10-Q

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION
	Item 1. Financial Statements.
		HARRIS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF INCOME
		HARRIS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEET
		HARRIS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
		NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
	Item 3. Quantitative and Qualitative Disclosure About Market Risk.
PART II. OTHER INFORMATION
	Item 6. Exhibits and Reports on Form 8-K.
SIGNATURE
EX-10(I) 2000 Stock Investment Plan
EX-10(II) Executive Performance Share Award Agrmt.
EX-10(III) Retirement Plan
EX-12 Ratio of Earnings to Fixed Charges

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form l0-Q

                                       (Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION l3 or l5(d)
OF THE SECURITIES EXCHANGE ACT OF l934

For the quarterly period ended September 28, 2001

or

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission File Number l-3863

HARRIS CORPORATION (Exact name of registrant as specified in its charter)

Delaware	34-0276860
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

l025 West NASA Boulevard
            Melbourne, Florida               329l9

(Address of principal executive offices)(Zip Code)

(321) 727-9l00

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (l) has filed all reports required to be filed by Section l3 or l5 (d) of the Securities Exchange Act of l934 during the preceding l2 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      

The number of shares outstanding of the registrant’s common stock, as of November 5, 2001 was 66,061,771 shares.

HARRIS CORPORATION

FORM 10-Q

For the Quarter Ended September 28, 2001

INDEX

Part I	Financial Information:
	Item 1 — Financial Statements (unaudited):
	Condensed Consolidated Statement of Income for the Quarters ended                      September 28, 2001 and September 29, 2000	2
	Condensed Consolidated Balance Sheets at September 28, 2001                      and June 29, 2001	3
	Condensed Consolidated Statement of Cash Flows for the Quarters                     ended September 28, 2001 and September 29, 2000	4
	Notes to Condensed Consolidated Financial Statements	5
	Item 2 — Management’s Discussion and Analysis of Financial Condition and                  Results of Operations	8
	Item 3 — Quantitative and Qualitative Disclosure About Market Risk	14
Part II	Other Information:
	Item 6 — Exhibits and Reports on Form 8-K	15
Signatures Exhibits

PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements.

HARRIS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME

(unaudited)

The following information for the quarters ended September 28, 2001 and September 29, 2000 has not been audited by independent accountants, but in the opinion of management reflects all adjustments (consisting only of normal, recurring items) necessary for a fair presentation of the results for the indicated periods. The results of operations for the quarter ended September 28, 2001 are not necessarily indicative of the results for the full fiscal year.

			Quarter Ended
	September 28,					September 29,
			2001				2000
		(In millions, except per share amounts)
Revenue
Revenue from product sales and services			$	443.4				$	460.4
Costs and Expenses
Cost of product sales and services				330.8					335.6
Engineering, selling and administrative expenses				99.6					100.8
Purchased in-process research and development				—					73.5
Other income (net)				(17.9	)				(43.9	)
				412.5					466.0
Operating income (loss)				30.9					(5.6	)
Interest income				3.2					4.3
Interest expense				(8.2	)				(8.1	)
Income (loss) before income taxes and goodwill amortization				25.9					(9.4	)
Income taxes				8.8					22.5
Income (loss) before goodwill amortization				17.1					(31.9	)
Goodwill amortization net of income taxes				—					(2.9	)
Net income (loss)			$	17.1				$	(34.8	)
Net income (loss) per common share
Basic:
Before goodwill amortization			$	.26				$	(.47	)
Goodwill amortization				—					(.04	)
			$	.26				$	(.51	)
Diluted:
Before goodwill amortization			$	.26				$	(.47	)
Goodwill amortization				—					(.04	)
			$	.26				$	(.51	)
Cash dividends paid per common share			$	.05				$	.05
Average basic shares outstanding				65.7					68.3
Average diluted shares outstanding				66.0					68.3

See Notes to Condensed Consolidated Financial Statements.

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HARRIS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET

(In millions)			September 28,			June 29,
			2001			2001
			(unaudited)			(audited)
Assets
Current Assets
	Cash and cash equivalents		$	92.8		$	103.0
	Marketable securities			93.4			146.8
	Receivables, net			404.0			451.6
	Unbilled costs and accrued earnings on fixed price contracts			205.8			182.6
	Inventories			263.1			267.7
	Current deferred income taxes			91.9			70.3
		Total current assets		1,151.0			1,222.0
Other Assets
	Plant and equipment, net			276.0			281.9
	Goodwill			209.4			215.1
	Non-current notes receivable			40.9			36.9
	Non-current deferred income taxes			16.4			19.5
	Other assets			177.2			184.5
				719.9			737.9
			$	1,870.9		$	1,959.9
Liabilities and Shareholders’ Equity
Current Liabilities
	Short-term debt		$	0.3		$	33.2
	Accounts payable			98.2			125.5
	Compensation and benefits			92.6			110.5
	Other accrued items			100.8			103.8
	Advance payments and unearned income			78.3			74.3
	Income taxes			16.6			11.2
	Current portion of long-term debt			1.6			1.8
		Total current liabilities		388.4			460.3
Other Liabilities
	Long-term debt			383.7			384.4
Shareholders’ Equity
	Preferred Stock, without par value; 1,000,000 shares authorized; none issued			—			—
	Common Stock, $1.00 par value; 250,000,000 shares authorized; issued and outstanding 65,979,333 shares at September 28, 2001 and 65,845,902 shares at June 29, 2001			66.0			65.8
	Other capital			215.7			214.0
	Retained earnings			816.1			802.3
	Unearned compensation			(5.0	)		(4.5	)
	Accumulated other comprehensive income			6.0			37.6
		Total shareholders’ equity		1,098.8			1,115.2
			$	1,870.9		$	1,959.9

See Notes to Condensed Consolidated Financial Statements.

3

HARRIS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(unaudited)

				Quarter Ended
(In millions)				September 28,			September 29,
				2001			2000
Operating Activities
	Net income (loss)			$	17.1		$	(34.8	)
	Adjustments to reconcile net income (loss) to net cash provided by operating activities:
			Depreciation and amortization		13.6			17.4
			Non-current deferred income tax		3.1			9.9
			Purchased in-process research & development		—			73.5
			Gain on the sale of securities available for sale		(16.7	)		(52.0	)
			Gain on the sale of GE Harris Energy Systems, LLC		(10.3	)		—
	(Increase) decrease in:
		Accounts and notes receivable			43.7			(10.4	)
		Unbilled costs and inventories			(16.3	)		(30.4	)
	Increase (decrease) in:
		Accounts payable and accrued expenses			(50.4	)		(1.5	)
		Advance payments and unearned income			3.9			3.1
		Income taxes			1.4			10.8
	Other				16.4			(16.9	)
Net cash provided by (used in) operating activities					5.5			(31.3	)
Investing Activities
	Cash paid for acquired businesses				(8.6	)		(126.1	)
	Additions of plant and equipment				(9.5	)		(13.9	)
	Cash paid for strategic investments				(2.1	)		(1.0	)
	Proceeds from the sale of securities available for sale				17.5			53.7
	Proceeds from the sale of GE Harris Energy Systems, LLC				23.0			—
Net cash provided by (used in) investing activities					20.3			(87.3	)
Financing Activities
	Decrease in debt				(33.8	)		(47.6	)
	Proceeds from sale of Common Stock				0.8			1.1
	Purchase of Common Stock for treasury				—			(51.6	)
	Cash dividends				(3.3	)		(3.4	)
Net cash used in financing activities					(36.3	)		(101.5	)
Effect of exchange rate changes on cash and cash equivalents					0.3			(0.6	)
Net decrease in cash and cash equivalents					(10.2	)		(220.7	)
Cash and cash equivalents at beginning of quarter					103.0			378.2
Cash and cash equivalents at end of quarter				$	92.8		$	157.5

See Notes to Condensed Consolidated Financial Statements.

4

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 28, 2001

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 accounting principles generally accepted in the United States. In the opinion of management such financial statements reflect all adjustments necessary for a fair presentation of financial position, results of operations and cash flows for such period. For further information refer to the financial statements and notes to financial statements included in Harris’ Annual Report on Form 10-K for the fiscal year ended June 29, 2001.

Note B — Recent Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 141, “Business Combinations” (“Statement 141”) and Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets” (“Statement 142”). Statement 141 eliminates the pooling method of accounting for all business combinations initiated after June 30, 2001 and addresses the initial recognition and measurement of goodwill and other intangible assets acquired in a business combination. Harris adopted this accounting standard for all business combinations initiated after June 30, 2001.

As of the beginning of the first quarter of fiscal 2002, Harris also adopted Statement 142, which addresses the financial accounting and reporting standards for goodwill and other intangible assets subsequent to their acquisition. Statement 142 requires that goodwill be separately disclosed from other intangible assets in the statement of financial position, and no longer be amortized but tested for impairment on a periodic basis. The provisions of Statement 142 also require the completion of a transitional impairment test within six months of adoption, with any impairments identified treated as a cumulative effect of a change in accounting principle. Harris is in the process of completing its transitional impairment test and does not believe it will have an adverse impact on Harris’ operations or financial position.

In accordance with Statement 142, Harris discontinued the amortization of goodwill as of the beginning of the first quarter of fiscal 2002. A reconciliation of previously reported net income (loss) and net income (loss) per common share to the amounts adjusted for the exclusion of goodwill amortization net of the related income tax effect follows:

			Quarter Ended
		September 28,				September 29,
				2001		2000
		(In millions, except per share amounts)
Reported net income (loss)				$	17.1	$	(34.8	)
Exclude goodwill amortization, net of income taxes of $1.6					—		2.9
Adjusted net income (loss)				$	17.1	$	(31.9	)
Basic net income (loss) per common share:
	Reported net income loss			$	.26	$	(.51	)
	Exclude goodwill amortization, net of income taxes				—		.04
				$	.26	$	(.47	)
Diluted net income (loss) per common share:
	Reported net income loss			$	.26	$	(.51	)
	Exclude goodwill amortization, net of income taxes				—		.04
				$	.26	$	(.47	)

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Note C — Comprehensive Loss and Accumulated Other Comprehensive Income

Comprehensive losses for the quarters ended September 28, 2001 and September 29, 2000 were $14.5 million and $93.1 million, respectively.

The components of accumulated other comprehensive income, net of related tax, at September 28, 2001 and June 29, 2001 are as follows:

(In millions)	September 28,			June 29,
	2001			2001
Net unrealized gains on securities available-for-sale	$	33.9		$	67.1
Foreign currency translation adjustments		(30.1	)		(28.5	)
Net unrealized gain (loss) on hedging activity		2.2			(1.0	)
	$	6.0		$	37.6

Note D — Receivables

Receivables are summarized below:

(In millions)	September 28,		June 29,
	2001		2001
Accounts receivable	$	395.9	$	443.5
Notes receivable due within one year-net		26.6		31.0
		422.5		474.5
Less allowances for collection losses		18.5		22.9
	$	404.0	$	451.6

Note E — Inventories and Unbilled Costs

Inventories are summarized below:

(In millions)	September 28,		June 29,
	2001		2001
Finished products	$	57.0	$	52.9
Work in process		23.6		25.8
Raw materials and supplies		182.5		189.0
	$	263.1	$	267.7

Unbilled costs and accrued earnings on fixed-price contracts are net of progress payments of $205.1 million at September 28, 2001 and $193.8 million at June 29, 2001.

Note F — Plant and Equipment

Plant and equipment are summarized below:

(In millions)	September 28,		June 29,
	2001		2001
Land	$	12.3	$	12.3
Buildings		273.3		273.1
Machinery and equipment		562.7		566.4
		848.3		851.8
Less allowances for depreciation		572.3		569.9
	$	276.0	$	281.9

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Note G — Goodwill

Changes in the carrying amount of goodwill for the quarter ended September 28, 2001, by operating segment, are as follows:

(In millions)	Government				Commercial
	Communications			Communications			Other			Total
Balance as of June 30, 2001	$	24.7			$	179.7	$	10.7			$215.1
Goodwill related to operations that were sold during the period		(3.3	)			—		(10.7	)		(14.0	)
Goodwill acquired during the period		—				7.7		—			7.7
Other (including translation and true-ups of previously estimated purchase price allocations)		(1.3	)			1.9		—			0.6
	$	20.1			$	189.3	$	—			$209.4

Harris has other identifiable intangible assets related primarily to technology acquired through acquisition. These other intangible assets included in “Other assets” on the condensed consolidated balance sheet were $13.6 million at September 28, 2001 and $11.6 million at June 29, 2001. Accumulated amortization on these intangible assets was $1.1 million at September 28, 2001 and $0.8 million at June 29, 2001. Amortization expense on these intangible assets was $0.3 million for the quarter ended September 28, 2001 and $0.2 million for the quarter ended September 29, 2000. The estimated amortization expense for the five fiscal years following fiscal 2001 is $1.4 million for each year and $6.9 million thereafter.

Note H — Net Income Per Share

Average outstanding shares used in the computation of net income (loss) per share are as follows:

		Quarter Ended
(In millions)		September 28,			September 29,
		2001			2000
Basic:
	Weighted average shares outstanding		65.9			68.5
	Contingently issuable shares		(0.2	)		(0.2	)
			65.7			68.3
Diluted:
	Weighted average shares outstanding		65.9			68.5
	Dilutive stock options		0.3			—
	Contingently issuable shares		(0.2	)		(0.2	)
			66.0			68.3

The effect of dilutive stock options is not included in the computation for the quarter ended September 29, 2000 because to do so would be antidilutive.

Note I — Reclassifications

Certain prior-year amounts have been reclassified on the financial statements to conform to current year classifications.

7

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis provides information that management believes is useful in understanding Harris’ operating results, cash flows, and financial condition. The discussion should be read in conjunction with, and is qualified in its entirety by reference to, the Condensed Consolidated Financial Statements and related notes appearing elsewhere in this report. Except for the historical information contained here, the discussions in this report contain forward-looking statements that involve risks and uncertainties. Harris’ actual results could differ materially from those discussed here. Factors that could cause or contribute to such differences include, but are not limited to, those discussed under “Forward-Looking Statements” below.

RESULTS OF OPERATIONS

Revenue and Operating Income by Segment

Revenue for the first quarter of fiscal 2002 was $443.4 million, a decrease of 3.7 percent compared to the prior year. Operating income in the first quarter of fiscal 2002 was $30.9 million versus an operating loss of $5.6 million for the prior year.

Segment revenue and operating income were as follows:

		Quarter Ended
								Percent
		September 28,			September 29,			Increase/
(In millions)		2001			2000			(Decrease)
REVENUE
Government Communications		$	216.0		$	198.3			8.9	%
Commercial Communications			227.4			262.1			(13.2	)%
	Total Revenue	$	443.4		$	460.4			(3.7	)%
OPERATING INCOME (LOSS)
Government Communications		$	18.7		$	15.5			20.6	%
	% of revenue		8.7	%		7.8	%
Commercial Communications(1)			6.2			(57.2	)		—
	% of revenue		2.7	%		(21.8	)%
Headquarters expense			(11.9	)		(7.8	)		52.6	%
Other income (net)			17.9			43.9			(59.2	)%
	Total Operating Income (Loss)	$	30.9		$	(5.6	)		—
	% of revenue		7.0	%		(1.2	)%

(1)    The quarter ended September 29, 2000 includes a $73.5 million write-off of purchased in-process research and development.

Government Communications Segment: Government Communications segment revenue in the first quarter of fiscal 2002 increased 8.9 percent from the prior year and operating income increased 20.6 percent. The segment continued its favorable technical and management performance on defense and other government contracts. Growth in the Government Communications segment continued on an upward trend begun in the second quarter of fiscal 2001, aided by increased U.S. government procurement. During the quarter, Harris sold its publishing systems business, which was part of the Government Communications segment. Harris realized a small gain on this sale.

Commercial Communications Segment: Commercial Communications segment revenue in the first quarter of fiscal 2002 decreased 13.2 percent from the prior year due to slow demand in worldwide telecom markets that have impacted the segment’s microwave communication and network support product sales.

8

The segment’s operating income for the first quarter of fiscal 2002 was $6.2 million compared to a loss in the prior year of $57.2 million. The fiscal 2001 operating loss includes a $73.5 million purchased in-process research and development write-off. Excluding the write-off of purchased in-process research and development, the Commercial Communications segment’s operating income decreased from $16.3 million in the first quarter of 2001 to $6.2 million in the first quarter of 2002 or 62.0 percent. This decrease was primarily driven by costs associated with a workforce reduction and other one-time expenses incurred in the microwave business and the decline in revenue noted above.

In the segment’s RF communications business, revenues were up 13 percent in the first quarter of fiscal 2002 when compared to the first quarter of fiscal 2001. Harris is the leading supplier of secure tactical radio communication for defense and other peacekeeping forces worldwide. Demand for Harris’ family of Falcon II radios including a new multiband, software reprogrammable radio with VHF for short-range ground-to-ground communications, UHF for ground-to-air, and SATCOM links for GPS and other satellite communications has been strong. In July 2001, the Falcon II was selected as a major component in the $2.4 billion U.K. Bowman Programme by CDC Systems U.K. Limited, the prime contractor for the program, which is one of the largest land-based military projects in recent U.K. history.

Revenues in the broadcast business increased 14 percent compared to the first quarter of the prior year. The continuing growth in broadcast revenues is directly related to the U.S. transition to digital television. The industry transition remains on track, and Harris is continuing to capture a large share of digital infrastructure sales. Harris is also taking a stronger position in the on-going digital transition in European-standard countries. In the first quarter of fiscal 2002, Harris acquired the Austrian-based Hirschmann Multimedia Communications Network, which positions Harris as the leading provider of international digital broadcasting equipment.

Slow demand in worldwide telecom markets led to decreasing revenues for both microwave communications and network support products. Although microwave communications revenues decreased 25 percent in the first quarter when compared to the prior year’s comparable period and network support revenues decreased 65% during the same period, Harris continued to outperform its competition in the microwave communications portion of its business. Capital spending constraints are significantly reducing telecom infrastructure buildouts in most international markets. In response, Harris took further steps during the quarter to reduce costs to improve the profitability of these businesses on lower revenue.

9

Comparative Statement of Income

Harris’ comparative statement of income is as follows:

		Quarter Ended
								Percent
		September 28,			September 29,			Increase/
(In millions)		2001			2000			(Decrease)
Revenue from product sales and services		$	443.4		$	460.4			(3.7	)%
Cost of product sales and services			330.8			335.6			(1.4	)%
Gross margin			112.6			124.8			(9.8	)%
	% of revenue		25.4	%		27.1	%
Engineering, selling and administrative expenses			99.6			100.8			(1.2	)%
	% of revenue		22.5	%		21.9	%
Purchased in-process research and development			—			73.5			—
Other income (net)			(17.9	)		(43.9	)		(59.2	)%
Operating income(loss)			30.9			(5.6	)		—
	% of revenue		7.0	%		(1.2	)%
Interest income			3.2			4.3			(25.6	)%
Interest expense			(8.2	)		(8.1	)		1.2	%
Income(loss) before goodwill amortization & taxes			25.9			(9.4	)		—
	% of revenue		5.8	%		(2.0	)%
Income taxes			8.8			22.5			(60.9	)%
Income (loss) before goodwill amortization		$	17.1		$	(31.9	)		—
	% of revenue		3.9	%		(6.9	)%

Gross Margin: The gross margin as a percent of revenue decreased from 27.1 percent in the first quarter of fiscal 2001 to 25.4 percent in the first quarter of 2002. The decrease is primarily due to a lower mix of sales in the Commercial Communications segment’s high margin network support products as well as a reduction in overall network support margins, which also resulted from the decline in revenues for these products.

Engineering, Selling and Administrative Expenses: Engineering, selling, and administrative expenses as a percent of revenue were 22.5 percent in the first quarter of fiscal 2002 versus 21.9 percent in the first quarter of fiscal 2001. The increase as a percentage of revenue was primarily due to costs associated with a planned workforce reduction in Harris’ microwave communications product line and increased corporate headquarters expense as a result of higher expenses from Harris’ supplemental executive retirement plan, which fluctuate as a function of the U.S. stock market. These increased expenses were partially offset by lower engineering, selling and administrative expenses in the Commercial Communications segment resulting from cost-cutting efforts primarily in the microwave communications and network support product areas.

Other Income (net): Other income decreased from $43.9 million in the first quarter of fiscal 2001 to $17.9 million in the first quarter of fiscal 2002 due primarily to a $35.3 million decrease in gains from the sale of marketable securities. This decrease was partially offset by a $10.3 million gain from the sale of Harris’ minority interest in its GE Harris Energy Systems, LLC joint venture in the first quarter of fiscal 2002.

Interest Income and Interest Expense: Interest income decreased from $4.3 million in the first quarter of fiscal 2001 to $3.2 million in the first quarter of fiscal 2002 due to lower cash balances and lower interest rates in the current year. Interest expense remained relatively flat from $8.1 million in the first quarter of fiscal 2001 to $8.2 million in the first quarter of fiscal 2002.

10

Income Taxes: The provision for income taxes as a percentage of pretax income was 34.0 percent in the first quarter of fiscal 2002 compared to income tax expense of $22.5 million on a pretax loss of $9.4 million in the first quarter of fiscal 2001. The fiscal 2001 pretax loss included a $73.5 million write-off of purchased in-process research and development that was non-deductible. Excluding the impact of this write-off, the provision for income taxes as a percentage of pretax income was 35.0 percent in the first quarter of fiscal 2001. Both fiscal 2002 and fiscal 2001 benefited from tax rates on foreign source income and export sales, which offset the additional provision needed for state income taxes. The fiscal 2002 rate is lower due to lower state income tax.

Return on Revenue: Income (loss) before goodwill amortization as a percentage of revenue was 3.9 percent in the first quarter of fiscal 2002 versus (6.9) percent in the first quarter of fiscal 2001. Excluding the impact of the $73.5 million after-tax write-off of purchased in-process research and development in the first quarter of fiscal 2001, income (loss) before goodwill amortization as a percentage of revenue was 9.0 percent. The remaining decrease was due primarily to the reasons previously discussed.

Liquidity and Financial Position

Harris’ comparative financial position is as follows:

	As of
	September 28,			As of			Percent
(In millions except per share amounts)	2001			June 29,			Increase/
	(unaudited)			2001			(Decrease)
Cash and cash equivalents	$	92.8		$	103.0			(9.9	)%
Marketable securities		93.4			146.8			(36.4	)%
Other current assets		964.8			972.2			(0.8	)%
Current liabilities		388.4			460.3			(15.6	)%
Working capital	$	762.6		$	761.7			0.1	%
Goodwill	$	209.4		$	215.1			(2.6	)%
Non-current deferred income taxes	$	16.4		$	19.5			(15.9	)%
Total debt	$	385.6		$	419.4			(8.1	)%
Total shareholders’ equity	$	1,098.8		$	1,115.2			(1.5	)%
Total debt as a % of total capital		26.0	%		27.3	%
Book value per share	$	16.65		$	16.94			(1.7	)%

Cash and cash equivalents: Significant cash receipts in the first quarter of fiscal 2002 related to the sale of Harris’ minority interest in its GE Harris Energy Systems, LLC joint venture of $23.0 million and the sale of securities available for sale of $17.5 million. These receipts were more than offset by a $33.8 million reduction in debt and $8.6 million paid for the acquisition of Hirschmann Multimedia Communications Network. Harris plans to use its cash and marketable securities for general corporate purposes in the future including marketing and research and development projects, acquisitions and repurchases of its common stock.

Credit arrangements: Harris has available syndicated credit facilities with various banks that provide for borrowings up to $400 million. The credit facilities consist of a $212.5 million 3-Year Credit Agreement, which expires in May of 2004 and a $187.5 million 364-Day Credit Agreement that expires in May of 2002. Interest rates on borrowings under these facilities and related fees are determined by a pricing matrix based upon Harris’ long-term debt rating assigned by Standard and Poor’s Ratings Group and Moody’s Investors Service. Harris is not required to maintain compensating balances in connection with these agreements. At September 28, 2001 no amounts were borrowed under these facilities. The covenants contained in these facilities include, among others, maintenance of consolidated tangible net worth of not less than $700 million

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(which amount is subject to increase), maintenance of a debt to earnings ratio, and a limit on total debt to $800 million. Harris also has an effective shelf registration filed with the Securities and Exchange Commission, which provides for the issuance of debt securities of up to $500 million.

Management currently believes that existing cash, funds generated from operations, sales of marketable securities, the credit facility, and access to the public and private debt markets will be sufficient to provide for Harris' anticipated requirements for working capital, capital expenditures, and any stock repurchases under the current repurchase program for the next twelve months.

Marketable securities: Marketable securities decreased from $146.8 million as of June 29, 2001 to $93.4 million as of September 28, 2001. The decrease was primarily due to Harris’ sale of a portion of its holdings in Intersil Corporation and a reduction in the quoted market price of Intersil Corporation stock.

Working capital: Working capital remained relatively flat from $761.7 million as of June 29, 2001 to $762.6 million as of September 28, 2001. The $10.2 million decrease in cash and cash equivalents and $53.4 million decrease in marketable securities noted above were offset by a $32.9 million reduction of short-term debt and a $39.0 million reduction in other current liabilities. The decrease in current liabilities resulted primarily from a reduction in accounts payable on lower volumes and a reduction in accrued salaries and wages due to the timing of payroll and annual incentive payments in the first quarter of fiscal 2002.

Goodwill: Goodwill decreased from $215.1 million as of June 29, 2001 to $209.4 million as of September 28, 2001. The decrease was due primarily to the write-off of goodwill associated with Harris’ minority interest in its GE Harris Energy Systems, LLC joint venture, which was sold during the first quarter of fiscal 2002. This decrease was partially offset by goodwill recorded as a result of the acquisition of Hirschmann Multimedia Communications Network. In determining the amount of goodwill associated with the Hirschmann Multimedia Communications Network acquisition, estimates were used pending a final allocation of the purchase price, which should be completed before the end of fiscal 2002. In determining the amount of purchase price allocated to intangibles from acquisitions, Harris uses established valuation techniques used in the communications technology industry, which include present value calculations of future cash flows.

Non-current deferred income taxes: The asset related to non-current deferred income taxes was $19.5 million as of June 29, 2001 versus a $16.4 million asset as of September 28, 2001.

Total debt and capitalization: Total debt decreased from $419.4 million as of June 29, 2001, representing 27.3 percent of total capital (defined as the sum of total debt plus shareholders’ equity) to $385.6 million as of September 28, 2001, representing 26.0 percent of total capital.

Purchase of Common Stock for treasury: Harris used $51.6 million to repurchase 1.8 million shares of its common stock in the first quarter of fiscal 2001. Harris did not repurchase any shares of its common stock in the first quarter of fiscal 2002. Harris’ Board of Directors has approved a share repurchase program which authorizes the repurchase of up to 15 million shares through open market transactions, in negotiated block transactions or pursuant to tender offers. Harris still has a remaining authorization to repurchase an additional 1.7 million shares under this repurchase program.

Additions of plant and equipment: Additions of plant and equipment in the first quarter of fiscal 2002 were $9.5 million versus $13.9 million in the first quarter of fiscal 2001 with no single large items accounting for the reduction. Total additions for Harris in fiscal 2002 are expected to be approximately $60 million.

Outlook

A good balance among Harris’ government and commercial businesses allowed Harris to achieve most of its quarterly financial targets during very difficult economic and political conditions around the globe. The Government Communications segment and the Commercial Communications segment’s secure tactical radio products are performing well in an improving marketplace. We expect these businesses to keep growing and provide a positive impact on Harris’ results over the foreseeable future. Both businesses are

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well positioned to support the war against terrorism. Harris also expects continued good performance from its broadcast business with the rollout of digital equipment over the next several years.

Before September 11th, worldwide market conditions were weak for commercial telecommunications equipment. Since September 11th, markets appear to have worsened. This is unfavorably impacting Harris’ microwave and network support businesses and has added risk to Harris’ fiscal 2002 sales and income. This risk will be increased if international markets do not improve early in calendar 2002. Start-up technology companies in which Harris has passive investments have also been impacted by these events. Although it is too early to reasonably estimate the impact, Harris anticipates that an impairment could be recognized before the end of fiscal 2002 in one or more of these investments.

While the microwave and network support businesses have been adversely impacted by the weak market for commercial telecommunications equipment, the current environment is driving higher growth in our government communications and secure tactical radio businesses. Additionally, we believe that long term, both Harris’ microwave and network support businesses are well positioned in their respective markets with excellent products, and are expected to respond quickly to improved economic conditions.

Forward-Looking Statements

This report contains forward-looking statements that reflect management’s current expectations, assumptions, and estimates of future performance and economic conditions. Such statements are made in reliance upon the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements may be identified by their use of forward-looking terminology, such as “believes”, “expects”, “may”, “should”, “would”, “will”, “intends”, “plans”, “estimates”, “anticipates”, and similar words. Harris cautions investors that any forward-looking statements are subject to risks and uncertainties that may cause actual results and future trends to differ materially from those matters expressed in or implied by such forward-looking statements. Harris’ consolidated results and the forward-looking statements could be affected by many factors, including:

•    general economic conditions in the markets in which Harris operates;
•    economic developments that have a particularly adverse effect on one or more of the markets served by Harris;
•    continuing weakness in the telecom market;
•    continuing challenges in the exit of its telecom switching business;
•    stability of key markets for communications products, particularly Asia and Latin America;
•    fluctuation in foreign currency exchange rates and the effectiveness of Harris’ currency hedging program;
•    fluctuations in the U.S. and worldwide defense and space budgets;
•    effect of the consolidation in the U.S. defense industry on Harris’ direct and indirect business with the U.S. Government;
•    Harris’ ability to receive government contract awards;
•    continued development and market acceptance of new products, especially digital television broadcast products and broadband
      wireless access products;
•    ability to be successful in the management and integration of acquired businesses;
•    ability to achieve further product cost reductions and efficiencies in Harris’ commercial manufacturing operations;
•    ability to continue the liquidation of its marketable securities portfolio; and
•    the successful resolution of patent infringement and other general litigation.

The forward-looking statements contained in this report are made as of the date hereof and Harris disclaims any intention or obligation to update or revise any forward-looking statements or to update the reasons why actual results could differ materially from those projected in the forward-looking statements, whether as a result of new information, future events, or otherwise.

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Item 3.  Quantitative and Qualitative Disclosure About Market Risk.

Harris, in the normal course of doing business, is exposed to the risks associated with foreign currency exchange rates, fluctuations in the market value of its equity securities available for sale, and changes in interest rates. Harris employs established policies and procedures governing the use of financial instruments to manage its exposure to such risks.

Harris uses foreign exchange contracts and options to hedge both balance sheet and off-balance sheet foreign currency commitments. Specifically, these foreign exchange contracts offset foreign currency denominated inventory and purchase commitments from suppliers, accounts receivable from and future committed sales to customers, and intercompany loans. Management believes the use of foreign currency financial instruments should reduce the risks, which arise from doing business in international markets. Contracts are generally for one year or less. At September 28, 2001, Harris had open foreign exchange contracts with a notional amount of $96.8 million, of which $30.6 million were classified as cash flow hedges and $66.2 million were classified as fair value hedges. This compares to total foreign exchange contracts with a notional amount of $43.0 million as of June 29, 2001, of which $6.3 million were classified as cash flow hedges and $36.7 million were classified as fair value hedges. All of these derivatives were recorded at their fair value on the balance sheet in accordance with FAS 133. Factors that could impact the effectiveness of Harris’ hedging programs include accuracy of sales estimates, volatility of currency markets and the cost and availability of hedging instruments. A 10 percent adverse change in currency exchange rates for Harris’ foreign currency derivatives held at September 28, 2001 would have an impact of approximately $9.3 million on the fair value of such instruments. This quantification of exposure to the market risk associated with foreign exchange financial instruments does not take into account the offsetting impact of changes in the fair value of Harris’ foreign denominated assets, liabilities, and firm commitments.

Harris also maintains a portfolio of marketable equity securities available for sale. These investments result from the retained interest in sold or spun-off businesses and the investment into start-up companies that have technology or products that are of interest to Harris. The fair market value of these securities at September 28, 2001 was $93.4 million, compared to $146.8 million at June 29, 2001. This decrease was primarily due to the sale of some of these investments in the first quarter of fiscal 2002 and a decrease in these securities’ quoted market prices. The corresponding unrealized gain is included as a component of shareholders’ equity. These investments have historically had higher volatility than most market indices. A 10 percent adverse change in the quoted market price of marketable equity securities would have an impact of approximately $9.3 million on the fair market value of these securities.

Harris utilizes option contracts in the form of cashless collars to hedge anticipated cash flows from the sale of marketable securities. Contracts are generally one year or less. At September 28, 2001, Harris had open option contracts for 825,000 shares of Intersil Corporation stock at a weighted average strike price of $32.87, which compares to 850,000 shares at a weighted average strike price of $32.35 as of June 29, 2001. All of these collars were classified as cash flow hedges and recorded at their fair value on the balance sheet in accordance with FAS 133. The fair market value of these collars reflected in other assets on the condensed consolidated balance sheet was $4.1 million at September 28, 2001 and $1.8 million at June 29, 2001. Factors that could impact the effectiveness of Harris’ hedging programs include accuracy of cash flow estimates, volatility of security markets, and the cost and availability of hedging instruments. A 10 percent adverse change in the quoted market price of marketable equity securities would have an impact of approximately $1.4 million on the fair value of such instruments.

Harris utilizes a balanced mix of debt maturities along with both fixed-rate and variable-rate debt to manage it exposures to changes in interest rates. Harris does not expect changes in interest rates to have a material effect on income or cash flows in fiscal 2002, although there can be no assurances that interest rates will not significantly change.

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PART II.  OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8-K.

(a)	Exhibits:
	(10) Material Contracts:
	(i)	Stock Option Agreement Terms and Conditions (as of 8/24/01) for grants under the Harris Corporation 2000 Stock Incentive Plan.
	(ii)	Executive Performance Share Award Terms and Conditions (as of 8/24/01) for grants under the Harris Corporation 2000 Stock Incentive Plan.
	(iii)	Harris Corporation Retirement Plan (amended and restated effective April 1, 2001)
	(12) Ratio of Earnings to Fixed Charges.
(b)	Reports on Form 8-K.
	No Current Reports on Form 8-K were filed during the fiscal quarter ended September 28, 2001.
	Items 1, 2, 3, 4, and 5 of Part II are not applicable and have been omitted.

SIGNATURE

     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 6, 2001	By:/s/Bryan R. Roub
	Bryan R. Roub Senior Vice President & Chief Financial Officer (principal financial officer and duly authorized officer)

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EXHIBIT INDEX

Exhibit No.
Under Reg.
S-K, Item 601 Description

(10) Material Contracts:

(i)	Stock Option Agreement Terms and Conditions (as of 8/24/01) for grants under the Harris Corporation 2000 Stock Incentive Plan.
(ii)	Executive Performance Share Award Terms and Conditions (as of 8/24/01) for grants under the Harris Corporation 2000 Stock Incentive Plan.
(iii)	Harris Corporation Retirement Plan (amended and restated effective April 1, 2001).

