sec. 3.3(a), provided that
for this purpose only the interest rate
shall be the rate in effect one month prior
to the month identified in Sec. 3.3(a); and
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"(II)" is 150% of the Participant's Average
Compensation as of July 15, 1997 (determined
in accordance with the terms of the Plan in
effect on June 30, 1997), minus the lesser
of (I) 50% of his Average Compensation as of
July 15, 1997 (determined in accordance with
the terms of the Plan in effect on June 30,
1997) and (II) 50% of his Covered
Compensation as of July 15, 1997 (determined
in accordance with the terms of the Plan in
effect on June 30, 1997).
5.3 VESTED BENEFITS UPON TERMINATION OF EMPLOYMENT. A Participant whose
employment as an Employee terminates on or after his Vested Date but before his
Early Retirement Date or his Normal Retirement Age may elect to receive the
Actuarial Equivalent of his Accrued Benefit as of the first day of any month
coinciding with or following the date his employment terminates in the form of
(i) a lump sum payment or (ii) the Participant's normal payment form as
described in Sec. 6.1(a), provided that a properly completed election is filed
with the Plan Sponsor in accordance with Sec. 6.2. In all other cases, a
Participant whose employment as an Employee terminates on or after his Vested
Date may elect to commence distribution of his Accrued Benefit in accordance
with Article Six. Subject to Exhibit A, a Participant whose employment
terminates before his Vested Date shall not be entitled to any benefit under the
Plan.
5.4 DISABILITY RETIREMENT BENEFIT.
(a) IN GENERAL. A Participant who becomes totally and permanently
disabled, as described in Sec. 5.4(b), while he is an Eligible Employee
and on or after the date on which he completes 10 Years of Service
determined under Sec. 3.39(a) shall be entitled to receive a benefit,
the payment of which shall commence in accordance with Article Six 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 his benefit shall be equal to the Actuarial
Equivalent of his Lump Sum Benefit determined as of his Normal
Retirement Date based on the following assumptions:
(1) his Covered Compensation determined as of the date his
employment terminated by reason of such disability,
(2) the Accrued Benefit Percentage which he would have been
credited with as of his Normal Retirement Date if he had
remained employed until such date and retired on that 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 the
greater of his Compensation (i) for the last calendar year
prior to the calendar year containing the date his employment
terminates by
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reason of such disability and (ii) for the calendar year in
which his employment terminates by reason of such disability.
(b) TOTAL AND PERMANENT DISABILITY. A Participant shall be considered
to be totally and permanently disabled for purposes of the Plan if he
suffers a physical or mental impairment which (1) qualifies him for a
monthly disability insurance benefit under the Social Security Act, (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, unless 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
working for a person other than the Employer or an
Affiliate-and arising out of such work; or
(iii) intentional, self-inflicted injury.
(c) PROOF OF DISABILITY. The Participant or his Beneficiary shall
provide evidence (i) that the Participant is eligible for disability
benefits under the Social Security Act, (ii) that such eligibility is
retroactive to the date his employment terminates and (iii) that the
Participant continued 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 the Plan. The decision of the
Committee 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 Sec. 5.4(a) may elect in writing to begin receiving his benefit,
calculated pursuant to this Sec. 5.4(d), as of the first day of any
month coinciding with or following the date he becomes totally and
permanently disabled, provided that a properly completed election is
filed with the Committee within the 90-day period ending on such date.
A disabled Participant may revoke previous election and make a new
election prior to the date payments are scheduled to commence pursuant
to such previous election, subject to the conditions of the previous
sentence. If a disabled Participant elects early commencement of his
benefit under this Sec. 5.4(d), then 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,
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(2) the Accrued Benefit Percentage with which he would have
been credited as of his Annuity Starting Date under this Sec.
5.4(d) if he had remained employed until such date and
terminated employment on that date, and
(3) the Average Compensation which he would have had as of his
Annuity Starting Date under this Sec. 5.4(d) if he had
continued to receive annual Compensation after his employment
terminated by reason of disability and through his Annuity
Starting Date in an amount equal to the greater of (i) his
Compensation for the last calendar year prior to the calendar
year containing the date his employment terminated by reason
of disability and (ii) his Compensation for the calendar year
in which his employment terminated by reason of disability.
(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 Article Seven.
(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 Service
and he shall be treated as if he had received annual Compensation
during such period equal to the greater of (i) his Compensation for the
last calendar year prior to the calendar year containing the date his
employment terminated by reason of disability and (ii) his Compensation
for the calendar year in which his employment terminated by reason of
disability.
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 the
Plan shall be suspended if, and as of the date, the Participant is
reemployed as a full-time Employee of an Employer (as determined in
accordance with the payroll records of the Employer).
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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
Sec. 5.6(d).
(b) CONTINUED EMPLOYMENT. If a Participant continues to work as a
full-time Employee after the Participant's Normal Retirement Age, then
payment of the Participant's benefits under the Plan shall not commence
while the Participant is so employed until his required beginning date
as determined pursuant to Sec. 6.2(d).
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 shall be determined automatically and payment
shall commence to the Participant as of the Participant's Normal
Retirement Date unless the Participant elects to defer such payments in
accordance with Sec. 6.2(c). Such benefit shall thereafter be adjusted
in accordance with Sec. 5.6 (d).
If the employment status of a Participant who is receiving benefits
under the 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 Sec. 5.5(c) and his benefits shall be suspended 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 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 Sec. 5.6(d).
(c) SUSPENSION NOTICE. The Committee shall provide written notice to
each Participant whose benefits are suspended under this Sec. 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 section 203 of ERISA.
(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 Sec. 5.5(c) and the Participant
received compensation for employment for less than 40 Hours of
Service 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.
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(2) PRIOR TO RECEIPT OF SUSPENSION NOTICE. If a Participant's
benefits are suspended in any month prior to his Normal
Retirement Age and the Participant did not receive the
suspension notice described in Sec. 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 Sec.
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 his Annuity Starting Date (calculated in accordance with
Sec. 5.6 if applicable) as adjusted in accordance with this
Sec. 5.5(d) and (ii) his Accrued Benefit determined as of his
Normal Retirement Date actuarially adjusted in accordance
with the factors set forth in Sec. 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 mortality table
described in Sec. 3.3(b)(1) and the interest rate in Sec.
3.3(b)(2).
5.6 CALCULATION OF ADDITIONAL ACCRUED BENEFIT-FOLLOWING INITIAL PAYMENT OF
BENEFITS.
(a) GENERAL. Except as provided 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 Years of Service, Average Compensation and
Covered Compensation determined as of the Participant's Employment
Termination Date by (2) the Accrued Benefit determined as of the
immediately preceding Employment Termination 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, then the Accrued Benefit payable upon
recommencement shall be the sum of (1) the Accrued Benefit payable at
the immediately preceding benefit commencement date, (2) the additional
Accrued Benefit payable as a result of employment following such
benefit commencement calculated in accordance with Sec. 5.6(a) and (3)
any adjustment required under Sec. 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 Sec. 6.1(a)
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<PAGE> 27
unless the Participant elects, in accordance with the election
procedures set forth in Sec. 6.2, to receive an optional form.
(c) LUMP SUM PAYMENTS. If the Accrued Benefit 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 Sec. 5.6(a) reduced by applicable early commencement reduction
factors and (2) any adjustment required under Sec. 5.5(d).
If any other Participant received a lump sum payment as of his Accrued
Benefit and he is thereafter reemployed as an Eligible Employee, he
shall be treated as a new Participant for purposes of determining his
Accrued Benefit following his reemployment.
(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 each December 31 following his Normal
Retirement Age in accordance with Sec. 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.
ARTICLE SIX
BENEFIT PAYMENT FORMS
6.1 NORMAL PAYMENT FORMS.
(a) IN GENERAL. Unless a Participant otherwise elects in accordance
with Sec. 6.2, a Participant's nonforfeitable Accrued Benefit under the
Plan shall be paid
(1) in the form of a single life annuity option (as described
in Sec. 6.3(a)(1)) if the Participant 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 Sec. 6.3(a)(3)) if
the Participant has a Spouse on his Annuity Starting Date.
(b) PAYMENT OF SMALL BENEFITS IN A LUMP SUM. If the lump sum Actuarial
Equivalent of a Participant's nonforfeitable Accrued Benefit as
determined as soon as practicable after he terminates employment does
not exceed, and at the time of any prior distribution did not exceed,
$3,500, then the Plan Sponsor shall direct the payment of the
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Participant's Accrued Benefit in a lump sum as soon as practicable
after the Participant terminates employment. If the Participant's
nonforfeitable Accrued Benefit is zero as of the date he terminates
employment, then such Participant shall be deemed to have received a
distribution of such nonforfeitable benefit upon termination of
employment.
(c) EMPLOYEE CONTRIBUTIONS OF FORMER HARRIS/LBP PLAN PARTICIPANTS.
Notwithstanding Sec. 6.1(a), a former Harris/LBP Plan Participant (as
defined in Exhibit A) may elect to receive the portion of his Accrued
Benefit attributable to employee contributions as provided in Exhibit
A.
6.2 ELECTION PROCEDURES AND TIMING.
(a) GENERAL. Subject to Sec. 6.2(b), a Participant who is eligible to
receive a benefit under Article Five 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 Accrued Benefit paid in
one of the optional benefit payment forms described in Sec. 6.3 or, if
applicable, Exhibit A.
(b) PROCEDURES AND SPOUSAL CONSENT. The Plan Sponsor shall (consistent
with the regulations under section 417 of the Code) 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
sections 401(a)(11), 411(a)(11), and 417 of the Code as may be
required, provided that the Participant and his Spouse may waive the
30-day waiting period between their receipt of such written explanation
and the Participant's Annuity Starting Date, in which event such
waiting period is reduced to seven days between the receipt of the
written explanation and the Participant's Annuity Starting Date. A
Participant who has made such an election may revoke the election and
make a new election prior to the date payments were scheduled to
commence under his previous election. If the Participant is married on
his Annuity Starting Date, and if as a result of the Participant's
election of an optional form of benefit under Sec. 6.3 (or revocation
or change thereof), the Participant's Spouse would not be entitled to
receive a survivor's benefit at least equal to the amount payable under
the normal form of benefit payment for married Participants (described
in Sec. 6.1(a)(2)), then such election shall not be effective unless it
shall have been consented to in writing by the Participant's Spouse at
the time of such election and such consent acknowledges the effect of
such election and is witnessed by either a Plan representative or a
notary public. Notwithstanding the foregoing, no spousal consent shall
be required if it is established to the satisfaction of the Plan
Sponsor that such consent cannot be obtained because the Participant's
Spouse cannot be located or such other circumstances as may be
prescribed by regulations. The consent of a Spouse shall not be
necessary for a distribution required by the terms of a qualified
domestic relations order described in Sec. 13.10.
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<PAGE> 29
Any such election or revocation of an election under this Sec. 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 Sec. 6.2(a) shall control the payment of benefits under
the Plan. A Spouse's properly executed consent to the payment of Plan
benefits in one of the optional payment arrangements shall be
irrevocable with respect to such Spouse under the Plan.
(c) TIMING. Upon a Participant's termination of employment,
distribution of a Participant's nonforfeitable Accrued Benefit shall be
made as properly elected by the Participant and in accordance with the
rules and procedures established by the Committee, provided that if the
Participant fails to make a valid election prior to the later of (i)
the end of the Plan Year in which the Participant attains age 65 and
(ii) the end of the Plan Year in which the Participant terminates
employment, a distribution of the Participant's nonforfeitable Accrued
Benefit shall commence in the normal payment form applicable to such
Participant under Sec. 6.1 within 60 days after the end of such Plan
Year. A terminated Participant may properly elect to receive his
nonforfeitable Accrued Benefit in the form of (i) a single sum payment
or (ii) the Participant's normal payment form as described in Sec. 6.1
(a) at any time after his termination of employment, and may properly
elect to receive his nonforfeitable Accrued Benefit after he attains
his Early Retirement Date or his Normal Retirement Date in his normal
payment form under Sec. 6.1 or any optional benefit form available to
him under Sec. 6.3(a). Such a terminated Participant may also properly
elects early commencement of such benefit under Article Five or Exhibit
A. Actual payment of the Participant's benefit shall begin as soon as
practicable after the Participant's Annuity Starting Date. Payments
which do not actually commence on the Participant's Annuity 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", then 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 Sec.
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
section 416(i) of the Code) 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.
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6.3 DESCRIPTION OF OPTIONS.
(a) PAYMENT OPTIONS. A Participant may elect to receive the Actuarial
Equivalent of his nonforfeitable Lump Sum Benefit in one of the
following optional forms set forth below:
(1) SINGLE LIFE ANNUITY OPTION - a monthly benefit payable
only during the lifetime of the Participant.
(2) 10 YEAR PERIOD CERTAIN AND CONTINUOUS ANNUITY OPTION - a
reduced monthly benefit (relative to Sec. 6.3(a)(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 Beneficiary for the
balance of such 10-year period.
(3) JOINT AND SURVIVOR ANNUITY OPTION - a reduced monthly
benefit (relative to Sec. 6.3(a)(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% (as the Participant
shall designate) of the monthly benefit payable during the
lifetime of the Participant for such Beneficiary's lifetime.
(4) SINGLE SUM OPTION - a distribution in a single sum.
(5) OTHER PAYMENT OPTIONS FOR CERTAIN PARTICIPANTS. See
Exhibit A.
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 section 401(a)(9)(G) of the Code.
(b) DIRECT ROLLOVER. In the case of a-distribution that is an "eligible
rollover distribution" within the meaning of section 402(c)(4) of the
Code, a Participant, surviving Spouse or a former spouse who is the
alternate payee under a qualified domestic relations order, as defined
in section 414(p) of the Code, may elect that all or any portion of
such distribution shall be directly transferred from the Plan to an
individual retirement account or annuity described in section 408 of
the Code, to another retirement plan qualified under section 401(a) of
the Code (the terms of which permit the acceptance of the rollover
distributions) or to an annuity plan described in section 403(a) of the
Code (the terms of which permit the acceptance of the rollover
distributions). A Participant's surviving Spouse may elect to have such
a distribution transferred only to an individual retirement account or
annuity described in section 408 of the Code. Notwithstanding the
foregoing, a Participant, alternate payee or surviving Spouse shall not
be entitled to elect
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to have an eligible rollover distribution transferred pursuant to this
subsection (c) if the eligible rollover distribution totals less than
$200.
6.4 BENEFICIARY. Subject to Sec. 6.2(b), each Participant may designate, on a
form provided for this purpose by the Plan Sponsor, (1) 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) a secondary Beneficiary to receive benefits, if any, payable
under an optional payment form which provides a guaranteed period of payments.
The Beneficiary of each married Participant shall be the surviving Spouse of
such Participant, unless such Spouse consents in writing to the designation of
another Beneficiary in accordance with the rules described in Sec. 6.2(b). In
the event that no such Beneficiary designation is made or is legally
ineffective, or if all designated Beneficiaries predecease the Participant, or
if the whereabouts of such Beneficiary is unknown, distributions shall be made
in the following order of priority:
(a) the Participant's surviving Spouse, if any,
(b) the Participant's designated beneficiary or beneficiaries under the
Lanier Worldwide, Inc. Savings Incentive Plan, if any,
(c) the person or persons expressly designated by the Participant to
receive the Participant's death benefit under the group term life
insurance program maintained by his Employer, if any,
(d) the estate of the Participant.
A Participant may, from time to time and subject to the spousal consent
provisions of Sec. 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 the Plan shall
cease, provided that if the optional form of payment provides a joint and
survivor 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 employee contributions, if any, under the 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. No person is entitled to any benefit under the Plan except and
to the extent expressly provided under the Plan. The fact that payments have
been made from the Plan in connection with any claim for benefits under the 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 the Plan or that there was a
mistake in the
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calculation of benefits under the Plan. Thus, if a benefit is paid under the
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, Spouse or Beneficiary 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 the Plan and it is
thereafter determined by the Plan Sponsor that a benefit should have been paid,
or if a benefit is underpaid under the Plan and it is thereafter determined by
the Plan Sponsor that such benefit was under paid, any succeeding benefits
payable shall be adjusted to correct such underpayment.
6.6 CLAIMS FOR BENEFITS. If any Participant or other person (a "claimant")
believes he is entitled to benefits in an amount greater than those which the
claimant is receiving or has received, the claimant may file a claim with the
Committee. Such a claim shall be in writing and state the nature of the claim,
the facts supporting the claim, the amount claimed, and the address of the
claimant. The Committee will review the claim and, unless special circumstances
require an extension of time, within 90 days after receipt of the claim, give
written notice by registered or certified mail to the claimant of the decision
with respect to the claim. If special circumstances require an extension of
time, the claimant shall be so advised in writing within the initial 90-day
period and in no event shall such an extension exceed 90 days. The notice of the
decision with respect to the claim shall be written in a manner calculated to be
understood by the claimant and, if the claim is wholly or partially denied, set
forth the specific reasons for the denial, specific references to the pertinent
Plan provisions on which the denial is based, a description of any additional
material or information necessary for the claimant to perfect the claim and an
explanation of why such material or information is necessary, and an explanation
of the claim review procedure under the Plan. The Committee also shall advise
the claimant that the claimant's duly authorized representative may request a
review of the denial by the Committee by filing with the Committee, within 60
days after notice of the denial has been received by the claimant, a written
request for such review. The claimant shall be informed that he may have
reasonable access to pertinent documents and submit comments in writing to the
Committee within the same 60-day period. If a request is so filed, review of the
denial shall be made by the Committee within 60 days after receipt of such
request, unless special circumstances require an extension of time, and the
claimant shall be given written notice of the resulting final decision. If
special circumstances require an extension of time, the claimant shall be so
advised in writing within the initial 60-day period and in no event shall an
extension exceed 60 days. The notice of the Committee's final decision shall
include specific reasons for the decision and specific references to the
pertinent Plan provisions on which the decision is based and shall be written in
a manner calculated to be understood by the claimant.
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ARTICLE SEVEN
SURVIVOR BENEFIT
7.1 PRERETIREMENT SURVIVOR BENEFIT.
(a) GENERAL. If a Participant dies after his Vested Date but before his
Annuity Starting Date, a survivor benefit shall be payable, subject to
the terms and conditions of this Sec. 7.1, on his behalf to his
Beneficiary determined in accordance with Sec. 6.4. The benefit, if
any, payable under this Sec. 7.1 shall be based on the Participant's
Lump Sum Benefit determined as of the date of the Participant's death
without reference to Sec. 5.2(d).
(b) COMMENCEMENT.
(1) SPOUSAL BENEFICIARY.
(i) NORMAL. If the Beneficiary eligible for a
survivor benefit under Sec. 7.1(a) is the
Participant's Spouse, then payment of such benefit
shall be scheduled to commence in the form of a
single life annuity as of the later of (i) the date
which would have been the deceased Participant's
Normal Retirement Date if he had survived and (ii)
the first day of the calendar month following his
date of death, provided that the surviving Spouse may
elect within the 90-day period ending on the date the
survivor benefit is schedule to commence that such
benefit be paid in the form of a lump sum payment.
Notwithstanding the foregoing, if the survivor
benefit payable to the Spouse does not exceed, or at
any time prior to the distribution did not exceed,
$3,500, then payment of such survivor benefit shall
be paid to the Spouse in a single sum payment as soon
as practicable after the Participant's date of death.
(ii) EARLY PAYMENT. If the survivor benefit payable
to the surviving Spouse under Sec. 7.1(a) exceeds
$3,500, then the surviving Spouse may file with the
Committee a written request that such benefit be paid
in the form of a single sum payment or in the form of
a single life annuity in accordance with Sec. 6.2.
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(2) NON-SPOUSAL BENEFICIARY.
(i) NORMAL. If the Beneficiary eligible for a
survivor benefit under Sec. 7.1 (a) is not the
Participant's Spouse, then payment of such benefit
shall be scheduled to commence in the form of a
single sum payment as soon as practicable after the
Participant's date of death.
7.2 NO POST RETIREMENT SURVIVOR BENEFITS. No survivor benefit shall be payable
under the Plan on behalf of a Participant if the Participant dies after his
Annuity Starting Date unless the form of benefit payable in respect of such
Participant as of his date of death provides for a survivor benefit.
ARTICLE EIGHT
PLAN FUNDING
8.1 CONTRIBUTIONS. The Employers shall pay all funding costs of the 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 the Plan and (2) is designed to
pay the normal costs of the Plan and to amortize the Plan's unfunded past
service liability 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 the Plan has been terminated or contributions have been
discontinued. Forfeitures arising under the Plan shall be applied to reduce the
costs of the 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 the Plan.
8.3 PROHIBITION AGAINST REVERSION.
(a) Except as provided in Sec. 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 the 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 Sec. 11.3 if the Plan is terminated.
Pension Equity Plan
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For this purpose, the term "liabilities" shall mean benefits actually
accrued as of the date of the termination.
(b) Upon direction of the Plan Sponsor, contributions by an Employer,
which are contingent of the deductibility of such contributions, shall
be returned by the Trustee, if and to the extent such a return is
permitted by law, under either of the following circumstances:
(1) the contribution made by the Employer was made by a
mistake of fact, provided that the contribution is returned to
the Employer within one year after the payment of such
contribution; or
(2) the Employer's deduction for such contribution is
disallowed under section 404 of the Code, provided that the
contribution is returned to the Employer within one year after
the disallowance.
An Employer entitled to the return of a contribution in accordance with
this Sec. 8.3(b) may in its discretion waive such right by submitting
written notice of such waiver to the Plan Sponsor.
ARTICLE NINE
NAMED FIDUCIARIES AND PLAN SPONSOR
9.1 NAMED FIDUCIARIES. The Board shall appoint the Committee, which shall
consist of two or more members. The, Committee shall be the "named fiduciary"
responsible for the control, management and administration of the Plan. The
Board shall have the right at any time, with or without cause, to remove one or
more members of the Committee. In addition, any member of the Committee may
resign and such resignation shall be effective upon delivery of written
resignation to the Plan Sponsor. Upon the resignation or removal of any member
of the Committee to act hereunder, the Board shall appoint a successor member of
the Committee if necessary to satisfy the minimum number of Committee members.
