<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For quarter ended September 30, 1994 Commission File Number 1-3863
HARRIS CORPORATION
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 34-0276860
------------------------ ---------------------------------
(State of Incorporation) (IRS Employer Identification No.)
1025 West NASA Boulevard
Melbourne, Florida 32919
----------------------------------------
(Address of principal executive offices)
(407) 727-9100
-------------------------------
(Registrant's telephone number)
-------------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
---- ----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the close of the period covered by this report.
39,416,250 Shares
----------
<PAGE> 2
PART I. FINANCIAL INFORMATION
- - - - - ------------------------------
HARRIS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME
The following information for the quarters ended September 30, 1994 and 1993
has not been audited by independent accountants, but in the opinion of
management reflects all adjustments (consisting only of normal recurring
accruals) necessary for a fair presentation of the results for the indicated
periods. The results of operations for the quarter ended September 30, 1994
are not necessarily indicative of the results for the full fiscal year.
<TABLE>
<CAPTION>
Quarter Ended
---------------------------
September 30, September 30,
1994 1993
------------ ------------
(In millions, except per
share amounts)
<S> <C> <C>
Revenue
Revenue from sales, rentals
and services $807.3 $769.1
Interest 8.8 8.2
------ ------
816.1 777.3
Costs and Expenses
Cost of sales, rentals and
services 561.5 520.5
Engineering, selling and
administrative expenses 195.9 203.5
Interest 14.8 14.2
Other - net (.4) (.7)
------ ------
Income before income taxes 44.3 39.8
Income taxes 15.5 15.1
------ ------
Income before cumulative effect of
change in accounting principle 28.8 24.7
Cumulative effect of change in accounting
principle (Postretirement Benefits Other
Than Pensions) - (10.1)
------ ------
Net Income $ 28.8 $ 14.6
====== ======
Income per share before cumulative effect
of change in accounting principle $.73 $.62
Cumulative effect of change in accounting
principle - (.25)
---- ----
Net Income Per Common Share (Primary) $.73 $.37
==== ====
Cash Dividends Paid Per Common Share $.31 $.28
==== ====
</TABLE>
<PAGE> 3
<TABLE>
HARRIS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
<CAPTION>
September 30, June 30,
1994 1994
------------ ------------
ASSETS (In millions)
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 86.7 $ 139.1
Marketable securities 29.9 -
Trade accounts and notes receivable - net, less allowance
for collection losses of $28,700,000 at September 30, 1994
and $29,500,000 at June 30, 1994 608.4 647.2
Unbilled costs and accrued earnings on fixed price contracts
based on percentage-of-completion accounting, less progress
payments of $225,700,000 at September 30, 1994 and
$206,400,000 at June 30, 1994 370.6 369.7
Inventories:
Work in process and finished products 387.2 385.6
Raw materials and supplies 78.1 77.5
------- -------
465.3 463.1
Deferred income taxes 68.3 79.2
------- -------
Total Current Assets 1,629.2 1,698.3
Plant and equipment, less allowances for depreciation of
$1,170,500,000 at September 30, 1994 and $1,167,500,000 at
June 30, 1994 568.3 551.3
Notes receivable - net 151.3 151.1
Intangibles resulting from acquisitions 163.1 166.0
Other assets 94.3 110.4
-------- --------
$2,602.2 $2,677.1
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short-term debt $ 24.9 $ 19.8
Trade accounts payable 132.0 184.5
Compensation and benefits 161.7 188.5
Other accrued items 176.6 164.9
Advance payments and unearned income 193.8 189.0
Income taxes 58.3 57.0
Current portion of long-term debt 1.9 1.0
-------- --------
Total Current Liabilities 749.2 804.7
Deferred income taxes 22.4 22.7
Long-term debt 662.2 661.7
Shareholders' Equity
Capital stock:
Preferred Stock, without par value:
Authorized - 1,000,000 shares; issued - none - -
Common Stock, par value $1 per share:
Authorized - 100,000,000 shares; issued 39,416,250 shares
at September 30, 1994 and 39,298,118 at June 30, 1994 39.4 39.3
Other capital 241.6 230.3
Retained earnings 902.2 943.1
Net unrealized gain on securities available-for-sale (net of
taxes) 11.4 -
Unearned compensation (10.0) (3.2)
Cumulative translation adjustments (12.2) (21.5)
-------- --------
Total Shareholders' Equity 1,172.4 1,188.0
-------- --------
$2,602.2 $2,677.1
======== ========
</TABLE>
<PAGE> 4
<TABLE>
HARRIS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
<CAPTION>
Quarter Ended
----------------------------
September 30, September 30,
1994 1993
------------- -------------
(In millions)
<S> <C> <C>
Cash flows from operating activities
Income before cumulative effect of change
in accounting principle $ 28.8 $ 24.7
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation of plant and equipment 41.5 38.3
Non-current deferred income tax (.4) 3.3
(Increase) decrease in:
Accounts and notes receivable 14.5 (4.8)
Unbilled costs and inventories (19.5) (42.7)
Other assets (2.6) (1.7)
Increase (decrease) in:
Trade payables and accrued expenses (59.9) (63.8)
Advance payments and unearned income 5.9 (8.8)
Income taxes 6.3 (36.9)
Other (.2) (3.5)
----- -----
Net cash provided by (used in) operating activities 14.4 (95.9)
----- -----
Cash flows from investing activities
Additions of plant and equipment-net of
normal disposals (56.1) (37.5)
----- -----
Net cash used in investing activities (56.1) (37.5)
----- -----
Cash flows from financing activities
Increase in short-term debt 6.0 55.9
Increase (decrease) in long-term debt .4 (.2)
Proceeds from sale of Common Stock 6.6 5.0
Purchase of Common Stock for treasury (4.3) -
Cash dividends (12.1) (11.1)
Dividend-in-kind (8.4) -
----- -----
Net cash provided by (used in) financing activities (11.8) 49.6
----- -----
Effect of exchange rate changes on cash and cash
equivalents 1.1 1.4
----- -----
Net decrease in cash and cash equivalents $(52.4) $(82.4)
====== ======
</TABLE>
<PAGE> 5
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1994
Note A -- Basis of Presentation
- - - - - -------------------------------
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with the instructions to Form 10-Q and Rule 10-01
of Regulation S-X. Accordingly, they do not include all information and
footnotes necessary for a complete presentation of financial position, results
of operations, and changes in cash flows in conformity with generally accepted
accounting principles. For further information refer to the financial
statements and notes to financial statements included in the Corporation's Form
10K for the fiscal year ended June 30, 1994.
Note B -- Accounting Standards
- - - - - ------------------------------
For the quarter ended September 30, 1994, the Corporation adopted Statement of
Financial Accounting Standards No. 115, "Accounting for Certain Investments in
Debt and Equity Securities". Under the provisions of this standard, the
Corporation's marketable securities, all of which are classified as
available-for-sale, are reported at fair value, with unrealized gains and
losses excluded from net income and reported as a net after-tax amount as a
separate component of stockholders' equity until realized. The cost basis of
marketable securities at September 30, 1994, was $11.1 million. Realized gains
or losses are determined using the specific identification method. Gross
realized gains included in net income for the first quarter of fiscal 1995 were
not material.
Note C -- Dividend-in-kind
- - - - - --------------------------
During the quarter ended September 30, 1994, the Corporation spun off as a tax
free dividend its computer systems business by distributing one share of Harris
Computer Systems Corporation common stock for every twenty shares of the
Corporation's Common Stock. The distribution ($55.2 million) is included as a
charge to retained earnings in the Condensed Consolidated Balance Sheet. In
the Condensed Consolidated Statement of Cash Flows, the dividend is presented
as a noncash transaction except for $8.4 million which was the cash balance of
Harris Computer Systems Corporation at the time of the spin-off.
Note D -- Litigation
- - - - - --------------------
In 1993, a California state court awarded damages against the Corporation in
the amount of $66.9 million, together with interest and costs of suit, to a
California software company. The suit arose from a contract between the
plaintiff and a discontinued operation of the Corporation. The Corporation
believes the judgment is unjustified and has filed an appeal with the
California Court of Appeals. The ultimate outcome of this litigation is
unknown. Accordingly, no provisions, beyond those already provided as part of
prior discontinued operation charges, have been made in the accompanying
consolidated financial statements. Prior discontinued operations charges
included legal costs the Corporation expects to incur in defending itself in
this matter.
<PAGE> 6
MANAGEMENT'S DISCUSSION AND ANALYSIS
- - - - - ------------------------------------
Sales and income before cumulative effect of change in accounting principle for
the first quarter were higher than the same period last year by 5.0 percent and
16.6 percent, respectively.
The Semiconductor segment reported strong growth in earnings and modestly
higher sales for the first quarter. A slightly higher cost of sales ratio was
more than offset by lower administrative and general expenses resulting from
prior year cost reduction efforts. The segment recognized a $12.1 million
charge for cost reduction actions in last year's fourth quarter. Approximately
25 percent of these reserves were used in this year's first quarter primarily
for severance payments, with the remaining reserves to be used in the second
and third quarters of this year. Segment net income also included gains from
the ongoing sales of investment securities in both the current and prior year.
Net income was up moderately in the Electronic Systems segment, while sales
were relatively flat compared to the prior year. A higher cost of sales ratio
resulting from increased bid and proposal costs were more than offset by
significantly lower administrative and general expenses. In the first quarter,
this segment's Computer Systems business was spun off to shareholders as an
independent public company. The computer systems business was not material to
the segment and its operating results.
Communications segment sales and net income were significantly higher than last
year's first quarter. Sales were higher at all operating units, while the
increase in earnings was led by the segment's broadcast-equipment and
microwave-systems businesses. A higher cost of sales ratio due to changes in
product mix and markets was offset by a lower operating expense ratio.
Net income at the Lanier Worldwide segment was significantly higher on a slight
increase in sales. An increase in the cost of sales ratio resulting from the
negative effect of changes in foreign currency was more than offset by reduced
operating expenses. Operating expenses continue to decline as the segment
benefits from prior year cost reduction efforts. These efforts were most
notable in Europe where operating margins improved significantly.
Cost of sales as a percentage of net sales increased to 69.6 percent versus
67.7 percent in last year's first quarter. Cost ratios were up in all
segments. The more significant increases were in the Electronic Systems and
Communications segments for the above discussed reasons.
Engineering, selling, and administrative expenses as a percentage of net sales
decreased from 26.5 percent last year to 24.3 percent in this year's first
quarter. The operating expense ratio was lower for all segments. For the
Corporation, operating expenditures were lower for all expense categories.
These reductions reflect continuing cost reduction initiatives in all segments
of the Corporation.
Interest expense in the first quarter increased from the prior year due to
higher rates. "Other-net", which includes gains from the sale of investment
securities in both the current and prior year, was comparable to last year's
first quarter.
The provision for income taxes as a percentage of pre-tax income was 35.0
percent, compared to 38.0 percent in the prior year. The statutory federal tax
rate for both periods was 35.0 percent. The decrease in the effective tax rate
from the prior year is due to increased foreign tax benefits.
Income before cumulative effect of change in accounting principle as a
percentage of sales was 3.6 percent in the first quarter, compared to 3.2
percent in the same period last year for the previously stated reasons.
Working capital decreased slightly from $893.6 million at June 30, 1994 to
$880.0 million at the end of the first quarter due to the spin-off of the
computer systems business which had working capital of $38.7 million. The
Corporation anticipates that the requirement for funds to finance operations
during fiscal 1995 will be met by cash flow from operations.
<PAGE> 7
PART II OTHER INFORMATION
- - - - - -------------------------
Item 5. Other information
-----------------
On November 11, 1994 -- the Corporation announced that, in order to
maintain its price competitiveness, the Electronic Systems Sector is
streamlining operations and reducing employment by approximately 700 people as
part of a major reduction in costs and expenses. The sector employs some 7,500,
primarily people in Palm Bay and Melbourne, Florida. The cost-reduction
actions include a flattening of the sector's management structure, eliminating
approximately 35 percent of executive positions, and consolidation of sector
and division functions. The sector also plans reductions in other fixed and
variable costs and expenses. An early return from these actions is expected,
which will be achieved within present operating plans and without the need for
a one-time charge.
Item 6. Exhibits and Reports on Form 8-K.
--------------------------------
(a) Exhibits:
(10)(a) Harris Corporation Master Trust dated as of August 1, 1994
between Harris Corporation and Bankers Trust Company, as
Trustee.
(b) Harris Corporation Master Rabbi Trust Agreement dated as of
August 1, 1994 between Harris Corporation and Bankers Trust
Company, as Trustee.
(11) Statement re: computation of per share earnings.
(27) Financial Data Schedule.
(b) Reports on Form 8-K.
No reports on Form 8-K have been filed during the quarter for which
this report is filed.
