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Proc-Type: 2001,MIC-CLEAR
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<SEC-DOCUMENT>0000950124-01-504405.txt : 20020413
<SEC-HEADER>0000950124-01-504405.hdr.sgml : 20020413
ACCESSION NUMBER: 0000950124-01-504405
CONFORMED SUBMISSION TYPE: 10-K405
PUBLIC DOCUMENT COUNT: 17
CONFORMED PERIOD OF REPORT: 20010930
FILED AS OF DATE: 20011221
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: JOHNSON CONTROLS INC
CENTRAL INDEX KEY: 0000053669
STANDARD INDUSTRIAL CLASSIFICATION: PUBLIC BUILDING AND RELATED FURNITURE [2531]
IRS NUMBER: 390380010
STATE OF INCORPORATION: WI
FISCAL YEAR END: 0930
FILING VALUES:
FORM TYPE: 10-K405
SEC ACT: 1934 Act
SEC FILE NUMBER: 001-05097
FILM NUMBER: 1820264
BUSINESS ADDRESS:
STREET 1: 5757 N GREEN BAY AVENUE
STREET 2: P O BOX 591
CITY: MILWAUKEE
STATE: WI
ZIP: 53201
BUSINESS PHONE: 4142281200
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K405
<SEQUENCE>1
<FILENAME>c66360e10-k405.txt
<DESCRIPTION>ANNUAL REPORT ON FORM 10-K
<TEXT>
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
---------------------
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 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 1-5097
---------------------
JOHNSON CONTROLS, INC.
(Exact name of registrant as specified in its charter)
<Table>
<S> <C>
WISCONSIN 39-0380010
(State of Incorporation) (I.R.S. Employer Identification No.)
5757 N. GREEN BAY AVENUE
P.O. BOX 591 MILWAUKEE, WISCONSIN 53201
(Address of principal executive offices) (Zip Code)
</Table>
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
414-524-1200
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
<Table>
<Caption>
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
------------------- -----------------------------------------
<S> <C>
Common Stock, $.16 2/3 par value New York Stock Exchange
Rights to Purchase Common Stock New York Stock Exchange
</Table>
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
NONE
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
<Table>
<Caption>
AGGREGATE MARKET VALUE NUMBER OF SHARES
OF NONAFFILIATES' SHARES OUTSTANDING AT
TITLE OF EACH CLASS AS OF NOVEMBER 15, 2001 NOVEMBER 15, 2001
------------------- ------------------------ -----------------
<S> <C> <C>
Common Stock, $.16 2/3 par value $7,025,460,140 87,555,585
Series D Convertible Preferred Stock, $1.00 par value,
$512,000 liquidation value $ 384,344,144 239.497
</Table>
DOCUMENTS INCORPORATED BY REFERENCE
Parts I, II and IV incorporate by reference portions of the Annual Report
to Shareholders for the year ended September 30, 2001.
Part III incorporates by reference portions of the Proxy Statement dated
December 10, 2001.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
JOHNSON CONTROLS, INC.
Index to Annual Report on Form 10-K
Year Ended September 30, 2001
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
CAUTIONARY STATEMENTS FOR FORWARD-LOOKING
INFORMATION............................................................. 3
PART I.
ITEM 1. BUSINESS................................................................... 3
ITEM 2. PROPERTIES................................................................. 10
ITEM 3. LEGAL PROCEEDINGS.......................................................... 10
ITEM 4. SUBMISSION OF MATTERS TO A VOTE
OF SECURITY HOLDERS...................................................... 12
EXECUTIVE OFFICERS OF THE REGISTRANT....................................... 12
PART II.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK
AND RELATED STOCKHOLDER MATTERS.......................................... 14
ITEM 6. SELECTED FINANCIAL DATA.................................................... 14
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS............................ 14
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK........................................................ 14
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA................................ 14
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE............................................................... 14
PART III.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT......................... 14
ITEM 11. EXECUTIVE COMPENSATION..................................................... 14
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT.................................................... 15
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS............................. 15
PART IV.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE
AND REPORTS ON FORM 8-K.................................................. 15
INDEX TO EXHIBITS.......................................................... 20-22
</TABLE>
<PAGE>
CAUTIONARY STATEMENTS FOR FORWARD-LOOKING INFORMATION
Johnson Controls, Inc. (the Company) has made forward-looking statements in this
document that are subject to risks and uncertainties. Forward-looking statements
include information concerning possible or assumed future risks preceded by,
following or that include the words "believes," "expects," "anticipates,"
"projects" or similar expressions. For those statements, the Company cautions
that the numerous important factors discussed elsewhere in this document and in
the Company's Form 8-K filing (dated November 9, 2001) could affect the
Company's actual results and could cause its actual consolidated results to
differ materially from those expressed in any forward-looking statement made by,
or on behalf of, the Company.
PART I
ITEM 1 BUSINESS
GENERAL DEVELOPMENT OF BUSINESS
Johnson Controls, Inc. is a Wisconsin corporation organized in 1885. Its
principal office is located at 5757 North Green Bay Avenue, Milwaukee, Wisconsin
53201-0591. From 1885 through 1978, the Company's operations were predominantly
in the controls business. Since 1978, the Company's operations have been
diversified through acquisitions and internal growth. It currently conducts
business in two operating segments, controls ("Controls Group") and automotive
("Automotive Systems Group").
The Controls Group is a global market leader in providing building control
systems, services and integrated facility management, covering a broad range of
operational, maintenance and consulting programs for the non-residential
buildings market. The segment's control systems integrate the management,
operation and control of critical building systems to maintain optimal comfort
levels, improve energy efficiency and monitor safety. The segment also provides
a complete suite of integrated facility management services to customers
worldwide, assuming responsibility for a broad array of responsibilities
associated with building operations and maintenance.
The Company's operations have broadened over the last two decades through
organic growth, augmented by strategic acquisitions, to include the manufacture
of automotive interior systems and automotive batteries. The Automotive Systems
Group is among the world's largest automotive suppliers, providing interior
systems for approximately 23 million vehicles annually. Its customers include
every major automaker in the world.
FINANCIAL INFORMATION ABOUT BUSINESS SEGMENTS
Note 14, "Segment Information," of the Notes to Consolidated Financial
Statements on pages 41 through 42 of the 2001 Annual Report to Shareholders is
incorporated herein by reference.
<PAGE>
PRODUCTS AND SERVICES
AUTOMOTIVE SYSTEMS GROUP
The Automotive Systems Group designs and manufactures products for passenger
cars and light trucks. The segment produces automotive interior systems for
original equipment manufacturers and automotive batteries for the replacement
and original equipment markets.
The segment's automotive interior systems and batteries are manufactured or
assembled in 179 cities worldwide. In addition to its domestic operations, the
Automotive Systems Group has operations in 29 foreign countries.
The Automotive Systems Group designs and manufactures automotive interior
systems for manufacturers of cars and light trucks, including vans and sport
utility vehicles. Automotive interior systems products include systems,
subsystems and components such as complete seating systems and components;
cockpit systems, including instrument panels and electronics; overhead systems,
including headliners and electronic convenience features; floor consoles; door
systems and cargo management systems.
The segment operates 77 assembly plants that supply automotive manufacturers
with complete seats on a "just-in-time/in-sequence" basis. All foam and metal
seating components, covers and seat mechanisms are shipped to these plants from
the segment's production facilities or outside suppliers. The seats are then
assembled to specific order and delivered on a predetermined schedule directly
to an automotive assembly line. Certain of the segment's other automotive
interior systems are also supplied on a just-in-time/in-sequence basis.
The Company's interior systems capabilities have grown significantly during the
last five years. Operations have expanded principally through internal growth
aided by strategic acquisitions. Recent acquisitions include the purchase of the
automotive electronics business of France-based Sagem SA in October 2001, which
augments the segment's capabilities in vehicle cockpit and engine electronics,
and the fiscal 2000 addition of Ikeda Bussan Co., Ltd. (Ikeda). In September
2000, the Company acquired a controlling interest in Ikeda, a Japanese supplier
of automotive interiors and the primary supplier of seating to Nissan Motor
Company. For fiscal 2001, automotive interior systems sales comprised
approximately 92 percent of total segment sales.
The Automotive Systems Group's production of automotive batteries generates the
remaining portion of segment sales. The Automotive Systems Group is the largest
automobile battery supplier in North and South America. Automotive batteries are
sold primarily under private label to automotive replacement battery retailers
and distributors and to automobile manufacturers as original equipment.
Batteries and plastic battery containers are manufactured at 11 plants in the
United States and, via partially-owned affiliates, at plants in India, Mexico
and South America. The segment has also recently expanded its battery operations
into the European market through the October 2001 acquisition of the German
automotive battery manufacturer Hoppecke Automotive GmbH & Co. KG.
<PAGE>
CONTROLS GROUP
The Controls Group is a major worldwide supplier of control systems, services
and integrated facility management to the non-residential buildings market. The
Controls Group engineers, manufactures, installs and services control systems.
The segment sells control systems directly to building owners, as well as
contractors, that manage all key building systems, including heating,
ventilating, air conditioning, refrigeration, lighting, security and fire
systems. The Controls Group employs sales engineers, application engineers and
mechanics working out of branch offices located in approximately 300 principal
cities throughout the world. The segment manufactures a broad line of electric
and electronic products for sale through its own sales force and to original
equipment manufacturers, wholesalers and distributors of air-conditioning,
refrigeration, commercial and residential heating, and water-pumping equipment.
Control systems products are manufactured in six domestic and five foreign
facilities. The segment's integrated facility management offerings provide
strategic facility management services, workplace design and consulting, move
management, facility benchmarking and project management.
Worldwide, approximately 15 percent of the Controls Group's sales are derived
from control system installations for newly constructed buildings, 40 percent
from the installation and service of control systems in the existing worldwide
commercial building market, while 45 percent originates from its integrated
facility management offerings.