(12) Ratio of Earnings to Fixed Charges

16 EX-10.I 3 l90939aex10-i.txt EX-10(I) 2000 STOCK INVESTMENT PLAN EXHIBIT 10(i) HARRIS CORPORATION 2000 STOCK INCENTIVE PLAN STOCK OPTION AGREEMENT TERMS AND CONDITIONS (AS OF 8/24/01) 1. THE OPTION - TERMS AND CONDITIONS. Under and subject to the provisions of the Harris Corporation 2000 Stock Incentive Plan (as amended from time to time the "PLAN"), Harris Corporation (the "CORPORATION") has granted to the Employee a Non-Qualified Stock Option (the "OPTION") to purchase such number of shares of Common Stock of the Corporation at the designated price per share as set forth in writing by the Corporation to the Employee. Such grant is subject to the following Terms and Conditions (together with the Corporation's letter specifying the number of options and exercise price, the "AGREEMENT"): (a) Except as set forth in Sections 1(e), 2(b), or 2(d), the Option shall not be exercisable to any extent until and unless the Employee shall have remained continuously in the employ of the Corporation for one year from the grant date. The grant of the Option shall not limit or restrict the Corporation's rights to terminate the Employee's employment. (b) During the lifetime of the Employee, the Option shall be exercisable only by the Employee, and, except as otherwise set forth in Section 2, only while the Employee continues as an Employee of the Corporation. (c) Notwithstanding any other provision of these Terms and Conditions and the Agreement, the Option shall expire no later than ten years from the grant date (the "EXPIRATION DATE"), and shall not be exercisable thereafter. (d) The Option shall become exercisable as follows: (i) After the end of one year and prior to the end of two years from the grant date, not more than fifty percent of the grant; (ii) After the end of two years and prior to the end of three years from the grant date, not more than seventy-five percent of the grant; and (iii) After the end of three years from the grant date, one-hundred percent of the grant. (e) Upon a "change of control" of the Corporation (as defined in Section 11.1 of the Plan) any outstanding Option shall immediately become fully exercisable. 2. TERMINATION OF EMPLOYMENT. (a) TERMINATION OF EMPLOYMENT. In the event of termination of employment with the Corporation other than as a result of circumstances described in Sections 2(b), (c), (d), (e), and (f) below, the Option, whether exercisable or not, shall terminate immediately upon termination of employment. 1 (b) DEATH. Notwithstanding Section 1(d), in the event of the death of the Employee while employed by the Corporation, the Option shall immediately become fully vested and exercisable and shall be exercisable only within the twelve (12) months following the date of death, but no later than the Expiration Date. In the event of the death of the Employee following termination of or cessation of employment, the Option shall be exercisable only within the twelve (12) months following the date of death, but no later than the Expiration Date and then only to the extent that the Option was exercisable on the day immediately prior to the date of the Employee's death. Following the death of the Employee, the Option may be exercised only by the executor or administrator of the Employee's estate or by the person or persons to whom the Employee's rights under the Option shall pass by the Employee's will or the laws of descent and distribution. (c) DISABILITY. In the event of cessation of employment due to disability of the Employee (as determined by the Corporation) while employed by the Corporation, the Option shall be exercisable by the Employee until the Expiration Date and only to the extent that the Option was exercisable at the date of such cessation of employment. (d) RETIREMENT. In the event of retirement of the Employee, the Option shall, if the retirement occurs after the Employee has reached age 55 and has ten or more years of full-time service with the Corporation, be exercisable by the Employee until the Expiration Date and only to the extent that the Option was exercisable at the date of such retirement. In the event of retirement of the Employee, the Option shall, if the retirement occurs after the Employee has reached age 62 and has ten or more years of full-time service with the Corporation, be exercisable by the Employee until the Expiration Date and shall, unless Section 2(b) is applicable, continue to become exercisable after such retirement according to the schedule set forth in Section 1(d). (e) MISCONDUCT. In the event of termination of employment of the Employee by the Corporation for deliberate, willful or gross misconduct ("MISCONDUCT"), as determined by the Corporation, the Option shall be exercisable only by the Employee within one (1) month following such cessation of employment but no later than the Expiration Date and only to the extent that it was exercisable at the date of such cessation of employment. (f) INVOLUNTARY TERMINATION. In the event of termination of employment of the Employee by the Corporation other than for Misconduct, the Option shall be exercisable only by the Employee within the three (3) months following such cessation of employment but no later than the Expiration Date and only to the extent that it was exercisable at the date of such cessation of employment. 3. EXERCISE OF OPTION. The Option may be exercised by delivering to the Corporation at the office of the Corporate Secretary (i) a written notice, signed by the person entitled to exercise the Option, stating the designated number of shares such person then elects to purchase, (ii) payment in an amount equal to the full purchase price of the shares to be purchased, and (iii) in the event the Option is exercised by any person other than the Employee, evidence satisfactory to the Corporation that such person has the right to exercise the Option. Payment shall be made (a) in cash, (b) in previously acquired shares of Common Stock of the Corporation, or (c) in any combination of cash and such shares. Shares tendered in payment of the purchase price which have been acquired through an exercise of a stock option shall have been held at least six months prior to exercise of the Option and shall be valued at the Fair Market Value. Upon the exercise of the Option, the Corporation shall issue and deliver to the Employee, one or more certificates for the shares in respect of which the Option shall have been so exercised. The Employee does not have any rights as a shareholder in respect of any shares as 2 to which the Option shall not have been duly exercised and no rights as a shareholder shall exist prior to the proper exercise of such Option. 4. PROHIBITION AGAINST TRANSFER. The Option and rights granted by the Corporation under these Terms and Conditions and the Agreement are not transferable except to family members or trust by will or by the laws of descent and distribution, provided that the Option may not be so transferred to family members or trusts except as permitted by applicable law or regulations. Without limiting the generality of the foregoing, the Option may not be assigned, transferred except as aforesaid, pledged or hypothecated, shall not be assignable by operation of law, and shall not be subject to execution, attachment or similar process. Any attempted assignment, transfer, pledge, hypothecation or other disposition of the Option contrary to the provisions hereof, or the levy of any execution, attachment or similar process upon the Option, shall be null and void and without effect. 5. EMPLOYMENT BY PARENT, SUBSIDIARY OR SUCCESSOR. For the purpose of these Terms and Conditions and the Agreement, employment by the Corporation, any Subsidiary of or a successor to the Corporation shall be considered employment by the Corporation. 6. BOARD COMMITTEE. The Board Committee shall have authority, subject to the express provisions of the Plan as in effect from time to time, to construe these Terms and Conditions and the Agreement and the Plan, to establish, amend and rescind rules and regulations relating to the Plan, and to make all other determinations in the judgment of the Board Committee necessary or desirable for the administration of the Plan. The Board Committee may correct any defect or supply any omission or reconcile any inconsistency in these Terms and Conditions and the Agreement in the manner and to the extent it shall deem expedient to carry the Plan into effect, and it shall be the sole and final judge of such expediency. 7. INCORPORATION OF PLAN PROVISIONS. These Terms and Conditions and the Agreement are made pursuant to the Plan, the provisions of which are hereby incorporated by reference. Capitalized terms not otherwise defined herein have the meanings set forth in the Plan. In the event of a conflict between the terms of these Terms and Conditions and the Agreement and the Plan, the terms of the Plan shall govern. 3 EX-10.II 4 l90939aex10-ii.txt EX-10(II) EXECUTIVE PERFORMANCE SHARE AWARD AGRMT. EXHIBIT 10(ii) HARRIS CORPORATION 2000 STOCK INCENTIVE PLAN EXECUTIVE PERFORMANCE SHARE AWARD AGREEMENT TERMS AND CONDITIONS (AS OF 8/24/01) 1. PERFORMANCE SHARE AWARD - TERMS AND CONDITIONS. Under and subject to the provisions of the Harris Corporation 2000 Stock Incentive Plan (as amended from time to time the "Plan"), Harris Corporation (the "Corporation") has granted to the Executive a Performance Share Award (the "Award") of such number of shares of Common Stock, $1.00 par value, of the Corporation as set forth and designated in writing by the Corporation to the Executive (the "Stock"). Such Award is subject to the following Terms and Conditions (which together with the Corporation's letter specifying the number of shares subject of the Award, the Performance Period and the Exhibit related thereto is referred to as the "Agreement"): (a) For purposes of the Agreement, the "Performance Period" shall be the Performance Period set forth and designated as such in writing by the Corporation to the Executive. (b) Upon the expiration of the Performance Period and satisfaction of the applicable withholding obligations, the Corporation shall at its option, cause such shares as to which the Executive is entitled pursuant to Section 1(c) hereof either (i) to be issued by delivery of a stock certificate in the name of the Executive or his or her designee, and the certificate shall be released to the custody of the Executive, or (ii) to be credited to an account for the benefit of the Executive or his or her designee maintained by the Corporation's stock transfer agent or its designee. (c) (i) The Award shall be contingent upon the attainment during the Performance Period of the goals exhibit delivered to the Executive at the time of the making of the Award (the "Exhibit"). The payout of the Award shall be determined upon the expiration of the Performance Period in accordance with the Exhibit. The final payout determination of the Award will be authorized by the Harris Board of Directors, the Board Committee, or its designee. (ii) If employment is commenced after July 15th of the first fiscal year of the Performance Period (such commencement date is referred to as the "Start Date"), the final payout to be made to the Executive determined in accordance with the prior provisions of this Section 1(c) shall be reduced by 1/36th for each month between July 1 of the first fiscal year of the Performance Period and the Start Date. Only a Start Date prior to the 15th of a month shall be deemed employment for a full month. Other than with respect to the final payout, the pro-ration pursuant to this Section will not otherwise impact the Award (e.g., the Executive will have full voting rights and will be entitled to receive dividend equivalent payments and other distributions with respect to all Award shares). 1 (d) Subject to Section 7 hereof, during the Performance Period, the Executive may exercise full voting rights with respect to all shares of Stock subject of the Award and shall be entitled to receive dividends and other distributions paid with respect to such shares. Upon the expiration of the Performance Period, the Executive may exercise voting rights and shall be entitled to receive dividends and other distributions with respect to the number of shares to which the Executive is entitled pursuant to Section 1(c) hereof. (e) The number of shares subject of the Award is based upon the assumption that the Executive shall continue to perform substantially the same duties throughout the Performance Period, and such number of shares may be reduced or increased by the Board of Directors or the Board Committee or its designee without formal amendment of this Agreement to reflect a change in duties during the Performance Period. 2. TERMINATION OF EMPLOYMENT. Other than in the event of a "change in control" covered in paragraph 5 herein, if the Executive ceases to be an employee of the Corporation or of one of its Subsidiaries or Affiliates prior to the expiration of the Performance Period: (i) for any reason other than death, disability or retirement after age 55 with ten or more years full-time service, all shares of Stock awarded to the Executive hereunder shall be forfeited; or (ii) due to (a) death, (b) disability or (c) retirement after the Executive has reached age 55 and has ten or more years of full-time service, the Executive shall be eligible to receive a pro-rata proportion of the shares of Stock which would have been issued to the Executive under the Award at the end of the Performance Period determined in accordance with the provisions of Section 1(c) hereof, such pro-rata proportion to be measured by a fraction of which the numerator is the number of months of the Performance Period during which the Executive's employment continued, and the denominator is the full number of months of the Performance Period. For purposes of this Section 2, only employment for 15 days or more of a month shall be deemed employment for a full month. 3. TRANSFER OF EMPLOYMENT. If the Executive transfers employment from one business unit of the Corporation or an Affiliate to another business unit or Affiliate during a Performance Period, the Executive shall be eligible to receive the number of shares of Stock determined by the Board of Directors or the Board Committee based upon such factors as the Board of Directors or the Board Committee, as the case may be, in its sole discretion may deem appropriate. 4. PROHIBITION AGAINST TRANSFER. Until the expiration of the Performance Period, the Award and the shares of Stock subject of the Award and the rights granted under these Terms and Conditions and the Agreement are nontransferable except to family members or trust by will or by the laws of descent and distribution, provided that the Award and the shares of stock subject of the Award may not be so transferred to family members or trust except as permitted by applicable law or regulations. Without limiting the generality of the foregoing except as aforesaid, the Award and such shares may not be sold, exchanged, assigned, transferred, pledged, hypothecated or otherwise disposed of until the expiration of the Performance Period, shall not be assignable by operation of law, and shall not be subject to execution, attachment or similar process. Any attempt to effect any of the foregoing shall be null and void and without effect. 5. CHANGE IN CONTROL. (a) Upon a "change in control" of the Corporation as defined in Section 11.1 of the Plan, the performance objectives shall be conclusively deemed to have been 2 attained. The Award shall be vested immediately prior to the occurrence of a "change in control." The Award shall be paid to the Executive at the end of the Performance Period, provided however: (i) in the event of death, disability, retirement, or involuntary termination other than for Cause, the Award shall be paid IN STOCK as soon as practicable; (ii) in the event of resignation or termination for Cause, the Award shall be forfeited; and (iii) in the event of a "change in the Corporation's capital structure," at the election of the Executive, the Award shall be paid IN STOCK or converted and paid IN CASH. The amount of the cash payment will be an amount equal to the number of shares subject of the Award multiplied by the highest price per share paid in any transaction reported on the New York Stock Exchange Composite Index: (x) during the sixty (60) day period preceding and including the date of a "change in the Corporation's capital structure;" or (y) during the sixty (60) day period preceding and including the date of "change in control". An Award in Stock or cash shall be paid as soon as practicable following a "change in the Corporation's capital structure." (b) For purposes hereof, a "change in the Corporation's capital structure" shall be deemed to have occurred if: (i) the Stock is no longer the only class of the Corporation's common stock; (ii) the Stock ceases to be, or is not readily, tradable on an established securities market (in the United States) within the meaning of Section 409 (l)(1) of the Internal Revenue Code of 1986, as amended; (iii) the Corporation issues warrants, convertible debt, or any other security that is exercisable or convertible into common stock, except for rights granted under the Plan; or (iv) the ratio of total debt to total capitalization exceeds 45 percent. Total debt is the total debt for borrowed money. Total capitalization is consolidated total assets of the Corporation less consolidated total liabilities of the Corporation. (c) "Cause" shall mean (1) a material breach by the Executive of the duties and responsibilities of the Executive (other than as a result of incapacity due to physical or mental illness) which is (x) demonstrably willful, continued and deliberate on the employee's part, (y) committed in bad faith or without reasonable belief that such breach is in the best interests of the Corporation and (z) not remedied within fifteen (15) days after receipt of written notice from the Corporation which specifically identifies the manner in which such breach has occurred or (2) the Executive's conviction of, or plea of NOLO CONTENDERE to, a felony involving willful misconduct which is materially and demonstrably injurious to the Corporation. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or based upon the advice of counsel for the Corporation shall be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests of the Corporation. Cause shall not exist unless and until the Company has delivered to Executive a copy of a resolution duly adopted by three-quarters (3/4) of the entire Board 3 at a meeting of the Board called and held for such purpose (after thirty (30) days notice to Executive and an opportunity for Executive, together with counsel, to be heard before the Board), finding that in the good faith opinion of the Board an event set forth in clauses (1) or (2) has occurred and specifying the particulars thereof in detail. The Company must notify the Executive of any event constituting Cause within ninety (90) days following the Company's knowledge of its existence or such event shall not constitute Cause under these Terms and Conditions. 6. MISCELLANEOUS. These Terms and Conditions and the Agreement (a) shall be binding upon and inure to the benefit of any successor of the Corporation, (b) shall be governed by the laws of the State of Delaware and any applicable laws of the United States, and (c) except as permitted under Sections 3.2, 12 and 13.6 of the Plan, may not be amended without the written consent of both the Corporation and the Executive. No contract or right of employment shall be implied by these Terms and Conditions and the Agreement of which they form a part. If the Award is assumed or a new award is substituted therefor in any corporate reorganization (including, but not limited to, any transaction of the type referred to in Section 424(a) of the Internal Revenue Code of 1986, as amended), employment by such assuming or substituting corporation or by a parent corporation or subsidiary thereof shall be considered for all purposes of the Award to be employment by the Corporation. 7. SECURITIES LAW REQUIREMENTS. The Corporation shall not be required to issue shares pursuant to the Award unless and until (a) such shares have been duly listed upon each stock exchange on which the Corporation's Stock is then registered; and (b) a registration statement under the Securities Act of 1933 with respect to such shares is then effective. 8. BOARD COMMITTEE. The Board Committee shall have authority, subject to the express provisions of the Plan as in effect from time to time, to construe these Terms and Conditions and the Agreement and the Plan, to establish, amend and rescind rules and regulations relating to the Plan, and to make all other determinations in the judgment of the Board Committee necessary or desirable for the administration of the Plan. The Board Committee may correct any defect or supply any omission or reconcile any inconsistency in these Terms and Conditions and the Agreement in the manner and to the extent it shall deem expedient to carry the Plan into effect, and it shall be the sole and final judge of such expediency. 9. ADJUSTMENTS. Non-recurring losses or charges which are separately identified and quantified in the Corporation's audited financial statements and notes thereto including, but not limited to, extraordinary items, changes in tax laws, changes in generally accepted accounting principles, impact of discontinued operations, restructuring charges, restatement of prior period financial results, shall be excluded from the calculation of performance results for purposes of the Plan. However, the Board Committee can choose to include any or all such non-recurring items as long as inclusion of each such item causes the Award to be reduced. 10. INCORPORATION OF PLAN PROVISIONS. These Terms and Conditions and the Agreement are made pursuant to the Plan, the provisions of which are hereby incorporated by reference. Capitalized terms not otherwise defined herein shall have the meanings set forth for such terms in 4 the Plan. In the event of a conflict between the terms of these Terms and Conditions and the Agreement and the Plan, the terms of the Plan shall govern. 5 EX-10.III 5 l90939aex10-iii.txt EX-10(III) RETIREMENT PLAN Exhibit 10(iii) HARRIS CORPORATION RETIREMENT PLAN (AMENDED AND RESTATED APRIL 1, 2001) TABLE OF CONTENTS ----------------- ARTICLE I DEFINITIONS .......................................................1 1.1 Accounts.............................................................1 1.2 After-Tax Account....................................................1 1.3 After-Tax Contributions..............................................1 1.4 Beneficiary..........................................................1 1.5 Break-in-Service.....................................................1 1.6 Code.................................................................1 1.7 Compensation.........................................................2 1.8 Consolidated Subsidiaries............................................4 1.9 Corporation..........................................................4 1.10 Disability...........................................................4 1.11 Early Retirement Age - means age 55..................................4 1.12 Employment Unit......................................................4 1.13 Employee.............................................................4 1.14 ERISA................................................................5 1.15 Excess Compensation..................................................5 1.16 Fiscal Year..........................................................5 1.17 Full-Time Employee...................................................6 1.18 Harris Stock Fund....................................................6 1.19 Harris Stock After-Tax Account.......................................6 1.20 Harris Stock Matching Account........................................6 1.21 Harris Stock Pre-Tax Account.........................................6 1.22 Highly Compensated Employee..........................................6 1.23 Hour of Service......................................................7 1.24 Investment Committee.................................................7 1.25 Investment Funds.....................................................7 1.26 Leave of Absence.....................................................7 1.27 Matching After-Tax Account...........................................7 1.28 Matching After-Tax Contributions.....................................7 1.29 Matching Contributions...............................................7 1.30 Matching Pre-Tax Account.............................................8 1.31 Matching Pre-Tax Contributions.......................................8 1.32 Military Leave.......................................................8 1.33 Normal Retirement Age................................................8 1.34 Participant..........................................................8 1.35 Participating Company................................................8 1.36 Plan.................................................................8 1.37 Plan Year............................................................8 1.38 Predecessor Company..................................................9 1.39 Pre-Tax Account......................................................9 1.40 Pre-Tax Contributions................................................9 1.41 Profit-Sharing Account...............................................9 i 1.42 Profit-Sharing Contributions.........................................9 1.43 Related Company......................................................9 1.44 Release Employee....................................................10 1.45 Retirement Plan Administrative Committee............................10 1.46 Rollover Account....................................................10 1.47 Savings Account.....................................................10 1.48 Service.............................................................10 1.49 Taxable Wage Base...................................................10 1.50 Trust Agreement.....................................................11 1.51 Trust Fund..........................................................11 1.52 Trustee.............................................................11 1.53 USERRA..............................................................11 1.54 Valuation Date......................................................11 1.55 Year of Service.....................................................11 ARTICLE II PARTICIPATION ...................................................12 2.1 In General..........................................................12 2.2 Renewal of Participation on Reemployment............................12 2.3 Periods of Service on Reemployment..................................12 2.4 Service with Predecessor Company....................................13 2.5 Military Leave......................................................13 2.6 Joint Venture Service...............................................13 ARTICLE III CONTRIBUTIONS AND ALLOCATIONS...................................14 3.1 Profit-Sharing Contributions........................................14 3.2 Allocation of Profit-Sharing Contribution to Participants...........16 3.3 Pre-Tax Contributions...............................................17 3.4 Matching Pre-Tax Contributions......................................18 3.5 After-Tax Contributions.............................................19 3.6 Matching After-Tax Contributions....................................19 3.7 Elections to Make Pre-Tax and After-Tax Contributions...............20 3.8 Rollover Contributions..............................................21 3.9 Participating Company's Obligation to Make Contributions............22 3.10 Treatment of Forfeited Amounts......................................23 3.11 Finality of Allocations.............................................23 ARTICLE IV LIMITATIONS ON CONTRIBUTIONS.....................................24 4.1 In General..........................................................24 4.2 Pre-Tax Contributions...............................................24 4.3 Limitations on Contributions for Highly-Compensated Employees.......24 4.4 Limitations on Annual Additions.....................................36 ii ARTICLE V VESTING AND FORFEITURES...........................................38 5.1 In General..........................................................38 5.2 Vesting on Retirement, Death or Disability..........................38 5.3 Vesting on Other Termination of Employment..........................38 5.4 Effect of In-Service Withdrawals on a Participant's Vested Percentage..........................................................39 5.5 Forfeitures.........................................................41 ARTICLE VI ACCOUNTS AND INVESTMENTS.........................................42 6.1 Establishment of Accounts...........................................42 6.2 Investment of Accounts..............................................43 6.3 Allocation of Earnings and Losses...................................45 6.4 Special Rules Concerning Harris Stock Fund..........................45 ARTICLE VII DISTRIBUTIONS ..................................................47 7.1 In General..........................................................47 7.2 Small Benefit Cash-out..............................................48 7.3 Form of Payment.....................................................49 7.4 Time of Payment.....................................................49 7.5 Direct Rollover.....................................................50 7.6 Benefit Amount and Withholding......................................51 7.7 Order of Distributions..............................................52 7.8 Statutory Requirements..............................................52 7.9 Designating Beneficiaries...........................................55 7.10 Payment of Group Insurance Premiums.................................56 7.11 Inability to Locate Participant.....................................57 ARTICLE VIII LOANS .........................................................57 8.1 Loans to Participants...............................................57 8.2 Loan Administration.................................................60 8.3 Repayment and Default...............................................61 8.4 Special Powers......................................................63 ARTICLE IX IN-SERVICE WITHDRAWALS...........................................64 9.1 Withdrawals After Age 59-1/2........................................64 9.2 Withdrawals from Savings Account and After-Tax Account..............64 9.3 Withdrawals from Rollover, Pre-Tax and Profit Sharing Accounts......64 9.4 Conditions Applicable to All Withdrawals............................67 9.5 Reduction of Investment Fund Balances...............................67 iii ARTICLE X TOP-HEAVY PROVISIONS..............................................68 10.1 In General..........................................................68 10.2 Minimum Allocation..................................................68 10.3 Minimum Vesting.....................................................68 10.4 Definitions.........................................................69 ARTICLE XI ADMINISTRATION ..................................................73 11.1 Named Fiduciaries...................................................73 11.2 Retirement Plan Administrative Committee............................73 11.3 Powers and Duties of Committee......................................74 11.4 Actions of Committee................................................74 11.5 Finality of Decisions...............................................74 11.6 Immunities..........................................................74 11.7 Advisors and Agents.................................................74 11.8 Committee Member who is Participant.................................75 11.9 Information Provided by Participating Companies.....................75 11.10 Expenses............................................................76 11.11 Trust...............................................................76 11.12 Trust Fund Available to Pay All Plan Benefits.......................76 ARTICLE XII AMENDMENT AND TERMINATION AND CHANGE OF CONTROL.................77 12.1 Amendment...........................................................77 12.2 Amendment of Appendix A.............................................78 12.3 Termination of Plan.................................................78 12.4 Discontinuance of Contributions.....................................78 12.5 Vesting on Termination or Discontinuance of Contributions...........78 12.6 Distribution on Termination.........................................78 12.7 Change of Control...................................................79 ARTICLE XIII MISCELLANEOUS PROVISIONS.......................................83 13.1 Restrictions on Alienation..........................................83 13.2 Exclusive Benefit Requirement.......................................85 13.3 Return of Contributions.............................................85 13.4 No Contract of Employment...........................................86 13.5 Payment of Benefits on Incapacity...................................86 13.6 Merger..............................................................86 13.7 Construction........................................................86 13.8 Governing Law.......................................................87 13.9 Mistaken Payments...................................................87 iv APPENDIX A Participating Companies.....................................................A-1 APPENDIX B Former Participants In the Intraplex, Inc. 401(K) Profit Sharing Plan.......B-1 v INTRODUCTION The Harris Corporation Retirement Plan (the "Plan") is hereby amended and restated effective April 1, 2001. The provisions of the Plan to the extent so amended and restated shall apply only to those participants in the Plan who are Employees on or after April 1, 2001. Any benefits of an individual who ceased being an Employee before April 1, 2001 and who is not re-employed by a Participating Company after such date shall be determined under the terms of the Plan that were in effect when such individual ceased to be an Employee. The Plan and its related trust are intended to be a tax-exempt plan and trust under sections 401(a) and 501(a) of the Code, respectively. The Plan also is intended to be a profit-sharing plan that contains a qualified cash or deferred arrangement under section 401(k) of the Code. ARTICLE I --------- DEFINITIONS ----------- 1.1 ACCOUNTS - means all of the accounts described in Section 6.1, and such other accounts that may be established on behalf of each Participant, to be credited with contributions made on behalf of a Participant, adjusted for earnings and losses as provided in the Plan and debited by Plan expenses allocable to the Accounts, distributions, withdrawals and loans to the Participant. 1.2 AFTER-TAX ACCOUNT - means the Account established to record After-Tax Contributions made on a Participant's behalf other than those invested in the Harris Stock Fund. 1.3 AFTER-TAX CONTRIBUTIONS - means the contributions described in Section 3.5. 1.4 BENEFICIARY - means the person or persons entitled to receive any benefits payable under the Plan on account of a Participant's death. 1.5 BREAK-IN-SERVICE - means a period other than a period included in the Employee's Service; provided, however, that a Break-in-Service shall not include a period of absence from employment during which the Employee is absent from employment for any period not in excess of 24 consecutive months because of (A) the Employee's pregnancy, (B) the birth of the Employee's child, (C) the placement of a child with the Employee in connection with the Employee's adoption of such child or (D) the need of the Employee to care for any such child for a period beginning immediately following such birth or placement. 1.6 CODE - means the Internal Revenue Code of 1986, as amended from time to time. 1 1.7 COMPENSATION - means the following items of remuneration which an Employee earns for work or personal services performed for a Participating Company: (a) salary or wages, including lump sum merit increases; (b) commission paid pursuant to a sales incentive plan; (c) overtime premium, shift differential or additional compensation in lieu of overtime premium; (d) compensation in lieu of vacation; (e) any annual bonus or incentive compensation payable in the form of cash pursuant to the Harris Corporation Annual Incentive Plan or any successor thereto or other similar plan or award program adopted from time to time by a Participating Company or Employment Unit employing the Employee or any stock award made in lieu of an annual cash bonus or incentive compensation; (f) any compensation of a type described in items (a) through (e) above which is paid as an employee contribution to the Plan; (g) any salary reduction contributions to a cafeteria plan (within the meaning of section 125 of the Code) maintained by a Participating Company; but excluding: 2 (i) any extraordinary compensation of a recurring or non-recurring nature not included under items (a) through (g) above, including one-time recognition awards and rewards under a referral program of a Participating Company; (ii) any award made or amount paid pursuant to the Harris Corporation Stock Incentive Plan or any successor thereto, including, but not limited to, performance shares, stock options, restricted stock, stock appreciation rights or other stock-based awards or dividend equivalents; (iii) severance pay or special retirement pay; (iv) retention bonuses or completion bonuses, unless authorized by the Retirement Committee in a uniform and nondiscriminatory manner; and (v) reimbursement or allowances with respect to expenses incurred in connection with employment, such as tax equalization, reimbursement for moving expenses, mileage or expense allowance or education expenses. In no event does the term "Compensation" include indirect compensation such as employer-paid group insurance premiums or contributions under this or other qualified employee benefit plan, other than as a contribution described in items (f) and (g) above. 3 Only compensation not in excess of $170,000 (as adjusted pursuant to section 401(a)(17)(B) of the Code) shall be taken into account. In addition, in the year in which any Employee becomes a Participant only Compensation received after he becomes a Participant shall be taken into account. For purposes of any test imposed under any section of the Code, the Plan authorizes the use of any definition of Compensation that satisfies the requirements of such section. 1.8 CONSOLIDATED SUBSIDIARIES - means those subsidiaries of the Corporation which are included in the consolidated annual financial statements for the Corporation. 1.9 CORPORATION - means Harris Corporation, a Delaware corporation. 1.10 DISABILITY - means a disability that qualifies a Participant for disability benefits under title II or title XVI of the Federal Social Security Act; such disability for Plan purposes shall be deemed to occur on the effective date determined by the Social Security Administration. 1.11 EARLY RETIREMENT AGE - means age 55. 1.12 EMPLOYMENT UNIT - means any division or other readily identifiable segment of the operations of a Participating Company, for example, as identified in the annual report or such other segment as may be established for purposes of the Plan by the Corporation, in its discretion. 1.13 EMPLOYEE - means an individual who is reported on the payroll records of the Corporation or other Participating Company as an employee unless either (i) the individual's employment relationship is covered by a collective bargaining agreement that does not provide for such individual's participation in the Plan or (ii) the individual does not receive any Compensation payable in U.S. dollars. No individual who renders services to a Participating 4 Company shall be considered an Employee for purposes of the Plan if such individual renders such services pursuant to (i) a written agreement providing that such services are to be rendered by the individual as an independent contractor, (ii) a written agreement with an entity, including a leasing organization within the meaning of section 414(n)(2) of the Code, that is not a Participating Company or Related Company, or (iii) a written agreement that contains a waiver of participation in the Plan. In particular, it is expressly intended that any individuals not treated as employees by a Participating Company on its payroll records is to be excluded from Plan participation even if a court or administrative agency determines that such an individual is a common law employee of a Participating Company. With respect to a Participating Company not all of whose employees are eligible to participate in the Plan (a "Limited Participating Company"), the term "Employee" shall include those employees of the Participating Company who were Participants immediately prior to their commencement of employment by the Limited Participating Company. A leased employee shall be treated as an Employee only for purposes of applying the requirements described in section 414(n)(3) of the Code and determining the number and identity of Highly Compensated Employees. 1.14 ERISA - means the Employee Retirement Income Security Act of 1974, as amended from time to time. 1.15 EXCESS COMPENSATION - means the portion of a Participant's Compensation that exceeds the Taxable Wage Base for the year in which the Compensation is received. 1.16 FISCAL YEAR - means the fiscal year of the Corporation. 5 1.17 FULL-TIME EMPLOYEE - means an Employee who is regularly scheduled by a Participating Company to work 30 or more hours per week, and who is not designated on the payroll records of a Participating Company as a temporary employee. 1.18 HARRIS STOCK FUND - means the Investment Fund that is primarily invested in qualifying employer securities (within the meaning of section 407 of ERISA). 1.19 HARRIS STOCK AFTER-TAX ACCOUNT - means the portion of the After-Tax Contributions made on a Participant's behalf invested in the Harris Stock Fund. 1.20 HARRIS STOCK MATCHING ACCOUNT - means the portion of the Matching Contributions made on a Participant's behalf invested in the Harris Stock Fund. 1.21 HARRIS STOCK PRE-TAX ACCOUNT - means the portion of the Pre-Tax Contributions made on a Participant's behalf invested in the Harris Stock Fund. 1.22 HIGHLY COMPENSATED EMPLOYEE - means, for a Plan Year, any Employee who is: (a) a 5%-owner (as determined under section 416(i)(1) of the Code) of an Employer at any time during the Plan Year or the preceding Plan Year; or (b) paid Compensation in excess of $85,000 (as adjusted pursuant to section 414(q)(1)(B)(ii) of the Code) from an Employer for the preceding Plan Year. The Employees taken into account under this paragraph (b) for each Plan Year shall be limited to those Employees who were members of the top-paid group (as defined in section 414(q)(3) of the Code) for the preceding Plan Year, unless otherwise elected by the Company for such Plan Year in accordance with applicable law. 6 1.23 HOUR OF SERVICE - means each hour for which an Employee is paid or entitled to payment for the performance of duties for a Participating Company or Related Company. 1.24 INVESTMENT COMMITTEE - means the Investment Committee - Retirement Plans of the Corporation's Board of Directors. 1.25 INVESTMENT FUNDS - means the funds designated from time to time by the Investment Committee in which contributions made on behalf of Participants may be invested. 1.26 LEAVE OF ABSENCE - means a period of interruption of the active employment of an Employee granted by a Participating Company or Predecessor Company with the understanding that the Employee will return to active employment at the expiration of the period of time. A Leave of Absence as originally granted may be extended by the Participating Company or Predecessor Company for additional periods. The term "Leave of Absence" does not include a Military Leave. 1.27 MATCHING AFTER-TAX ACCOUNT - means the Account established to record Matching After-Tax Contributions made on a Participant's behalf other than those invested in the Harris Stock Fund. 1.28 MATCHING AFTER-TAX CONTRIBUTIONS - means the contributions made on behalf of a Participant under Section 3.6. 1.29 MATCHING CONTRIBUTIONS - means the aggregate of the Matching After-Tax Contributions and the Matching Pre-Tax Contributions made on behalf of a Participant. 7 1.30 MATCHING PRE-TAX ACCOUNT - means the Account established to record the Matching Pre-Tax Contributions made on a Participant's behalf other than those invested in the Harris Stock Fund. 1.31 MATCHING PRE-TAX CONTRIBUTIONS - means the contributions made on behalf of a Participant under Section 3.4. 1.32 MILITARY LEAVE - means an Employee's absence from active employment with a Participating Company or Predecessor Company for a period of service in the "uniformed services", within the meaning of the Uniformed Services Employment and Reemployment Rights Act of 1994, as amended, which entitles the person rendering such service to reemployment under such Act. 1.33 NORMAL RETIREMENT AGE - means age 65. 1.34 PARTICIPANT - means an Employee who satisfies the requirements of Section 2.1. 1.35 PARTICIPATING COMPANY - means the Corporation or any Related Company, or division or operation thereof so designated by the Retirement Plan Administrative Committee. Appendix A, as it may be amended by the Retirement Plan Administrative Committee from time to time, lists each Participating Company, or division thereof, whose Employees may become Participants. 1.36 PLAN - means the Harris Corporation Retirement Plan. 1.37 PLAN YEAR - means the Fiscal Year. 8 1.38 PREDECESSOR COMPANY - means any corporation (a) of which a Related Company is a successor by reason of having acquired all or substantially all of its business and assets by purchase, merger, consolidation or liquidation, or (b) from which a Related Company acquired a business formerly conducted by such corporation; provided, however, that in the case of any such corporation that continued to conduct a trade or business subsequent to the acquisition by a Related Company referred in (a) or (b) above, the status of such corporation as a Predecessor Company relates only to the period of time prior to the date of such acquisition. 1.39 PRE-TAX ACCOUNT - means the Account established to record the Pre-Tax Contributions made on a Participant's behalf other than those invested in the Harris Stock Fund. 1.40 PRE-TAX CONTRIBUTIONS - means the contributions made on behalf of a Participant under Section 3.3. 1.41 PROFIT-SHARING ACCOUNT - means the Account established to record the Profit-Sharing Contributions made on a Participant's behalf. 1.42 PROFIT-SHARING CONTRIBUTIONS - means the contributions described in Section 3.1. 1.43 RELATED COMPANY - means the Corporation or any corporation that is a member of a controlled group of corporations (as defined in section 414(b) of the Code) with the Corporation; any trade or business (whether or not incorporated) which is under common control (as defined in section 414(c) of the Code) with the Corporation; any organization (whether or not incorporated) which is a member of an affiliated service group (as defined in section 414(m) of the Code) which includes the Corporation, or any other entity required to be aggregated with the Corporation under section 414(o) of the Code. 9 1.44 RELEASE EMPLOYEE - An employee of the Corporation who is transferred by the Corporation to a Related Company (other than a Participating Company) and who is designated by the Retirement Plan Administrative Committee as a Release Employee for purposes of receiving a Profit-Sharing Contribution for the Plan Year in which such transfer occurred. 1.45 RETIREMENT PLAN ADMINISTRATIVE COMMITTEE - means the committee established pursuant to Section 11.2. 1.46 ROLLOVER ACCOUNT - means the Account established to record the rollover contributions made by a Participant pursuant to Section 3.8. 1.47 SAVINGS ACCOUNT - means the Account established under Section 6.1(f). 1.48 SERVICE - means the periods during which the Employee is employed by a Related Company, determined in accordance with the elapsed time rules set forth in section 1.410(a)-7 of the Treasury Regulations; provided, however, that an individual on Military Leave shall have the period of such leave credited as a period of Service provided such Employee returns to the employ of a Related Company within the period prescribed by USERRA. Service shall be computed in terms of completed years and completed days. 1.49 TAXABLE WAGE BASE - means the maximum amount of earnings that may be considered wages under section 3121(a)(1) of the Code, except for purposes of Medicare taxes, as in effect on the first day of the Plan Year. In the case of an Employee who was a Participant for only a portion of a particular Plan Year, the Taxable Wage Base shall be multiplied by the ratio of the number of calendar months (including a fraction of a month as a full month) in the Plan Year during which he was a Participant to 12 months. 10 1.50 TRUST AGREEMENT - means the trust agreement relating to the Harris Corporation Retirement Plan, entered into between the Corporation and the Trustee, as it may be amended from time to time. 1.51 TRUST FUND - means the assets held by the Trustee in accordance with the Trust Agreement. 1.52 TRUSTEE - means Bankers Trust Company, or such successor (or successors) thereto designated by the Corporation to act as trustee under the provisions of the Trust Agreement, who shall agree to act as such by executing the Trust Agreement. 1.53 USERRA - the Uniformed Services Employment and Reemployment Rights Act of 1994, as amended. 1.54 VALUATION DATE - means each day the New York Stock Exchange is open and any other day as the Retirement Plan Administrative Committee may determine. 1.55 YEAR OF SERVICE. A period of Service of 365 days. 11 ARTICLE II ---------- PARTICIPATION ------------- 2.1 IN GENERAL. An Employee shall become a Participant in the Plan on the date he completes a Year of Service, provided that he is employed by a Participating Company on that date. Notwithstanding the above, and solely for purposes of making Pre-Tax Contributions, After-Tax Contributions and Rollover Contributions, a Full-Time Employee shall become a Participant in the Plan on the date he first performs an Hour of Service. 2.2 RENEWAL OF PARTICIPATION ON REEMPLOYMENT. An Employee who terminates employment after he completes a Year of Service and is reemployed by a Participating Company shall become a Participant immediately on reemployment. An Employee who terminates employment before he completes a Year of Service shall become a Participant as provided in Section 2.1, provided that his Service prior to reemployment shall be used to satisfy the Year of Service requirement of Section 2.1 to the extent provided under Section 2.3. 2.3 PERIODS OF SERVICE ON REEMPLOYMENT. The following rules shall apply to an Employee who terminates employment before he completes a Year of Service and is re-employed by a Related Company: (a) CREDIT FOR PRIOR PERIOD OF SERVICE. If the Employee is re-employed by a Related Company, then his Service before he terminated employment shall be taken into account in determining whether the Employee has completed a Year of Service for purposes of Section 2.1 and for purposes of determining a Participant's Service under Section 5.3. (b) CREDIT FOR PERIOD OF ABSENCE. If the Employee terminates employment due to quitting, discharge, or retirement and is re-employed by a Related Company within 12 12 months of his termination date, his period of absence shall be taken into account in determining whether the Employee has completed a Year of Service for purposes of Section 2.1 and for purposes of determining a Participant's Service under Section 5.3. If the Employee terminates employment for any reason other than quitting, discharge, or retirement, and subsequently quits, is discharged, or retires, his period of absence shall be taken into account in determining whether the Employee has completed a Year of Service for purposes of Section 2.1 and for purposes of determining a Participant's Service under Section 5.3 only if he is re-employed by a Related Company within 12 months of the date of his termination of employment. 2.4 SERVICE WITH PREDECESSOR COMPANY. In the case of a corporation (other than a Related Company) that becomes a Predecessor Company by reason of the acquisition of all or substantially all of the assets and business of such corporation by a Related Company, an Employee's Service shall include employment with such Predecessor Company only to the extent expressly provided in the corporate documents effecting the acquisition. 2.5 MILITARY LEAVE. Notwithstanding any provision of the Plan to the contrary, (i) a Participant who returns to employment after a period of Military Leave may elect to make Pre-Tax Contributions and After-Tax Contributions to the Plan in respect of such period of Military Leave and (ii) the Participating Company that employs such a Participant shall make any Profit-Sharing Contributions and Matching Contributions on behalf of such Participant to the Plan upon the Participant's reemployment to the extent required by applicable law and in accordance with section 414(u) of the Code. 2.6 JOINT VENTURE SERVICE. Notwithstanding anything in the Plan to the contrary, an Employee's Service shall include the Employee's period of employment by an entity in which 13 the Corporation owns less than 80% but more than 1% of the outstanding equity interest in such entity (a "joint venture") only if (i) the joint venture is designated by the Retirement Plan Administrative Committee as eligible for service credit under this Section 2.6; (ii) such Employee was employed by a Related Company prior to such Employee's employment by the joint venture and was not employed by any person or entity other than a Related Company (an "unrelated employer") between such Employee's employment by a Related Company and the joint venture; and (iii) such Employee returns to employment with a Related Company following the Employee's termination of employment with the joint venture without having been employed by an unrelated employer between such Employee's employment by the joint venture and a Related Company. ARTICLE III ----------- CONTRIBUTIONS AND ALLOCATIONS ----------------------------- 3.1 PROFIT-SHARING CONTRIBUTIONS. (a) BASIC. The amount of Profit-Sharing Contributions made on behalf of Participating Companies for a Fiscal Year with respect to Participants in the Plan shall equal 11 1/2 percent of the adjusted consolidated net income of the Corporation and its Consolidated Subsidiaries before net income taxes for such Fiscal Year as determined in subsection (c), reduced by the portion of such amount with respect to Participants' Compensation that would have been allocable under Section 3.2 of the Plan if Compensation were determined without regard to statutory limits under section 401(a)(17) or 415 of the Code. (b) SPECIAL. The Corporation, in its discretion, may provide for an additional Profit-Sharing Contribution in a specified dollar amount or pursuant to a formula with respect to any Fiscal Year. 14 (c) ADJUSTED CONSOLIDATED NET INCOME. The adjusted consolidated net income of the Corporation and its Consolidated Subsidiaries before net income taxes shall be determined on the basis of the annual audit report prepared by the Corporation's independent public accountants by adjusting the consolidated net income shown in the report to eliminate the effect, if any, of the following items: (1) any provision for taxes on or measured by income for such years required by the laws of the United States or of any state or political subdivision thereof (including, however, any taxes required under the Ohio Franchise Income Tax, whether or not in fact measured by income), or any provision for similar taxes required by the laws of any other country; (2) all items consisting of credits or deficiencies relating to taxes described in clause (1) above on or measured by income for prior Fiscal Years; (3) any provision for contributions for such Fiscal Year under this Plan or under any profit-sharing retirement plan of a Consolidated Subsidiary of the Corporation; (4) all dividends received during such Fiscal Year with respect to stock of a Related Company which is not included among the Consolidated Subsidiaries; (5) gains or losses from the sale, exchange or other disposition of capital or depreciable property, as defined in the Code; 15 (6) any income from the use of the "lifo" inventory method resulting from either a reduction in inventory or a decrease in the cost index; (7) all items of income and expense which relate directly to the conduct by a Related Company of a business (i) which was formerly conducted by a corporation which was not then a Related Company, and (ii) the net income (or loss) of which was included for the first time in determining the consolidated net income of the Corporation and its Consolidated Subsidiaries for the Fiscal Year in question; (8) all exchange adjustments resulting from translating to United States currency those year-end balance sheet items of subsidiaries which are denominated in a foreign currency; and (9) any item of income or expense relating to the right of any employee to receive cash upon cancellation of an unexercised stock option. 