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HARRIS CORPORATION
--------------------------------
(Registrant)
Date: November 11, 1994 By:/s/Bryan R. Roub
-----------------------------
Bryan R. Roub
Senior Vice President - Finance
(Chief Financial Officer)
<PAGE> 1
EXHIBIT 10(a)
HARRIS CORPORATION
MASTER TRUST
August 1, 1994
<PAGE> 2
<TABLE>
TABLE OF CONTENTS
ARTICLE I
Title-Purpose-Policy-Effect
<S> <C> <C>
1.1 Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.4 Exclusive Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.5 Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.6 Domestic Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.7 Trustee Not Responsible for Enforcing Contributions
or for Sufficiency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE II
Participation
2.1 Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.2 Effect on Adopting Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.3 Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.4 Valuations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.5 Participant Records and Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE III
Administration of Participating Plans
3.1 Payment of Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
</TABLE>
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<PAGE> 3
<TABLE>
<S> <C> <C>
3.2 Reliance on Corporation Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.3 Trustee Not Responsible for Plan Administration . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE IV
Investment of Trust Assets
4.1 Asset Managers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.2 Investment Discretion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.3 Limitations on Investment Discretion . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.4 Responsibility for Diversification . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE V
Investment Funds Within the Master Fund
5.1 Participating Investment Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.2 The Company Stock Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE VI
Responsibility for Directed Funds
6.1 Responsibility for Selection of Agents . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.2 Trustee Not Responsible for Investments in Directed Funds . . . . . . . . . . . . . . . . 16
6.3 Investment Vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.4 Reliance on Asset Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.5 Merger of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.6 Notification of Named Fiduciary in Event of Breach . . . . . . . . . . . . . . . . . . . . 19
6.7 Definition of Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
</TABLE>
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<PAGE> 4
<TABLE>
<S> <C> <C>
6.8 Duty to Enforce Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.9 Restrictions on Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE VII
Powers of Asset Managers
7.1 General Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7.2 Additional Powers of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.3 Limitation of Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE VIII
Records and Accounts of Trustee
8.1 Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.2 Annual Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.3 Periodic Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.4 Account Stated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.5 Judicial Accountings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.6 Necessary Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE IX
Compensation, Taxes and Expenses
9.1 Compensation and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
9.2 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.3 Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
</TABLE>
- iii -
<PAGE> 5
<TABLE>
<S> <C> <C>
ARTICLE X
Resignation or Removal of Trustee
10.1 Resignation or Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.2 Designation of a Successor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.3 Reserve for Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE XI
Withdrawal of Participating Plans
11.1 Event of Withdrawal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11.2 Disqualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11.3 Approval of Appropriate Agencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE XII
Amendment or Termination
12.1 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
12.2 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
12.3 Trustee's Authority to Survive Termination . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE XIII
Tender Offers
13.1 In General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
13.2 Trustee's Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
</TABLE>
- iv -
<PAGE> 6
ARTICLE XIV
Authorities
<TABLE>
<S> <C> <C>
14.1 Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
14.2 Subsidiary or Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
14.3 Named Fiduciary and Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
14.4 Investment Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
14.5 Form of Communications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
14.6 Continuation of Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
14.7 No Obligation to Act on Unsatisfactory Notice . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE XV
General Provisions
15.1 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
15.2 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
15.3 Reliance on Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
15.4 Successor to the Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
15.5 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
15.6 Plan Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
15.7 No Waiver; Reservation of Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
15.8 Descriptive Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
15.9 Spendthrift Provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
</TABLE>
- v -
<PAGE> 7
<TABLE>
ARTICLE XVI
Undertaking by Company
<S> <C> <C>
16.1 Undertaking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
16.2 Limitation on Undertaking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
16.3 Waiver of Defense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
16.4 Survival of Undertakings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Appendix A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Appendix B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Appendix C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
</TABLE>
- vi -
<PAGE> 8
Agreement and Declaration of Trust made as of this 1st day of AUGUST,
1994, by and between HARRIS CORPORATION, a Delaware corporation, and BANKERS
TRUST COMPANY, a New York banking corporation.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Harris Corporation wishes to establish a master trust to
serve as a funding medium for eligible employee benefit plans of Harris
Corporation and its subsidiaries and affiliates; and
WHEREAS, Bankers Trust Company is willing to act as trustee of such
trust upon all of the terms and conditions hereinafter set forth.
NOW, THEREFORE, Harris Corporation and Bankers Trust Company declare
and agree that Bankers Trust Company will receive, hold and
administer all sums of money and such other property acceptable to Bankers
Trust Company as shall from time to time be contributed, paid or delivered to
it hereunder, together with any and all increments thereto, proceeds and
reinvestment thereof and income therefrom, IN TRUST, upon all of the following
terms and conditions:
ARTICLE I
Title-Purpose-Policy-Effect
---------------------------
1.1. NAME. The master trust established hereunder shall be known
as the Harris Corporation Master Trust and is sometimes hereinafter referred to
as the "Trust".
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1.2. DEFINITIONS. Where used in this Agreement and Declaration of
Trust, unless the context otherwise requires or unless otherwise expressly
provided:
(a) "Account Party" shall mean the Named Fiduciary and any
Person to whom the Trustee shall be instructed by the Named Fiduciary
to deliver its annual or other periodic account under Section 8.2 or
Section 8.3,EXCEPT, THAT with respect to any filings, notices, reports
or accountings required to be given under the General Trust, "Account
Party" shall be limited to that officer designated herein to represent
the Company.
(b) "Accounting Period" shall mean either the twelve
consecutive month period ending on June 30 or for the first year in
which the Trustee acts as Trustee hereunder or ceases to act as
Trustee with respect to any Participating Plan, the twelve-consecutive
month period or shorter period ending on June 30.
(c) "Agreement" shall mean all of the provisions of this
instrument and of all other written instruments amendatory hereof.
(d) "Asset Manager" shall mean the Trustee (other than for
purposes of Article VI), Named Fiduciary or Investment Manager,
individually or collectively as the context shall require, with
respect to those assets held in any Investment Fund established
hereunder over which it exercises, or to the extent it is authorized
to exercise, discretionary investment authority or control.
(e) "Bankers" shall mean Bankers Trust Company.
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(f) "Board of Directors" shall mean the board of directors
of the Company.
(g) "Code" shall mean the Internal Revenue Code of 1986,
as amended from time to time, and the Regulations issued thereunder.
(h) "Common Stock Fund" shall mean an Investment Fund
consisting of common stock of the Company.
(i) "Company" shall mean Harris Corporation or any
successor thereto.
(j) "Company Stock" shall mean the common stock of the
Company and securities convertible into common stock of the Company.
(k) "Corporation Committee" shall mean, with respect to
each Participating Plan, the Committee or other Person responsible for
benefit administration under such Participating Plan, including any
representative (designated in writing as such) or designee thereof
authorized to act on behalf of such Committee.
(l) "Directed Fund" shall mean any Investment Fund, or
part thereof, subject to the discretionary management and control of
the Named Fiduciary or any Investment Manager, other than the Trustee.
(m) "Discretionary Fund" shall mean any Investment Fund,
or part thereof, subject to the discretionary management and control
of the Trustee.
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(n) "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended from time to time and the Regulations
issued thereunder.
(o) "General Trust" shall mean the BT Pyramid Trust
created by Bankers Trust Company under Declaration of Trust effective
June 30, 1991, as heretofore or hereafter amended.
(p) "Insurance Contract" shall mean any contract or policy
(including any annuity contract) of any kind issued by an insurance
company, whether or not providing for the allocation of amounts
received by the insurance company thereunder solely to the general
account or solely to one or more separate accounts (including separate
accounts maintained for the collective investment of qualified
retirement plans), or a combination thereof, and whether or not any
such allocation may be made in the discretion of the insurance
company.
(q) "Investment Fund" shall mean each pool of assets
established for investment purposes pursuant to Section 5.1 in the
Trust in which one or more Participating Plans has an interest during
an Accounting Period. The term shall also include for all purposes
hereof any sub-fund or account into which an Investment Fund shall be
divided from time to time at the direction of the Named Fiduciary.
(r) "Investment Manager" shall mean a bank, insurance
company or investment adviser satisfying the requirements of Section
3(38) of ERISA.
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(s) "Investment Vehicle" shall mean any common, collective
or commingled trust (other than the General Trust or an Investment
Fund), investment company, corporation functioning as an investment
intermediary, Insurance Contract, partnership, joint venture or other
entity or arrangement to which, or pursuant to which, assets of an
Investment Fund within the Trust may be transferred or in which the
Trust has an interest, beneficial or otherwise (whether or not the
underlying assets thereof are deemed to constitute "plan assets" for
any purpose under ERISA).
(t) "Master Fund" shall mean all cash and other property
contributed, paid or delivered to the Trustee hereunder, all
investments made therewith and proceeds thereof and all earnings and
profits thereon, less payments, transfers or other distributions
which, at the time of reference, shall have been made by the Trustee,
as authorized herein. The Master Fund shall include each Investment
Fund and all evidences of ownership, interest or participation in an
Investment Vehicle, but shall not, solely by reason of the Master
Fund's investment therein, be deemed to include any assets of such
Investment Vehicle.
(u) "Named Fiduciary" shall mean the Person or its
designee with respect to a Participating Plan, who, within the meaning
of Section 402(a)(2), 402(c)(3) or 403(a)(1) of ERISA, has the
authority to perform the separate functions allocated to that "Named
Fiduciary" under this
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Agreement. Unless otherwise specifically provided to the contrary,
the Named Fiduciary shall mean the Company.
(v) "Participating Plan" shall mean any employee benefit plan
which meets the requirements for eligibility specified in
Section 2.1. All Participating Plans are listed on Appendix A
attached hereto.
(w) "Person" shall mean a natural person, trust, estate,
corporation, mutual company, joint-stock company, unincorporated
organization, association, partnership, joint venture, employee
organization, committee, board, participant, beneficiary, trustee,
partner, or venturer acting in an individual, fiduciary or
representative capacity, as the context may require.
(x) "Share" shall mean the interest of any Participating
Plan in the Master Fund, and where appropriate any Investment Fund,
the accounting for which will be maintained by the Trustee in a manner
agreed upon between the Company and the Trustee and may be expressed
in "units".
(y) "Trustee" shall mean Bankers Trust Company.
(z) "Valuation Date" shall mean the last day of the
Accounting Period, calendar quarter or any more frequent date for
reporting and/or investment purposes agreed to by the Trustee.
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The plural of any term shall have a meaning corresponding to the singular
thereof as so defined and any neuter pronoun used herein shall include the
masculine or feminine, as the context may require.
1.3. PURPOSE. The Trust is established to fund the benefits
payable to participants and their beneficiaries under each Participating Plan
and to permit the collective investment of the assets of the Participating
Plans.
1.4. EXCLUSIVE BENEFIT. Except as may otherwise be permitted by
law and the terms of the Participating Plan, at no time prior to the
satisfaction of all liabilities with respect to participants and their
beneficiaries under the Participating Plans shall any part of the Master Fund
be used for, or diverted to, any purposes other than for the exclusive benefit
of such participants and their beneficiaries, and for defraying the reasonable
expenses of administering the Participating Plans. No provision herein
designed to provide for the pooling of assets of Participating Plans for
investment purposes shall be deemed or construed to authorize the utilization
of the assets of any Participating Plan to discharge the obligations and
liabilities of any other Participating Plan.
1.5. EFFECT. All persons at any time interested in any
Participating Plan shall be bound by the provisions of this Agreement and, in
the event of any conflict between this Agreement and the provisions of a
Participating Plan or any instrument or agreement forming part of such Plan
other than this Agreement, the provisions of this Agreement shall control.
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1.6. DOMESTIC TRUST. The Trust shall at all times be maintained as
a domestic trust in the United States.
1.7. TRUSTEE NOT RESPONSIBLE FOR ENFORCING CONTRIBUTIONS OR FOR
SUFFICIENCY. The Trustee shall have no responsibility hereunder
for enforcing payment of any contribution to any Participating Plan, for the
timing or amount thereof, or for the adequacy of the Master Fund or the funding
standards adopted for any Participating Plan to meet or discharge any pension
or other liabilities of such Plan.
ARTICLE II
Participation
2.1. ELIGIBILITY. Any employee benefit plan established by the
Company, or a subsidiary or an affiliate of the Company, may be funded, in
whole or in part, through the Trust if (i) the plan is qualified under Section
401(a) of the Code, (ii) the Trust is exempt from taxation under Section 501(a)
of the Code, and (iii) this Agreement has been duly adopted as the trust under
the plan by the Board of Directors or, in the case of such subsidiary or
affiliate, the Company has consented thereto.
2.2. EFFECT ON ADOPTING COMPANY. When the Master Trust has been
adopted by any subsidiary or affiliate of the Company, such subsidiary or
affiliate shall be bound by the decisions, instructions, actions and directions
of the Company, the Corporation Committee or the Named Fiduciary under or
affecting
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this Agreement, and the Trustee shall be fully protected by the Company and
such subsidiary or affiliate in relying upon the decisions, instructions,
actions and directions of the Company, the Administrative Committee or the
Named Fiduciary. Except as may be hereafter specifically provided, the Trustee
shall not be required to give notice to or to obtain the consent of any
subsidiary or affiliate with respect to any action to be taken by the Trustee
pursuant to this Agreement, and the Company shall have the sole authority to
enforce this Agreement on behalf of any subsidiary or affiliate.
2.3. SHARES. The Trustee shall maintain a separate account and
such subaccounts as it and the Company shall deem advisable to reflect the
Share of each Participating Plan, or part thereof. The Named Fiduciary shall
provide the Trustee with current information in order that the Trustee may
determine such Shares. An Investment Fund may be divided into one or more
sub-funds or accounts or described in a different manner on any books kept or
reports rendered by the Trustee without in any way affecting the duties or
responsibilities of the Trustee under the provisions of this Agreement;
PROVIDED, HOWEVER, the books and records of the Trustee shall at all times be
maintained so that the interest of each Participating Plan may be determined.
2.4. VALUATIONS. The Trustee shall determine the value of the
assets of the Master Fund and each Investment Fund as of each Valuation Date.
Except in the case of an Investment Fund in which amortized cost is the
valuation method designated, assets will be valued at their market values at
the close of business on
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the Valuation Date, or, in the absence of readily ascertainable market values,
at such values as the Trustee shall determine in accordance with methods
consistently followed and uniformly applied. Anything in this Agreement to the
contrary notwithstanding, with respect to assets constituting part of a
Directed Fund, the Trustee may rely for all purposes of this Agreement on the
latest valuation and transaction information submitted to it by the Person
responsible for the investment of such assets even if such information predates
the Valuation Date. The Named Fiduciary will cause such Person to provide the
Trustee with all information needed by the Trustee to discharge its obligations
to value such assets and to account under this Agreement.