MAJOR CUSTOMERS AND COMPETITION
As described previously, the Company is a major supplier to the automotive
industry. Sales to its major customers, as a percentage of consolidated net
sales, were as follows for the most recent three-year period:
<TABLE>
<CAPTION>
Customer 2001 2000 1999
- -------- ---- ---- ----
<S> <C> <C> <C>
DaimlerChrysler AG 14% 16% 16%
Ford Motor Company 11% 13% 13%
General Motors Corporation 14% 14% 13%
</TABLE>
AUTOMOTIVE SYSTEMS GROUP
Approximately 55 percent of Automotive Systems Group sales over the last three
years were to the three automobile manufacturers listed in the previous table.
In fiscal 2001, approximately 74 percent of the Company's total sales to these
manufacturers originated in North America, 23 percent were based in Europe and 3
percent were attributable to other foreign markets. Because of the importance of
new vehicle sales of major automotive manufacturers to its operations, the
segment is affected by general business conditions in this industry.
The Automotive Systems Group faces competition from other automotive parts
suppliers and, with respect to certain products, from the automobile
manufacturers which themselves produce or have the capability to produce many of
the products or services the segment supplies. Competition is based on
technology, quality and price. Design, engineering and product
<PAGE>
planning are increasingly important factors. Independent suppliers that
represent the segment's principal competitors include Lear Corporation,
Faurecia, Magna International, Inc., Delphi Automotive Systems Corporation and
Visteon Corporation.
Approximately 89 percent of the Automotive Systems Group's automotive battery
sales in fiscal 2001 were to the automotive replacement market, with the
remaining sales to the original equipment market. The segment is the principal
supplier of batteries to many of the largest merchants in the battery
aftermarket, including Interstate Battery System of America, AutoZone, Sears,
Roebuck & Co., Advance Auto Parts and Pep Boys. It is also a major supplier of
automotive batteries to Wal-Mart Stores. Each of these customers sells
replacement batteries under their own brand labels. The segment also
manufactures spiral-wound lead-acid batteries sold globally under the Optima (R)
brand name. Original equipment and replacement batteries are sold to a number of
large manufacturers of motor vehicles.
Automotive battery sales depend principally on quality, price, delivery, and
service, including marketing support and technical advice. The segment primarily
competes in the battery market with Exide Technologies, Delphi Automotive
Systems Corporation and East Penn Manufacturing Company.
CONTROLS GROUP
The Controls Group conducts much of its operations through thousands of
individual contracts that are either negotiated or awarded on a competitive
basis. Key factors in awarding contracts include product and service quality,
price, reputation, technology, application engineering capability and
construction management expertise. Competition for contracts includes many
regional, national and international controls providers; larger competitors in
the control systems and services market include Honeywell International and
Siemens Building Technologies (of Siemens AG). The integrated facility
management services market is highly fragmented, with no other company being
dominant. Sales of these services are largely dependent upon numerous individual
contracts with commercial businesses worldwide and various departments and
agencies of the U.S. Federal Government. The loss of any individual contract
would not have a materially adverse effect on the Company.
BACKLOG
At September 30, 2001, the Company's Automotive Systems Group had an incremental
backlog of new orders for its interior systems to be executed within the next
fiscal year of approximately $800 million. The automotive backlog, which
excludes fiscal 2002 acquisitions and includes certain unconsolidated
subsidiaries, is generally subject to a number of risks and uncertainties, such
as the actual volume and timing of vehicle production upon which the backlog
value is based.
The Company's backlog relating to the Controls Group was applicable to its
control systems and services operations, which derive a significant portion of
revenues from long-term contracts that are accounted for on the
percentage-of-completion method. In accordance with customary industry practice,
customers are progress billed on an estimated basis as work proceeds. At
September 30, 2001, the unearned backlog of installed control systems contracts
to be executed
<PAGE>
within the next fiscal year was $1.49 billion, compared with the prior year's
$1.23 billion. The preceding data does not include amounts associated with
integrated facility management contracts because such contracts are typically
multi-year service awards; the backlog amount outstanding at any given period is
not necessarily indicative of the amount of revenue to be earned in the coming
fiscal period.
RAW MATERIALS
Raw materials used by the Automotive Systems Group in connection with its
automotive interiors and battery operations, including steel, urethane
chemicals, lead, sulfuric acid and polypropylene, were readily available during
the year and such availability is expected to continue. The Controls Group is
not dependent upon any single source of supply for essential materials, parts or
components.
INTELLECTUAL PROPERTY
Generally, the Company seeks statutory protection for most intellectual property
embodied in patents, trademarks and copyrights. Some intellectual property,
where appropriate or possible, is protected by a contract, license, agreement or
hold-in-confidence undertaking.
The Company owns numerous U.S. and foreign patents (and their respective
counterparts), the more important of which cover those technologies and
inventions embodied in current products, or which are used in the manufacture of
those products. While the Company believes patents are important to its business
operations and in the aggregate constitute a valuable asset, no single patent,
or group of patents, is critical to the success of the business. The Company,
from time to time, grants licenses under its patents and technology and receives
licenses under patents and technology of others.
The Company has numerous registered trademarks in the United States and in many
foreign countries. The most important of these marks are "JOHNSON CONTROLS"
(including a stylized version thereof), "JCI" and "JOHNSON." These marks are
universally used in connection with certain of its product lines and services.
The trademarks and service marks "PENN," "METASYS," "HOMELINK," "AUTOVISION,"
"TRAVELNOTE," "OPTIMA" and "INSPIRA" are used in connection with certain Company
product lines and services. The majority of the Company's original equipment and
replacement automotive batteries are sold carrying customer-owned private labels
and trademarks. The Company also markets automotive batteries under the licensed
trademarks "EVEREADY" and "ENERGIZER."
Most works of authorship produced for the Company, such as computer programs,
catalogs and sales literature, carry appropriate notices indicating the
Company's claim to copyright protection under U.S. law and appropriate
international treaties.
<PAGE>
ENVIRONMENTAL, HEALTH AND SAFETY MATTERS
Laws addressing the protection of the environment (Environmental Laws) and
workers' safety and health (Worker Safety Laws) govern the Company's ongoing
global operations. They generally provide for civil and criminal penalties, as
well as injunctive and remedial relief, for noncompliance or require remediation
of sites where Company-related materials have been released into the
environment.
The Company has expended substantial resources globally, both financial and
managerial, to comply with Environmental Laws and Worker Safety Laws and
maintains procedures designed to foster and ensure compliance. Certain of the
Company's businesses are or have been engaged in the handling or use of
substances that may impact work health and safety or the environment. The
Company is committed to protecting its workers and the environment against the
risks associated with these substances.
The Company's operations and facilities have been, and in the future may become,
the subject of formal or informal enforcement actions or proceedings for
noncompliance with such laws or for the remediation of Company-related
substances released into the environment. Such matters typically are resolved by
negotiation with regulatory authorities that result in commitments to
compliance, abatement, or remediation programs and, in some cases, payment of
penalties. Historically, neither such commitments nor such penalties have been
material. (See Item 3 "Legal Proceedings" of this report for a discussion of the
Company's potential environmental liabilities.)
ENVIRONMENTAL CAPITAL EXPENDITURES
The Company's ongoing environmental compliance program often results in capital
expenditures. Environmental considerations are a part of all significant capital
expenditures; however, expenditures in 2001 related solely to environmental
compliance were not material. It is management's opinion that the amount of any
future capital expenditures related solely to environmental compliance will not
have a material adverse effect on the Company's financial results or competitive
position in any one year.
EMPLOYEES
As of September 30, 2001, the Company employed approximately 112,000 employees,
of whom approximately 79,000 were hourly and 33,000 were salaried.
SEASONAL FACTORS
Sales of automotive interior systems and batteries to automobile manufacturers
for use as original equipment are dependent upon the demand for new automobiles.
Management believes that demand for new automobiles generally reflects
sensitivity to overall economic conditions with no material seasonal effect. The
automotive replacement battery market is affected by weather patterns because
batteries are more likely to fail when extremely low temperatures place
substantial additional power requirements upon a vehicle's electrical system.
Also, battery life is shortened by extremely high temperatures, which accelerate
corrosion rates. Therefore, either
<PAGE>
mild winter or moderate summer temperatures may adversely affect automotive
replacement battery sales.
The Controls Group's activities are executed on a relatively continuous basis,
with no significant fluctuation in revenues during the year.
INTERNATIONAL OPERATIONS
The Automotive Systems Group has manufacturing facilities worldwide. The segment
has wholly- and majority-owned automotive interior systems manufacturing
facilities located outside the United States, including plants in Argentina,
Australia, Austria, Belgium, Brazil, Canada, China, the Czech Republic, France,
Germany, Hungary, India, Italy, Japan, Korea, Malaysia, Mexico, The Netherlands,
Portugal, Romania, Slovakia, Slovenia, South Africa, Spain, Sweden, Thailand,
Turkey, the United Kingdom and Venezuela. These facilities produce, depending on
the location, complete seats, interior systems and related components. The
segment has partially-owned operations in Asia, Europe and South America that
manufacture complete seats, interior systems and/or seating components. The
segment also has partially-owned affiliates in India, Mexico and South America
that produce automotive batteries. Licensing and joint venture arrangements are
also in effect with certain foreign manufacturers of batteries and automotive
parts.
Through a number of foreign subsidiaries and branches, the Controls Group
operates fully-staffed sales offices, offering engineering, installation and
service capabilities (the counterpart to the domestic controls operations), and,
in many cases, integrated facility management services. Offices are located in
Australia, Austria, Belgium, Brazil, Canada, China, CIS (Russia), the Czech
Republic, Denmark, Finland, France, Germany, Greece, Hong Kong, Hungary, India,
Israel, Italy, Japan, Korea, Malaysia, Mexico, The Netherlands, Norway, the
Philippines, Poland, Portugal, Republic of Kazakhstan, Saudi Arabia, Singapore,
Slovakia, South Africa, Spain, Sweden, Switzerland, Thailand, Turkey, United
Arab Emirates and the United Kingdom. In addition, Controls Group products are
marketed through distributors represented in approximately 40 countries.