3.2 ALLOCATION OF PROFIT-SHARING CONTRIBUTION TO PARTICIPANTS. (a) IN GENERAL. The Profit-Sharing Contributions for a Plan Year with respect to an Employment Unit shall be allocated among eligible Participants described in subsection (c) who are employed by the Employment Unit during some part or all of the Plan Year based on the ratio of each eligible Participant's Compensation plus Excess Compensation for the Plan Year to the Compensation plus Excess Compensation of all eligible Participants for the Plan Year. (b) LIMITATION ON AMOUNT. Notwithstanding subsection (a), the amount allocated to an eligible Participant with respect to Excess Compensation shall not exceed the 16 "base contribution percentage" by more than the lesser of (i) the base contribution percentage and (ii) 5.7% (or if greater, the percentage equal to the Old Age portion of the tax under section 3111(a) of the Code, as in effect on the first day of the Plan Year). Any remaining amount shall be allocated based on the ratio of each Participant's Compensation for the Plan Year to the Compensation of all eligible Participants for the Plan Year. The term "base contribution percentage" means the percentage of Compensation contributed by the Participating Company with respect to each Participant's Compensation not in excess of the Participant's Taxable Wage Base. (c) LIMITATION ON ELIGIBILITY. A Participant shall be eligible to receive an allocation of Profit-Sharing Contributions for a Plan Year if (i) the Participant is employed on the earlier of (A) the last day of the Plan Year and (B) the June 30 nearest to the last day of the Plan Year or (ii) the Participant terminated employment during the Plan Year on or after Early Retirement Age or Normal Retirement Age, or due to Disability, death, reduction-in-force program, Leave of Absence or Military Leave, or is transferred by the Corporation as a Release Employee to an entity that is not a Participating Company. 3.3 PRE-TAX CONTRIBUTIONS. (a) CONTRIBUTION ELECTION. Each Participant shall be deemed to have elected to defer 6% of his Compensation for a Plan Year in the form of Pre-Tax Contributions, to become effective as of the first payroll period as soon as administratively practicable following his satisfaction of the participation requirements set forth in Section 2.1, unless the Participant elects otherwise prior to such payroll period in the time and manner prescribed by the Retirement Plan Administrative Committee. If a Participant who elects not to make Pre-Tax Contributions to the Plan in accordance with the foregoing sentence subsequently decides to make Pre-Tax 17 Contributions to the Plan, such Participant's election to make Pre-Tax Contributions shall become effective as of the first payroll period commencing immediately after the effective date of the election or such later date as may be administratively practicable. An election shall remain in effect until revised or revoked. Pre-Tax Contributions shall be contributed to the Plan in cash; PROVIDED that the Corporation, in its discretion, may contribute Pre-Tax Contributions to be invested in the Harris Stock Fund in shares of common stock of the Corporation, which may be contributed at a discount from fair market value. The sum of the Pre-Tax Contributions and other elective deferrals (within the meaning of section 402(g)(3)) made on behalf of the Participant to the Plan and any other plan of a Participating Company or Related Company for any calendar year shall not exceed $10,500 (as adjusted in accordance with section 402(g)(5)). The portion of any Pre-Tax Contribution made on behalf of a Participant that is attributable to a discount from fair market value on shares of common stock of the Corporation shall be disregarded for the purposes of determining (i) whether the Participant's Pre-Tax Contributions exceed 12 percent of his Compensation for the Plan Year, and (ii) whether the Participant's Pre-Tax Contributions and other elective deferrals exceed $10,500 (as adjusted in accordance with section 402(g)(5)) for the calendar year. (b) CONTRIBUTIONS IN EXCESS OF THE MAXIMUM. If the Pre-Tax Contributions on behalf of a Participant for a calendar year reach the limit described in subsection (a), any additional contributions to be made during the calendar year pursuant to the Participant's election shall be made as After-Tax Contributions and any Matching Pre-Tax Contributions with respect to that amount shall be made as Matching After-Tax Contributions. 3.4 MATCHING PRE-TAX CONTRIBUTIONS. Each Participating Company shall make a Matching Pre-Tax Contribution to the Plan on behalf of each Participant who is employed by 18 such Participating Company and has completed a Year of Service in the amount of 100 percent of the Pre-Tax Contributions made on behalf of the Participant for the Plan Year, but only to the extent that such Pre-Tax Contributions do not exceed six percent of the Participant's Compensation for such Plan Year. Matching Pre-Tax Contributions shall be contributed in cash; provided, that the Corporation, in its discretion, may contribute Matching Pre-Tax Contributions to be invested in the Harris Stock Fund in shares of common stock of the Corporation, which may be contributed at a discount from fair market value. The portion of any Matching Pre-Tax Contribution made on behalf of a Participant for a Plan Year that is attributable to a discount from fair market value on shares of common stock of the Corporation shall be disregarded for the purpose of determining whether the Matching Pre-Tax Contributions made on behalf of the Participant exceed six percent of the Participant's Compensation for such Plan Year. 3.5 AFTER-TAX CONTRIBUTIONS. A Participant may elect to contribute to the Plan as an After-Tax Contribution an amount equal to any whole percentage of his Compensation for such Plan Year not exceeding 12 percent. After-Tax Contributions shall be contributed in cash; provided that the Corporation, in its discretion, may contribute After-Tax Contributions to be invested in the Harris Stock Fund in shares of common stock of the Corporation, which may be contributed at a discount from fair market value. The portion of any After-Tax Contribution made by a Participant for a Plan Year that is attributable to a discount from fair market value on shares of common stock of the Corporation shall be disregarded for the purpose of determining whether the Participant's After-Tax Contributions exceed 12 percent of his Compensation for such Plan Year. 3.6 MATCHING AFTER-TAX CONTRIBUTIONS. Each Participating Company shall make a Matching After-Tax Contribution to the Plan on behalf of each Participant who is employed by 19 such Participating Company in the amount of 100 percent of the After-Tax Contributions made by the Participant for the Plan Year, but only to the extent that such After-Tax Contributions do not exceed six percent of the Participant's Compensation for such Plan Year. Matching After-Tax Contributions shall be contributed in cash; provided, that the Corporation, in its discretion, may contribute Matching After-Tax Contributions to be invested in the Harris Stock Fund in shares of common stock of the Corporation, which may be contributed at a discount from fair market value. The portion of any Matching After-Tax Contribution made on behalf of a Participant for a Plan Year that is attributable to a discount from fair market value on shares of common stock of the Corporation shall be disregarded for the purpose of determining whether the Matching After-Tax Contributions made on behalf of the Participant exceed six percent of the Participant's Compensation for such Plan Year. 3.7 ELECTIONS TO MAKE PRE-TAX AND AFTER-TAX CONTRIBUTIONS. (a) INITIAL ELECTIONS. If a Participant elected not to begin making automatic Pre-Tax Contributions to the Plan in accordance with the first sentence of Section 3.3(a), then the Participant may elect subsequently to begin making Pre-Tax Contributions to the Plan at such times and in such manner as may be prescribed by the Retirement Plan Administrative Committee. A Participant may elect to begin making After-Tax Contributions at such times and in such manner as may be prescribed by the Retirement Plan Administrative Committee. Any election made under this Section 3.7(a) shall become effective as of the first payroll period commencing immediately after the later of the date on which the Employer receives the Participant's election, the date designated by the Participant in his election or such later date as may be administratively practicable. 20 (b) CHANGING ELECTIONS. A Participant may change the percentage (in increments of one percent) of future Pre-Tax Contributions or After-Tax Contributions (or both) made on his behalf at such times and in such manner as may be prescribed by the Retirement Plan Administrative Committee. A change may be made not more than once each payroll period. A change of election shall become effective as of the first payroll period commencing immediately after the date of the election, or such later date as may be administratively practicable. (c) TERMINATING ELECTIONS. A Participant may terminate his election to have Pre-Tax Contributions or After-Tax Contributions (or both) made on his behalf at such times and in such manner as may be prescribed by the Retirement Plan Administrative Committee. The termination election shall become effective as of the first payroll period commencing immediately after the date of the election, or such later date as may be administratively practicable. (d) CORPORATION'S DISCRETION TO LIMIT ELECTIONS. The Retirement Plan Administrative Committee may direct that Participant elections with respect to Pre-Tax Contributions or After-Tax Contributions (or both) be changed in any manner the Retirement Plan Administrative Committee, in its discretion, shall determine appropriate to preserve the qualification of the Plan under section 401(a) of the Code and as a qualified cash or deferred arrangement under section 401(k) of the Code. 3.8 ROLLOVER CONTRIBUTIONS. A Participant, with the consent of the Retirement Plan Administrative Committee or its delegate, may at any time make a rollover contribution to the Plan. Rollover contributions may include only (a) cash amounts and participant loan notes that 21 are eligible rollover distributions (as defined in section 402(c)(4) of the Code) transferred directly from a trust described in section 401(a) of the Code which is exempt from tax under section 501(a) of the Code or from a qualified annuity plan described in section 403(a) of the Code, and (b) cash amounts equal to eligible rollover distributions paid into the Trust no later than the 60th day following the day on which the individual received the eligible rollover distribution from a trust described in section 401(a) of the Code which is exempt from tax under section 501(a) of the Code or from a conduit individual retirement account or individual retirement annuity within the meaning of section 408 of the Code (provided that no amount in such account or value of such annuity is attributable to a source other than an eligible rollover distribution as defined in section 402(c)(4) of the Code (and any related earnings)). A Participant may be required to establish that the transfer of amounts into a Rollover Account will not require any changes to the terms of the Plan or will not expose the Plan or Trust to adverse tax consequences. 3.9 PARTICIPATING COMPANY'S OBLIGATION TO MAKE CONTRIBUTIONS. (a) CONTRIBUTIONS. Each Participating Company agrees to pay to the Trustee the contributions that are required with respect to Participants who are performing services at one of such Participating Company's Employment Units. Profit-Sharing Contributions with respect to a Fiscal Year shall be paid to the Trustee no later than the due date for filing the Participating Company's federal income tax return for such Fiscal Year, including extensions. Pre-Tax Contributions and After-Tax Contributions shall be withheld and paid by the Employment Unit, and Matching Contributions shall be paid by the Participating Company to the Trustee no later than 20 days following the last day of the calendar month in which the amounts were withheld from the Participants' Compensation, or sooner as required by Federal law. 22 (b) LIMITATION. Contributions under this Article III shall not be required to the extent they exceed the deduction limitations of section 404 of the Code, in which case such contributions shall be reduced to the extent allowable and necessary in the following order: (1) Profit-Sharing Contributions; (2) Matching Contributions; and (3) Pre-Tax Contributions. 3.10 TREATMENT OF FORFEITED AMOUNTS. (a) REDUCTION OF CONTRIBUTIONS. Forfeitures shall be allocated to Employment Units as provided in subsection (b) and used to reduce Profit-Sharing Contributions and Matching Contributions of the Participating Companies in which the Employment Units are included. (b) ALLOCATION OF FORFEITURES TO EMPLOYMENT UNITS. Forfeitures of Profit-Sharing Contributions and Matching Contributions shall be credited to the Employment Unit with which the Participant was last employed before the forfeiture occurred, or as otherwise determined by the Retirement Plan Administrative Committee. 3.11 FINALITY OF ALLOCATIONS. The Retirement Plan Administrative Committee shall cause a written benefit statement to be given to each Participant at least annually setting forth the amount of the contributions allocated to his Accounts; provided, however, that if any such Participant is deceased, such statement shall be given to his Beneficiary. Any Participant or Beneficiary claiming that an error has been made in a benefit statement shall notify the Retirement Plan Administrative Committee in writing within 90 days following the delivery or mailing of such statement. The Retirement Plan Administrative Committee shall review the claim and advise the Participant or Beneficiary of its decision in writing. If no such notice of error is filed, the benefit statement shall be presumed to be correct. 23 ARTICLE IV ---------- LIMITATIONS ON CONTRIBUTIONS ---------------------------- 4.1 IN GENERAL. Notwithstanding any provisions of Article III to the contrary, the contributions provided for in Article III shall be limited to the extent necessary to meet the requirements of this Article IV. 4.2 PRE-TAX CONTRIBUTIONS. (a) TREATMENT OF CERTAIN CONTRIBUTIONS AS AFTER-TAX. If the Retirement Plan Administrative Committee determines that a Participant's Pre-Tax Contributions for a calendar year have reached the dollar limit described in Section 3.3(a), any additional contributions for that calendar year pursuant to the Participant's Pre-Tax Contribution election shall be treated in the manner provided under Section 3.3. (b) RETURN OF EXCESS DEFERRALS. In the event that a Participant's Pre-Tax Contributions made to the Plan for a calendar year exceed the dollar limit described in Section 3.3(a), the excess amount, as adjusted for income and loss, may, in the discretion of the Retirement Plan Administrative Committee, be distributed to the Participant no later than April 15 of the following year in accordance with the requirements of section 402(g) of the Code and Treasury Regulation section 1.402(g)-l. 4.3 LIMITATIONS ON CONTRIBUTIONS FOR HIGHLY-COMPENSATED EMPLOYEES. (a) LIMITS IMPOSED BY SECTION 401(K)(3) OF THE CODE. Notwithstanding the provisions of Section 3.3, if the Pre-Tax Contributions made for a Plan Year fail to satisfy both of the tests set forth in subparagraphs (1) and (2) of this paragraph, the adjustments prescribed in Section 4.3(e)(1) shall be made. 24 (1) The average deferral percentage for the group consisting of all highly compensated Employees for the Plan Year does not exceed the product of the average deferral percentage for the group consisting of all non-highly compensated Employees for the immediately preceding Plan Year and 1.25. (2) The average deferral percentage for the group consisting of all highly compensated Employees for the Plan Year (i) does not exceed the average deferral percentage of the group consisting of all non-highly compensated Employees for the immediately preceding Plan Year by more than 2 percentage points, and (ii) does not exceed the product of the average deferral percentage of the group consisting of all non-highly compensated Employees for the immediately preceding Plan Year and 2.0. (b) LIMITS IMPOSED BY SECTION 401(M) OF THE CODE. Notwithstanding the provisions of Sections 3.1, 3.4 and 3.6, if the aggregate of the Matching Contributions and After-Tax Contributions made for a Plan Year fail to satisfy both of the tests set forth in subparagraphs (1) and (2) of this paragraph, the adjustments prescribed in Section 4.3(e)(2) shall be made. (1) The average contribution percentage for the group consisting of all highly compensated Employees for the Plan Year does not exceed the product of the average contribution percentage for the group consisting of all non-highly compensated Employees for the immediately preceding Plan Year and 1.25. 25 (2) The average contribution percentage for the group consisting of all highly compensated Employees for the Plan Year (i) does not exceed the average contribution percentage of the group consisting of all non-highly compensated Employees for the immediately preceding Plan Year by more than 2 percentage points, and (ii) does not exceed the product of the average contribution percentage of the group consisting of all non-highly compensated Employees for the immediately preceding Plan Year and 2.0. (c) AGGREGATE LIMIT ON CONTRIBUTIONS. Notwithstanding anything herein to the contrary, for Plan Years commencing prior to January 1, 2002, if the aggregate of the Pre-Tax Contributions, Matching Contributions and After-Tax Contributions made for a Plan Year fail to satisfy all of the tests set forth in subparagraphs (1), (2) and (3) of this paragraph, the adjustments prescribed in Section 4.3(e)(3) shall be made. (1) The average deferral percentage for the group consisting of highly compensated Employees for the Plan Year does not exceed the product of the average deferral percentage for the group consisting of all non-highly compensated Employees for the immediately preceding Plan Year and 1.25. (2) The average contribution percentage for the group consisting of highly compensated Employees for the Plan Year does not exceed the product of the average contribution percentage for the group consisting of all non-highly compensated Employees for the immediately preceding Plan Year and 1.25. 26 (3) The sum of the average deferral percentage (as determined under Section 4.3(d)(1) after making the adjustments required by Section 4.3(e)(1) for the Plan Year) and the average contribution percentage (as determined under Section 4.3(d)(2) after making the adjustments required by Section 4.3(e)(2) for the Plan Year) for the group consisting of highly compensated Employees for the Plan Year does not exceed the aggregate limit for such Plan Year. (d) DEFINITIONS AND SPECIAL RULES. For purposes of this Section: (1) The "average deferral percentage" (i) for the group of highly compensated Employees for a Plan Year shall be the average of the ratios, calculated separately for each Employee in such group to the nearest one-hundredth of one percent, of the Pre-Tax Contributions made for the benefit of such Employee to the total compensation for such Plan Year paid to such Employee, and (ii) for the group of non-highly compensated Employees for the immediately preceding Plan Year shall be the average of the ratios, calculated separately for each Employee in such group to the nearest one-hundredth of one percent, of the Pre-Tax Contributions made for the benefit of such Employee for the immediately preceding Plan Year to the total compensation for the immediately preceding Plan Year paid to such Employee. (2) The "average contribution percentage" 27 (i) for the group of highly compensated Employees for a Plan Year shall be the average of the ratios, calculated separately for each Employee in such group to the nearest one-hundredth of one percent, of the Matching Contributions, the After-Tax Contributions and, in the Retirement Plan Administrative Committee's sole discretion, to the extent permitted under rules prescribed by the Secretary of the Treasury or otherwise under the law, the Pre-Tax Contributions made during such year for the benefit of such Employee to such Employee's compensation for such Plan Year, and (ii) for the group of non-highly compensated Employees for the immediately preceding Plan Year shall be the average of the ratios, calculated separately for each Employee in such group to the nearest one-hundredth of one percent, of the Employer matching contributions, After-Tax Contributions and, in the Retirement Plan Administrative Committee's sole discretion, to the extent permitted under rules prescribed by the Secretary of the Treasury or otherwise under the law, the Pre-Tax Contributions made during the immediately preceding Plan Year for the benefit of such Employee to such Employee's compensation for the immediately preceding Plan Year. (3) The "aggregate limit" shall equal the greater of (A) the sum of (i) 1.25 times the greater of the average deferral percentage or the average contribution percentage for the immediately preceding Plan Year for the group consisting of non-highly compensated Employees for such immediately preceding Plan Year, plus (ii) the lesser of (a) the sum of two percentage points and the lesser of the average deferral percentage or the 28 average contribution percentage for the immediately preceding Plan Year for the group consisting of all non-highly compensated Employees for such immediately preceding Plan Year, and (b) 200% of the lesser of the average deferral percentage or the average contribution percentage for the immediately preceding Plan Year for the group consisting of all non-highly compensated Employees for such immediately preceding Plan Year, and (B) the sum of (i) 1.25 times the lesser of the average deferral percentage or the average contribution percentage for the immediately preceding Plan Year for the group consisting of all non-highly compensated Employees for such immediately preceding Plan Year, plus (ii) the lesser of (a) the sum of two percentage points plus the greater of the average deferral percentage or the average contribution percentage for the immediately preceding Plan Year for the group consisting of all non-highly compensated Employees for such immediately preceding Plan Year, and (b) 200% of the greater of the average deferral percentage and the average contribution percentage for the immediately preceding Plan Year for the group consisting of all non-highly compensated Employees for such immediately preceding Plan Year; (4) "highly compensated Employee" shall mean any Employee who has become a Participant who performs services in the determination year and is in one or more of the following groups: (i) Employees who were five percent owners as determined in section 416(i)(1)(A)(iii) of the Code at any time during the determination year or the look-back year, or (ii) 29 Employees with compensation greater than $85,000 (as adjusted pursuant to section 415(d) of the Code) during the look-back year and who were in the top-paid group during the look-back year. Any former Employee who had a separation year prior to the determination year and was a highly compensated Employee as described in any of clauses (i) and (ii) above for either (A) his separation year or (B) any determination year ending on or after this attainment of age 55 shall be considered a "highly compensated Employee". For purposes of determining whether a person is a highly compensated Employee of a Participating Company with respect to a Plan Year, the term "determination year" means the Plan Year for which the determination is being made; the term "look-back year" means the twelve-month period immediately preceding the determination year; the term "top-paid group" means the top 20% of employees of the Participating Company ranked on the basis of compensation received during the year (provided, however, that when determining the number of employees in such group, employees described in section 414(q)(8) of the Code and Q&A 9(b) of Treasury Regulation section 1.414(q)-1T are excluded); "compensation" means compensation within the meaning of section 415(c)(3) of the Code, including elective or salary reduction contributions to a cafeteria plan, qualified transportation fringe benefits, cash or deferred arrangement or tax-sheltered annuity; employers aggregated under section 414(b), (c), (m) or (o) of the Code are treated as a single employer; and "separation year" means the determination year the 30 Employee separates from service with the applicable Participating Company. (5) "non-highly compensated Employee" shall mean any Employee who has become a Participant who performs services in the determination year (as defined in subparagraph (4) of this paragraph) and is not a highly compensated Employee. (6) "compensation" shall have the meaning set forth in section 414(s) of the Code or, in the discretion of the Retirement Plan Administrative Committee, any other meaning in accordance with the Code for these purposes; (7) if the Plan and one or more other plans of a Participating Company or any of its affiliates to which pre-tax contributions, matching contributions or employee contributions (as such terms are defined for purposes of section 401(m) of the Code), or qualified non-elective contributions (as such term is defined in section 401(m)(4)(C) of the Code), are made are treated as one plan for purposes of section 410(b) of the Code, such plans shall be treated as one plan for purposes of this Section. If a highly compensated Employee participates in the Plan and one or more other plans of his employer or any of its affiliates to which any such contributions are made, all such contributions shall be aggregated for purposes of this Section. (e) ADJUSTMENTS TO COMPLY WITH LIMITS. (1) ADJUSTMENTS TO COMPLY WITH SECTION 401(k)(3) OF THE CODE. The Retirement Plan Administrative 31 Committee shall cause to be made such periodic computations as it shall deem necessary or appropriate to determine whether either of the tests set forth in Section 4.3(a)(1) or 4.3(a)(2) will be satisfied during a Plan Year and, if it appears to the Retirement Plan Administrative Committee that neither of such tests will be satisfied, the Retirement Plan Administrative Committee shall take such steps as it deems necessary or appropriate to adjust the Pre-Tax Contributions made for all or a portion of the remainder of such Plan Year on behalf of each Participant who is a highly compensated Employee to the extent necessary in order for one of such tests to be satisfied. If after the end of a Plan Year it is determined that regardless of any such steps taken neither of the tests set forth in Section 4.3(a)(1) or 4.3(a)(2) will be satisfied with respect to such Plan Year, the Retirement Plan Administrative Committee shall calculate a total amount by which Pre-Tax Contributions must be reduced in order to satisfy either such test, in the manner prescribed by section 401(k)(8)(B) of the Code (the "excess contributions amount"). The amount of Pre-Tax Contributions to be reduced for each Participant who is a highly compensated Employee shall be determined by first reducing the Pre-Tax Contributions of each Participant whose actual dollar amount of Pre-Tax Contributions for such Plan Year is the highest until such reduced dollar amount equals the next highest actual dollar amount of Pre-Tax Contributions made for such Plan Year on behalf of any highly compensated Participant or until the total reduction equals the excess 32 contributions amount. If further reductions are necessary, then such contributions on behalf of each Participant who is a highly compensated Employee and whose actual dollar amount of Pre-Tax Contributions made for such Plan Year is the highest (determined after the reduction described in the previous sentence) shall be reduced in accordance with the previous sentence. Such reductions shall continue to be made to the extent necessary so that the total reduction equals the excess contributions amount. The amount by which Pre-Tax Contributions are to be reduced in accordance with this Section 4.3(e) shall be deemed to be After-Tax Contributions and any Matching Pre-Tax Contributions made with respect to such Pre-Tax Contributions shall be deemed to be After-Tax Matching Contributions. The amount by which a Participant's Pre-Tax Contributions are reduced in accordance with this Section 4.3(e) shall be reduced by any Pre-Tax Contributions previously distributed to such Participant pursuant to Section 4.2 for such Plan Year. The amount of any income allocable to any such reductions shall be determined pursuant to applicable regulations promulgated by the U.S. Treasury Department. The unadjusted amount of any reductions distributed shall be treated as "annual additions" for purposes of Section 4.4. (2) ADJUSTMENTS TO COMPLY WITH SECTION 401(m) OF THE CODE. The Retirement Plan Administrative Committee shall cause to be made such periodic computations as it shall deem necessary or appropriate to determine whether either of the tests set forth in Section 4.3(b)(1) or 4.3(b)(2) will be 33 satisfied during a Plan Year with respect to the Plan, and if it appears to the Retirement Plan Administrative Committee that neither of such tests will be satisfied, the Retirement Plan Administrative Committee shall take such steps as it deems necessary or appropriate to adjust the Matching Contributions and the After-Tax Contributions made for all or a portion of the remainder of such Plan Year on behalf of each Participant who is a highly compensated Employee to the extent necessary in order for one of such tests to be satisfied. If after the end of a Plan Year it is determined that regardless of any steps taken neither of the tests set forth in Section 4.3(b)(1) or 4.3(b)(2) will be satisfied with respect to such Plan Year, the Retirement Plan Administrative Committee shall calculate the maximum contribution percentage permissible for Participants who are highly compensated Employees under the tests set forth in Sections 4.3(b)(1) and 4.3(b)(2) and reduce the Matching Contributions and After-Tax Contributions made on behalf of each Participant who is a highly compensated Employee and whose actual dollar amount of Matching Contributions and After-Tax Contributions for such Plan Year is the highest in the same manner described in subparagraph (1) of this paragraph to the extent necessary to comply with Section 4.3(b)(1) or 4.3(b)(2). The reduction described in the foregoing sentence shall be made first with respect to a Participant's After-Tax Contributions in excess of six percent of Compensation, second with respect to any remaining After-Tax Contributions and any Matching After-Tax 34 Contributions attributable thereto, third with respect to any Matching Pre-Tax Contributions. The Retirement Plan Administrative Committee shall distribute no later than the last day of the subsequent Plan Year to each such Participant the amount of such reductions made with respect to vested Matching Contributions and After-Tax Contributions plus any income allocable thereto to which such Participant would be entitled under the Plan if such Participant had terminated service on the last day of the Plan Year for which such contributions are made (or earlier if such Participant actually terminates service at any earlier date), and any remaining amount of such reductions plus any income allocable thereto shall be forfeited and used to reduce contributions in accordance with Section 3.10. The amount of any such income allocable to any such reductions to be so distributed or forfeited shall be determined pursuant to applicable regulations promulgated by the U.S. Treasury Department. (3) ADJUSTMENTS TO COMPLY WITH THE AGGREGATE LIMIT. For Plan Years commencing prior to January 1, 2002, if after making the adjustments required by subparagraphs (1) and (2) of this paragraph for a Plan Year the Retirement Plan Administrative Committee determines that the sum of the average deferral percentage and the average contribution percentage for the group consisting of Participants who are highly compensated Employees exceeds the aggregate limit for such Plan Year, the Retirement Plan Administrative Committee shall no later than the last day of the subsequent Plan Year reduce (i) first the After-Tax Contributions made for 35 such Plan Year on behalf of each Participant who is a highly compensated Employee and any corresponding Matching Contributions and (ii) second, the Pre-Tax Contributions made for such Plan Year on behalf of each Participant who is a highly compensated Employee and any corresponding Matching Contributions to the extent necessary to eliminate such excess. Such reduction shall be effected in the same manner described in subparagraphs (1) and (2), as applicable, of this Section 4.3(e). (4) DISCOUNT ON SHARES OF COMMON STOCK TREATED AS MATCHING CONTRIBUTION. Solely for purposes of this Section 4.3, if shares of common stock of the Corporation are contributed to the Plan at a discount from fair market value as a Pre-Tax Contribution, then the amount of such discount shall be treated as a Matching Pre-Tax Contribution. 4.4 LIMITATIONS ON ANNUAL ADDITIONS. (a) THE DEFINED CONTRIBUTION LIMIT. The "annual addition," as defined herein, for any Plan Year to a Participant's accounts in all defined contribution plans maintained by each Participating Company or Related Company shall not exceed the lesser of (1) 25 percent of the Participant's Compensation for the Plan Year, and (2) $35,000 (as adjusted in accordance with section 415(d) of the Code). The term "annual additions" means the sum of all contributions and forfeitures allocated to a Participant's accounts (other than a rollover account). (b) REDUCTION OF CONTRIBUTIONS. If the Retirement Plan Administrative Committee determines at any time that the annual addition to any Participant's Accounts exceeds 36 such limitation for any Plan Year, then the contributions on behalf of the Participant shall be reduced, to the extent necessary, in the following order: (1) Pre-Tax Contributions in excess of six percent of the Participant's Compensation; (2) Remaining Pre-Tax Contributions and Matching Pre-Tax Contributions attributable thereto on a pro rata basis; (3) Profit-Sharing Contributions; (4) After-Tax Contributions in excess of six percent of the Participant's Compensation; (5) Remaining After-Tax Contributions and Matching After-Tax Contributions attributable thereto on a pro rata basis. After-Tax Contributions and Pre-Tax Contributions, each as adjusted for gains, shall be returned to the Participant. Matching Contributions and Profit-Sharing Contributions, as adjusted for gains, to the extent allowable shall be held in a suspense account and allocated to the accounts of such Participant in the next Plan Year. If the Participant is not covered by the Plan in the next Plan Year, the amount shall be allocated to the remaining Participants in the Plan who are employed by the Employment Unit that employed the Participant. 37 ARTICLE V --------- VESTING AND FORFEITURES ----------------------- 5.1 IN GENERAL. A Participant shall have a fully vested interest at all times in his Pre-Tax Account, After-Tax Account, Harris Stock Pre-Tax Account, Harris Stock After-Tax Account and Savings Account (other than the portion of such accounts attributable to matching contributions made after October 1, 1984) and Rollover Account. 5.2 VESTING ON RETIREMENT, DEATH OR DISABILITY. A Participant shall have a fully vested interest in his Profit Sharing Account, Matching Pre-Tax Account, Matching After-Tax Account, Harris Stock Matching Account, and portion of his Savings Account attributable to matching contributions made after October 1, 1984, on termination of his employment by any Related Company in the event of the Participant's: (a) retirement on or after Early Retirement Age; (b) retirement on or after the effective date of the Participant's Disability; or (c) death. 5.3 VESTING ON OTHER TERMINATION OF EMPLOYMENT. (a) VESTING SCHEDULE. A Participant who terminates employment other than on the occurrence of one of the events described in Section 5.2 shall have a vested interest in his Profit-Sharing Account, Matching Pre-Tax Account, Matching After-Tax Account, Harris Stock Matching Account and the portion of his Savings Account attributable to matching contributions made after October 1, 1984 in accordance with the following schedule: 38 Years of Service Vested Percentage ---------------- ----------------- Less than 3 years 0% 3 years but less than 4 years 30% 4 years but less than 5 years 40% 5 years but less than 6 years 60% 6 years but less than 7 years 80% 7 years or more 100% (b) COMPUTING A PARTICIPANT'S SERVICE. All periods of Service shall be taken into account for purposes of subsection (a). In addition, (i) in the case of a Participant whose employment is terminated by a Related Company or Participating Company in connection with a reduction-in-force, the period of time that begins on the Participant's employment termination date and ends 12 months thereafter shall be taken into account for purposes of subsection (a) and (ii) any prior Service or period of absence shall be taken into account in determining a Participant's Service for purposes of subsection (a) as provided in Section 2.3(a) and 2.3(b). (c) VESTING ON SALE OF BUSINESS. In the event of the sale or disposition of a business or a sale of substantially all of the assets of a trade or business, the Corporation may, in its discretion, provide for accelerated vesting with respect to those Participants affected by the sale. 5.4 EFFECT OF IN-SERVICE WITHDRAWALS ON A PARTICIPANT'S VESTED PERCENTAGE. If a Participant receives a withdrawal under Article IX or a distribution under Article VII from his 39 Profit-Sharing Account at a time when the Participant has less than a fully vested interest in that account, the dollar amount of his vested interest in his Profit-Sharing Account (X) shall be determined at any subsequent time by the following formula: X = P(AB + D) - D For the purpose of applying the formula, P is the percentage of the Participant's interest in his Profit-Sharing Account that is vested at the time the determination is made, AB is the balance credited to the Profit-Sharing Account at the time the determination is made, and D is the amount of the withdrawal. 40 5.5 FORFEITURES. (a) TIMING OF FORFEITURE. A Participant who terminates employment with less than a fully vested interest in his Accounts shall forfeit the nonvested interest of such Accounts upon termination of employment. (b) EFFECT OF PARTIAL DISTRIBUTION ON A PARTICIPANT'S VESTED PERCENTAGE. If the Participant elects to receive a lump sum distribution of less than the full amount of his vested interest, the part of his nonvested interest that shall be forfeited under subsection (a) is the total nonvested interest multiplied by a fraction, the numerator of which is the amount of the distribution and the denominator of which is the total value of his vested interest in his Accounts other than his After-Tax Account, Harris Stock After-Tax Account and Rollover Account. (c) EFFECT OF REEMPLOYMENT ON FORFEITURE. If a Participant incurs a forfeiture under subsection (a) and subsequently returns to employment with a Participating Company and becomes a Participant in the Plan before incurring five consecutive one-year Periods of Severance, then the forfeited amount shall be restored by the Employment Unit of the Participating Company with which the Participant is reemployed. 41 ARTICLE VI ---------- ACCOUNTS AND INVESTMENTS ------------------------ 6.1 ESTABLISHMENT OF ACCOUNTS. The Retirement Plan Administrative Committee shall establish and maintain for each Participant the following Accounts showing the Participant's interest under the Plan: (a) Profit-Sharing Account to reflect Profit-Sharing Contributions made on the Participant's behalf. (b) Pre-Tax Account to reflect Pre-Tax Contributions made on the Participant's behalf other than those invested in the Harris Stock Fund; (c) After-Tax Account to reflect After-Tax Contributions made on the Participant's behalf other than those invested in the Harris Stock Fund; (d) Matching Pre-Tax Account to reflect Matching Pre-Tax Contributions made on the Participant's behalf other than those invested in the Harris Stock Fund; (e) Matching After-Tax Account to reflect Matching After-Tax Contributions made on the Participant's behalf other than those invested in the Harris Stock Fund; (f) Savings Account to reflect the Savings Contributions under the Plan as in effect prior to July 1, 1990, and the aggregate of the Participant's voluntary and required contributions to the Harris Video Systems Savings/Incentive Plan less withdrawals, as of June 30, 1990; (g) Harris Stock Pre-Tax Account to reflect the portion of the Pre-Tax Contributions made on the Participant's behalf invested in the Harris Stock Fund; 42 (h) Harris Stock After-Tax Account to reflect the portion of the After-Tax Contributions made on the Participant's behalf invested in the Harris Stock Fund; (i) Harris Stock Matching Account to reflect the portion of the Matching Pre-Tax Contributions and Matching After-Tax Contributions made on the Participant's behalf and invested in the Harris Stock Fund; and (j) Rollover Account to reflect the Participant's Rollover Contributions. 6.2 INVESTMENT OF ACCOUNTS. Subject to Section 6.4, each Participant shall have the right to direct the investment of his Accounts and future contributions to his Accounts among the Investment Funds in accordance with the following procedures and such other procedures provided in the documents pertaining to each Investment Fund. (a) ELECTION PROCEDURES. Each election shall be made in accordance with the rules and procedures established by the Retirement Plan Administrative Committee in its absolute discretion. (b) ELECTIONS FOR CURRENT BALANCES. A Participant's election to transfer his or her Account balances between Investment Funds shall be made with respect to the Investment Fund from which the amount is to be transferred in either (i) increments of one percent (or such larger percentage as determined by the Retirement Plan Administrative Committee) or (ii) a fixed dollar amount. (c) ELECTIONS IN 1% INCREMENTS FOR FUTURE CONTRIBUTIONS. A Participant's election with respect to future contributions shall be made in increments of one percent (or such larger percentage as determined by the Retirement Plan Administrative Committee) of the 43 contribution (after the contribution is reduced by any dollar amount directed into the Harris Stock Fund), provided that the combined Pre-Tax Contributions and After-Tax Contributions invested in the Harris Stock Fund shall equal no more than one percent (or such larger percentage as determined by the Retirement Plan Administrative Committee) of Compensation as provided under Section 6.4(a). To the extent Pre-Tax Contributions and After-Tax Contributions are invested in the Harris Stock Fund, the Matching Contributions attributable thereto also shall be invested in the Harris Stock Fund; (d) CHANGING ELECTIONS. A Participant may elect to change his investment election at such times and in such manner as determined by the Retirement Plan Administrative Committee. An investment election change shall be effective on the day the change is made, provided that such day is a Valuation Date and that the Participant makes the election change on such date before the deadline established from time to time by the Retirement Plan Administrative Committee, except as provided in the last sentence of this subsection (d). An investment election change (i) made on a day that is not a Valuation Date or (ii) made on a Valuation Date after the deadline established by the Retirement Plan Administrative Committee shall become effective on the next following Valuation Date. If more than one election change is made on a Valuation Date before the applicable deadline, the most recent election change shall be given effect. Notwithstanding the foregoing, certain Investment Funds may be subject to additional restrictions on investment election changes according to such Investment Fund's terms or conditions imposed by the Retirement Plan Administrative Committee. (e) ELECTIONS APPLY TO ALL ACCOUNTS. Each of the Participant's Accounts shall be invested among the Investment Funds in the same manner, such that each election by a 44 Participant with respect to the Investment Funds shall apply to all of his Accounts in the same proportion. (f) INVESTMENT ABSENT ELECTION. A Participant's Accounts and contributions made on behalf of the Participant shall be invested in such Investment Fund as the Retirement Plan Administrative Committee shall designate from time to time until the Participant makes a valid investment election pursuant to this Section 6.2. 6.3 ALLOCATION OF EARNINGS AND LOSSES. In determining a Participant's share of the earnings or losses of each of the Investment Funds as of any Valuation Date, the total earnings or losses of the particular Investment Fund since the immediately preceding Valuation Date, net of expenses allocable to such fund, shall be allocated among the Participants' Accounts invested in the fund on such Valuation Date based on the ratio of each Participant's Accounts to the aggregate of the Accounts of all Participants, before taking into account any contributions or loan repayments that are required to be but are not yet made as of the Valuation Date and before taking into account any transfers resulting from investment election changes pursuant to Section 6.2(d), distributions, withdrawals or loans to Participants made as of the Valuation Date. Contributions and loan repayments to an Account are not credited with earnings for the Valuation Date on which the contributions or loan repayments are credited to the Account. 6.4 SPECIAL RULES CONCERNING HARRIS STOCK FUND. Notwithstanding any provision of Section 6.2 to the contrary, the rules set forth in this Section shall apply to investments in the Harris Stock Fund. (a) AVAILABILITY. Only Pre-Tax Contributions, After-Tax Contributions and Matching Contributions made with respect to Compensation earned on or after October 1, 1993 45 may be invested in the Harris Stock Fund. For any Plan Year, the combined Pre-Tax Contributions and After-Tax Contributions invested in the Fund on behalf of a Participant in each Plan Year shall equal no more than one percent (or such larger percentage as determined by the Retirement Plan Administrative Committee) of the Participant's Compensation for such Plan Year. The portion of any Pre-Tax Contribution or After-Tax Contribution that is attributable to a discount from fair market value on shares of common stock of the Corporation shall be disregarded for purposes of the immediately preceding sentence. An election to invest in the Harris Stock Fund shall take effect as soon as administratively feasible after the election is received. (b) RESTRICTIONS ON TRANSFERS. A Participant may not transfer amounts from other Investment Funds to the Harris Stock Fund. Any contributions invested in the Harris Stock Fund must remain in the fund for a minimum of two Plan Years following the end of the Plan Year in which the investment is made (the "Holding Period"), provided that amounts invested in the Harris Stock Fund may be distributed to the Participant before the expiration of the Holding Period if the Participant is otherwise entitled to a distribution under the Plan. The Retirement Plan Administrative Committee, in its sole discretion, may impose additional restrictions or requirements regarding transfers from the Harris Stock Fund. (c) DIVIDENDS. A Participant's allocable share of cash or stock dividends (and other cash earnings) credited to the Harris Stock Fund will be reinvested in the Harris Stock Fund and shall be subject to the same Holding Period as applies to the underlying stock on which the dividend (or other earnings) is paid pursuant to Section 6.4(b). 46 (d) CONTRIBUTIONS. The normal form of contributions for amounts invested in the Harris Stock Fund shall be in cash; provided, however, that the Corporation, in its discretion, may make the contribution in common stock of the Corporation, which may be contributed at a discount from fair market value. The Trustee is authorized to purchase common stock of the Corporation on the open market, and to give effect to the discount, if any, established from time to time by allocating shares to each Participant's Account in addition to the number of shares that would have been allocated to the Participant's Account if the discount had not been established. (e) DISTRIBUTIONS. Distributions from the Harris Stock Fund shall be in the form of cash or shares of Harris Stock at the election of the Participant. Fractional shares and distributions of a de minimis amount as determined by the Retirement Plan Administrative Committee shall be paid in cash. (f) VOTING. Participants may submit non-binding proxies to the Trustee, which will vote the shares in the Harris Stock Fund in the exercise of its sole discretion. ARTICLE VII ----------- DISTRIBUTIONS ------------- 7.1 IN GENERAL. A Participant shall be entitled to receive a distribution of the vested interest in his Accounts upon the Participant's termination of employment. As permitted under law and as may be determined by the Retirement Plan Administrative Committee in its sole discretion, distributions may be made to affected Participants upon the sale or disposition of the stock in a subsidiary or the sale or disposition of assets of a trade or business. A termination of employment shall not be deemed to occur for purposes of this Section 7.1 and Section 7.2 until 47 the Participant is no longer employed by a Related Company. A Participant may elect, in accordance with procedures established by the Retirement Plan Administrative Committee, to receive the sum of the balances of his Accounts, if any, that are invested in the Harris Stock Fund either in (a) cash, or (b) in shares of common stock of the Corporation; provided, however, that distributions of fractional shares and de minimis amounts (as determined by the Retirement Plan Administrative Committee) shall be made in cash. If a Participant has elected to receive a distribution of the balances of his Accounts that are invested in the Harris Stock Fund in shares of common stock of the Corporation, then such distribution shall, in the discretion of the Retirement Plan Administrative Committee, either be made in certificated form or credited to an account established for the Participant under a plan maintained by a Related Company. 7.2 SMALL BENEFIT CASH-OUT. Except as provided in Section 7.5, in any case in which the vested interest in a Participant's Accounts does not exceed $5,000 (or such larger amount as may be permitted by law) the vested interest shall be paid to the Participant in a lump sum as soon as reasonably practicable after the Participant's termination of employment. In the case of a deceased Participant, such vested interest shall be paid, to the deceased Participant's beneficiary in a lump sum as soon as reasonably practicable after the Participant's death, except that if such Beneficiary is the deceased Participant's spouse, then the Beneficiary may elect a direct rollover in accordance with Section 7.5. Effective as of March 22, 1999, for purposes of this Section 7.2 and Section 12.6, if at the time of commencement of the distribution of a Participant's vested interest in his Accounts in scheduled periodic payments the value of such interest exceeded $5,000, then at the time of any subsequently scheduled periodic payment such account balance will be deemed to exceed $5,000 (or such larger amount as may be permitted by law) unless otherwise permitted under the law. 48 7.3 FORM OF PAYMENT. (a) OPTIONS. In any case in which a Participant's vested interest in his Accounts exceeds the amount provided in Section 7.2, the Participant (or in the event of death, his Beneficiary) entitled to receive a distribution may elect at any time to receive payment in: (1) an amount not greater than the vested balance of the Participant's Accounts, provided, however, that only one such payment may be made in any single month; (2) substantially equal periodic installment payments, payable not less frequently than annually and not more frequently than monthly, over a period of time to be elected by the Participant (or Beneficiary); (3) a combination of (1) and (2); or (4) a direct rollover pursuant to Section 7.5. (b) CHANGES ALLOWED. A Participant (or, in the event of death, his Beneficiary) may change his election with respect to the form of payment at any time before or after distribution of benefits commences, subject to the provisions of Section 7.8. (c) EFFECT OF FAILURE TO SPECIFY AN OPTION. If a Participant (or Beneficiary) fails to file an election under this Section 7.3, then his benefits shall be paid in accordance with Section 7.4. 7.4 TIME OF PAYMENT. (a) On termination of employment, a Participant, other than one described in Section 7.2, may elect that payment of benefits begins as soon as administratively practicable or 49 at any other time permitted under the Plan. If such a Participant fails to file an election as to the timing of his benefit payment, then payment of his benefit shall commence in accordance with the provisions of Section 7.8. (b) If a Participant dies before his required beginning date (as described in Section 7.8(b)) and there is no election in effect with respect to the payment of the Participant's benefits to his Beneficiary who is not his spouse, then payment of the Participant's benefits shall be made in a single sum no later than the December 31 of the calendar year which contains the fifth anniversary of the Participant's death. (c) Installment payments described in Section 7.3(a)(2) or (3) shall not be made to a Participant who terminated employment with a Participating Company and who subsequently becomes employed by a Participating Company, unless such Participant has attained age 59 1/2 on or before the date of such subsequent employment. Any remaining Account balances shall be distributed to the Participant in accordance with the terms of this Article VII upon the earlier to occur of the Participant's (i) subsequent termination of employment and (ii) attainment of age 59 1/2. 7.5 DIRECT ROLLOVER. (a) A Participant or "distributee" may elect at any time to have any portion of an "eligible rollover distribution" paid in a direct rollover to the trustee or custodian of an "eligible retirement plan" specified by the Participant or distributee, whichever is applicable. Payment of a direct rollover in the form of a check payable to the trustee or custodian of an eligible retirement plan, for the benefit of the Participant or distributee, may be mailed to the Participant or distributee. 50 (b) For purposes of this Section 7.5, the following terms shall have the following meanings: (1) "distributee" means a surviving spouse, or a spouse or former spouse who is an alternate payee under a qualified domestic relations order defined in section 414(p) of the Code. (2) "eligible retirement plan" means an individual retirement account described in section 408(a) of the Code, an individual retirement annuity described in section 408(b) of the Code, an annuity plan described in section 403(a) of the Code, or a qualified trust described in section 401(a) of the Code that accepts an eligible rollover distribution. (3) "eligible rollover distribution" means any distribution of all or a portion of the Participant's Accounts, other than the portion of his After-Tax Account and Harris Stock After-Tax Account attributable to After-Tax Contributions, but does not include a distribution (i) in installments over a period of ten years or more or over a period described in Section 7.8(c), (ii) to the extent the distribution is required under section 401(a)(9) of the Code or (iii) to the extent the distribution constitutes a hardship distribution of Pre-Tax Contributions described in section 401(k)(2)(B)(i)(IV) of the Code. 7.6 BENEFIT AMOUNT AND WITHHOLDING. (a) VESTED AMOUNT AND ADJUSTMENTS. For purposes of this Article VII, a Participant's vested interest in his Accounts shall be determined as of the Valuation Date 51 coinciding with or immediately following the date of the event giving rise to the distribution, plus any Profit-Sharing Contribution to which the Participant may be entitled under Section 3.2 that has not yet been credited to the Participant's Profit-Sharing Account. Any unpaid amount in the Participant's Accounts shall continue to be adjusted for earnings and losses as provided in Section 6.3 until it is distributed. (b) WITHHOLDING. The amount of any distribution shall be reduced to the extent necessary to comply with Federal, state and local income tax withholding requirements. 