2.5. PARTICIPANT RECORDS AND ACCOUNTS. Certain Participating Plans
may be defined contribution plans with respect to which one or more participant
accounts are maintained in accordance with the provisions of such Participating
Plan. Except as the parties may otherwise agree in writing, the Trustee shall
not be required to maintain any separate records or accounts with respect to
any participant of any Participating Plan, and any records or accounts required
to be maintained pursuant to the terms of any such Plan or to comply with ERISA
or the Code shall be the responsibility of the Company. If the parties at any
time agree that the Trustee shall maintain such records, a description of the
services to be provided by the Trustee, if any, shall be attached hereto as
Appendix B.
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ARTICLE III
Administration of Participating Plans
-------------------------------------
3.1. PAYMENT OF BENEFITS. On the direction of the Corporation
Committee, the Trustee shall pay moneys out of the Share of a Participating
Plan directly to or for the benefit of participants in such Plan and their
beneficiaries, or to an insurance company to provide for the payment of such
benefits by the purchase of an Insurance Contract, or to a paying or disbursing
agent (which may be the Corporation Committee). Any assets disbursed or paid
over by the Trustee pursuant to this Section 3.1 shall no longer be part of the
Master Fund.
3.2. RELIANCE ON CORPORATION COMMITTEE. Any directions pursuant to
Section 3.1 may, but need not, specify the application to be made of moneys so
ordered. The Trustee shall charge such transfer against the Share of such one
or more of the Participating Plans as the Corporation Committee shall direct.
Each direction to the Trustee under Section 3.1 shall constitute a
certification by the Corporation Committee that such direction is in accordance
with applicable law, the terms of any relevant Participating Plan and the terms
of this Agreement, and the Trustee shall have no duty to make any independent
inquiry or investigation as to any of the foregoing before acting upon such
direction, or to see to the application of any moneys paid over.
3.3. TRUSTEE NOT RESPONSIBLE FOR PLAN ADMINISTRATION. The Trustee
shall not be responsible under this Agreement, or otherwise, in any way
respecting the determination, computation, payment or application of any
benefit, for the form,
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terms, payment provisions or issuer of any Insurance Contract which it is
directed to purchase to provide for the payment of benefits under any
Participating Plan, for performing any functions under any such Insurance
Contract which it may be directed to purchase and/or hold as contract holder
thereunder (other than the execution of any documents incidental thereto and
transfer or receipt of funds thereunder), or for any other matter affecting the
administration of a Participating Plan, by the Company or the Corporation
Committee or any other Person to whom such responsibility is allocated or
delegated pursuant to the terms of the Participating Plan.
ARTICLE IV
Investment of Trust Assets
--------------------------
4.1. ASSET MANAGERS. Discretionary authority for the management
and control of assets of a Participating Plan from time to time held in the
Master Fund may be retained, allocated or delegated, as the case may be, for
one or more purposes, to and among the Asset Managers by the Named Fiduciary,
in its absolute discretion. The terms and conditions of appointment, authority
and retention of any Asset Manager shall be the sole responsibility of the
Named Fiduciary. The Named Fiduciary shall promptly notify the Trustee in
writing of the appointment or removal of an Asset Manager. Any notice of
appointment pursuant to this Section 4.1 shall constitute a representation and
warranty that the Asset Manager has been appointed in accordance with the
provisions of the
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Participating Plan and that any Asset Manager (other than the Trustee or the
Named Fiduciary) is an Investment Manager.
4.2. INVESTMENT DISCRETION. Subject to Section 5.1, the assets
of the Trust shall be invested and reinvested, without distinction
between principal and income, at such time or times in such investments and
pursuant to such investment strategies or courses of action and in such shares
and proportions, as the Asset Managers, in their sole discretion, shall deem
advisable.
4.3. LIMITATIONS ON INVESTMENT DISCRETION. In addition to the
limitations imposed by Section 5.1, the Named Fiduciary may limit, restrict or
impose guidelines affecting the exercise of the discretion hereinabove
conferred on any Asset Manager. Any limitations, restrictions or guidelines
applicable to the Trustee, as Asset Manager, shall be communicated in writing
to the Trustee. The Trustee shall have no responsibility with respect to the
formulation of any funding policy or any investment or diversification policies
embodied therein. The Named Fiduciary shall be responsible for communicating,
and monitoring adherence to, any limitations or guidelines imposed on any other
Asset Manager by Section 5.1 or Section 7.3 or the guidelines described above.
4.4. RESPONSIBILITY FOR DIVERSIFICATION. The Named Fiduciary shall
be responsible for determining the diversification policy (if required) of the
Master Fund, for monitoring adherence by the Assert Managers to such policy,
and for advising the Asset Managers with respect to limitations on employer or
other
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securities or property contained in any Participating Plan or imposed on such
Plan by applicable law or by the Named Fiduciary.
ARTICLE V
Investment Funds Within the Master Fund
---------------------------------------
5.1. PARTICIPATING INVESTMENT FUNDS. At the direction of the Named
Fiduciary, the interest of a Participating Plan in the Master Fund may be
allocated and held and invested in one or more Investment Funds established
hereunder by the Named Fiduciary as required or permitted by the terms of each
Participating Plan. As of the date hereof, the Master Fund shall be held and
invested in the Investment Funds listed and described in Appendix C attached
hereto. The Named Fiduciary, to the extent permitted by a Participating Plan,
may establish additional Investment Funds, or freeze, terminate or modify the
description of any Investment Fund. The determination of the Named Fiduciary
of investments eligible for inclusion in any Investment Fund shall be
conclusive and binding on all Persons interested in the Participating Plans.
Such Investment Funds shall include, where applicable, a Common Stock Fund
which shall consist of Company Stock. The income of each Investment Fund shall
be accumulated and invested in such Fund. To the extent that any cash shall be
allocated to the Common Stock Fund, the Trustee shall regularly purchase
Company Stock on the open market or, if the Plan so provides, from the Company
or in private transactions, in accordance with a non-discretionary purchasing
program.
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The Trustee shall have no authority or obligation to invest or
reinvest cash balances of any Directed Fund in the General Trust or otherwise
pursuant to this Agreement unless and until it receives appropriate directions
from the Asset Manager. Cash balances (including interim investment thereof)
in the Common Stock Fund shall be limited to the administrative needs of such
Investment Fund. For the purposes of this Section 5.1 and Section 5.2,
"administrative needs" shall mean needs consistent with the Trustee's
implementation of the regular purchasing program described herein, anticipated
distributions and withdrawals from such Investment Fund, and transfers among
the Investment Funds at the election of participants. Any investment
limitation affecting Company securities shall not be applicable to the extent
any Investment Fund is invested in units of the General Trust.
5.2. THE COMPANY STOCK FUND. Notwithstanding the unrestricted
powers conferred on the Trustee in this Agreement, the Trustee shall purchase
and retain the Company Stock in the Common Stock Fund regardless of market
fluctuations and, subject to Article XVI, the Trustee shall sell such stock
only to meet administrative needs of the Participating Plan. The Trustee shall
have no duty to inform participants in the Participating Plans of the unique
nature of the Company Stock Fund.
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ARTICLE VI
Responsibility for Directed Funds
---------------------------------
6.1. RESPONSIBILITY FOR SELECTION OF AGENTS. All transactions of
any kind or nature in or from a Directed Fund shall be made upon such terms and
conditions and from or through such brokers, dealers and principals and other
agents as the Asset Manager shall direct. No such transactions shall be
executed through the facilities of the Trustee except where the Trustee shall
make available its facilities solely for the purpose of temporary investment of
cash reserves of a Directed Fund. Nothing in the preceding sentence shall
confer any authority upon the Trustee to invest the cash balances of any
Directed Fund unless and until it receives directions from the Asset Manager.
6.2. TRUSTEE NOT RESPONSIBLE FOR INVESTMENTS IN DIRECTED FUNDS.
The Trustee shall be under no duty or obligation to review or to question any
direction of any Asset Manager, or to review securities or any other property
held in any Directed Fund with respect to prudence or proper diversification or
compliance with any limitation on the Asset Manager's authority under this
Agreement or the terms of a Participating Plan, any agreement entered into
between the Company or the Named Fiduciary and the Asset Manager or imposed by
applicable law, or to make any suggestions or recommendation to the Company,
the Named Fiduciary or the Asset Manager with respect to the retention or
investment of any assets of any Directed Fund, and shall have no authority to
take any action or to
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refrain from taking any action with respect to any asset of a Directed Fund
unless and until it is directed to do so by the Asset Manager.
6.3. INVESTMENT VEHICLES. Any Investment Vehicle, or interest
therein, acquired by or transferred to the Trustee upon the
directions of the Asset Manager shall be allocated to a designated Directed
Fund, and the Trustee's duties and responsibilities under this Agreement shall
not be increased or otherwise affected thereby. The Trustee shall be
responsible solely for the safekeeping of the physical evidence, if any, of the
Trust's ownership of or interest or participation in such Investment Vehicle.
6.4. RELIANCE ON ASSET MANAGER. The Trustee shall be required
under this Agreement to execute documents, to settle transactions, to take
action on behalf of or in the name of the Trust and to make and receive
payments on the direction of the Asset Manager. Any direction of the Asset
Manager shall constitute a certification to the Trustee (i) that the
transaction will not constitute a prohibited transaction under ERISA or the
Code, (ii) that the investment is authorized under the terms of this Agreement
and any other agreement or law affecting the Asset Manager's authority to deal
with the Directed Fund, (iii) that any contract, agency, joinder, adoption,
participation or partnership agreement, deed, assignment or other document of
any kind which the Trustee is requested or required to execute to effectuate
the transaction has been reviewed by the Asset Manager and, to the extent it
deems advisable and prudent, its counsel, (iv) that such instrument or document
is in proper form for execution by the Trustee, and
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(v) that all other reasonable acts to perfect and protect the Trust's rights
have been taken, and the Trustee shall have no duty to make any independent
inquiry or investigation as to any of the foregoing before acting upon such
direction. In addition, the Trustee shall not be liable for the default of any
Person with respect to any Investment Vehicle or any investment in a Directed
Fund or for the form, genuineness, validity, sufficiency or effect of any
document executed by, delivered to or held by it for any Directed Fund on
account of such investment, or if, for any reason (other than the negligence or
willful misconduct of the Trustee) any rights of the Trust therein shall lapse
or shall become unenforceable or worthless.
6.5. MERGER OF FUNDS. The Trustee shall not have any discretionary
responsibility or authority to manage or control any asset held in a Directed
Fund upon the resignation or removal of an Asset Manager unless and until it
has been notified in writing by the Named Fiduciary that the Asset Manager's
authority has terminated and that such Directed Fund's assets are to be
integrated with the Discretionary Fund. Such notice shall not be deemed
effective until two bank business days (i.e., two days on which the Bank is
open for business) after it has been received by the Trustee. The Trustee
shall not be liable for any losses to the Master Fund resulting from the
disposition of any investment made by the Asset Manager or for the retention of
any illiquid or unmarketable investment or any investment which is not publicly
traded or for the holding of any other investment acquired by the Asset Manager
if the Trustee is unable to dispose of such investment because of any
restrictions imposed by the Securities Act of 1933 or
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other Federal or state law, or if an orderly liquidation of such investment is
impractical under prevailing conditions, or for failure to comply with any
investment limitations imposed pursuant to Section 4.3 or 5.1, or for any other
violation of the terms of this Agreement, the Participating Plans or applicable
law as a result of the addition of Directed Fund assets to the Discretionary
Fund.
6.6. NOTIFICATION OF NAMED FIDUCIARY IN EVENT OF BREACH. If the
Trustee has knowledge of a breach committed by an Asset Manager, it shall
notify the Named Fiduciary thereof and the Trustee shall have no further
responsibility hereunder therefor.
6.7. DEFINITION OF KNOWLEDGE. The parties hereto acknowledge that
while the Trustee will perform certain duties (such as custodial, reporting,
recording, valuation and bookkeeping functions) with respect to Directed Funds,
such duties will not involve the exercise of any discretionary authority to
manage or control the assets of the Directed Funds and will be the
responsibility of officers or other employees of the Trustee who are unfamiliar
with and have no responsibility for investment management. Therefore, in the
event that knowledge of the Trustee shall be a prerequisite to imposing a duty
upon or to determining liability of the Trustee under this Agreement or any
statute regulating the conduct of the Trustee with respect to such Directed
Funds or relieving the Company of its undertakings under Section 16.2, the
Trustee will not be presumed hereunder to have knowledge of, or to have
participated in, any act or omission of an Asset Manager involving the
investment of assets allocated to the Directed Funds solely as a
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result of the receipt and processing of information in the course of performing
such duties.
6.8. DUTY TO ENFORCE CLAIMS. The Trustee shall have no duty to
commence or maintain any action, suit or legal proceeding on behalf of the
Trust on account of or growing out of any investment made in or for a Directed
Fund unless the Trustee has been directed to do so by the Asset Manager or the
Named Fiduciary and unless the Trustee is either in possession of funds
sufficient for such purpose or has been indemnified to its satisfaction for
reasonable counsel fees, costs and other expenses and liabilities to which it,
in its sole judgment, may be subjected by beginning or maintaining such action,
suit or legal proceeding.
6.9. RESTRICTIONS ON TRANSFER. Nothing herein shall be deemed to
empower any Asset Manager to direct the Trustee to transfer any asset of a
Directed Fund to itself except for purposes enumerated in paragraph (j), (l) or
(m) of Section 7.1.