Any successor member of the Committee shall have all the rights, privileges and
duties of the predecessor, but shall not be held accountable for the acts of the
predecessor.
9.2 ALLOCATION AND DELEGATION BY NAMED FIDUCIARIES. The Plan Sponsor or the
Committee may by written instrument filed with the records of the Plan,
designate any person, committee of persons, partnership or corporation to carry
out any of its responsibilities under the Plan, other than the responsibilities
of the Trustee in the management and control of the Trust Fund; provided 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. In addition, the
members of the Committee may allocate the Committee's responsibilities among
themselves.
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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 Sec. 9.2, may employ one or more persons to render advice with
respect to any responsibility the Plan Sponsor has under the Plan or such person
has by virtue of such designation.
9.4 DUAL FIDUCIARY CAPACITIES. Any person may serve in more than one fiduciary
capacity with respect to the Plan, and a fiduciary may be a Participant provided
such person otherwise satisfies the requirements for participation under the
Plan, provided that no such fiduciary shall take part in any action or any
matter involving solely his or her rights under the Plan.
9.5 COMMITTEE POWER AND DUTIES.
(a) GENERAL. The Committee shall be the "administrator" of the Plan
within the meaning of such term as used in ERISA and, except for the
duties specifically vested in the Trustee, shall be responsible for the
administration of the provisions of the Plan. The Committee shall have
the exclusive responsibility and complete discretionary authority to
control the operation, management and administration of the Plan, with
all powers necessary to enable it properly to carry out such
responsibilities, including (but not limited to) the power to construe
the Plan and the Trust Agreement, to determine eligibility for
benefits, to resolve all interpretive, operational, equitable and other
questions that arise under the 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.
The members of the Committee, and each of them separately, shall
discharge their duties with respect to the Plan (i) solely in the
interest of the Participants, their Spouses and Beneficiaries, (ii) for
the exclusive purpose of providing benefits to Employees participating
in the Plan, their Spouse and Beneficiaries and of defraying reasonable
expenses in administering the Plan and (iii) with the care, skill,
prudence and diligence under the circumstances then prevailing that a
prudent man acting in a like capacity and familiar with such matters
would use in the conduct of an enterprise of a like character and with
like aims. The Employers hereby jointly and severally indemnify the
members of the Committee, and each of them, from the effects and
consequences of their acts, omissions and conduct in their official
capacity, except to the extent that such effects and consequences
result from their own willful misconduct.
(b) COMMITTEE ACTION. The Committee may act at a meeting, or by writing
without a meeting, by the vote or written assent of-a majority of its
members. The Committee shall elect from its members a chairman and a
secretary. The secretary shall keep the Trustee advised of the identity
of the members holding those offices, keep records of all meeting of
the Committee, and forward all necessary communication to the Trustee.
The
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Committee may adopt such rules and procedures as it deems desirable for
the conduct of its affairs and the administration of the Plan, provided
that any such rules and procedures shall be consistent with the
provisions of the Plan and ERISA.
(c) RECORDS. The Committee shall keep a record of its proceedings and
all such records, together with such other documents as the Committee
shall determine are necessary or advisable for the administration of
the Plan, shall be preserved in the custody of the Committee.
(d) INFORMATION. Each Employer shall supply the Committee 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 Committee. The Committee may require a
Participant, Spouse or Beneficiary to complete and file with the
Committee an application for benefits and all other forms approved by
the Committee, and to furnish all pertinent information requested by
the Committee. The Committee may relay upon all such information so
furnished to it, including the Participant's current mailing address.
(e) SELECTION OF COUNSEL, ACCOUNTANTS, AGENTS AND OTHER SERVICE
PROVIDERS. The Committee may employ counsel (who may be counsel for any
Employer), actuaries, accountants, agents and may arrange for such
clerical and other services as it may require in carrying out the
provisions of the Plan. The Committee and the Employers and their
officers and directors shall be entitled to rely on all tables,
valuations, certificates and reports furnished by any actuary, upon all
certificates and reports made by its accountants and upon all opinions
given by legal counsel employed by them. The members of the Committee
and the Employers and their officers and directors shall be fully
protected in respect of any action taken or suffered by them in good
faith in reliance upon any such actuary, accountants or counsel, and
all action so taken or suffered shall be conclusive upon all
Participants, Spouses and Beneficiaries under the Plan.
(f) 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 Committee to
perform services on behalf of the Plan.
(g) COMMITTEE EXPENSES. No member of the Committee shall receive any
compensation or fee for his services, but the Plan Sponsor shall
reimburse the Committee members for any necessary expenditures incurred
in the discharge of their duties as Committee members.
(h) PLAN AND TRUST FUND EXPENSES. All costs and expenses incurred in
administering the Plan and the Trust fund, including investment
advisory fees, expenses of the
Pension Equity Plan
33
<PAGE> 38
Committee and the Plan Administrator, fees and expenses of counsel and
the Trustee, and other administrative expenses shall be paid from the
Trust Fund by the Trustee to the extent such expenses are not paid for
by the Employers. The Plan Sponsor or an Employer may seek
reimbursement of any expense paid by it which is properly payable by
the Trust Fund.
ARTICLE TEN
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.
ARTICLE ELEVEN
TERMINATION, AMENDMENT AND TRANSFERS
11.1 RIGHT TO TERMINATE. The Plan Sponsor expects the Plan to be continued
indefinitely but may terminate the Plan, in whole or in part, 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 the Plan, in whole or in part, by
action of its board of directors and thereby terminate the accrual of benefits
under the Plan for its Employees.
11.2 FULL VESTING UPON TERMINATION. If the Plan shall be terminated or partially
terminated under this Article Eleven, then the Accrued Benefit of each
Participant who is an Employee on the effective date of such termination or
partial termination who is affected by such 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 Sec. 11.3
regarding the allocation of such assets among such benefits.
11.3 ALLOCATION OF ASSETS. Upon a complete termination of the 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 section
4044 of ERISA.
After all the liabilities of the 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 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.
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11.4 MERGER, CONSOLIDATION AND TRANSFER OF ASSETS OR LIABILITIES. In the case of
any merger or consolidation of the Plan with, or transfer of assets or
liabilities of the 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 the Plan had then terminated).
11.5 AMENDMENT. The Plan Sponsor shall have the right at any time and from time
to time to amend the Plan in any respect by action of the Board, provided, that
except as specified in Sec. 11.3, no amendment shall operate either directly or
indirectly to give any Employer any interest in the Trust Fund, or to permit the
corpus or the income of the Trust Fund to be used or diverted for purposes other
than for the exclusive benefit of Participants and Beneficiaries. No amendment
shall eliminate or reduce an early retirement subsidy or eliminate an optional
form of benefit except to the extent permissible under section 411(d)(6) of the
Code.
ARTICLE TWELVE
RESTRICTIONS ON CERTAIN BENEFITS
12.1 LIMITATIONS ON ANNUAL BENEFIT. 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 section 415 of the Code, as adjusted for the cost
of living in accordance with section 415(d) of the Code and the regulations
under section 415(d) of the Code, as of January 1 of each limitation year (as
defined in section 415(d) of the Code) for Participants who are Employees and
retired and terminated Participants who are receiving benefits or who are
entitled to receive benefits, provided that the limitations of section 415 of
the Code 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 Sec. 12.1 but does not exceed the limitations of section
415 of the Code 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 the Plan shall not be less than his "current
accrued benefit" (as such term 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.
For Plan Years commencing prior to July 1, 2000, if a Participant participates
in one or more defined contribution plans maintained by an Affiliate and the sum
of the "defined benefit fraction" under the Plan and the "defined contribution
plan fraction" under such defined contribution plan or plans (as such fractions
are described in section 415 of the Code) is greater
Pension Equity Plan
35
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than one, his rate of benefit accrual under the 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 of section 415 of the Code
have been exceeded with respect to any Participant, the Participant's
"compensation," as defined in section 415(c)(3) of the Code, shall include the
items described in Sec. 3.14(a)(ii). A Participant's Employer shall include
Affiliates as such term is defined in Sec. 3.3, but modified by section 414(h)
of the Code.
12.2 LIMIT ON BENEFITS OF HIGHEST-PAID EMPLOYEES IN THE EVENT OF PLAN
TERMINATION.
(a) RESTRICTED PARTICIPANTS. A restricted Participant for any Plan Year
is a Participant who is among the group of the 25 most highly
compensated employees (within the meaning of Section 414(q) of the
Code) 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 Treasury Regulation Sec. 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.
(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 Committee.
(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 section
401(a)(4)of the Code. Any security arrangement in effect with
Pension Equity Plan
36
<PAGE> 41
respect to a restricted Participant shall continue to apply only if and
to the extent required under Treasury Regulation Sec. 1.401(a)(4)-5(b).
In particular, any security arrangement may be terminated on
certification by the Committee that the Participant will be subject to
one of the limits described in subsection (b) above.
ARTICLE THIRTEEN
MISCELLANEOUS
13.1 SPENDTHRIFT CLAUSE. Except to the extent permitted by law or Sec. 13.10, no
benefit, payment or distribution under the 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 the Plan except to the extent
expressly provided in the Plan.
13.2 LEGALLY INCOMPETENT. The Committee 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 Committee 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 the 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 the Plan.
13.4 DISCRIMINATION. The Committee 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 Committee 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 that the Committee shall not permit any
discrimination in favor of highly compensated employees (within the meaning of
section 414(q)of the Code) which would be prohibited under section 401(a) of the
Code. If for any Plan Year the Committee determines that following the terms of
the Plan would result in a failure to satisfy the nondiscrimination tests under
section 401(a)(4) of the Code or the coverage requirements under section 410(b)
of the Code, then the Committee shall take such action, to the extent permitted
under the Code, as it deems appropriate under the circumstances to prevent such
failure.
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13.5 PLAN NOT AN EMPLOYMENT CONTRACT. The Plan is not a contract of employment.
Participation in the Plan shall not give any Employee the right to be retained
in the employ of the Employer or any Affiliate, nor, upon termination of his
employment, to have any interest in the Trust Fund except as expressly provided
in the Plan.
13.6 CLAIMS. Any payment to a Participant, Spouse or Beneficiary or to his legal
representatives or heirs-at-law, made in accordance with the provisions of the
Plan, shall to the extent thereof be in full satisfaction of all claims under
the Plan against 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.
13.7 NONREVERSION. Except as provided in Sec. 8.3 and Article Eleven, 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.
13.8 AGENT FOR SERVICE OF PROCESS. The agent for service of process for the Plan
and the Committee 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.
13.9 TOP HEAVY PLAN.
(a) DETERMINATION. If the Committee as of each June 30 ("the
determination date") determines that the sum of the present value of
the accrued benefits (as defined below) of "key employees" (as defined
in section 416(i) of the Code) 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 section 416(q) of the
Code, the Plan shall be "top heavy" for the Plan Year which begins on
the immediately following July 1. For purposes of this Sec. 13.9, such
present value shall be determined using the mortality table specified
in Sec. 3.3(b)(1) and an interest rate specified in Sec. 3.3(b)(2) and
the present value "top-heavy"). Any accruals required under this
section by reason of the Plan being "top heavy" shall be off-set 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 Sec. 13.9)
solely by reason of such plan being "top heavy". No accruals shall be
permitted under this Sec. 13.9 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.
(b) A Participant's nonforfeitable interest in his Accrued Benefit
under the Plan shall be determined under the following schedule:
Pension Equity Plan
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<TABLE>
<CAPTION>
------------------------------------ --------------------------------
COMPLETED YEARS NONFORFEITABLE
OF SERVICE INTEREST
---------- --------
---------------------------------------------------------------------
<S> <C>
Less than 2............................ 0%
---------------------------------------------------------------------
2...................................... 20%
---------------------------------------------------------------------
3...................................... 40%
---------------------------------------------------------------------
4...................................... 60%
---------------------------------------------------------------------
5 or more.............................. 100%
---------------------------------------------------------------------
</TABLE>
However, the vesting schedule set forth above shall not apply to any Participant
who does not have an Hour of Service after the date as of which the Plan becomes
"top heavy". In the event that the Plan later ceases to be "top heavy," the
vesting rules in Sec. 3.39 shall once again apply, provided 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 Service on the date
the Plan ceases to be "top heavy" shall continue to be determined under
the vesting schedule set forth in this Sec. 13.9(b)(2) if such vesting
schedule is more favorable to the Participant, and
(C) solely for purposes of Sec. 3.39(b) and Sec. 7.1, "2 full Years of
Service" shall replace the language in Sec. 3.38(a).
(3) If a Participant receives his Accrued Benefit in the form of a lump
sum payment and such Participant's nonforfeitable Accrued Benefit is
less than 100% upon his termination of participation in the Plan as a
result of the Plan being top-heavy in any year of his employment, then
such Participant upon his reemployment, provided he is reemployed
before incurring 5 Breaks in Service, may have his Accrued Benefit
calculated in accordance with Sec. 3.39 but without regard to the final
sentence in Sec. 3.39(a)(3) if he repays to the Plan an amount equal to
the dollar amount of his lump sum payment plus interest on such payment
in accordance with section 411(a)(7) of the Code.
(4) The Plan Sponsor shall take such action as necessary to satisfy the
requirements of sections 415(e) and 416(h) of the Code if the Plan
Sponsor (following the procedure set forth in 13.9(a)) determines that
the Plan fails to meet the requirements set forth in section 416(h) of
the Code.
Pension Equity Plan
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<PAGE> 44
13.10 QUALIFIED DOMESTIC RELATIONS ORDERS. Benefits under the Plan shall be paid
in accordance with the applicable requirements of a "qualified domestic
relations order" as that term is defined in section 414(p) of the Code and
section 206(d)(3) of ERISA. The Committee, in accordance with a uniform and
nondiscriminatory procedures established by the Committee, shall
(a) promptly notify the Participant and any alternate payee (as that
term is defined in section 414(p)(8) of the Code) of the receipt of a
domestic relations order and the 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 the Plan pursuant to such order
in accordance with the rules set forth in section 414(p) of the Code.
The determinations and the distribution made by, or at the direction of, the
committee under this Sec. 13.10 shall be final and binding on the Participant,
and an all other persons interested in such order.
The Plan shall begin payments of benefits to an alternate payee as of the later
of (i) the earliest date on which distribution may be made pursuant to the
order, and (ii) as soon as administratively practicable after the date such
order is determined by the Committee to be a "qualified domestic relations
order." 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 Sec. 3.3(b)(2).
13.11 INCOME TAX WITHHOLDING. The amount of any distribution to a Participant,
Spouse, Beneficiary or alternate payee shall be reduced to the extent necessary
to comply with federal, state and local income tax withholding requirements.
Pension Equity Plan
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<PAGE> 45
IN WITNESS WHEREOF, Lanier Worldwide, Inc. has caused the Plan to be executed
and its seal to be affixed and attested by its duly authorized officers this
20TH day of AUGUST, 1997.
LANIER WORLDWIDE, INC.
By:
------------------------------
Title:
---------------------------
(SEAL)
ATTEST:
By:
----------------------
Title:
--------------------
Pension Equity Plan
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<PAGE> 46
EXHIBIT A
ARTICLE ONE
FORMER LANIER PARTICIPANTS - EMPLOYEE CONTRIBUTIONS
---------------------------------------------------
1.1. APPLICATION. This Article One shall apply only to those Participants who
are Former LBP Participants.
1.2. DEFINITIONS. The terms in this Article One shall have the meanings set
forth opposite such terms for purposes of this Article One. Except as provided
in this Sec. 1.2, a capitalized term shall have the meaning set forth in the
Plan as in effect on June 30, 1997.
(a) FORMER LBP PARTICIPANT. A person who was a participant in the Harris/LBP
Plan and who made mandatory participant contributions to the Harris/LBP Plan
before January 1, 1982.
(b) HARRIS/LBP PLAN. The Harris/Lanier Retirement Plan and Trust Agreement as
last amended and restated effective as of January 1, 1988.
1.3. 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 employee contributions as determined in
accordance with section 411(c) of the Code is $3,500 or less, such participant
shall receive a lump sum payment of his entire Accrued Benefit attributable to
such employee contributions.
(b) RIGHT OF IN SERVICE WITHDRAWAL. At any time prior to his termination of
employment, a Former LBP Participant may request a withdrawal of his employee
contributions which shall be paid in the normal annuity form described in Sec.
6.1 of the Plan. Notwithstanding the foregoing, a Former LBP Participant may
request (subject to the spousal consent rules of Sec. 6.2 of the Plan) to
receive a single sum distribution of his employee contributions. A Participant
who withdraws his contributions under this section at any time on or after
January 1, 1982 and who thereafter repays the amount refunded with interest as
provided in (d) below shall not be entitled to withdraw his employee
contributions again prior to his Annuity Starting Date.
(c) VOLUNTARY WITHDRAWAL ON TERMINATION. A Former LBP Participant who terminates
employment may request (subject to the spousal consent rules of Sec. 6.2 of the
Plan) 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 (d) below, then any benefit to which
such Participant (or his Spouse) may become entitled under the Plan shall be
recalculated
Pension Equity Plan
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to exclude an amount equal to his Accrued Benefit derived from employee
contributions as determined in accordance with section 411(c) of the Code.
(d) INTEREST. Interest referred to in this subsection (d) 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 section 1274 of the Code 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 subsection (d) shall
be adjusted from time to time in accordance with regulations under section
411(c) of the Code.
(e) REPAYMENT. Repayment described in this subsection (e) means repayment to the
Plan by the Former LBP Participant of the amount of the distribution together
with interest at the rates provided in subsection (d) above in the form of a
cash payment 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 5
consecutive Breaks in Service following the distribution and (ii) in the case of
any other withdrawal, 5 years after the date of the withdrawal.
1.4. SURVIVOR BENEFITS.
(a) SURVIVOR BENEFITS. In the event a Former LBP Participant made contributions
to the Plan and such Participant dies before his Vested Date and his Annuity
Starting Date, such Participant shall be treated as dying after his Vested Date
for purposes of Sec. 7.1 of the Plan and any survivor benefit payable under Sec.
7.1 of the Plan shall be based on his Accrued Benefit attributable to his
employee contributions then remaining in the Plan, with interest thereon
computed at the rate described in Sec. 1.3(d) above, 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 or other 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 Sec. 1.3(d), 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 Sec. 1.4, if any, shall be paid in a
single sum in cash.
Pension Equity Plan
2
<PAGE> 48
ARTICLE TWO
OPTIONAL FORMS OF BENEFITS
--------------------------
2.1. APPLICATION. The terms of this Article Two shall apply to those
Participants identified below.
2.2. DEFINITIONS. The terms in this Article Two shall have the meanings set
forth opposite such terms for purposes of this Article Two. Except as provided
in this Sec. 2.2, a capitalized term shall have the meaning set forth in the
Plan as in effect on June 30, 1997.
(a) FORMER LBP PARTICIPANT. A person who was a participant in the Harris/LBP
Plan before October 1, 1989.
(b) FORMER HARRIS/DPI PARTICIPANT. A person who was a participant in the
Harris/DPI Plan before October 1, 1989.
(c) FORMER 3M PARTICIPANT. A 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 joint venture agreement between Harris/DPI and 3M 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 joint venture 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.
(d) HARRIS/DPI. Harris/3M Document Products, Inc.
(e) HARRIS/DPI PLAN. The Harris/3M Document Products, Inc. Pension Plan as last
amended and restated effective as of July 1, 1987.
(f) HARRIS/LBP PLAN. The Harris/Lanier Retirement Plan and Trust Agreement as
last amended and restated effective as of January 1, 1988.
(g) 3M. Minnesota Mining and Manufacturing Company.
(h) 3M PLAN. The Employee Retirement Income Plan of Minnesota Mining and
Manufacturing Company as in effect immediately prior to June 30, 1986.
2.3. OPTIONAL FORMS OF BENEFIT - FORMER LBP PARTICIPANTS.
(a) GENERAL. Subject to Sec. 6.2 of the Plan, each Former LBP Participant may
elect to have the following optional payment forms at his Annuity Starting Date
after his Early Retirement Date or Normal Retirement Date in addition to the
optional payment forms described in Sec. 6.3 of the Plan.
Pension Equity Plan
3
<PAGE> 49
OPTION A:
---------
A single sum cash distribution of the portion of his benefit accrued
under the Harris/LBP Plan as of December 31, 1981, and a benefit
payable under any optional form described in Sec. 6.3 of the Plan for
that portion of his benefit accrued under the Plan after December 31,
1981.
OPTION B:
---------
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 to elect an immediate single sum payment or an immediate
annuity benefit in the form of his normal annuity payment form. 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 the Plan after September 30, 1989 and through
April 30, 1990. The remainder of his Accrued Benefit shall be paid in
accordance with the terms of Articles Five and Six of the Plan.
2.4. OPTIONAL FORMS OF BENEFIT - FORMER 3M PARTICIPANTS.
(a) GENERAL. Subject to Sec. 6.2 of the Plan and to the limitations in this Sec.
2.4, each Former 3M Participant who terminates employment on or after his Early
Retirement Date or his Normal Retirement Date may elect to have that portion of
his Accrued Benefit which equals the Actuarial Equivalent of such Participant's
accrued benefit under the 3M Plan as of the date his employment was transferred
to the Plan Sponsor ("3M Benefit") paid in the form of a 5 or 15 year annuity
which shall be payable monthly during the lifetime of the Participant and shall,
if the Participant dies within 5 or 15 years of his Annuity Stating Date
continue to be paid to his surviving designated Beneficiary for the balance of
such 5 or 15 year period.
ARTICLE THREE
EARLY RETIREMENT BENEFITS
-------------------------
3.1. APPLICATION. This Article Three shall apply only to Participants in the
Plan as of June 30, 1997, Former 3M Participants, Eligible McCarthy Employees
and Eligible Milner Employees as defined below.