7.7 ORDER OF DISTRIBUTIONS. Any distribution under this Plan shall be charged against the Participant's Accounts pursuant to administrative procedures designed to maximize the tax benefits to the Participant by distributing to him first his After-Tax Contributions to the extent permitted by law. 7.8 STATUTORY REQUIREMENTS. Notwithstanding any other provisions of the Plan to the contrary, the following rules shall apply to all payments under the Plan: (a) LATEST COMMENCEMENT DATE. Unless the Participant files a written election to defer payment of benefits, benefits payments with respect to any Participant shall commence no later than the 60th day after the close of the Plan Year in which the latest of the following occurs: (1) the date on which the Participant attains Normal Retirement Age; (2) the 10th anniversary of the date on which the Participant commenced participation in the Plan; and 52 (3) the date on which the Participant terminated employment. Failure to file an election under Section 7.4 for payment of benefits to commence shall be deemed to be a written election to defer payment of benefits under this subsection (a). (b) REQUIRED BEGINNING DATE. Notwithstanding subsection (a) above, payment of benefits to a Participant shall commence no later than the later of (i) April 1 of the calendar year following the calendar year in which the Participant attains age 70 1/2 and (ii) April 1 of the calendar year following the calendar year in which the Participant retires. (c) MAXIMUM DURATION OF DISTRIBUTIONS. Payment of a Participant's benefit shall be made over a period not to exceed one of the following periods: (1) the life of the Participant; (2) the life of the Participant and the Participant's Beneficiary; (3) a period certain not extending beyond the life expectancy of the Participant; or (4) a period certain not extending beyond the joint and last survivor expectancy of the Participant and his Beneficiary. (d) MINIMUM DISTRIBUTION REQUIREMENTS. With respect to distributions under the Plan made for calendar years beginning on or after January 1, 2001, the Plan will apply the minimum distribution requirements of section 401(a)(9) of the Code in accordance with the regulations under section 401(a)(9) that were proposed on January 17, 2001, notwithstanding any 53 provision of the Plan to the contrary. This Section 7.8(d) shall continue in effect until the end of the last calendar year beginning before the effective date of final regulations under section 401(a)(9) of the Code or such other date specified in guidance published by the Internal Revenue Service. (e) DISTRIBUTION AFTER THE PARTICIPANT'S DEATH. In the event a Participant who is receiving benefits dies, the remaining balance of his benefits shall be distributed at least as rapidly as under the method of distribution elected by the Participant unless otherwise permitted under law. If a Participant dies before distribution of benefits commences, the Participant's entire interest will be distributed no later than five years after the end of the year of the Participant's death, except to the extent that an election is made to receive distributions in accordance with (1) or (2) below: (1) if any portion of the Participant's benefit is payable to a Beneficiary who is not the Participant's spouse, then distributions may be made over the life or life expectancy of the Beneficiary, provided that distributions commence on or before December 31 of the calendar year immediately following the calendar year in which the Participant died, and (2) if the Beneficiary is the Participant's spouse, then distributions may commence on or before the later of (i) December 31 of the calendar year immediately following the calendar year in which the Participant died and (ii) December 31 of the calendar year in which the Participant would have attained age 70 1/2. If the Participant's spouse dies before payments begin, 54 then subsequent distribution shall be made as if the spouse had been the Participant. Any amount paid to a child of the Participant shall be treated as if it had been paid to the surviving spouse if the amount becomes payable to the spouse when the child reaches the age of majority. 7.9 DESIGNATING BENEFICIARIES. (a) WRITTEN DESIGNATION. Each Participant may designate, in the manner prescribed by the Retirement Plan Administrative Committee, a Beneficiary or Beneficiaries to receive any benefits payable as a result of the death of the Participant. This designation may be changed by the Participant at any time by giving notice to the Retirement Plan Administrative Committee in accordance with rules and procedures established by the Retirement Plan Administrative Committee. Any designation of a Beneficiary other than the Participant's spouse must be consented to by the spouse in writing (or other method permitted by the Internal Revenue Service) and witnessed by a notary public (or a representative of the Plan prior to October 1, 1993). Any consent required under this Section 7.9 shall be valid only with respect to the spouse who signed it. Spousal consent shall not be required if the Participant establishes to the satisfaction of a Plan representative that such consent may not be obtained because (a) there is no spouse; (b) the spouse cannot be located, or (c) there exists such other circumstances as the Secretary of the Treasury may prescribe as excusing the requirement for such consent. A Participant may revoke any prior election without obtaining the consent of the spouse to such revocation. In the absence of a new election that meets the requirements of this Section 7.9, the Participant's surviving spouse shall be the Beneficiary. 55 (b) DEATH PRIOR TO DESIGNATING BENEFICIARY OR DEATH AFTER DESIGNATED BENEFICIARY'S DEATH. In the event a Participant dies with no beneficiary designation on file or after the death of a designated Beneficiary, the Participant's Beneficiary with respect to the portion of the benefits for which no Beneficiary has been designated shall be the deceased Participant's surviving spouse, if any, and if there is no surviving spouse, the descendants of the deceased Participant, if any, per stirpes, or if there are no descendants, the estate of the deceased Participant. (c) SUCCESSOR BENEFICIARIES. A Beneficiary who has been designated in accordance with Section 7.9(a) may name a successor beneficiary or beneficiaries in accordance with procedures established by the Retirement Plan Administrative Committee. If the designated Beneficiary dies after the Participant and before the entire amount of the Participant's benefit under the Plan in which the designated Beneficiary has an interest has been distributed, then any remaining amount shall be distributed, as soon as practicable after the death of such designated Beneficiary, in the form of a single sum payment to the successor beneficiary or if there is no such successor beneficiary, to the Beneficiary's estate. 7.10 PAYMENT OF GROUP INSURANCE PREMIUMS. The Retirement Plan Administrative Committee may, in its sole discretion, permit a retired Participant who (i) is eligible to be included in any contributory group insurance program maintained or sponsored by an Employment Unit, (ii) is receiving benefits under the Plan in monthly installments and (iii) elects to be covered under such contributory group insurance program to direct that a specified portion of the installment payments be withheld and paid by the Trustee on the Participant's behalf to the Employment Unit as his contribution under such group insurance program. Such direction by a retired Participant, if permitted by the Retirement Plan Administrative Committee, shall be in 56 writing on a form prescribed by the Retirement Plan Administrative Committee. Any such direction may be revoked by the retired Participant not less than 15 days prior to the effective date of such revocation. Any withholding and payment of insurance costs on behalf of a retired Participant shall be made in accordance with Treasury Regulation section 1.401(a)-13. 7.11 INABILITY TO LOCATE PARTICIPANT. If, at any time after a Participant's benefit becomes payable, a check or other instrument in payment of such benefit is returned unclaimed or the Retirement Plan Administrative Committee is otherwise unable to locate the individual to whom a payment is due, then all payments to such individual shall be discontinued. If, after exercising reasonable diligence, the Retirement Plan Administrative Committee is unable to locate such individual, the portion of the Participant's benefit payable to such individual shall be forfeited and applied to reduce the administrative expenses of the Plan; provided, that if such individual subsequently makes a claim for benefits, then the forfeited amount shall be reinstated to the extent required by law by the Participating Company that last employed the Participant. ARTICLE VIII ------------ LOANS ----- 8.1 LOANS TO PARTICIPANTS. (a) MAKING OF LOANS. Subject to the restrictions set forth in this section, the Retirement Plan Administrative Committee shall establish a loan program whereby any Participant who is currently employed by a Participating Company may request, by such method prescribed by the Retirement Plan Administrative Committee for such purpose, to borrow funds from such Participant's Pre-Tax Account, After-Tax Account and Rollover Account. The principal balance of such loan shall not be less than $500, shall be in increments of $100 and 57 shall not exceed the lesser of: (1) 50% of the vested portion of the Participant's Account as of the Valuation Date coinciding with or immediately preceding the date on which the loan is made; and (2) $50,000, reduced by the highest outstanding loan balance of the Participant of any previous loans from the Plan and any other plans of a Related Company during the one year period ending immediately before the date of which the current loan is made. (b) RESTRICTIONS. (1) The Participant shall execute a loan application on the form supplied by the Retirement Plan Administrative Committee and submit such application to the Retirement Plan Administrative Committee, or shall comply with one or more alternative methods prescribed by the Retirement Plan Administrative Committee for such purpose. (2) A Participant shall not have more than two loans outstanding at any time. (3) The period for repayment of the loan shall be at least twelve months, but shall not exceed four and one-half years, or such other periods as may be established from time to time by the Retirement Plan Administrative Committee; provided, however, that the period for repayment shall always be in six-month intervals. 58 (4) Except as provided in Section 8.1(d), no loan shall be made unless the Participant consents to have such loan repaid in substantially equal installments deducted from (i) the regular payments of the Participant's compensation during the term of the loan while the Participant is employed by a Related Company and (ii) any severance payments received from a Related Company. (5) Each loan shall be secured by the vested portion of the Participant's Accounts under the Plan in an amount equal to the initial principal amount of such loan. (6) The interest rate for a loan made under this Plan shall be fixed for the term of each loan, and shall be set as determined by the Retirement Plan Administrative Committee at a rate which it deems reasonable at the time for a fully secured loan and which is consistent with applicable Department of Labor regulations. (7) If a Participant who has terminated employment with a Related Company has an outstanding loan balance and requests a distribution of his Accounts, the amount available for such distribution shall be reduced by the amount of any outstanding loan balances. (8) Loan application and processing fees and any other reasonable expenses which the Plan incurs to extend, make and service a loan shall be specified from time to time by the Retirement Plan Administrative Committee and shall be charged against the Accounts of a Participant requesting a loan in 59 the manner described in Section 8.1(c). In addition, each Participant requesting a loan shall, as a condition of receiving such loan, authorize the relevant Participating Company to deduct from such Participant's wages, any state documentary stamp and other taxes required to be paid on such loan. (c) ACCOUNTS. A loan to an individual under this Plan shall be made from his Pre-Tax Account, After-Tax Account and Rollover Account. The amount of the loan and any applicable fees shall be withdrawn from the Investment Funds other than the Harris Stock Fund in which the Participant has chosen to invest his Accounts in proportion to their value in his Accounts as of the Valuation Date immediately preceding the loan. (d) APPLICABILITY. Notwithstanding the foregoing, loans shall be available under this Section 8.1 to any Participant or Beneficiary who is a "party in interest" as defined in section 3(14) of ERISA, regardless of such Participant's or Beneficiary's employment status, provided that each such Participant or Beneficiary who requests a loan shall, as a condition of receiving a loan, agree to the repayment of the loan at the times and in the manner determined by the Retirement Plan Administrative Committee, but not less frequently than quarter-annually. 8.2 LOAN ADMINISTRATION. The Retirement Plan Administrative Committee shall be responsible for administering the loan program, but may delegate the operation of the program to the Plan's record-keeper. The procedures for applying for a loan and the basis on which loans will be approved or denied shall be described in the summary plan description for the Plan or in other documents prepared by or at the direction of the Retirement Plan Administrative 60 Committee for this purpose and such additional documents are hereby incorporated by reference to the extent required by the Department of Labor. 8.3 REPAYMENT AND DEFAULT. (a) PREPAYMENT. An individual may repay, at any time, all of the outstanding principal balance of his loan, plus interest due, without penalty. (b) CREDITING PAYMENTS. Principal and interest payments shall be credited to the Participant's Pre-Tax Account, After-Tax Account and Rollover Account, as applicable, and shall be invested in the same manner as Pre-Tax Contributions, After-Tax Contributions and Rollover Contributions. (c) RETIREMENT. An individual who terminates employment with a Related Company on or after Early Retirement Age, and who at the time of termination has an outstanding loan, may elect to either (i) continue his loan repayments on a monthly basis until such outstanding loan is paid in full, or (ii) repay the outstanding principal balance of his loan, plus interest due, within 90 days of his termination of employment. (d) MILITARY LEAVE. Loan repayments for individuals on Military Leave shall be temporarily suspended during the period of such leave, and the period of such suspension shall not count toward the maximum period of repayment set forth in Section 8.1(b)(3). (e) DEFAULT. The events of default shall be set forth in the agreement evidencing the loan. Such events shall include, but not be limited to, the following: (1) an individual terminates employment with a Related Company for any reason other than retirement on or after Early Retirement Age and does not 61 repay the loan(s) in full within 90 days after the individual's last day of such employment or, to the extent loan repayments are deducted from a Participant's severance pay in accordance with Section 8.1(b)(4), such Participant does not repay the loan(s) in full within 90 days after the final severance payment is made; (2) an individual terminates employment with a Related Company on or after Early Retirement Age and fails to make a payment within 90 days after the due date of the payment. (3) an individual who has had loan repayments suspended during a period of Military Leave fails to return to employment within the time prescribed by USERRA and does not repay the loan(s) in full within 90 days after the expiration of the period prescribed by USERRA for reemployment. (4) the Trustee concludes that the individual no longer is a good credit risk; (5) to the extent permissible under federal law, the individual's obligation to repay the loan has been discharged through bankruptcy or any other legal process of action which did not actually result in payment in full; and (6) the individual does not make payments when due, subject to any applicable grace period. (f) EFFECT OF DEFAULT. Upon the existence or occurrence of an event of default, the loan may become due and payable in full and, if such loan is not actually repaid in full, shall be canceled on the books and records of the Plan and the amount otherwise distributable to such 62 individual shall be reduced, as of the date his Accounts otherwise become distributable, by the principal amount of the loan then due plus any accrued but unpaid interest. Such principal and interest shall be determined without regard to whether the loan had been discharged through bankruptcy or any other legal process or action which did not actually result in payment in full; however, interest shall continue to accrue on such loan only to the extent permitted under applicable law. Cancellation of the amount distributable to an individual under this subsection (d) shall not occur until a distributable event occurs under the Plan. In the event a default occurs before a distributable event occurs, the Retirement Plan Administrative Committee shall take such other steps to cure the default as it deems appropriate under the circumstances to preserve Plan assets. 8.4 SPECIAL POWERS The Retirement Plan Administrative Committee shall have the power to take such action as it deems necessary or appropriate to stop the benefit payments to or on behalf of an individual who fails to repay a loan (without regard to whether the obligation to repay the loan had been discharged through bankruptcy or other legal process or action) until his Pre-Tax Account, After-Tax Account and Rollover Account have been reduced by the principal due (without regard to such discharge) on such loan or to distribute the note which evidences such loan in full satisfaction of any interest in the Pre-Tax Account, After-Tax Account, and Rollover Account which is attributable to the unpaid balance of such loan. 63 ARTICLE IX ---------- IN-SERVICE WITHDRAWALS ---------------------- 9.1 WITHDRAWALS AFTER AGE 59-1/2. A Participant who has attained age 59-1/2 may withdraw at the time and in the manner prescribed by the Committee all or any portion of the vested interests in his Accounts. A distribution made pursuant to this Section 9.1 may be made in any form of payment provided under Section 7.3. 9.2 WITHDRAWALS FROM SAVINGS ACCOUNT AND AFTER-TAX ACCOUNT. (a) AVAILABILITY. Subject to Sections 9.4 and 9.5, a Participant may elect to withdraw from the Plan at any time in a single sum an amount not greater than the balances of his Savings Account and After-Tax Account in the time and manner prescribed by the Retirement Plan Administrative Committee. The amount withdrawn shall be debited first to his Savings Account and then to his After-Tax Account. Effective June 10, 2001, the amount withdrawn shall be debited first to his After-Tax Account and then to his Savings Account. (b) LIMITATIONS. A Participant may make a withdrawal under this Section 9.2 no more than once in any calendar quarter. A Participant's election to make After-Tax Contributions shall be suspended, and no After-Tax Contributions or Matching After-Tax Contributions shall be credited to the Participant's Account, for a period of three months after the date of a Participant's withdrawal from his After-Tax Account. The Participant's election shall automatically be reinstated at the expiration of such three-month period, unless the Participant has filed a change of election pursuant to Section 3.7. 9.3 WITHDRAWALS FROM ROLLOVER, PRE-TAX AND PROFIT SHARING ACCOUNTS. 64 (a) AVAILABILITY. Subject to Sections 9.4 and 9.5, a Participant who has taken all available loans under Article VIII hereof and who has exhausted his right to withdrawals under Sections 9.1 and 9.2 may elect, if he has an immediate and heavy financial need within the meaning of Treasury Regulation section 1.401(k)-1(d)(2)(iv), to withdraw in a single sum an amount not greater than (i) 100 percent of his Pre-Tax Contributions, (ii) the entire balance of his Rollover Account, and (iii) the vested balance of his Profit Sharing Account, in the time and manner prescribed by the Retirement Plan Administrative Committee. A Participant shall be deemed to have an immediate and heavy financial need if the withdrawal is requested for any of the following reasons: (1) to pay expenses for medical care previously incurred by the Participant, his spouse or any of his dependents or necessary for these persons to obtain medical care; (2) to purchase (excluding mortgage payments) a principal residence for the Participant; (3) to pay for tuition and related education fees for the next 12 months of post-secondary education for the Participant, his spouse, children or dependents; (4) to prevent the eviction of the Participant from his principal residence or a foreclosure on the mortgage of the Participant's principal residence; or 65 (5) the occurrence of any other event determined by the Commissioner of Internal Revenue pursuant to Treasury Regulation section 1.401(k)-1(d)(2)(iv). A withdrawal to satisfy an immediate and heavy financial need of the Participant may be made only if: (i) the withdrawal is not in excess of the amount required to meet the financial need of the Participant, including taxes and additions to tax applicable to such withdrawal, and (ii) the Participant has obtained all other distributions, withdrawals, and all nontaxable loans currently available under the Plan and any other plans maintained by a Related Company. The Participant shall be required (i) to certify to the Retirement Plan Administrative Committee in the manner prescribed by the Retirement Plan Administrative Committee both the reason for the financial need and that such need cannot be satisfied from sources other than a withdrawal from the Participant's Accounts, and (ii) to submit any additional supporting documentation as may be requested by the Retirement Plan Administrative Committee. (b) ORDER OF WITHDRAWALS. Withdrawals under this Section 9.3 shall be withdrawn from a Participant's Accounts in the following order: (i) from the Participant's Rollover Account, if any; (ii) to the extent that the balance of the Participant's Rollover Account is not sufficient to satisfy the amount of the requested withdrawal, from the Participant's Pre-Tax Contributions; and (iii) to the extent that the Participant's Rollover Account and Pre-Tax 66 Contributions are not sufficient to satisfy the amount of the requested withdrawal, from the vested balance of the Participant's Profit Sharing Account. (c) LIMITATIONS. A Participant may take a withdrawal under this Section 9.3 no more than once in any six-month period. 9.4 CONDITIONS APPLICABLE TO ALL WITHDRAWALS. A Participant shall elect to make any withdrawal permitted under this Article IX in such time and in such manner as designated by the Retirement Plan Administrative Committee. The amount available for withdrawal under this Article IX shall be reduced by the amount of any outstanding loan balance under Article VIII hereof, and no withdrawal under this Article IX shall be permitted to the extent that such withdrawal would cause the aggregate amount of such outstanding loan balance to exceed the limits described in Section 8.2. No withdrawal shall be permitted under this Article IX of the portion of a Participant's Account, if any, which is invested in the Harris Stock Fund and which has not met the Holding Period described in Section 6.4(b). The amount available for withdrawal under this Article IX is also subject to reduction in the sole discretion of the Retirement Plan Administrative Committee to take into account the investment experience of the Trust Fund between the date of the election and the date of the withdrawal. 9.5 REDUCTION OF INVESTMENT FUND BALANCES. The Investment Funds in which a Participant's Accounts are invested, other than amounts in the Harris Stock Fund which have not satisfied the Holding Period set forth in Section 6.4(b), shall be reduced proportionately to reflect the amount of the Participant's withdrawals under this Article IX. 67 ARTICLE X --------- TOP-HEAVY PROVISIONS -------------------- 10.1 IN GENERAL. Notwithstanding any other provisions of the Plan to the contrary, for any Plan Year in which this Plan is "top-heavy," as defined herein, the provisions of this Article X shall apply. If the Plan is top-heavy and then ceases to be top-heavy, except as otherwise provided in Section 10.3, the provisions of this Article X shall cease to apply. 10.2 MINIMUM ALLOCATION. (a) AMOUNT. For any Plan Year for which the Plan is top-heavy, a minimum allocation shall be made for each "non-key employee" who is employed by a Participating Company on the last day of the Plan Year in an amount equal to the lesser of (1) three percent of Compensation or (2) the largest percentage of Compensation allocated to any "key employee" during the Plan Year. The minimum allocation shall be determined without regard to any Social Security contribution, and without regard to any Pre-Tax Contributions made on behalf of non-key employees. The minimum allocation shall not apply to any non-key employee who receives a minimum contribution or minimum benefit under any other plan of a Related Company. (b) ALLOCATION. To satisfy subsection (a), the Profit-Sharing Contributions for such Plan Year first shall be allocated to all Participants employed on the last day of the Plan Year in an amount that meets the minimum allocation amount, and any remaining Profit-Sharing Contribution then shall be allocated in accordance with Section 3.2. 10.3 MINIMUM VESTING. For any Plan Year for which the Plan is top-heavy, the vested interest of a Participant who is employed by a Participating Company during any part of the Plan Year shall be determined under the following schedule: 68 Period of Service Vested Percentage ----------------- ----------------- Less than 2 years 0% 2 years but less than 3 years 20% 3 years but less than 4 years 40% 4 years but less than 5 years 60% 5 years but less than 6 years 80% 6 years or more 100% If the Plan becomes top-heavy and later ceases to be top-heavy, a Participant who has three Years of Service as determined under Section 5.3 may elect to have his vested interest continue to be determined under this Section 10.3, notwithstanding that the Plan is no longer top-heavy. 10.4 DEFINITIONS. For purposes of this Article X, the following terms shall have the following meanings: (a) "Determination date" means the last day of the preceding Plan Year. (b) "Determination period" means the Plan Year containing the determination date and the four preceding Plan Years. (c) "Key employee" means an Employee or former employee (and their Beneficiaries) who, at any time during the determination period, is 69 (1) an officer of the Participating Company and has annual compensation greater than 50 percent of the dollar limitation in effect under section 415(b)(1)(A) of the Code for any such Plan Year, (2) one of the ten Employees having annual compensation in excess of the limitation in effect under section 415(c)(1)(A) of the Code and owning (or considered as owning with the meaning of section 318 of the Code) the largest interests in the Participating Company, (3) a five-percent owner (within the meaning of section 416(i)(1)(B) of the Code) of the Participating Company, or (4) a one-percent owner of the Participating Company having annual compensation from the Participating Company of more than $150,000. The determination of "key employee" shall be made under section 416(i)(1) of the Code, the terms of which are incorporated herein by reference. (d) "Non-key employee" means any Employee who is not a key employee. (e) "Permissive aggregation group" means the "required aggregation group" and any other plans of the Participating Company which, when considered as a group with the required aggregation group, would continue to satisfy the requirements of sections 401(a)(4) and 410 of the Code. (f) "Required aggregation group" means (1) each qualified plan of the Participating Company in which at least one key employee participates or participated at any 70 time during the determination period (regardless of whether the plan has terminated), and (2) any other qualified plan of the Participating Company which enables a plan described in (1) to meet the requirements of sections 401(a) and 410 of the Code. (g) "Top-heavy" means: (1) the top-heavy ratio for the Plan exceeds 60 percent and the Plan is not part of any required aggregation group or permissive aggregation group; (2) the Plan is part of a required aggregation group but not a permissive aggregation group and the top-heavy ratio for the required aggregation group exceeds 60 percent; (3) the Plan is part of a required aggregation group and a permissive aggregation group and the top-heavy ratio for the permissive aggregation group exceeds 60 percent. (h) "Top-heavy ratio" means: (1) if the Participating Company or Related Company has not maintained any defined benefit plan which during the five-year period ending on the determination date had accrued benefits, the top-heavy ratio is a fraction, the numerator of which is the sum of the account balances of all key employees as of the determination date (including any part of any account balance distributed in the five-year period ending on the determination date), and the denominator of which is the sum of all account balances 71 (including any part of any account balance distributed in the five-year period ending on the determination date). (2) If a Related Company maintains or has maintained a defined benefit plan which during the five-year period ending on the determination date had accrued benefits, the top-heavy ratio is a fraction, the numerator of which is the sum of account balances under the defined contributions plans for all key employees (including any part of any account balance distributed in the five-year period ending on the determination date), and the present value of accrued benefits under the defined benefit plans for all key employees as of the determination date, and the denominator of which is the sum of the account balances under the defined contribution plans for all participants (including any part of any account balance distributed in the five-year period ending on the determination date), and the present value of accrued benefits under the defined benefit plans for all participants as of the determination date. (3) For purposes of (1) and (2) above, the value of account balances and the present value of accrued benefits shall be determined as of the most recent "valuation date" that falls within or ends with the 12-month period ending on the determination date, except as provided in section 416 of the Code for the first and second plan years of a defined benefit plan. In the case of a defined benefit plan, the "present value of accrued benefits" shall be determined under the terms of the applicable defined benefit plan. The account balances and accrued benefits of a Participant who is not a key 72 employee but who was a key employee in a prior year, or who has not been credited with at least an Hour of Service with any Participating Company maintaining the plan at any time during the five-year period ending on the determination date shall be disregarded. When aggregating plans, the value of account balances and accrued benefits shall be calculated with reference to the determination dates that fall within the same calendar year. (4) The calculation of the top-heavy ratio shall be determined in accordance with section 416 of the Code, the provisions of which are incorporated herein by reference. (i) "Valuation date" means the last day of the Plan Year. ARTICLE XI ---------- ADMINISTRATION -------------- 11.1 NAMED FIDUCIARIES. The Retirement Plan Administrative Committee shall be the "named fiduciary" within the meaning of such term as used in ERISA; provided that to the extent a Participant, former Participant or Beneficiary directs that his Accounts be invested in the Harris Stock Fund, such Participant or Beneficiary and not the Retirement Plan Administrative Committee shall be the "named fiduciary" with respect to such investment decisions. 11.2 RETIREMENT PLAN ADMINISTRATIVE COMMITTEE. The Chief Executive Officer of the Corporation shall have the power to appoint and to remove members to the Retirement Plan Administrative Committee. A member of the Retirement Plan Administrative Committee may 73 resign at any time by giving written notice to the Investment Committee or the Chief Executive Officer of the Corporation at least 15 days prior to the effective date of the resignation. 11.3 POWERS AND DUTIES OF COMMITTEE. The Retirement Plan Administrative Committee shall have the powers and duties conferred on it by the terms of the Plan. The Retirement Plan Administrative Committee may establish such rules and regulations as it deems necessary to enable it to administer the Plan. The Retirement Plan Administrative Committee shall have the discretionary authority to determine eligibility for benefits and construe the terms of the Plan. Benefits under the Plan will be paid only to a Participant or Beneficiary if the Retirement Plan Administrative Committee decides in its discretion that the Participant or Beneficiary is entitled to benefits. 11.4 ACTIONS OF COMMITTEE. No formal meeting and no minutes shall be required with respect to actions taken by the Retirement Plan Administrative Committee. 11.5 FINALITY OF DECISIONS. All decisions and directions made by the Retirement Plan Administrative Committee, in the discretionary exercise of its powers and duties, shall be final and binding on all parties concerned. 11.6 IMMUNITIES. Except as otherwise provided by law, no member of the Investment Committee or Retirement Plan Administrative Committee shall be liable to a Participating Company or to any Participant or Beneficiary by reason of such committee's exercise in good faith of any power or discretion vested in such committee under the Plan. 11.7 ADVISORS AND AGENTS. The Corporation, the Investment Committee, or, with the consent of the Corporation or Investment Committee, the Retirement Plan Administrative 74 Committee, may employ one or more persons to render advice with respect to any responsibility it has under the Plan. The Corporation or the Investment Committee may appoint unrelated parties to carry out trustee and investment management responsibilities with respect to the Plan. The Corporation or the Retirement Plan Administrative Committee may appoint an unrelated party to carry out the record-keeping responsibilities with respect to the Plan. The Corporation shall indemnify any person, including any employee of the Corporation, who is acting on behalf of the Corporation, Investment Committee or Retirement Plan Administrative Committee in this capacity with respect to liability that may arise by reason of such person's action or failure to act concerning the Plan, excepting any willful or gross misconduct or criminal acts to the extent required in the respective contracts governing such arrangements. 11.8 COMMITTEE MEMBER WHO IS PARTICIPANT. A member of the Retirement Plan Administrative Committee who also is a Participant shall have no right to vote with respect to any action that pertains solely to him as a Participant. In the event a majority of the remaining members are unable to agree as to the action to be taken with respect to the Participant, the chief executive officer of the Corporation shall appoint an impartial person to arbitrate the matter between the remaining members and to reach a decision. 11.9 INFORMATION PROVIDED BY PARTICIPATING COMPANIES. Each Participating Company and Employment Unit shall provide the Corporation, the Retirement Plan Administrative Committee and the Trustee with complete and timely information regarding employment data for each Employee and Participant needed by the Corporation, Retirement Plan Administrative Committee or Trustee to administer the Plan, including, but not limited to, information concerning Compensation, date of employment, date of termination of employment, reason for 75 termination and any other information required by the Corporation, Retirement Plan Administrative Committee, or Trustee. 11.10 EXPENSES. All costs and expenses incurred in administering the Plan and the Trust, including the expenses of the Investment Committee and the Retirement Plan Administrative Committee, investment advisory and record-keeping fees, the fees of counsel and any agents for the Corporation, the fees and expenses of the Trustee, the fees of counsel for the Trustee and other administrative expenses shall be paid by the Trustee from the Trust Fund to the extent that such expenses are not paid by the Participating Companies. The Retirement Plan Administrative Committee, in its sole discretion, having regard for the nature of the particular expense, shall determine the portion of such expense, if any, which is to be borne by any Participating Company. A Participating Company may seek reimbursement of any expense paid by such company that the Retirement Plan Administrative Committee determines is properly payable by the Trust Fund. 11.11 TRUST. A trust shall be created by the execution of the Trust Agreement between the Corporation and the Trustee. All contributions under the Plan shall be paid to the Trustee. The Trustee shall hold all monies and other property received by it and invest and reinvest the same, together with the income therefrom, on behalf of the Participants collectively in accordance with the provisions of the Trust Agreement. The Trustee shall make distributions from the Trust Fund at such time or times to such person or persons and in such amounts as the Retirement Plan Administrative Committee directs in accordance with the Plan. 11.12 TRUST FUND AVAILABLE TO PAY ALL PLAN BENEFITS. The Plan is intended to be a single plan under Treasury Regulation section 1.414(l)-1(b)(1). The maintenance of Accounts as 76 required by the terms of the Plan shall be for record-keeping purposes only. All of the Trust Fund shall be available to pay benefits to all Participants and Beneficiaries. ARTICLE XII ----------- AMENDMENT AND TERMINATION AND CHANGE OF CONTROL ----------------------------------------------- 12.1 AMENDMENT. The Corporation reserves the right to amend the Plan by action of its Board of Directors or the Investment Committee thereof at any time and from time to time, subject to the following limitations: (a) no amendment shall be made which vests in any Participating Company any interest in any assets of the Plan other than as specifically provided in Section 12.3; (b) no amendment shall be made which would have the effect of decreasing a Participant's "accrued benefit" as proscribed in section 411(d)(6) of the Code; and (c) no amendment shall have the effect of reducing a Participant's vested interest in his Accounts. If the Plan is amended to change the vesting schedule, each Participant with at least three Years of Service shall have the right to elect to have his vested interest computed without regard to the amendment. Each Participant shall be permitted to make this election during the period ending 60 days after the latest of the date (1) the amendment is adopted; (2) the amendment is effective, and (3) the Participant is issued a written notice of the amendment by the Corporation or its delegate. 77 12.2 AMENDMENT OF APPENDIX A. Notwithstanding Section 12.1, the Retirement Plan Administrative Committee shall have the authority to designate Participating Companies and to revise Appendix A from time to time. 12.3 TERMINATION OF PLAN. This Plan is intended to be permanent, and it is the expectation of the Corporation that it will continue indefinitely. However, the Corporation reserves the right to terminate the Plan by resolution of its Board of Directors or the appropriate committee thereof. In the case of a complete termination of the Plan, previously unallocated forfeitures shall be allocated as otherwise provided in the Plan. To the extent previously unallocated forfeitures cannot be allocated because all Participants have reached the limitations of section 415 of the Code, the unallocated amount shall revert back to the appropriate Participating Company, as provided in Section 3.10. 12.4 DISCONTINUANCE OF CONTRIBUTIONS. The Corporation reserves the right to discontinue contributions to the Plan by amendment or by resolution of the Board of Directors or the appropriate committee thereof. 12.5 VESTING ON TERMINATION OR DISCONTINUANCE OF CONTRIBUTIONS. As of the date of the partial or complete termination of the Plan or upon the complete discontinuance of contributions to the Plan, each affected Participant shall become fully vested in his Accounts and no further allocations of contributions or forfeitures shall be made after such date on behalf of an affected Participant. 12.6 DISTRIBUTION ON TERMINATION. Upon the complete termination of the Plan, the Trustee shall distribute to each affected Participant the full amount standing to the credit of his Accounts; provided that if such amount exceeds (or at the time of any prior distribution 78 exceeded) $5,000 (or such larger amount as may be permitted by law) and the Participant is not yet age 65, such lump sum shall not be paid without his consent. If the Participant does not consent, an annuity contract shall be purchased for and distributed to the Participant. 12.7 CHANGE OF CONTROL. (a) DEFINITION. Change in Control means the occurrence of any one of the following events: (i) any "person" (as such term is defined in section 3(a)(9) of the Securities Exchange Act of 1934 (the "Exchange Act") and as used in sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes a "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Corporation representing 20 percent or more of the combined voting power of the Corporation's then outstanding securities eligible to vote for the election of the Board of Directors (the "Board") of the Corporation (the "Corporation Voting Securities"); PROVIDED HOWEVER, -------- ------- that the event described in this paragraph (i) shall not be deemed to be a Change in Control by virtue of any of the following acquisitions: (A) by the Corporation or any Subsidiary, (B) by any employee benefit plan sponsored or maintained by the Corporation or any Subsidiary, (C) by any underwriter temporarily holding securities pursuant to an offering of such securities, or (D) pursuant to a "Non-Control Transaction" (as defined in paragraph (iii)); (ii) individuals who, on July 1, 1996, constitute the Board (the "Incumbent Directors") cease for any reason to constitute at least a majority of the 79 Board, provided that any person becoming a director subsequent to July 1, 1996, whose election or nomination for election was approved by a vote of at least two-thirds of the Incumbent Directors who remain on the Board (either by a specific vote or by approval of the proxy statement of the Corporation in which such person is named as a nominee for director, without objection to such nomination) shall also be deemed to be an Incumbent Director; PROVIDED, HOWEVER, that no individual initially elected or nominated as a director of the Corporation as a result of an actual or threatened election contest with respect to directors or any other actual or threatened solicitation of proxies or consents by or on behalf of any person other than the Board shall be deemed to be an Incumbent Director; (iii) the consummation of a merger, consolidation, share exchange or similar form of corporate reorganization of the Corporation or any such type of transaction involving the Corporation or any of its Subsidiaries that requires the approval of the Corporation's stockholders (whether for such transaction or the issuance of securities in the transaction or otherwise) (a "Business Combination"), unless immediately following such Business Combination: (A) more than 80 percent of the total voting power of the corporation resulting from such Business Combination (including, without limitation, any corporation which directly or indirectly has beneficial ownership of 100 percent of the Corporation Voting Securities) eligible to elect directors of such corporation is represented by shares that were Corporation Voting Securities immediately prior to such Business Combination (either by remaining outstanding or being converted), and such voting power is in substantially the same proportion as the voting power of such 80 Corporation Voting Securities immediately prior to the Business Combination, (B) no person (other than any publicly traded holding company resulting from such Business Combination, any employee benefit plan sponsored or maintained by the Corporation (or the corporation resulting from such Business Combination)), becomes the beneficial owner, directly or indirectly, of 20 percent or more of the total voting power of the outstanding voting securities eligible to elect directors of the corporation resulting from such Business Combination, and (C) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were Incumbent Directors at the time of the Board's approval of the execution of the initial agreement providing for such Business Combination (any Business Combination which satisfies the conditions specified in (A), (B) and (C) shall be deemed to be a "Non-Control Transaction"); or (iv) the stockholders of the Corporation approve a plan of complete liquidation or dissolution of the Corporation or the direct or indirect sale or other disposition of all or substantially all of the assets of the Corporation and its Subsidiaries. Notwithstanding the foregoing, a Change in Control of the Corporation shall not be deemed to occur solely because any person acquires beneficial ownership of more than 20 percent of the Corporation Voting Securities as a result of the acquisition of Corporation Voting Securities by the Corporation which reduces the number of Corporation Voting Securities outstanding, PROVIDED THAT if after such acquisition by the Corporation such person becomes the beneficial owner of additional Corporation Voting Securities that increases the percentage of 81 outstanding Corporation Voting Securities beneficially owned by such person, a Change in Control of the Corporation shall then occur. For purposes of the definition of a "Change of Control", the term "Subsidiary" shall mean any corporation or other entity in which the Corporation has a direct or indirect ownership interest of 50 percent or more of the total combined voting power of the then outstanding securities of such corporation or other entity entitled to vote generally in the election of directors or in which the Corporation has the right to receive 50 percent or more of the distribution of profits or 50 percent of the assets on liquidation or dissolution. Notwithstanding any other provisions of the Plan to the contrary, if a Change in Control occurs, then during the period commencing on the date of acquisition of said voting power, control of the Board, or consummation of a Business Combination, and ending at the close of business on the last day of the Fiscal Year that includes such date (the "Restriction Period"), the provisions of this Section 12.7 shall apply. (b) EFFECT. During the Restriction Period, the Plan may not be terminated or amended to the extent the amendment would: (1) reduce coverage under the Plan; (2) reduce the amount of Profit-Sharing Contributions required to be made for the Plan Year ending on the last day of the Restriction Period; (3) reduce the amount of After-Tax Contributions eligible for a matching contribution that a Participant is permitted to make or the amount of the Matching After-Tax Contributions required under Sections 3.5 and 3.6; or 82 (4) reduce the amount of Pre-Tax Contributions that a Participant is permitted to make or the amount of Matching Pre-Tax Contributions required under Sections 3.3 and 3.4. (c) For the purpose of computing the amount of the Profit-Sharing Contributions for the twelve-month period ending on the last day of a Restriction Period, the adjusted consolidated net income of the Corporation and its Consolidated Subsidiaries before net income taxes for the Fiscal Year ending on such date is deemed to be the forecast of the consolidated net income of the Corporation and its Consolidated Subsidiaries for such Fiscal Year as set forth in the annual operating plan of the Corporation for such Fiscal Year. (d) During the Restriction Period, any person who was an Employee on the day preceding the first day of the Restriction Period shall be deemed to be an Employee so long as he is employed by a member of a "controlled group of corporations" which includes, or by a trade or business that is under common control with (as those terms are defined in sections 414(b) and (c) of the Code) the Corporation, any corporation which is the survivor of any merger or consolidation to which the Corporation was a party, or any corporation into which the Corporation has been liquidated. ARTICLE XIII ------------ MISCELLANEOUS PROVISIONS ------------------------ 13.1 RESTRICTIONS ON ALIENATION: QUALIFIED DOMESTIC RELATIONS ORDERS. Except as may be required (i) to offset an amount that a Participant is ordered to pay to the Plan as a result of a judgement, settlement, order or decree entered on or after August 5, 1997 as permitted under section 401(a)(13)(C) of the Code or (ii) for income tax withholding purposes, no benefit or 83 interest under this Plan shall be subject to assignment or alienation, either voluntarily or involuntarily. The preceding sentence shall apply to the creation, assignment or recognition of a right to any benefit payable with respect to a Participant pursuant to a domestic relations order, unless such order is determined by the Retirement Plan Administrative Committee to be a "qualified domestic relations order", as defined in section 414(p) of the Code. In accordance with uniform and nondiscriminatory procedures established by the Retirement Plan Administrative Committee from time to time, the Retirement Plan Administrative Committee upon the receipt of a domestic relations order which seeks to require the distribution of a Participant's Account in whole or in part to an "alternate payee" (as that term is defined in section 414(p)(8) of the Code) shall: (1) promptly notify the Participant and such "alternate payee" of the receipt of such order and of the procedure which the Retirement Plan Administrative Committee will follow to determine whether such order constitutes a "qualified domestic relations order" within the meaning of section 414(p) of the Code, (2) determine whether such order constitutes a "qualified domestic relations order" and notify the Participant and the "alternate payee" of the results of such determination, and (3) if the Retirement Plan Administrative Committee determines that such order does constitute a "qualified domestic relations order," distribute to such "alternate payee" under the terms of such order the amount called for under the order in a single sum within 60 days of the date such order is 84 determined to constitute a qualified domestic relations order, without regard to whether a distribution would be permissible to the Participant at such time under this Plan. The determination and the distribution made by, or at the direction of, the Retirement Plan Administrative Committee under this Section 13.1 shall be final and binding on the Participant and on all other persons interested in such order. An "alternate payee" under this Section 13.1 shall not be an eligible person for purposes of obtaining a loan pending the distribution of such alternate payee's entire interest under this Plan. 13.2 EXCLUSIVE BENEFIT REQUIREMENT. Except as provided in Sections 12.3, 13.1 and 13.3, no assets of the Plan shall revert to a Participating Company or be used for or diverted to purposes other than providing benefits to Participants and their Beneficiaries and defraying reasonable costs of administering the Plan. 13.3 RETURN OF CONTRIBUTIONS. (a) MISTAKE OF FACT. Any contribution made by a Participating Company due to a mistake of fact shall be returned to the Participating Company within one year of the date the contribution was made. (b) NONDEDUCTIBLE CONTRIBUTIONS. In the event the deduction of a contribution made by a Participating Company is disallowed under section 404 of the Code, such contribution (to the extent disallowed) shall be returned to the Participating Company within one year of the disallowance of the deduction. 85 13.4 NO CONTRACT OF EMPLOYMENT. Neither the establishment and maintenance of the Plan nor the participation in the Plan by any Employee shall be construed as a contract between the Employee and any Participating Company so as to give any Employee the right to be retained by any Participating Company, or to interfere with the rights of any Participating Company to discharge the Employee at any time. 13.5 PAYMENT OF BENEFITS ON INCAPACITY. In the event the Retirement Plan Administrative Committee determines that any person to whom a distribution is to be made is unable to care for his affairs by reason of illness or other disability, any amount distributable to such person (unless prior claim thereto shall have been made by a duly qualified guardian or other legal representative) may, in the discretion of the Retirement Plan Administrative Committee, be paid to such other person deemed by the Retirement Plan Administrative Committee to be responsible for such person. Any such payment made under this Section 13.5 shall constitute a complete discharge of any liability under this Plan. 13.6 MERGER. In the event of a merger or consolidation with, or transfer of assets or liabilities to any other plan, each Participant shall receive a benefit immediately after such merger, consolidation or transfer (if the Plan then terminated) which is at least equal to the benefit the Participant was entitled to receive immediately before such merger, consolidation or transfer (if the Plan had then terminated). 13.7 CONSTRUCTION. The headings and subheadings in this Plan have been inserted for convenience of reference only and are to be ignored in the construction of its provisions. Wherever appropriate, the masculine shall be read as the feminine, the plural as the singular, and the singular as the plural. References in this Plan to a section shall be to a section in this Plan 86 unless otherwise indicated. References in this Plan to a section of the Code, ERISA or any other federal law shall also refer to the regulations issued under such section. 13.8 GOVERNING LAW. This Plan shall be construed, to the extent to which state law is applicable, in accordance with the laws of the State of Florida. Venue for any action arising under this Plan shall be in Brevard County, Florida. 13.9 MISTAKEN PAYMENTS. If a mistake is made in favor of a Participant, Beneficiary or alternate payee in the payment of benefits under this Plan, then the Corporation or the Trustee (acting at the Corporation direction and on behalf of the Plan) shall take such action against such Participant, Beneficiary or alternate payee to remedy such mistake and to make the Plan whole as the Corporation deems proper and appropriate under the circumstances, and any mistake in favor of the Plan shall promptly be corrected by, or at the direction of, the Retirement Plan Administrative Committee. HARRIS CORPORATION Date: 10/26/01 By: /s/ Jeffrey Pratt Morrill -------------------------- ------------------------------- Title: Assistant Treasurer ---------------------------- 87 APPENDIX A PARTICIPATING COMPANIES The following Related Companies are Participating Companies as of the respective dates set forth below: Harris Corporation (January 1, 1998) Harris Publishing Systems Corporation (January 1, 1998 - August 16, 2001) Harris Technical Services Corporation (January 1, 1998) Baseview Products, Inc. (January 1, 1998 - August 16, 2001) Maritime Communication Services, Inc. (January 1, 1998) Harris Intraplex, Inc. (July 1, 1999) Harris Pacific, Inc. (October 5, 1999) Audio Broadcast Group, Inc. (November 24, 1999) Harris Automation (January 11, 2000) Harris Broadband Wireless Access, Inc. (September 1, 2000) Harris-Exigent, Inc. (June 2, 2001) A-1 APPENDIX B FORMER PARTICIPANTS IN THE INTRAPLEX, INC. 401(k) PROFIT SHARING PLAN Effective as of July 1, 1999, the Harris Intraplex, Inc. 401(k) Profit Sharing Plan (the "Intraplex Plan") was merged into the Plan and the accounts maintained for participants under the Intraplex Plan were transferred to the Plan. Notwithstanding anything in the Plan to the contrary, the following provisions shall apply to the Participants whose accounts under the Intraplex Plan were transferred to the Plan in connection with such merger (the "Intraplex Participants"): 1. SERVICE. For purposes of determining an Intraplex Participant's Service, the Intraplex Participant shall be credited with Service equal to (a) the number of whole Years of Service credited to the Intraplex Participant under the Intraplex Plan as of June 30, 1999, plus (b) the greater of (1) the Service that would be credited the Intraplex Participant under Article 2 of the Plan during the Plan Year commencing on July 1, 1999, and (2) the service that would be credited to the Intraplex Participant under the terms of the Intraplex Plan for the Plan Year commencing on July 1, 1999. 2. DISTRIBUTIONS (a) AFTER ELIMINATION EFFECTIVE DATE. For distributions commencing after the earlier of (i) the date which occurs 90 days following the date a summary of material modification is furnished to Intraplex Participants describing the elimination of optional forms of benefit, in accordance with Treasury Regulation section 1.411(d)-4(e)(1)(ii) and (ii) July 1, 2002 (whichever date occurs first, the "Elimination Effective Date"), an Intraplex Participant who is eligible to receive a distribution of his benefit under the Plan may elect to have his benefit B-1 distributed in any form of benefit offered under Section 7.3 of the Plan, subject to the provisions of Section 7.2 of the Plan. (b) DISTRIBUTIONS ON OR BEFORE ELIMINATION EFFECTIVE DATE. For distributions commencing on or prior to the Elimination Effective Date, an Intraplex Participant who is eligible to receive a distribution of his benefit under the Plan may elect, in addition to any form of benefit offered under Section 7.3 of the Plan, to have his benefit distributed in any one of the following optional benefit forms, subject to the provisions of Section 7.2 of the Plan: (i) a joint and survivor annuity with the Participant's spouse as contingent annuitant under which the amount payable to the Participant's spouse is 50% of the amount payable during the joint lives of the Participant and his spouse; or (ii) a straight life annuity for the Participant's life. (c) If an Intraplex Participant is married and elects that his benefit be distributed on or prior to the Elimination Effective Date in the form of a straight life annuity pursuant to Section 2(b)(ii) hereof, such benefit shall be distributed in the form of a straight life annuity only if the Participant's spouse consents in writing to such form of distribution and such consent is witnessed by either a Plan representative or Notary Public. If a Participant's spouse does not properly consent to such form of distribution, benefits will be distributed in the form of a joint and survivor annuity. B-2 EX-12 6 l90939aex12.txt EX-12 RATIO OF EARNINGS TO FIXED CHARGES EXHIBIT 12 COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