ARTICLE VII
Powers of Asset Managers
------------------------
7.1. GENERAL POWERS. Without in any way limiting the powers and
discretions conferred upon any Asset Manager by the other provisions of this
Agreement or by law, each Asset Manager shall be vested with the following
powers and discretions with respect to the assets of the Trust subject to its
management and control, and, upon the directions of the Asset Manager of a
Directed Fund, the Trustee shall make, execute, acknowledge and deliver any and
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all documents of transfer and conveyance and any and all other instruments that
may be necessary or appropriate to enable such Asset Manager to carry out such
powers and discretions:
(a) to sell, exchange, convey, transfer or otherwise
dispose of any property by private contract or at public auction, and no person
dealing with the Asset Manager shall be bound to see to the application of the
purchase money or to inquire into the validity, expediency or propriety of any
such sale or other disposition;
(b) to enter into contracts or to make commitments either
alone or in company with others to sell or acquire property;
(c) to purchase or sell, write or issue, puts, calls or
other options, covered or uncovered, to enter into financial futures
contracts, forward placement contracts and standby contracts, and in
connection therewith, to deposit, hold (or direct Bankers, as Trustee or in its
individual capacity, to deposit or hold) or pledge assets of the Master Fund;
(d) to purchase part interests in real property or in
mortgages on real property, wherever such real property may be situated;
(e) to lease to others for any term without regard to the
duration of the Trust any real property or part interest in real property;
(f) to delegate to a manager or the holder or holders of a
majority interest in any real property or mortgage on real property or in any
oil, mineral or gas properties, the management and operation of any part
interest in such
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property or properties (including the authority to sell such part interests or
otherwise carry out the decisions of such manager or the holder or holders of
such majority interest);
(g) to vote upon any stocks, bonds or other securities
(BUT, with respect to the voting of Company Stock and/or to other shareholder
rights therein, subject to the provisions of any Participating Plan); to give
general or special proxies or powers of attorney with or without power of
substitution; to exercise any conversion privileges, subscription rights or
other options and to make any payments incidental thereto; to consent to or
otherwise participate in corporate reorganizations or other changes affecting
corporate securities and to delegate discretionary powers and to pay any
assessments or charges in connection therewith; and generally to exercise any
of the powers of an owner with respect to stocks, bonds, securities or other
property;
(h) to organize corporations under the laws of any state
for the purpose of acquiring or holding title to property (or, in the case of a
Directed Fund, to direct the Trustee to organize such corporations or to
appoint an ancillary trustee acceptable to the Trustee for such purpose);
(i) to invest in a fund consisting of securities issued by
corporations and selected and retained solely because of their inclusion in,
and in accordance with, one or more commonly used indices of such securities,
with the objective of providing investment results for the fund which
approximate the overall performance of such designated index;
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(j) to enter into any partnership, as a general or limited
partner, or joint venture;
(k) to purchase units or certificates issued by an
investment company or pooled trust or comparable entity;
(l) to transfer money or other property to an insurance
company issuing an Insurance Contract;
(m) to transfer assets of a Discretionary or Directed
Fund to a common, collective or commingled trust fund exempt from
tax under the Code maintained by an Asset Manager or an affiliate of an Asset
Manager or by another trustee who is designated in writing by the Named
Fiduciary, to be held and invested subject to all of the terms and conditions
thereof, and such trust shall be deemed adopted as part of the Trust and the
Participating Plans to the extent that assets of the Trust are invested
therein; PROVIDED, HOWEVER, that any transfer from a Directed Fund to the
General Trust may be made only with the prior approval of the Trustee and shall
be invested only in one or more short term investment funds or other special
purpose funds established from time to time thereunder; and
(n) to be reimbursed for the reasonable expenses incurred
in exercising any of the foregoing powers or to pay the reasonable expenses
incurred by any agent, manager or trustee appointed pursuant hereto.
7.2. ADDITIONAL POWERS OF TRUSTEE. In addition, the Trustee is
hereby authorized:
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<PAGE> 31
(a) to register any securities held in the Master Fund in
its own name or in the name of a nominee and to hold any securities in bearer
form, and to combine certificates representing such securities with
certificates of the same issue held by the Trustee in other fiduciary or
representative capacities or as agent for customers, or to deposit or to
arrange for the deposit of such securities in any qualified central depository
even though, when so deposited, such securities may be merged and held in bulk
in the name of the nominee of such depository with other securities deposited
therein by other depositors, or to deposit or arrange for the deposit of any
securities issued by the United States Government, or any agency or
instrumentality thereof, with a Federal Reserve Bank, but the books and records
of the Trustee shall at all times show that all such investments are part of
the Master Fund;
(b) to employ suitable agents, depositories and counsel,
domestic or foreign, and to charge their reasonable expenses and compensation
against the Master Fund, and to confer upon any such depository the powers
conferred upon the Trustee by paragraph (a) of this Section 7.2 as well as the
power to appoint subagents and depositories, wherever situated, in connection
with the retention of securities or other property;
(c) to borrow money from any source as may be necessary or
advisable to effectuate the purposes of the Trust on such terms and conditions
as the Trustee, in its absolute discretion, may deem advisable;
- 24 -
<PAGE> 32
(d) to deposit any funds of the Trust in accounts deposits
or savings certificates, which bear a reasonable rate of interest, issued and
maintained by Bankers Trust Company, in its separate corporate capacity, or in
any other institution affiliated with Bankers Trust Company;
(e) to compromise, compound, submit to arbitration or
settle any debt or obligation owing to or from or otherwise adjust all claims
in favor of or against the Master Fund other than claims solely affecting the
right of any Person to benefits under a Participating Plan; to reduce or
increase the rate of interest or extend, or otherwise modify, foreclose upon
default, or enforce any such debt or obligation; to sue or defend suits or
legal proceedings to protect any interest in the Trust and to represent the
Trust in all suits or legal proceedings in any court or before any other
administrative agency, body or tribunal;
(f) to make any distribution or transfer of assets as of a
Valuation Date authorized under Article X or XI or to effectuate participants'
rights under a Participating Plan in cash or in kind, or partly in cash or
kind, and, in furtherance thereof, to value such assets, which valuation shall
be conclusive and binding on all Persons;
(g) upon the direction of the Named Fiduciary, to maintain
and operate one or more market inventory funds as a vehicle to exchange
securities among Discretionary Funds and Directed Funds without alienating the
property from the Trust;
- 25 -
<PAGE> 33
(h) to enroll the Master Fund in a program maintained by
Bankers to permit customer's accounts to participate in dividend reinvestment
plans offered by issuers of securities held in accounts, such as the Master
Fund, in order to realize upon the discount from market value offered
shareholders without impact on the managed assets in the Master Fund, and to
receive reasonable compensation therefor (including reimbursement for certain
of its out-of-pocket costs associated therewith) out of the income received by
the Master Fund from participation in such program;
(i) to hold uninvested cash awaiting investment and such
additional cash balances for such time period as it shall reasonably deem
necessary, without incurring any liability for the payment of interest thereon;
and
(j) generally, consistent with the provisions of this
Agreement to perform all acts (whether or not expressly authorized herein)
which it may deem necessary and prudent for the protection of the assets of the
Trust.
7.3. LIMITATION OF POWERS. The foregoing provisions of this
Article VII shall not be deemed to expand the permissible investments for any
Investment Fund under Section 5.1 or to limit the Named Fiduciary's power to
restrict the exercise of such powers by an Asset Manager as provided in Section
4.3. In addition, any powers conferred on the Trustee or any other Asset
Manager thereunder may be suspended or revoked at any time by the Named
Fiduciary upon written notice to the Asset Manager or the Trustee in accordance
with Section 15.6.
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<PAGE> 34
ARTICLE VIII
Records and Accounts of Trustee
-------------------------------
8.1. RECORDS. The Trustee shall keep accurate and detailed
accounts of all investments, receipts, disbursements and other transactions in
the Master Fund and all accounts, books and records relating thereto shall be
open to inspection and audit at all reasonable times during normal business
hours by any Person designated by the Named Fiduciary.
8.2. ANNUAL ACCOUNT. Within ninety (90) days following the close
of each Accounting Period, and within ninety (90) days after the removal or
resignation of the Trustee as provided in Article X, the Trustee shall file
with the Account Party, in accordance with Section 15.6, a written account
setting forth the receipts and disbursements of the Master Fund and the
investments and other transactions effected by it upon its own authority or
pursuant to the directions of any Person as herein provided during the
Accounting Period.
8.3. PERIODIC ACCOUNT. If so required by the terms of any
Particular Plan, within thirty (30) days following the close of each calendar
month, calendar quarter or other time period (but not more frequently than
monthly) the Trustee shall provide the Account Party with, in accordance with
Section 15.6, a written account for any such Participating Plan, setting forth
the receipts and disbursements of the Master Fund and the investments and other
transactions effected by it upon its own authority or pursuant to the
directions of any Person as herein provided during such period; PROVIDED,
HOWEVER, that such written account
- 27 -
<PAGE> 35
shall be limited to an accounting of investments and transactions in the Master
Fund and shall not affect the responsibilities of the parties, if any, under
Section 2.5 herein.
8.4. ACCOUNT STATED. Upon the expiration of ninety (90) days from
the date of filing its annual account with the Account Party, the Trustee shall
be forever released and discharged from all liability and further
accountability to the Company, the Account Party or any other Person with
respect to the accuracy of such accounting and the propriety of all acts and
failures to act of the Trustee reflected in such account, except with respect
to any such acts or transactions as to which the Account Party shall, within
such 90-day period, file with the Trustee specific written objections.
8.5. JUDICIAL ACCOUNTINGS. Nothing herein shall in any way limit
the right of the Trustee to bring any action or proceeding in a court of
competent jurisdiction to settle its account or for such other relief with
respect thereto as it may deem appropriate.
8.6. NECESSARY PARTIES. Except to the extent that Sections 502 and
504 of ERISA may provide otherwise, in order to protect the Master Fund from
the expense of litigation, no Person other than the Company shall be a
necessary party in any proceeding under Section 8.5 or may require the Trustee
to account or may institute any other action or proceeding against the Trustee
or the Trust.
- 28 -
<PAGE> 36
ARTICLE IX
Compensation, Taxes and Expenses
--------------------------------
9.1. COMPENSATION AND EXPENSES. Any reasonable expenses incurred
by the Trustee in connection with its administration of the Master Trust
including, but not limited to, reasonable fees for legal services rendered to
the Trustee in connection with the performance of its duties hereunder, such
compensation to the Trustee as shall be agreed upon from time to time between
the Trustee and the Company, and all other proper charges and disbursements of
the Trustee, shall be paid from the Master Fund, unless paid by the Company.
Anything in the preceding sentence to the contrary notwithstanding, the Company
shall reimburse the Trustee for any such expenses if for any reason such
expenses are not paid out of the Master Fund. The Trustee's entitlement to
reimbursement hereunder shall not be affected by the resignation or removal of
the Trustee or by the termination of the Trust. The Named Fiduciary may direct
the Trustee to pay from the Master Fund any other administration expenses of a
Participating Plan. Each direction to the Trustee under this Section 9.1 and
Section 9.3 shall constitute a certification by the Named Fiduciary that such
direction is in accordance with applicable law, the terms of any relevant
Participating Plan and the terms of this Agreement, and the Trustee shall have
no duty to make any independent inquiry or investigation as to any of the
foregoing before acting upon such direction, or to see to the application of
any moneys paid over.
- 29 -
<PAGE> 37
9.2. TAXES. All taxes of any and all kinds whatsoever that may be
levied or assessed under existing or future laws, domestic or foreign, upon the
Master Fund or the income thereof shall be paid from the Master Fund, unless
paid by the Company.
The Trustee shall notify the Named Fiduciary of any taxes that may be
assessed. In the event that the Named Fiduciary shall determine that the taxes
are not lawfully assessed, it may elect to direct the Trustee at the expense of
the Trust, to contest such assessments, or it may itself contest such
assessment.
9.3. ALLOCATION. Any tax or expense paid from the Master Fund
hereunder which is determined by the Named Fiduciary to be specially allocable
to one or more Investment Funds or Participating Plans, as the case may be,
shall be charged against such Investment Funds or the Share of such
Participating Plans, in such proportions as the Named Fiduciary shall direct
the Trustee in writing. Any expense which is allocable to all of the
Investment Funds or all of the Participating Plans shall be charged against
each of the Investment Funds or each of the Participating Plans in the same
proportion as the value of the total assets held in each such Investment Fund
or Participating Plan bears to the value of the total assets in the Master
Fund.
- 30 -
<PAGE> 38
ARTICLE X
Resignation or Removal of Trustee
---------------------------------
10.1. RESIGNATION OR REMOVAL. The Trustee may be removed by the
Company at any time upon sixty (60) days' notice in writing to the Trustee.
The Trustee may resign at any time upon sixty (60) days' notice in writing to
the Company. The parties may waive the sixty-day notice period by the written
consent of both parties.
10.2. DESIGNATION OF A SUCCESSOR. Upon the removal or resignation
of the Trustee, the Company shall either appoint a successor trustee who shall
have substantially the same powers and duties as those conferred upon the
Trustee hereunder, and upon acceptance of such appointment by the successor
trustee, the Trustee shall assign, transfer and pay over the Master Fund to
such successor trustee, or the Company shall direct the Trustee to assign,
transfer and pay over the Master Fund to one or more insurance companies
pursuant to insurance contracts issued to the Participating Plans. If, for any
reason, the Company cannot or does not act promptly to appoint a successor
trustee or designate an insurance company in the event of the resignation or
removal of the Trustee, the Trustee may apply to a court of competent
jurisdiction for the appointment of a successor trustee, and any reasonable
expenses incurred by the Trustee in connection therewith shall be charged to
and paid from the Master Fund as an expense of administration.
- 31 -
<PAGE> 39
10.3. RESERVE FOR EXPENSES. Upon its resignation or removal under
Section 10.1, the Trustee is authorized to reserve such amount as to it may
deem advisable for payments of its reasonable fees and expenses in connection
with the settlement of its account or otherwise, and any balance of such
reserve remaining after the payment of such fees and expenses shall be paid
over in accordance with the directions of the Company under Section 10.2. The
Trustee is authorized to invest such reserves in any investment authorized
under the terms of this Agreement appropriate for the temporary investment of
cash reserves of trusts.