Products are manufactured in plants located in China, Germany, Italy, Mexico and
The Netherlands, with the remainder of the product line supplied from the United
States and via partially-owned affiliates. The Controls Group also has joint
venture operations in Argentina, Brazil, China, Hong Kong, Italy, Japan, Kuwait,
Malaysia, Philippines, Portugal, Singapore, Spain, Switzerland and Thailand.
The financial results of all foreign operations are subject to currency exchange
rate fluctuations. The Company selectively uses financial instruments to
minimize its risk of loss from fluctuations in exchange rates. The Company
primarily enters into forward exchange contracts to reduce the earnings and cash
flow impact of non-functional currency denominated receivables and payables,
predominantly intercompany transactions. Gains and losses from hedging
instruments offset the gains or losses on the underlying assets, liabilities and
investment positions being hedged. All hedging transactions are authorized and
executed pursuant to clearly defined policies and procedures, which strictly
prohibit the use of financial instruments for trading purposes.
<PAGE>
FINANCIAL INFORMATION ABOUT GEOGRAPHIC AREAS
Note 14, "Segment Information," of the Notes to Consolidated Financial
Statements on pages 41 through 42 of the 2001 Annual Report to Shareholders is
incorporated herein by reference.
RESEARCH AND DEVELOPMENT EXPENDITURES
Note 11, "Research and Development," of the Notes to Consolidated Financial
Statements on page 40 of the 2001 Annual Report to Shareholders is incorporated
herein by reference.
ITEM 2 PROPERTIES
The Company has numerous wholly- and majority-owned manufacturing facilities
located throughout the world. The Company considers its facilities to be
suitable and adequate. The majority of the facilities are operating at normal
levels based on capacity.
The following table lists the principal manufacturing, administrative, warehouse
and research and development facilities by geographic region and segment:
Geographic Region and Segment
(in millions of square feet)
<TABLE>
<CAPTION>
Owned Facilities Leased Facilities Total
---------------- ----------------- -----
<S> <C> <C> <C>
North America
Automotive Systems Group 14.4 5.5 19.9
Controls Group 1.9 0.3 2.2
Europe
Automotive Systems Group 8.7 6.9 15.6
Controls Group 0.3 0.9 1.2
Other foreign
Automotive Systems Group 3.2 0.8 4.0
Controls Group - 0.2 0.2
------------ ------------ -----------
Total 28.5 14.6 43.1
=========== ============ ===========
</TABLE>
In addition, hundreds of Controls Group branch offices in major cities
throughout the world are either owned or leased. These offices vary in size in
proportion to the volume of business in the particular locality.
ITEM 3 LEGAL PROCEEDINGS
Environmental Litigation and Proceedings. As noted previously, liabilities
potentially arise globally under various Environmental Laws and Worker Safety
Laws for activities that are not in compliance with such laws and for the
cleanup of sites where Company-related substances have been released into the
environment.
Currently, the Company is responding to allegations that it is responsible for
performing environmental remediation, or for the repayment of costs spent by
governmental entities or others performing remediation, at approximately 50
sites. Many of these sites are landfills used by the
<PAGE>
Company in the past for the disposal of waste materials; others are secondary
lead smelters and lead recycling sites where the Company returned
lead-containing materials for recycling; a few involve the cleanup of Company
manufacturing facilities; and the remaining fall into miscellaneous categories.
The Company may face similar claims of liability at additional sites in the
future. Where potential liabilities are alleged, the Company pursues a course of
action intended to mitigate them.
The Company accrues for potential environmental losses consistent with generally
accepted accounting principles; that is, when it is probable a loss has been
incurred and the amount of the loss is reasonably estimable. Its reserves for
environmental costs totaled $28 million and $41 million at September 30, 2001
and 2000, respectively. The current year change was primarily due to the
resolution of an estimated environmental liability associated with the
operations of a lead supplier. The Company reviews the status of the sites on a
quarterly basis and adjusts its reserves accordingly. Such potential liabilities
accrued by the Company are undiscounted and do not take into consideration
possible recoveries of future insurance proceeds. They do, however, take into
account the likely share other parties will bear at remediation sites. It is
difficult to estimate the Company's ultimate level of liability at many
remediation sites due to the large number of other parties that may be involved,
the complexity of determining the relative liability among those parties, the
uncertainty as to the nature and scope of the investigations and remediation to
be conducted, the uncertainty in the application of law and risk assessment, the
various choices and costs associated with diverse technologies that may be used
in corrective actions at the sites, and the often quite lengthy periods over
which eventual remediation may occur. Nevertheless, the Company has no reason to
believe at the present time that any claims, penalties or costs in connection
with known environmental matters will have a material adverse effect on the
Company's financial position, results of operations or cash flows.
Typically, site remediation matters are addressed at the administrative agency
level of the government. Occasionally, however, litigation is involved. The most
significant of such matters where litigation has been commenced by the
government or by private parties and remains pending against the Company is as
follows:
United States v. NL Industries, Inc., Case No. 91-CV-00578-WDS (United
States District Court for the Southern District of Illinois), filed July
31, 1991. The EPA sought to enforce an administrative order issued on
November 27, 1990 against Johnson Controls and other defendants
requiring performance of a cleanup at a secondary smelter facility in
Granite City, Illinois. The Company, the other defendants and the other
parties to the 1990 order chose to not perform on the basis that the
administrative record of decision underlying that order did not support
the remedy the agency was requiring. The complaint alleged that the
defendants should pay penalties (up to $25,000 per day and three times
the cost of work the government performs) for failing to comply with the
order. It also alleged that the Company should be responsible for past
government expenditures. According to the agency, the total cost, both
past and future, will probably exceed $64 million. The Company executed
a consent decree settling this matter, but the court has not yet entered
the decree. Nevertheless, the Company and the other parties to the
Consent Decree have performed almost all of the work required by the
decree. The reserves relating to environmental matters include an amount
attributable to the cost of the work that the
<PAGE>
Company will perform in conjunction with other parties at the site, as
well as payment to the federal government for the Company's share of
past response costs and penalties.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None during the fourth quarter of the fiscal year covered by this report.
EXECUTIVE OFFICERS OF THE REGISTRANT
Pursuant to General Instruction of G(3) of Form 10-K, the following list is
included as an unnumbered Item in Part I of this report in lieu of being
included in the Company's Proxy Statement for its 2002 Annual Meeting of
Shareholders.
James H. Keyes, 61, was elected Chairman of the Board in 1993 and Chief
Executive Officer in 1988. He served as President from 1986 to 1998.
Mr. Keyes joined the Company in 1966.
John M. Barth, 55, was elected President and Chief Operating Officer in
1998. He was elected a member of the Board of Directors in 1997.
Previously, Mr. Barth served as an Executive Vice President with
responsibility for the Automotive Systems Group. Mr. Barth joined the
Company in 1969.
Stephen A. Roell, 51, was elected Senior Vice President in 1998 and has
served as Chief Financial Officer since 1991. He was a Vice President
from 1991 to 1998, and earlier served as Corporate Controller and
Treasurer. Mr. Roell joined the Company in 1982.
Ben C.M. Bastianen, 57, was elected a Corporate Vice President in 1999
and has served as Corporate Treasurer since 1991, when he joined the
Company.
Susan F. Davis, 48, was elected Vice President, Human Resources in
1994. Previously, she served as Vice President of Organizational
Development for the Automotive Systems Group and the former Plastics
Technology Group. Ms. Davis joined the Company in 1983.
Giovanni "John" Fiori, 58, was elected a Corporate Vice President in
1992 and serves as President of automotive operations in Europe,
Africa, South America and Asia. Previously, he served as Vice President
of automotive seating operations in Europe. Mr. Fiori joined the
Company in 1987.
John P. Kennedy, 58, was elected a Corporate Vice President in 1989 and
has been Secretary since 1987 and General Counsel since 1984, when he
joined the Company.
Robert Netolicka, 54, was elected a Corporate Vice President in 1997
and manages special projects for the Controls Group. Mr. Netolicka has
held a number of senior management positions within the Controls Group
since joining the Company in 1974, including President of integrated
facility management services for the Controls Group.
<PAGE>
Jerome D. Okarma, 49, was elected Assistant Secretary in 1990. He has
served as Deputy General Counsel since June 2000. Prior to that he
served as Assistant General Counsel from 1989 to June 2000, and
previously as Group Vice President and General Counsel of the Controls
Group.
Darlene Rose, 56, was elected Vice President, Corporate Development and
Strategy in 1999. She previously served as Director of Corporate
Benefits and Payroll, and earlier held management positions in audit,
financial planning and information technology. Ms. Rose joined the
Company in 1969.
Rande S. Somma, 49, was elected a Corporate Vice President in 1998. He
has served as President of automotive operations in North America since
April 2000. Mr. Somma served in several senior management positions
within the Automotive Systems Group since joining the Company in 1988,
including President of Worldwide Marketing and Development.
Brian J. Stark, 52, was elected a Corporate Vice President in 1995 and
serves as President of the Controls Group. Mr. Stark has held a number
of senior management positions within the Controls Group since joining
the Company in 1972, including President of control systems and
services for the Controls Group.
Subhash "Sam" Valanju, 58, was elected a Corporate Vice President in
1999 and has served as Chief Information Officer since joining the
Company in 1996.
Bogoljub "Bob" Velanovich, 64, was elected a Corporate Vice President
in January 2000. He also serves as Group Vice President - Manufacturing
and Engineering Quality and Product Launch Assurance for the Automotive
Systems Group. Mr. Velanovich served in several senior management
positions within the Automotive Systems Group since joining the Company
in 1991.
Keith E. Wandell, 52, was elected a Corporate Vice President in 1997
and serves as President of battery operations for the Automotive
Systems Group. Previously, he served in a number of management
positions, most recently as Vice President and General Manager of the
Automotive Systems Group's Starting, Lighting and Ignition Division.
Mr. Wandell joined the Company in 1988.
Denise M. Zutz, 50, was elected Vice President, Corporate Communication
in 1991. She previously served as Director of Corporate Communication
and served in other communication positions since joining the Company
in 1973.