Quarter Ended ----------------------------- September 28, September 29, (In millions, except ratios) 2001 2000 ----------------------------- EARNINGS: Net Income $ 17.1 $ (34.8) Plus: Income taxes 8.8 20.9 Fixed charges 10.0 9.9 Amortization of capitalized interest - - Less: Interest capitalized during the period - - Undistributed earnings in equity investments - (1.7) -------- -------- $ 35.9 $ (5.7) ======== ======== FIXED CHARGES: Interest expense $ 8.2 $ 8.1 Plus: Interest capitalized during the period - - Portion of rents deemed representative of the interest factor 1.8 1.8 -------- -------- $ 10.0 $ 9.9 ======== ======== RATIO OF EARNINGS TO FIXED CHARGES 3.59 (0.58) ======== ========

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EX-10.I

                                                                   EXHIBIT 10(i)
                               HARRIS CORPORATION
                            2000 STOCK INCENTIVE PLAN
                             STOCK OPTION AGREEMENT
                              TERMS AND CONDITIONS
                                 (AS OF 8/24/01)


         1. THE OPTION - TERMS AND CONDITIONS. Under and subject to the
provisions of the Harris Corporation 2000 Stock Incentive Plan (as amended from
time to time the "PLAN"), Harris Corporation (the "CORPORATION") has granted to
the Employee a Non-Qualified Stock Option (the "OPTION") to purchase such number
of shares of Common Stock of the Corporation at the designated price per share
as set forth in writing by the Corporation to the Employee. Such grant is
subject to the following Terms and Conditions (together with the Corporation's
letter specifying the number of options and exercise price, the "AGREEMENT"):

                  (a) Except as set forth in Sections 1(e), 2(b), or 2(d), the
Option shall not be exercisable to any extent until and unless the Employee
shall have remained continuously in the employ of the Corporation for one year
from the grant date. The grant of the Option shall not limit or restrict the
Corporation's rights to terminate the Employee's employment.

                  (b) During the lifetime of the Employee, the Option shall be
exercisable only by the Employee, and, except as otherwise set forth in Section
2, only while the Employee continues as an Employee of the Corporation.

                  (c) Notwithstanding any other provision of these Terms and
Conditions and the Agreement, the Option shall expire no later than ten years
from the grant date (the "EXPIRATION DATE"), and shall not be exercisable
thereafter.

                  (d) The Option shall become exercisable as follows:

                           (i) After the end of one year and prior to the end of
two years from the grant date, not more than fifty percent of the grant;

                           (ii) After the end of two years and prior to the end
of three years from the grant date, not more than seventy-five percent of the
grant; and

                           (iii) After the end of three years from the grant
date, one-hundred percent of the grant.

                  (e) Upon a "change of control" of the Corporation (as defined
in Section 11.1 of the Plan) any outstanding Option shall immediately become
fully exercisable.

         2.       TERMINATION OF EMPLOYMENT.

                  (a) TERMINATION OF EMPLOYMENT. In the event of termination of
employment with the Corporation other than as a result of circumstances
described in Sections 2(b), (c), (d), (e), and (f) below, the Option, whether
exercisable or not, shall terminate immediately upon termination of employment.


                                       1


                  (b) DEATH. Notwithstanding Section 1(d), in the event of the
death of the Employee while employed by the Corporation, the Option shall
immediately become fully vested and exercisable and shall be exercisable only
within the twelve (12) months following the date of death, but no later than the
Expiration Date. In the event of the death of the Employee following termination
of or cessation of employment, the Option shall be exercisable only within the
twelve (12) months following the date of death, but no later than the Expiration
Date and then only to the extent that the Option was exercisable on the day
immediately prior to the date of the Employee's death. Following the death of
the Employee, the Option may be exercised only by the executor or administrator
of the Employee's estate or by the person or persons to whom the Employee's
rights under the Option shall pass by the Employee's will or the laws of descent
and distribution.

                  (c) DISABILITY. In the event of cessation of employment due to
disability of the Employee (as determined by the Corporation) while employed by
the Corporation, the Option shall be exercisable by the Employee until the
Expiration Date and only to the extent that the Option was exercisable at the
date of such cessation of employment.

                  (d) RETIREMENT. In the event of retirement of the Employee,
the Option shall, if the retirement occurs after the Employee has reached age 55
and has ten or more years of full-time service with the Corporation, be
exercisable by the Employee until the Expiration Date and only to the extent
that the Option was exercisable at the date of such retirement. In the event of
retirement of the Employee, the Option shall, if the retirement occurs after the
Employee has reached age 62 and has ten or more years of full-time service with
the Corporation, be exercisable by the Employee until the Expiration Date and
shall, unless Section 2(b) is applicable, continue to become exercisable after
such retirement according to the schedule set forth in Section 1(d).

                  (e) MISCONDUCT. In the event of termination of employment of
the Employee by the Corporation for deliberate, willful or gross misconduct
("MISCONDUCT"), as determined by the Corporation, the Option shall be
exercisable only by the Employee within one (1) month following such cessation
of employment but no later than the Expiration Date and only to the extent that
it was exercisable at the date of such cessation of employment.

                  (f) INVOLUNTARY TERMINATION. In the event of termination of
employment of the Employee by the Corporation other than for Misconduct, the
Option shall be exercisable only by the Employee within the three (3) months
following such cessation of employment but no later than the Expiration Date and
only to the extent that it was exercisable at the date of such cessation of
employment.

         3. EXERCISE OF OPTION. The Option may be exercised by delivering to the
Corporation at the office of the Corporate Secretary (i) a written notice,
signed by the person entitled to exercise the Option, stating the designated
number of shares such person then elects to purchase, (ii) payment in an amount
equal to the full purchase price of the shares to be purchased, and (iii) in the
event the Option is exercised by any person other than the Employee, evidence
satisfactory to the Corporation that such person has the right to exercise the
Option. Payment shall be made (a) in cash, (b) in previously acquired shares of
Common Stock of the Corporation, or (c) in any combination of cash and such
shares. Shares tendered in payment of the purchase price which have been
acquired through an exercise of a stock option shall have been held at least six
months prior to exercise of the Option and shall be valued at the Fair Market
Value. Upon the exercise of the Option, the Corporation shall issue and deliver
to the Employee, one or more certificates for the shares in respect of which the
Option shall have been so exercised. The Employee does not have any rights as a
shareholder in respect of any shares as


                                       2


to which the Option shall not have been duly exercised and no rights as a
shareholder shall exist prior to the proper exercise of such Option.

         4. PROHIBITION AGAINST TRANSFER. The Option and rights granted by the
Corporation under these Terms and Conditions and the Agreement are not
transferable except to family members or trust by will or by the laws of descent
and distribution, provided that the Option may not be so transferred to family
members or trusts except as permitted by applicable law or regulations. Without
limiting the generality of the foregoing, the Option may not be assigned,
transferred except as aforesaid, pledged or hypothecated, shall not be
assignable by operation of law, and shall not be subject to execution,
attachment or similar process. Any attempted assignment, transfer, pledge,
hypothecation or other disposition of the Option contrary to the provisions
hereof, or the levy of any execution, attachment or similar process upon the
Option, shall be null and void and without effect.

         5. EMPLOYMENT BY PARENT, SUBSIDIARY OR SUCCESSOR. For the purpose of
these Terms and Conditions and the Agreement, employment by the Corporation, any
Subsidiary of or a successor to the Corporation shall be considered employment
by the Corporation.

         6. BOARD COMMITTEE. The Board Committee shall have authority, subject
to the express provisions of the Plan as in effect from time to time, to
construe these Terms and Conditions and the Agreement and the Plan, to
establish, amend and rescind rules and regulations relating to the Plan, and to
make all other determinations in the judgment of the Board Committee necessary
or desirable for the administration of the Plan. The Board Committee may correct
any defect or supply any omission or reconcile any inconsistency in these Terms
and Conditions and the Agreement in the manner and to the extent it shall deem
expedient to carry the Plan into effect, and it shall be the sole and final
judge of such expediency.

         7. INCORPORATION OF PLAN PROVISIONS. These Terms and Conditions and the
Agreement are made pursuant to the Plan, the provisions of which are hereby
incorporated by reference. Capitalized terms not otherwise defined herein have
the meanings set forth in the Plan. In the event of a conflict between the terms
of these Terms and Conditions and the Agreement and the Plan, the terms of the
Plan shall govern.


                                       3

EX-10.II

                                                                  EXHIBIT 10(ii)
                               HARRIS CORPORATION
                            2000 STOCK INCENTIVE PLAN
                   EXECUTIVE PERFORMANCE SHARE AWARD AGREEMENT
                              TERMS AND CONDITIONS
                                 (AS OF 8/24/01)


         1. PERFORMANCE SHARE AWARD - TERMS AND CONDITIONS. Under and subject to
the provisions of the Harris Corporation 2000 Stock Incentive Plan (as amended
from time to time the "Plan"), Harris Corporation (the "Corporation") has
granted to the Executive a Performance Share Award (the "Award") of such number
of shares of Common Stock, $1.00 par value, of the Corporation as set forth and
designated in writing by the Corporation to the Executive (the "Stock"). Such
Award is subject to the following Terms and Conditions (which together with the
Corporation's letter specifying the number of shares subject of the Award, the
Performance Period and the Exhibit related thereto is referred to as the
"Agreement"):

                  (a) For purposes of the Agreement, the "Performance Period"
         shall be the Performance Period set forth and designated as such in
         writing by the Corporation to the Executive.

                  (b) Upon the expiration of the Performance Period and
         satisfaction of the applicable withholding obligations, the Corporation
         shall at its option, cause such shares as to which the Executive is
         entitled pursuant to Section 1(c) hereof either (i) to be issued by
         delivery of a stock certificate in the name of the Executive or his or
         her designee, and the certificate shall be released to the custody of
         the Executive, or (ii) to be credited to an account for the benefit of
         the Executive or his or her designee maintained by the Corporation's
         stock transfer agent or its designee.

                  (c) (i) The Award shall be contingent upon the attainment
         during the Performance Period of the goals exhibit delivered to the
         Executive at the time of the making of the Award (the "Exhibit"). The
         payout of the Award shall be determined upon the expiration of the
         Performance Period in accordance with the Exhibit. The final payout
         determination of the Award will be authorized by the Harris Board of
         Directors, the Board Committee, or its designee.

                           (ii) If employment is commenced after July 15th of
         the first fiscal year of the Performance Period (such commencement date
         is referred to as the "Start Date"), the final payout to be made to the
         Executive determined in accordance with the prior provisions of this
         Section 1(c) shall be reduced by 1/36th for each month between July 1
         of the first fiscal year of the Performance Period and the Start Date.
         Only a Start Date prior to the 15th of a month shall be deemed
         employment for a full month. Other than with respect to the final
         payout, the pro-ration pursuant to this Section will not otherwise
         impact the Award (e.g., the Executive will have full voting rights and
         will be entitled to receive dividend equivalent payments and other
         distributions with respect to all Award shares).



                                       1


                  (d) Subject to Section 7 hereof, during the Performance
         Period, the Executive may exercise full voting rights with respect to
         all shares of Stock subject of the Award and shall be entitled to
         receive dividends and other distributions paid with respect to such
         shares. Upon the expiration of the Performance Period, the Executive
         may exercise voting rights and shall be entitled to receive dividends
         and other distributions with respect to the number of shares to which
         the Executive is entitled pursuant to Section 1(c) hereof.

                  (e) The number of shares subject of the Award is based upon
         the assumption that the Executive shall continue to perform
         substantially the same duties throughout the Performance Period, and
         such number of shares may be reduced or increased by the Board of
         Directors or the Board Committee or its designee without formal
         amendment of this Agreement to reflect a change in duties during the
         Performance Period.

         2. TERMINATION OF EMPLOYMENT. Other than in the event of a "change in
control" covered in paragraph 5 herein, if the Executive ceases to be an
employee of the Corporation or of one of its Subsidiaries or Affiliates prior to
the expiration of the Performance Period: (i) for any reason other than death,
disability or retirement after age 55 with ten or more years full-time service,
all shares of Stock awarded to the Executive hereunder shall be forfeited; or
(ii) due to (a) death, (b) disability or (c) retirement after the Executive has
reached age 55 and has ten or more years of full-time service, the Executive
shall be eligible to receive a pro-rata proportion of the shares of Stock which
would have been issued to the Executive under the Award at the end of the
Performance Period determined in accordance with the provisions of Section 1(c)
hereof, such pro-rata proportion to be measured by a fraction of which the
numerator is the number of months of the Performance Period during which the
Executive's employment continued, and the denominator is the full number of
months of the Performance Period. For purposes of this Section 2, only
employment for 15 days or more of a month shall be deemed employment for a full
month.

         3. TRANSFER OF EMPLOYMENT. If the Executive transfers employment from
one business unit of the Corporation or an Affiliate to another business unit or
Affiliate during a Performance Period, the Executive shall be eligible to
receive the number of shares of Stock determined by the Board of Directors or
the Board Committee based upon such factors as the Board of Directors or the
Board Committee, as the case may be, in its sole discretion may deem
appropriate.

         4. PROHIBITION AGAINST TRANSFER. Until the expiration of the
Performance Period, the Award and the shares of Stock subject of the Award and
the rights granted under these Terms and Conditions and the Agreement are
nontransferable except to family members or trust by will or by the laws of
descent and distribution, provided that the Award and the shares of stock
subject of the Award may not be so transferred to family members or trust except
as permitted by applicable law or regulations. Without limiting the generality
of the foregoing except as aforesaid, the Award and such shares may not be sold,
exchanged, assigned, transferred, pledged, hypothecated or otherwise disposed of
until the expiration of the Performance Period, shall not be assignable by
operation of law, and shall not be subject to execution, attachment or similar
process. Any attempt to effect any of the foregoing shall be null and void and
without effect.

         5. CHANGE IN CONTROL. (a) Upon a "change in control" of the Corporation
as defined in Section 11.1 of the Plan, the performance objectives shall be
conclusively deemed to have been


                                       2


attained. The Award shall be vested immediately prior to the occurrence of a
"change in control." The Award shall be paid to the Executive at the end of the
Performance Period, provided however: (i) in the event of death, disability,
retirement, or involuntary termination other than for Cause, the Award shall be
paid IN STOCK as soon as practicable; (ii) in the event of resignation or
termination for Cause, the Award shall be forfeited; and (iii) in the event of a
"change in the Corporation's capital structure," at the election of the
Executive, the Award shall be paid IN STOCK or converted and paid IN CASH. The
amount of the cash payment will be an amount equal to the number of shares
subject of the Award multiplied by the highest price per share paid in any
transaction reported on the New York Stock Exchange Composite Index: (x) during
the sixty (60) day period preceding and including the date of a "change in the
Corporation's capital structure;" or (y) during the sixty (60) day period
preceding and including the date of "change in control". An Award in Stock or
cash shall be paid as soon as practicable following a "change in the
Corporation's capital structure."

                  (b) For purposes hereof, a "change in the Corporation's
         capital structure" shall be deemed to have occurred if:

                           (i) the Stock is no longer the only class of the
         Corporation's common stock;

                           (ii) the Stock ceases to be, or is not readily,
         tradable on an established securities market (in the United States)
         within the meaning of Section 409 (l)(1) of the Internal Revenue Code
         of 1986, as amended;

                           (iii) the Corporation issues warrants, convertible
         debt, or any other security that is exercisable or convertible into
         common stock, except for rights granted under the Plan; or

                           (iv) the ratio of total debt to total capitalization
         exceeds 45 percent. Total debt is the total debt for borrowed money.
         Total capitalization is consolidated total assets of the Corporation
         less consolidated total liabilities of the Corporation.

                  (c) "Cause" shall mean (1) a material breach by the Executive
         of the duties and responsibilities of the Executive (other than as a
         result of incapacity due to physical or mental illness) which is (x)
         demonstrably willful, continued and deliberate on the employee's part,
         (y) committed in bad faith or without reasonable belief that such
         breach is in the best interests of the Corporation and (z) not remedied
         within fifteen (15) days after receipt of written notice from the
         Corporation which specifically identifies the manner in which such
         breach has occurred or (2) the Executive's conviction of, or plea of
         NOLO CONTENDERE to, a felony involving willful misconduct which is
         materially and demonstrably injurious to the Corporation. Any act, or
         failure to act, based upon authority given pursuant to a resolution
         duly adopted by the Board or based upon the advice of counsel for the
         Corporation shall be conclusively presumed to be done, or omitted to be
         done, by the Executive in good faith and in the best interests of the
         Corporation. Cause shall not exist unless and until the Company has
         delivered to Executive a copy of a resolution duly adopted by
         three-quarters (3/4) of the entire Board



                                       3


         at a meeting of the Board called and held for such purpose (after
         thirty (30) days notice to Executive and an opportunity for Executive,
         together with counsel, to be heard before the Board), finding that in
         the good faith opinion of the Board an event set forth in clauses (1)
         or (2) has occurred and specifying the particulars thereof in detail.
         The Company must notify the Executive of any event constituting Cause
         within ninety (90) days following the Company's knowledge of its
         existence or such event shall not constitute Cause under these Terms
         and Conditions.

         6. MISCELLANEOUS. These Terms and Conditions and the Agreement (a)
shall be binding upon and inure to the benefit of any successor of the
Corporation, (b) shall be governed by the laws of the State of Delaware and any
applicable laws of the United States, and (c) except as permitted under Sections
3.2, 12 and 13.6 of the Plan, may not be amended without the written consent of
both the Corporation and the Executive. No contract or right of employment shall
be implied by these Terms and Conditions and the Agreement of which they form a
part. If the Award is assumed or a new award is substituted therefor in any
corporate reorganization (including, but not limited to, any transaction of the
type referred to in Section 424(a) of the Internal Revenue Code of 1986, as
amended), employment by such assuming or substituting corporation or by a parent
corporation or subsidiary thereof shall be considered for all purposes of the
Award to be employment by the Corporation.

         7. SECURITIES LAW REQUIREMENTS. The Corporation shall not be required
to issue shares pursuant to the Award unless and until (a) such shares have been
duly listed upon each stock exchange on which the Corporation's Stock is then
registered; and (b) a registration statement under the Securities Act of 1933
with respect to such shares is then effective.

          8. BOARD COMMITTEE. The Board Committee shall have authority, subject
to the express provisions of the Plan as in effect from time to time, to
construe these Terms and Conditions and the Agreement and the Plan, to
establish, amend and rescind rules and regulations relating to the Plan, and to
make all other determinations in the judgment of the Board Committee necessary
or desirable for the administration of the Plan. The Board Committee may correct
any defect or supply any omission or reconcile any inconsistency in these Terms
and Conditions and the Agreement in the manner and to the extent it shall deem
expedient to carry the Plan into effect, and it shall be the sole and final
judge of such expediency.

         9. ADJUSTMENTS. Non-recurring losses or charges which are separately
identified and quantified in the Corporation's audited financial statements and
notes thereto including, but not limited to, extraordinary items, changes in tax
laws, changes in generally accepted accounting principles, impact of
discontinued operations, restructuring charges, restatement of prior period
financial results, shall be excluded from the calculation of performance results
for purposes of the Plan. However, the Board Committee can choose to include any
or all such non-recurring items as long as inclusion of each such item causes
the Award to be reduced.

         10. INCORPORATION OF PLAN PROVISIONS. These Terms and Conditions and
the Agreement are made pursuant to the Plan, the provisions of which are hereby
incorporated by reference. Capitalized terms not otherwise defined herein shall
have the meanings set forth for such terms in


                                       4


the Plan. In the event of a conflict between the terms of these Terms and
Conditions and the Agreement and the Plan, the terms of the Plan shall govern.

















                                       5

EX-10.III

                                                                Exhibit 10(iii)




















                               HARRIS CORPORATION

                                 RETIREMENT PLAN

                      (AMENDED AND RESTATED APRIL 1, 2001)









                                TABLE OF CONTENTS
                                -----------------



ARTICLE I  DEFINITIONS .......................................................1

1.1      Accounts.............................................................1
1.2      After-Tax Account....................................................1
1.3      After-Tax Contributions..............................................1
1.4      Beneficiary..........................................................1
1.5      Break-in-Service.....................................................1
1.6      Code.................................................................1
1.7      Compensation.........................................................2
1.8      Consolidated Subsidiaries............................................4
1.9      Corporation..........................................................4
1.10     Disability...........................................................4
1.11     Early Retirement Age - means age 55..................................4
1.12     Employment Unit......................................................4
1.13     Employee.............................................................4
1.14     ERISA................................................................5
1.15     Excess Compensation..................................................5
1.16     Fiscal Year..........................................................5
1.17     Full-Time Employee...................................................6
1.18     Harris Stock Fund....................................................6
1.19     Harris Stock After-Tax Account.......................................6
1.20     Harris Stock Matching Account........................................6
1.21     Harris Stock Pre-Tax Account.........................................6
1.22     Highly Compensated Employee..........................................6
1.23     Hour of Service......................................................7
1.24     Investment Committee.................................................7
1.25     Investment Funds.....................................................7
1.26     Leave of Absence.....................................................7
1.27     Matching After-Tax Account...........................................7
1.28     Matching After-Tax Contributions.....................................7
1.29     Matching Contributions...............................................7
1.30     Matching Pre-Tax Account.............................................8
1.31     Matching Pre-Tax Contributions.......................................8
1.32     Military Leave.......................................................8
1.33     Normal Retirement Age................................................8
1.34     Participant..........................................................8
1.35     Participating Company................................................8
1.36     Plan.................................................................8
1.37     Plan Year............................................................8
1.38     Predecessor Company..................................................9
1.39     Pre-Tax Account......................................................9
1.40     Pre-Tax Contributions................................................9
1.41     Profit-Sharing Account...............................................9



                                        i



1.42     Profit-Sharing Contributions.........................................9
1.43     Related Company......................................................9
1.44     Release Employee....................................................10
1.45     Retirement Plan Administrative Committee............................10
1.46     Rollover Account....................................................10
1.47     Savings Account.....................................................10
1.48     Service.............................................................10
1.49     Taxable Wage Base...................................................10
1.50     Trust Agreement.....................................................11
1.51     Trust Fund..........................................................11
1.52     Trustee.............................................................11
1.53     USERRA..............................................................11
1.54     Valuation Date......................................................11
1.55     Year of Service.....................................................11


ARTICLE II  PARTICIPATION ...................................................12

2.1      In General..........................................................12
2.2      Renewal of Participation on Reemployment............................12
2.3      Periods of Service on Reemployment..................................12
2.4      Service with Predecessor Company....................................13
2.5      Military Leave......................................................13
2.6      Joint Venture Service...............................................13


ARTICLE III  CONTRIBUTIONS AND ALLOCATIONS...................................14

3.1      Profit-Sharing Contributions........................................14
3.2      Allocation of Profit-Sharing Contribution to Participants...........16
3.3      Pre-Tax Contributions...............................................17
3.4      Matching Pre-Tax Contributions......................................18
3.5      After-Tax Contributions.............................................19
3.6      Matching After-Tax Contributions....................................19
3.7      Elections to Make Pre-Tax and After-Tax Contributions...............20
3.8      Rollover Contributions..............................................21
3.9      Participating Company's Obligation to Make Contributions............22
3.10     Treatment of Forfeited Amounts......................................23
3.11     Finality of Allocations.............................................23


ARTICLE IV  LIMITATIONS ON CONTRIBUTIONS.....................................24

4.1      In General..........................................................24
4.2      Pre-Tax Contributions...............................................24
4.3      Limitations on Contributions for Highly-Compensated Employees.......24
4.4      Limitations on Annual Additions.....................................36



                                       ii



ARTICLE V  VESTING AND FORFEITURES...........................................38

5.1      In General..........................................................38
5.2      Vesting on Retirement, Death or Disability..........................38
5.3      Vesting on Other Termination of Employment..........................38
5.4      Effect of In-Service Withdrawals on a Participant's Vested
         Percentage..........................................................39
5.5      Forfeitures.........................................................41


ARTICLE VI  ACCOUNTS AND INVESTMENTS.........................................42

6.1      Establishment of Accounts...........................................42
6.2      Investment of Accounts..............................................43
6.3      Allocation of Earnings and Losses...................................45
6.4      Special Rules Concerning Harris Stock Fund..........................45


ARTICLE VII  DISTRIBUTIONS ..................................................47

7.1      In General..........................................................47
7.2      Small Benefit Cash-out..............................................48
7.3      Form of Payment.....................................................49
7.4      Time of Payment.....................................................49
7.5      Direct Rollover.....................................................50
7.6      Benefit Amount and Withholding......................................51
7.7      Order of Distributions..............................................52
7.8      Statutory Requirements..............................................52
7.9      Designating Beneficiaries...........................................55
7.10     Payment of Group Insurance Premiums.................................56
7.11     Inability to Locate Participant.....................................57


ARTICLE VIII  LOANS .........................................................57

8.1      Loans to Participants...............................................57
8.2      Loan Administration.................................................60
8.3      Repayment and Default...............................................61
8.4      Special Powers......................................................63


ARTICLE IX  IN-SERVICE WITHDRAWALS...........................................64

9.1      Withdrawals After Age 59-1/2........................................64
9.2      Withdrawals from Savings Account and After-Tax Account..............64
9.3      Withdrawals from Rollover, Pre-Tax and Profit Sharing Accounts......64
9.4      Conditions Applicable to All Withdrawals............................67
9.5      Reduction of Investment Fund Balances...............................67


                                      iii



ARTICLE X  TOP-HEAVY PROVISIONS..............................................68

10.1     In General..........................................................68
10.2     Minimum Allocation..................................................68
10.3     Minimum Vesting.....................................................68
10.4     Definitions.........................................................69


ARTICLE XI  ADMINISTRATION ..................................................73

11.1     Named Fiduciaries...................................................73
11.2     Retirement Plan Administrative Committee............................73
11.3     Powers and Duties of Committee......................................74
11.4     Actions of Committee................................................74
11.5     Finality of Decisions...............................................74
11.6     Immunities..........................................................74
11.7     Advisors and Agents.................................................74
11.8     Committee Member who is Participant.................................75
11.9     Information Provided by Participating Companies.....................75
11.10    Expenses............................................................76
11.11    Trust...............................................................76
11.12    Trust Fund Available to Pay All Plan Benefits.......................76


ARTICLE XII  AMENDMENT AND TERMINATION AND CHANGE OF CONTROL.................77

12.1     Amendment...........................................................77
12.2     Amendment of Appendix A.............................................78
12.3     Termination of Plan.................................................78
12.4     Discontinuance of Contributions.....................................78
12.5     Vesting on Termination or Discontinuance of Contributions...........78
12.6     Distribution on Termination.........................................78
12.7     Change of Control...................................................79


ARTICLE XIII  MISCELLANEOUS PROVISIONS.......................................83

13.1     Restrictions on Alienation..........................................83
13.2     Exclusive Benefit Requirement.......................................85
13.3     Return of Contributions.............................................85
13.4     No Contract of Employment...........................................86
13.5     Payment of Benefits on Incapacity...................................86
13.6     Merger..............................................................86
13.7     Construction........................................................86
13.8     Governing Law.......................................................87
13.9     Mistaken Payments...................................................87





                                       iv



                                   APPENDIX A

Participating Companies.....................................................A-1


                                   APPENDIX B

Former Participants In the Intraplex, Inc. 401(K) Profit Sharing Plan.......B-1



















                                       v






                                  INTRODUCTION

         The Harris Corporation Retirement Plan (the "Plan") is hereby amended
and restated effective April 1, 2001. The provisions of the Plan to the extent
so amended and restated shall apply only to those participants in the Plan who
are Employees on or after April 1, 2001. Any benefits of an individual who
ceased being an Employee before April 1, 2001 and who is not re-employed by a
Participating Company after such date shall be determined under the terms of the
Plan that were in effect when such individual ceased to be an Employee.

         The Plan and its related trust are intended to be a tax-exempt plan and
trust under sections 401(a) and 501(a) of the Code, respectively. The Plan also
is intended to be a profit-sharing plan that contains a qualified cash or
deferred arrangement under section 401(k) of the Code.




















                                    ARTICLE I
                                    ---------

                                   DEFINITIONS
                                   -----------


         1.1 ACCOUNTS - means all of the accounts described in Section 6.1, and
such other accounts that may be established on behalf of each Participant, to be
credited with contributions made on behalf of a Participant, adjusted for
earnings and losses as provided in the Plan and debited by Plan expenses
allocable to the Accounts, distributions, withdrawals and loans to the
Participant.

         1.2 AFTER-TAX ACCOUNT - means the Account established to record
After-Tax Contributions made on a Participant's behalf other than those invested
in the Harris Stock Fund.

         1.3 AFTER-TAX CONTRIBUTIONS - means the contributions described in
Section 3.5.

         1.4 BENEFICIARY - means the person or persons entitled to receive any
benefits payable under the Plan on account of a Participant's death.

         1.5 BREAK-IN-SERVICE - means a period other than a period included in
the Employee's Service; provided, however, that a Break-in-Service shall not
include a period of absence from employment during which the Employee is absent
from employment for any period not in excess of 24 consecutive months because of
(A) the Employee's pregnancy, (B) the birth of the Employee's child, (C) the
placement of a child with the Employee in connection with the Employee's
adoption of such child or (D) the need of the Employee to care for any such
child for a period beginning immediately following such birth or placement.

         1.6 CODE - means the Internal Revenue Code of 1986, as amended from
time to time.




                                       1



         1.7 COMPENSATION - means the following items of remuneration which an
Employee earns for work or personal services performed for a Participating
Company:

                  (a) salary or wages, including lump sum merit increases;

                  (b)  commission paid pursuant to a sales incentive plan;

                  (c) overtime premium, shift differential or additional
                  compensation in lieu of overtime premium;

                  (d)  compensation in lieu of vacation;

                  (e) any annual bonus or incentive compensation payable in the
                  form of cash pursuant to the Harris Corporation Annual
                  Incentive Plan or any successor thereto or other similar plan
                  or award program adopted from time to time by a Participating
                  Company or Employment Unit employing the Employee or any stock
                  award made in lieu of an annual cash bonus or incentive
                  compensation;

                  (f) any compensation of a type described in items (a) through
                  (e) above which is paid as an employee contribution to the
                  Plan;

                  (g) any salary reduction contributions to a cafeteria plan
                  (within the meaning of section 125 of the Code) maintained by
                  a Participating Company;

but excluding:






                                       2


                  (i) any extraordinary compensation of a recurring or
                  non-recurring nature not included under items (a) through (g)
                  above, including one-time recognition awards and rewards under
                  a referral program of a Participating Company;

                  (ii) any award made or amount paid pursuant to the Harris
                  Corporation Stock Incentive Plan or any successor thereto,
                  including, but not limited to, performance shares, stock
                  options, restricted stock, stock appreciation rights or other
                  stock-based awards or dividend equivalents;

                  (iii)  severance pay or special retirement pay;

                  (iv) retention bonuses or completion bonuses, unless
                  authorized by the Retirement Committee in a uniform and
                  nondiscriminatory manner; and

                  (v) reimbursement or allowances with respect to expenses
                  incurred in connection with employment, such as tax
                  equalization, reimbursement for moving expenses, mileage or
                  expense allowance or education expenses.