ARTICLE XI
Withdrawal of Participating Plans
---------------------------------
11.1. EVENT OF WITHDRAWAL. Upon receipt of notice from the Company
of the termination (including any partial termination) and distribution of the
assets of a Participating Plan or of the withdrawal of any Participating Plan,
or part thereof, from the Trust, the Trustee shall segregate the share of the
assets of the Master Fund allocable to such Participating Plan, or part
thereof, and shall dispose of such assets in accordance with the directions of
the Company.
11.2. DISQUALIFICATION. The Company shall promptly notify the
Trustee if any Participating Plan has been or is likely to be disqualified
under Section 401 of the Code. In that event, the Share of such Participating
Plan shall be treated as a Plan withdrawn pursuant to Section 11.1.
- 32 -
<PAGE> 40
11.3. APPROVAL OF APPROPRIATE AGENCIES. The Trustee may, in its
absolute discretion, condition delivery, transfer or distribution of any assets
withdrawn from the Master Fund under this Article XI upon the Trustee's
receiving assurances satisfactory to it that any notice which may be required
to be given under ERISA or the Code to any Person, the Department of Labor, the
Internal Revenue Service or the Pension Benefit Guaranty Corporation has been
given, or that any filing which is required to be made to determine that a
termination has not affected the qualification of a Participating Plan has been
made, and that any plan to which such assets are to be transferred is a
qualified plan under Section 401(a) of the Code. The Trustee shall not be
responsible under any Participating Plan to give any such notice or make any
such filings or maintain any records required under ERISA or the Code, all of
which, for purposes of this Agreement, shall be the responsibility of the
Company.
ARTICLE XII
Amendment or Termination
------------------------
12.1. AMENDMENT. Subject to Section 1.4, the Company reserves the
right at any time and from time to time to amend, in whole or in part, any or
all of the provisions of this Agreement by notice thereof in writing delivered
to the Trustee; PROVIDED, HOWEVER, no amendment which affects the rights,
duties or responsibilities of the Trustee may be made without its prior written
consent.
- 33 -
<PAGE> 41
12.2. TERMINATION. Subject to Section 1.4, the Company reserves the
right to terminate this Agreement by notice in writing thereof delivered to the
Trustee. In the event of termination, the Trustee shall dispose of the Master
Fund, after the payment of or other provision for all of its reasonable
expenses (including any compensation to which the Trustee may be entitled), all
in accordance with the written directions of the Company. In the event that
termination results from the removal of the Trustee or the withdrawal of all of
the Participating Plans, then such disposition shall be implemented in
accordance with the provisions of Article X or Article XI as the case may be.
12.3. TRUSTEE'S AUTHORITY TO SURVIVE TERMINATION. Until the final
distribution of the Master Fund, the Trustee shall continue to have and may
exercise all of the powers and discretions conferred upon it by this Agreement.
ARTICLE XIII
Tender Offers
-------------
13.1. IN GENERAL. In the event that any person (other than the
Company or any affiliate thereof) shall make a public offer for Company Stock
held in the Common Stock Fund, the Company undertakes to provide promptly a
copy of the offer, and any other material information concerning such offer, to
each Participating Plan participant (including, for the purposes of this
Article XIII, any beneficiary of a deceased participant) who has an interest in
the Common Stock Fund with a form for furnishing to the Trustee timely
instructions as to whether
- 34 -
<PAGE> 42
the Company Stock allocated to participants' accounts for purposes of this
Article XIII should be tendered. Each participant may elect that all, but not
less than all, of the Company Stock allocated to his account be tendered by the
Trustee on his behalf. Upon timely receipt of instructions from a participant
to so tender, the Trustee shall tender all such Company Stock allocated to such
participant's account. Any Company Stock held by the Trustee as to which it
receives either no instructions or incomplete instructions from a participant
to whose account such stock is allocated shall be tendered in the same
proportion as such Company Stock held by the Trustee for which participant
instructions have been timely received by the Trustee. Any securities or other
property received by the Trustee as a result of having tendered Company Stock,
as hereinabove provided, shall be held, and any cash so received shall be
invested in short term investments, pending any further action which the
Trustee may be required or directed to take pursuant to the Participating Plan.
Notwithstanding anything in this Agreement to the contrary, during the period
of any public offer for Company Stock, the Trustee shall refrain from making
purchases of Company Stock under this Agreement. In addition to any
compensation or expenses provided under Section 9.1, the Trustee shall be
entitled to reasonable compensation and reimbursement for its reasonable
out-of-pocket expenses for any services attributable to the duties and
responsibilities described in this Section 13.1.
13.2. TRUSTEE'S INDEMNIFICATION. In addition to any other claims
the Trustee may have under this Agreement or by law, the Company hereby agrees
to
- 35 -
<PAGE> 43
hold the Trustee harmless and to indemnify the Trustee from and against any and
all losses, claims, damages, liabilities or expenses whatsoever (including, but
not limited to, any and all reasonable expenses incurred in investigating,
preparing or defending against any litigation or proceeding, commenced or
threatened, or any claim whatsoever), (a) arising out of, relating to or in
connection with any public offer of the kind referred to above, whether in
respect of the solicitation of directions from Participating Plan participants,
or tabulating, reporting or acting upon such directions or otherwise, or (b)
arising out of or based upon any untrue statement or alleged untrue statement
contained in any instrument, document or other material furnished by or through
the Company to Participating Plan participants, or otherwise used by the
Company or authorized by it for use in respect of, any such public offer or
arising out of or based upon an omission or alleged omission to state a
material fact required to be stated or necessary to make other statements made
in any such material not misleading, except, solely in the case of
indemnification pursuant to clause (a), for a loss, claim, damage, liability or
expense to the extent attributable to the bad faith or negligence of the
Trustee.
- 36 -
<PAGE> 44
ARTICLE XIV
Authorities
-----------
14.1. COMPANY. Whenever the provisions of this Agreement
specifically require or permit any action to be taken by "the Company", such
action must be authorized by the Board of Directors, or appropriate committee
thereof, and satisfactory documentation of such action shall be provided to the
Trustee.
14.2. SUBSIDIARY OR AFFILIATE. Any action required or permitted to
be taken under this Agreement by a subsidiary or affiliate of the Company shall
be given by the Board of Directors.
14.3. NAMED FIDUCIARY AND COMMITTEE. The Company shall furnish the
Trustee from time to time with a list of the names and signatories of all
Persons (other than the Company) authorized hereunder: (i) to receive
accountings under Section 1.2(a); (ii) to act as a Named Fiduciary; (iii) to
act as members of the Corporation Committee; or (iv) to issue orders, notices,
requests, instructions and objections to the Trustee pursuant to the provisions
of this Agreement. Any such list and the form of the instructions may be
relied upon for accuracy and completeness by the Trustee. Each such Person
shall thereupon furnish the Trustee with a list of the names and signatories of
those individuals, if any, who are authorized, jointly or severally or
otherwise, to act for such Person hereunder, and the Trustee shall be fully
protected in acting upon any notices or directions received from any of them.
- 37 -
<PAGE> 45
14.4. INVESTMENT MANAGER. The Named Fiduciary shall cause each
Investment Manager to furnish the Trustee from time to time with the names and
signatures of those persons authorized to direct the Trustee on its behalf
hereunder.
14.5. FORM OF COMMUNICATIONS. Any agreement or understanding
between the Company and any Person (including an Investment Manager) or any
other provision of this Agreement to the contrary notwithstanding, all notices,
directions and other communications to the Trustee shall be in writing or in
such other form, including transmission by electronic means through the
facilities of third parties or otherwise, specifically agreed to in writing by
the Trustee. The Trustee shall be fully protected in acting in accordance
therewith, but shall not thereby assume responsibility for the failure or
breakdown of any such means of communication not due to its own negligence or
willful misconduct.
14.6. CONTINUATION OF AUTHORITY. The Trustee shall have the right
to assume, in the absence of written notice to the contrary, that no event
constituting a change in the composition or authority of the Named Fiduciary or
membership of the Corporation Committee or terminating the authority of any
Person, including any Investment Manager, has occurred.
14.7. NO OBLIGATION TO ACT ON UNSATISFACTORY NOTICE. The Trustee
shall incur no liability under this Agreement for any failure to act pursuant
to any notice, direction or any other communication from any Asset Manager, the
Company, the Named Fiduciary, the Corporation Committee, or any other Person
- 38 -
<PAGE> 46
or the designee of any of them unless and until it shall have received
instructions in the form specified in this Article XIV.
ARTICLE XV
General Provisions
------------------
15.1. GOVERNING LAW. To the extent that state law shall not have
been preempted by the provisions of ERISA or any other law of the United States
heretofore or hereafter enacted, this Agreement shall be administered,
construed and enforced according to the laws of the State of New York.
15.2. ENTIRE AGREEMENT. The Trustee's duties and responsibilities
to any Participating Plan or any Person interested therein shall be limited to
those specifically set forth in this Agreement. No amendment to any
Participating Plan or agreement or instrument affecting any Participating Plan
or any other document shall affect the Trustee's duties or responsibilities
hereunder without its prior written consent.
15.3. RELIANCE ON EXPERTS. The Trustee may consult with experts
(who may be experts employed by the Company) including legal counsel,
appraisers, pricing services, accountants or actuaries, selected by it with due
care with respect to the meaning and construction of this Agreement or any
provision hereof, or concerning its powers and duties hereunder.
15.4. SUCCESSOR TO THE TRUSTEE. Any successor, by merger or
otherwise, to substantially all of the trust business of Bankers shall
automatically and without
- 39 -
<PAGE> 47
further action become the Trustee hereunder, subject to all the terms and
conditions and entitled to all the benefits and immunities hereof.
15.5. NOTICES. All notices, reports, annual accounts and other
communications from the Trustee to the Company, the Named Fiduciary,
Corporation Committee, Investment Manager, or any other Person shall be deemed
to have been duly given if mailed, postage prepaid, or delivered in hand to
such Person at its address appearing on the records of the Trustee, which
address shall be filed with the Trustee at the time of the establishment of the
Trust and shall be kept current thereafter by the Named Fiduciary. All
directions, notices, statements, objections and other communications to the
Trustee shall be deemed to have been given if mailed, postage prepaid, or
delivered in hand to the Trustee at its offices.
15.6. PLAN DOCUMENTS. The Named Fiduciary shall provide the Trustee
with complete, current copies of all Participating Plans and the most recent
tax qualification letters relative thereto. The Trustee shall be entitled to
reply upon the Named Fiduciary's attention to this obligation and shall be
under no duty to inquire to any Person as to the existence of any documents not
provided hereunder.
15.7. NO WAIVER; RESERVATION OF RIGHTS. The rights, remedies,
privileges and immunities expressed herein are cumulative and are not
exclusive, and the Trustee shall be entitled to claim all other rights,
remedies, privileges and immunities to which it may be entitled under
applicable law.
- 40 -
<PAGE> 48
15.8. DESCRIPTIVE HEADINGS. The captions in this Agreement are
solely for convenience of reference and shall not define or limit the
provisions hereof.
15.9. SPENDTHRIFT PROVISION. Except as may be required or permitted
by law, no interest or claim of interest of any kind of any participant in any
Participating Plan under the provisions of this Trust is assignable, nor may
any such interest or claim be subject to garnishment, attachment, execution or
levy of any kind, and no attempt to transfer, assign, pledge or otherwise
encumber or dispose of such interest by act of the Person involved or by
operation of law will be recognized.
ARTICLE XVI
Undertaking by Company
----------------------
16.1. UNDERTAKING. In consideration of Bankers' agreeing to enter
into this Agreement, the Company hereby agrees to hold harmless Bankers,
individually and as Trustee, and Bankers' directors, officers, and employees,
from and against all amounts, including without limitation taxes, reasonable
expenses (including reasonable counsel fees), liabilities, claims, damages,
actions, suits or other charges, incurred by or assessed against Bankers,
individually or as Trustee, or its directors, officers or employees (i) as a
direct or indirect result of any act or omission of any predecessor trustee or
fiduciary appointed under any Participating Plan unless the investment acquired
by such predecessor trustee or fiduciary becomes part of the Discretionary Fund
and Bankers fails to take appropriate
- 41 -
<PAGE> 49
action with respect thereto; (ii) except as otherwise provided in Section 16.2,
as a direct or indirect result of anything done in good faith by or on behalf
of Bankers in reliance upon the directions of any Investment Manager, the
Corporation Committee, the Company, or the Named Fiduciary, or anything omitted
to be done in good faith in the absence of such directions, or (iii) except as
otherwise provided in Section 16.2, as a direct or indirect result of the
failure of the Company, the Corporation Committee, or the Named Fiduciary,
directly or indirectly, to adequately, carefully and diligently discharge its
fiduciary responsibilities with respect to the Participating Plans.
16.2. LIMITATION ON UNDERTAKING. Anything hereinabove to the
contrary notwithstanding, the Company shall have no responsibility to Bankers
under Section 16.1 (ii) or (iii) if Bankers knowingly participated in or
knowingly concealed any act or omission of any Person described therein knowing
that such act or omission constituted a breach of such Person's fiduciary
responsibilities, or if Bankers fails to perform any of the duties specifically
undertaken by it under the provisions of this Agreement in the manner herein
provided, or if Bankers fails to act in conformity with duly given and
authorized directions hereunder.
16.3. WAIVER OF DEFENSE. The Company expressly waives and shall be
forever estopped from asserting as a defense against Bankers, or any of its
directors, officers or employees, in any action to enforce this undertaking
that any one of them failed to discharge any obligation he, she or it may have
or to be deemed to have had under any statute governing the conduct of
fiduciaries in
- 42 -
<PAGE> 50
following the directions of the Company, the Named Fiduciary or Corporation
Committee, the Investment Manager or any Person duly authorized to act for any
of them under Article XIV.