3.2. DEFINITIONS. The terms in this Sec. 3.2 shall have the meanings set forth
opposite such terms for purposes of this Article Three. Except as provided in
this Sec. 3.2, a capitalized term shall have the meaning set forth in the Plan
as in effect on June 30, 1997.
Pension Equity Plan
4
<PAGE> 50
(a) ELIGIBLE MCCARTHY EMPLOYEE. Each Former 3M Participant who is a
McCarthy Employee, and whose projected EUR Date as determined as of
December 31, 1986 was on or before January 1, 2002.
(b) ELIGIBLE MILNER EMPLOYEE. Each Former 3M Participant who is a Milner
Employee, and whose projected EUR Date as determined as of April 26,
1987 was on or before May 1, 2002.
(c) 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 satisfies
(or would have satisfied if he had continued in employment as an
Employee) the age and service criteria set forth below:
<TABLE>
<CAPTION>
ATTAINED AGE AT COMPLETED YEARS OF
BENEFIT COMMENCEMENT DATE BENEFIT SERVICE
------------------------- ------------------
<S> <C> <C>
62 to 65 28
61 29
60 30
59 32
58 34
</TABLE>
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:
(i) The number of completed Years of Service for a Participant
whose Annuity Starting Date is between his 58th and 60th birth
dates shall be equal to (A) the completed Years of 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 Service for a
Participant whose Annuity Starting Date is between his 60th
and 62nd birth dates shall be equal to (A) the completed Years
of 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.
(d) FORMER HARRIS/DPI PARTICIPANT. A person who was a participant in the
Harris/DPI Plan before October 1, 1989.
(e) FORMER 3M PARTICIPANT. A 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 joint venture agreement between Harris/DPI
and 3M and each Former Harris/DPI Participant
Pension Equity Plan
5
<PAGE> 51
who transferred from 3M Puerto Rico, Inc. to Harris/DPI after January
31, 1987 but before August 1, 1987 in accordance with the joint venture
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.
(f) HARRIS/DPI. Harris/3M Document Products, Inc.
(g) HARRIS/DPI PLAN. The Harris/3M Document Products, Inc. Pension Plan as
last amended and restated effectives of July 1, 1987.
(h) MCCARTHY. McCarthy Enterprises, Inc.
(i) MCCARTHY EMPLOYEE. Each individual (1) who was an Eligible Employee (as
determined under the Plan in effect at that time) 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 became an employee of
McCarthy as a result of the sale of certain assets of the Plan Sponsor
to McCarthy on such date.
(j) MILNER. The Milner Company.
(k) MILNER EMPLOYEE. Each individual (1) who is an Eligible Employee) as
determined under the Plan in effect at that time) 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
became an employee of Milner as a result of the sale of certain assets
of the Plan Sponsor to Milner on such date.
(l) 3M. Minnesota Mining and Manufacturing Company.
(m) 3M PLAN. The Employee Retirement Income Plan of Minnesota Mining and
Manufacturing Company as in effect from time to time prior to June 30,
1986.
(n) SOCIAL SECURITY BENEFIT. The monthly primary insurance amount ("PIA")
which would be payable for each Former 3M Participant in accordance
with the following:
(1) PIA shall be determined:
(A) For a Former 3M Participant who on June 30, 1989 had not
reached age 62, assuming that
(i) he is age 62 on June 30, 1989,
Pension Equity Plan
6
<PAGE> 52
(ii) his post-termination wages from June 30, 1989
through his retirement age under the Social Security
Act were zero, and
(iii) his PIA would be payable at age 62.
(B) For a Former 3M Participant who on June 30, 1989 was at
least age 62, assuming that
(i) his post-termination wages from June 30, 1989
through his retirement age under the Social Security
Act were zero and
(ii) his PIA would be payable on June 30, 1989.
3.3. EARLY RETIREMENT BENEFITS -- PLAN PARTICIPANTS WITH ACCRUED BENEFITS AS OF
JUNE 30, 1997
(a) GENERAL. A Participant who terminates employment as an Employee on or after
his Early Retirement Date and before his Normal Retirement Date and who elects
to begin receipt of his benefits before his Normal Retirement Date shall be
entitled to receive a subsidy equal to the difference between his Accrued
Benefit determined as of June 30, 1997 without reference to the provisions of
Sec. 3.3(b) below and his Accrued Benefit determined as of June 30, 1997
determined in accordance with Sec. 3.3(b).
(b) EARLY COMMENCEMENT REDUCTION FACTOR. If the payment of a Participant's
benefit begins between his Early Retirement Date and his Normal Retirement Date,
then, subject to Sec. 3.4 below, the portion of his Accrued Benefit attributable
to his accrued benefit as of June 30, 1997 shall be determined as a percentage
of his accrued benefit as of June 30, 1997 which otherwise would be payable to
him at his Normal Retirement Date. The percentage shall be determined in
accordance with the following table:
<TABLE>
<CAPTION>
PARTICIPANTS ATTAINED AGE AT PERCENTAGE OF JUNE 30, 1997 ACCRUED BENEFIT
ANNUITY STARTING DATE PAYABLE AT NORMAL RETIREMENT DATE
--------------------- ---------------------------------
<S> <C>
65.........................................100%
64..........................................99%
63..........................................97%
62..........................................92%
61..........................................86%
60..........................................80%
</TABLE>
Pension Equity Plan
7
<PAGE> 53
<TABLE>
<S> <C>
59..........................................74%
58..........................................68%
57..........................................62%
56..........................................56%
55..........................................50%
</TABLE>
3.4. EARLY RETIREMENT BENEFITS -- FORMER 3M PARTICIPANTS.
(a) EARLY UNREDUCED RETIREMENT DATE PROVISIONS.
(1) UNREDUCED BENEFIT.
(i) GENERAL. A Former 3M Participant who terminates employment
on or after his EUR Date and who elects to begin receipt of
his benefits before his Normal Retirement Date shall be
entitled to receive a subsidy equal to his accrued benefit
determined as of June 30, 1997 without reference to the
subsection (ii) below, and his accrued benefit determined as
of June 30, 1997 determined in accordance with subsection (ii)
below.
(ii) 100% SUBSIDY. If the payment of a Former 3M Participant's
Accrued Benefit begins on or after his EUR Date and before his
Normal Retirement Date, then the portion of his accrued
benefit attributable to his Accrued Benefit as of June 30,
1997 shall equal 100% of his accrued benefit as of June 30,
1997 which otherwise would be payable to him at his Normal
Retirement Date.
(2) 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 Accrued Benefits shall be increased by providing
such Participant with an additional benefit, payable monthly, 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.
(3) MCCARTHY ENTERPRISES, INC. Solely for the purposes of determining
whether an Eligible McCarthy Employee is eligible for the early
unreduced retirement provisions of this section with respect to his
Accrued Benefit as determined as of December 31, 1986, his continuous
employment with McCarthy from December 31, 1986 until the date he
Pension Equity Plan
8
<PAGE> 54
first terminates employment with McCarthy shall be deemed to be
employment as an Employee under the 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 (3).
(4) THE MILNER COMPANY. Solely for purposes of determining whether an
Eligible Milner Employee is eligible for the early unreduced retirement
provisions of this section with respect to his Accrued Benefit as
determined as of April 26, 1987, his continuous employment with Milner
from April 26, 1987 until the date he first terminates employment with
Milner shall be deemed to be employment as an Employee under the Plan.
(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 in accordance with Article Six of the Plan.
(2) AMOUNT. If a Former 3M Participant terminates employment as an
Employee in accordance with Sec. 3.3(b)(1) above either (i) before his
EUR Date if he has an EUR Date or (ii) if he does not have an EUR Date,
then his benefit shall be the greater of (A) and (B) where
"(A)" equals the greater of (i) or (ii) where
(i) equals his Accrued Benefit as reduced in
accordance with Sec. 3.3 above 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 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 determined as of
June 30, 1986 (in accordance with the terms of the 3M
Plan as of June 30, 1986) 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
Pension Equity Plan
9
<PAGE> 55
Date, if any. If such Participant terminates
employment on or after his EUR Date, his benefit
shall be determined in accordance with Sec. 3.3(a)(1)
above.
(c) NORMAL BENEFIT FORM - FULLY SUBSIDIZED JOINT AND 50% SURVIVOR ANNUITY.
Notwithstanding Sec. 6.1(a)(2) of the Plan, 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 Sec. 4.3(a)(2) above) in the form of a fully
subsidized (as described in section 417 of the Code) joint and 50%
survivor annuity payable to the Participant if the Participant has a
Spouse on his Benefit Commencement Date. The monthly benefit payable to
such Former 3M Participant during his lifetime shall be equal to the
monthly benefit payable to him in the single life form of annuity
described in Sec. 6.3(a)(1) of the Plan and monthly benefit equal to
50% of the benefit payable to the Participant shall be payable to the
Participant's surviving Spouse for such Spouse's lifetime.
ARTICLE FOUR
SPECIAL VESTING PROVISIONS FOR CERTAIN PARTICIPANTS
---------------------------------------------------
4.1. APPLICATION. This Article Four shall apply only to Eligible McCarthy
Employees, Eligible Milner Employees, and Plaza Employees described below.
4.2. DEFINITIONS. The terms in this Article Four shall have the meanings set
forth opposite such terms for purposes of this Article Four. Except as provided
in this Sec. 4.2, a capitalized term shall have the meaning set forth in the
Plan as in effect on June 30, 1997.
(a) ELIGIBLE MCCARTHY EMPLOYEE. Each Former 3M Participant who is a
McCarthy Employee, and whose projected EUR Date as determined as of
December 31, 1986 was on or before January 1, 2002.
(b) ELIGIBLE MILNER EMPLOYEE. Each Former 3M Participant who is a Milner
Employee, and whose projected EUR Date (as defined in Sec. 4.3(a)(1))
as determined as of April 26, 1987 was on or before May 1, 2002.
(c) 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 satisfies
(or would have satisfied if he had continued in employment as an
Employee) the age and service criteria set forth below:
Pension Equity Plan
10
<PAGE> 56
<TABLE>
<CAPTION>
ATTAINED AGE AT COMPLETED YEARS OF
BENEFIT COMMENCEMENT DATE BENEFIT SERVICE
------------------------- ---------------
<S> <C>
62 to 65 28
61 29
60 30
59 32
58 34
</TABLE>
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:
(i) The number of completed Years of Service for a
Participant whose Annuity Starting Date is between
58th and 60th birth dates shall be equal to (A) the
completed Years of 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 Service for a
Participant whose Annuity Starting Date is between
his 60th and 62nd birth dates shall be equal to (A)
the completed Years of Servic e 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.
(d) FORMER LBP PARTICIPANT. A person who was a participant in the
Harris/LBP Plan before October 1, 1989.
(e) FORMER HARRIS/DPI PARTICIPANT. A person who was a participant in the
Harris/DPI Plan before October 1, 1989.
(e) FORMER 3M PARTICIPANT. A 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 joint venture agreement between Harris/DPI
and 3M 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 joint venture 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.
(g) HARRIS/DPI. Harris/3M Document Products, Inc.
Pension Equity Plan
11
<PAGE> 57
(h) HARRIS/DPI PLAN. The Harris/3M Document Products, Inc. Pension Plan as
last amended and restated effected as of July 1, 1987.
(i) HARRIS/LBP PLAN. The Harris/Lanier Retirement Plan and Trust Agreement
as last amended and restated effective as of January 1, 1988.
(j) MCCARTHY. McCarthy Enterprises, Inc.
(k) MCCARTHY EMPLOYEE. Each individual (1) who was an Eligible Employee (as
determined under the Plan in effect at that time) 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 became an employee of
McCarthy as a result of the sale of certain assets of the Plan Sponsor
to McCarthy on such date.
(l) MILNER. The Milner Company.
(m) MILNER EMPLOYEE. Each individual (1) who is an Eligible Employee (as
determined under the Plan in effect at that time) 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
became an employee of Milner as a result of the sale of certain assets
of the Plan Sponsor to Milner on such date.
(n) PLAZA EMPLOYEE. Each individual who was an Eligible Employee performing
services at 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.
(o) 3M. Minnesota Mining and Manufacturing Company.
4.3 SPECIAL VESTING PROVISIONS.
(a) MCCARTHY EMPLOYEES. The nonforfeitable 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 Service and his Vested Date 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
the Plan.
(2) No benefit shall be payable under the Plan to any McCarthy
Employee who terminates employment with McCarthy before he
completes 10 Years of
Pension Equity Plan
12
<PAGE> 58
Service or, if he is an employee of McCarthy on July 1, 1989,
5 Years of 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.
(3) If a McCarthy Employee is reemployed as an Eligible
Employee after December 31, 1986, his nonforfeitable interest
in that portion of his Accrued Benefit, if any, accrued after
such date shall be determined solely with respect to his Years
of Service under the Plan without regard to the special rules
of this section and no such individual shall receive service
credit (for vesting or benefit purposes) for employment with
McCarthy with respect to any benefits accrued under the Plan
after December 31, 1986.
(b) MILNER EMPLOYEES. 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 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 the 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 Service (as determined in
accordance with subsection (3) below) and any survivor benefit
under Article Seven attributable to such Accrued Benefit shall
be payable to his Spouse, provided, that any Milner Employee
who is also a Former LBP Participant may receive his Accrued
Benefit at any time after his terminates employment with
Milner.
(3) No benefit shall be payable under the Plan to any Milner
Employee who terminates employment with Milner before he
completes 10 Years of Service, or, if he is an Employee of
Milner on July 1, 1989, 5 Years of Service 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 Service under the Plan without regard to the special rules
of this section and no such individual shall receive service
credit (for vesting or benefit purposes) for
Pension Equity Plan
13
<PAGE> 59
employment with Milner with respect to any benefits accrued
under the Plan after April 26, 1987.
(c) PLAZA EMPLOYEES. Solely for purposes of determining a Plaza
Employee's nonforfeitable interest in his Accrued Benefit as of January
1, 1991, his Years of 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 the Plan
as long as such Plaza Employee is treated as a "leased employee" of an
Affiliate under section 414 of the Code. His Accrued Benefit shall be
payable to him in accordance with Article Six of the Plan; 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
the Plan or such earlier time as distribution is permissible under the
Code and consistent with the timing rules of Article Six of the Plan.
ARTICLE FIVE
ACCRUED BENEFIT AS OF JUNE 30, 1997
5.1 GENERAL. Notwithstanding anything in the Plan or this Exhibit A to the
contrary, the Accrued Benefit of a participant shall not be less than the
participant's Accrued Benefit under the Plan as of June 30, 1997 (as determined
under the terms of the Plan in effect as of such date), or in the case of a
participant employed by Lanier Puerto Rico, Inc. as of July 15, 1997 (as
determined under the terms of the Plan in effect as of June 30, 1997).
Pension Equity Plan
14
<PAGE> 60
AMENDMENT NUMBER ONE
TO THE
LANIER WORLDWIDE, INC. PENSION EQUITY PLAN
WHEREAS, Lanier Worldwide, Inc. (the "Corporation") maintains for the
benefit of certain employees the Lanier Worldwide, Inc. Pension Equity Plan (as
amended and restated as of July 1, 1997) (the "Plan");
WHEREAS, the Corporation has the authority to amend the Plan pursuant
to Section 11.5 of the Plan; and
WHEREAS, the Corporation desires to amend the Plan in certain respects
effective July 1, 1997.
NOW, THEREFORE, BE IT RESOLVED, that pursuant to the authority granted
in Section 11.5 of the Plan, Section 3.32 of the Plan is hereby amended as
follows:
3.32 PRIOR PLAN ACCRUED BENEFIT. For each Participant employed by
Lanier Puerto Rico, Inc. in the Plan on July 15, 1997, and for each
other Participant in the Plan on June 30, 1997, his Accrued Benefit
determined in accordance with the terms of the Plan in effect as of
June 30, 1997.
FURTHER RESOLVED, the first sentence of Section 5.2(b) is hereby
amended as follows:
Except as provided in Sec. 5.2(c), (d), (e) and (f), a Participant's
Accrued Benefit Percentage shall be equal to the sum of the following
applicable percentages:
FURTHER RESOLVED, the first sentence of Section 5.2(c) is hereby
amended as follows:
Except as provided in Sec. 5.2(e) and (f) for Participants employed by
Lanier Puerto Rico, Inc., the Accrued Benefit Percentage of a
Participant with an Accrued Benefit on June 30, 1997 shall be equal to
the greater of the following:
FURTHER RESOLVED, Section 5.2(d) is hereby amended as follows:
(d) ALTERNATIVE BENEFIT DETERMINATION FOR CERTAIN PLAN PARTICIPANTS
WITH A PRIOR PLAN ACCRUED BENEFIT. If a Participant satisfies the
requirements of (i) or (ii) below, then such Participant's benefit
payable under the Plan shall be the greater of (a) his Accrued Benefit
determined as of his Employment Termination Date and (b) his Prior Plan
Accrued Benefit. In the case of a Participant who satisfies the
requirements of clause (i) below, the Average Compensation and Years of
Service used in determining his Prior Plan Accrued Benefit shall be
determined as of his Employment Termination Date. In the
<PAGE> 61
case of a participant who satisfies the requirements of clause (ii)
below, the Years of Service used in determining his Prior Plan Accrued
Benefit shall be determined as of his Employment Termination Date and
the Average Compensation used in determining his Prior Plan Accrued
Benefit shall be determined as of December 31, 1997.
(i) The Participant had attained his Early Retirement Date or
his Normal Retirement Age as of July 1, 1997, or in the case
of a Participant employed by Lanier Puerto Rico, Inc., as of
July 15, 1997; or
(ii) The Participant's Early Retirement Date was within five
years of July 1, 1997 (or in the case of a Participant
employed by Lanier Puerto Rico, Inc., as of July 15, 1997)
provided the Participant remained employed by an Employer
during that period, or the Participant is a Former 3M
Participant (as defined in Exhibit A) who is eligible for an
early unreduced retirement benefit in accordance with Sec. 3.4
of Exhibit A.
For purposes of this Sec. 5.2(d), the Prior Plan Accrued Benefit will be
expressed in the form of a lump sum payment (a lump sum Actuarial Equivalent)
and will be reduced by 1.5% of the Participant's Average Compensation
(determined as of the Participant's Employment Termination Date or December 31,
1997 as provided above) multiplied by the Participant's Years of Service for
purposes of benefit accrual since July 1, 1997.
FURTHER RESOLVED, Section 5.2(e) is hereby amended as follows:
ACCRUED BENEFIT PERCENTAGES OF EMPLOYEES OF LANIER PUERTO RICO, INC. Except as
provided in Sec. 5.2(f), the Accrued Benefit Percentage of a Participant who is
an employee of Lanier Puerto Rico, Inc. shall be equal to the sum (1) plus (2)
where:
"(1)" is the sum of the following applicable percentages based
on the Participant's age:
(i) 1.5% for each Year of Service before the
Participant attains age 35;
(ii) 4% for the Year of Service in which the
Participant attains age 35, as provided in clauses
(vii), and for each Year of Service thereafter before
the Participant attains age 40;
(iii) 6% for each Year of Service in which the
Participant attains age 40, as provided in clause
(vii), and for each Year of Service thereafter before
the Participant attains age 50;
2
<PAGE> 62
(iv) 10% for each Year of Service in which the
Participant attains age 50, as provided in clause
(vii), and for each Year of Service thereafter before
the Participant attains age 55;
(v) 12% for each year of Service in which the
Participant attains age 55, as provided in clause
(vii), and for each Year of Service thereafter before
the Participant attains age 60;
(vi) 13% for each Year of Service in which the
Participant attains age 60, as provided in clause
(vii), and for each Year of Service thereafter.
(vii) for each Year of Service in which the
Participant attains age 35, 40, 50, 55, or 60, the
relevant applicable percentage shall be the sum of
pro rata portions of each of the percentages
applicable before and after the Participant attains
the relevant age. Such pro rata portions shall be
determined as follows:
(1) THE PRE-ATTAINED AGE PORTION. The
product of 1.5%, 4%, 6%, 10%, or 12%, as
applicable, multiplied by a fraction, the
numerator of which shall be the number of
full months during such year up to, but not
including, the month in which the
Participant attained the relevant age and
the denominator of which shall be 12.
(2) THE POST-ATTAINED AGE PORTION. The
product of 4%, 6%, 10%, 12%, or 13%, as
applicable, multiplied by a fraction, the
numerator of which shall be the number of
full months during such year beginning with
the month in which the Participant attained
the relevant age and the denominator of
which shall be 12.
(viii) For the year in which a Participant terminates
employment, the relevant percentage shall be
determined by multiplying the applicable percentage
by a fraction, the numerator of which is the number
of full months during which the Participant is
employed by an Employer and the denominator of which
is 12.
"(2)" is the sum of the following applicable percentages based
on the Participant's Years of Service:
(i) 1% for each Year of Service up to and including
the Participant's 20th Year of Service;
3
<PAGE> 63
(ii) 2% for each Year of Service commencing with the
Participant's 21st Year of Service and up to and
including the Participant's 25th Year of Service;
(iii) 3% for each year of Service commencing with the
Participant's 26th Year of Service.
Notwithstanding anything in the Plan to the contrary, the benefits of a
Participant who is an employee of Lanier Puerto Rico, Inc. and who terminates
employment with Lanier Puerto Rico, Inc. prior to July 15, 1997 shall be
determined in accordance with the terms of the Plan in effect on June 30, 1997.