In no event does the term "Compensation" include indirect compensation such as
employer-paid group insurance premiums or contributions under this or other
qualified employee benefit plan, other than as a contribution described in items
(f) and (g) above.





                                       3


         Only compensation not in excess of $170,000 (as adjusted pursuant to
section 401(a)(17)(B) of the Code) shall be taken into account. In addition, in
the year in which any Employee becomes a Participant only Compensation received
after he becomes a Participant shall be taken into account. For purposes of any
test imposed under any section of the Code, the Plan authorizes the use of any
definition of Compensation that satisfies the requirements of such section.

         1.8  CONSOLIDATED SUBSIDIARIES - means those subsidiaries of the
Corporation which are included in the consolidated annual financial statements
for the Corporation.

         1.9  CORPORATION - means Harris Corporation, a Delaware corporation.

         1.10 DISABILITY - means a disability that qualifies a Participant for
disability benefits under title II or title XVI of the Federal Social Security
Act; such disability for Plan purposes shall be deemed to occur on the effective
date determined by the Social Security Administration.

         1.11 EARLY RETIREMENT AGE - means age 55.

         1.12 EMPLOYMENT UNIT - means any division or other readily identifiable
segment of the operations of a Participating Company, for example, as identified
in the annual report or such other segment as may be established for purposes of
the Plan by the Corporation, in its discretion.

         1.13 EMPLOYEE - means an individual who is reported on the payroll
records of the Corporation or other Participating Company as an employee unless
either (i) the individual's employment relationship is covered by a collective
bargaining agreement that does not provide for such individual's participation
in the Plan or (ii) the individual does not receive any Compensation payable in
U.S. dollars. No individual who renders services to a Participating



                                       4


Company shall be considered an Employee for purposes of the Plan if such
individual renders such services pursuant to (i) a written agreement providing
that such services are to be rendered by the individual as an independent
contractor, (ii) a written agreement with an entity, including a leasing
organization within the meaning of section 414(n)(2) of the Code, that is not a
Participating Company or Related Company, or (iii) a written agreement that
contains a waiver of participation in the Plan. In particular, it is expressly
intended that any individuals not treated as employees by a Participating
Company on its payroll records is to be excluded from Plan participation even if
a court or administrative agency determines that such an individual is a common
law employee of a Participating Company. With respect to a Participating Company
not all of whose employees are eligible to participate in the Plan (a "Limited
Participating Company"), the term "Employee" shall include those employees of
the Participating Company who were Participants immediately prior to their
commencement of employment by the Limited Participating Company. A leased
employee shall be treated as an Employee only for purposes of applying the
requirements described in section 414(n)(3) of the Code and determining the
number and identity of Highly Compensated Employees.

         1.14 ERISA - means the Employee Retirement Income Security Act of 1974,
as amended from time to time.

         1.15 EXCESS COMPENSATION - means the portion of a Participant's
Compensation that exceeds the Taxable Wage Base for the year in which the
Compensation is received.

         1.16 FISCAL YEAR - means the fiscal year of the Corporation.





                                       5


         1.17 FULL-TIME EMPLOYEE - means an Employee who is regularly scheduled
by a Participating Company to work 30 or more hours per week, and who is not
designated on the payroll records of a Participating Company as a temporary
employee.

         1.18 HARRIS STOCK FUND - means the Investment Fund that is primarily
invested in qualifying employer securities (within the meaning of section 407 of
ERISA).

         1.19 HARRIS STOCK AFTER-TAX ACCOUNT - means the portion of the
After-Tax Contributions made on a Participant's behalf invested in the Harris
Stock Fund.

         1.20 HARRIS STOCK MATCHING ACCOUNT - means the portion of the Matching
Contributions made on a Participant's behalf invested in the Harris Stock Fund.

         1.21 HARRIS STOCK PRE-TAX ACCOUNT - means the portion of the Pre-Tax
Contributions made on a Participant's behalf invested in the Harris Stock Fund.

         1.22 HIGHLY COMPENSATED EMPLOYEE - means, for a Plan Year, any Employee
who is:

              (a) a 5%-owner (as determined under section 416(i)(1) of the Code)
of an Employer at any time during the Plan Year or the preceding Plan Year; or

              (b) paid Compensation in excess of $85,000 (as adjusted pursuant
to section 414(q)(1)(B)(ii) of the Code) from an Employer for the preceding Plan
Year. The Employees taken into account under this paragraph (b) for each Plan
Year shall be limited to those Employees who were members of the top-paid group
(as defined in section 414(q)(3) of the Code) for the preceding Plan Year,
unless otherwise elected by the Company for such Plan Year in accordance with
applicable law.




                                       6



         1.23 HOUR OF SERVICE - means each hour for which an Employee is paid or
entitled to payment for the performance of duties for a Participating Company or
Related Company.

         1.24 INVESTMENT COMMITTEE - means the Investment Committee - Retirement
Plans of the Corporation's Board of Directors.

         1.25 INVESTMENT FUNDS - means the funds designated from time to time by
the Investment Committee in which contributions made on behalf of Participants
may be invested.

         1.26 LEAVE OF ABSENCE - means a period of interruption of the active
employment of an Employee granted by a Participating Company or Predecessor
Company with the understanding that the Employee will return to active
employment at the expiration of the period of time. A Leave of Absence as
originally granted may be extended by the Participating Company or Predecessor
Company for additional periods. The term "Leave of Absence" does not include a
Military Leave.

         1.27 MATCHING AFTER-TAX ACCOUNT - means the Account established to
record Matching After-Tax Contributions made on a Participant's behalf other
than those invested in the Harris Stock Fund.

         1.28 MATCHING AFTER-TAX CONTRIBUTIONS - means the contributions made on
behalf of a Participant under Section 3.6.

         1.29 MATCHING CONTRIBUTIONS - means the aggregate of the Matching
After-Tax Contributions and the Matching Pre-Tax Contributions made on behalf of
a Participant.




                                       7


         1.30 MATCHING PRE-TAX ACCOUNT - means the Account established to record
the Matching Pre-Tax Contributions made on a Participant's behalf other than
those invested in the Harris Stock Fund.

         1.31 MATCHING PRE-TAX CONTRIBUTIONS - means the contributions made on
behalf of a Participant under Section 3.4.

         1.32 MILITARY LEAVE - means an Employee's absence from active
employment with a Participating Company or Predecessor Company for a period of
service in the "uniformed services", within the meaning of the Uniformed
Services Employment and Reemployment Rights Act of 1994, as amended, which
entitles the person rendering such service to reemployment under such Act.

         1.33 NORMAL RETIREMENT AGE - means age 65.

         1.34 PARTICIPANT - means an Employee who satisfies the requirements of
Section 2.1.

         1.35 PARTICIPATING COMPANY - means the Corporation or any Related
Company, or division or operation thereof so designated by the Retirement Plan
Administrative Committee. Appendix A, as it may be amended by the Retirement
Plan Administrative Committee from time to time, lists each Participating
Company, or division thereof, whose Employees may become Participants.

         1.36 PLAN - means the Harris Corporation Retirement Plan.

         1.37 PLAN YEAR - means the Fiscal Year.







                                       8


         1.38 PREDECESSOR COMPANY - means any corporation (a) of which a Related
Company is a successor by reason of having acquired all or substantially all of
its business and assets by purchase, merger, consolidation or liquidation, or
(b) from which a Related Company acquired a business formerly conducted by such
corporation; provided, however, that in the case of any such corporation that
continued to conduct a trade or business subsequent to the acquisition by a
Related Company referred in (a) or (b) above, the status of such corporation as
a Predecessor Company relates only to the period of time prior to the date of
such acquisition.

         1.39 PRE-TAX ACCOUNT - means the Account established to record the
Pre-Tax Contributions made on a Participant's behalf other than those invested
in the Harris Stock Fund.

         1.40 PRE-TAX CONTRIBUTIONS - means the contributions made on behalf of
a Participant under Section 3.3.

         1.41 PROFIT-SHARING ACCOUNT - means the Account established to record
the Profit-Sharing Contributions made on a Participant's behalf.

         1.42 PROFIT-SHARING CONTRIBUTIONS - means the contributions described
in Section 3.1.

         1.43 RELATED COMPANY - means the Corporation or any corporation that is
a member of a controlled group of corporations (as defined in section 414(b) of
the Code) with the Corporation; any trade or business (whether or not
incorporated) which is under common control (as defined in section 414(c) of the
Code) with the Corporation; any organization (whether or not incorporated) which
is a member of an affiliated service group (as defined in section 414(m) of the
Code) which includes the Corporation, or any other entity required to be
aggregated with the Corporation under section 414(o) of the Code.





                                       9


         1.44 RELEASE EMPLOYEE - An employee of the Corporation who is
transferred by the Corporation to a Related Company (other than a Participating
Company) and who is designated by the Retirement Plan Administrative Committee
as a Release Employee for purposes of receiving a Profit-Sharing Contribution
for the Plan Year in which such transfer occurred.

         1.45 RETIREMENT PLAN ADMINISTRATIVE COMMITTEE - means the committee
established pursuant to Section 11.2.

         1.46 ROLLOVER ACCOUNT - means the Account established to record the
rollover contributions made by a Participant pursuant to Section 3.8.

         1.47 SAVINGS ACCOUNT - means the Account established under Section
6.1(f).

         1.48 SERVICE - means the periods during which the Employee is employed
by a Related Company, determined in accordance with the elapsed time rules set
forth in section 1.410(a)-7 of the Treasury Regulations; provided, however, that
an individual on Military Leave shall have the period of such leave credited as
a period of Service provided such Employee returns to the employ of a Related
Company within the period prescribed by USERRA. Service shall be computed in
terms of completed years and completed days.

         1.49 TAXABLE WAGE BASE - means the maximum amount of earnings that may
be considered wages under section 3121(a)(1) of the Code, except for purposes of
Medicare taxes, as in effect on the first day of the Plan Year. In the case of
an Employee who was a Participant for only a portion of a particular Plan Year,
the Taxable Wage Base shall be multiplied by the ratio of the number of calendar
months (including a fraction of a month as a full month) in the Plan Year during
which he was a Participant to 12 months.





                                       10


         1.50 TRUST AGREEMENT - means the trust agreement relating to the Harris
Corporation Retirement Plan, entered into between the Corporation and the
Trustee, as it may be amended from time to time.

         1.51 TRUST FUND - means the assets held by the Trustee in accordance
with the Trust Agreement.

         1.52 TRUSTEE - means Bankers Trust Company, or such successor (or
successors) thereto designated by the Corporation to act as trustee under the
provisions of the Trust Agreement, who shall agree to act as such by executing
the Trust Agreement.

         1.53 USERRA - the Uniformed Services Employment and Reemployment Rights
Act of 1994, as amended.

         1.54 VALUATION DATE - means each day the New York Stock Exchange is
open and any other day as the Retirement Plan Administrative Committee may
determine.

         1.55 YEAR OF SERVICE. A period of Service of 365 days.













                                       11


                                   ARTICLE II
                                   ----------

                                  PARTICIPATION
                                  -------------

         2.1 IN GENERAL. An Employee shall become a Participant in the Plan on
the date he completes a Year of Service, provided that he is employed by a
Participating Company on that date. Notwithstanding the above, and solely for
purposes of making Pre-Tax Contributions, After-Tax Contributions and Rollover
Contributions, a Full-Time Employee shall become a Participant in the Plan on
the date he first performs an Hour of Service.

         2.2 RENEWAL OF PARTICIPATION ON REEMPLOYMENT. An Employee who
terminates employment after he completes a Year of Service and is reemployed by
a Participating Company shall become a Participant immediately on reemployment.
An Employee who terminates employment before he completes a Year of Service
shall become a Participant as provided in Section 2.1, provided that his Service
prior to reemployment shall be used to satisfy the Year of Service requirement
of Section 2.1 to the extent provided under Section 2.3.

         2.3 PERIODS OF SERVICE ON REEMPLOYMENT. The following rules shall apply
to an Employee who terminates employment before he completes a Year of Service
and is re-employed by a Related Company:

              (a) CREDIT FOR PRIOR PERIOD OF SERVICE. If the Employee is
re-employed by a Related Company, then his Service before he terminated
employment shall be taken into account in determining whether the Employee has
completed a Year of Service for purposes of Section 2.1 and for purposes of
determining a Participant's Service under Section 5.3.

              (b) CREDIT FOR PERIOD OF ABSENCE. If the Employee terminates
employment due to quitting, discharge, or retirement and is re-employed by a
Related Company within 12





                                       12


months of his termination date, his period of absence shall be taken into
account in determining whether the Employee has completed a Year of Service for
purposes of Section 2.1 and for purposes of determining a Participant's Service
under Section 5.3. If the Employee terminates employment for any reason other
than quitting, discharge, or retirement, and subsequently quits, is discharged,
or retires, his period of absence shall be taken into account in determining
whether the Employee has completed a Year of Service for purposes of Section 2.1
and for purposes of determining a Participant's Service under Section 5.3 only
if he is re-employed by a Related Company within 12 months of the date of his
termination of employment.

         2.4 SERVICE WITH PREDECESSOR COMPANY. In the case of a corporation
(other than a Related Company) that becomes a Predecessor Company by reason of
the acquisition of all or substantially all of the assets and business of such
corporation by a Related Company, an Employee's Service shall include employment
with such Predecessor Company only to the extent expressly provided in the
corporate documents effecting the acquisition.

         2.5 MILITARY LEAVE. Notwithstanding any provision of the Plan to the
contrary, (i) a Participant who returns to employment after a period of Military
Leave may elect to make Pre-Tax Contributions and After-Tax Contributions to the
Plan in respect of such period of Military Leave and (ii) the Participating
Company that employs such a Participant shall make any Profit-Sharing
Contributions and Matching Contributions on behalf of such Participant to the
Plan upon the Participant's reemployment to the extent required by applicable
law and in accordance with section 414(u) of the Code.

         2.6 JOINT VENTURE SERVICE. Notwithstanding anything in the Plan to the
contrary, an Employee's Service shall include the Employee's period of
employment by an entity in which







                                       13


the Corporation owns less than 80% but more than 1% of the outstanding equity
interest in such entity (a "joint venture") only if (i) the joint venture is
designated by the Retirement Plan Administrative Committee as eligible for
service credit under this Section 2.6; (ii) such Employee was employed by a
Related Company prior to such Employee's employment by the joint venture and was
not employed by any person or entity other than a Related Company (an "unrelated
employer") between such Employee's employment by a Related Company and the joint
venture; and (iii) such Employee returns to employment with a Related Company
following the Employee's termination of employment with the joint venture
without having been employed by an unrelated employer between such Employee's
employment by the joint venture and a Related Company.

                                  ARTICLE III
                                  -----------

                          CONTRIBUTIONS AND ALLOCATIONS
                          -----------------------------

         3.1  PROFIT-SHARING CONTRIBUTIONS.

              (a) BASIC. The amount of Profit-Sharing Contributions made on
behalf of Participating Companies for a Fiscal Year with respect to Participants
in the Plan shall equal 11 1/2 percent of the adjusted consolidated net income
of the Corporation and its Consolidated Subsidiaries before net income taxes for
such Fiscal Year as determined in subsection (c), reduced by the portion of such
amount with respect to Participants' Compensation that would have been allocable
under Section 3.2 of the Plan if Compensation were determined without regard to
statutory limits under section 401(a)(17) or 415 of the Code.

              (b) SPECIAL. The Corporation, in its discretion, may provide for
an additional Profit-Sharing Contribution in a specified dollar amount or
pursuant to a formula with respect to any Fiscal Year.






                                       14


         (c) ADJUSTED CONSOLIDATED NET INCOME. The adjusted consolidated net
income of the Corporation and its Consolidated Subsidiaries before net income
taxes shall be determined on the basis of the annual audit report prepared by
the Corporation's independent public accountants by adjusting the consolidated
net income shown in the report to eliminate the effect, if any, of the following
items:

          (1)  any provision for taxes on or measured by income for such years
               required by the laws of the United States or of any state or
               political subdivision thereof (including, however, any taxes
               required under the Ohio Franchise Income Tax, whether or not in
               fact measured by income), or any provision for similar taxes
               required by the laws of any other country;

          (2)  all items consisting of credits or deficiencies relating to taxes
               described in clause (1) above on or measured by income for prior
               Fiscal Years;

          (3)  any provision for contributions for such Fiscal Year under this
               Plan or under any profit-sharing retirement plan of a
               Consolidated Subsidiary of the Corporation;

          (4)  all dividends received during such Fiscal Year with respect to
               stock of a Related Company which is not included among the
               Consolidated Subsidiaries;

          (5)  gains or losses from the sale, exchange or other disposition of
               capital or depreciable property, as defined in the Code;





                                       15


          (6)  any income from the use of the "lifo" inventory method resulting
               from either a reduction in inventory or a decrease in the cost
               index;

          (7)  all items of income and expense which relate directly to the
               conduct by a Related Company of a business (i) which was formerly
               conducted by a corporation which was not then a Related Company,
               and (ii) the net income (or loss) of which was included for the
               first time in determining the consolidated net income of the
               Corporation and its Consolidated Subsidiaries for the Fiscal Year
               in question;

          (8)  all exchange adjustments resulting from translating to United
               States currency those year-end balance sheet items of
               subsidiaries which are denominated in a foreign currency; and

          (9)  any item of income or expense relating to the right of any
               employee to receive cash upon cancellation of an unexercised
               stock option.

         3.2  ALLOCATION OF PROFIT-SHARING CONTRIBUTION TO PARTICIPANTS.

              (a) IN GENERAL. The Profit-Sharing Contributions for a Plan Year
with respect to an Employment Unit shall be allocated among eligible
Participants described in subsection (c) who are employed by the Employment Unit
during some part or all of the Plan Year based on the ratio of each eligible
Participant's Compensation plus Excess Compensation for the Plan Year to the
Compensation plus Excess Compensation of all eligible Participants for the Plan
Year.

              (b) LIMITATION ON AMOUNT. Notwithstanding subsection (a), the
amount allocated to an eligible Participant with respect to Excess Compensation
shall not exceed the







                                       16


"base contribution percentage" by more than the lesser of (i) the base
contribution percentage and (ii) 5.7% (or if greater, the percentage equal to
the Old Age portion of the tax under section 3111(a) of the Code, as in effect
on the first day of the Plan Year). Any remaining amount shall be allocated
based on the ratio of each Participant's Compensation for the Plan Year to the
Compensation of all eligible Participants for the Plan Year. The term "base
contribution percentage" means the percentage of Compensation contributed by the
Participating Company with respect to each Participant's Compensation not in
excess of the Participant's Taxable Wage Base.

              (c) LIMITATION ON ELIGIBILITY. A Participant shall be eligible to
receive an allocation of Profit-Sharing Contributions for a Plan Year if (i) the
Participant is employed on the earlier of (A) the last day of the Plan Year and
(B) the June 30 nearest to the last day of the Plan Year or (ii) the Participant
terminated employment during the Plan Year on or after Early Retirement Age or
Normal Retirement Age, or due to Disability, death, reduction-in-force program,
Leave of Absence or Military Leave, or is transferred by the Corporation as a
Release Employee to an entity that is not a Participating Company.

         3.3  PRE-TAX CONTRIBUTIONS.

              (a) CONTRIBUTION ELECTION. Each Participant shall be deemed to
have elected to defer 6% of his Compensation for a Plan Year in the form of
Pre-Tax Contributions, to become effective as of the first payroll period as
soon as administratively practicable following his satisfaction of the
participation requirements set forth in Section 2.1, unless the Participant
elects otherwise prior to such payroll period in the time and manner prescribed
by the Retirement Plan Administrative Committee. If a Participant who elects not
to make Pre-Tax Contributions to the Plan in accordance with the foregoing
sentence subsequently decides to make Pre-Tax






                                       17


Contributions to the Plan, such Participant's election to make Pre-Tax
Contributions shall become effective as of the first payroll period commencing
immediately after the effective date of the election or such later date as may
be administratively practicable. An election shall remain in effect until
revised or revoked. Pre-Tax Contributions shall be contributed to the Plan in
cash; PROVIDED that the Corporation, in its discretion, may contribute Pre-Tax
Contributions to be invested in the Harris Stock Fund in shares of common stock
of the Corporation, which may be contributed at a discount from fair market
value. The sum of the Pre-Tax Contributions and other elective deferrals (within
the meaning of section 402(g)(3)) made on behalf of the Participant to the Plan
and any other plan of a Participating Company or Related Company for any
calendar year shall not exceed $10,500 (as adjusted in accordance with section
402(g)(5)). The portion of any Pre-Tax Contribution made on behalf of a
Participant that is attributable to a discount from fair market value on shares
of common stock of the Corporation shall be disregarded for the purposes of
determining (i) whether the Participant's Pre-Tax Contributions exceed 12
percent of his Compensation for the Plan Year, and (ii) whether the
Participant's Pre-Tax Contributions and other elective deferrals exceed $10,500
(as adjusted in accordance with section 402(g)(5)) for the calendar year.

              (b) CONTRIBUTIONS IN EXCESS OF THE MAXIMUM. If the Pre-Tax
Contributions on behalf of a Participant for a calendar year reach the limit
described in subsection (a), any additional contributions to be made during the
calendar year pursuant to the Participant's election shall be made as After-Tax
Contributions and any Matching Pre-Tax Contributions with respect to that amount
shall be made as Matching After-Tax Contributions.

         3.4  MATCHING PRE-TAX CONTRIBUTIONS. Each Participating Company shall
make a Matching Pre-Tax Contribution to the Plan on behalf of each Participant
who is employed by







                                       18


such Participating Company and has completed a Year of Service in the amount of
100 percent of the Pre-Tax Contributions made on behalf of the Participant for
the Plan Year, but only to the extent that such Pre-Tax Contributions do not
exceed six percent of the Participant's Compensation for such Plan Year.
Matching Pre-Tax Contributions shall be contributed in cash; provided, that the
Corporation, in its discretion, may contribute Matching Pre-Tax Contributions to
be invested in the Harris Stock Fund in shares of common stock of the
Corporation, which may be contributed at a discount from fair market value. The
portion of any Matching Pre-Tax Contribution made on behalf of a Participant for
a Plan Year that is attributable to a discount from fair market value on shares
of common stock of the Corporation shall be disregarded for the purpose of
determining whether the Matching Pre-Tax Contributions made on behalf of the
Participant exceed six percent of the Participant's Compensation for such Plan
Year.

         3.5  AFTER-TAX CONTRIBUTIONS. A Participant may elect to contribute to
the Plan as an After-Tax Contribution an amount equal to any whole percentage of
his Compensation for such Plan Year not exceeding 12 percent. After-Tax
Contributions shall be contributed in cash; provided that the Corporation, in
its discretion, may contribute After-Tax Contributions to be invested in the
Harris Stock Fund in shares of common stock of the Corporation, which may be
contributed at a discount from fair market value. The portion of any After-Tax
Contribution made by a Participant for a Plan Year that is attributable to a
discount from fair market value on shares of common stock of the Corporation
shall be disregarded for the purpose of determining whether the Participant's
After-Tax Contributions exceed 12 percent of his Compensation for such Plan
Year.

         3.6  MATCHING AFTER-TAX CONTRIBUTIONS. Each Participating Company shall
make a Matching After-Tax Contribution to the Plan on behalf of each Participant
who is employed by




                                       19


such Participating Company in the amount of 100 percent of the After-Tax
Contributions made by the Participant for the Plan Year, but only to the extent
that such After-Tax Contributions do not exceed six percent of the Participant's
Compensation for such Plan Year. Matching After-Tax Contributions shall be
contributed in cash; provided, that the Corporation, in its discretion, may
contribute Matching After-Tax Contributions to be invested in the Harris Stock
Fund in shares of common stock of the Corporation, which may be contributed at a
discount from fair market value. The portion of any Matching After-Tax
Contribution made on behalf of a Participant for a Plan Year that is
attributable to a discount from fair market value on shares of common stock of
the Corporation shall be disregarded for the purpose of determining whether the
Matching After-Tax Contributions made on behalf of the Participant exceed six
percent of the Participant's Compensation for such Plan Year.

         3.7  ELECTIONS TO MAKE PRE-TAX AND AFTER-TAX CONTRIBUTIONS.

              (a) INITIAL ELECTIONS. If a Participant elected not to begin
making automatic Pre-Tax Contributions to the Plan in accordance with the first
sentence of Section 3.3(a), then the Participant may elect subsequently to begin
making Pre-Tax Contributions to the Plan at such times and in such manner as may
be prescribed by the Retirement Plan Administrative Committee. A Participant may
elect to begin making After-Tax Contributions at such times and in such manner
as may be prescribed by the Retirement Plan Administrative Committee. Any
election made under this Section 3.7(a) shall become effective as of the first
payroll period commencing immediately after the later of the date on which the
Employer receives the Participant's election, the date designated by the
Participant in his election or such later date as may be administratively
practicable.





                                       20


              (b) CHANGING ELECTIONS. A Participant may change the percentage
(in increments of one percent) of future Pre-Tax Contributions or After-Tax
Contributions (or both) made on his behalf at such times and in such manner as
may be prescribed by the Retirement Plan Administrative Committee. A change may
be made not more than once each payroll period. A change of election shall
become effective as of the first payroll period commencing immediately after the
date of the election, or such later date as may be administratively practicable.

              (c) TERMINATING ELECTIONS. A Participant may terminate his
election to have Pre-Tax Contributions or After-Tax Contributions (or both) made
on his behalf at such times and in such manner as may be prescribed by the
Retirement Plan Administrative Committee. The termination election shall become
effective as of the first payroll period commencing immediately after the date
of the election, or such later date as may be administratively practicable.

              (d) CORPORATION'S DISCRETION TO LIMIT ELECTIONS. The Retirement
Plan Administrative Committee may direct that Participant elections with respect
to Pre-Tax Contributions or After-Tax Contributions (or both) be changed in any
manner the Retirement Plan Administrative Committee, in its discretion, shall
determine appropriate to preserve the qualification of the Plan under section
401(a) of the Code and as a qualified cash or deferred arrangement under section
401(k) of the Code.

         3.8  ROLLOVER CONTRIBUTIONS. A Participant, with the consent of the
Retirement Plan Administrative Committee or its delegate, may at any time make a
rollover contribution to the Plan. Rollover contributions may include only (a)
cash amounts and participant loan notes that







                                       21


are eligible rollover distributions (as defined in section 402(c)(4) of the
Code) transferred directly from a trust described in section 401(a) of the Code
which is exempt from tax under section 501(a) of the Code or from a qualified
annuity plan described in section 403(a) of the Code, and (b) cash amounts equal
to eligible rollover distributions paid into the Trust no later than the 60th
day following the day on which the individual received the eligible rollover
distribution from a trust described in section 401(a) of the Code which is
exempt from tax under section 501(a) of the Code or from a conduit individual
retirement account or individual retirement annuity within the meaning of
section 408 of the Code (provided that no amount in such account or value of
such annuity is attributable to a source other than an eligible rollover
distribution as defined in section 402(c)(4) of the Code (and any related
earnings)). A Participant may be required to establish that the transfer of
amounts into a Rollover Account will not require any changes to the terms of the
Plan or will not expose the Plan or Trust to adverse tax consequences.

         3.9  PARTICIPATING COMPANY'S OBLIGATION TO MAKE CONTRIBUTIONS.

              (a) CONTRIBUTIONS. Each Participating Company agrees to pay to the
Trustee the contributions that are required with respect to Participants who are
performing services at one of such Participating Company's Employment Units.
Profit-Sharing Contributions with respect to a Fiscal Year shall be paid to the
Trustee no later than the due date for filing the Participating Company's
federal income tax return for such Fiscal Year, including extensions. Pre-Tax
Contributions and After-Tax Contributions shall be withheld and paid by the
Employment Unit, and Matching Contributions shall be paid by the Participating
Company to the Trustee no later than 20 days following the last day of the
calendar month in which the amounts were withheld from the Participants'
Compensation, or sooner as required by Federal law.





                                       22


              (b) LIMITATION. Contributions under this Article III shall not be
required to the extent they exceed the deduction limitations of section 404 of
the Code, in which case such contributions shall be reduced to the extent
allowable and necessary in the following order: (1) Profit-Sharing
Contributions; (2) Matching Contributions; and (3) Pre-Tax Contributions.

         3.10  TREATMENT OF FORFEITED AMOUNTS.

              (a) REDUCTION OF CONTRIBUTIONS. Forfeitures shall be allocated to
Employment Units as provided in subsection (b) and used to reduce Profit-Sharing
Contributions and Matching Contributions of the Participating Companies in which
the Employment Units are included.

              (b) ALLOCATION OF FORFEITURES TO EMPLOYMENT UNITS. Forfeitures of
Profit-Sharing Contributions and Matching Contributions shall be credited to the
Employment Unit with which the Participant was last employed before the
forfeiture occurred, or as otherwise determined by the Retirement Plan
Administrative Committee.

         3.11  FINALITY OF ALLOCATIONS. The Retirement Plan Administrative
Committee shall cause a written benefit statement to be given to each
Participant at least annually setting forth the amount of the contributions
allocated to his Accounts; provided, however, that if any such Participant is
deceased, such statement shall be given to his Beneficiary. Any Participant or
Beneficiary claiming that an error has been made in a benefit statement shall
notify the Retirement Plan Administrative Committee in writing within 90 days
following the delivery or mailing of such statement. The Retirement Plan
Administrative Committee shall review the claim and advise the Participant or
Beneficiary of its decision in writing. If no such notice of error is filed, the
benefit statement shall be presumed to be correct.





                                       23


                                   ARTICLE IV
                                   ----------

                          LIMITATIONS ON CONTRIBUTIONS
                          ----------------------------

         4.1  IN GENERAL. Notwithstanding any provisions of Article III to the
contrary, the contributions provided for in Article III shall be limited to the
extent necessary to meet the requirements of this Article IV.

         4.2  PRE-TAX CONTRIBUTIONS.

              (a) TREATMENT OF CERTAIN CONTRIBUTIONS AS AFTER-TAX. If the
Retirement Plan Administrative Committee determines that a Participant's Pre-Tax
Contributions for a calendar year have reached the dollar limit described in
Section 3.3(a), any additional contributions for that calendar year pursuant to
the Participant's Pre-Tax Contribution election shall be treated in the manner
provided under Section 3.3.

              (b) RETURN OF EXCESS DEFERRALS. In the event that a Participant's
Pre-Tax Contributions made to the Plan for a calendar year exceed the dollar
limit described in Section 3.3(a), the excess amount, as adjusted for income and
loss, may, in the discretion of the Retirement Plan Administrative Committee, be
distributed to the Participant no later than April 15 of the following year in
accordance with the requirements of section 402(g) of the Code and Treasury
Regulation section 1.402(g)-l.

         4.3  LIMITATIONS ON CONTRIBUTIONS FOR HIGHLY-COMPENSATED EMPLOYEES.

              (a) LIMITS IMPOSED BY SECTION 401(K)(3) OF THE CODE.
Notwithstanding the provisions of Section 3.3, if the Pre-Tax Contributions made
for a Plan Year fail to satisfy both of the tests set forth in subparagraphs (1)
and (2) of this paragraph, the adjustments prescribed in Section 4.3(e)(1) shall
be made.





                                       24


              (1)    The average deferral percentage for the group consisting of
                     all highly compensated Employees for the Plan Year does not
                     exceed the product of the average deferral percentage for
                     the group consisting of all non-highly compensated
                     Employees for the immediately preceding Plan Year and 1.25.

              (2)    The average deferral percentage for the group consisting of
                     all highly compensated Employees for the Plan Year (i) does
                     not exceed the average deferral percentage of the group
                     consisting of all non-highly compensated Employees for the
                     immediately preceding Plan Year by more than 2 percentage
                     points, and (ii) does not exceed the product of the average
                     deferral percentage of the group consisting of all
                     non-highly compensated Employees for the immediately
                     preceding Plan Year and 2.0.

              (b) LIMITS IMPOSED BY SECTION 401(M) OF THE CODE. Notwithstanding
the provisions of Sections 3.1, 3.4 and 3.6, if the aggregate of the Matching
Contributions and After-Tax Contributions made for a Plan Year fail to satisfy
both of the tests set forth in subparagraphs (1) and (2) of this paragraph, the
adjustments prescribed in Section 4.3(e)(2) shall be made.

              (1)    The average contribution percentage for the group
                     consisting of all highly compensated Employees for the Plan
                     Year does not exceed the product of the average
                     contribution percentage for the group consisting of all
                     non-highly compensated Employees for the immediately
                     preceding Plan Year and 1.25.







                                       25


              (2)    The average contribution percentage for the group
                     consisting of all highly compensated Employees for the Plan
                     Year (i) does not exceed the average contribution
                     percentage of the group consisting of all non-highly
                     compensated Employees for the immediately preceding Plan
                     Year by more than 2 percentage points, and (ii) does not
                     exceed the product of the average contribution percentage
                     of the group consisting of all non-highly compensated
                     Employees for the immediately preceding Plan Year and 2.0.

              (c) AGGREGATE LIMIT ON CONTRIBUTIONS. Notwithstanding anything
herein to the contrary, for Plan Years commencing prior to January 1, 2002, if
the aggregate of the Pre-Tax Contributions, Matching Contributions and After-Tax
Contributions made for a Plan Year fail to satisfy all of the tests set forth in
subparagraphs (1), (2) and (3) of this paragraph, the adjustments prescribed in
Section 4.3(e)(3) shall be made.

              (1)    The average deferral percentage for the group consisting of
                     highly compensated Employees for the Plan Year does not
                     exceed the product of the average deferral percentage for
                     the group consisting of all non-highly compensated
                     Employees for the immediately preceding Plan Year and 1.25.

              (2)    The average contribution percentage for the group
                     consisting of highly compensated Employees for the Plan
                     Year does not exceed the product of the average
                     contribution percentage for the group consisting of all
                     non-highly compensated Employees for the immediately
                     preceding Plan Year and 1.25.





                                       26


              (3)    The sum of the average deferral percentage (as determined
                     under Section 4.3(d)(1) after making the adjustments
                     required by Section 4.3(e)(1) for the Plan Year) and the
                     average contribution percentage (as determined under
                     Section 4.3(d)(2) after making the adjustments required by
                     Section 4.3(e)(2) for the Plan Year) for the group
                     consisting of highly compensated Employees for the Plan
                     Year does not exceed the aggregate limit for such Plan
                     Year.

              (d) DEFINITIONS AND SPECIAL RULES. For purposes of this Section:

              (1)    The "average deferral percentage"

                     (i) for the group of highly compensated Employees for a
              Plan Year shall be the average of the ratios, calculated
              separately for each Employee in such group to the nearest
              one-hundredth of one percent, of the Pre-Tax Contributions made
              for the benefit of such Employee to the total compensation for
              such Plan Year paid to such Employee, and

                     (ii) for the group of non-highly compensated Employees for
              the immediately preceding Plan Year shall be the average of the
              ratios, calculated separately for each Employee in such group to
              the nearest one-hundredth of one percent, of the Pre-Tax
              Contributions made for the benefit of such Employee for the
              immediately preceding Plan Year to the total compensation for the
              immediately preceding Plan Year paid to such Employee.

              (2) The "average contribution percentage"







                                       27


                     (i) for the group of highly compensated Employees for a
              Plan Year shall be the average of the ratios, calculated
              separately for each Employee in such group to the nearest
              one-hundredth of one percent, of the Matching Contributions, the
              After-Tax Contributions and, in the Retirement Plan Administrative
              Committee's sole discretion, to the extent permitted under rules
              prescribed by the Secretary of the Treasury or otherwise under the
              law, the Pre-Tax Contributions made during such year for the
              benefit of such Employee to such Employee's compensation for such
              Plan Year, and

                     (ii) for the group of non-highly compensated Employees for
              the immediately preceding Plan Year shall be the average of the
              ratios, calculated separately for each Employee in such group to
              the nearest one-hundredth of one percent, of the Employer matching
              contributions, After-Tax Contributions and, in the Retirement Plan
              Administrative Committee's sole discretion, to the extent
              permitted under rules prescribed by the Secretary of the Treasury
              or otherwise under the law, the Pre-Tax Contributions made during
              the immediately preceding Plan Year for the benefit of such
              Employee to such Employee's compensation for the immediately
              preceding Plan Year.

              (3)    The "aggregate limit" shall equal the greater of (A) the
                     sum of (i) 1.25 times the greater of the average deferral
                     percentage or the average contribution percentage for the
                     immediately preceding Plan Year for the group consisting of
                     non-highly compensated Employees for such immediately
                     preceding Plan Year, plus (ii) the lesser of (a) the sum of
                     two percentage points and the lesser of the average
                     deferral percentage or the







                                       28


                     average contribution percentage for the immediately
                     preceding Plan Year for the group consisting of all
                     non-highly compensated Employees for such immediately
                     preceding Plan Year, and (b) 200% of the lesser of the
                     average deferral percentage or the average contribution
                     percentage for the immediately preceding Plan Year for the
                     group consisting of all non-highly compensated Employees
                     for such immediately preceding Plan Year, and (B) the sum
                     of (i) 1.25 times the lesser of the average deferral
                     percentage or the average contribution percentage for the
                     immediately preceding Plan Year for the group consisting of
                     all non-highly compensated Employees for such immediately
                     preceding Plan Year, plus (ii) the lesser of (a) the sum of
                     two percentage points plus the greater of the average
                     deferral percentage or the average contribution percentage
                     for the immediately preceding Plan Year for the group
                     consisting of all non-highly compensated Employees for such
                     immediately preceding Plan Year, and (b) 200% of the
                     greater of the average deferral percentage and the average
                     contribution percentage for the immediately preceding Plan
                     Year for the group consisting of all non-highly compensated
                     Employees for such immediately preceding Plan Year;

              (4)    "highly compensated Employee" shall mean any Employee who
                     has become a Participant who performs services in the
                     determination year and is in one or more of the following
                     groups: (i) Employees who were five percent owners as
                     determined in section 416(i)(1)(A)(iii) of the Code at any
                     time during the determination year or the look-back year,
                     or (ii)








                                       29


                     Employees with compensation greater than $85,000 (as
                     adjusted pursuant to section 415(d) of the Code) during the
                     look-back year and who were in the top-paid group during
                     the look-back year. Any former Employee who had a
                     separation year prior to the determination year and was a
                     highly compensated Employee as described in any of clauses
                     (i) and (ii) above for either (A) his separation year or
                     (B) any determination year ending on or after this
                     attainment of age 55 shall be considered a "highly
                     compensated Employee". For purposes of determining whether
                     a person is a highly compensated Employee of a
                     Participating Company with respect to a Plan Year, the term
                     "determination year" means the Plan Year for which the
                     determination is being made; the term "look-back year"
                     means the twelve-month period immediately preceding the
                     determination year; the term "top-paid group" means the top
                     20% of employees of the Participating Company ranked on the
                     basis of compensation received during the year (provided,
                     however, that when determining the number of employees in
                     such group, employees described in section 414(q)(8) of the
                     Code and Q&A 9(b) of Treasury Regulation section
                     1.414(q)-1T are excluded); "compensation" means
                     compensation within the meaning of section 415(c)(3) of the
                     Code, including elective or salary reduction contributions
                     to a cafeteria plan, qualified transportation fringe
                     benefits, cash or deferred arrangement or tax-sheltered
                     annuity; employers aggregated under section 414(b), (c),
                     (m) or (o) of the Code are treated as a single employer;
                     and "separation year" means the determination year the







                                       30


                     Employee separates from service with the applicable
                     Participating Company.

              (5)    "non-highly compensated Employee" shall mean any Employee
                     who has become a Participant who performs services in the
                     determination year (as defined in subparagraph (4) of this
                     paragraph) and is not a highly compensated Employee.

              (6)    "compensation" shall have the meaning set forth in section
                     414(s) of the Code or, in the discretion of the Retirement
                     Plan Administrative Committee, any other meaning in
                     accordance with the Code for these purposes;

              (7)    if the Plan and one or more other plans of a Participating
                     Company or any of its affiliates to which pre-tax
                     contributions, matching contributions or employee
                     contributions (as such terms are defined for purposes of
                     section 401(m) of the Code), or qualified non-elective
                     contributions (as such term is defined in section
                     401(m)(4)(C) of the Code), are made are treated as one plan
                     for purposes of section 410(b) of the Code, such plans
                     shall be treated as one plan for purposes of this Section.
                     If a highly compensated Employee participates in the Plan
                     and one or more other plans of his employer or any of its
                     affiliates to which any such contributions are made, all
                     such contributions shall be aggregated for purposes of this
                     Section.