16.4. SURVIVAL OF UNDERTAKINGS. The Company further agrees that the
undertakings made in this Article XVI shall be binding on its successors or
assigns and shall survive termination, amendment or restatement of this
Agreement, or the resignation or removal of the Trustee, and that this Article
shall be construed as a contract between the Company and the Trustee according
to the laws of the State of New York in effect from time to time.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized and their
corporate seals to be hereunto affixed and attested to as of the day and year
first above written.
(Corporate Seal) HARRIS CORPORATION
----------------------------------
Attest: By /s/ D.S. Wasserman
-------------------------------
Title: Vice President-Treasurer
/s/ Keith M. Davis
- - - - - -------------------------------
Title:
- 43 -
<PAGE> 51
(Corporate Seal) BANKERS TRUST COMPANY
Attest: By /s/ Frank Eipper
------------------------------
Title: Vice President
/s/ Teresa L. Curtin
- - - - - -----------------------------
Title: Asst. Vice President
- 44 -
<PAGE> 52
APPENDIX A
Participating Plans
-------------------
Harris Corporation Retirement Plan
Harris Corporation Union Retirement Plan
Harris Corporation Pension Plan
Lanier Worldwide, Inc. Pension Plan
- 45 -
<PAGE> 53
APPENDIX B
Recording-Keeping Requirements under Section 2.5
------------------------------------------------
None
- 46 -
<PAGE> 54
APPENDIX C
Investment Funds
----------------
Balanced Fund
Short-Term Bond Fund
Money Market Fund
Stable Value Fund
Equity Income Fund
Indexed Equity Fund
Growth Fund
Harris Stock Fund
- 47 -
<PAGE> 55
STATE OF FLORIDA )
) ss. :
COUNTY OF BREVARD )
On the 10TH day of OCTOBER, in the year one thousand nine hundred
and ninety-four, before me personally came D.S. WASSERMAN to me
known, who being by me duly sworn, did depose and say: that he/she resides in
MELBOURNE, FL; that he/she is the VICE PRESIDENT- TREASURER of Harris
Corporation, the corporation described in and which executed the above
instrument; that he/she knows the seal of said corporation; that the seal
affixed to said instrument is such corporate seal; and that it was so affixed
by order of the Board of Directors of said corporation, and that he/she signed
his/her name thereto by like order.
/s/ Rhonda G. Johnson
---------------------------
Notary Public
- 48 -
<PAGE> 56
STATE OF NEW YORK )
) ss. :
COUNTY OF NEW YORK )
On the 13TH day of OCTOBER, in the year one thousand nine
hundred and ninety-four, before me personally came FRANK EIPPER to me known,
who being by me duly sworn, did depose and say: that he/she resides in
STAMFORD, CT; that he/she is the VICE PRESIDENT of BANKERS TRUST COMPANY, the
corporation described in and which executed the above instrument; that he/she
knows the seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by order of the Board of Directors
of said corporation, and that he/she signed his/her name thereto by like order.
/s/ Allison O. Taylor
-------------------------------
Notary Public
- 49 -
<PAGE> 1
EXHIBIT 10(b)
HARRIS CORPORATION
MASTER RABBI TRUST AGREEMENT
----------------------------
<PAGE> 2
HARRIS CORPORATION MASTER
RABBI TRUST AGREEMENT
---------------------
This Trust Agreement made as of the 1st day of August, 1994 by and between
HARRIS CORPORATION, a Delaware corporation ("Company") and BANKERS TRUST
COMPANY, a New York banking corporation ("Trustee").
WHEREAS, Company has adopted various nonqualified deferred
compensation plans and arrangements, as listed in Appendix A (the
"Plans");
WHEREAS, Company has incurred or expects to incur liability
under the terms of such Plans with respect to the individuals participating
in such Plans (individually a "Participant" and collectively the
"Participants");
WHEREAS, Company established the Harris Corporation Benefits Trust
Agreement, effective September 23, 1987, which was amended and restated as the
Harris Corporation Master Rabbi Trust Agreement, effective May 27, 1993 (the
"Prior Agreement");
WHEREAS, Company desires to amend and restate the Prior Agreement in
its entirety and appoint Trustee as successor trustee, effective August 1,
1994;
WHEREAS, Company wishes to contribute to the trust (the "Trust") the
assets that shall be held therein, subject to the claims of Company's creditors
in the event of Company's Insolvency, as herein defined, until paid to
Participants and their beneficiaries in such manner and at such times as
specified in the Plans;
WHEREAS, it is the intention of the parties that this Trust shall
constitute an unfunded arrangement and shall not affect the status of the Plans
as unfunded plans maintained for the purpose of providing deferred compensation
for a select
<PAGE> 3
group of management or highly compensated employees for purposes of Title 1 of
the Employee Retirement Income Security Act of 1974; and
WHEREAS, it is the intention of Company to make contributions to the
Trust to provide itself with a source of funds to assist it in the meeting of
its liabilities under the Plans.
NOW THEREFORE, the parties do hereby amend and restate the Prior
Agreement and agree that the Trust shall be comprised, held and disposed of as
follows.
SECTION 1. ESTABLISHMENT OF TRUST.
- - - - - ----------------------------------
(a) Company hereby establishes the Trust with the Trustee,
consisting of such sums of money and other property acceptable to the Trustee
as from time to time shall be paid and delivered to and accepted by the Trustee
from the Company in accordance with subsection (e) below. All such money and
other property paid or delivered to and accepted by the Trustee shall become
the principal of the Trust to be held, administered and disposed of by Trustee
as provided in this Trust Agreement.
(b) The Trust hereby established is revocable by Company; it shall
become irrevocable upon a Change in Control, as defined herein.
(c) The Trust is intended to be a grantor trust, of which Company
is the grantor, within the meaning of subpart E, part I, subchapter J, chapter
1, subtitle
- 2 -
<PAGE> 4
A of the Internal Revenue Code of 1986, as amended, and shall be construed
accordingly.
(d) The principal of the Trust, and any earnings thereon shall be
held separate and apart from other funds of Company and shall be used
exclusively for the uses and purposes of the Participants and general creditors
as herein set forth. The Participants and their beneficiaries shall have no
preferred claim on, or any beneficial ownership interest in, any assets of the
Trust. Any rights created under the Plans and this Trust Agreement shall be
mere unsecured contractual rights of the Participants and their beneficiaries
against Company. Any assets held by the Trust shall be subject to the claims of
Company's general creditors under federal and state law in the event of
Insolvency, as defined in Section 3(a) herein.
(e) Company, in its sole discretion, may at any time, or from time
to time, make additional deposits of cash or other property in trust with
Trustee to augment the principal to be held, administered and disposed of by
Trustee as provided in this Trust Agreement. Neither Trustee nor any
Participant or beneficiary shall have any right to compel such additional
deposits. Except as hereinafter provided, Company shall make contributions to
the Trust from time to time as it shall determine in its sole discretion;
provided, however that Company shall be required to contribute the required
funding amount within the five-day period following a Change in Control. For
purposes of this Agreement, the term "required funding amount" means the amount
required to fund the obligations of Company under the Plans.
- 3 -
<PAGE> 5
(f) The Trustee does not assume any responsibility or undertake
any duty to enforce payment of any contribution to the Plans or for the
adequacy of the Trust or the funding standards adopted by Company to meet and
discharge any liability under the Plans. No duties or obligations shall be
imposed hereunder upon Trustee with respect to the Trust unless they have been
specifically undertaken by Trustee by the express terms of this Agreement.
SECTION 2. PAYMENTS TO PARTICIPANTS AND THEIR BENEFICIARIES.
- - - - - ------------------------------------------------------------
(a) Company shall from time to time deliver to Trustee a schedule
(the "Payment Schedule") that indicates the amounts payable in respect of each
Participant (and his or her beneficiaries), that provides a formula or other
instructions acceptable to Trustee for determining the amounts so payable,
the form in which such amount is to be paid (as provided for or available under
the Plans), the time of commencement for payment of such amounts and
appropriate federal, state and local tax withholding information. Except as
otherwise provided herein, Trustee shall make payments to the Participants and
their beneficiaries in accordance with such Payment Schedule. The Trustee may
rely upon and shall be under no duty to verify the information contained in the
Payment Schedule. The Trustee shall make provision for the reporting and
withholding of any federal, state or local taxes that may be required to be
withheld with respect to the payment of benefits pursuant to the terms of this
Agreement and shall pay amounts withheld to the appropriate taxing authorities,
or shall determine that
- 4 -
<PAGE> 6
such amounts have been reported, withheld and paid by Company. To the extent
that Trustee pays benefits due a Participant under a Plan, Company shall be
forever released and discharged from the obligation to pay such benefits.
(b) The entitlement of a Participant or his or her beneficiaries
to benefits under the Plans shall be determined by Company or such party as it
shall designate under the Plans, and any claim for such benefits shall be
considered and reviewed under the procedures set out in the Plans.
(c) Company may make payment of benefits directly to the
Participants or their beneficiaries as they become due under the terms of the
Plans. Company shall notify Trustee of its decision to make payment of benefits
directly prior to the time amounts are payable to Participants or their
beneficiaries. In addition, if the principal of the Trust, and any earnings
thereon, are not sufficient to make payments of benefits in accordance with the
terms of the Plans, Company shall immediately make up the balance of each such
payment as it falls due. Trustee shall notify Company when principal and
earnings are not sufficient. Trustee shall not be responsible for withholding
any federal, state or local taxes payable with respect to benefits paid by
Company and shall pay amounts withheld to the appropriate taxing authority.
- 5 -
<PAGE> 7
SECTION 3. TRUSTEE RESPONSIBILITY REGARDING PAYMENTS TO TRUST BENEFICIARY
- - - - - --------------------------------------------------------------------------
WHEN COMPANY IS INSOLVENT,
- - - - - -------------------------
(a) Trustee shall cease payment of benefits to the Participants
and their beneficiaries if Company is Insolvent. Company shall be considered
"Insolvent" for purposes of this Trust Agreement if (i) Company is unable to
pay its debts as they become due, or (ii) Company is subject to a pending
proceeding as a debtor under the United States Bankruptcy Code.
(b) At all times during the continuance of this Trust, as provided
in Section 1 (d) hereof, the principal and income of the Trust shall be subject
to claims of general creditors of Company under federal and state law as set
forth below.
(1) The Board of Directors or the Chief Executive Officer
of Company shall have the duty to inform Trustee in writing of Company's
Insolvency. If a person claiming to be a creditor of Company alleges in
writing to Trustee that Company has become Insolvent, Trustee shall determine
whether Company is Insolvent and, pending such determination, Trustee shall
discontinue payment of benefits to the Participants or their beneficiaries. In
all cases, Trustee shall be entitled to conclusively rely upon the written
certification of the Board of Directors or the Chief Executive Officer of
Company when determining whether Company is insolvent.
(2) Unless Trustee has actual knowledge of Company's
Insolvency, or has received notice from Company or a person claiming to be a
creditor alleging that Company is Insolvent, Trustee shall have no duty to
inquire whether
- 6 -
<PAGE> 8
Company is Insolvent. Trustee may in all events rely on such evidence
concerning Company's solvency as may be furnished to Trustee and that provides
Trustee with a reasonable basis for making a determination concerning Company's
solvency.
(3) If at any time Trustee has determined that Company is
Insolvent, Trustee shall discontinue payments to the Participants or their
beneficiaries and shall hold the assets of the Trust for the benefit of
Company's general creditors. Nothing in this Trust Agreement shall in any way
diminish any rights of the Participants or their beneficiaries to pursue their
rights as general creditors of Company with respect to benefits due under the
Plans or otherwise.
(4) Trustee shall resume the payment of benefits to the
Participants or their beneficiaries in accordance with Section 2 of this Trust
Agreement only after Company has informed Trustee in writing that Company is
not Insolvent (or is no longer Insolvent).
(c) Provided that there are sufficient assets, if Trustee
discontinues the payment of benefits from the Trust pursuant to Section 3(b)
hereof and subsequently resumes such payments, the first payment following such
discontinuance shall include the aggregate amount of all payments due to the
Participants or their beneficiaries under the terms of the Plan for the period
of such discontinuance, less the aggregate amount of any payments made to the
Participants or their beneficiaries by Company in lieu of the payments provided
for hereunder during any such period of discontinuance.
- 7 -
<PAGE> 9
SECTION 4. PAYMENTS TO COMPANY.
- - - - - -------------------------------
Except as provided in Section 3 hereof, after the Trust has become
irrevocable, Company shall have no right or power to direct Trustee to return
to Company or to divert to others any of the Trust assets before all payment of
benefits have been made to the Participants and their beneficiaries pursuant to
the terms of the Plans.
SECTION 5. INVESTMENT AND ADMINISTRATIVE AUTHORITY.
- - - - - ---------------------------------------------------
(a) Responsibility for the management and control of the Trust
(including the power to acquire or dispose of Trust assets) may be vested, in
the discretion of Company, in Trustee and/or in such one or more Investment
Managers, as hereinafter defined, appointed by Company. The portion of the
Trust over which Trustee shall have such responsibility is hereinafter referred
to as the "Discretionary Fund". Any portion of the Trust over which an
Investment Manager shall have such responsibility is hereinafter referred to as
a "Directed Fund". Allocation of assets of the Trust between and among any
Discretionary or Directed Funds shall be determined by Company.
(b) Trustee shall invest and reinvest the Discretionary Fund as a
single fund without distinction between principal and income in such investment
and at such time or times and in such shares and proportions as it, in its
absolute discretion, shall deem advisable; except that, Trustee is authorized
to hold in the Discretionary Fund uninvested cash awaiting investment and to
maintain such
- 8 -
<PAGE> 10
additional cash balances as it shall deem reasonable or necessary to meet
anticipated distributions from or administrative costs of the Plans or Trust,
without incurring any liability for the payment of interest on such cash.