FURTHER RESOLVED, the Plan is amended to include the following Section 5.2(f):
(f) ACCRUED BENEFIT PERCENTAGES OF PARTICIPANTS EMPLOYED BY LANIER PUERTO RICO,
INC. ON JULY 15, 1997. The Accrued Benefit Percentage of a Participant employed
by Lanier Puerto Rico, Inc. with an Accrued Benefit on July 15, 1997 shall be
equal to the greater of the following:
(1) the Participant's Accrued Benefit Percentage under Sec. 5.2(e),
except that if the Participant had attained age 40 and had at least
five years of Service on July 15, 1997, the Participant's Accrued
Benefit Percentage shall be increased by 1% for each year of the
Participant's full Years of Service prior to such date; and
(2) the sum of (A) and (B) where:
"(A)" is the Participant's Accrued Benefit Percentage under
Sec. 5.2(e) for Years of Service after July 15, 1997;
"(B)" is the percentage which is equal to (I) divided by (II),
where:
"(I)" is the lump sum Actuarial Equivalent of the
Participant's Prior Plan Accrued Benefit on July 15,
1997 determined in accordance with Sec. 3.3(a),
provided that for this purpose only the interest rate
shall be the rate in effect one month prior to the
month identified in Sec. 3.3(a); and
"(II)" is 150% of the Participant's Average
Compensation as of July 15, 1997 (determined in
accordance with the terms of the Plan in effect on
June 30, 1997), minus the lesser of (I) 50% of his
Average Compensation as of July 15, 1997 (determined
in accordance with the terms of the Plan in effect on
June 30, 1997) and (II) 50% of his Covered
Compensation as of July 15, 1997 (determined in
accordance with the terms of the Plan in effect on
June 30, 1997).
4
<PAGE> 64
FURTHER RESOLVED, Section 5.1 of Exhibit A is hereby amended as follows:
GENERAL. Notwithstanding anything in the Plan or this Exhibit A to the contrary,
the Accrued Benefit of a Participant shall not be less than the Participant's
Accrued Benefit under the Plan as of June 30, 1997 (as determined under the
terms of the Plan in effect as of such date), or in the case of a Participant
employed by Lanier Puerto Rico, Inc. as of July 15, 1997 (as determined under
the terms of the Plan in effect as of June 30, 1997).
5
<PAGE> 65
JULY 25, 1997
MINUTES OF THE PENSION/COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS OF
LANIER WORLDWIDE, INC.
The committee discussed and approved an amendment to the Pension Equity Plan.
(attached). Approval was given for FY `98 salary actions affecting selected
members of the Lanier Executive Team (attached). Final authorization for Long
Term Incentive Plan (LTIP) assessments and payouts as well as pay actions for
the Executive Vice Presidents, General Managers and Lanier President will occur
at the August Board of Director meeting of Harris Corporation.
6
<PAGE> 66
AMENDMENT NUMBER TWO
TO THE
LANIER WORLDWIDE, INC.
PENSION EQUITY PLAN
WHEREAS, Lanier Worldwide, Inc. a Delaware corporation (the
"CORPORATION"), heretofore has adopted and maintains the Lanier Worldwide, Inc.
Pension Equity Plan (as amended and restated as of July 1, 1997) (the "PLAN");
and
WHEREAS, the Plan was amended and restated effected July 1,
1997 to, among other things, modify the definition of "Compensation" to exclude
therefrom payments made to a Participant under long-term incentive plans,
including the Harris Corporation Stock Incentive Plan; and
WHEREAS, notwithstanding the amendment referred to above, the
Corporation now desires to include amounts received under the Harris Corporation
Stock Incentive Plan in respect of the exercise of options on or prior to
December 31, 1997 (which date corresponds to amounts reported on a Participant's
W-2 for calendar 1997) in the definition of Compensation and to make certain
clarifying amendments to the Plan.
NOW, THEREFORE, pursuant to the power of amendment contained
in Section 11.5 of the Plan, the Plan is hereby amended as follows:
1. Effective as of the date hereof, Section 3.13 is amended in
its entirety to read as follows:
3.13 COMPENSATION - For each Participant, the term
"Compensation: includes remuneration described in paragraphs (a) and
(b) below, except for the remuneration described in paragraph (c)
below, which is excluded.
(a) The Participant's base salary and wages paid by the
Participant's Employer, and certain other amounts paid by the Employer
that are includible in the Participant's gross income, including income
attributable to the grant, vesting or exercise of an option or
performance share award under the Harris Corporation Stock Incentive
Plan, overtime payments, commission payments, annual bonuses, regional
and shift differentials, vacation pay, compensation received while on
an Authorized Leave of Absence, and short-term disability payments.
(b) Elective deferrals made by an Employer on behalf of the
Participant that are not includible in the Participant's gross income
for federal income tax purposes for such period because such deferrals
either (i) are contributed to a cash or deferred arrangement described
in Section 401(k) of the Code or (ii) are excluded under Section 125 of
the Code.
<PAGE> 67
(c) Any payments made under a severance pay plan or program,
any payment made in consideration of the Participant's release
of claims in favor of an Employer or an Affiliate, any foreign
or domestic assignment allowance, any contest payments, any
expense related reimbursements (including reimbursements
commonly referred to as "runzheimer" payments), any signing
bonuses, any payment made under any long-term incentive plan
(including, but not limited to, income attributable to the
grant, vesting or exercise of an option or performance share
award under the Harris Corporation Stock Incentive Plan, other
than income attributable to the exercise of options under the
Harris Corporation Stock Incentive Plan on or prior to
December 31, 1997), the value of life insurance includible in
the Participant's gross income, and any non-cash perquisites.
2. Section 5.2(d) is amended by substituting the words "under
the terms of this Plan in effect on his Employment Termination Date" for the
words "as of his Employment Termination Date" (i) appearing in the second and
third sentences thereof and (ii) appearing in the parenthetical in the last
sentence thereof.
3. Section 11.1 is amended by inserting the words "or the
Committee" immediately after the words "the Board" appearing in the first
sentence thereof.
4. Section 11.3 is amended by inserting the words "or the
Committee" immediately after the term "Plan Sponsor" wherever such term appears
in such Section.
5. Section 11.5 is amended by inserting the words "or the
Committee" immediately after the words "the Board."
IN WITNESS WHEREOF, Lanier Worldwide, Inc. has caused this
instrument to be executed on its behalf by its duly authorized officer on this
26th day of June, 1998.
LANIER WORLDWIDE, INC.
By:
--------------------------
Name:
Title:
2
<PAGE> 68
AMENDMENT NUMBER THREE
TO THE
LANIER WORLDWIDE, INC. PENSION EQUITY PLAN
WHEREAS, Lanier Worldwide, Inc., a Delaware corporation (the
"Corporation"), heretofore has adopted and maintains the Lanier Worldwide, Inc.
Pension Equity Plan (as amended and restated as of July 1, 1997) (the "Plan");
WHEREAS, the Corporation has the authority to amend the Plan pursuant
to Section 11.5 of the Plan; and
WHEREAS, the Corporation desires to amend the Plan effective July 1,
1997 (except where otherwise noted), to clarify certain administrative details
of Plan operation; and
WHEREAS, the Corporation intends that no accrued benefit as of the date
this amendment is adopted shall be reduced by the following clarifications.
NOW, THEREFORE, pursuant to the power of amendment contained in Section
11.5 of the Plan, the Plan is hereby amended as follows effective as of July 1,
1997 (except where otherwise provided):
1. The last sentence of the first paragraph of Section 3.39(b)(1) of
the Plan is replaced in its entirety by:
An Eligible Employee will be deemed to be a Participant for a
full calendar month at the beginning of a period of employment
if he is both a Participant and an Eligible Employee
continuously from the 15th through the end of the month, and
an Eligible Employee will be deemed to be a Participant for a
full calendar month at the end of a period of employment if he
is both a Participant and an Eligible Employee continuously
from the 1st through the 16th of the month.
2. Section 5.2(c)(2)(B) of the Plan is amended in its entirety to read
as follows:
(B) is the percentage which is equal to (I) divided by (II),
where:
"(I)" is the lump sum Actuarial Equivalent of the
Participant's Prior Plan Accrued Benefit on June 30,
1997, determined in accordance with ss.3.3(a),
provided that for this purpose only: (i) the interest
rate shall be the rate in effect one month prior to
the month identified in ss.3.3(a); (ii) Covered
Compensation used to determine the Participant's
Prior Plan Accrued Benefit shall be Covered
Compensation for Plan Year 1997 as of July 1, 1997;
(iii) the Actuarial Equivalent rates contained in
ss.3.3(a)(2) shall be used if and only if the
Participant's Early Retirement Date coincides with
<PAGE> 69
or precedes July 1, 2002; and, (iv) in the case of
(iii) above, the rates contained in ss.3.3(a)(2)
shall be applied as if the Participant terminated or
retired July 1, 1997; and
"(II)" is 150% of the Participant's Average
Compensation as of June 30, 1997 (determined in
accordance with the terms of the Plan in effect on
such date), minus the lesser of: (i) 50% of the
Participant's Average Compensation as of June 30,
1997 (determined in accordance with the terms of the
Plan in effect on such date), and (ii) 50% of the
Participant's Covered Compensation as of July 1,
1997.
3. Section 5.2(e)(I) of the Plan is amended in its entirety to read as
follows:
"(I)" is the sum of the following applicable percentages based
on the Participant's age:
(i) 2.5% for each Year of Service before the
Participant attains age 35;
(ii) 5% for the Year of Service in which the
Participant attains age 35, as provided in clause
(vii), and for each Year of Service thereafter before
the Participant attains age 40;
(iii)7% for each Year of Service in which the
Participant attains age 40, as provided in clause
(vii), and for each Year of Service thereafter before
the Participant attains age 50;
(iv) 11% for each Year of Service in which the
Participant attains age 50, as provided in clause
(vii), and for each Year of Service thereafter before
the Participant attains age 55;
(v) 13% for each Year of Service in which the
Participant attains age 55, as provided in clause
(vii), and for each Year of Service thereafter before
the Participant attains age 60;
(vi) 14% for each Year of Service in which the
Participant attains age 60, as provided in clause
(vii), and for each Year of Service thereafter.
(vii) for each Year of Service in which the
Participant attains age 35, 40, 50, 55 or 60, the
relevant applicable percentage shall be the sum of
pro rata portions of each of the percentages
applicable before and after the Participant attains
the relevant age. Such pro rata portions shall be
determined as follows:
2
<PAGE> 70
(1) THE PRE-ATTAINED AGE PORTION. The product of
2.5%, 5%, 7%, 11%, or 13%, as applicable,
multiplied by a fraction, the numerator of which
shall be the number of full months during such
year up to, but not including, the month in
which the Participant attained the relevant age
and the denominator of which shall be 12.
(2) THE POST-ATTAINED AGE PORTION. The product
of 5%, 7%, 11%, 13%, or 14%, as applicable,
multiplied by a fraction, the numerator of which
shall be the number of full months during such
year beginning with the month in which the
Participant attained the relevant age and the
denominator of which shall be 12.
(viii) For the year in which a Participant terminates
employment, the relevant percentage shall be determined by
multiplying the applicable percentage by a fraction, the
numerator of which is the number of full months during which
the Participant is employed by an Employer and the denominator
of which is 12.
4. Section 5.2(f)(2)(B) of the Plan is amended in its entirety to read
as follows:
"(B)" is the percentage which is equal to (I) divided by (II),
where:
"(I)" is the lump sum Actuarial Equivalent of the
Participant's Prior Plan Accrued Benefit on July 15,
1997, determined in accordance with ss.3.3(a),
provided that for this purpose only: (i) the interest
rate shall be the rate in effect one month prior to
the month identified in ss.3.3(a); (ii) Covered
Compensation used to determine the Participant's
Prior Plan Accrued Benefit shall be Covered
Compensation for Plan Year 1997 as of July 15, 1997;
(iii) the Actuarial Equivalent rates contained in
ss.3.3(a)(2) shall be used if and only if the
Participant's Early Retirement Date coincides with or
precedes July 1, 2002; and, (iv) in the case of (iii)
above, the rates contained in ss.3.3(a)(2) shall be
applied as if the Participant terminated or retired
July 15, 1997; and
"(II)" is 150% of the Participant's Average
Compensation as of July 15, 1997, minus the lesser
of: (i) 50% of the Participant's Average Compensation
as of July 15, 1997 and (ii) 50% of the Participant's
Covered Compensation as of July 15, 1997.
5. Effective July 1, 1998, Sections 6.1 and 7.1 of the Plan and Section
1.3(a) of EXHIBIT A of the Plan are hereby amended to replace "$3,500" with
"$5,000 (or such other amount permitted under applicable law)".
6. Sections 3.3(a) and (b) of EXHIBIT A of the Plan are amended in
their entirety to read as follows:
3
<PAGE> 71
(a) SUBSIDIZED EARLY RETIREMENT BENEFITS. In the calculation of a Prior
Plan Accrued Benefit prior to Normal Retirement Date with respect to a
Participant who terminates employment as an Employee on or after his
Early Retirement Date and before his Normal Retirement Date, such
benefit shall be reduced for early commencement in accordance with the
table below:
<TABLE>
<CAPTION>
Participant's Age Percentage of Benefit
----------------- ---------------------
<S> <C>
65 100%
64 99
63 97
62 92
61 86
60 80
59 74
58 68
57 62
56 56
55 50
</TABLE>
7. that Section 3.4(a)(1) of EXHIBIT A of the Plan is amended in its
entirety to read as follows:
(1) UNREDUCED BENEFIT. In the calculation of a Prior Plan Accrued
Benefit for a Former 3M Participant who terminates employment
as an Employee on or after his EUR Date, such benefit shall be
his Prior Plan Accrued Benefit without reduction for early
commencement.
8. Section 3.4(b)(2) of EXHIBIT A of the Plan is amended in its
entirety to read as follows:
(2) AMOUNT. In the calculation of a Prior Plan Accrued Benefit for
a Former 3M Participant who terminates employment as an
Employee on or after his Early Retirement Date and prior to
his EUR Date, or prior to his Normal Retirement Date if he
does not have an EUR Date, such benefit shall be reduced for
early commencement by 5/12% for each month prior to the
earlier of his Normal Retirement Date or his EUR Date, or
reduced by the factors contained in Section 3.3(a) of Exhibit
A if more favorable.
4
<PAGE> 72
9. Section 3.4(d) is added at the end of EXHIBIT A of the Plan:
(d) SPECIAL EARLY RETIREMENT BENEFIT. A Former 3M
Participant (i) whose Early Retirement Date does not
occur by July 1, 2002 and (ii) who retires on or
after his Early Retirement Date and prior to his
Normal Retirement Date, shall be entitled to a
special early retirement minimum benefit determined
as follows:
(1) The Participant's Lump Sum Benefit under Section
5.2(c) shall be recalculated using his Average
Compensation as of December 31, 1997 and his Accrued
Benefit Percentage as of his Employment Termination
Date.
(2) Such Lump Sum Benefit shall be converted to a
Single Life Annuity at Normal Retirement Date using
the Actuarial Equivalent interest and mortality rates
applicable to Lump Sum Benefits.
(3) Such Single Life Annuity shall be reduced for
early commencement by 5/12% for each month prior to
the earlier of his Normal Retirement Date or his EUR
Date, or reduced by the factors contained in Section
3.3(a) of Exhibit A if more favorable.
(4) The resulting early retirement annuity shall be
converted to a Lump Sum Benefit using the Actuarial
Equivalent interest and mortality rates applicable to
Lump Sum Benefits.
5
<PAGE> 73
AMENDMENT NUMBER FOUR
TO THE
LANIER WORLDWIDE, INC. PENSION EQUITY PLAN
WHEREAS, Lanier Worldwide, Inc., a Delaware corporation (the
"Corporation"), heretofore has adopted and maintains the Lanier Worldwide, Inc.
Pension Equity Plan (as amended and restated as of July 1, 1997) (the "Plan");
WHEREAS, the Corporation has the authority to amend the Plan pursuant
to Section 11.5 of the Plan; and
WHEREAS, the Corporation desires to amend the Plan effective July 1,
1997 in certain respects.
NOW, THEREFORE, pursuant to the power of amendment contained in Section
11.5 of the Plan, the Plan is hereby amended as follows effective as of July 1,
1997:
1. Section 3.3(a)(1) is hereby amended to add the following at the end
thereof:
For purposes of section 417 of the Code, the "stability period" shall
be the Plan Year and the "lookback month" shall be the May prior to
applicable Plan Year.
2. Section 3.13 of the Plan is hereby amended to add the following
sentence at the end thereof:
Notwithstanding any provision in the Plan to the contrary, the Accrued
Benefit of a Participant who is "section 401(a)(17) employee" (as such
term is defined in Treasury Regulation Sec. 1.401(a)(17)-1(e)(2)(i))
shall be determined in accordance with Treasury Regulation Sec.
1.401(a)(17)-l(e).
3. Section 6.2(c) of the Plan is hereby amended to delete therefrom the
final sentence.
4. Section 6.2(d) of the Plan is hereby amended to read as follows:
(d) REQUIRED BEGINNING DATE. Notwithstanding any provision in the Plan
to the contrary, if a Participant who is a "five percent owner" (as
defined in section 416(i) of the Code) does not retire or otherwise
terminate employment with his Employer on or before April I of the year
following the year in which the Participant attains age 70 1/2 (his
"required beginning date"), distribution of his Accrued Benefit shall
commence as of such April I (or such later date as may be permitted by
the Code or applicable regulations).
<PAGE> 74
Any other Participant who does not retire or terminate employment with
his Employer on or before his required beginning date shall be
permitted to elect to receive his Accrued Benefit as of his required
beginning date. The Accrued Benefit of a Participant who is not a five
percent owner and who does not elect receive his Accrued Benefit as of
his required beginning date shall be actuarially increased for the
period commencing on his required beginning date and ending on the date
distribution of his Accrued Benefit commences (including any
suspendible service under section 203(a) of ERISA), using the mortality
table described in ss.-3.3(b)(1) and interest rate described in
ss.3.3(b)(2). If a Participant who attained age 70 1/2 before January
1, 1997 and has not retired or terminated employment with his Employer
elects to stop receiving distributions of his Accrued Benefit, there
shall be no new Annuity Starting Date upon recommencement of
distribution of his Accrued Benefit.
5. Section 12.1 is hereby amended to add the following after the third
paragraph thereof:
If a Participant's Accrued Benefit is paid in a form other than a
straight life annuity, the Accrued Benefit must be actuarially adjusted
as provided in this paragraph to a straight life annuity before
applying the limitations of this Section. For limitation years
beginning prior to January 1, 1995, such actuarially equivalent
straight life annuity shall be determining using the greater of (i)
using the interest rate specified Section 3.3 for determining actuarial
equivalence for the same benefit form or (ii) an interest rate of five
percent. For limitation years beginning after December 31, 1994, the
actuarially equivalent straight life annuity shall equal the greater of
(i) the annuity benefit computed using the interest rate and mortality
table specified in Section 3.3 for determining actuarial equivalence
for the same benefit form and (ii) the annuity benefit computed using
an interest rate of five percent and the applicable mortality table
defined under Section 3.3. Increases in frozen accrued benefits shall
not be permitted except to the extent permitted by the Code or
applicable regulations.
In the event that benefits commence under the Plan at or after age 62
but prior to the Participant's "Social Security Retirement Age" (as
defined in section 415(b)(8) of the Code), the Participant's Accrued
Benefit may not exceed an annual benefit of $90,000, reduced by: (i) in
the case of a Participant whose Social Security Retirement Age is 65,
5/9 of one percent for each month by which benefits commence prior to
the month the Participant attains age 65 or (ii) in the case of a
Participant whose Social Security Retirement Age is greater than 65,
5/9 of one percent for each of the first 36 months after age 62 and
5/12 of one percent for each additional month (up to 24 months) by
which benefits commence prior to the month in which the Participant
attains his Social Security Retirement Age. If a Participant receives
his Accrued Benefit prior to attaining age 62, such Participant's
Accrued Benefit shall be limited to the actuarial equivalent of the
Participant's limitation for benefits commencing at age 62, with the
reduced dollar limitation for such benefits further reduced for each
month by which benefits commence
2
<PAGE> 75
prior to the month the Participant attains age 62. The annual benefit
beginning prior to age 62 shall be determined as the lesser of (i) the
equivalent annual benefit computed using the interest rate and
mortality table equivalence used under the Plan to compute early
retirement benefits and (ii) the equivalent annual benefit computed
using a five percent interest rate and the applicable mortality table
under Section 3.3.
A Participant's "old-law benefits" (as defined in Revenue Ruling 98-1)
to which section 415(b)(2)(E) of the Code is not applicable include
each possible annuity starting date and optional form of benefit based
on the Participant's Accrued Benefit as of July 1, 1997, and Method
Three described in Q&A-14 of Revenue Ruling 98-1 shall be used to apply
the limitations of section 415(b) of the Code to such benefits.
3
<PAGE> 76
AMENDMENT NUMBER FIVE
TO THE
LANIER WORLDWIDE, INC. PENSION EQUITY PLAN
WHEREAS, Lanier Worldwide, Inc., a Delaware corporation (the
"Corporation") heretofore has adopted and maintains the Lanier Worldwide, Inc.
Pension Equity Plan (the "Plan"); and
WHEREAS, the Corporation has the authority to amend the Plan pursuant
to Section 11.5 of the Plan; and
WHEREAS, the Corporation desires to amend the Plan in certain respects.
NOW THEREFORE, pursuant to the power of amendment contained in Section
11.5 of the Plan, the Plan is hereby amended as follows:
1. Section 3.7 of the Plan is hereby amended effective retroactively to
July 1, 1997 to read as follows to clarify that average compensation is based on
a Participant's final ten calendar years as an employee:
3.7 AVERAGE COMPENSATION. As of any Determination Date, the average of
a Participant's Compensation during the five consecutive complete
calendar years during which the Participant was an Employee (or actual
number of consecutive complete calendar years the Employee was an
Employee if less than five) in which such average is highest out of the
ten consecutive calendar year period during which the Participant was
an Employee (or the actual number of consecutive calendar years the
Employee was an Employee if less than ten) ending immediately prior to
the calendar year that includes the Participant's Employment
Termination Date. Notwithstanding the foregoing, (a) the ten calendar
year period shall include the year that includes the Participant's
Employment Termination Date if the inclusion of such year would
increase the Participant's Average Compensation and (b) 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.