There are no family relationships, as defined by the instructions to this item,
between the above executive officers.
All officers are elected for terms that expire on the date of the meeting of the
Board of Directors following the Annual Meeting of Shareholders or until their
successors are elected and qualified.
<PAGE>
PART II
The information required by Part II, Items 5, 6, 7, 7A and 8, are incorporated
herein by reference to the Company's 2001 Annual Report to Shareholders as
follows:
ITEM 5 MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS - See price range and dividend information on page 20 of the
2001 Annual Report to Shareholders.
<TABLE>
<CAPTION>
Number of Record Holders
Title of Class as of November 15, 2001
-------------- -----------------------
<S> <C>
Common Stock, $.16-2/3 par value 59,311
</TABLE>
ITEM 6 SELECTED FINANCIAL DATA - See "Five Year Summary" on page 44 of the
2001 Annual Report to Shareholders.
ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - See pages 20 through 27 of the 2001 Annual
Report to Shareholders.
ITEM 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK - See
"Risk Management" on pages 25 through 26 of Management's Discussion and
Analysis section of the 2001 Annual Report to Shareholders.
ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA - See pages 28 through 42
of the 2001 Annual Report to Shareholders.
ITEM 9 DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
The information required by Part III, Items 10, 11, 12, and 13, are incorporated
herein by reference to the Company's Proxy Statement for its 2001 Annual Meeting
of Shareholders (2001 Proxy), dated December 10, 2001, as follows:
ITEM 10 DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT - Incorporated by
reference to sections entitled "Election of Directors," "Board
Information," "Board Compensation" and "Section 16(a) Beneficial
Ownership Reporting Compliance" of the 2001 Proxy. Required information
on executive officers of the Company appears on pages 12-13 of Part I
of this report.
ITEM 11 EXECUTIVE COMPENSATION - Incorporated by reference to sections
entitled "Executive Compensation," "Compensation Committee Report,"
"Performance Graph" and "Employment Agreements" of the 2001 Proxy.
<PAGE>
ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT -
Incorporated by reference to the section entitled "Johnson Controls
Share Ownership" of the 2001 Proxy.
ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS - None.
PART IV
ITEM 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K
<TABLE>
<CAPTION>
Page in
Annual Report*
--------------
<S> <C>
(a) The following documents are filed as part of this report:
(1) Financial Statements
Consolidated Statement of Income for the years ended September
30, 2001, 2000 and 1999 ......................................................... 28
Consolidated Statement of Financial Position at
September 30, 2001 and 2000...................................................... 29
Consolidated Statement of Cash Flows for the years ended
September 30, 2001, 2000 and 1999................................................ 30
Consolidated Statement of Shareholders' Equity for the years
ended September 30, 2001, 2000 and 1999.......................................... 31
Notes to Consolidated Financial Statements......................................... 32-42
Report of Independent Accountants.................................................. 43
</TABLE>
*Incorporated by reference from the indicated pages of the 2001 Annual Report to
Shareholders.
<TABLE>
<CAPTION>
Page in
Form 10-K
<S> <C>
(2) Financial Statement Schedule
Report of Independent Accountants on Financial Statement Schedule.................. 17
For the years ended September 30, 2001, 2000 and 1999:
II. Valuation and Qualifying Accounts........................................... 19
</TABLE>
<PAGE>
All other schedules are omitted because they are not applicable, or the required
information is shown in the financial statements or notes thereto.
Financial statements of 50 percent or less-owned companies have been omitted
because the proportionate share of their profit before income taxes and total
assets are less than 20 percent of the respective consolidated amounts, and
investments in such companies are less than 20 percent of consolidated total
assets.
(3) Exhibits
Reference is made to the separate exhibit index contained on pages
20 through 22 filed herewith.
(b) The following Form 8-K's were filed during the fourth quarter of fiscal
2001 or thereafter through the date of this report:
(i) A Form 8-K was filed November 9, 2001 to take advantage of the "safe
harbor" provisions of the Private Securities Litigation Reform Act of
1995 and to provide updated disclosure of the factors that could affect
any forward-looking statements made by, or on behalf of, the Company.
(ii) A Form 8-K was filed October 24, 2001 to disclose the Company's
financial results for the fourth quarter of fiscal 2001.
(iii) A Form 8-K was filed July 19, 2001 to disclose the Company's financial
results for the third quarter of fiscal 2001.
Other Matters
For the purposes of complying with the amendments to the rules governing Form
S-8 under the Securities Act of 1933, the undersigned registrant hereby
undertakes as follows, which undertaking shall be incorporated by reference into
registrant's Registration Statements on Form S-8 Nos. 33-30309, 33-31271,
33-58092, 33-58094, 33-49862, 333-10707, 333-36311, 333-66073, and 333-41564.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
<PAGE>
[PRICEWATERHOUSECOOPERS LOGO]
[PRICEWATERHOUSECOOPERS LETTERHEAD]
Report of Independent Accountants On
Financial Statement Schedule
To the Board of Directors and Shareholders
of Johnson Controls, Inc.
Our audits of the consolidated financial statements referred to in our report
dated October 22, 2001 appearing in the 2001 Annual Report to Shareholders of
Johnson Controls, Inc. (which report and consolidated financial statements are
incorporated by reference in this Annual Report on Form 10-K) also included an
audit of the Financial Statement Schedule listed in Item 14(a)(2) of this Form
10-K. In our opinion, this Financial Statement Schedule presents fairly, in all
material respects, the information set forth therein when read in conjunction
with the related consolidated financial statements.
/s/ PricewaterhouseCoopers LLP
- -------------------------- ---
PricewaterhouseCoopers LLP
Milwaukee, Wisconsin
October 22, 2001
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
JOHNSON CONTROLS, INC.
By /s/ Stephen A. Roell
--------------------------
Stephen A. Roell
Senior Vice President and
Chief Financial Officer
Date: December 21, 2001
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below as of December 21, 2001, by the following persons on
behalf of the registrant and in the capacities indicated:
/s/ James H. Keyes /s/ John M. Barth
- --------------------------- -----------------------------------
James H. Keyes John M. Barth
Chairman, Chief Executive Officer President, Chief Operating Officer
and Director and Director
/s/ Stephen A. Roell /s/ Robert W. Smith
- --------------------------- -----------------------------------
Stephen A. Roell Robert W. Smith
Senior Vice President and Assistant Corporate Controller
Chief Financial Officer
/s/ Paul A. Brunner /s/ William H. Lacy
- --------------------------- -----------------------------------
Paul A. Brunner William H. Lacy
Director Director
/s/ Robert A. Cornog /s/ Natalie A. Black
- --------------------------- -----------------------------------
Robert A. Cornog Natalie A. Black
Director Director
/s/ Richard F. Teerlink
- ---------------------------
Richard F. Teerlink
Director
<PAGE>
JOHNSON CONTROLS, INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(in millions)
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30, 2001 2000 1999
- ------------------------ ------------------------------------------------------
<S> <C> <C> <C>
ACCOUNTS RECEIVABLE - ALLOWANCE FOR DOUBTFUL ACCOUNTS
Balance at beginning of period $31.9 $26.9 $21.2
Accounts charged off (6.2) (5.4) (5.9)
Provision charged to costs and expenses 9.9 15.4 15.9
Reserve adjustments (7.9) (4.1) (4.0)
Acquisition of businesses 2.6 0.1 1.8
Currency translation (0.7) (1.5) (0.4)
Other (1.5) 0.5 (1.7)
------------------------------------------------------
Balance at end of period $28.1 $31.9 $26.9
======================================================
DEFERRED TAX ASSETS - VALUATION ALLOWANCE
Balance at beginning of period $61.4 $65.2 $58.6
Allowance established for new loss carryforwards and tax credits 34.3 18.1 21.6
Allowance reversed for loss carryforwards utilized (7.0) (21.9) (15.0)
------------------------------------------------------
Balance at end of period $88.7 $61.4 $65.2
======================================================
</TABLE>
<PAGE>
JOHNSON CONTROLS, INC.
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBITS TITLE PAGE
<S> <C> <C>
3.(i) Restated Articles of Incorporation of Johnson Controls, Inc., as
amended January 22, 1997, (incorporated by reference to
Exhibit 3.(i) to Johnson Controls, Inc. Annual Report on Form
10-K for the year ended September 30, 1997).
3.(ii) By-laws of Johnson Controls, Inc., as amended November 14, 23-34
2001, filed herewith.
4.A Miscellaneous long-term debt agreements and financing leases
with banks and other creditors and debenture indentures.*
4.B Miscellaneous industrial development bond long-term debt
issues and related loan agreements and leases.*
4.C Rights Agreement between Johnson Controls, Inc. and Firstar
Trust Company (Rights Agent), as amended November 16,
1994, (incorporated by reference to Exhibit 4.C to Johnson
Controls, Inc. Annual Report on Form 10-K for the year ended
September 30, 1994). Wells Fargo Bank Minnesota, N.A. was
appointed successor Rights Agent effective May 11, 2001.
4.D Certificate of the Relative Rights and Preferences of the Series
D Convertible Preferred Stock of Johnson Controls, Inc.
(incorporated by reference to an exhibit to the Form 8-K dated
May 26, 1989).
4.E Note and Guaranty Agreement dated June 19, 1989 between
Johnson Controls, Inc., as Guarantor, and Johnson Controls,
Inc. Employee Stock Ownership Trust, acting by and through
Lasalle National Bank, as trustee, as issuer, (Incorporated by
reference to Exhibit 4.E to Johnson Controls, Inc. Annual
Report on Form 10-K for the year ended September 30, 1990).
4.F Letter of agreement dated December 6, 1990 between Johnson
Controls, Inc., LaSalle National Trust, N.A. and Fidelity
Management Trust Company which replaces LaSalle National
Trust, N.A. as Trustee of the Johnson Controls, Inc. Employee
Stock Ownership Plan Trust with Fidelity Management Trust
Company as Successor Trustee, effective January 1, 1991
(incorporated by reference to Exhibit 4.F to Johnson Controls,
Inc. Annual Report on Form 10-K for the year ended
September 30, 1991).