Trustee shall discharge the foregoing powers and discretions in
accordance with the funding policy, and to the extent the Plans so provide,
guidelines established by Company and from time to time communicated in writing
to Trustee. Trustee shall have no responsibility with respect to the
formulation of any funding, investment or diversification policy embodied in
such guidelines.
In addition, if Company has exercised its discretion to vest
responsibility for the management and control of any portion of the Trust in
one or more Investment Managers, or, if the Trust is not the only funding
medium under the Plans, then Company shall be responsible under the Plans and
this Agreement for determining the proper diversification policy with respect
to the investment of Plan assets (including the Trust), for monitoring
adherence to such policy and for advising Trustee with respect to its
compliance with any investment limitations.
(c) The investment and reinvestment of any Directed Fund
established under this Trust Agreement shall be under the exclusive management
and control of an Investment Manager appointed by Company.
For purposes of this Trust Agreement, "Investment Manager" shall mean
an investment adviser registered under the Investment Advisers Act of 1940, a
bank (other than the Trustee) as defined in that Act, or an insurance company
qualified to perform investment management services under the laws of more than
one
- 9 -
<PAGE> 11
State, which shall have acknowledged in writing that it is a fiduciary with
respect to the Plans, and which shall have the power to manage, acquire and
dispose of Plan assets. Trustee shall not be a party to any agreement with an
Investment Manager, and the terms and conditions of appointment and retention
of an Investment Manger shall be the sole responsibility of Company.
Company shall certify in writing to Trustee: (a) that it has appointed
an Investment Manager in accordance with the Plan; (b) that the Investment
Manager is an "Investment Manager" as such term is defined above; and (c) the
assets of the Trust Fund to be allocated to the Directed Fund over which such
Investment Manager shall have responsibility.
The Investment Manager shall furnish Trustee from time to time with
the names and signatures of those persons who shall be authorized to direct
Trustee on its behalf hereunder. Trustee shall have the right to request that
all directions by an Investment Manager pursuant to this Trust Agreement be in
writing and shall assume no liability hereunder for failure to act pursuant to
such directions unless and until it shall receive directions in form
satisfactory to it.
Supervision of an Investment Manager shall be the exclusive
responsibility of Company. Therefore, Trustee shall be under no duty or
obligation to review or to question any direction of the Investment Manager or
to review the securities or other property held in any Directed Fund with
respect to prudence, proper diversification of Trust or Plan assets or
compliance with any limitation on the Investment Manager's authority under the
terms of the Plans, any agreement
- 10 -
<PAGE> 12
entered into between Company and an Investment Manager or imposed by applicable
law, or to make any suggestions to Company or an Investment Manager with
respect to the investment and reinvestment of any Directed Fund.
The parties hereto acknowledge that while Trustee will perform certain
duties (such as custodial, reporting, recording and bookkeeping functions) with
respect to Directed Funds, such duties do not involve the exercise of any
discretionary authority to manage or control assets of the Directed Funds and
will be the responsibility of officers and other employees of Trustee who are
unfamiliar with and have no responsibility for investment management.
Therefore, in the event that knowledge of Trustee shall be a prerequisite to
imposing a duty upon or determining liability of Trustee under this Trust
Agreement or any statute regulating the conduct of Trustee with respect to such
Directed Funds, Trustee will not be deemed to have knowledge of or have
participated in any act or omission of an Investment Manager involving the
investment of assets allocated to the Directed Funds solely as a result of the
receipt and processing of information in the course of performing such duties.
Trustee shall not have any discretionary responsibility or authority
to manage or control any asset held in a Directed Fund upon the resignation or
removal of an Investment Manager unless and until it has been notified in
writing by Company that the Investment Manager's authority has terminated and
that such Directed Fund assets are to be integrated with the Discretionary
Fund. Such notice shall not be deemed effective until two business days after
it has been
- 11 -
<PAGE> 13
received by Trustee. Trustee shall not be liable for any losses to the Trust
resulting from the disposition of any investment made by an Investment Manager
or for the retention of any illiquid or unmarketable investment or any
investment which is not publicly traded or for the holding of any other
investment acquired by the Investment Manager if Trustee is unable to dispose
of such investment because of the Securities Act of 1933 or other Federal or
state law or if an orderly liquidation of such investment is impractical under
prevailing conditions, or for failure to comply with any investment or
diversification limitations imposed by Company, or for any other violation of
the terms of is Trust Agreement, the Plans or applicable laws, as a result of
the addition of Directed Fund assets to the Discretionary Fund.
(c) Without in any way limiting the powers and discretions
conferred upon Trustee and any Investment Manager by the other provisions of
this Agreement or by law, Trustee and each Investment Manager shall be vested
with the following powers and discretions with respect to the assets of the
Trust subject to its management and control, and, upon the directions of the
Investment Manager of a Directed Fund, Trustee shall make, execute, acknowledge
and deliver any and all documents of transfer and conveyance and any and all
other instruments that may be necessary or appropriate to enable such
Investment Manager to carry out such powers and discretions:
(1) to purchase, sell, exchange, convey, transfer or
otherwise acquire or dispose of any property by private contract or at
public auction, and no
- 12 -
<PAGE> 14
person dealing with Trustee or Investment Manager shall be bound to
see to the application of the purchase money or to inquire into the
validity, expediency or propriety of any such acquisition or
disposition, except that prior written approval of Company is required
for Trustee to purchase, sell, lease, or otherwise acquire or dispose
of real property on behalf of the Trust;
(2) to purchase or sell, write or issue, puts, calls or other
options, covered or uncovered, to enter into financial futures
contracts, forward placement contracts and standby contracts, and in
connection therewith, to deposit, hold (or direct Bankers Trust
Company, as trustee or in its individual capacity, to deposit or hold)
or pledge assets of the Trust;
(3) to vote upon any stocks, bonds or other securities; to
give general or special proxies or powers of attorney with or without
power of substitution; to exercise any conversion privileges,
subscription rights or other options and to make any payments
incidental thereto; to consent to or otherwise participate in
corporate reorganizations or other changes affecting corporate
securities and to delegate discretionary powers and to pay any
assessments or charges in connection therewith; and generally to
exercise any of the powers of an owner with respect to stocks, bonds,
securities and other property;
(4) to invest in a fund consisting of securities issued by
corporations and selected and retained solely because of their
inclusion in, and in accordance with, one or more commonly used
indices of such securities, with
- 13 -
<PAGE> 15
the objective of providing investment results for the fund which
approximate the overall performance of such designated index;
(5) to enter into any partnerships, as a general or
limited partner, or joint venture;
(6) to purchase units or certificates issued by an
investment company or pooled trust or comparable entity;
(7) to transfer money or other property to an insurance
company issuing an insurance contract;
(8) to transfer assets of a Discretionary or Directed Fund to
a common, collective or commingled trust fund maintained by Trustee,
Investment Manager, or an affiliate of Trustee or Investment Manager,
or by another trustee who is designated by Company, to be held and
invested subject to all of the terms and conditions thereof, and such
trust shall be deemed adopted as part of the Trust and the Plans, to
the extent that assets of the Trust are invested therein; and
(9) to be reimbursed for the reasonable expenses incurred in
exercising any of the foregoing powers or to pay the reasonable
expenses incurred by any agent, manager or trustee appointed pursuant
hereto.
(d) In addition, Trustee is hereby authorized:
(1) to register any securities held in the Trust in its own
name or in the name of a nominee and to hold any securities in bearer
form, and to combine certificates representing such securities with
certificates of the
- 14 -
<PAGE> 16
same issue held by Trustee in other fiduciary or representative
capacities or as agent for customers, or to deposit or to arrange for
the deposit of such securities in any qualified central depository,
even though, when so deposited, such securities may be merged and held
in bulk in the name of the nominee of such depository with other
securities deposited therein by other depositors, or to deposit or
arrange for the deposit of any securities issued by the United States
government or any agency or instrumentality thereof, with a Federal
Reserve Bank, but the books and records of Trustee shall at all times
show that all such investments are part of the Trust;
(2) to employ suitable agents, depositories and counsel,
domestic or foreign, and to charge reasonable expenses and
compensation against the Trust, and to confer upon any such depository
the powers conferred upon Trustee by paragraph (1) above, as well as
the power to appoint subagents and depositories, wherever situated, in
connection with the retention of securities and other property;
(3) to borrow money from any source as may be necessary or
advisable to effectuate the purposes of the Trust on such terms and
conditions as Trustee may deem advisable, subject to prior written
approval by Company;
(4) to compromise, compound, submit to arbitration or settle
any debt or obligation owing to or from or otherwise adjust all claims
in favor of or against the Trust, other than claims solely affecting
the right of any person
- 15 -
<PAGE> 17
to benefits under the Plans; to reduce or increase the rate of
interest or extend or otherwise modify, foreclose upon default, or
enforce any such debt or obligation; to sue or defend suits or legal
proceedings to protect any interest in the Trust and to represent the
Trust in all suits or legal proceedings in any court or before any
other administrative agency or body or tribunal; and
(5) generally, consistent with the provisions of this Trust
Agreement, to perform all acts (whether or not expressly authorized
herein) which it may deem necessary and prudent for the protection of
the assets of the Trust; provided however, that in the event of a
Change in Control as defined in Section 13(e), written approval by
Company is required for Trustee to borrow on behalf of the Trust, or
to lease or sell real property on behalf of the Trust.
Notwithstanding anything to the contrary contained in this Trust
Agreement, in the event of a Change in Control as defined in Section 13(e),
Trustee shall invest all assets of the Trust in such fixed-income securities as
the Trustee deems appropriate, in the exercise of its sole discretion, for a
period of one year following such event and thereafter shall have and exercise
investment discretion with respect to all assets of the Trust.
- 16 -
<PAGE> 18
SECTION 6. DISPOSITION OF INCOME.
- - - - - ---------------------------------
During the term of this Trust, all income received by the Trust, net
of expenses and taxes, shall be accumulated and reinvested.
SECTION 7. MONTHLY AND ANNUAL ACCOUNTING BY TRUSTEE.
- - - - - ----------------------------------------------------
Trustee shall keep accurate and detailed records of all investments,
receipts, disbursements, and all other transactions required to be made,
including such specific records as shall be agreed upon in writing between
Company and Trustee and all books and records relating thereto shall be open to
inspection and audit at all reasonable times by any persons designated by
Company. Within 30 days following the close of each month, within 90 days
following the close of each fiscal year (ending June 30th) and within 90 days
after the removal or resignation of Trustee, Trustee shall deliver to Company a
written account of its administration of the Trust during such month or year,
as the case may be, or during the period from the close of the last preceding
year to the date of such removal or resignation, setting forth all investments,
receipts, disbursements and other transactions effected by it upon its own
authority, or pursuant to the directions of any Investment Manager, including a
description of all securities and investments purchased and sold with the cost
or net proceeds of such purchases or sales (accrued interest paid or receivable
being shown separately), and showing all cash, securities and other property
held in the Trust at the end of such month, year or as of the date of such
removal or resignation, as the case may be. Upon the
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<PAGE> 19
expiration of ninety (90) days from the date of filing such annual or other
account, Trustee shall be forever released and discharged from all liability
and accountability to the Company with respect to the propriety of all acts
(and failures to act) and transactions reflected in such account, except with
respect to any such acts or transactions as to which the Company shall, within
such ninety (90) day period file with Trustee specific written objections.
Company shall be entitled to such conferences with Trustee, as Company
shall reasonably request, including but not limited to an annual conference.
SECTION 8. RESPONSIBILITY OF COMPANY, TRUSTEE AND INVESTMENT MANAGERS.
- - - - - ----------------------------------------------------------------------
(a) Company, Trustee and each Investment Manager shall discharge
their respective fiduciary duties with the care, skill, prudence and diligence
under the circumstances then prevailing that a prudent person acting in like
capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims, provided, however, that
Trustee shall incur no liability to any person for any action taken pursuant to
a direction, request or approval given by Company or an Investment Manager
which is contemplated by, and in conformity with, the terms of this Trust
Agreement or anything omitted to be done by Trustee in the absence of any such
direction, request or approval. Company agrees to indemnify Trustee against
Trustee's reasonable costs, expenses and liabilities (including, without
limitation, reasonable attorneys' fees and expenses) arising out of or relating
to any action taken by Trustee in good faith
- 18 -
<PAGE> 20
and without negligence and in reliance upon direction, request or approval
given by Company or an Investment Manager or anything omitted to be done in
good faith in the absence of any such direction, request or approval. If
Company does not pay such costs, expenses and liabilities in a reasonably
timely manner, Trustee may obtain payment from the Trust.
(b) If Trustee undertakes or defends any litigation arising in
connection with this Trust, Company agrees to indemnify Trustee against
Trustee's reasonable costs, expenses and liabilities (including, without
limitation, reasonable attorneys' fees and expenses) relating thereto and to be
primarily liable for such payments. If Company does not pay such costs,
expenses and liabilities in a reasonably timely manner, Trustee may obtain
payment from the Trust.
(c) Trustee may consult with legal counsel and may reasonably rely
on such counsel (who may also be counsel for Company generally) with respect to
any of its duties or obligations hereunder.
(d) Trustee may hire agents, accountants, actuaries, investment
advisors, financial consultants or other professionals reasonably required to
assist it in performing any of its duties or obligations hereunder and may
charge the reasonable fees of such professionals to the Trust.