2. The last sentence of Section 3.39(a)(3) of the Plan is hereby
amended effective retroactively to July 1, 1997 to read as follows to clarify
the rules for service with an Affiliate:
Employment by an Affiliate which is not an Employer shall be taken into
account solely for purposes of (i) determining such Employee's Years of
Service and eligibility to participate in the Plan, (ii) determining
when such person has retired or otherwise terminated his employment and
(iii) determining when such person has been reemployed or continues in
employment to the same extent it would have had such service been as an
Employee of an Employer.
<PAGE> 77
3. The last sentence of Section 4.1 of the Plan is hereby amended
effective retroactively to July 1, 1997 to read as follows to clarify the
participation requirements:
An Eligible Employee who is classified as a temporary, summer or casual
part-time employee shall become a Participant the first day of the
month immediately following or coincident with the later of (i) the
last day of the 12-month period beginning on such Eligible Employee's
Employment Commencement Date (or any subsequent 12-month period
beginning on any anniversary of such Employment Commencement Date)
during which such Eligible Employee completes at least 1,000 Hours of
Service or (ii) the date on which such Eligible Employee attains age
21.
4. Section 5.3 of the Plan is hereby amended effective retroactively to
July 1, 1997 to add the following two sentences at the end thereof to clarify
the rules for service with an Affiliate:
If an Affiliate ceases to be an Affiliate, any Participant employed by
the Affiliate shall be deemed to have terminated employment as an
Employee and as an employee of any Affiliate for purposes of the Plan.
In no event will a Participant be treated as if he or she had
terminated employment with an Employer if he or she is employed by an
Affiliate.
5. Section 11.5 of the Plan is hereby amended effective as soon as this
Amendment Number Five is adopted by the board of directors of the Corporation to
read as follows:
11.5. AMENDMENT. The Plan Sponsor shall have the right at any time and
from time to time to amend the Plan in any respect by action of the
Chief Executive Officer and the Chief Operating Officer of the Plan
Sponsor, provided that, except as specified in ss. 11.3, no amendment
shall operate either directly or indirectly to give any Employer any
interest in the Trust Fund or to permit the corpus or the income of the
Trust Fund to be used or diverted for purposes other than for the
exclusive benefit of Participants and Beneficiaries. No amendment shall
eliminate or reduce an early retirement subsidy or eliminate an
optional form of benefit except to the extent permissible under Section
411(d)(6) of the Code.
<PAGE> 1
Exhibit 10.16
LANIER WORLDWIDE, INC.
SAVINGS INCENTIVE PLAN
(as amended and restated as of July 1,1997)
<PAGE> 2
TABLE OF CONTENTS
PAGE
ARTICLE I HISTORY AND EFFECTIVE DATE.........................................1
ARTICLE II CONSTRUCTION......................................................1
2.1 Controlling Laws............................................1
2.2 Construction................................................2
ARTICLE III DEFINITIONS......................................................2
3.1 Account.....................................................2
3.2 Affiliate...................................................2
3.3 Average Contribution Percentage.............................2
3.4 Average Deferral Percentage.................................2
3.5 Authorized Leave of Absence.................................2
3.6 Before-Tax-Account..........................................3
3.7 Before-Tax-Contributions....................................3
3.8 Beneficiary.................................................3
3.9 Board.......................................................3
3.10 Break in Service............................................3
3.11 Code........................................................3
3.12 Committee...................................................3
3.13 Compensation................................................3
3.14 Contribution Percentage.....................................4
3.15 Deferral Percentage.........................................4
3.16 Earnings and Profits........................................5
3.17 Effective Date..............................................5
3.18 Election Form...............................................5
3.19 Eligible Employee...........................................5
3.20 Employee....................................................5
3.21 Employer....................................................5
3.22 Employment Commencement Date................................5
3.23 Employment Termination Date.................................6
3.24 Entry Date..................................................6
3.25 ERISA.......................................................6
3.26 Excess Aggregate Contributions..............................6
3.27 Excess Contributions........................................6
3.28 Excess Deferrals............................................6
3.29 Forfeiture..................................................6
3.30 Harris/LBP Plan.............................................6
3.31 Harris Stock................................................6
3.32 Harris Stock Fund...........................................6
3.33 Highly Compensated Participant..............................6
3.34 Hour of Service.............................................7
3.35 Matching Account............................................7
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<PAGE> 3
3.36 Matching Contributions......................................8
3.37 Matched Deferrals...........................................8
3.39 Nonhighly Compensated Participant...........................8
3.40 Normal Retirement Age.......................................8
3.41 Participant.................................................8
3.42 Participant Requirement.....................................8
3.43 Plan........................................................8
3.44 Plan Sponsor................................................8
3.45 Plan Year...................................................8
3.46 Reemployment Commencement Date..............................8
3.47 Rollover Account............................................8
3.48 Trust Agreement.............................................8
3.49 Trust Fund..................................................9
3.50 Trustee.....................................................9
3.51 Valuation Date..............................................9
3.52 Year of Service.............................................9
ARTICLE IV PARTICIPATION....................................................10
4.1 General Rule...............................................10
4.2 Reemployment Rule..........................................10
4.3 Change in Employment Status or Transfer From an
Affiliate...............................................11
4.4 Information................................................11
4.5 Leased Employees...........................................11
ARTICLE V CONTRIBUTIONS AND ACCOUNTS........................................11
5.1 Before Tax Contributions...................................11
5.2 Election Rules.............................................13
5.3 Matching Contributions and Forfeitures.....................14
5.4 Limitation on Allocations..................................15
5.5 Rollover Accounts..........................................21
5.6 Account Investments........................................22
5.7 Special Rules Concerning Harris Stock Fund.................22
5.8 Expenses...................................................23
ARTICLE VI PLAN BENEFITS....................................................23
6.1 Normal Retirement Benefit..................................23
6.2 Disability Benefit.........................................24
6.3 Death Benefit..............................................24
6.4 Vested Benefit.............................................24
6.5 Forfeiture of Benefit of Missing Claimant..................25
6.6 Loans......................................................26
6.7 No In-Service Withdrawals..................................28
ARTICLE VII....................................................................
7.1 Method.....................................................29
7.2 Distribution Deadlines.....................................29
ii
<PAGE> 4
7.3 Direct Rollover............................................30
7.4 Claim for Benefit..........................................30
7.5 Mistakes...................................................30
7.6 Designation of Beneficiary.................................31
ARTICLE VIII NAMED FIDUCIARIES, THE COMMITTEE, AND PLAN EXPENSES............31
8.1 Named Fiduciaries..........................................31
8.2 Allocation and Delegation by Named Fiduciaries.............32
8.3 Advisers...................................................32
8.4 Dual Fidicuary Capacities..................................32
8.5 The Committee..............................................32
8.6 Payment of Expenses........................................33
ARTICLE IX TRUST FUND AND TRUSTEE...........................................33
ARTICLE X AMENDMENT AND TERMINATION.........................................33
10.1 Amendment..................................................33
10.2 Termination................................................33
10.3 Merger or Consolidation....................................34
ARTICLE XI MISCELLANEOUS....................................................34
11.1 Spendthrift Clause.........................................34
11.2 Legally Incompetent........................................34
11.3 Benefits Supported Only by Trust Fund......................34
11.4 Discrimination.............................................35
11.5 Claims.....................................................35
11.6 Agent for Service of Process...............................35
11.7 Nonreversion...............................................35
11.8 Plan Not An Employment Contract............................35
11.9 Top Heavy Plan.............................................36
11.10 Qualified Domestic Relations Order.........................37
iii
<PAGE> 5
LANIER WORLDWIDE, INC.
SAVINGS INCENTIVE PLAN
(as amended and restated as of July 1, 1997)
ARTICLE I
HISTORY AND EFFECTIVE DATE
--------------------------
The Lanier Worldwide, Inc. Savings Incentive Plan (the "Plan") is an
amendment and restatement of the Plan in effect as of January 1, 1997. This
amendment and restatement, effective July 1, 1997, (i) provides for the daily
valuation of Participants' Accounts, (ii) provides Participants the opportunity
to change their investment elections daily, (iii) increases the rate of Matching
Contributions and (iv) reflects the applicable requirements imposed on
tax-qualified plans under the Small Business Job Protection Act of 1996 and the
Uniformed Services Employment and Reemployment Rights Act of 1994.
The Plan in effect as of January 1, 1997 was an amendment and
restatement of the Plan effective as of June 28, 1994. The Plan in effect as of
June 28, 1994 was an amendment and restatement of the Plan effective as of June
30, 1992. The Plan in effect as of June 30, 1992 was an amendment and
restatement of the Plan effective as of April 30, 1990. The Plan in effect as of
April 30, 1990 was an amendment and restatement of the Plan in effect as of
October 1, 1989. The Plan in effect as of October 1, 1989 was an amendment and
restatement of the Harris/3M Document Products, Inc. Savings Incentive Plan, as
originally effective as of April 1, 1986 ("Harris/DPI Plan"). The Harris/Lanier
Advantage Plan and Trust ("Harris/LBP Plan"), as originally effective as of
October 1, 1986, was merged into the Plan effective as of October 1, 1989.
Except as expressly provided otherwise, the provisions of the Plan as
amended and restated as of July 1, 1997 shall apply only to those individuals
who are employees of an Employer on or after July 1, 1997. Any benefits of an
individual whose employment with an Employer terminated before July 1, 1997 and
who is not reemployed by an Employer after such date shall, except as expressly
provided otherwise in the Plan, be determined solely in accordance with the
provisions of the relevant prior Plan document (or documents).
ARTICLE II
CONSTRUCTION
------------
2.1 CONTROLLING LAWS. The Plan and its related Trust Agreement shall be
construed and interpreted under the laws of the State of Delaware, without
regard to its principles of conflicts of laws, to the extent such laws are not
preempted by ERISA.
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<PAGE> 6
2.2 CONSTRUCTION. Plan headings and subheadings are for convenience of
reference only and are not to be construed to alter the terms of the Plan.
Whenever used in the Plan, the masculine gender shall be deemed to include the
feminine gender, and unless context otherwise requires, terms in the plural
shall include the singular, and terms in the singular shall include the plural.
References in this Plan to "sec. " shall be to a section in this Plan unless
otherwise indicated.
ARTICLE III
DEFINITIONS
3.1 ACCOUNT. The balance to the credit of a Participant under this
Plan. A Participant's Account may be subdivided for bookkeeping purposes into a
Before-Tax Account, a Matching Account and, where applicable, a Rollover
Account.
3.2 AFFILIATE. Any entity that is (a) a member of the same controlled
group of corporations (within the meaning of section 414(b) of the Code) of
which an Employer is a member, (b) a trade or business (whether or not
incorporated) under common control (within the meaning of section 414(c) of the
Code) with an Employer, (c) an organization (whether or not incorporated) that
is a member of an affiliated service group (within the meaning of section 414(m)
of the Code) that includes an Employer, a corporation described in clause (a) of
this subdivision or a trade or business described in clause (b) of this
subdivision, or (d) an organization which is required to be aggregated with an
Employer pursuant to Regulations promulgated under section 414(o) of the Code.
3.3 AVERAGE CONTRIBUTION PERCENTAGE. 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 the immediately
preceding Plan Year. Notwithstanding the preceding sentence, the Committee may
elect, in any manner prescribed by the Secretary of the Treasury of the United
States, to determine the Average Contribution Percentage for Nonhighly
Compensated Participants for a Plan Year based upon the Contribution Percentage
for the current Plan Year rather than the prior Plan Year.
3.4 AVERAGE DEFERRAL PERCENTAGE. 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 the immediately
preceding Plan Year. Notwithstanding the preceding sentence, the Committee may
elect, in any manner prescribed by the Secretary of the Treasury of the United
States, to determine the Average Deferral Percentage for Nonhighly Compensated
Participants for a Plan Year based upon the Deferral Percentage for the current
Plan Year rather than the prior Plan Year.
3.5 AUTHORIZED LEAVE OF ABSENCE. Any period of absence authorized by an
Employer under its standard personnel practices, including as required by the
Family and Medical Leave Act of 1993, provided that the Employee returns to the
employ of the Employer by the end of such period, except as may be otherwise
required by the Family and Medical Leave Act of 1993.
-2-
<PAGE> 7
3.6 BEFORE-TAX-ACCOUNT. The portion of a Participant's Account
attributable to Before-Tax Contributions.
3.7 BEFORE-TAX-CONTRIBUTIONS. The sum of (a) that portion of a
Participant's Compensation (as described in sec. 3.13(a)) which the Participant
elects to defer into this Plan pursuant to sec. 5. 1 and (b) any additional
contribution made to the Plan pursuant to sec. 5.4(d)(6).
3.8 Beneficiary. A person last designated by a Participant to receive
all or a portion of the Participant's Account in the event of the Participant's
death subject to the provisions of ss. 7.6.
3.9 BOARD. The board of directors of the Plan Sponsor.
3.10 BREAK IN SERVICE. Any 12 consecutive month period beginning on an
Employee's Employment Termination Date or anniversary of such date during which
the Employee has not completed an Hour of Service for an Employer. For purposes
of this definition, an Employee shall be credited with an Hour of Service for
any period in which the Employee is (i) on an Authorized Leave of Absence for
reasons other than those identified in section (ii), (ii) is on an Authorized
Leave of Absence for up to 24 consecutive months because of (a) the Employee's
pregnancy, (b) the birth of the Employee's child, (c) the placement of the child
with the Employee in connection with the Employee's adoption of such child or
(d) the need to care for any such child for a period beginning immediately
following such birth or placement, or (iii) absence from work due to "qualified
military service" (as such term is defined in the Uniformed Services Employment
and Reemployment Act of 1994) and is entitled to reemployment under such Act.
Notwithstanding the foregoing, clause (ii) of this definition shall not be
applicable unless the Employee furnishes to the Committee such legal
documentation as may be reasonably required by the Committee to establish that
the absence is for reasons set forth in such clause and to verify the duration
of such absence.
3.11 CODE. The Internal Revenue Code of 1986, as amended.
3.12 COMMITTEE. The Pension and Retirement Committee of the Board.
3.13 COMPENSATION.
(a) For purposes of determining the amount of a Participant's
Before-Tax Contributions and Matching Contributions for any period,
remuneration described in (i) minus remuneration described in (ii)
where:
(i) is remuneration which constitutes the
Participant's base salary and wages paid by the Participant's
Employer, and other amounts paid by the Employer that are
includible in the Participant's gross income, including
overtime payments, commission payments, annual bonuses,
regional and shift differentials, but excluding payments
described in (ii) below.
(ii) is remuneration which constitutes any payment
made under a severance pay plan or program, any payment made
in consideration of the
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<PAGE> 8
Participant's release of claims in favor of an Employer or an
Affiliate, any foreign or domestic assignment allowance, any
contest payments, any expense-related reimbursements
(including reimbursements commonly referred to as "Runzheimer"
payments), any signing bonuses, any payment made under any
long-term incentive plan, compensation received while on an
Authorized Leave of Absence, short-term disability payments,
and the value of life insurance includible in the
Participant's gross income.
(b) For purposes of determining the limitations under section
415 of the Code described in sec. 5.4, the Committee may use any
definition of compensation permitted under section 415(c)(3) of the
Code.
(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 Committee may
use any definition of compensation allowable under section 414(s) of
the Code.
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 section 401(k) of the Code, or because they are
contributed to a cafeteria plan described in section 125 of the Code, shall be
included as Compensation for all purposes, provided that for Plan Years
commencing prior to July 1, 1999, such elective deferrals shall not be included
for determining the limitations under section 415 of the Code described in ss.
5.4.
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 sec. 5.2(d) or (f) or the application
of the limitations under section 415 of the Code described in sec. 5.4.
The amount of a Participant's Compensation that may be taken into
account for any purpose of the Plan shall not exceed (i) for the Plan Year
commencing on January 1, 1997, $160,000 and (ii) for each subsequent Plan Year,
the amount prescribed by section 401(a)(17) of the Code (as adjusted for
increases in the cost-of-living pursuant to section 401(a)(17)(B) of the Code).
3.14 CONTRIBUTION PERCENTAGE. For each Participant, the ratio 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
this purpose, the amount of the Matching Contributions credited to a
Participant's Matching Account shall be determined taking into account any
discount on contributions of Harris Stock made pursuant to sec. 5.3(a) or 5.1
(a); provided that the Plan Sponsor does not elect to take the discount
applicable to Harris Stock contributed pursuant to sec. 5.1(a) into account
under sec. 5.4(d)(7).
3.15 DEFERRAL PERCENTAGE. For each Participant, the ratio of (a) the
amount of the Before-Tax Contributions, if any, to be credited for such Plan
Year to his Before-Tax Employee
-4-
<PAGE> 9
Account to (b) his Compensation for such Plan Year. For this purpose, the amount
of a Participant's Before-Tax Contributions shall be determined taking into
account any discount on contributions of Harris Stock pursuant to sec. 5.1(a);
provided that the Plan Sponsor elects to take such discount into account under
sec. 5.4(d)(7).
3.16 EARNINGS AND PROFITS. The net income of an Employer as determined
for each calendar quarter by the Employer for financial accounting purposes.
3.17 EFFECTIVE DATE. With respect to this amendment and restatement of
the Plan, July 1, 1997, except as otherwise specifically provided herein.
3.18 ELECTION FORM. A form designated by the Committee for making one
or more of the elections and designations provided for under this Plan, in
accordance with such rules as may be adopted by the Committee from time to time.
An election form may be set forth on a paper document or, if prescribed by the
Committee, may be communicated to, and completed by, Employees by electronic or
telephonic means.
3.19 ELIGIBLE EMPLOYEE. An Employee of an Employer, other than any
Employee described below:
(a) an Employee who is included in a unit of employees covered
by a collective bargaining agreement which does not provide that such
Employee be eligible to participate in this Plan;
(b) an Employee who is a nonresident alien and who receives no
earned income from an Employer from sources within the United States;
or
(c) 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 Employees who work primarily
within the United States; or
(d) an Employee who is employed by the Plan Sponsor at the
Puerto Rico branch or by Lanier Puerto Rico, Inc.
3.20 EMPLOYEE. An individual whose relationship with an Employer is,
under common law, that of an employee. Notwithstanding the foregoing, no
individual who renders service for an Employer shall be considered an Employee
for purposes of the Plan if such Employee renders such services pursuant to
either (i) an agreement providing that such services are to be rendered by the
individual as an independent contractor or (ii) an agreement with an entity,
including a leasing organization within the meaning of section 414(n)(2) of the
Code, that is not an Employer or Affiliate.
3.21 EMPLOYER. The Plan Sponsor, and any other entity which (i) adopts
the Plan and (ii) the Board designates in writing from time to time as an
Employer under the Plan.
3.22 EMPLOYMENT COMMENCEMENT DATE. The first date on which an Employee
first performs an Hour of Service for an Employer.
-5-
<PAGE> 10
3.23 EMPLOYMENT TERMINATION DATE. The earlier of (a) and (b) below:
(a) The date the Employee quits, retires, dies or is
discharged in accordance with the personnel policy of his Employer; and
(b) the first anniversary of the first day of an Employee's
absence from service for any other reason (e.g., disability, leave of
absence, layoff, etc.), except as provided in sec. 3.52(a), provided
that an Employee who fails to return to employment at the expiration of
a leave of absence shall be deemed to have terminated employment on the
earlier of (i) the date on which his leave of absence expires and (ii)
the first anniversary of the first day of his absence (except as
provided in sec. 3.10(c)).
3.24 ENTRY DATE. The first day of the bi-weekly payroll period
beginning on or after the date on which an Eligible Employee satisfies the
applicable Participation Requirement.
3.25 ERISA. The Employee Retirement Income Security Act of 1974, as
amended.
3.26 EXCESS AGGREGATE CONTRIBUTIONS. The excess of (a) the Matching
Contributions 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 section 401(m)(2)(A) of the Code (as described in sec. 5.4(e)).
3.27 EXCESS CONTRIBUTIONS. The excess of (a) the Before-Tax
Contributions actually made on behalf of Highly Compensated Participants for a
Plan Year over (b) the e maximum amount of such contributions permissible for
such Plan Year under section 401(k)(3)(A) of the Code, as described in sec.
5.4(d).
3.28 EXCESS DEFERRALS. For each Participant for each calendar year the
Before-Tax Contributions for such Plan Year that the Participant designates as
exceeding the dollar limit prescribed by sec. 5.4(c).
3.29 FORFEITURE. Any amount deducted from a Participant's Account and
forfeited by the Participant in accordance with the terms of this Plan.
3.30 HARRIS/LBP PLAN. The Harris/Lanier Advantage Plan, as amended from
time to time.
3.31 HARRIS STOCK. Common Stock of Harris Corporation.
3.32 HARRIS STOCK FUND. The Plan's investment fund that is designed to
be invested primarily in Harris Stock.
3.33 HIGHLY COMPENSATED PARTICIPANT. For any Plan Year, a Participant
who:
(a) is a 5%-owner (as defined in section 416(i)(1) of the
Code) of an Employer at any time during the Plan Year or the preceding
Plan Year; or
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<PAGE> 11
(b) is paid Compensation in excess of $80,000 (as adjusted
for increases in the cost of living in accordance with section
414(q)(1)(B)(ii) of the Code) from an Employer for the preceding Plan
Year. If the Committee so elects for a Plan Year, the Participants
taken into account under this paragraph (b) shall be limited to those
Participants who were members of the top-paid group (as defined in
section 414(q)(3) of the Code) for the preceding Plan Year.
Solely for purposes of this Section, the term "Participant" shall
include any Eligible Employee to the extent such Employee has satisfied the
Participation Requirement but who has not elected to make Before-Tax
Contributions under the Plan. To the extent permitted by the Secretary of the
Treasury of the United States, the Committee may elect to determine who is a
Highly Compensated Participant under paragraphs (a) and (b) above by
substituting "the calendar year which ends in the Plan Year" for "the preceding
Plan Year" as it appears therein.