</TABLE>
<PAGE>
JOHNSON CONTROLS, INC.
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBITS TITLE PAGE
<S> <C> <C>
4.G Indenture for debt securities dated February 22, 1995 between
Johnson Controls, Inc. and Chemical Bank Delaware (now
known as Chase Bank), trustee (incorporated by reference to
the Form S-3 filed February 13, 1995, which became effective
February 17, 1995).
10.A Johnson Controls, Inc., 1992 Stock Option Plan as amended
through January 24, 1996 (incorporated by reference to Exhibit
10.A to Johnson Controls, Inc. Annual Report on Form 10-K
for the year ended September 30, 1996).
10.B Johnson Controls, Inc., 1984 Stock Option Plan as amended
through September 22, 1993 (incorporated by reference to
Exhibit 10.B to Johnson Controls, Inc. Annual Report on Form
10-K for the year ended September 30, 1993).
10.C Johnson Controls, Inc., 1992 Stock Plan for Outside Directors,
(incorporated by reference to Exhibit 10.D to Johnson
Controls, Inc. Annual Report on Form 10-K for the year ended
September 30, 1992).
10.D Johnson Controls, Inc., Common Stock Purchase Plan for
Executives as amended March 28, 2001 (incorporated by
reference to Exhibit 10.D to Johnson Controls, Inc. Quarterly
Report on Form 10-Q for the quarter ended March 31, 2001).
10.E Johnson Controls, Inc., Deferred Compensation Plan for
Certain Directors as amended through October 1, 2001, filed
herewith. 35-46
10.F Johnson Controls, Inc., Executive Incentive Compensation Plan
as amended through October 1, 2001, filed herewith. 47-57
10.G Johnson Controls, Inc., Executive Incentive Compensation
Plan, Deferred Option, Qualified Plan as amended through
October 1, 2001, filed herewith. 58-69
10.H Johnson Controls, Inc., Long-Term Performance Plan as
amended through October 1, 2001, filed herewith. 70-80
</TABLE>
<PAGE>
JOHNSON CONTROLS, INC.
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBITS TITLE PAGE
<S> <C> <C>
10.I Johnson Controls, Inc., Executive Survivor Benefits Plan
amended through October 1, 2001, filed herewith. 81-90
10.J Johnson Controls, Inc., Equalization Benefit Plan amended
through October 1, 2001, filed herewith. 91-105
10.K Form of employment agreement, as amended through
September 26, 2001, between Johnson Controls, Inc. and all
elected officers and key executives, filed herewith. 106-126
10.L Form of indemnity agreement, as amended, between Johnson
Controls, Inc. and all elected officers, (incorporated by
reference to Exhibit 10.K to Johnson Controls, Inc. Annual
Report on Form 10-K for the year ended September 30, 1991).
10.M Johnson Controls, Inc., Director Share Unit Plan, as amended
through October 1, 2001, filed herewith. 127-137
10.N Johnson Controls, Inc., 2000 Stock Option Plan, as amended
through October 1, 2001, filed herewith. 138-150
10.O Johnson Controls, Inc., Restricted Stock Plan, effective
October 1, 2001, filed herewith. 151-163
10.P Johnson Controls, Inc., Executive Deferred Compensation
Plan, effective October 1, 2001, filed herewith. 164-184
12 Statement regarding computation of ratio of earnings to fixed
charges for he year ended September 30, 2001, filed herewith. 185
13 2001 Annual Report to Shareholders (incorporated sections
only in electronic filing), filed herewith. 186-210
21 Subsidiaries of the Registrant, filed herewith. 211-215
23 Consent of Independent Accountants dated December 21,
2001, filed herewith. 216
</TABLE>
*These instruments are not being filed as exhibits herewith because none of
the long-term debt instruments authorizes the issuance of debt in excess of
ten percent of the total assets of Johnson Controls, Inc., and its
subsidiaries on a consolidated basis. Johnson Controls, Inc. agrees to
furnish a copy of each such agreement to the Securities and Exchange
Commission upon request.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.(II)
<SEQUENCE>3
<FILENAME>c66360ex3-ii.txt
<DESCRIPTION>BY-LAWS OF JOHNSON CONTOLS, INC.
<TEXT>
<PAGE>
EXHIBIT 3.(ii)
JOHNSON CONTROLS, INC.
BY-LAWS
(As in effect November 14, 2001)
ARTICLE I
OFFICES
The principal office of the corporation in the State of Wisconsin shall
be located in the City of Glendale, County of Milwaukee. The corporation may
have such other offices, either within or without the State of Wisconsin, as the
Board of Directors may designate or as the business of the corporation may
require from time to time.
The registered office of the corporation required by the Wisconsin
Business Corporation Law to be maintained in the State of Wisconsin may be, but
need not be, identical with the principal office in the State of Wisconsin, and
the address of the registered office may be changed from time to time by the
Board of Directors.
ARTICLE II
SHAREHOLDERS
Section 1. ANNUAL MEETING. The Annual Meeting of the shareholders of
the Corporation (an "Annual Meeting") shall be held on the fourth Wednesday in
the month of January in each year, at the hour of 2:00 o'clock P.M., or at such
other hour or day as may be designated by the Board of Directors. At each Annual
Meeting, the shareholders shall elect a number of directors equal to the number
of the class whose term expires at the time of such meeting and shall conduct
any other business properly brought before the Annual Meeting in accordance with
Article II, Section 13 of the By-Laws. In the event of failure, through
oversight or otherwise, to hold the Annual Meeting of shareholders in any year
on the date herein provided therefor, the Annual Meeting, upon waiver of notice
or upon due notice, may be held at a later date and any election had or business
done at such Annual Meeting shall be as valid and effectual as if had or done at
the Annual Meeting on the date herein provided. In fixing a meeting date for any
Annual Meeting, the Board of Directors may consider such factors as it deems
relevant within the good faith exercise of its business judgment.
Section 2. SPECIAL MEETINGS.
(a) A special meeting of the shareholders of the Corporation
(a "Special Meeting") may be called only by (i) the Chairman of the Board, (ii)
the President or (iii) the Board of Directors and shall be called by the
Chairman of the Board or the President upon the demand, in accordance with this
Section 2, of the holders of record of shares representing at least 10% of all
the votes entitled to be cast on any issue proposed to be considered at the
Special Meeting.
(b) In order that the Corporation may determine the
shareholders entitled to demand a Special Meeting, the Board of Directors may
fix a record date to determine the shareholders entitled to make such a demand
(the "Demand Record Date"). The Demand Record Date shall not precede the date
upon which the resolution fixing the Demand Record Date is adopted by the Board
of Directors and shall not be more than 10 days after the date upon which the
resolution fixing the Demand Record Date is adopted by the Board of Directors.
Any shareholder of record seeking to have shareholders demand a Special Meeting
shall, by sending written notice to the Secretary of the Corporation by hand or
by certified or registered mail, return receipt requested, request the Board of
Directors to fix a Demand Record Date. The Board of Directors shall promptly,
but in all events within 10 days after the date on which a valid request to fix
a Demand Record Date is received, adopt a resolution fixing the Demand Record
Date and shall make a public announcement of such Demand Record Date. If no
Demand Record Date has been fixed by the Board of Directors within 10 days after
the date on which such request is received by the Secretary, the Demand Record
Date shall be the 10th day after the first date on which a valid written request
to set a Demand Record Date is received by the Secretary. To be valid, such
written request shall set forth the purpose or purposes for which the Special
Meeting is to be held, shall be signed by one or more shareholders of record (or
their
<PAGE>
duly authorized proxies or other representatives), shall bear the date of
signature of each such shareholder (or proxy or other representative) and shall
set forth all information about each such shareholder and about the beneficial
owner or owners, if any, on whose behalf the request is made that would be
required to be set forth in a shareholder's notice described in paragraph
(a)(ii) of Article II, Section 13 of these By-Laws.
(c) In order for a shareholder or shareholders to demand a
Special Meeting, a written demand or demands for a Special Meeting by the
holders of record as of the Demand Record Date of shares representing at least
10% of all the votes entitled to be cast on each issue proposed to be considered
at the Special Meeting must be delivered to the Corporation. To be valid, each
written demand by a shareholder for a Special Meeting shall set forth the
specific purpose or purposes for which the Special Meeting is to be held (which
purpose or purposes shall be limited to the purpose or purposes set forth in the
written request to set a Demand Record Date received by the Corporation pursuant
to paragraph (b) of this Section 2), shall be signed by one or more persons who
as of the Demand Record Date are shareholders of record (or their duly
authorized proxies or other representatives), shall bear the date of signature
of each such shareholder (or proxy or other representative), and shall set forth
the name and address, as they appear in the Corporation's books, of each
shareholder signing such demand and the class and number of shares of the
Corporation which are owned of record and beneficially by each such shareholder,
shall be sent to the Secretary by hand or by certified or registered mail,
return receipt requested, and shall be received by the Secretary within 70 days
after the Demand Record Date.
(d) The Corporation shall not be required to call a Special
Meeting upon shareholder demand unless, in addition to the documents required by
paragraph (c) of this Section 2, the Secretary receives a written agreement
signed by each Soliciting Shareholder, pursuant to which each Soliciting
Shareholder, jointly and severally, agrees to pay the Corporation's costs of
holding the special meeting, including the costs of preparing and mailing proxy
materials for the Corporation's own solicitation, provided that if each of the
resolutions introduced by any Soliciting Shareholder at such meeting is adopted,
and each of the individuals nominated by or on behalf of any Soliciting
Shareholder for election as director at such meeting is elected, then the
Soliciting Shareholders shall not be required to pay such costs. For purposes of
this paragraph (d), the following terms shall have the meanings set forth below:
(i) "Affiliate" of any Person shall mean any Person
controlling, controlled by or under common control with such first
Person.
(ii) "Participant" shall have the meaning assigned to such
term in Rule 14a-11 promulgated under the Exchange Act.
(iii) "Person" shall mean any individual, firm, corporation,
partnership, joint venture association, trust, unincorporated
organization or other entity.