              (e)    ADJUSTMENTS TO COMPLY WITH LIMITS. (1) ADJUSTMENTS TO
                     COMPLY WITH SECTION 401(k)(3) OF THE CODE. The Retirement
                     Plan Administrative










                                       31


                     Committee shall cause to be made such periodic computations
                     as it shall deem necessary or appropriate to determine
                     whether either of the tests set forth in Section 4.3(a)(1)
                     or 4.3(a)(2) will be satisfied during a Plan Year and, if
                     it appears to the Retirement Plan Administrative Committee
                     that neither of such tests will be satisfied, the
                     Retirement Plan Administrative Committee shall take such
                     steps as it deems necessary or appropriate to adjust the
                     Pre-Tax Contributions made for all or a portion of the
                     remainder of such Plan Year on behalf of each Participant
                     who is a highly compensated Employee to the extent
                     necessary in order for one of such tests to be satisfied.
                     If after the end of a Plan Year it is determined that
                     regardless of any such steps taken neither of the tests set
                     forth in Section 4.3(a)(1) or 4.3(a)(2) will be satisfied
                     with respect to such Plan Year, the Retirement Plan
                     Administrative Committee shall calculate a total amount by
                     which Pre-Tax Contributions must be reduced in order to
                     satisfy either such test, in the manner prescribed by
                     section 401(k)(8)(B) of the Code (the "excess contributions
                     amount"). The amount of Pre-Tax Contributions to be reduced
                     for each Participant who is a highly compensated Employee
                     shall be determined by first reducing the Pre-Tax
                     Contributions of each Participant whose actual dollar
                     amount of Pre-Tax Contributions for such Plan Year is the
                     highest until such reduced dollar amount equals the next
                     highest actual dollar amount of Pre-Tax Contributions made
                     for such Plan Year on behalf of any highly compensated
                     Participant or until the total reduction equals the excess



                                       32


                     contributions amount. If further reductions are necessary,
                     then such contributions on behalf of each Participant who
                     is a highly compensated Employee and whose actual dollar
                     amount of Pre-Tax Contributions made for such Plan Year is
                     the highest (determined after the reduction described in
                     the previous sentence) shall be reduced in accordance with
                     the previous sentence. Such reductions shall continue to be
                     made to the extent necessary so that the total reduction
                     equals the excess contributions amount. The amount by which
                     Pre-Tax Contributions are to be reduced in accordance with
                     this Section 4.3(e) shall be deemed to be After-Tax
                     Contributions and any Matching Pre-Tax Contributions made
                     with respect to such Pre-Tax Contributions shall be deemed
                     to be After-Tax Matching Contributions. The amount by which
                     a Participant's Pre-Tax Contributions are reduced in
                     accordance with this Section 4.3(e) shall be reduced by any
                     Pre-Tax Contributions previously distributed to such
                     Participant pursuant to Section 4.2 for such Plan Year. The
                     amount of any income allocable to any such reductions shall
                     be determined pursuant to applicable regulations
                     promulgated by the U.S. Treasury Department. The unadjusted
                     amount of any reductions distributed shall be treated as
                     "annual additions" for purposes of Section 4.4.

              (2)    ADJUSTMENTS TO COMPLY WITH SECTION 401(m) OF THE CODE. The
                     Retirement Plan Administrative Committee shall cause to be
                     made such periodic computations as it shall deem necessary
                     or appropriate to determine whether either of the tests set
                     forth in Section 4.3(b)(1) or 4.3(b)(2) will be







                                       33


                     satisfied during a Plan Year with respect to the Plan, and
                     if it appears to the Retirement Plan Administrative
                     Committee that neither of such tests will be satisfied, the
                     Retirement Plan Administrative Committee shall take such
                     steps as it deems necessary or appropriate to adjust the
                     Matching Contributions and the After-Tax Contributions made
                     for all or a portion of the remainder of such Plan Year on
                     behalf of each Participant who is a highly compensated
                     Employee to the extent necessary in order for one of such
                     tests to be satisfied. If after the end of a Plan Year it
                     is determined that regardless of any steps taken neither of
                     the tests set forth in Section 4.3(b)(1) or 4.3(b)(2) will
                     be satisfied with respect to such Plan Year, the Retirement
                     Plan Administrative Committee shall calculate the maximum
                     contribution percentage permissible for Participants who
                     are highly compensated Employees under the tests set forth
                     in Sections 4.3(b)(1) and 4.3(b)(2) and reduce the Matching
                     Contributions and After-Tax Contributions made on behalf of
                     each Participant who is a highly compensated Employee and
                     whose actual dollar amount of Matching Contributions and
                     After-Tax Contributions for such Plan Year is the highest
                     in the same manner described in subparagraph (1) of this
                     paragraph to the extent necessary to comply with Section
                     4.3(b)(1) or 4.3(b)(2). The reduction described in the
                     foregoing sentence shall be made first with respect to a
                     Participant's After-Tax Contributions in excess of six
                     percent of Compensation, second with respect to any
                     remaining After-Tax Contributions and any Matching
                     After-Tax



                                       34


                     Contributions attributable thereto, third with respect to
                     any Matching Pre-Tax Contributions. The Retirement Plan
                     Administrative Committee shall distribute no later than the
                     last day of the subsequent Plan Year to each such
                     Participant the amount of such reductions made with respect
                     to vested Matching Contributions and After-Tax
                     Contributions plus any income allocable thereto to which
                     such Participant would be entitled under the Plan if such
                     Participant had terminated service on the last day of the
                     Plan Year for which such contributions are made (or earlier
                     if such Participant actually terminates service at any
                     earlier date), and any remaining amount of such reductions
                     plus any income allocable thereto shall be forfeited and
                     used to reduce contributions in accordance with Section
                     3.10. The amount of any such income allocable to any such
                     reductions to be so distributed or forfeited shall be
                     determined pursuant to applicable regulations promulgated
                     by the U.S. Treasury Department.

              (3)    ADJUSTMENTS TO COMPLY WITH THE AGGREGATE LIMIT. For Plan
                     Years commencing prior to January 1, 2002, if after making
                     the adjustments required by subparagraphs (1) and (2) of
                     this paragraph for a Plan Year the Retirement Plan
                     Administrative Committee determines that the sum of the
                     average deferral percentage and the average contribution
                     percentage for the group consisting of Participants who are
                     highly compensated Employees exceeds the aggregate limit
                     for such Plan Year, the Retirement Plan Administrative
                     Committee shall no later than the last day of the
                     subsequent Plan Year reduce (i) first the After-Tax
                     Contributions made for






                                       35


                     such Plan Year on behalf of each Participant who is a
                     highly compensated Employee and any corresponding Matching
                     Contributions and (ii) second, the Pre-Tax Contributions
                     made for such Plan Year on behalf of each Participant who
                     is a highly compensated Employee and any corresponding
                     Matching Contributions to the extent necessary to eliminate
                     such excess. Such reduction shall be effected in the same
                     manner described in subparagraphs (1) and (2), as
                     applicable, of this Section 4.3(e).

              (4)    DISCOUNT ON SHARES OF COMMON STOCK TREATED AS MATCHING
                     CONTRIBUTION. Solely for purposes of this Section 4.3, if
                     shares of common stock of the Corporation are contributed
                     to the Plan at a discount from fair market value as a
                     Pre-Tax Contribution, then the amount of such discount
                     shall be treated as a Matching Pre-Tax Contribution.

         4.4  LIMITATIONS ON ANNUAL ADDITIONS.

              (a) THE DEFINED CONTRIBUTION LIMIT. The "annual addition," as
defined herein, for any Plan Year to a Participant's accounts in all defined
contribution plans maintained by each Participating Company or Related Company
shall not exceed the lesser of (1) 25 percent of the Participant's Compensation
for the Plan Year, and (2) $35,000 (as adjusted in accordance with section
415(d) of the Code). The term "annual additions" means the sum of all
contributions and forfeitures allocated to a Participant's accounts (other than
a rollover account).

              (b) REDUCTION OF CONTRIBUTIONS. If the Retirement Plan
Administrative Committee determines at any time that the annual addition to any
Participant's Accounts exceeds






                                       36


such limitation for any Plan Year, then the contributions on behalf of the
Participant shall be reduced, to the extent necessary, in the following order:

              (1)    Pre-Tax Contributions in excess of six percent of the
                     Participant's Compensation;

              (2)    Remaining Pre-Tax Contributions and Matching Pre-Tax
                     Contributions attributable thereto on a pro rata basis;

              (3)    Profit-Sharing Contributions;

              (4)    After-Tax Contributions in excess of six percent of the
                     Participant's Compensation;

              (5)    Remaining After-Tax Contributions and Matching After-Tax
                     Contributions attributable thereto on a pro rata basis.

         After-Tax Contributions and Pre-Tax Contributions, each as adjusted for
gains, shall be returned to the Participant. Matching Contributions and
Profit-Sharing Contributions, as adjusted for gains, to the extent allowable
shall be held in a suspense account and allocated to the accounts of such
Participant in the next Plan Year. If the Participant is not covered by the Plan
in the next Plan Year, the amount shall be allocated to the remaining
Participants in the Plan who are employed by the Employment Unit that employed
the Participant.





                                       37


                                   ARTICLE V
                                   ---------

                             VESTING AND FORFEITURES
                             -----------------------

         5.1 IN GENERAL. A Participant shall have a fully vested interest at all
times in his Pre-Tax Account, After-Tax Account, Harris Stock Pre-Tax Account,
Harris Stock After-Tax Account and Savings Account (other than the portion of
such accounts attributable to matching contributions made after October 1, 1984)
and Rollover Account.

         5.2 VESTING ON RETIREMENT, DEATH OR DISABILITY. A Participant shall
have a fully vested interest in his Profit Sharing Account, Matching Pre-Tax
Account, Matching After-Tax Account, Harris Stock Matching Account, and portion
of his Savings Account attributable to matching contributions made after October
1, 1984, on termination of his employment by any Related Company in the event of
the Participant's:

              (a)    retirement on or after Early Retirement Age;

              (b)    retirement on or after the effective date of the
                     Participant's Disability; or

              (c)    death.

         5.3  VESTING ON OTHER TERMINATION OF EMPLOYMENT.

              (a) VESTING SCHEDULE. A Participant who terminates employment
other than on the occurrence of one of the events described in Section 5.2 shall
have a vested interest in his Profit-Sharing Account, Matching Pre-Tax Account,
Matching After-Tax Account, Harris Stock Matching Account and the portion of his
Savings Account attributable to matching contributions made after October 1,
1984 in accordance with the following schedule:






                                       38


              Years of Service                            Vested Percentage
              ----------------                            -----------------

              Less than 3 years                                      0%

              3 years but less than 4 years                         30%

              4 years but less than 5 years                         40%

              5 years but less than 6 years                         60%

              6 years but less than 7 years                         80%

              7 years or more                                      100%

              (b) COMPUTING A PARTICIPANT'S SERVICE. All periods of Service
shall be taken into account for purposes of subsection (a). In addition, (i) in
the case of a Participant whose employment is terminated by a Related Company or
Participating Company in connection with a reduction-in-force, the period of
time that begins on the Participant's employment termination date and ends 12
months thereafter shall be taken into account for purposes of subsection (a) and
(ii) any prior Service or period of absence shall be taken into account in
determining a Participant's Service for purposes of subsection (a) as provided
in Section 2.3(a) and 2.3(b).

              (c) VESTING ON SALE OF BUSINESS. In the event of the sale or
disposition of a business or a sale of substantially all of the assets of a
trade or business, the Corporation may, in its discretion, provide for
accelerated vesting with respect to those Participants affected by the sale.

         5.4 EFFECT OF IN-SERVICE WITHDRAWALS ON A PARTICIPANT'S VESTED
PERCENTAGE. If a Participant receives a withdrawal under Article IX or a
distribution under Article VII from his






                                       39


Profit-Sharing Account at a time when the Participant has less than a fully
vested interest in that account, the dollar amount of his vested interest in his
Profit-Sharing Account (X) shall be determined at any subsequent time by the
following formula:

                                X = P(AB + D) - D

For the purpose of applying the formula, P is the percentage of the
Participant's interest in his Profit-Sharing Account that is vested at the time
the determination is made, AB is the balance credited to the Profit-Sharing
Account at the time the determination is made, and D is the amount of the
withdrawal.










                                       40


         5.5  FORFEITURES.

              (a) TIMING OF FORFEITURE. A Participant who terminates employment
with less than a fully vested interest in his Accounts shall forfeit the
nonvested interest of such Accounts upon termination of employment.

              (b) EFFECT OF PARTIAL DISTRIBUTION ON A PARTICIPANT'S VESTED
PERCENTAGE. If the Participant elects to receive a lump sum distribution of less
than the full amount of his vested interest, the part of his nonvested interest
that shall be forfeited under subsection (a) is the total nonvested interest
multiplied by a fraction, the numerator of which is the amount of the
distribution and the denominator of which is the total value of his vested
interest in his Accounts other than his After-Tax Account, Harris Stock
After-Tax Account and Rollover Account.

              (c) EFFECT OF REEMPLOYMENT ON FORFEITURE. If a Participant incurs
a forfeiture under subsection (a) and subsequently returns to employment with a
Participating Company and becomes a Participant in the Plan before incurring
five consecutive one-year Periods of Severance, then the forfeited amount shall
be restored by the Employment Unit of the Participating Company with which the
Participant is reemployed.


















                                       41


                                   ARTICLE VI
                                   ----------

                            ACCOUNTS AND INVESTMENTS
                            ------------------------

         6.1  ESTABLISHMENT OF ACCOUNTS. The Retirement Plan Administrative
Committee shall establish and maintain for each Participant the following
Accounts showing the Participant's interest under the Plan:

              (a) Profit-Sharing Account to reflect Profit-Sharing Contributions
made on the Participant's behalf.

              (b) Pre-Tax Account to reflect Pre-Tax Contributions made on the
Participant's behalf other than those invested in the Harris Stock Fund;

              (c) After-Tax Account to reflect After-Tax Contributions made on
the Participant's behalf other than those invested in the Harris Stock Fund;

              (d) Matching Pre-Tax Account to reflect Matching Pre-Tax
Contributions made on the Participant's behalf other than those invested in the
Harris Stock Fund;

              (e) Matching After-Tax Account to reflect Matching After-Tax
Contributions made on the Participant's behalf other than those invested in the
Harris Stock Fund;

              (f) Savings Account to reflect the Savings Contributions under the
Plan as in effect prior to July 1, 1990, and the aggregate of the Participant's
voluntary and required contributions to the Harris Video Systems
Savings/Incentive Plan less withdrawals, as of June 30, 1990;

              (g) Harris Stock Pre-Tax Account to reflect the portion of the
Pre-Tax Contributions made on the Participant's behalf invested in the Harris
Stock Fund;






                                       42


              (h) Harris Stock After-Tax Account to reflect the portion of the
After-Tax Contributions made on the Participant's behalf invested in the Harris
Stock Fund;

              (i) Harris Stock Matching Account to reflect the portion of the
Matching Pre-Tax Contributions and Matching After-Tax Contributions made on the
Participant's behalf and invested in the Harris Stock Fund; and

              (j) Rollover Account to reflect the Participant's Rollover
Contributions.

         6.2  INVESTMENT OF ACCOUNTS. Subject to Section 6.4, each Participant
shall have the right to direct the investment of his Accounts and future
contributions to his Accounts among the Investment Funds in accordance with the
following procedures and such other procedures provided in the documents
pertaining to each Investment Fund.

              (a) ELECTION PROCEDURES. Each election shall be made in accordance
with the rules and procedures established by the Retirement Plan Administrative
Committee in its absolute discretion.

              (b) ELECTIONS FOR CURRENT BALANCES. A Participant's election to
transfer his or her Account balances between Investment Funds shall be made with
respect to the Investment Fund from which the amount is to be transferred in
either (i) increments of one percent (or such larger percentage as determined by
the Retirement Plan Administrative Committee) or (ii) a fixed dollar amount.

              (c) ELECTIONS IN 1% INCREMENTS FOR FUTURE CONTRIBUTIONS. A
Participant's election with respect to future contributions shall be made in
increments of one percent (or such larger percentage as determined by the
Retirement Plan Administrative Committee) of the







                                       43


contribution (after the contribution is reduced by any dollar amount directed
into the Harris Stock Fund), provided that the combined Pre-Tax Contributions
and After-Tax Contributions invested in the Harris Stock Fund shall equal no
more than one percent (or such larger percentage as determined by the Retirement
Plan Administrative Committee) of Compensation as provided under Section 6.4(a).
To the extent Pre-Tax Contributions and After-Tax Contributions are invested in
the Harris Stock Fund, the Matching Contributions attributable thereto also
shall be invested in the Harris Stock Fund;

              (d) CHANGING ELECTIONS. A Participant may elect to change his
investment election at such times and in such manner as determined by the
Retirement Plan Administrative Committee. An investment election change shall be
effective on the day the change is made, provided that such day is a Valuation
Date and that the Participant makes the election change on such date before the
deadline established from time to time by the Retirement Plan Administrative
Committee, except as provided in the last sentence of this subsection (d). An
investment election change (i) made on a day that is not a Valuation Date or
(ii) made on a Valuation Date after the deadline established by the Retirement
Plan Administrative Committee shall become effective on the next following
Valuation Date. If more than one election change is made on a Valuation Date
before the applicable deadline, the most recent election change shall be given
effect. Notwithstanding the foregoing, certain Investment Funds may be subject
to additional restrictions on investment election changes according to such
Investment Fund's terms or conditions imposed by the Retirement Plan
Administrative Committee.

              (e) ELECTIONS APPLY TO ALL ACCOUNTS. Each of the Participant's
Accounts shall be invested among the Investment Funds in the same manner, such
that each election by a







                                       44


Participant with respect to the Investment Funds shall apply to all of his
Accounts in the same proportion.

              (f) INVESTMENT ABSENT ELECTION. A Participant's Accounts and
contributions made on behalf of the Participant shall be invested in such
Investment Fund as the Retirement Plan Administrative Committee shall designate
from time to time until the Participant makes a valid investment election
pursuant to this Section 6.2.

         6.3  ALLOCATION OF EARNINGS AND LOSSES. In determining a Participant's
share of the earnings or losses of each of the Investment Funds as of any
Valuation Date, the total earnings or losses of the particular Investment Fund
since the immediately preceding Valuation Date, net of expenses allocable to
such fund, shall be allocated among the Participants' Accounts invested in the
fund on such Valuation Date based on the ratio of each Participant's Accounts to
the aggregate of the Accounts of all Participants, before taking into account
any contributions or loan repayments that are required to be but are not yet
made as of the Valuation Date and before taking into account any transfers
resulting from investment election changes pursuant to Section 6.2(d),
distributions, withdrawals or loans to Participants made as of the Valuation
Date. Contributions and loan repayments to an Account are not credited with
earnings for the Valuation Date on which the contributions or loan repayments
are credited to the Account.

         6.4  SPECIAL RULES CONCERNING HARRIS STOCK FUND. Notwithstanding any
provision of Section 6.2 to the contrary, the rules set forth in this Section
shall apply to investments in the Harris Stock Fund.

              (a) AVAILABILITY. Only Pre-Tax Contributions, After-Tax
Contributions and Matching Contributions made with respect to Compensation
earned on or after October 1, 1993






                                       45


may be invested in the Harris Stock Fund. For any Plan Year, the combined
Pre-Tax Contributions and After-Tax Contributions invested in the Fund on behalf
of a Participant in each Plan Year shall equal no more than one percent (or such
larger percentage as determined by the Retirement Plan Administrative Committee)
of the Participant's Compensation for such Plan Year. The portion of any Pre-Tax
Contribution or After-Tax Contribution that is attributable to a discount from
fair market value on shares of common stock of the Corporation shall be
disregarded for purposes of the immediately preceding sentence. An election to
invest in the Harris Stock Fund shall take effect as soon as administratively
feasible after the election is received.

              (b) RESTRICTIONS ON TRANSFERS. A Participant may not transfer
amounts from other Investment Funds to the Harris Stock Fund. Any contributions
invested in the Harris Stock Fund must remain in the fund for a minimum of two
Plan Years following the end of the Plan Year in which the investment is made
(the "Holding Period"), provided that amounts invested in the Harris Stock Fund
may be distributed to the Participant before the expiration of the Holding
Period if the Participant is otherwise entitled to a distribution under the
Plan. The Retirement Plan Administrative Committee, in its sole discretion, may
impose additional restrictions or requirements regarding transfers from the
Harris Stock Fund.

              (c) DIVIDENDS. A Participant's allocable share of cash or stock
dividends (and other cash earnings) credited to the Harris Stock Fund will be
reinvested in the Harris Stock Fund and shall be subject to the same Holding
Period as applies to the underlying stock on which the dividend (or other
earnings) is paid pursuant to Section 6.4(b).






                                       46


              (d) CONTRIBUTIONS. The normal form of contributions for amounts
invested in the Harris Stock Fund shall be in cash; provided, however, that the
Corporation, in its discretion, may make the contribution in common stock of the
Corporation, which may be contributed at a discount from fair market value. The
Trustee is authorized to purchase common stock of the Corporation on the open
market, and to give effect to the discount, if any, established from time to
time by allocating shares to each Participant's Account in addition to the
number of shares that would have been allocated to the Participant's Account if
the discount had not been established.

              (e) DISTRIBUTIONS. Distributions from the Harris Stock Fund shall
be in the form of cash or shares of Harris Stock at the election of the
Participant. Fractional shares and distributions of a de minimis amount as
determined by the Retirement Plan Administrative Committee shall be paid in
cash.

              (f) VOTING. Participants may submit non-binding proxies to the
Trustee, which will vote the shares in the Harris Stock Fund in the exercise of
its sole discretion.



                                  ARTICLE VII
                                  -----------

                                  DISTRIBUTIONS
                                  -------------

         7.1  IN GENERAL. A Participant shall be entitled to receive a
distribution of the vested interest in his Accounts upon the Participant's
termination of employment. As permitted under law and as may be determined by
the Retirement Plan Administrative Committee in its sole discretion,
distributions may be made to affected Participants upon the sale or disposition
of the stock in a subsidiary or the sale or disposition of assets of a trade or
business. A termination of employment shall not be deemed to occur for purposes
of this Section 7.1 and Section 7.2 until







                                       47


the Participant is no longer employed by a Related Company. A Participant may
elect, in accordance with procedures established by the Retirement Plan
Administrative Committee, to receive the sum of the balances of his Accounts, if
any, that are invested in the Harris Stock Fund either in (a) cash, or (b) in
shares of common stock of the Corporation; provided, however, that distributions
of fractional shares and de minimis amounts (as determined by the Retirement
Plan Administrative Committee) shall be made in cash. If a Participant has
elected to receive a distribution of the balances of his Accounts that are
invested in the Harris Stock Fund in shares of common stock of the Corporation,
then such distribution shall, in the discretion of the Retirement Plan
Administrative Committee, either be made in certificated form or credited to an
account established for the Participant under a plan maintained by a Related
Company.

         7.2  SMALL BENEFIT CASH-OUT. Except as provided in Section 7.5, in any
case in which the vested interest in a Participant's Accounts does not exceed
$5,000 (or such larger amount as may be permitted by law) the vested interest
shall be paid to the Participant in a lump sum as soon as reasonably practicable
after the Participant's termination of employment. In the case of a deceased
Participant, such vested interest shall be paid, to the deceased Participant's
beneficiary in a lump sum as soon as reasonably practicable after the
Participant's death, except that if such Beneficiary is the deceased
Participant's spouse, then the Beneficiary may elect a direct rollover in
accordance with Section 7.5. Effective as of March 22, 1999, for purposes of
this Section 7.2 and Section 12.6, if at the time of commencement of the
distribution of a Participant's vested interest in his Accounts in scheduled
periodic payments the value of such interest exceeded $5,000, then at the time
of any subsequently scheduled periodic payment such account balance will be
deemed to exceed $5,000 (or such larger amount as may be permitted by law)
unless otherwise permitted under the law.







                                       48


         7.3  FORM OF PAYMENT.

              (a) OPTIONS. In any case in which a Participant's vested interest
in his Accounts exceeds the amount provided in Section 7.2, the Participant (or
in the event of death, his Beneficiary) entitled to receive a distribution may
elect at any time to receive payment in:

              (1)    an amount not greater than the vested balance of the
                     Participant's Accounts, provided, however, that only one
                     such payment may be made in any single month;

              (2)    substantially equal periodic installment payments, payable
                     not less frequently than annually and not more frequently
                     than monthly, over a period of time to be elected by the
                     Participant (or Beneficiary);

              (3)    a combination of (1) and (2); or

              (4)    a direct rollover pursuant to Section 7.5.

              (b) CHANGES ALLOWED. A Participant (or, in the event of death, his
Beneficiary) may change his election with respect to the form of payment at any
time before or after distribution of benefits commences, subject to the
provisions of Section 7.8.

              (c) EFFECT OF FAILURE TO SPECIFY AN OPTION. If a Participant (or
Beneficiary) fails to file an election under this Section 7.3, then his benefits
shall be paid in accordance with Section 7.4.

         7.4  TIME OF PAYMENT.

              (a) On termination of employment, a Participant, other than one
described in Section 7.2, may elect that payment of benefits begins as soon as
administratively practicable or








                                       49


at any other time permitted under the Plan. If such a Participant fails to file
an election as to the timing of his benefit payment, then payment of his benefit
shall commence in accordance with the provisions of Section 7.8.

              (b) If a Participant dies before his required beginning date (as
described in Section 7.8(b)) and there is no election in effect with respect to
the payment of the Participant's benefits to his Beneficiary who is not his
spouse, then payment of the Participant's benefits shall be made in a single sum
no later than the December 31 of the calendar year which contains the fifth
anniversary of the Participant's death.

              (c) Installment payments described in Section 7.3(a)(2) or (3)
shall not be made to a Participant who terminated employment with a
Participating Company and who subsequently becomes employed by a Participating
Company, unless such Participant has attained age 59 1/2 on or before the date
of such subsequent employment. Any remaining Account balances shall be
distributed to the Participant in accordance with the terms of this Article VII
upon the earlier to occur of the Participant's (i) subsequent termination of
employment and (ii) attainment of age 59 1/2.

         7.5  DIRECT ROLLOVER.

              (a) A Participant or "distributee" may elect at any time to have
any portion of an "eligible rollover distribution" paid in a direct rollover to
the trustee or custodian of an "eligible retirement plan" specified by the
Participant or distributee, whichever is applicable. Payment of a direct
rollover in the form of a check payable to the trustee or custodian of an
eligible retirement plan, for the benefit of the Participant or distributee, may
be mailed to the Participant or distributee.






                                       50


              (b) For purposes of this Section 7.5, the following terms shall
have the following meanings:

              (1)    "distributee" means a surviving spouse, or a spouse or
                     former spouse who is an alternate payee under a qualified
                     domestic relations order defined in section 414(p) of the
                     Code.

              (2)    "eligible retirement plan" means an individual retirement
                     account described in section 408(a) of the Code, an
                     individual retirement annuity described in section 408(b)
                     of the Code, an annuity plan described in section 403(a) of
                     the Code, or a qualified trust described in section 401(a)
                     of the Code that accepts an eligible rollover distribution.

              (3)    "eligible rollover distribution" means any distribution of
                     all or a portion of the Participant's Accounts, other than
                     the portion of his After-Tax Account and Harris Stock
                     After-Tax Account attributable to After-Tax Contributions,
                     but does not include a distribution (i) in installments
                     over a period of ten years or more or over a period
                     described in Section 7.8(c), (ii) to the extent the
                     distribution is required under section 401(a)(9) of the
                     Code or (iii) to the extent the distribution constitutes a
                     hardship distribution of Pre-Tax Contributions described in
                     section 401(k)(2)(B)(i)(IV) of the Code.

         7.6  BENEFIT AMOUNT AND WITHHOLDING.

              (a) VESTED AMOUNT AND ADJUSTMENTS. For purposes of this Article
VII, a Participant's vested interest in his Accounts shall be determined as of
the Valuation Date







                                       51


coinciding with or immediately following the date of the event giving rise to
the distribution, plus any Profit-Sharing Contribution to which the Participant
may be entitled under Section 3.2 that has not yet been credited to the
Participant's Profit-Sharing Account. Any unpaid amount in the Participant's
Accounts shall continue to be adjusted for earnings and losses as provided in
Section 6.3 until it is distributed.

              (b) WITHHOLDING. The amount of any distribution shall be reduced
to the extent necessary to comply with Federal, state and local income tax
withholding requirements.

         7.7 ORDER OF DISTRIBUTIONS. Any distribution under this Plan shall be
charged against the Participant's Accounts pursuant to administrative procedures
designed to maximize the tax benefits to the Participant by distributing to him
first his After-Tax Contributions to the extent permitted by law.

         7.8 STATUTORY REQUIREMENTS. Notwithstanding any other provisions of the
Plan to the contrary, the following rules shall apply to all payments under the
Plan:

              (a) LATEST COMMENCEMENT DATE. Unless the Participant files a
written election to defer payment of benefits, benefits payments with respect to
any Participant shall commence no later than the 60th day after the close of the
Plan Year in which the latest of the following occurs:

              (1)    the date on which the Participant attains Normal Retirement
                     Age;

              (2)    the 10th anniversary of the date on which the Participant
                     commenced participation in the Plan; and





                                       52


              (3)    the date on which the Participant terminated employment.
                     Failure to file an election under Section 7.4 for payment
                     of benefits to commence shall be deemed to be a written
                     election to defer payment of benefits under this subsection
                     (a).

              (b) REQUIRED BEGINNING DATE. Notwithstanding subsection (a) above,
payment of benefits to a Participant shall commence no later than the later of
(i) April 1 of the calendar year following the calendar year in which the
Participant attains age 70 1/2 and (ii) April 1 of the calendar year following
the calendar year in which the Participant retires.

              (c) MAXIMUM DURATION OF DISTRIBUTIONS. Payment of a Participant's
benefit shall be made over a period not to exceed one of the following periods:

              (1)    the life of the Participant;

              (2)    the life of the Participant and the Participant's
                     Beneficiary;

              (3)    a period certain not extending beyond the life expectancy
                     of the Participant; or

              (4)    a period certain not extending beyond the joint and last
                     survivor expectancy of the Participant and his Beneficiary.

              (d) MINIMUM DISTRIBUTION REQUIREMENTS. With respect to
distributions under the Plan made for calendar years beginning on or after
January 1, 2001, the Plan will apply the minimum distribution requirements of
section 401(a)(9) of the Code in accordance with the regulations under section
401(a)(9) that were proposed on January 17, 2001, notwithstanding any






                                       53


provision of the Plan to the contrary. This Section 7.8(d) shall continue in
effect until the end of the last calendar year beginning before the effective
date of final regulations under section 401(a)(9) of the Code or such other date
specified in guidance published by the Internal Revenue Service.

              (e) DISTRIBUTION AFTER THE PARTICIPANT'S DEATH. In the event a
Participant who is receiving benefits dies, the remaining balance of his
benefits shall be distributed at least as rapidly as under the method of
distribution elected by the Participant unless otherwise permitted under law. If
a Participant dies before distribution of benefits commences, the Participant's
entire interest will be distributed no later than five years after the end of
the year of the Participant's death, except to the extent that an election is
made to receive distributions in accordance with (1) or (2) below:

              (1)    if any portion of the Participant's benefit is payable to a
                     Beneficiary who is not the Participant's spouse, then
                     distributions may be made over the life or life expectancy
                     of the Beneficiary, provided that distributions commence on
                     or before December 31 of the calendar year immediately
                     following the calendar year in which the Participant died,
                     and

              (2)    if the Beneficiary is the Participant's spouse, then
                     distributions may commence on or before the later of (i)
                     December 31 of the calendar year immediately following the
                     calendar year in which the Participant died and (ii)
                     December 31 of the calendar year in which the Participant
                     would have attained age 70 1/2. If the Participant's spouse
                     dies before payments begin,



                                       54


                     then subsequent distribution shall be made as if the spouse
                     had been the Participant.

         Any amount paid to a child of the Participant shall be treated as if it
had been paid to the surviving spouse if the amount becomes payable to the
spouse when the child reaches the age of majority.

         7.9  DESIGNATING BENEFICIARIES.

              (a) WRITTEN DESIGNATION. Each Participant may designate, in the
manner prescribed by the Retirement Plan Administrative Committee, a Beneficiary
or Beneficiaries to receive any benefits payable as a result of the death of the
Participant. This designation may be changed by the Participant at any time by
giving notice to the Retirement Plan Administrative Committee in accordance with
rules and procedures established by the Retirement Plan Administrative
Committee. Any designation of a Beneficiary other than the Participant's spouse
must be consented to by the spouse in writing (or other method permitted by the
Internal Revenue Service) and witnessed by a notary public (or a representative
of the Plan prior to October 1, 1993). Any consent required under this Section
7.9 shall be valid only with respect to the spouse who signed it. Spousal
consent shall not be required if the Participant establishes to the satisfaction
of a Plan representative that such consent may not be obtained because (a) there
is no spouse; (b) the spouse cannot be located, or (c) there exists such other
circumstances as the Secretary of the Treasury may prescribe as excusing the
requirement for such consent. A Participant may revoke any prior election
without obtaining the consent of the spouse to such revocation. In the absence
of a new election that meets the requirements of this Section 7.9, the
Participant's surviving spouse shall be the Beneficiary.






                                       55


              (b) DEATH PRIOR TO DESIGNATING BENEFICIARY OR DEATH AFTER
DESIGNATED BENEFICIARY'S DEATH. In the event a Participant dies with no
beneficiary designation on file or after the death of a designated Beneficiary,
the Participant's Beneficiary with respect to the portion of the benefits for
which no Beneficiary has been designated shall be the deceased Participant's
surviving spouse, if any, and if there is no surviving spouse, the descendants
of the deceased Participant, if any, per stirpes, or if there are no
descendants, the estate of the deceased Participant.

              (c) SUCCESSOR BENEFICIARIES. A Beneficiary who has been designated
in accordance with Section 7.9(a) may name a successor beneficiary or
beneficiaries in accordance with procedures established by the Retirement Plan
Administrative Committee. If the designated Beneficiary dies after the
Participant and before the entire amount of the Participant's benefit under the
Plan in which the designated Beneficiary has an interest has been distributed,
then any remaining amount shall be distributed, as soon as practicable after the
death of such designated Beneficiary, in the form of a single sum payment to the
successor beneficiary or if there is no such successor beneficiary, to the
Beneficiary's estate.

         7.10  PAYMENT OF GROUP INSURANCE PREMIUMS. The Retirement Plan
Administrative Committee may, in its sole discretion, permit a retired
Participant who (i) is eligible to be included in any contributory group
insurance program maintained or sponsored by an Employment Unit, (ii) is
receiving benefits under the Plan in monthly installments and (iii) elects to be
covered under such contributory group insurance program to direct that a
specified portion of the installment payments be withheld and paid by the
Trustee on the Participant's behalf to the Employment Unit as his contribution
under such group insurance program. Such direction by a retired Participant, if
permitted by the Retirement Plan Administrative Committee, shall be in








                                       56


writing on a form prescribed by the Retirement Plan Administrative Committee.
Any such direction may be revoked by the retired Participant not less than 15
days prior to the effective date of such revocation. Any withholding and payment
of insurance costs on behalf of a retired Participant shall be made in
accordance with Treasury Regulation section 1.401(a)-13.

         7.11 INABILITY TO LOCATE PARTICIPANT. If, at any time after a
Participant's benefit becomes payable, a check or other instrument in payment of
such benefit is returned unclaimed or the Retirement Plan Administrative
Committee is otherwise unable to locate the individual to whom a payment is due,
then all payments to such individual shall be discontinued. If, after exercising
reasonable diligence, the Retirement Plan Administrative Committee is unable to
locate such individual, the portion of the Participant's benefit payable to such
individual shall be forfeited and applied to reduce the administrative expenses
of the Plan; provided, that if such individual subsequently makes a claim for
benefits, then the forfeited amount shall be reinstated to the extent required
by law by the Participating Company that last employed the Participant.

                                  ARTICLE VIII
                                  ------------

                                      LOANS
                                      -----

         8.1  LOANS TO PARTICIPANTS.

              (a) MAKING OF LOANS. Subject to the restrictions set forth in this
section, the Retirement Plan Administrative Committee shall establish a loan
program whereby any Participant who is currently employed by a Participating
Company may request, by such method prescribed by the Retirement Plan
Administrative Committee for such purpose, to borrow funds from such
Participant's Pre-Tax Account, After-Tax Account and Rollover Account. The
principal balance of such loan shall not be less than $500, shall be in
increments of $100 and







                                       57


shall not exceed the lesser of:

              (1)    50% of the vested portion of the Participant's Account as
                     of the Valuation Date coinciding with or immediately
                     preceding the date on which the loan is made; and

              (2)    $50,000, reduced by the highest outstanding loan balance of
                     the Participant of any previous loans from the Plan and any
                     other plans of a Related Company during the one year period
                     ending immediately before the date of which the current
                     loan is made.

              (b)    RESTRICTIONS.

              (1)    The Participant shall execute a loan application on the
                     form supplied by the Retirement Plan Administrative
                     Committee and submit such application to the Retirement
                     Plan Administrative Committee, or shall comply with one or
                     more alternative methods prescribed by the Retirement Plan
                     Administrative Committee for such purpose.

              (2)    A Participant shall not have more than two loans
                     outstanding at any time.

              (3)    The period for repayment of the loan shall be at least
                     twelve months, but shall not exceed four and one-half
                     years, or such other periods as may be established from
                     time to time by the Retirement Plan Administrative
                     Committee; provided, however, that the period for repayment
                     shall always be in six-month intervals.







                                       58


              (4)    Except as provided in Section 8.1(d), no loan shall be made
                     unless the Participant consents to have such loan repaid in
                     substantially equal installments deducted from (i) the
                     regular payments of the Participant's compensation during
                     the term of the loan while the Participant is employed by a
                     Related Company and (ii) any severance payments received
                     from a Related Company.

              (5)    Each loan shall be secured by the vested portion of the
                     Participant's Accounts under the Plan in an amount equal to
                     the initial principal amount of such loan.

              (6)    The interest rate for a loan made under this Plan shall be
                     fixed for the term of each loan, and shall be set as
                     determined by the Retirement Plan Administrative Committee
                     at a rate which it deems reasonable at the time for a fully
                     secured loan and which is consistent with applicable
                     Department of Labor regulations.

              (7)    If a Participant who has terminated employment with a
                     Related Company has an outstanding loan balance and
                     requests a distribution of his Accounts, the amount
                     available for such distribution shall be reduced by the
                     amount of any outstanding loan balances.

              (8)    Loan application and processing fees and any other
                     reasonable expenses which the Plan incurs to extend, make
                     and service a loan shall be specified from time to time by
                     the Retirement Plan Administrative Committee and shall be
                     charged against the Accounts of a Participant requesting a
                     loan in







                                       59


                     the manner described in Section 8.1(c). In addition, each
                     Participant requesting a loan shall, as a condition of
                     receiving such loan, authorize the relevant Participating
                     Company to deduct from such Participant's wages, any state
                     documentary stamp and other taxes required to be paid on
                     such loan.

              (c)  ACCOUNTS. A loan to an individual under this Plan shall be
made from his Pre-Tax Account, After-Tax Account and Rollover Account. The
amount of the loan and any applicable fees shall be withdrawn from the
Investment Funds other than the Harris Stock Fund in which the Participant has
chosen to invest his Accounts in proportion to their value in his Accounts as of
the Valuation Date immediately preceding the loan.

              (d)  APPLICABILITY. Notwithstanding the foregoing, loans shall be
available under this Section 8.1 to any Participant or Beneficiary who is a
"party in interest" as defined in section 3(14) of ERISA, regardless of such
Participant's or Beneficiary's employment status, provided that each such
Participant or Beneficiary who requests a loan shall, as a condition of
receiving a loan, agree to the repayment of the loan at the times and in the
manner determined by the Retirement Plan Administrative Committee, but not less
frequently than quarter-annually.

         8.2  LOAN ADMINISTRATION. The Retirement Plan Administrative Committee
shall be responsible for administering the loan program, but may delegate the
operation of the program to the Plan's record-keeper. The procedures for
applying for a loan and the basis on which loans will be approved or denied
shall be described in the summary plan description for the Plan or in other
documents prepared by or at the direction of the Retirement Plan Administrative







                                       60


Committee for this purpose and such additional documents are hereby incorporated
by reference to the extent required by the Department of Labor.

         8.3  REPAYMENT AND DEFAULT.

              (a) PREPAYMENT. An individual may repay, at any time, all of the
outstanding principal balance of his loan, plus interest due, without penalty.

              (b) CREDITING PAYMENTS. Principal and interest payments shall be
credited to the Participant's Pre-Tax Account, After-Tax Account and Rollover
Account, as applicable, and shall be invested in the same manner as Pre-Tax
Contributions, After-Tax Contributions and Rollover Contributions.