3.34 HOUR OF SERVICE. Each hour for which:
(a) an Employee is paid, or entitled to payment, for the
performance of duties as an Employee;
(b) an Employee is paid, or entitled to payment, by an
Employer on account of a period of time during which no duties are
performed (irrespective of whether the employment relationship has
terminated) due to vacation, holiday, illness, incapacity (including
disability), lay-off, jury, military duty or leave of absence. No more
than 501 Hours of Service will be credited under this paragraph (b) for
any single continuous period (regardless of whether such period occurs
in a single computation period);
(c) back pay is awarded or agreed to by the Employer or an
Affiliate. Such hours shall be credited to the Plan Years to which the
award, agreement or payment pertains rather than the Plan Year in which
the award, agreement or payment is made.
For purposes of paragraphs (b) and (c) above, an Hour of Service shall
be calculated in accordance with Department of Labor Regulation sec.
2530.200b-2, which provides that (i) if a payment is based upon hours, days,
weeks or other unit of time the number of Hours of Service credited will be the
number of regularly scheduled working hours for such Employee for such unit of
time, and (ii) if the payment due is not based upon units of time, the number of
Hours of Service credited shall be equal to the amount of the payment divided by
the Employee's most recent hourly rate of compensation. For payments made to an
Employee without a regular work schedule, the number of hours credited shall be
calculated on a reasonable basis which reflects the average hours worked by the
Employee, or by other employees in the same job classification, over a
representative period of time and which is consistently applied with respect to
all employees within the same job classification. In order to avoid double
counting, the same Hours of Service shall not be credited both under paragraph
(a) or paragraph (b), as applicable, and under paragraph (c).
3.35 MATCHING ACCOUNT. The portion of a Participant's Account
attributable to Matching Contributions.
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<PAGE> 12
3.36 MATCHING CONTRIBUTIONS. The contributions made pursuant to sec.
5.3.
3.37 MATCHED DEFERRALS. The portion of the Before-Tax Contributions
contributed to the Plan on behalf of a Participant for each pay period which do
not exceed 6% of his Compensation for such pay period.
3.38 MAXIMUM DEFERRAL PERCENTAGE.
(a) For each Nonhighly Compensated Participant, 15%, and
(b) for each Highly Compensated Participant, 8% (or such
lesser amount which the Committee, in its sole discretion, determines
is necessary to satisfy the applicable requirements of the Code).
3.39 NONHIGHLY COMPENSATED PARTICIPANT. For any Plan Year, each
Participant who is not a Highly Compensated Participant.
3.40 NORMAL RETIREMENT AGE. The date a Participant attains age 65.
3.41 PARTICIPANT. Each Eligible Employee to the extent he has satisfied
the Participation Requirement or a former Eligible Employee who has not received
a complete distribution of his Account.
3.42 PARTICIPANT REQUIREMENT.
(a) With respect to eligibility for Before-Tax
Contributions and Rollover Contributions, the date on which an Eligible
Employee first performs an Hour of Service; and
(b) with respect to eligibility for Matching
Contributions, the earlier of (i) the date on which an Eligible
Employee completes one Year of Service and (ii) the date on which such
Eligible Employee attains age 2 1.
3.43 PLAN. The Lanier Worldwide, Inc. Savings Incentive Plan as set
forth in this document, as may be amended in accordance with Article X.
3.44 PLAN SPONSOR. Lanier Worldwide, Inc. and any successor to such
corporation.
3.45 PLAN YEAR. The fiscal year ending June 30.
3.46 REEMPLOYMENT COMMENCEMENT DATE. The first date on which a former
Employee is reemployed by an Employer after a Break in Service and first
performs an Hour of Service for an Employer.
3.47 ROLLOVER ACCOUNT. The portion of a Participant's Account
attributable to funds transferred to the Plan from another tax-qualified plan
pursuant to the provisions of sec. 5.5.
3.48 TRUST AGREEMENT. The Qualified Trust Agreement between Lanier
Worldwide, Inc. and T. Rowe Price Trust Company, as may be amended from time to
time.
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3.49 TRUST FUND. The trust fund created in accordance with the Trust
Agreement.
3.50 TRUSTEE. The person or persons acting as the trustee from time to
time of the Trust Fund.
3.51 VALUATION DATE. Each calendar day. The determination of the
Valuation Date as of which transactions under the Plan are effected shall be
determined in accordance with rules and procedures established by the Committee.
3.52 YEAR OF SERVICE. Each completed year in any "period of employment"
as an Employee, as determined in accordance with paragraphs (a)-(e) below.
(a) PERIOD OF EMPLOYMENT An Employee's "period of employment"
will be deemed to start on his Employment Commencement Date (or
Reemployment Commencement Date, as the case may be) and end on the
Employee's next following Employment Termination Date. In addition, an
Employee shall receive credit for vesting and participation purposes
for each period of employment and for each period of separation from
service due to an absence or termination of employment after his
Employment Commencement Date (or Reemployment Commencement Date, as the
case may be) if such separation is less than 12 consecutive months in
duration.
(b) TERMINATION/REEMPLOYMENT. If an Employee terminates
employment and is reemployed less than 12 months after his Employment
Termination Date, the Employee's Years of Service shall be determined
by including the period of time between his Employment Termination Date
and his Reemployment Commencement Date. Except as provided in sec.
3.52(c) and (d), if an Employee terminates employment and is reemployed
more than 12 months after his Employment Termination Date, his Years of
Service shall be determined by aggregating the service in each
completed period of employment in accordance with the rules set forth
below:
(1) FULL YEARS - First, determine the number of
completed 12 consecutive month periods within each period of
employment.
(2) EXTRA MONTHS - Next, determine the number of
completed months within each period of employment in excess of
full years of employment in each 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 (or
Reemployment Commencement date, as the case may be) to the
immediately preceding date in the next succeeding month will
be treated as a completed month of employment.
(3) EXCESS DAYS - Next, determine the number of days
of employment within each period of employment in excess of
completed months of employment and aggregate those additional
days into additional months on the basis that 30 days of such
employment equals one month.
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<PAGE> 14
(c) SERVICE PRIOR TO AGE 18. 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 sec. 6.4.
(d) SERVICES WITH OTHER ENTITIES. Except as set forth in
section 3.51(e) and section 4.5, no period of employment which an
Employee completes as an employee of any other organization whatsoever
shall be taken into account under the Plan unless such organization is
an Affiliate; provided, that service with an organization prior to the
time the organization became an Affiliate or after the organization
ceases to be a Affiliate may be recognized if the corporate documents
governing the acquisition or disposition of the stock or assets of such
organization require such recognition. Employment by an Affiliate which
is not an Employer shall be taken into account solely for purposes of
(i) determining such Employee's Years of Service and eligibility to
participate in the Plan and (ii) determining when such person has
retired or otherwise terminated his employment to the same extent it
would have had such service been as an Employee of an Employer.
(e) QUALIFIED MILITARY SERVICE. A Participant who is absent
from employment on account of qualified military service (as defined in
section 414(u)(5) of the Code) and who is entitled to reemployment
rights under the Uniformed Service Employment and Reemployment Rights
Act of 1994 shall be credited with Years of Service for vesting and
participation purposes under the Plan for the period of his qualified
military service.
ARTICLE IV
PARTICIPATION
-------------
4.1 GENERAL RULE. Each Eligible Employee who is not classified as a
temporary, summer or casual part-time employee and who was a Participant in this
Plan immediately prior to the Effective Date shall be a Participant in this Plan
as of the Effective Date. Each other Eligible Employee who is not classified as
a temporary, summer or casual part-time employee shall become a Participant on
the first Entry Date which immediately follows or is coincident with the date he
satisfies the applicable Participation Requirement. An Eligible Employee who is
classified as a temporary, summer or casual part-time employee shall become a
Participant the first Entry Date immediately following or coincident with the
earlier of (i) the date on which he is no longer classified as a temporary,
summer or casual part-time employee, and (ii) the last day of the 12-month
period beginning on such Eligible Employee's Employment Commencement Date (or
any subsequent 12-month period beginning on any anniversary of such Employment
Commencement Date) during which such Eligible Employee completes at least 1,000
Hours of Service.
4.2 REEMPLOYMENT RULE. If an Employee terminates employment before he
satisfies the Participation Requirement and he is thereafter reemployed as an
Eligible Employee after incurring a Break in Service, he shall be subject to the
general participation rule of sec. 4.1 based on his date of reemployment.
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<PAGE> 15
If an Employee terminates employment after he satisfies the
Participation Requirement but before he becomes a Participant and he is
thereafter reemployed as an Eligible Employee, he shall become a Participant on
the later of (a) the Entry Date on which he would have been eligible to
participate under sec. 4.1 had he not terminated employment and (b) the first
Entry Date after his reemployment, provided, that he completes the appropriate
Election Forms, as prescribed by the Committee.
If a Participant terminates employment and he is thereafter reemployed
as an Eligible Employee, he shall resume participation on the first Entry Date
beginning after his reemployment on which he is an Eligible Employee, provided,
that he completes the appropriate Election Forms, as prescribed by the
Committee.
4.3 CHANGE IN EMPLOYMENT STATUS OR TRANSFER FROM AN AFFILIATE. If an
individual who is not a Participant shall become an Eligible Employee because of
a change in employment status or because of his transfer of employment to an
Employer from an Affiliate which is not an Employer, such individual shall
become a Participant on the later of (i) the date of such change or transfer and
(ii) the first Entry Date coincident with or following his satisfaction of the
Participation Requirement.
4.4 INFORMATION. Each Eligible Employee shall complete and deliver an
election Form to the Committee which sets forth such information as the
Committee deems necessary for the orderly administration of this Plan.
4.5 LEASED EMPLOYEES. If an individual who performed services as a
leased employee (within the meaning of section 414(n)(2) of the Code) of an
Employer or an Affiliate becomes an Employee, or if an Employee becomes such a
leased employee, then any period during which the individual performed services
as a leased employee shall be taken into account solely for the purposes of
determining whether and when such individual is eligible to participate in the
Plan under this Article 4 and measuring such individual's Years of Service to
the same extent such period would have been taken into account had such service
been performed as an Employee. Notwithstanding the foregoing sentence, this
section shall not apply to any period of service during which such a leased
employee was covered by a plan described in section 414(n)(5) of the Code.
ARTICLE V
CONTRIBUTIONS AND ACCOUNTS
--------------------------
5.1 BEFORE TAX CONTRIBUTIONS.
(a) PERCENTAGE. Subject to the rules set forth in sec. 5.1,
and in Secs. 5.2 and 5.4, each Participant may elect to defer any whole
percentage of his Compensation payable each pay period which is not in
excess of the Maximum Deferral Percentage. If a Participant elects to
invest Before-Tax Contributions in the Harris Stock Fund, then the
normal form of contribution shall be in cash, and such cash shall be
used to purchase shares of Harris Stock. Notwithstanding the previous
sentence, the Plan Sponsor may make, in its sole discretion, the
Before-Tax Contribution in the form of shares of Harris
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<PAGE> 16
Stock. Any such contribution of Harris Stock may be made at a
discount from fair market value. The Trustee is authorized to purchase
shares of Harris Stock in the open market, and to give effect to any
discount decided upon by the Plan Sponsor by allocating to the Account
of each Participant on whose behalf a Before-Tax Contribution is to be
made the number of shares equal to the amount of such Before-Tax
Contribution divided by the discounted purchase price established by
the Plan Sponsor (such shares hereinafter referred to as the
"Discounted Shares").
(b) PAYROLL DEDUCTIONS. All contributions described in sec.
5.1(a) shall be made exclusively through payroll withholding, and such
contributions shall be transferred by an 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 sec. 5.4, any BeforeTax Contributions received by the Trustee on
behalf of each Participant since the immediately preceding Valuation
Date shall be credited to his Before-Tax Account as soon as
administratively practicable, provided that any Discounted Shares shall
be segregated into a separate subaccount for purposes of determining
the Participant's Deferral Percentage or Contribution Percentage as
provided for in secs. 5.4(d)(7) and 5.4(e)(4). 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 attributable to Before-Tax Contributions which are invested in
each investment fund within the Trust Fund shall be determined by, or
at the direction of, the Committee 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.
(e) MAKE UP OF BEFORE-TAX CONTRIBUTIONS FOR REEMPLOYED
VETERANS. A Participant who is absent from employment on account of
qualified military service (as defined in section 414(a)(5) of the
Code) and is entitled to reemployment rights under the Uniformed
Service Employment and Reemployment Rights Act of 1994 shall have the
right to make Before-Tax Contributions under the Plan ("Make Up
Deferrals") for his period of qualified military service. Such
Participant may elect to make such Make Up Deferrals during the period
beginning on the date of such Employee's reemployment and ending on the
earlier of:
(i) the end of the period equal to the product of
three and such Employee's period of qualified military
service, and
(ii) the fifth anniversary of the date of such
reemployment.
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<PAGE> 17
Such Employee shall not be permitted to contribute Make Up Deferrals to the
Plan in excess of the amount which the Employee could have elected to have
made under the Plan in the form of Before-Tax Contributions if the Employee had
continued in employment with his Employer during such period of qualified
military service. Such Employee shall be deemed to have earned "Compensation"
equal to the Compensation such Participant would have received during the
period of qualified military service but for his absence due to qualified
military service. If the Compensation the Participant would have received
during such period is not reasonably certain, the Participant's Compensation
for his period of qualified military service shall be based on the Participants
Compensation during the 12-month period (or, if shorter, the period of
employment) immediately preceding the qualified military service. Earnings and
losses on such Make Up Deferrals shall be credited as required by law. The
manner in which a Participant may elect to make Make Up Deferrals pursuant to
this subsection (e) shall be prescribed by the Committee.
5.2 ELECTION RULES.
(a) INITIAL ELECTION. A Participant's initial election under
sec. 5.1 for any period of employment shall be effective as of the
first Entry Date on or after the later of (1) the date he timely
delivers a properly completed Election Form to the Committee and
(2) the date he satisfies the Participation Requirement in
section 3.41(a). An election shall remain in effect until revised or
revoked.
(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
Committee.
(c) REVOCATION OF ELECTION A Participant shall have the right
to revoke 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 Committee.
(d) RESUMPTION AFTER REVOCATION. An Eligible Employee who has
revoked an election to make Before-Tax Contributions may elect to
resume making Before-Tax Contributions in accordance with sec. 5.1
effective for the first pay period which begins at least 90 days after
the date his revocation became effective, provided that the Eligible
Employee timely delivers a properly completed Election Form to the
Committee.
(e) TIMELINESS AND ELECTION PROCEDURES. The Committee 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 Committee in its absolute
discretion deems appropriate under the circumstances for the proper
administration of this Plan.
(f) COMMITTEE ACTION. The Committee shall have the right at
any time unilaterally to reduce the contribution which an Eligible
Employee elected to be made on his behalf if the Committee acting in
its absolute discretion determines that such reduction might be
necessary to satisfy the limitations of sec. 5.4.
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<PAGE> 18
5.3 MATCHING CONTRIBUTIONS AND FORFEITURES.
(a) AMOUNT. Subject to the rules set forth in this sec. 5.3
and sec. 5.4, the Plan Sponsor shall make a Matching Contribution on
behalf of each Employer from Earnings and Profits of all Employers for
the preceding calendar quarter. Such Matching Contribution shall be
made on behalf of each Eligible Employee who has met the Participation
Requirement with respect to Matching Contributions for each pay period
beginning on or after his applicable Entry Date and shall be equal to
50 percent of the Matched Deferrals contributed on the Participant's
behalf for the pay period.
The normal form of Matching Contribution for Before-Tax
Contributions invested in the Harris Stock Fund shall be in cash, to be
invested in shares of Harris Stock, provided that the Plan Sponsor, in
its sole discretion, may make the Matching Contribution in shares of
Harris Stock. Any such contribution of Harris Stock may be made at a
discount from fair market value, provided that the fair market value of
all Matching Contributions does not exceed the Earnings and Profits of
all Employers from the preceding calendar quarter. The Trustee is
authorized to purchase shares of Harris Stock in the open market, and
to give effect to any discount decided upon by the Plan Sponsor by
allocating to the Account of each Participant on whose behalf the
Matching Contribution is to be made the number of shares equal to the
amount of such Matching Contribution divided by the discounted purchase
price established by the Plan Sponsor (such shares hereinafter referred
to the "Discounted Matching Shares").
(b) FORFEITURES. Forfeitures shall be applied to reduce the
amounts which the Plan Sponsor contributes to the Plan in the form of
Matching Contributions.
(c) TIMING. The Matching Contribution shall be made as soon as
practicable after the Before-Tax Contribution is credited to the
Participant's Before-Tax Account, but no less frequently than
quarterly.
(d) INSUFFICIENT EARNINGS AND PROFITS. If the Employers have
insufficient Forfeitures and Earnings and Profits for the preceding
calendar quarter to make the full contribution called for under sec.
5.3(a), the Plan Sponsor may, in its sole discretion, make no
contribution or a smaller contribution for that calendar quarter.
(e) ACCOUNT CREDITS AND VESTING. The Matching Contributions
made on behalf of each Participant shall be credited by, or at the
direction of, the Committee 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 sec. 6.4.
(f) INVESTMENT GAINS AND LOSSES. The investment gains and
losses attributable to Matching Contributions which are invested in
each investment fund within the Trust Fund shall be determined by, or
at the direction of, the Committee 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
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<PAGE> 19
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.
(g) MAKE UP OF EMPLOYER MATCHING CONTRIBUTIONS. A Participant
who makes Make Up Deferrals as described in sec. 5.1(e) shall be
entitled to an allocation of matching contributions ("Make Up Matching
Contributions") in an amount equal to the amount of Matching
Contributions which would have been allocated to the Account of such
Participant under the Plan if such Make Up Deferrals had been made in
the form of Before-Tax Contributions during the period of such
Participant's qualified military service (as determined pursuant to
section 414(u) of the Code). The amounts necessary to make such
allocation of Make Up Matching Contributions shall be derived from
Forfeitures not yet applied towards Matching Contributions for the
Plan Year in which the Make Up Matching Deferrals are made, and if
such Forfeitures are not sufficient for this purpose, then the
Participant's Employer shall make a special contribution which shall
be utilized solely for purposes of such allocation.
The Plan shall not be treated as failing to satisfy the
nondiscrimination rules of subsections (d) and (e) of sec. 5.4 of the
Plan (relating to sections 401(k)(3) and 401(m) of the Code) for any
Plan Year solely on account of any make up contributions made by a
Participant or an Employer pursuant to this Section.
5.4 LIMITATION ON ALLOCATIONS.
(a) GENERAL RULE. The contributions made under secs. 5.1 and
5.3 and the crediting of such contributions to a Participant's Account
shall be subject to limitations, applied in the following order:
(b) STATUTORY LIMITATIONS ON CONTRIBUTIONS.
(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
Contributions and as Before-Tax Contributions, when added to
the contributions which are treated under sec. 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 Committee deems
necessary or
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<PAGE> 20
appropriate to satisfy the requirements of section
415 of the Code (including any applicable transition
rules) taking into account the coordination rules of
sec. 5.4(b)(2) and the correction provisions of sec.
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 Employer
or an Affiliate, such contribution shall be treated
under this sec. 5.4(b) as made under this Plan.
(ii) If a defined benefit plan is adopted or
maintained by an Employer or an Affiliate under which
a benefit is accrued on behalf of a Participant, any
adjustment required to satisfy the requirements of
section 415 of the Code 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 section 415(1)
of the Code and contributions credited under a
welfare benefit fund maintained by any Employer or an
Affiliate for any year to a reserve for
post-retirement medical benefits for a Participant
who is a "key Employee" within the meaning of section
416(i) of the Code shall be treated as a Matching
Contribution made on his behalf under this Plan when,
and to the extent, required under section 415 or
419A(d) of the Code.
(3) CORRECTIONS. If the Committee determines that the
contributions credited to a Participant's Account (subject to
this sec. 5.4) will exceed the limitations set forth in this
sec. 5.4(b), then the Committee shall transfer such excess
from the Participant's Account to a special suspense account.
Such transfer shall be made first from the Participant's
Matching Contributions and thereafter from his BeforeTax
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 sec. 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 entirely.
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 Committee or its delegate.
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<PAGE> 21
(c) INDIVIDUAL DOLLAR LIMIT.
(1) THIS PLAN. The sum of a Participant's
Before-Tax Contributions under this Plan and his "elective
deferrals" (within the meaning of section 402(g) of the Code)
under any plan maintained by an Affiliate shall not exceed (i)
for the calendar year commencing on January 1, 1997, $9,500
and (ii) for each subsequent calendar year, the dollar limit
prescribed by section 402(g) of the Code (as adjusted for cost
of living increases in accordance with section 402(g)(5) of
the Code).
(2) OTHER PLANS. If a Participant's aggregate
Before-Tax Contributions under this Plan and his "elective
deferrals" (within the meaning of section 402(g) of the Code),
if any, made under other plans or contracts exceeds the
individual dollar limit described in sec. 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
Committee on or before March 1 of the immediately following
calendar year in accordance with section 402(g) of the Code
and such reasonable administrative rules as may be established
by the Committee 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.
(4) DETERMINATION OF INVESTMENT GAIN OR LOSS.
Excess Deferrals shall be adjusted for investment gain or loss
as determined by the Committee in accordance with section
402(g) of the Code and the related regulations.
(5) DISTRIBUTION OF EXCESS DEFERRALS.
Notwithstanding any other provision of this Plan, Excess
Deferrals, adjusted to reflect any investment gain or 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 sec. 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.
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<PAGE> 22
(d) LIMITATIONS ON BEFORE-TAX CONTRIBUTIONS FOR HIGHLY
COMPENSATED PARTICIPANTS.