(iv) "Proxy" shall have the meaning assigned to such term in
Rule 14a-1 promulgated under the Exchange Act.
(v) "Solicitation" shall have the meaning assigned to such
term in Rule 14a-11 promulgated under the Exchange Act.
(vi) "Soliciting Shareholder" shall mean, with respect to any
Special Meeting demanded by a shareholder or shareholders, any of the
following Persons:
(A) if the number of shareholders signing the demand
or demands of meeting delivered to the Corporation pursuant to
paragraph (c) of this Section 2 is ten or fewer, each
shareholder signing any such demand;
(B) if the number of shareholders signing the demand
or demands of meeting delivered to the Corporation pursuant to
paragraph (c) of this Section 2 is more than ten, each Person
who either (I) was a Participant in any Solicitation of such
demand or demands or (II) at the time of the delivery to the
Corporation of the documents described in paragraph (c) of
this Section 2, had engaged or intended to engage in any
Solicitation of Proxies for use at such Special Meeting (other
than a Solicitation of Proxies on behalf of the Corporation);
or
(C) any Affiliate of a Soliciting Shareholder, if a
majority of the directors then in office determine, reasonably
and in good faith, that such Affiliate should be required to
sign the written notice described in paragraph (c)
<PAGE>
of this Section 2 and/or the written agreement described in
this paragraph (d) in order to prevent the purposes of this
Section 2 from being evaded.
(e) Except as provided in the following sentence, any Special
Meeting shall be held at such hour and day as may be designated by whichever of
the Chairman of the Board, the President or the Board of Directors shall have
called such meeting. In the case of any Special Meeting called by the Chairman
of the Board or the President upon the demand of shareholders (a "Demand Special
Meeting"), such meeting shall be held at such hour and day as may be designated
by the Board of Directors; provided, however, that the date of any Demand
Special Meeting shall be not more than 70 days after the Meeting Record Date (as
defined in Article II, Section 5); and provided further that in the event that
the directors then in office fail to designate an hour and date for a Demand
Special Meeting within 10 days after the date that valid written demands for
such meeting by the holders of record as of the Demand Record Date of shares
representing at least 10% of all the votes entitled to be cast on each issue
proposed to be considered at the special meeting are delivered to the
Corporation (the "Delivery Date"), then such meeting shall be held at 2:00 P.M.
local time on the 100th day after the Delivery Date or, if such 100th day is not
a Business Day (as defined below), on the first preceding Business Day. In
fixing a meeting date for any Special Meeting, the Chairman of the Board, the
President or the Board of Directors may consider such factors as he or it deems
relevant within the good faith exercise of his or its business judgment,
including, without limitation, the nature of the action proposed to be taken,
the facts and circumstances surrounding any demand for such meeting, and any
plan of the Board of Directors to call an Annual Meeting or a Special Meeting
for the conduct of related business.
(f) The Corporation may engage nationally recognized
independent inspectors of elections to act as an agent of the Corporation for
the purpose of promptly performing a ministerial review of the validity of any
purported written demand or demands for a Special Meeting received by the
Secretary. For the purpose of permitting the inspectors to perform such review,
no purported demand shall be deemed to have been delivered to the Corporation
until the earlier of (i) five Business Days following receipt by the Secretary
of such purported demand and (ii) such date as the independent inspectors
certify to the Corporation that the valid demands received by the Secretary
represent at least 10% of all the votes entitled to be cast on each issue
proposed to be considered at the Special Meeting. Nothing contained in this
paragraph shall in any way be construed to suggest or imply that the Board of
Directors or any shareholder shall not be entitled to contest the validity of
any demand, whether during or after such five Business Day period, or to take
any other action (including, without limitation, the commencement, prosecution
or defense of any litigation with respect thereto).
(g) For purposes of these By-Laws, "Business Day" shall mean
any day other than a Saturday, a Sunday or a day on which banking institutions
in the State of Wisconsin are authorized or obligated by law or executive order
to close.
Section 3. PLACE OF MEETING. The Board of Directors, the Chairman or
the President may designate any place, either within or without the State of
Wisconsin, as the place of meeting for any Annual Meeting or Special Meeting, or
for any postponement thereof, and in case the Board of Directors, the Chairman
or the President shall fail or neglect to make such designation, the Secretary
shall designate the time and place of such meeting. Any adjourned meeting may be
reconvened at any place designated by vote of the Board of Directors or by the
Chairman or the President.
Section 4. NOTICE OF MEETING. The Corporation shall send written or
printed notice stating the place, day and hour of any Annual Meeting or Special
Meeting not less than 10 days nor more than 70 days before the date of such
meeting either personally or by mail to each shareholder of record entitled to
vote at such meeting and to other shareholders as may be required by law or by
the Restated Articles of Incorporation. In the event of any Demand Special
Meeting, such notice of meeting shall be sent not more than 30 days after the
Delivery Date. If mailed, such notice of meeting shall be addressed to the
shareholder at his address as it appears on the Corporation's record of
shareholders. Unless otherwise required by law or the Restated Articles of
Incorporation, a notice of an Annual Meeting need not include a description of
the purpose for which the meeting is called. In the case of any Special Meeting,
(a) the notice of meeting shall describe any business that the Board of
Directors shall have theretofore determined to bring before the meeting and (b)
in the case of a Demand Special Meeting, the notice of meeting (i) shall
describe any business set forth in the statement of purpose of the demands
received by the Corporation in accordance with Article II, Section 2 of these
By-Laws and (ii) shall contain all of the information required in the notice
received by the Corporation in accordance with Article II, Section 13(b)(ii) of
these By-Laws.
Section 5. FIXING OF RECORD DATE. The Board of Directors may fix a
future date not less than 10 days and not more than 70 days prior to the date of
any Annual Meeting or Special Meeting as the record date for the determination
of shareholders entitled to notice of, or to vote at, such meeting (the "Meeting
Record Date"). In the case of any Demand Special Meeting, (i) the Meeting Record
Date shall be not later than the 30th day after the Deliver Date and (ii) if the
Board of Directors fails to fix the Meeting Record Date within 30 days after the
Delivery Date, then the close of business on such 30th day shall be the Meeting
Record Date. The shareholders of record on
<PAGE>
the Meeting Record Date shall be the shareholders entitled to notice of and to
vote at the meeting. Except as may be otherwise provided by law, a determination
of shareholders entitled to notice of or to vote at a meeting of shareholders is
effective for any adjournment of such meeting unless the Board of Directors
fixes a new Meeting Record Date, which it shall do if the meeting is postponed
or adjourned to a date more than 120 days after the date fixed for the original
meeting.
Section 6. SHAREHOLDER LISTS. After a record date has been fixed for a
meeting of shareholders, the Secretary or agent having charge of the shareholder
record shall prepare a list of the names of all of the shareholders who are
entitled to notice of the meeting. The list shall be arranged by class or series
of shares and shall show the address of and number of shares held by each
shareholder. The corporation shall make the shareholders' list available for
inspection by any shareholder, beginning 2 business days after notice of the
meeting is given for which the list was prepared and continuing to the date of
the meeting, at the corporation's principal office or at a place identified in
the meeting notice in the city where the meeting will be held. The corporation
shall make the shareholders' list available at the meeting, and any shareholder
or his or her agent or attorney may inspect the list at any time during the
meeting or any adjournment. Refusal or failure to prepare or make available the
shareholders' list does not affect the validity of action taken at the meeting.
Section 7. QUORUM; POSTPONEMENTS; ADJOURNMENTS.
(a) Except as otherwise provided by law or by the Restated
Articles of Incorporation, when specified business is to be voted upon by one or
more classes or series of shares entitled to vote as a separate voting group,
the holders of shares representing a majority of the votes entitled to be cast
on the matter by the voting group shall constitute a quorum of that voting group
for the transaction of such business. Once a share is represented for any
purpose at a meeting, other than for the purpose of objecting to holding the
meeting or transacting business at the meeting, it is considered present, for
purposes of determining whether a quorum exists, for the remainder of the
meeting and for any adjournment of that meeting unless a new Meeting Record Date
is or must be set for that adjourned meeting.
(b) The Board of Directors acting by resolution may postpone
and reschedule any previously scheduled Annual Meeting or Special Meeting;
provided, however, that a Demand Special Meeting shall not be postponed beyond
the 100th day following the Delivery Date. Any Annual Meeting or Special Meeting
may be adjourned from time to time, whether or not there is a quorum, (i) at any
time, upon a resolution of shareholders if the votes cast in favor of such
resolution by the holders of shares of each voting group entitled to vote on any
matter theretofore properly brought before the meeting exceed the number of
votes cast against such resolution by the holders of shares of each such voting
group or (ii) at any time prior to the transaction of any business at such
meeting, by the Chairman of the Board or pursuant to resolution of the Board of
Directors. No notice of the time and place of adjourned meetings need be given
except as required by law. At any adjourned meeting at which a quorum shall be
present or represented, any business may be transacted which might have been
transacted at the meeting as originally notified.
Section 8. PROXIES. At all the meetings of shareholders, a shareholder
entitled to vote may vote his or her shares in person or by proxy. A shareholder
may appoint a proxy to vote or otherwise act for the shareholder by signing an
appointment form, either personally or by his or her attorney-in-fact. An
appointment of a proxy is effective when received by the secretary or other
officer or agent of the corporation authorized to tabulate votes. An appointment
is valid for 11 months from the date of its signing unless a different period is
expressly provided in the appointment form.
Section 9. VOTING OF SHARES. Except as otherwise provided by law or by
the Articles of Incorporation, holders of Common Stock and holders of Preferred
Stock shall be entitled to one vote for each share of each such class held on
all questions on which shareholders are entitled to vote, and the holders of
Common Stock and the holders of Preferred Stock shall vote together as one
class.
Section 10. ACCEPTANCE OF INSTRUMENTS SHOWING SHAREHOLDER ACTION. If
the name signed on a vote, waiver or proxy appointment does not correspond to
the name of its shareholder, the corporation may accept the vote, waiver or
proxy appointment and give it effect as the act of the shareholder if any of the
following apply:
(a) The shareholder is an entity and the name signed purports
to be that of an officer or agent of the entity.