(e) Trustee shall have, without exclusion, all powers conferred on
trustees by applicable law, unless expressly provided otherwise herein,
provided, however, that if an insurance policy is held as an asset of the
Trust, Trustee shall have no power to name a beneficiary of the policy other
than the Trust, to assign
- 19 -
<PAGE> 21
the policy (as distinct from conversion of the policy to a different form)
other than to a successor trustee, or to loan to any person the proceeds of any
borrowing against such policy. Trustee shall not be responsible under this
Trust Agreement for the form, term, payment provisions or issuer of any
insurance contract which it may be directed to purchase and/or hold as
contractholder hereunder.
(f) However, notwithstanding the provisions of Section 8(e) above,
Trustee may loan to Company the proceeds of any borrowing against an insurance
policy held as an asset of the Trust.
(g) Notwithstanding any powers granted to Trustee pursuant to this
Trust Agreement or to applicable law, Trustee shall not have any power that
could give this Trust the objective of carrying on a business and dividing the
gains therefrom, within the meaning of Section 301.7701-2 of the Procedure and
Administrative Regulations promulgated pursuant to the Internal Revenue Code.
SECTION 9. COMPENSATION AND EXPENSES OF TRUSTEE.
- - - - - ------------------------------------------------
All administrative and Trustee's fees and expenses (including, but not
limited to, reasonable legal fees) shall be paid from the Trust unless paid by
the Company. Trustee shall be entitled to the fees listed on Schedule A
attached hereto as reasonable compensation for the services rendered under this
Trust Agreement. Trustee's entitlement to reimbursement hereunder shall not be
affected by the resignation or removal of the Trustee or by the termination of
the Trust.
- 20 -
<PAGE> 22
SECTION 10. RESIGNATION AND REMOVAL OF TRUSTEE.
- - - - - -----------------------------------------------
(a) Trustee may resign at any time by written notice to Company,
which shall be effective 90 days after receipt of such notice unless Company
and Trustee agree otherwise.
(b) Trustee may be removed by Company on 90 days notice or upon
shorter notice accepted by Trustee.
(c) In the event of a Change in Control, as defined herein, for
a one-year period following such event, Trustee may be removed by
Company only if 75 percent of the number of the Participants consent to such
removal.
(d) If Trustee resigns within one year of a Change in Control, as
defined herein, Company shall select a successor trustee in accordance with the
provisions of Section 11(b) hereof prior to the effective date of Trustee's
resignation or removal.
(e) Upon resignation or removal of Trustee and appointment of a
successor trustee, all assets shall subsequently be transferred to the
successor trustee. The transfer shall be completed within 180 days after
receipt of notice of resignation, removal or transfer, unless Company extends
the time limit.
(f) If Trustee resigns or is removed, a successor shall be
appointed, in accordance with Section 11 hereof, by the effective date of
resignation or removal under paragraph(s)(a) or (b) of this section. If no
such appointment has been made, Trustee may apply to a court of competent
jurisdiction for appointment of a
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<PAGE> 23
successor or for instructions. All expenses of Trustee in connection with the
proceeding shall be allowed as administrative expenses of the Trust.
SECTION 11. APPOINTMENT OF SUCCESSOR.
- - - - - -------------------------------------
(a) If Trustee resigns or is removed in accordance with Section
10(a) or (b) hereof, Company may appoint any third party, such as a bank trust
department or other party that may be granted corporate trustee powers under
state law, as a successor to replace Trustee upon resignation or removal. The
appointment shall be effective when accepted in writing by the new trustee, who
shall have all of the rights and powers of the former Trustee, including
ownership rights in the Trust assets. The former Trustee shall execute any
instrument necessary or reasonably requested by Company or the successor
trustee to evidence the transfer.
(b) If Trustee resigns or is removed pursuant to the provisions of
Section 10(c) or (d) hereof, Company shall select a successor trustee;
provided, however, that in the event of a Change in Control as defined in
Section 13(e), for a one-year period following such event, 75 percent of the
number of the Participants must consent to the appointment of a successor
trustee. The appointment of a successor trustee shall be effective when
accepted in writing by the new trustee. The new trustee shall have all the
rights and powers of the former Trustee, including ownership rights in Trust
assets. The former Trustee shall execute any instrument
- 22 -
<PAGE> 24
necessary or reasonably requested by the successor trustee to evidence the
transfer.
(c) The successor trustee need not examine the records and acts of
any prior Trustee and may retain or dispose of existing Trust assets, subject
to Sections 7 and 8 hereof. The successor trustee shall not be responsible for
and Company shall indemnify and defend the successor trustee from any claim or
liability resulting from any action or inaction of any prior Trustee or from
any other past event, or any condition existing at the time it becomes
successor trustee.
SECTION 12. AMENDMENT OR TERMINATION.
- - - - - -------------------------------------
(a) This Trust Agreement may be amended by a written instrument
executed by Trustee and Company; provided, however, that no amendments may be
made within a one-year period after the occurrence of a Change in Control, as
defined in Section 13(e), unless 75 percent of the number of Participants
consent to the amendments. Notwithstanding the foregoing, no such amendment
shall conflict with the terms of the Plans (as certified to the Trustee by
Company) or shall make the Trust revocable after it has become irrevocable in
accordance with Section 1(b).
(b) The Trust shall not terminate until the date on which the
Participants and their beneficiaries are no longer entitled to benefits
pursuant to the terms of the Plans, unless sooner revoked in accordance with
Section l(b)
- 23 -
<PAGE> 25
hereof. Upon termination of the Trust, and pursuant to the written direction of
Company, any assets remaining in the Trust shall be returned to Company.
(c) Upon written approval of the Participants or beneficiaries
entitled to payment of benefits pursuant to the terms of the Plans, Company may
terminate this Trust prior to the time all benefit payments under the Plans
have been made. Upon written direction from Company, all assets in the Trust at
termination shall be returned to Company.
SECTION 13. MISCELLANEOUS.
- - - - - --------------------------
(a) Any provision of this Trust Agreement prohibited by law shall
be ineffective to the extent of any such prohibition, without invalidating the
remaining provisions hereof.
(b) Notwithstanding anything to the contrary contained elsewhere
in this Trust Agreement, any reference to the Plan or Plan provisions which
require knowledge or interpretation of the Plan shall impose a duty upon the
Company to communicate such knowledge or interpretation to the Trustee. The
Trustee shall have no obligation to know or interpret any portion of the Plan
and shall in no way be liable for any action taken contrary to the Plan.
(c) This Trust Agreement shall be governed by and construed in
accordance with the laws of New York.
(d) Any action required to be taken by Company pursuant to the
terms of this Trust Agreement may be taken by the Board of Directors of Company
or by
- 24 -
<PAGE> 26
any person authorized to act on behalf of Company by such Board of Directors.
All actions of such Board shall be evidenced by a resolution of the Board of
Directors certified to Trustee over the signature of its Secretary or Assistant
Secretary under the corporate seal and Trustee shall be fully protected in
acting in accordance with such resolutions so certified to it.
(e) For purposes of this Trust, the term "Change in Control" shall
mean the occurrence of either of the following events:
(1) A third person, including a "group" as defined in Section
13(d)(3) of the Securities Exchange Act of 1934, or any rules or regulations
thereunder, acquires shares of Company having 20 percent or more of the total
number of votes that may be cast for the election of Directors of Company; or
(2) As the result of any cash tender or exchange offer, merger
or other business combination, sale of assets or contested election, or any
combination of the foregoing transactions (a "Transaction"), the persons who
were Directors of Company before the Transaction shall cease to constitute a
majority of the Board of Directors of Company or any successor to Company.
SECTION 14. NOTICE OF CHANGE IN CONTROL.
- - - - - ----------------------------------------
Within five days after having knowledge of a Change in Control,
Company shall provide written notice of the occurrence of such Change in
Control to Trustee and the Participants.
- 25 -
<PAGE> 27
SECTION 15. COMMUNICATIONS TO TRUSTEE OR COMPANY.
- - - - - -------------------------------------------------
Communications to Trustee shall be sent to Trustee as follows:
Bankers Trust Company, Global Assets--Retirement Services, 280 Park Avenue, 15
East, New York NY 10017, Attention: Doug Doucette, or to such other address as
Trustee may specify. No communication shall be binding upon Trustee until it is
received by Trustee. Communications to Company shall be sent to Company's
principal office at 1025 West NASA Boulevard, Melbourne, Florida 32919,
Attention: Corporate Secretary, or to such other address as Company may
specify.
SECTION 16. NON-ALIENATION OF BENEFITS.
- - - - - ---------------------------------------
No benefit under a Plan shall at any time be subject in any manner to
alienation or encumbrance. If any Participant or beneficiary shall attempt to,
or shall, alienate or in any way encumber his benefits under a Plan, or any
part thereof, or if by reason of his bankruptcy or other event happening at any
time any such benefits would otherwise be received by anyone else or would not
be enjoyed by him, his interest in all such benefits shall automatically
terminate and the same shall be held or applied to or for the benefit of such
person, his spouse, children, or other dependents in accordance with the terms
of such Plan.
- 26 -
<PAGE> 28
SECTION 17. ARBITRATION.
- - - - - ------------------------
Any dispute between Participants and Company or Trustee as to the
interpretation or application of the provisions of the Agreement and amounts
payable under a Plan shall be determined exclusively by binding arbitration in
Melbourne, Florida in accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator's award
in any court or competent jurisdiction. All fees and expenses of such
arbitration shall be paid by the Trustee and considered an expense of the
Trust.
SECTION 18. TRUST BENEFITS LIMITED TO PLAN BENEFITS.
- - - - - ----------------------------------------------------
Nothing herein contained shall be construed as conferring upon any
person any rights with respect to the Trust or the administration thereof other
than the right to such benefits as may be provided with respect to such person
by the terms of a Plan. All rights created under the Plans and this Agreement
shall be mere unsecured contractual rights of the Participant against Company.
SECTION 19. EFFECTIVE DATE.
- - - - - ---------------------------
The effective date of this Trust Agreement shall be August 1, 1994.
HARRIS CORPORATION
By:/s/ D.S. Wasserman
-------------------------------
Title:/s/ Vice President-Treasurer
----------------------------
Date:/s/ October 10, 1994
-----------------------------
- 27 -
<PAGE> 29
BANKERS TRUST COMPANY
By:/s/ Frank Eipper
-------------------------------
Title:/s/ Vice President
----------------------------
Date:/s/ 10/13/94
-----------------------------
- 28 -
<PAGE> 30
APPENDIX A
----------
HARRIS CORPORATION MASTER RABBI TRUST AGREEMENT
SUPPLEMENTAL BENEFITS PLANS
---------------------------
o Harris Corporation Supplemental Executive Retirement Plan
o Lanier Worldwide, Inc. Supplemental Executive Retirement Plan
o Harris Corporation Directors Retirement Plan
o Harris Corporation Deferred Compensation Plan for Principal Executives
o Individual Deferred Compensation Agreements
- 29 -
<PAGE> 31
This fee schedule will be in effect for the period commencing 8/1/94 and
ending 9/30/96. It presumes that the structure of the plan and the
servicing requirements will remain unchanged during the fee period. If such
changes occur, Bankers Trust has the right to request additional fees; Harris
Corporation will have the opportunity to approve these fees in advance.
HARRIS CORPORATION
/s/ October 10, 1994 By:/s/ D.S. Wasserman
- - - - - ------------------------------ -------------------------------
Date Title: Vice President-Treasurer
BANKERS TRUST COMPANY
/s/ 10-13-94 By:/s/ Frank Eipper
- - - - - ------------------------------ ------------------------------
Date Title: Vice President
Assumptions
- - - - - -----------
1. The Harris Corporation Master Rabbi Trust consists of five plans with
one separately managed portfolio. There will be one unitization.
2. Participant Recordkeeping, Benefit Payment Services, and Participant
Tax Reporting Services will be provided by the client or a client
vendor.
- 30 -
<PAGE> 1
<TABLE>
EXHIBIT 11 - COMPUTATION OF NET INCOME PER SHARE
----------
<CAPTION>
Quarter Ended
-----------------------------
September 30, September 30,
1994 1993
-------------- -------------
(In millions except
per share amounts)
<S> <C> <C>
Primary:
Average shares outstanding 39.4 39.8
===== =====
Income before cumulative effect of
change in accounting principle $ 28.8 $ 24.7
Cumulative effect of change in
accounting principle - (10.1)
------ ------
Net income $ 28.8 $ 14.6
====== ======
Per share amounts:
Income before cumulative effect of
change in accounting principle $.73 $.62
Cumulative effect of change in
accounting principle - (.25)
---- ----
Total $.73 $.37
==== ====
Fully diluted:
Total primary average shares
outstanding 39.4 39.8
Dilutive stock options and employee
stock purchase plan shares
- based on treasury stock method
using the greater of quarter-end
market price or average market price .1 .2
------ ------
Average fully diluted shares
outstanding 39.5 40.0
====== ======
Per share amounts:
Income before cumulative effect of
change in accounting principle $.73 $.62
Cumulative effect of change in
accounting principle - (.25)
---- ----
Total $.73 $.37
==== ====
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> SEP-30-1994
<CASH> 86,700
<SECURITIES> 29,900
<RECEIVABLES> 637,100
<ALLOWANCES> 28,700
<INVENTORY> 835,900
<CURRENT-ASSETS> 1,629,200
<PP&E> 1,738,800
<DEPRECIATION> 1,170,500
<TOTAL-ASSETS> 2,602,200
<CURRENT-LIABILITIES> 749,200
<BONDS> 662,200
<COMMON> 39,400
0
0
<OTHER-SE> 1,133,000
<TOTAL-LIABILITY-AND-EQUITY> 2,602,200
<SALES> 807,300
<TOTAL-REVENUES> 816,100
<CGS> 561,500
<TOTAL-COSTS> 195,900
<OTHER-EXPENSES> (400)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,800
<INCOME-PRETAX> 44,300
<INCOME-TAX> 15,500
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 28,800
<EPS-PRIMARY> .73
<EPS-DILUTED> .73
</TABLE>