(1) GENERAL. The Average Deferral Percentage for
lengthy Compensated Participants for a Plan Year shall not
exceed the greater of (A) and (B), where:
"(A)" is the Average Deferral Percentage for
Nonhighly Compensated Participants for such Plan Year
multiplied by 1.25; and
"(B)" is 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) OTHER PLAN OR ARRANGEMENTS For purposes of
this sec. 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 section 401(k) of the
Code that are maintained by an Employer or an Affiliate shall
be determined as if all such contributions were made under
this Plan. Further, if this Plan satisfies the requirements of
section 401(a)(4) or 410(b) of the Code only if aggregated
with one or more other plans, or if one or more other plans
satisfy the requirements of section 401(a)(4) or 410(b) of the
Code only if aggregated with this Plan, then this sec. 5.4(d)
shall be applied by determining the Deferral Percentage of
each Participant as if all such plans were a single plan.
(3) DISTRIBUTION OF EXCESS CONTRIBUTIONS. If the
Committee determines that Excess Contributions have been made
for any Plan Year, then 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 on behalf of each High Compensated Participant
whose actual dollar amount of Before-Tax Contributions for
such Plan Year is highest until such dollar amount equals the
greater of (i) the largest dollar amount such that one of the
tests set forth in sec. 5.4(d)(1) shall be satisfied and (ii)
the next highest actual dollar amount of Before-Tax
Contributions made for such Plan Year by any Highly
Compensated Participant. If further reductions are necessary,
then such Before-Tax Contributions on behalf of each Highly
Compensated Participant whose actual dollar amount of Pay
Deferral Contributions made for such Plan Year is the highest
(determined after the reduction described in the preceding
sentence) shall be reduced in accordance with the preceding
sentence. Such reductions shall continue to be made to the
extent necessary so that one of the nondiscrimination tests
set forth in sec. 5.4(d)(1) shall be satisfied. The amount of
Excess Contributions which are to be distributed under this
sec. 5.4(d)(3) with respect to a Highly Compensated
Participant for any
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<PAGE> 23
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 pursuant to sec. 5.4 (c).
(4) DETERMINATION OF INVESTMENT GAINS OR LOSSES.
Excess Contributions shall be adjusted for investment gain or
loss as determined by the Committee in accordance with section
401(k) of the Code.
(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. To the extent
permitted by section 401(k)(3) of the Code, 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 may cause an additional contribution to be made to the
Plan on behalf of all eligible Nonhighly Compensated
Participants in an amount which will result in satisfying the
requirements of sec. 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 (i) shall be a
"qualified matching contribution" within the meaning of
section 401(k) of the Code, (ii) shall be allocated and
credited as of such date in equal parts among the Before-Tax
Accounts of all such Nonhighly Compensated Participants and
(iii) shall be used only to satisfy the limitations of this
sec. 5.4(d). A Nonhighly Compensated Participant shall be
eligible for a qualified matching contribution under this sec.
5.4(d) if such Participant elected that Before-Tax
Contributions be made to his Account during the last Calendar
quarter of such Plan Year and was an Eligible Employee on the
last day of such Plan Year.
(7) INCLUSION OF HARRIS STOCK DISCOUNT. For purposes
of calculating a Participant's Deferral Percentage, the value
of any Discounted Shares contributed to the Participant's
Account in the Plan Year which are allocated to the subaccount
described in sec. 5.1(c) will be included, unless the Plan
Sponsor elects to include the value of such Discounted Shares
in determining the Participant's Contribution Percentage as
provided in sec. 5.4(e)(4).
(e) LIMITATIONS ON MATCHING CONTRIBUTIONS FOR HIGHLY
COMPENSATED PARTICIPANTS.
(1) GENERAL. The Average Contribution Percentage for
Highly Compensated Participants for such 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, and
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<PAGE> 24
(ii) the lesser of (A) the Average Contribution
Percentage for Nonhighly Compensated Participants for
such Plan Year multiplied by 2, and (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) OTHER PLAN OR ARRANGEMENTS. For purposes of
this sec. 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 section
401(m) of the Code), or "matching contributions" (as described
in section 401(m)(4) of the Code) allocated to his account
under two or more plans or arrangements described in section
401(a) or 401(k) of the Code that are maintained by an
Employer or an Affiliate shall be determined as if all such
contributions were made under this Plan.
Further, if this Plan satisfies the requirements of
sections 401(a)(4) and 410(b) of the Code only if aggregated
with one or more other plans, or if one or more other plans
satisfy the requirements of sections 401(a)(4) and 410(b) of
the Code only if aggregated with this Plan, then this sec.
5.4(e) shall be applied by determining the Contribution
Percentages of each Participant as if all such plans were a
single plan.
(3) DISTRIBUTION OF EXCESS AGGREGATE CONTRIBUTIONS.
If the Committee determines that Excess Aggregate
Contributions have been made for any Plan Year, then such
Excess Aggregate Contributions (together with any investment
gains or losses) shall be forfeited (if otherwise forfeitable
under sec. 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 sec. 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
sec. 5.4(e) if such allocation would be inconsistent with
section 401(m) of the Code. 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 section 401(m) of the
Code.
(4) ELECTION REGARDING HARRIS STOCK DISCOUNT. For
purposes of calculating a Participant's Contribution
Percentage, the Plan Sponsor may elect to include the value of
any Discounted Shares contributed to the Participant's Account
in the Plan Year which are allocated to the subaccount
described in sec.5.1(c). If no such election is made by the
Plan Sponsor, the value of such Discounted Share will be
included in determining the Participant's Deferral Percentage
as provided in sec. 5.4(d)(7).
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<PAGE> 25
(f) MULTIPLE USE LIMIT. The Committee shall take whatever
action is required to prevent the multiple use of the alternative test
described in sec. 5.4(d)(1)(ii) for Before-Tax Contributions and in
sec. 5.4(e)(1)(ii) for Matching Contributions in the same Plan Year to
the extent required under section 401(m) of Code. The Committee shall
reduce the Before-Tax Contributions made on behalf of Highly
Compensated Participants (in the manner described in sec. 5.4(d)(3)) 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 sec. 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 Committee
deems necessary or appropriate 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 Committee 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.
(a) ESTABLISHMENT OF ACCOUNT. An Eligible Employee may
establish a Rollover Account, with the consent of the Committee or its
delegate. An Eligible Employee may only contribute amounts to a
Rollover Account which are eligible rollover distributions within the
meaning of section 402(c)(4) of the Code. Eligible rollover
distributions are defined as (1) funds that the Participant elects to
directly transfer either from another plan that is tax-qualified as
described in section 401(a) of the Code or from a tax-qualified annuity
plan described in section 403 of the Code, less any after-tax amount
considered contributed to such plan by the Participant as determined
under section 402(d)(4)(d)(i) of the Code, and (2) funds previously
distributed from such a tax-qualified plan that were contributed to a
"conduit" individual retirement account or annuity. Any such eligible
rollover distribution must be transferred to the Plan within 60 days of
the Participants receipt thereof unless the Participant elects to
directly transfer such distribution pursuant to subsection (1) above. 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.
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<PAGE> 26
(b) INVESTMENT GAINS AND LOSSES. The investment gains and
losses attributable to Rollover Contributions which are invested in
each investment fund within the Trust Fund shall be determined by, or
at the direction of, the Committee as of each Valuation Date, and such
investment gains and losses shall be credited to each Rollover 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 Rollover 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 Rollover Account shall be determined
before crediting any Rollover Contributions credited to such account as
of such Valuation Date.
5.6 ACCOUNT INVESTMENTS. The Trustee at the direction of the Committee
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 Committee
furnishes from time to time to Participants. Each Participant shall direct the
investment of his Account with respect to (1) amounts credited to his Before-Tax
and Matching Accounts as of the preceding Valuation Date, (2) his Rollover
Account and (3) future amounts credited to his Before-Tax and Matching Accounts
after such Valuation Date, in accordance with the following rules:
(a) Each such election shall be made on a properly completed
Election Form, in accordance with the applicable procedures of the
Committee.
(b) No more than one change of election may be made on each
business day of the Employer with respect to each of (1), (2) and (3)
above, (i.e., one change with respect to a Participant's current
Before-Tax and Matching Accounts balance, one change with respect to a
Participant's Rollover Account or one change with respect to future
amounts to be credited to his Before-Tax and Matching Accounts, or any
combination of such changes).
(c) A Participant's election with respect to his Account
balance as of the preceding Valuation Date may be made in such
increments of such balance as the Committee may prescribe from time to
time. A Participant's election with respect to future contributions
credited to his Account after such Valuation Date shall be made in ten
percent increments of such contributions (or such other increments as
the Committee may prescribe from time to time to time).
(d) An election shall be effective on the same day if received
before 4:00 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 SPECIAL RULES CONCERNING HARRIS STOCK FUND. Notwithstanding any
other provision is to the contrary, the following rules shall apply to
investments in the Harris Stock Fund.
(a) AVAILABILITY. For any Plan Year, the Before-Tax
Contributions invested in this fund on behalf of a Participant in each
Plan Year shall equal no more than one
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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 so invested may be
distributed to the Participant (or his Beneficiary) before the
expiration of the 36-month period if such person is otherwise entitled
to a distribution under the Plan.
(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 Fond 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. Each election
shall be completed by following the appropriate procedure pursuant
to sec. 5.6. 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 contribution for amounts
invested in the Harris Stock Fund shall be in cash; provided that the
Employer, in its discretion, may make the contribution in Harris Stock,
which may be contributed at a discount from fair market value. The
Trustee is authorized to purchase Harris Stock in the open market, and
to give effect to the discount, if any, that has been established from
time to time by allocating shares to Participant's Accounts in addition
to the number of shares purchased on the open market by means of a
given contribution. Elections to invest in the Harris Stock Fund shall
be given effect as soon as practicable.
(e) DISTRIBUTIONS. Distributions from the Harris Stock Fund
shall be paid in the form of cash or shares of Harris Stock at the
election of the Participant, provided that fractional shares and
distributions of a de minimis amount as determined by the Committee or
its delegate 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
accordance with the terms of the Trust Agreement (to the extent the
provisions therefore not inconsistent with ERISA).
5.8 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.
ARTICLE VI
PLAN BENEFITS
-------------
6.1 NORMAL RETIREMENT BENEFIT. The Account of a Participant who attains
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
Article 7. A Participant who
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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 Article 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 within the meaning of sec. 6.2(b) shall become fully
vested on the date his employment is so terminated and shall be paid
to him in accordance with sec. 7.1 If such former Participant
recovers from his disability and is reemployed as an Employee, such
Employee shall participate in the Plan in accordance with sec. 4.2 and
shall become vested 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 sec. 6.4(b).
(b) DEFINITION. A Participant shall be treated as disabled for
purposes of this sec. 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, (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
Committee 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
working for a person other than an Employer or any Affiliate
and arising out of such work, or
(iii) any intentional, self-inflicted injury.
(c) DETERMINATION. The Committee (or its delegate) 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 Committee for purposes of the Plan shall be
final and conclusive.
6.3 DEATH BENEFIT. If a Participant dies, the vested portion of his
Account shall be paid to his Beneficiary in accordance with Article 7. 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, his Rollover Account and the vested
portion of his Matching Account after the date of his separation from
service (within the meaning of section 401(k)(2)(B) of the Code), or,
if sooner. upon the disposition of substantially all the
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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 section 401(k)(10) of the Code).
Payment of such amounts shall be made in accordance with Article 7.
(b) VESTING SCHEDULE. The Committee shall determine the vested
portion of the Matching Account of a Participant who has not attained
Normal Retirement Age, become disabled as determined under sec. 6.2 or
died 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 Article 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
Article 7 or the date on which such Participant incurs five consecutive
Breaks in Service.
- --------------------------------------------------------------------------------
Vested Percentage
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 five consecutive Breaks in Service and any
portion of his Matching Account had been treated as a Forfeiture under
sec. 6.4(b), then 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 and (b) the date the Employee incurs five 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 VI by reason other than his death
and the Committee is unable to locate such Participant or if no Beneficiary of a
deceased Participant is identified and located by the Committee, then the
Committee, 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 Committee 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
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<PAGE> 30
Committee, the Committee promptly shall 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. The source of such restoration shall be any
Forfeitures which have not been allocated to the accounts of other Participants,
or if there are insufficient amounts in this regard, through an additional
contribution to the Plan by the Plan Sponsor to the extent necessary to make
such restoration.
If this Plan is terminated and the Committee (after taking the action
described in this sec. 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 the date of such termination shall be treated as such person's
Beneficiary and such Account shall be divided in an equitable manner 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 Committee, and all such
requests shall be granted 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 sec. 6.6(a). For
purposes of this sec. 6.6, the term "eligible person" means each
Participant and Beneficiary who is a "party in interest" (as defined in
section 3(14) of ERISA) with respect to this Plan.
(b) ADMINISTRATION. The Committee shall be the "named
fiduciary" responsible for administering the loan program through its
Human Resources Department and may establish procedures for loan
application and approval.
(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 section 401(a) of the Code shall not exceed
the lesser of (i) and (ii), where,
"(i)" equals 50% of the vested portion of his Account
determined as of the Valuation Date coinciding with
or immediately preceding the day on which the loan is
made, 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 Employer or an Affiliate during the one-year
period ending one day 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.
(2) No loan shall be made under this Plan to an
eligible person who is
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<PAGE> 31
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 (or such other period not exceeding five years as
provided in procedures authorized by the Committee). 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.
(5) No more than one loan shall be made under this
Plan to an eligible person at any one time.
(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 Committee at a rate which the Committee
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 Committee deems appropriate for an
eligible Person who is not an active Employee. Loan procedures
authorized by the Committee may provide for temporary
suspensions of loan repayments for a leave of absence not
exceeding one year or for periods of "qualified military
service" (within the meaning of section 414(u) of the Code),
each to the extent permitted under applicable law.
(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:
(i) an eligible person's employment as an Employee
terminates for any reason whatsoever unless 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 applicable 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.
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<PAGE> 32
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 canceled 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 at that time
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, an eligible
person's Account shall not be reduced by the loan amount plus any
accrued interest under this sec. 6.6(e)(2) until a distributable event
occurs under the Plan. In the event a default occurs before a
distributable event, the Committee 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 Committee 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 such person
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
Committee and the Trustee. The Account investments from which the loan
proceeds shall be withdrawn and the Account investments to which loan
repayments shall be credited shall be determined under procedures
authorized by the Committee. A Participant's loan shall be an asset of
his Account and all interest paid on such loan shall be credited to his
Account.
(g) SPECIAL POWERS. The Committee shall have the power to take
such action as the Committee 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 full
amount due (without regard to such discharge) on such loan or, to the
extent his obligation to repay is not extinguished under applicable
law, 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 sec. 6.4(a).
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<PAGE> 33
ARTICLE VII
BENEFIT DISTRIBUTION
--------------------
7.1 METHOD. The vested portion of a Participant's Account shall be paid
in a single lump sum cash payment to him or, in the case of his death, to his
Beneficiary. Such payment, to the extent the underlying loan obligation is not
extinguished under applicable law, may include distribution of the Participant's
note which evidences a loan under sec. 6.6. Notwithstanding the foregoing, a
Participant may elect to receive any amount invested in the Harris Stock Fund in
the form of Harris Stock, provided that fractional shares and distribution of a
de minimis amount as determined in the sole discretion of the Committee or its
delegate shall be paid in cash.
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 sec. 6.4(a).
(b) $3,500 OR LESS. If the vested portion of a Participant's
Account is $3,500 or less and has not exceeded $3,500 at the time of
any prior distributions under the Plan, then such vested portion
automatically shall be paid to such Participant as of the earliest date
permitted under sec. 7.2(a).
(c) MORE THAN $3,500. If the vested portion of a Participant's
Account exceeds (or at the time of any prior distribution exceeded)
$3,500, then distribution of such Account at any time before the
Participant reaches Normal Retirement Age shall be subject to the
Participant's consent. Notwithstanding the preceding sentence, payment
of the vested portion of his Account shall be made to him no later than
60 days after the end of the later of the Plan Year in which such
Participant's termination of employment occurs and the Plan Year in
which the Participant attains age 65.
(d) STATUTORY DEADLINES.
(1) PARTICIPANT.
(i) INITIAL DISTRIBUTION. Notwithstanding sec. 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 sec. 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."
(ii) REQUIRED BEGINNING DATE. Except as otherwise
provided in this 7.2(d)(1)(ii), a Participant's
"required beginning date" shall be the April I
following the calendar year in which he reaches age
701/2.
If a Participant continues in employment with an Employer
after his "required
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<PAGE> 34
beginning date," then 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 lump sum before the date which is the first
anniversary of the Participant's date of death.
7.3 DIRECT ROLLOVER.
(a) 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 distributes, may be mailed to the
Participant or distributee.
(b) For Purposes of this sec. 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" as 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, to the extent prescribed by the Secretary of the Treasury
of the United States does not include a distribution to the
extent it is required under section 401(a)(9) of the Code.
7.4 CLAIM FOR BENEFIT. Subject to secs. 7.2(b)(1) and 7.2(d)(1) and
(2), as a condition to the payment of any benefit under this Plan, a claim for
such benefit must be filed with the Committee 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
established by the Committee.
7.5 MISTAKES. If a mistake is made in favor of a Participant or a
Beneficiary in the payment of an Account, the Committee or the Trustee (acting
at the Committee'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 Committee deems proper and appropriate under the
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<PAGE> 35
circumstances, and any mistake made in favor of the Plan shall promptly be
corrected by, or at the direction of, the Committee.
7.6 DESIGNATION OF BENEFICIARY. Each Participant shall have the right
to designate a Beneficiary or Beneficiaries (who may be designated contingently
or successively and who may be an entity other than a natural person) to receive
any distribution to be made under this Article upon the death of such
Participant; provided that such designation shall not be effective if the
Participant is married on the date of the Participant's death unless such
designation has been consented to by such surviving spouse in writing
acknowledging the effect of such consent and witnessed by a Plan representative
or a notary public, or it is established to the satisfaction of a Plan
representative that such consent cannot be obtained because the Participants
spouse cannot be located or because of such other circumstances as may be
prescribed in Treasury Regulations. A Participant may from time to time, without
the consent of any Beneficiary, change or cancel any such designation. Such
designation and each change therein shall be made on the Election Form
prescribed by the Committee and shall be filed with the Committee. If (i) no
Beneficiary been named by a deceased Participant, (ii) such designation is not
effective pursuant to the first sentence of this section, (iii) the designated
Beneficiary has predeceased the Participant or (iv) the whereabouts of the
designated Beneficiary is unknown, any undistributed vested balance of the
deceased Participant shall be made in the following order of priority:
(a) the Participant's surviving spouse, if any,
(b) the Participant's designated beneficiary or beneficiaries
under the Lanier Worldwide, Inc. Pension Equity Plan, if any,
(c) the persons or persons expressly designated by the
Participant to receive the death benefit payable under the group term
life insurance program maintained by his Employer, if any,
(d) the estate of the Participant.
The marriage of a Participant shall be deemed to revoke any prior designation of
a Beneficiary made by such Participant and a divorce shall be deemed to revoke
any prior designation of the Participant's divorced spouse as Beneficiary if
written evidence of such marriage or divorce shall be received by the Committee
before distribution shall have been made in accordance with such designation.
ARTICLE VIII
NAMED FIDUCIARIES, THE COMMITTEE, AND PLAN EXPENSES
---------------------------------------------------
8.1 NAMED FIDUCIARIES. The Committee shall be the "named fiduciary"
within the meaning of such term as used in ERISA, provided that, to the extent a
Participant directs that his Before-Tax Contributions (and, hence, any
corresponding Matching Contributions) be invested in the Harris Stock Fund, the
Committee shall not be the "named fiduciary" with respect to such investment
decision and the Participant shall be responsible for the effects of such
decisions.
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<PAGE> 36
8.2 ALLOCATION AND DELEGATION BY NAMED FIDUCIARIES. The Committee 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 that no such allocation or designation shall
be effective until such person has consented to such designation.
8.3 ADVISERS. The Committee, or a person designated by the Committee to
perform any responsibility of the Committee pursuant to the procedure described
in sec. 8.2, may employ one or more persons to render advice with respect to any
responsibility the Committee 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 if such person otherwise satisfies the requirements for
participation under this Plan.
8.5 THE COMMITTEE.
(a) APPOINTMENT. The Board shall appoint the members of the
Committee which shall be responsible (except for duties specifically
vested in the Trustee) for the administration of the provisions of the
Plan. The Committee shall be the "administrator" of the Plan within the
meaning of such term as used in ERISA. The Board shall have the right
at any time, with or without cause, to remove any member or members of
the Committee. A member of the Committee may resign and his resignation
shall be effective upon delivery of his written resignation to the Plan
Sponsor. Upon the resignation, removal or failure or inability for any
reason of any member of the Committee to act hereunder, the Board shall
appoint a successor member. All successor members of the Committee
shall have all the rights, privileges and duties of their predecessors,
but shall not be held accountable for the acts of their predecessors.
Any member of the Committee may, but need not, be an employee or a
director, officer or shareholder of the Plan Sponsor, and such status
shall not disqualify him from taking any action hereunder or render him
accountable for any distribution or other material advantage received
by him under the Plan, provided that no member of the Committee who is
a Participant shall take part in any action of the Committee or any
matter involving solely his own rights under the Plan. The Trustee
shall be promptly notified of the names of the persons appointed as
members of the Committee and any successor members of the Committee by
delivery to the Trustee of a certified copy of the resolutions of the
Board making such appointment.
(b) POWERS AND DUTIES. The Committee shall have the exclusive
responsibility and complete discretionary authority to control the
operation, management and administration of the Plan, with all powers
necessary to enable it properly to carry out such responsibilities,
including (but not limited to) the full discretionary power to construe
the terms of the Plan and the Trust Agreement, to determine eligibility
for benefits, to resolve all interpretive, operational, equitable,
factual and other questions that arise under the Plan and to settle
disputed claims. The decisions of the Committee 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 and
any other concerned parties.
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<PAGE> 37
(c) RECORDS. The Committee shall keep a record of its
proceedings and all such records, together with such other documents as
the Committee shall determine are necessary or advisable for the
administration of the Plan, shall be preserved in the custody of the
Committee.
(d) INFORMATION. Each Employer shall supply the Committee 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 Committee.
(e) 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 Committee to
perform services on behalf of the Plan.