(b) The name purports to be that of a personal representative,
administrator, executor, guardian or conservator representing the shareholder
and, if the corporation requests, evidence of fiduciary status acceptable to the
corporation is presented with respect to the vote, waiver or proxy appointment.
<PAGE>
(c) The name signed purports to be that of a receiver or
trustee in bankruptcy of the shareholder and, if the corporation requests,
evidence of this status acceptable to the corporation is presented with respect
to the vote, waiver or proxy appointment.
(d) The name signed purports to be that of a pledgee,
beneficial owner, or attorney-in-fact of the shareholder and, if the corporation
requests, evidence acceptable to the corporation of the signatory's authority to
sign for the shareholder is presented with respect to the vote, waiver or proxy
appointment.
(e) Two or more persons are the shareholder as co-tenants or
fiduciaries and the name signed purports to be the name of at least one of the
co-owners and the person signing appears to be acting on behalf of all
co-owners.
Section 11. WAIVER OF NOTICE BY SHAREHOLDERS. A shareholder may waive
any notice whatever required to be given to any shareholder of the corporation
under the Articles of Incorporation or By-Laws or any provision of law, by a
waiver thereof in writing, signed at any time, whether before or after the date
and time stated in the notice, by the shareholder entitled to such notice;
provided that such waiver shall contain the same information as would have been
required to be included in such notice under any applicable provisions of
Chapter 180, Wisconsin Statutes, except the time and place of meeting, and shall
be delivered to the corporation for inclusion in the corporate records. A
shareholder's attendance at a meeting, in person or by proxy, waives objection
to the following: (a) lack of notice or defective notice of the meeting, unless
the shareholder at the beginning of the meeting or promptly upon arrival objects
to holding the meeting or transacting business at the meeting; and (b)
consideration of a particular matter at the meeting that is not within the
purpose described in the meeting notice, unless the shareholder objects to
considering the matter when it is presented.
Section 12. VALIDITY OF PROXIES, ETC. The Corporation or its authorized
officers, agents or other representatives may reject a vote, waiver, proxy
appointment, request to fix a Demand Record Date or demand for a Special Meeting
if the Secretary or other duly authorized officer or agent of the Corporation,
acting in good faith, has reasonable basis for doubt about the validity of the
signature or signatures on it, about the signatory's authority to sign for the
shareholder or about any other matter affecting the validity of such vote,
waiver, proxy appointment, request or demand.
Section 13. NOTICE OF SHAREHOLDER BUSINESS AND NOMINATION OF DIRECTORS.
(a) Annual Meetings of Shareholders.
(i) Nominations of persons for election to the Board
of Directors of the Corporation and the proposal of business
to be considered by the shareholders may be made at an Annual
Meeting (A) pursuant to the Corporation's notice of meeting,
(B) by or at the direction of the Board of Directors or (C) by
any shareholder of the Corporation who is a shareholder of
record at the time of giving of notice provided for in this
By-Law, is entitled to vote at the meeting and complies with
the notice procedures set forth in this Section 13.
(ii) To be timely, a shareholder's notice shall be
received by the Secretary of the Corporation at the principal
executive offices of the Corporation not less than 45 days nor
more than 75 days prior to the month and day in the current
year corresponding to the date on which the Corporation first
mailed its proxy materials for the prior year's annual meeting
of shareholders; provided, however, that in the event that the
date of the Annual Meeting is advanced by more than 30 days or
delayed by more than 60 days from the fourth Wednesday in the
month of January, notice by the shareholder to be timely must
be so received not earlier than the 90th day prior to the date
of such Annual Meeting and not later than the close of
business on the later of (x) the 60th day prior to such Annual
Meeting and (y) the 10th day following the day on which the
public announcement of the date of such meeting is first made.
(iii) Notwithstanding anything in the second sentence
of paragraph (a)(ii) of this Section 13 to the contrary, in
the event that the number of directors to be elected to the
Board of Directors of the Corporation is increased and there
is no public announcement naming all of the nominees for
Director or specifying the size of the increased Board of
Directors made by the Corporation at least 70 days prior to
the fourth Tuesday in the month of January, a shareholder's
notice required by this Section 13 shall also be considered
timely, but only with respect to nominees for any new
positions
<PAGE>
created by such increase, if it shall be received by the
Secretary at the principal executive offices of the
Corporation not later than the close of business on the 10th
day following the day on which such public announcement is
first made by the Corporation.
(b) Special Meetings of Shareholders. Only such business shall
be conducted at a Special Meeting as shall have been described in the notice of
meeting sent to shareholders pursuant to Article II, Section 4 of the By-Laws.
Nominations of persons for election to the Board of Directors may be made at a
Special Meeting at which directors are to be elected pursuant to such notice of
meeting (i) by or at the direction of the Board of Directors or (ii) by any
shareholder of the Corporation who (A) is a shareholder of record at the time of
giving of such notice of meeting, (B) is entitled to vote at the meeting and (C)
complies with the notice procedures set forth in this Section 13. Any
shareholder desiring to nominate persons for election to the Board of Directors
at such a Special Meeting shall cause a written notice to be received by the
Secretary of the Corporation at the principal executive offices of the
Corporation not earlier than 90 days prior to such Special Meeting and not later
than the close of business on the later of (x) the 60th day prior to such
Special Meeting and (y) the 10th day following the day on which public
announcement is first made of the date of such Special Meeting and of the
nominees proposed by the Board of Directors to be elected at such meeting. Such
written notice shall be signed by the shareholder of record who intends to make
the nomination (or his duly authorized proxy or other representative), shall
bear the date of signature of such shareholder (or proxy or other
representative) and shall set forth: (A) the name and address, as they appear on
the Corporation's books, of such shareholder and the beneficial owner or owners,
if any, on whose behalf the nomination is made; (B) the class and number of
shares of the Corporation which are beneficially owned by such shareholder or
beneficial owner or owners; (C) a representation that such shareholder is a
holder of record of shares of the Corporation entitled to vote at such meeting
and intends to appear in person or by proxy at the meeting to make the
nomination specified in the notice; (D) the name and residence address of the
person or persons to be nominated, (E) a description of all arrangements or
understandings between such shareholder or beneficial owner or owners and each
nominee and any other person or persons (naming such person or persons) pursuant
to which the nomination is to be made by such shareholder, (F) such other
information regarding each nominee proposed by such shareholder as would be
required to be disclosed in solicitations of proxies for elections of directors,
or would be otherwise required to be disclosed, in each case pursuant to
Regulation 14A under the Exchange Act, including any information that would be
required to be included in a proxy statement filed pursuant to Regulation 14A
had the nominee been nominated by the Board of Directors and (G) the written
consent of each nominee to be named in a proxy statement and to serve as a
director of the Corporation if so elected.
(c) General.
(i) Only persons who are nominated in accordance with
the procedures set forth in this Section 13 shall be eligible
to serve as directors. Only such business shall be conducted
at a meeting of shareholders as shall have been brought before
the meeting in accordance with the procedures set forth in
this Section 13. The chairman of the meeting shall have the
power and duty to determine whether a nomination or any
business proposed to be brought before the meeting was made in
accordance with the procedures set forth in this Section 13
and, if any proposed nomination or business is not in
compliance with this Section 13, to declare that such
defective proposal shall be disregarded.
(ii) For purposes of this Section 13, "public
announcement" shall mean disclosure in a press release
reported by the Dow Jones News Service, Associated Press or
comparable national news service or in a document publicly
filed by the Corporation with the Securities and Exchange
Commission pursuant to Section 13, 14 or 15(d) of the Exchange
Act.
(iii) Notwithstanding the foregoing provisions of
this Section 13, a shareholder shall also comply with all
applicable requirements of the Exchange Act and the rules and
regulations thereunder with respect to the matters set forth
in this Section 13. Nothing in this Section 13 shall be deemed
to limit the Corporation's obligation to include shareholder
proposals in its proxy statement if such inclusion is required
by Rule 14a-8 under the Exchange Act.
Section 14. CONDUCT OF MEETING. The Chairman of the Board of Directors,
and in his absence (or if no person then holds such office), the President, and
in his absence, any officer or director designated by the President, and in his
absence, a Vice President in the order provided under Section 6 of Article IV of
the By-Laws, and in their absence, any person chosen by the shareholders present
shall call any Annual Meeting or Special Meeting to order and shall act as
chairman of the meeting, and the Secretary of the Corporation shall act as
<PAGE>
secretary of all meetings of the shareholders, but, in the absence of the
Secretary, the presiding officer may appoint any other person to act as
secretary of the meeting.
ARTICLE III
BOARD OF DIRECTORS
Section 1. NUMBER AND TENURE QUALIFICATIONS. All corporate powers shall
be exercised by or under the authority of, and the business and affairs of the
corporation managed under the direction of a Board of eleven directors divided
into three classes, to consist of two classes with four members each, and one
class of three members each, and the term of office of one class shall expire at
each annual meeting. At each annual meeting, the number of directors equal to
the number of the class whose term expires at the time of such meeting shall be
elected to hold office until the third succeeding annual meeting. Each director
shall hold office for the term for which he is elected and until his death or
until he shall resign or shall have been removed from office. Any director may
be removed from office by shareholders prior to the expiration of his or her
term, but only (i) at a special meeting called for the purpose of removing the
director, (ii) by the affirmative vote of the number of outstanding shares set
forth in the Restated Articles of Incorporation and (iii) for cause as
hereinafter defined; provided, however, that, if the Board of Directors, by
resolution adopted by the Requisite Vote (as hereinafter defined), shall have
recommended removal of a director, then the shareholders may remove such
director without cause by the vote referred to above. As used herein, "cause"
shall exist only if the director whose removal is proposed has been convicted of
a felony by a court of competent jurisdiction, where such conviction is no
longer subject to direct appeal, or has been adjudged liable for actions or
omissions in the performance of his or her duty to the Corporation in a matter
which has a materially adverse effect on the business of the Corporation, where
such adjudication is no longer subject to appeal. As used herein, the term
"Requisite Vote" shall mean the affirmative vote of at least two-thirds of the
directors then in office plus one director. A director may resign at any time by
delivering written notice to the chairperson of the Board of Directors or to the
corporation. A resignation is effective when the notice is delivered unless the
notice specifies a later effective date. Any action by the Board of Directors,
other than pursuant to a Requisite Vote, or shareholders eliminating the
requirement to establish cause for the removal of a director shall not operate
to eliminate such requirement with respect to any director incumbent at the time
of such action. The Board of Directors, at the regular meeting thereof held
immediately after the annual meeting of shareholders, may elect one of its
members to act as its Chairman until his successor is elected or his prior
death, resignation or removal; and such Chairman shall, when present, preside at
all meetings of the Board of Directors and perform all such other duties as may
be prescribed by the Board from time to time.