              (c) RETIREMENT. An individual who terminates employment with a
Related Company on or after Early Retirement Age, and who at the time of
termination has an outstanding loan, may elect to either (i) continue his loan
repayments on a monthly basis until such outstanding loan is paid in full, or
(ii) repay the outstanding principal balance of his loan, plus interest due,
within 90 days of his termination of employment.

              (d) MILITARY LEAVE. Loan repayments for individuals on Military
Leave shall be temporarily suspended during the period of such leave, and the
period of such suspension shall not count toward the maximum period of repayment
set forth in Section 8.1(b)(3).

              (e) DEFAULT. The events of default shall be set forth in the
agreement evidencing the loan. Such events shall include, but not be limited to,
the following:

              (1)    an individual terminates employment with a Related Company
                     for any reason other than retirement on or after Early
                     Retirement Age and does not







                                       61


                     repay the loan(s) in full within 90 days after the
                     individual's last day of such employment or, to the extent
                     loan repayments are deducted from a Participant's severance
                     pay in accordance with Section 8.1(b)(4), such Participant
                     does not repay the loan(s) in full within 90 days after the
                     final severance payment is made;

              (2)    an individual terminates employment with a Related Company
                     on or after Early Retirement Age and fails to make a
                     payment within 90 days after the due date of the payment.

              (3)    an individual who has had loan repayments suspended during
                     a period of Military Leave fails to return to employment
                     within the time prescribed by USERRA and does not repay the
                     loan(s) in full within 90 days after the expiration of the
                     period prescribed by USERRA for reemployment.

              (4)    the Trustee concludes that the individual no longer is a
                     good credit risk;

              (5)    to the extent permissible under federal law, the
                     individual's obligation to repay the loan has been
                     discharged through bankruptcy or any other legal process of
                     action which did not actually result in payment in full;
                     and

              (6)    the individual does not make payments when due, subject to
                     any applicable grace period.

              (f)  EFFECT OF DEFAULT. Upon the existence or occurrence of an
event of default, the loan may become due and payable in full and, if such loan
is not actually repaid in full, shall be canceled on the books and records of
the Plan and the amount otherwise distributable to such







                                       62


individual shall be reduced, as of the date his Accounts otherwise become
distributable, by the principal amount of the loan then due plus any accrued but
unpaid interest. Such principal and interest shall be determined without regard
to whether the loan had been discharged through bankruptcy or any other legal
process or action which did not actually result in payment in full; however,
interest shall continue to accrue on such loan only to the extent permitted
under applicable law. Cancellation of the amount distributable to an individual
under this subsection (d) shall not occur until a distributable event occurs
under the Plan. In the event a default occurs before a distributable event
occurs, the Retirement Plan Administrative Committee shall take such other steps
to cure the default as it deems appropriate under the circumstances to preserve
Plan assets.

         8.4 SPECIAL POWERS The Retirement Plan Administrative Committee shall
have the power to take such action as it deems necessary or appropriate to stop
the benefit payments to or on behalf of an individual who fails to repay a loan
(without regard to whether the obligation to repay the loan had been discharged
through bankruptcy or other legal process or action) until his Pre-Tax Account,
After-Tax Account and Rollover Account have been reduced by the principal due
(without regard to such discharge) on such loan or to distribute the note which
evidences such loan in full satisfaction of any interest in the Pre-Tax Account,
After-Tax Account, and Rollover Account which is attributable to the unpaid
balance of such loan.









                                       63


                                   ARTICLE IX
                                   ----------

                             IN-SERVICE WITHDRAWALS
                             ----------------------

         9.1  WITHDRAWALS AFTER AGE 59-1/2. A Participant who has attained age
59-1/2 may withdraw at the time and in the manner prescribed by the Committee
all or any portion of the vested interests in his Accounts. A distribution made
pursuant to this Section 9.1 may be made in any form of payment provided under
Section 7.3.

         9.2  WITHDRAWALS FROM SAVINGS ACCOUNT AND AFTER-TAX ACCOUNT.

              (a) AVAILABILITY. Subject to Sections 9.4 and 9.5, a Participant
may elect to withdraw from the Plan at any time in a single sum an amount not
greater than the balances of his Savings Account and After-Tax Account in the
time and manner prescribed by the Retirement Plan Administrative Committee. The
amount withdrawn shall be debited first to his Savings Account and then to his
After-Tax Account. Effective June 10, 2001, the amount withdrawn shall be
debited first to his After-Tax Account and then to his Savings Account.

              (b) LIMITATIONS. A Participant may make a withdrawal under this
Section 9.2 no more than once in any calendar quarter. A Participant's election
to make After-Tax Contributions shall be suspended, and no After-Tax
Contributions or Matching After-Tax Contributions shall be credited to the
Participant's Account, for a period of three months after the date of a
Participant's withdrawal from his After-Tax Account. The Participant's election
shall automatically be reinstated at the expiration of such three-month period,
unless the Participant has filed a change of election pursuant to Section 3.7.

         9.3  WITHDRAWALS FROM ROLLOVER, PRE-TAX AND PROFIT SHARING ACCOUNTS.







                                       64


              (a) AVAILABILITY. Subject to Sections 9.4 and 9.5, a Participant
who has taken all available loans under Article VIII hereof and who has
exhausted his right to withdrawals under Sections 9.1 and 9.2 may elect, if he
has an immediate and heavy financial need within the meaning of Treasury
Regulation section 1.401(k)-1(d)(2)(iv), to withdraw in a single sum an amount
not greater than (i) 100 percent of his Pre-Tax Contributions, (ii) the entire
balance of his Rollover Account, and (iii) the vested balance of his Profit
Sharing Account, in the time and manner prescribed by the Retirement Plan
Administrative Committee. A Participant shall be deemed to have an immediate and
heavy financial need if the withdrawal is requested for any of the following
reasons:

              (1)    to pay expenses for medical care previously incurred by the
                     Participant, his spouse or any of his dependents or
                     necessary for these persons to obtain medical care;

              (2)    to purchase (excluding mortgage payments) a principal
                     residence for the Participant;

              (3)    to pay for tuition and related education fees for the next
                     12 months of post-secondary education for the Participant,
                     his spouse, children or dependents;

              (4)    to prevent the eviction of the Participant from his
                     principal residence or a foreclosure on the mortgage of the
                     Participant's principal residence; or






                                       65


              (5)    the occurrence of any other event determined by the
                     Commissioner of Internal Revenue pursuant to Treasury
                     Regulation section 1.401(k)-1(d)(2)(iv).

         A withdrawal to satisfy an immediate and heavy financial need of the
Participant may be made only if:

                     (i) the withdrawal is not in excess of the amount required
              to meet the financial need of the Participant, including taxes and
              additions to tax applicable to such withdrawal, and

                     (ii) the Participant has obtained all other distributions,
              withdrawals, and all nontaxable loans currently available under
              the Plan and any other plans maintained by a Related Company.

The Participant shall be required (i) to certify to the Retirement Plan
Administrative Committee in the manner prescribed by the Retirement Plan
Administrative Committee both the reason for the financial need and that such
need cannot be satisfied from sources other than a withdrawal from the
Participant's Accounts, and (ii) to submit any additional supporting
documentation as may be requested by the Retirement Plan Administrative
Committee.

              (b) ORDER OF WITHDRAWALS. Withdrawals under this Section 9.3 shall
be withdrawn from a Participant's Accounts in the following order: (i) from the
Participant's Rollover Account, if any; (ii) to the extent that the balance of
the Participant's Rollover Account is not sufficient to satisfy the amount of
the requested withdrawal, from the Participant's Pre-Tax Contributions; and
(iii) to the extent that the Participant's Rollover Account and Pre-Tax






                                       66


Contributions are not sufficient to satisfy the amount of the requested
withdrawal, from the vested balance of the Participant's Profit Sharing Account.

              (c) LIMITATIONS. A Participant may take a withdrawal under this
Section 9.3 no more than once in any six-month period.

         9.4 CONDITIONS APPLICABLE TO ALL WITHDRAWALS. A Participant shall elect
to make any withdrawal permitted under this Article IX in such time and in such
manner as designated by the Retirement Plan Administrative Committee. The amount
available for withdrawal under this Article IX shall be reduced by the amount of
any outstanding loan balance under Article VIII hereof, and no withdrawal under
this Article IX shall be permitted to the extent that such withdrawal would
cause the aggregate amount of such outstanding loan balance to exceed the limits
described in Section 8.2. No withdrawal shall be permitted under this Article IX
of the portion of a Participant's Account, if any, which is invested in the
Harris Stock Fund and which has not met the Holding Period described in Section
6.4(b). The amount available for withdrawal under this Article IX is also
subject to reduction in the sole discretion of the Retirement Plan
Administrative Committee to take into account the investment experience of the
Trust Fund between the date of the election and the date of the withdrawal.

         9.5 REDUCTION OF INVESTMENT FUND BALANCES. The Investment Funds in
which a Participant's Accounts are invested, other than amounts in the Harris
Stock Fund which have not satisfied the Holding Period set forth in Section
6.4(b), shall be reduced proportionately to reflect the amount of the
Participant's withdrawals under this Article IX.










                                       67


                                   ARTICLE X
                                   ---------

                              TOP-HEAVY PROVISIONS
                              --------------------

         10.1 IN GENERAL. Notwithstanding any other provisions of the Plan to
the contrary, for any Plan Year in which this Plan is "top-heavy," as defined
herein, the provisions of this Article X shall apply. If the Plan is top-heavy
and then ceases to be top-heavy, except as otherwise provided in Section 10.3,
the provisions of this Article X shall cease to apply.

         10.2 MINIMUM ALLOCATION.

              (a) AMOUNT. For any Plan Year for which the Plan is top-heavy, a
minimum allocation shall be made for each "non-key employee" who is employed by
a Participating Company on the last day of the Plan Year in an amount equal to
the lesser of (1) three percent of Compensation or (2) the largest percentage of
Compensation allocated to any "key employee" during the Plan Year. The minimum
allocation shall be determined without regard to any Social Security
contribution, and without regard to any Pre-Tax Contributions made on behalf of
non-key employees. The minimum allocation shall not apply to any non-key
employee who receives a minimum contribution or minimum benefit under any other
plan of a Related Company.

              (b) ALLOCATION. To satisfy subsection (a), the Profit-Sharing
Contributions for such Plan Year first shall be allocated to all Participants
employed on the last day of the Plan Year in an amount that meets the minimum
allocation amount, and any remaining Profit-Sharing Contribution then shall be
allocated in accordance with Section 3.2.

         10.3 MINIMUM VESTING. For any Plan Year for which the Plan is
top-heavy, the vested interest of a Participant who is employed by a
Participating Company during any part of the Plan Year shall be determined under
the following schedule:







                                       68


                  Period of Service                  Vested Percentage
                  -----------------                  -----------------

                  Less than 2 years                           0%

                  2 years but less than 3 years              20%

                  3 years but less than 4 years              40%

                  4 years but less than 5 years              60%

                  5 years but less than 6 years              80%

                  6 years or more                           100%

         If the Plan becomes top-heavy and later ceases to be top-heavy, a
Participant who has three Years of Service as determined under Section 5.3 may
elect to have his vested interest continue to be determined under this Section
10.3, notwithstanding that the Plan is no longer top-heavy.

         10.4 DEFINITIONS. For purposes of this Article X, the following terms
shall have the following meanings:

              (a)    "Determination date" means the last day of the preceding
                     Plan Year.

              (b)    "Determination period" means the Plan Year containing the
                     determination date and the four preceding Plan Years.

              (c) "Key employee" means an Employee or former employee (and their
Beneficiaries) who, at any time during the determination period, is







                                       69


              (1)    an officer of the Participating Company and has annual
                     compensation greater than 50 percent of the dollar
                     limitation in effect under section 415(b)(1)(A) of the Code
                     for any such Plan Year,

              (2)    one of the ten Employees having annual compensation in
                     excess of the limitation in effect under section
                     415(c)(1)(A) of the Code and owning (or considered as
                     owning with the meaning of section 318 of the Code) the
                     largest interests in the Participating Company,

              (3)    a five-percent owner (within the meaning of section
                     416(i)(1)(B) of the Code) of the Participating Company, or

              (4)    a one-percent owner of the Participating Company having
                     annual compensation from the Participating Company of more
                     than $150,000.

         The determination of "key employee" shall be made under section
416(i)(1) of the Code, the terms of which are incorporated herein by reference.

              (d) "Non-key employee" means any Employee who is not a key
employee.

              (e) "Permissive aggregation group" means the "required aggregation
group" and any other plans of the Participating Company which, when considered
as a group with the required aggregation group, would continue to satisfy the
requirements of sections 401(a)(4) and 410 of the Code.

              (f) "Required aggregation group" means (1) each qualified plan of
the Participating Company in which at least one key employee participates or
participated at any








                                       70


time during the determination period (regardless of whether the plan has
terminated), and (2) any other qualified plan of the Participating Company which
enables a plan described in (1) to meet the requirements of sections 401(a) and
410 of the Code.

              (g)    "Top-heavy" means:

              (1)    the top-heavy ratio for the Plan exceeds 60 percent and the
                     Plan is not part of any required aggregation group or
                     permissive aggregation group;

              (2)    the Plan is part of a required aggregation group but not a
                     permissive aggregation group and the top-heavy ratio for
                     the required aggregation group exceeds 60 percent;

              (3)    the Plan is part of a required aggregation group and a
                     permissive aggregation group and the top-heavy ratio for
                     the permissive aggregation group exceeds 60 percent.

              (h)    "Top-heavy ratio" means:

              (1)    if the Participating Company or Related Company has not
                     maintained any defined benefit plan which during the
                     five-year period ending on the determination date had
                     accrued benefits, the top-heavy ratio is a fraction, the
                     numerator of which is the sum of the account balances of
                     all key employees as of the determination date (including
                     any part of any account balance distributed in the
                     five-year period ending on the determination date), and the
                     denominator of which is the sum of all account balances








                                       71


                     (including any part of any account balance distributed in
                     the five-year period ending on the determination date).

              (2)    If a Related Company maintains or has maintained a defined
                     benefit plan which during the five-year period ending on
                     the determination date had accrued benefits, the top-heavy
                     ratio is a fraction, the numerator of which is the sum of
                     account balances under the defined contributions plans for
                     all key employees (including any part of any account
                     balance distributed in the five-year period ending on the
                     determination date), and the present value of accrued
                     benefits under the defined benefit plans for all key
                     employees as of the determination date, and the denominator
                     of which is the sum of the account balances under the
                     defined contribution plans for all participants (including
                     any part of any account balance distributed in the
                     five-year period ending on the determination date), and the
                     present value of accrued benefits under the defined benefit
                     plans for all participants as of the determination date.

              (3)    For purposes of (1) and (2) above, the value of account
                     balances and the present value of accrued benefits shall be
                     determined as of the most recent "valuation date" that
                     falls within or ends with the 12-month period ending on the
                     determination date, except as provided in section 416 of
                     the Code for the first and second plan years of a defined
                     benefit plan. In the case of a defined benefit plan, the
                     "present value of accrued benefits" shall be determined
                     under the terms of the applicable defined benefit plan. The
                     account balances and accrued benefits of a Participant who
                     is not a key







                                       72


                     employee but who was a key employee in a prior year, or who
                     has not been credited with at least an Hour of Service with
                     any Participating Company maintaining the plan at any time
                     during the five-year period ending on the determination
                     date shall be disregarded. When aggregating plans, the
                     value of account balances and accrued benefits shall be
                     calculated with reference to the determination dates that
                     fall within the same calendar year.

              (4)    The calculation of the top-heavy ratio shall be determined
                     in accordance with section 416 of the Code, the provisions
                     of which are incorporated herein by reference.

              (i)    "Valuation date" means the last day of the Plan Year.

                                   ARTICLE XI
                                   ----------

                                 ADMINISTRATION
                                 --------------

         11.1 NAMED FIDUCIARIES. The Retirement Plan Administrative Committee
shall be the "named fiduciary" within the meaning of such term as used in ERISA;
provided that to the extent a Participant, former Participant or Beneficiary
directs that his Accounts be invested in the Harris Stock Fund, such Participant
or Beneficiary and not the Retirement Plan Administrative Committee shall be the
"named fiduciary" with respect to such investment decisions.

         11.2 RETIREMENT PLAN ADMINISTRATIVE COMMITTEE. The Chief Executive
Officer of the Corporation shall have the power to appoint and to remove members
to the Retirement Plan Administrative Committee. A member of the Retirement Plan
Administrative Committee may








                                       73


resign at any time by giving written notice to the Investment Committee or the
Chief Executive Officer of the Corporation at least 15 days prior to the
effective date of the resignation.

         11.3 POWERS AND DUTIES OF COMMITTEE. The Retirement Plan Administrative
Committee shall have the powers and duties conferred on it by the terms of the
Plan. The Retirement Plan Administrative Committee may establish such rules and
regulations as it deems necessary to enable it to administer the Plan. The
Retirement Plan Administrative Committee shall have the discretionary authority
to determine eligibility for benefits and construe the terms of the Plan.
Benefits under the Plan will be paid only to a Participant or Beneficiary if the
Retirement Plan Administrative Committee decides in its discretion that the
Participant or Beneficiary is entitled to benefits.

         11.4 ACTIONS OF COMMITTEE. No formal meeting and no minutes shall be
required with respect to actions taken by the Retirement Plan Administrative
Committee.

         11.5 FINALITY OF DECISIONS. All decisions and directions made by the
Retirement Plan Administrative Committee, in the discretionary exercise of its
powers and duties, shall be final and binding on all parties concerned.

         11.6 IMMUNITIES. Except as otherwise provided by law, no member of the
Investment Committee or Retirement Plan Administrative Committee shall be liable
to a Participating Company or to any Participant or Beneficiary by reason of
such committee's exercise in good faith of any power or discretion vested in
such committee under the Plan.

         11.7 ADVISORS AND AGENTS. The Corporation, the Investment Committee,
or, with the consent of the Corporation or Investment Committee, the Retirement
Plan Administrative







                                       74


Committee, may employ one or more persons to render advice with respect to any
responsibility it has under the Plan. The Corporation or the Investment
Committee may appoint unrelated parties to carry out trustee and investment
management responsibilities with respect to the Plan. The Corporation or the
Retirement Plan Administrative Committee may appoint an unrelated party to carry
out the record-keeping responsibilities with respect to the Plan. The
Corporation shall indemnify any person, including any employee of the
Corporation, who is acting on behalf of the Corporation, Investment Committee or
Retirement Plan Administrative Committee in this capacity with respect to
liability that may arise by reason of such person's action or failure to act
concerning the Plan, excepting any willful or gross misconduct or criminal acts
to the extent required in the respective contracts governing such arrangements.

         11.8 COMMITTEE MEMBER WHO IS PARTICIPANT. A member of the Retirement
Plan Administrative Committee who also is a Participant shall have no right to
vote with respect to any action that pertains solely to him as a Participant. In
the event a majority of the remaining members are unable to agree as to the
action to be taken with respect to the Participant, the chief executive officer
of the Corporation shall appoint an impartial person to arbitrate the matter
between the remaining members and to reach a decision.

         11.9 INFORMATION PROVIDED BY PARTICIPATING COMPANIES. Each
Participating Company and Employment Unit shall provide the Corporation, the
Retirement Plan Administrative Committee and the Trustee with complete and
timely information regarding employment data for each Employee and Participant
needed by the Corporation, Retirement Plan Administrative Committee or Trustee
to administer the Plan, including, but not limited to, information concerning
Compensation, date of employment, date of termination of employment, reason for








                                       75


termination and any other information required by the Corporation, Retirement
Plan Administrative Committee, or Trustee.

         11.10 EXPENSES. All costs and expenses incurred in administering the
Plan and the Trust, including the expenses of the Investment Committee and the
Retirement Plan Administrative Committee, investment advisory and record-keeping
fees, the fees of counsel and any agents for the Corporation, the fees and
expenses of the Trustee, the fees of counsel for the Trustee and other
administrative expenses shall be paid by the Trustee from the Trust Fund to the
extent that such expenses are not paid by the Participating Companies. The
Retirement Plan Administrative Committee, in its sole discretion, having regard
for the nature of the particular expense, shall determine the portion of such
expense, if any, which is to be borne by any Participating Company. A
Participating Company may seek reimbursement of any expense paid by such company
that the Retirement Plan Administrative Committee determines is properly payable
by the Trust Fund.

         11.11 TRUST. A trust shall be created by the execution of the Trust
Agreement between the Corporation and the Trustee. All contributions under the
Plan shall be paid to the Trustee. The Trustee shall hold all monies and other
property received by it and invest and reinvest the same, together with the
income therefrom, on behalf of the Participants collectively in accordance with
the provisions of the Trust Agreement. The Trustee shall make distributions from
the Trust Fund at such time or times to such person or persons and in such
amounts as the Retirement Plan Administrative Committee directs in accordance
with the Plan.

         11.12 TRUST FUND AVAILABLE TO PAY ALL PLAN BENEFITS. The Plan is
intended to be a single plan under Treasury Regulation section 1.414(l)-1(b)(1).
The maintenance of Accounts as








                                       76


required by the terms of the Plan shall be for record-keeping purposes only. All
of the Trust Fund shall be available to pay benefits to all Participants and
Beneficiaries.

                                  ARTICLE XII
                                  -----------

                 AMENDMENT AND TERMINATION AND CHANGE OF CONTROL
                 -----------------------------------------------

         12.1 AMENDMENT. The Corporation reserves the right to amend the Plan by
action of its Board of Directors or the Investment Committee thereof at any time
and from time to time, subject to the following limitations:

              (a) no amendment shall be made which vests in any Participating
Company any interest in any assets of the Plan other than as specifically
provided in Section 12.3;

              (b) no amendment shall be made which would have the effect of
decreasing a Participant's "accrued benefit" as proscribed in section 411(d)(6)
of the Code; and

              (c) no amendment shall have the effect of reducing a Participant's
vested interest in his Accounts. If the Plan is amended to change the vesting
schedule, each Participant with at least three Years of Service shall have the
right to elect to have his vested interest computed without regard to the
amendment. Each Participant shall be permitted to make this election during the
period ending 60 days after the latest of the date (1) the amendment is adopted;
(2) the amendment is effective, and (3) the Participant is issued a written
notice of the amendment by the Corporation or its delegate.








                                       77


         12.2 AMENDMENT OF APPENDIX A. Notwithstanding Section 12.1, the
Retirement Plan Administrative Committee shall have the authority to designate
Participating Companies and to revise Appendix A from time to time.

         12.3 TERMINATION OF PLAN. This Plan is intended to be permanent, and it
is the expectation of the Corporation that it will continue indefinitely.
However, the Corporation reserves the right to terminate the Plan by resolution
of its Board of Directors or the appropriate committee thereof. In the case of a
complete termination of the Plan, previously unallocated forfeitures shall be
allocated as otherwise provided in the Plan. To the extent previously
unallocated forfeitures cannot be allocated because all Participants have
reached the limitations of section 415 of the Code, the unallocated amount shall
revert back to the appropriate Participating Company, as provided in Section
3.10.

         12.4 DISCONTINUANCE OF CONTRIBUTIONS. The Corporation reserves the
right to discontinue contributions to the Plan by amendment or by resolution of
the Board of Directors or the appropriate committee thereof.

         12.5 VESTING ON TERMINATION OR DISCONTINUANCE OF CONTRIBUTIONS. As of
the date of the partial or complete termination of the Plan or upon the complete
discontinuance of contributions to the Plan, each affected Participant shall
become fully vested in his Accounts and no further allocations of contributions
or forfeitures shall be made after such date on behalf of an affected
Participant.

         12.6 DISTRIBUTION ON TERMINATION. Upon the complete termination of the
Plan, the Trustee shall distribute to each affected Participant the full amount
standing to the credit of his Accounts; provided that if such amount exceeds (or
at the time of any prior distribution









                                       78


exceeded) $5,000 (or such larger amount as may be permitted by law) and the
Participant is not yet age 65, such lump sum shall not be paid without his
consent. If the Participant does not consent, an annuity contract shall be
purchased for and distributed to the Participant.

         12.7 CHANGE OF CONTROL.

              (a) DEFINITION. Change in Control means the occurrence of any one
of the following events:

                     (i) any "person" (as such term is defined in section
              3(a)(9) of the Securities Exchange Act of 1934 (the "Exchange
              Act") and as used in sections 13(d)(3) and 14(d)(2) of the
              Exchange Act) is or becomes a "beneficial owner" (as defined in
              Rule 13d-3 under the Exchange Act), directly or indirectly, of
              securities of the Corporation representing 20 percent or more of
              the combined voting power of the Corporation's then outstanding
              securities eligible to vote for the election of the Board of
              Directors (the "Board") of the Corporation (the "Corporation
              Voting Securities"); PROVIDED HOWEVER, -------- ------- that the
              event described in this paragraph (i) shall not be deemed to be a
              Change in Control by virtue of any of the following acquisitions:
              (A) by the Corporation or any Subsidiary, (B) by any employee
              benefit plan sponsored or maintained by the Corporation or any
              Subsidiary, (C) by any underwriter temporarily holding securities
              pursuant to an offering of such securities, or (D) pursuant to a
              "Non-Control Transaction" (as defined in paragraph (iii));

                     (ii) individuals who, on July 1, 1996, constitute the Board
              (the "Incumbent Directors") cease for any reason to constitute at
              least a majority of the






                                       79


              Board, provided that any person becoming a director subsequent to
              July 1, 1996, whose election or nomination for election was
              approved by a vote of at least two-thirds of the Incumbent
              Directors who remain on the Board (either by a specific vote or by
              approval of the proxy statement of the Corporation in which such
              person is named as a nominee for director, without objection to
              such nomination) shall also be deemed to be an Incumbent Director;
              PROVIDED, HOWEVER, that no individual initially elected or
              nominated as a director of the Corporation as a result of an
              actual or threatened election contest with respect to directors or
              any other actual or threatened solicitation of proxies or consents
              by or on behalf of any person other than the Board shall be deemed
              to be an Incumbent Director;

                     (iii) the consummation of a merger, consolidation, share
              exchange or similar form of corporate reorganization of the
              Corporation or any such type of transaction involving the
              Corporation or any of its Subsidiaries that requires the approval
              of the Corporation's stockholders (whether for such transaction or
              the issuance of securities in the transaction or otherwise) (a
              "Business Combination"), unless immediately following such
              Business Combination: (A) more than 80 percent of the total voting
              power of the corporation resulting from such Business Combination
              (including, without limitation, any corporation which directly or
              indirectly has beneficial ownership of 100 percent of the
              Corporation Voting Securities) eligible to elect directors of such
              corporation is represented by shares that were Corporation Voting
              Securities immediately prior to such Business Combination (either
              by remaining outstanding or being converted), and such voting
              power is in substantially the same proportion as the voting power
              of such







                                       80


              Corporation Voting Securities immediately prior to the Business
              Combination, (B) no person (other than any publicly traded holding
              company resulting from such Business Combination, any employee
              benefit plan sponsored or maintained by the Corporation (or the
              corporation resulting from such Business Combination)), becomes
              the beneficial owner, directly or indirectly, of 20 percent or
              more of the total voting power of the outstanding voting
              securities eligible to elect directors of the corporation
              resulting from such Business Combination, and (C) at least a
              majority of the members of the board of directors of the
              corporation resulting from such Business Combination were
              Incumbent Directors at the time of the Board's approval of the
              execution of the initial agreement providing for such Business
              Combination (any Business Combination which satisfies the
              conditions specified in (A), (B) and (C) shall be deemed to be a
              "Non-Control Transaction"); or

                     (iv) the stockholders of the Corporation approve a plan of
              complete liquidation or dissolution of the Corporation or the
              direct or indirect sale or other disposition of all or
              substantially all of the assets of the Corporation and its
              Subsidiaries.

         Notwithstanding the foregoing, a Change in Control of the Corporation
shall not be deemed to occur solely because any person acquires beneficial
ownership of more than 20 percent of the Corporation Voting Securities as a
result of the acquisition of Corporation Voting Securities by the Corporation
which reduces the number of Corporation Voting Securities outstanding, PROVIDED
THAT if after such acquisition by the Corporation such person becomes the
beneficial owner of additional Corporation Voting Securities that increases the
percentage of






                                       81


outstanding Corporation Voting Securities beneficially owned by such person, a
Change in Control of the Corporation shall then occur.

         For purposes of the definition of a "Change of Control", the term
"Subsidiary" shall mean any corporation or other entity in which the Corporation
has a direct or indirect ownership interest of 50 percent or more of the total
combined voting power of the then outstanding securities of such corporation or
other entity entitled to vote generally in the election of directors or in which
the Corporation has the right to receive 50 percent or more of the distribution
of profits or 50 percent of the assets on liquidation or dissolution.

         Notwithstanding any other provisions of the Plan to the contrary, if a
Change in Control occurs, then during the period commencing on the date of
acquisition of said voting power, control of the Board, or consummation of a
Business Combination, and ending at the close of business on the last day of the
Fiscal Year that includes such date (the "Restriction Period"), the provisions
of this Section 12.7 shall apply.

              (b)    EFFECT. During the Restriction Period, the Plan may not be
                     terminated or amended to the extent the amendment would:

              (1)    reduce coverage under the Plan;

              (2)    reduce the amount of Profit-Sharing Contributions required
                     to be made for the Plan Year ending on the last day of the
                     Restriction Period;

              (3)    reduce the amount of After-Tax Contributions eligible for a
                     matching contribution that a Participant is permitted to
                     make or the amount of the Matching After-Tax Contributions
                     required under Sections 3.5 and 3.6; or







                                       82


              (4)    reduce the amount of Pre-Tax Contributions that a
                     Participant is permitted to make or the amount of Matching
                     Pre-Tax Contributions required under Sections 3.3 and 3.4.

              (c) For the purpose of computing the amount of the Profit-Sharing
Contributions for the twelve-month period ending on the last day of a
Restriction Period, the adjusted consolidated net income of the Corporation and
its Consolidated Subsidiaries before net income taxes for the Fiscal Year ending
on such date is deemed to be the forecast of the consolidated net income of the
Corporation and its Consolidated Subsidiaries for such Fiscal Year as set forth
in the annual operating plan of the Corporation for such Fiscal Year.

              (d) During the Restriction Period, any person who was an Employee
on the day preceding the first day of the Restriction Period shall be deemed to
be an Employee so long as he is employed by a member of a "controlled group of
corporations" which includes, or by a trade or business that is under common
control with (as those terms are defined in sections 414(b) and (c) of the Code)
the Corporation, any corporation which is the survivor of any merger or
consolidation to which the Corporation was a party, or any corporation into
which the Corporation has been liquidated.

                                  ARTICLE XIII
                                  ------------

                            MISCELLANEOUS PROVISIONS
                            ------------------------

              13.1 RESTRICTIONS ON ALIENATION: QUALIFIED DOMESTIC RELATIONS
ORDERS. Except as may be required (i) to offset an amount that a Participant is
ordered to pay to the Plan as a result of a judgement, settlement, order or
decree entered on or after August 5, 1997 as permitted under section
401(a)(13)(C) of the Code or (ii) for income tax withholding purposes, no
benefit or








                                       83


interest under this Plan shall be subject to assignment or alienation, either
voluntarily or involuntarily. The preceding sentence shall apply to the
creation, assignment or recognition of a right to any benefit payable with
respect to a Participant pursuant to a domestic relations order, unless such
order is determined by the Retirement Plan Administrative Committee to be a
"qualified domestic relations order", as defined in section 414(p) of the Code.
In accordance with uniform and nondiscriminatory procedures established by the
Retirement Plan Administrative Committee from time to time, the Retirement Plan
Administrative Committee upon the receipt of a domestic relations order which
seeks to require the distribution of a Participant's Account in whole or in part
to an "alternate payee" (as that term is defined in section 414(p)(8) of the
Code) shall:

                     (1)    promptly notify the Participant and such "alternate
                            payee" of the receipt of such order and of the
                            procedure which the Retirement Plan Administrative
                            Committee will follow to determine whether such
                            order constitutes a "qualified domestic relations
                            order" within the meaning of section 414(p) of the
                            Code,

                     (2)    determine whether such order constitutes a
                            "qualified domestic relations order" and notify the
                            Participant and the "alternate payee" of the results
                            of such determination, and

                     (3)    if the Retirement Plan Administrative Committee
                            determines that such order does constitute a
                            "qualified domestic relations order," distribute to
                            such "alternate payee" under the terms of such order
                            the amount called for under the order in a single
                            sum within 60 days of the date such order is









                                       84


                            determined to constitute a qualified domestic
                            relations order, without regard to whether a
                            distribution would be permissible to the Participant
                            at such time under this Plan.

         The determination and the distribution made by, or at the direction of,
the Retirement Plan Administrative Committee under this Section 13.1 shall be
final and binding on the Participant and on all other persons interested in such
order. An "alternate payee" under this Section 13.1 shall not be an eligible
person for purposes of obtaining a loan pending the distribution of such
alternate payee's entire interest under this Plan.

         13.2 EXCLUSIVE BENEFIT REQUIREMENT. Except as provided in Sections
12.3, 13.1 and 13.3, no assets of the Plan shall revert to a Participating
Company or be used for or diverted to purposes other than providing benefits to
Participants and their Beneficiaries and defraying reasonable costs of
administering the Plan.

         13.3 RETURN OF CONTRIBUTIONS.

              (a) MISTAKE OF FACT. Any contribution made by a Participating
Company due to a mistake of fact shall be returned to the Participating Company
within one year of the date the contribution was made.

              (b) NONDEDUCTIBLE CONTRIBUTIONS. In the event the deduction of a
contribution made by a Participating Company is disallowed under section 404 of
the Code, such contribution (to the extent disallowed) shall be returned to the
Participating Company within one year of the disallowance of the deduction.







                                       85


         13.4 NO CONTRACT OF EMPLOYMENT. Neither the establishment and
maintenance of the Plan nor the participation in the Plan by any Employee shall
be construed as a contract between the Employee and any Participating Company so
as to give any Employee the right to be retained by any Participating Company,
or to interfere with the rights of any Participating Company to discharge the
Employee at any time.

         13.5 PAYMENT OF BENEFITS ON INCAPACITY. In the event the Retirement
Plan Administrative Committee determines that any person to whom a distribution
is to be made is unable to care for his affairs by reason of illness or other
disability, any amount distributable to such person (unless prior claim thereto
shall have been made by a duly qualified guardian or other legal representative)
may, in the discretion of the Retirement Plan Administrative Committee, be paid
to such other person deemed by the Retirement Plan Administrative Committee to
be responsible for such person. Any such payment made under this Section 13.5
shall constitute a complete discharge of any liability under this Plan.

         13.6 MERGER. In the event of a merger or consolidation with, or
transfer of assets or liabilities to any other plan, each Participant shall
receive a benefit immediately after such merger, consolidation or transfer (if
the Plan then terminated) which is at least equal to the benefit the Participant
was entitled to receive immediately before such merger, consolidation or
transfer (if the Plan had then terminated).

         13.7 CONSTRUCTION. The headings and subheadings in this Plan have been
inserted for convenience of reference only and are to be ignored in the
construction of its provisions. Wherever appropriate, the masculine shall be
read as the feminine, the plural as the singular, and the singular as the
plural. References in this Plan to a section shall be to a section in this Plan








                                       86


unless otherwise indicated. References in this Plan to a section of the Code,
ERISA or any other federal law shall also refer to the regulations issued under
such section.

         13.8 GOVERNING LAW. This Plan shall be construed, to the extent to
which state law is applicable, in accordance with the laws of the State of
Florida. Venue for any action arising under this Plan shall be in Brevard
County, Florida.

         13.9 MISTAKEN PAYMENTS. If a mistake is made in favor of a Participant,
Beneficiary or alternate payee in the payment of benefits under this Plan, then
the Corporation or the Trustee (acting at the Corporation direction and on
behalf of the Plan) shall take such action against such Participant, Beneficiary
or alternate payee to remedy such mistake and to make the Plan whole as the
Corporation deems proper and appropriate under the circumstances, and any
mistake in favor of the Plan shall promptly be corrected by, or at the direction
of, the Retirement Plan Administrative Committee.

                                              HARRIS CORPORATION

Date: 10/26/01                         By: /s/ Jeffrey Pratt Morrill
      --------------------------          -------------------------------
                                       Title: Assistant Treasurer
                                             ----------------------------










                                       87






                                   APPENDIX A

                             PARTICIPATING COMPANIES

         The following Related Companies are Participating Companies as of the
respective dates set forth below:

              Harris Corporation (January 1, 1998)

              Harris Publishing Systems Corporation (January 1, 1998 - August
              16, 2001)

              Harris Technical Services Corporation (January 1, 1998)

              Baseview Products, Inc. (January 1, 1998 - August 16, 2001)

              Maritime Communication Services, Inc. (January 1, 1998)

              Harris Intraplex, Inc. (July 1, 1999)

              Harris Pacific, Inc. (October 5, 1999)

              Audio Broadcast Group, Inc. (November 24, 1999)

              Harris Automation (January 11, 2000)

              Harris Broadband Wireless Access, Inc. (September 1, 2000)

              Harris-Exigent, Inc. (June 2, 2001)




                                       A-1






                                   APPENDIX B

                             FORMER PARTICIPANTS IN
                 THE INTRAPLEX, INC. 401(k) PROFIT SHARING PLAN



             Effective as of July 1, 1999, the Harris Intraplex, Inc. 401(k)
Profit Sharing Plan (the "Intraplex Plan") was merged into the Plan and the
accounts maintained for participants under the Intraplex Plan were transferred
to the Plan. Notwithstanding anything in the Plan to the contrary, the following
provisions shall apply to the Participants whose accounts under the Intraplex
Plan were transferred to the Plan in connection with such merger (the "Intraplex
Participants"):

         1.  SERVICE. For purposes of determining an Intraplex Participant's
Service, the Intraplex Participant shall be credited with Service equal to (a)
the number of whole Years of Service credited to the Intraplex Participant under
the Intraplex Plan as of June 30, 1999, plus (b) the greater of (1) the Service
that would be credited the Intraplex Participant under Article 2 of the Plan
during the Plan Year commencing on July 1, 1999, and (2) the service that would
be credited to the Intraplex Participant under the terms of the Intraplex Plan
for the Plan Year commencing on July 1, 1999.

         2.  DISTRIBUTIONS

             (a) AFTER ELIMINATION EFFECTIVE DATE. For distributions commencing
after the earlier of (i) the date which occurs 90 days following the date a
summary of material modification is furnished to Intraplex Participants
describing the elimination of optional forms of benefit, in accordance with
Treasury Regulation section 1.411(d)-4(e)(1)(ii) and (ii) July 1, 2002
(whichever date occurs first, the "Elimination Effective Date"), an Intraplex
Participant who is eligible to receive a distribution of his benefit under the
Plan may elect to have his benefit






                                       B-1



distributed in any form of benefit offered under Section 7.3 of the Plan,
subject to the provisions of Section 7.2 of the Plan.


              (b) DISTRIBUTIONS ON OR BEFORE ELIMINATION EFFECTIVE DATE. For
distributions commencing on or prior to the Elimination Effective Date, an
Intraplex Participant who is eligible to receive a distribution of his benefit
under the Plan may elect, in addition to any form of benefit offered under
Section 7.3 of the Plan, to have his benefit distributed in any one of the
following optional benefit forms, subject to the provisions of Section 7.2 of
the Plan:

                   (i) a joint and survivor annuity with the Participant's
spouse as contingent annuitant under which the amount payable to the
Participant's spouse is 50% of the amount payable during the joint lives of the
Participant and his spouse; or

                   (ii) a straight life annuity for the Participant's life.


              (c) If an Intraplex Participant is married and elects that his
benefit be distributed on or prior to the Elimination Effective Date in the form
of a straight life annuity pursuant to Section 2(b)(ii) hereof, such benefit
shall be distributed in the form of a straight life annuity only if the
Participant's spouse consents in writing to such form of distribution and such
consent is witnessed by either a Plan representative or Notary Public. If a
Participant's spouse does not properly consent to such form of distribution,
benefits will be distributed in the form of a joint and survivor annuity.



                                       B-2

EX-12

                                   EXHIBIT 12

                COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES



                                                               Quarter Ended
                                                       -----------------------------
                                                       September 28,   September 29,
(In millions, except ratios)                               2001            2000
                                                       -----------------------------

                                                                   
EARNINGS:
Net Income                                                $   17.1       $  (34.8)
Plus: Income taxes                                             8.8           20.9
      Fixed charges                                           10.0            9.9
      Amortization of capitalized interest                     -              -
Less: Interest capitalized during the period                   -              -
      Undistributed earnings in equity investments             -             (1.7)
                                                          --------       --------
                                                          $   35.9       $   (5.7)
                                                          ========       ========

FIXED CHARGES:
Interest expense                                          $    8.2       $    8.1
Plus: Interest capitalized during the period                   -              -
      Portion of rents deemed representative of
       the interest factor                                     1.8            1.8
                                                          --------       --------
                                                          $   10.0       $    9.9
                                                          ========       ========

RATIO OF EARNINGS TO FIXED CHARGES                            3.59          (0.58)
                                                          ========       ========