8.6 PAYMENT OF EXPENSES. All reasonable and proper expenses of the Plan
and the Trust Fund, including investment advisory fees and the Trustee's fees as
agreed upon by the Committee 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 Committee and the Trustee) to pay such
expenses. The Plan Sponsor may seek reimbursement of any expense which is
properly payable by the Trust Fund.
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.
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 the Plan in any respect by action of the 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 the Plan and the
Trust Fund to be exempt from income taxes under sections 401(a) and 501(a) of
the Code, respectively.
10.2 TERMINATION. The Plan Sponsor reserves the right to terminate the
Plan, in whole or in part, or to declare a discontinuance of contributions to
the Plan at any time by action of its Board, and the Plan Sponsor reserves the
right to terminate the participation in the Plan, in whole or in part, by any
Employer by action of the Board. Furthermore, an Employer's participation in the
Plan automatically shall terminate if, and at such time as, its status as an
Employer terminates
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<PAGE> 38
for any reason whatsoever (other than through a merger or consolidation into
another Employer). If there is a termination or partial termination of the Plan
or a declaration of a discontinuance of contributions to the Plan, then 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 section 401(k) of the Code,
and the Trustee shall follow such directions.
10.3 MERGER OR CONSOLIDATION. In the case of any merger or
consolidation of the Plan with, or transfer of assets or liabilities of the Plan
to, any other plan, each person for whom an Account is maintained shall, if such
Plan is 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 been terminated, provided that 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 sections 401(a)(11) and 417 of the Code.
ARTICLE XI
MISCELLANEOUS
-------------
11.1 SPENDTHRIFT CLAUSE. Subject to sec. 11.10, no Account, benefit,
payment or distribution under the 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 the Plan
except under sec. 6.6.
11.2 LEGALLY INCOMPETENT. The Committee 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 Committee, the Plan Sponsor or any 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 the 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
the Plan.
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<PAGE> 39
11.4 DISCRIMINATION. The Committee shall administer the 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 Committee 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 that the Committee shall not permit any
discrimination in favor of Highly Compensated Employees which would be
prohibited under section 401(a) of the Code. If for any Plan Year the Committee
determines that following the terms of the Plan would result in a failure to
satisfy the coverage requirements under section 410(b) of the Code, then the
Committee shall take such action as it deems appropriate under the circumstances
to prevent such failure.
11.5 CLAIMS. Any payment to a Participant or Beneficiary or to his
legal representative, or heirs-at-law, made in accordance with the provisions of
the Plan, shall to the extent thereof be in full satisfaction of all claims
under the Plan against the Employers, any of whom may require such Participant,
Beneficiary, Spouse, 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.
11.6 AGENT FOR SERVICE OF PROCESS. The agent for service of process for
the Plan and the Committee shall be the person currently listed in the records
of the Secretary of State of Delaware as the agent for service of process for
the Plan Sponsor.
11.7 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 sec. 5.4(b)(3) with
respect to a suspense account established in accordance with section
415 of the Code;
(b) a contribution which is made by an Employer or the Plan
Sponsor by a mistake of fact upon direction of the Committee shall be
refunded by the Trustee to the Employer or 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 section 401(a) of the
Code 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 sec. 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 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.
11.8 PLAN NOT AN EMPLOYMENT CONTRACT. The Plan is not a contract of
employment. Participation in the Plan shall not give any Employee the right to
be retained in the employ of the
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<PAGE> 40
Employer or any Affiliate, nor, upon termination of his employment, to have any
interest in the Trust Fund except as expressly provided in the Plan.
11.9 TOP HEAVY PLAN.
(a) DETERMINATION. If the Committee as of each June 30
("determination date") determines that the sum of the present value of
the accrued benefits of "key employees" (as defined in section
416(i)(1) of the Code) 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 section 416(q) of the Code, the
Plan shall be "top heavy" for the Plan Year which begins on the
immediately following July 1. For purposes of this sec. 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 the determination date,
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 tax-qualified plan (as described in section
401(a) of the Code) maintained by an Employer or 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 section 401(a)(4) or
410 of the Code, and
(B) each other tax-qualified plan maintained by an
Employer or an Affiliate (other than plan described in
clause (A)) which may be aggregated with the 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
sections 401(a)(4) and 410 of the Code, 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.
(b) SPECIAL TOP HEAVY PLAN RULES. If the Committee determines
that the Plan is "top heavy" for any Plan Year, then the special rules
set forth in this sec. 11.9 shall apply notwithstanding any other rules
to the contrary set forth elsewhere in the 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
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<PAGE> 41
equal to the lesser of (A) 4% of his Compensation (as defined
for purposes of sec. 5.4(b)) for such year and (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.
(2) For Plan Years commencing prior to January 1,
2000, the Committee shall take such action as necessary to
satisfy the requirements of section 415(e) and section 416(h)
of the Code if it (following the procedures set forth in this
sec. 11.9) determines that the Plan fails to meet the
requirements set forth in section 416(h)(2)(B) of the Code.
11.10 QUALIFIED DOMESTIC RELATIONS ORDER. Benefits under the Plan shall
be paid in accordance with the applicable requirements of a "qualified domestic
relations order" as that term is defined in' section 414(p) of the Code and
section 206(d)(3) of ERISA. The Committee, in accordance with a uniform and
nondiscriminatory procedures established by the Committee, shall
(a) promptly notify the Participant and any alternate payee
(as that term is defined in section 414(p)(8) of the Code) of the
receipt of a domestic relations order and the 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 the Plan pursuant to
such order in accordance with the rules set forth in section 414(p) of
the Code.
The Plan shall commence payment of benefits to the Alternate Payee as of the
later of (i) the earliest date a distribution may be made pursuant to the order
and (ii) as soon as administratively practicable after the date such order is
determined by the Committee to be a "qualified domestic relations order."
The determinations and the distribution made by, or at the direction
of, the Committee under this sec. 11.10 shall be final and binding on the
Participant, and on all other persons interested in such order. Unless the
"alternate payee" is also a Participant under the Plan or is a "party in
interest" (as defined in section 3(14) of ERISA), an "alternate payee" under
this sec. 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.
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<PAGE> 42
IN WITNESS WHEREOF, Lanier Worldwide, Inc. has caused its duly
authorized officers to execute and affix its seal to this Plan this____ day of
__________, 1997.
LANIER WORLDWIDE, INC.
By:__________________________
Title:_______________________
(SEAL)
ATTEST
By:____________________________
Title:_________________________
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<PAGE> 43
AMENDMENT NUMBER ONE
TO THE
LANIER WORLDWIDE, INC. SAVINGS INCENTIVE PLAN
WHEREAS, Lanier Worldwide, Inc., a Delaware corporation (the
"Corporation"), heretofore has adopted and maintains the Lanier Worldwide,
Inc. Savings Incentive Plan (as amended and restated as of July 1, 1997) (the
"Plan");
WHEREAS, the Corporation has the authority to amend the Plan pursuant
to Section10.1 of the Plan;
WHEREAS, the Corporation desires to amend the Plan effective July 1,
1998 to provide that upon a participant's termination of employment the Plan
will automatically distribute the participant's vested account balance if it
is equal to or less than the maximum amount (currently $5,000.00) that may be
so distributed under the law; and
WHEREAS, the Corporation desires to amend the Plan in certain other
respects.
NOW, THEREFORE, pursuant to the power of amendment contained in
Section 10.5 of the Plan, the Plan is hereby amended as follows:
1. Effective as of July 1, 1997, the final sentence of Section
5.4(b)(3) is hereby amended to read as follows:
Transfers of Before-Tax Contributions to such suspense accounts shall
be returned to the Participant.
2. Effective July 1, 1997, Section 5.4(d)(3) is hereby amended to
read as follows:
CALCULATION AND DISTRIBUTION OF EXCESS CONTRIBUTIONS. If the
Plan Administrator determines that there are Excess Contributions for
a Plan Year, then the Excess Contributions (and income allocable
thereto) shall be distributed to certain Highly Compensated
Participants before the end of the immediately following Plan Year as
required under section 401(k)(8) of the Code. The amount of any
income allocable to any Before-Tax Contributions to be so distributed
shall be determined pursuant to Regulations.
The amount of Excess Contributions shall be determined in the
following manner. The Deferral Percentage of the Highly Compensated
Participant(s) with the highest Deferral Percentage shall be reduced
by a percent (or in the case of more than one such Highly Compensated
Participant, a pro rata portion of such percent) equal to the lesser
of (i) the amount required to cause the Deferral Percentage of such
Highly Compensated
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<PAGE> 44
Participant(s) to equal the Deferral Percentage of the Highly
Compensated Participant with the next highest Deferral Percentage and
(ii) the amount which would cause the Plan to satisfy sec. 5.4(d)(1)
for the relevant Plan Year. If the Deferral Percentage test is not
satisfied after reducing the Deferral Percentage of the Highly
Compensated Participant(s) with the highest Deferral Percentage, then
the Deferral Percentages of the remaining Highly Compensated
Participants shall be ranked in descending order, from the next
highest Deferral Percentage to the lowest, and each such Deferral
Percentage shall be reduced, in descending order, until the Deferral
Percentage test is satisfied. The percent by which each Deferral
Percentage is so reduced is then multiplied by the Compensation of
Highly Compensated Participant(s) to whom such Deferral Percentage
relates, and the resulting amounts are added together to determine
the total amount of the Excess Contributions.
The portion of the Excess Contributions to be distributed to a Highly
Compensated Participant shall be determined in the following manner.
The Highly Compensated Participant(s) with the highest dollar amount
of Before-Tax Contributions shall receive an amount (if there is more
than one such Highly Compensated Participant, a pro rata share of
such amount) equal to the lesser of (i) the Excess Contributions and
(ii) the portion of the Excess Contributions equal to the excess of
the Before-Tax Contributions made on the behalf of such Highly
Compensated Participant(s) over the Before-Tax Contributions made on
behalf of the Highly Compensated Participant(s) with the next highest
dollar amount of Before-Tax Contributions. The steps described in the
foregoing sentence shall be repeated by identifying the amount of
Before-Tax Contributions to be distributed to each successive Highly
Compensated Employee with the next highest dollar amount of
Before-Tax Contributions until the Excess Contributions are
exhausted. The amount of Before-Tax Contributions to be distributed
under this sec. 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 pursuant to sec. 5.4(c).
3. Effective July 1, 1997, Section 5.4(e)(3) is hereby amended to
read as follows:
CALCULATION AND DISTRIBUTION OF EXCESS AGGREGATE
CONTRIBUTIONS. If the Plan Administrator determines that there are
Excess Aggregate Contributions for a Plan Year, then the Excess
Aggregate Contributions (and income allocable thereto) shall be
forfeited (if otherwise forfeitable under sec.6.4) or distributed (if
not so forfeitable) to certain Highly Compensated Participants before
the end of the immediately following Plan Year as required under
section 401(m)(6) of the Code. The amount of any income allocable to
any Matching Contributions to be so forfeited or distributed shall be
determined pursuant to Regulations.
The amount of Excess Aggregate Contributions shall be determined in
the following manner. The Contribution Percentage of the Highly
Compensated Participant(s) with the highest Contribution Percentage
shall be reduced by a percent (or in the case of more
2
<PAGE> 45
than one such Highly Compensated Participant, a pro rata portion of
such percent) equal to the lesser of (i) the amount required to cause
the Contribution Percentage of such Highly Compensated Participant(s)
to equal the Contribution Percentage of the Highly Compensated
Participant with the next highest Contribution Percentage and (ii)
the amount which would cause the Plan to satisfy sec. 5.4(e)(1) for
the relevant Plan Year. If the Contribution Percentage test is not
satisfied after reducing the Contribution Percentage of the Highly
Compensated Participant(s) with the highest Contribution Percentage,
then the Contribution Percentages of the remaining Highly Compensated
Participants shall be ranked in descending order, from the next
highest Contribution Percentage to the lowest, and each such
Contribution Percentage shall be reduced, in descending order, until
the Contribution Percentage test is satisfied. The percent by which
each Contribution Percentage is so reduced is then multiplied by the
Compensation of Highly Compensated Participant(s) to whom such
Contribution Percentage relates, and the resulting amounts are added
together to determine the total amount of the Excess Aggregate
Contributions.
The portion of the Excess Aggregate Contributions to be forfeited or
distributed to a Highly Compensated Participant shall be determined
in the following manner. The Highly Compensated Participant(s) with
the highest dollar amount of Matching Contributions shall be
allocated an amount to be forfeited or distributed (if there is more
than one such Highly Compensated Participant, a pro rata share of
such amount) equal to the lesser of (i) the Excess Aggregate
Contributions and (ii) the portion of the Excess Aggregate
Contributions equal to the excess of the Matching Contributions made
on the behalf of such Highly Compensated Participant(s) over the
Before-Tax Contributions made on behalf of the Highly Compensated
Participant(s) with the next highest dollar amount of Matching
Contributions. The steps described in the foregoing sentence shall be
repeated by identifying the amount of Matching Contributions to be
allocated to each successive Highly Compensated Employee with the
next highest dollar amount of Matching Contributions until the Excess
Aggregate Contributions are exhausted. The amount of Matching
Contributions to be distributed under this sec. 5.4(e)(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 pursuant to sec. 5.4(c).
4. Effective July 1, 1998, Sections 7.2(b) and (c) of the Plan are
hereby amended to replace "$3,500" with "$5,000 (or such other amount
permitted under applicable law)" therein.
5. Effective July 1, 1998, Section 7.2(b) shall be retitled "$5,000
or Less" and Section 7.2(c) shall be retitled "More than $5,000".
6. Effective July 1, 1997, the second paragraph of Section 10.2 is
hereby amended to insert the phrase "without establishment or maintenance of
another defined contribution plan other than as permitted under section 401(k)
of the Code" immediately after the word "declaration".
3
<PAGE> 46
7. Effective August 5, 1997, Section 11.1 of the Plan is hereby
amended delete therefrom the clause "Subject to sec.11.10," and insert in its
place the clause "Subject to sec. 11.10 and any offset payment to the Plan
permitted pursuant to section 401(a)(13)(C) of the Code."
4
<PAGE> 47
AMENDMENT NUMBER TWO
TO THE
LANIER WORLDWIDE, INC. SAVINGS INCENTIVE PLAN
WHEREAS, Lanier Worldwide, Inc., a Delaware corporation (the
"Corporation"), heretofore has adopted and maintains the Lanier Worldwide,
Inc. Savings Incentive Plan (as amended and restated as of July 1, 1997) (the
"Plan");
WHEREAS, the Corporation has the authority to amend the Plan pursuant
to Section 10.1 of the Plan;
WHEREAS, the Corporation desires to amend the Plan effective January
1, 1999 in certain respects.
NOW, THEREFORE, pursuant to the power to amendment contained in
Section 10.1 of the Plan, the Plan is hereby amended effective January 1, 1999
as follows:
1. Section 5.2(a) of the Plan is hereby amended to read as follows:
Subject to the rules set forth in this sec. 5.2 and secs. 5.1 and
5.4, each Participant shall be deemed to have elected to defer 3% of
his Compensation payable each pay period, effective as of the first
Entry Date following his satisfaction of the applicable Participation
Requirement, unless the Participant elects otherwise prior to such
Entry Date in the time and manner prescribed by the Committee. If a
Participant who elects not to make Before-Tax Contributions to the
Plan in accordance with the foregoing sentence desires to begin
making Before-Tax Contributions to the Plan after the Plan after the
Entry Date following his satisfaction of the applicable Participation
Requirement, such Participant's initial election shall be effective
as of the first Entry Date following the date he timely delivers a
properly completed Election Form to the Committee. An election shall
remain in effect until revised or revoked.
2. Section 5.2(c) of the Plan is hereby amended to read as follows:
A Participant shall have the right to revoke an election to make
Before-Tax Contributions at any time during a Plan year, and any
revocation of such an election shall become effective as soon as
practicable after the Participant properly completes and delivers the
related Election Form to the Committee.
<PAGE> 48
AMENDMENT NUMBER THREE
TO THE
LANIER WORLDWIDE, INC. SAVINGS INCENTIVE PLAN
WHEREAS, Lanier Worldwide, Inc., a Delaware corporation (the
"Corporation"), heretofore has adopted and maintains the Lanier Worldwide,
Inc. Savings Incentive Plan (as amended and restated as of July 1, 1997) (the
"Plan");
WHEREAS, the Corporation has the authority to amend the Plan pursuant
to Section 10.1 of the Plan; and
WHEREAS, the Corporation desires to amend the Plan effective June 1,
1999 to provide that upon a participant's involuntary termination as a result
of the sale of Medquist Transcriptions, LTD., such participant shall be fully
vested in his or her regular matching account balance.
NOW, THEREFORE, pursuant to the power of amendment contained in
Section 10.1 of the Plan, the Plan is hereby amended to add the following new
Section 6.4(d):
(d) FORMER MEDQUIST EMPLOYEES. Notwithstanding any contrary provision
of this Plan, each Participant whose employment with all Employers
and all Affiliates terminated involuntarily as a result of the sale
of Medquist Transcriptions, LTD. described in the Asset Purchase
Agreement, dated April 9, 1999, by and among Medquist Transcriptions,
LTD., Lanier Professional Services, Inc. and Harris Southwest
Properties, Inc., shall be fully vested in his or her Regular
Matching Account as of such termination date.
<PAGE> 49
AMENDMENT NUMBER FOUR
TO THE
LANIER WORLDWIDE, INC. SAVINGS INCENTIVE PLAN
WHEREAS, Lanier Worldwide, Inc., a Delaware corporation (the
"Corporation"), heretofore has adopted and maintains the Lanier Worldwide,
Inc. Savings Incentive Plan (the "Plan");
WHEREAS, the Corporation has the authority to amend the Plan pursuant
to Section 10.1 of the Plan;
WHEREAS, the Corporation desires to amend the Plan effective as of
the date that the common stock of the Corporation is distributed to the
stockholders of Harris Corporation as a dividend on their shares of the common
stock of Harris Corporation.
NOW, THEREFORE, pursuant to the power of amendment contained in
Section 10.1 of the Plan, the Plan is hereby amended effective as of the date
that the common stock of the Corporation is distributed to the stockholders of
Harris Corporation as a dividend on their shares of the common stock of Harris
Corporation as follows:
1. Section 3.31 of the Plan is hereby amended to read as follows:
3.31 STOCK. The common stock of the Plan Sponsor, together with the
associated preferred stock purchase rights; provided, however, that
the term "Stock" shall also refer to the common stock of Harris
Corporation purchased for the Plan before the date that the common
stock of the Plan Sponsor is distributed to the stockholders of
Harris Corporation as a dividend on their shares of the common stock
of Harris Corporation.
2. The term "Stock" shall be substituted for the term "Harris Stock"
wherever that term appears and the term "Stock Fund" shall be substituted for
the term "Harris Stock Fund" wherever that term appears.
3. Section 3.42 of the Plan is hereby amended to read as follows to
clarify the participation requirement:
3.42. PARTICIPATION REQUIREMENT
(a) With respect to eligibility for Before-Tax Contributions and
Rollover Contributions, the later of (i) the date on which an
Eligible Employee first performs an Hour of Service after his or her
Employment Commencement Date or (ii) the date on which such Eligible
Employee attains age 21; and
(b) with respect to eligibility for Matching Contributions, the later
of (i) the date on which an Eligible Employee completes one Year of
Service or (ii) the date on which such Eligible Employee attains age
21.
<PAGE> 50
4. The last sentence of Section 4.1 of the Plan is hereby amended to
read as follows to clarify the participation requirement:
An Eligible Employee who is classified as a temporary, summer or
casual part-time employee shall become a Participant the first Entry
Date immediately following or coincident with the later of (i) the
last day of the 12-month period beginning on such Eligible Employee's
Employment Commencement Date (or any subsequent 12-month period
beginning on any anniversary of such Employment Commencement Date)
during which such Eligible Employee completes at least 1,000 Hours of
Service or (ii) the date on which such Eligible Employee attains age
21.
5. Section 5.7(b) of the Plan is hereby amended to read as follows:
(b) RESTRICTIONS ON TRANSFERS. A Participant may not transfer amounts
from other Investment Funds to the Stock Fund. Any contributions
invested in this fund must remain in this fund for a minimum of 12
months, provided that amounts so invested may be distributed to the
Participant (or his Beneficiary) before the expiration of the
12-month period if such person is otherwise entitled to a
distribution under the Plan. Notwithstanding the foregoing, the
12-month restriction shall not apply to the common stock of Harris
Corporation ("Harris Stock"), and Harris Stock may be liquidated and
the proceeds may be invested in other Investment Funds or in Stock.
6. Section 5.7(c) of the Plan is hereby amended to read as follows:
(c) DIVIDENDS. A Participant's allocable share of cash dividends
(other than cash earnings) credited to the Stock Fund will be
reinvested in the Stock Fund unless a 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 Stock Fund. Each election shall be completed by
following the appropriate procedure pursuant to sec. 5.6. Dividends
paid in the form of stock of the Plan Sponsor will be retained in the
Participant's Account. Dividends paid in the form of stock of Harris
Corporation will be liquidated and such liquidated dividends will be
cash earnings subject to investment elections in accordance with this
subsection of the Plan.
7. Section 10.1 of the Plan is hereby amended to read as follows:
10.1. AMENDMENT. The Plan Sponsor shall have the right at any time
and from time to time to amend the Plan in any respect by action of
the Chief Executive Officer and the Chief Operating Officer of the
Plan Sponsor, 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
the Plan may be amended retroactively to affect the Accounts
maintained for any person if necessary to cause the Plan and the
Trust Fund to be exempt from income taxes under sections 401(a) and
501(a) of the Code, respectively.
<PAGE> 1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the reference to our firm under the caption "Independent
Certified Public Accountants" and to the use of our report dated July 27, 1999
in the Registration Statement on Form 10 of Lanier Worldwide, Inc. dated
September 28, 1999.
/s/ Ernst & Young LLP
Orlando, Florida
September 27, 1999