Section 2. REGULAR MEETINGS. A regular meeting of the Board of
Directors of the Corporation shall be held without notice other than this By-Law
immediately after, and at the same place as the annual meeting of the
shareholders and each adjourned session thereof. The Board of Directors may
provide, by resolution, the time and place either within or without the State of
Wisconsin for the holding of additional regular meetings without notice other
than such resolution.
Section 3. SPECIAL MEETINGS. Special meetings of the Board of Directors
may be called by or at the request of the Chairman of the Board, Chief Executive
Officer, Secretary, or any two directors. The person or persons authorized to
call special meetings of the Board of Directors may fix the time and place,
either within or without the State of Wisconsin, for the holding of any special
meeting of the Board of Directors called by them.
Section 4. NOTICE. Notice of any special meeting shall be given at
least six hours previously thereto orally or in writing to each director at his
business address; provided that if notice is given by mail or private carrier
only, it shall be given at least forty-eight hours prior to such meeting.
Whenever any notice whatever is required to be given to any director of the
corporation under the Articles of Incorporation or By-Laws or any provision of
law, a waiver thereof in writing, signed at any time, whether before or after
the time of the meeting, by the director entitled to such notice and retained by
the corporation, shall be deemed equivalent to the giving of such notice. The
attendance of a director at or participation in a meeting shall constitute a
waiver of notice of such meeting, unless the director at the beginning of the
meeting or promptly upon his or her arrival objects to holding the meeting or
transacting business at the meeting and does not thereafter vote for or assent
to action taken at the meeting. Neither the business to be transacted at, nor
the purpose of, any regular or special meeting of the Board of Directors need be
specified in the notice or waiver of notice of such meeting.
Section 5. QUORUM. Except as otherwise provided by law or by the
Articles of Incorporation or these By-Laws a majority of the number of directors
fixed by Section 1 of this Article III shall constitute a quorum for the
transaction of business at any meeting of the Board of Directors.
Notwithstanding the foregoing, if less than such majority is present at a
meeting, a majority of the directors present may adjourn the meeting from time
to time
<PAGE>
without further notice other than by announcement at the meeting if the
adjournment shall be to the following day, but if the meeting shall be adjourned
to a date later than the following day, notice of such adjourned meeting shall
be duly given to each director not less than six hours before the time set for
such adjourned meeting; provided that if notice is given by mail or private
carrier only, it shall be given not less than forty-eight hours before the time
set for such adjourned meeting.
Section 6. MANNER OF ACTING. If a quorum is present when a vote is
taken, the affirmative vote of a majority of directors present shall be the act
of the Board of Directors, unless the act of a greater number is required by law
or by the Articles of Incorporation or these By-Laws.
Section 7. VACANCIES. Any vacancy occurring in the Board of Directors,
including a vacancy created by an increase in the number of directors, may be
filled by any of the following: (i) the shareholders, (ii) the Board of
Directors or (iii) if the directors remaining in office constitute fewer than a
quorum of the Board, the directors, by the affirmative vote of a majority of all
directors remaining in office; provided, however, that if the vacant office was
held by a director elected by a voting group of shareholders, only the holders
of shares of that voting group may vote to fill the vacancy if it is filled by
the shareholders, and only the remaining directors elected by that voting group
may vote to fill the vacancy if it is filled by the directors. Any director
elected pursuant to this Section 7 shall serve until the next election of the
class of which such director shall have been chosen and until his or her
successor shall be duly elected and qualified.
Section 8. COMPENSATION. The Board of Directors, irrespective of any
personal interest of any of its members, may establish compensation of all
directors for services to the corporation as directors, officers or otherwise,
or may delegate such authority to an appropriate committee. The Board of
Directors also shall have authority to provide for or to delegate authority to
an appropriate committee to provide for pensions, disability or death benefits,
and other benefits or payments, to directors, officers and employees and to
their estates, families, dependents or beneficiaries on account of prior
services rendered by such directors, officers and employees to the corporation.
Section 9. PRESUMPTION OF ASSENT. A director of the corporation who is
present and is announced as present at a meeting of the Board of Directors or a
committee thereof at which action on any corporate matter is taken assents to
the action taken unless any of the following occurs: (i) the director objects at
the beginning of the meeting or promptly upon his or her arrival to the holding
of the meeting or transacting business at the meeting; (ii) minutes of the
meeting are prepared and the director's dissent from the action taken is entered
in those minutes; or (iii) the director delivers written notice of his or her
dissent or abstention to the presiding officer of the meeting before its
adjournment or to the corporation immediately after adjournment of the meeting.
Such right to dissent or abstain shall not apply to a director who voted in
favor of such action.
Section 10. COMMITTEES. The Board of Directors by resolution approved
by a majority of all the directors in office when the action is taken (if a
quorum of the directors is present and acting) may designate one or more
committees, including an executive committee, each committee to consist of two
or more directors elected by the Board of Directors, which to the extent
provided in said resolution as initially adopted, and as thereafter supplemented
or amended by further resolution adopted by a like vote, shall have and may
exercise, when the Board of Directors is not in session, the authority of the
Board of Directors in the management of the business and affairs of the
corporation, except that a committee may not do any of the following: (i)
authorize distributions; (ii) approve or propose to shareholders action that
Chapter 180, Wisconsin Statutes, requires be approved by shareholders; (iii)
fill vacancies on the Board of Directors or, unless the Board of Directors
provides by resolution that any vacancies on a committee shall be filled by the
affirmative vote of a majority of the remaining committee members, on any of its
committees; (iv) amend the corporation's Articles of Incorporation; (v) adopt,
amend or repeal By-Laws; (vi) approve a plan of merger not requiring shareholder
approval; (vii) authorize or approve reacquisition of shares, except according
to a formula or method prescribed by the Board of Directors or (viii) authorize
or approve the issuance or sale or contract for sale of shares, or determine the
designation and relative rights, preferences and limitations of a class or
series of shares, except that the Board of Directors may authorize a committee
or a senior executive officer of the corporation to do so within limits
prescribed by the Board of Directors. Unless otherwise provided by the Board of
Directors, members of a committee shall serve at the pleasure of the Board of
Directors. The Board of Directors may elect one or more of its members as
alternate members of any such committee who may take the place of any absent
member or members at any meeting of such committee, upon request by the Chief
Executive Officer or upon request by the chairman of such meeting. Subject to
any provision of law and these By-Laws, each such committee shall fix its own
rules governing the conduct of its activities and shall make such reports to the
Board of Directors of its activities as the Board of Directors may request.
Section 11. INFORMAL ACTION WITHOUT MEETING. Any action required or
permitted by the Articles of Incorporation or By-Laws or any provision of law to
be taken by the Board of Directors at a meeting may
<PAGE>
be taken without a meeting if the action is taken by all members of the Board,
and the action is evidenced by one or more written consents describing the
action taken, signed by each director and retained by the corporation.
Section 12. TELEPHONIC MEETINGS. Except as herein provided and
notwithstanding any place set forth in the notice of the meeting or these
By-Laws, the Board of Directors (and any committees thereof) may participate in
a regular or special meeting by, or conduct the meeting through the use of, any
means of communication by which all participating directors may simultaneously
hear each other during the meeting, including a conference telephone call. If a
meeting is conducted through the use of such means, all participating directors
shall be informed that a meeting is taking place at which official business may
be transacted. Any participant in a meeting by such means shall be deemed
present in person at such meeting. If action is to be taken at any meeting held
by such means on (i) a plan of merger or share exchange; (ii) a sale, lease,
exchange or other disposition of substantial property or assets of the
corporation; (iii) a voluntary dissolution or the revocation of voluntary
dissolution proceedings; or (iv) a filing for bankruptcy, then the identity of
each director participating in such meeting must be verified by the disclosure
of each such director's social security number to the chairman of the meeting or
in such other manner as such chairman deems reasonable under the circumstances
before a vote may be taken on any of the foregoing matters. For purposes of the
preceding clause (ii), the phrase "substantial property or assets" shall mean
property or assets of the corporation having a net book value on the date of
such meeting equal to 10% or more of the net book value of all of the
consolidated property and assets of the corporation on and as of the close of
the fiscal year last ended prior to the date of such meeting. Notwithstanding
the foregoing, no action may be taken at any meeting held by such means on any
particular matter which the Chairman of the Board (or chairman of the committee)
determines, in his or her discretion, to be inappropriate under the
circumstances for action at a meeting held by such means, such determination to
be made and announced in the notice of such meeting.
ARTICLE IV
OFFICERS
Section 1. NUMBER. The principal officers of the corporation shall be a
Chairman of the Board of Directors (said office to exist at such times as the
Board of Directors shall deem advisable), a President, one or more Vice
Presidents, a Secretary, and a Treasurer, each of whom shall be elected by the
Board of Directors. Such other officers and assistant officers as may be deemed
necessary may be elected or appointed by the Board of Directors or, to the
extent authorized by the Board of Directors or by these By-Laws, by a duly
appointed officer of the Corporation. Any two or more offices may be held by the
same person. The Chairman of the Board, if any, and the President shall be
chosen from among the Board of Directors; the other officers need not be
directors.
Section 2. ELECTION AND TERM OF OFFICE. The officers of the corporation
to be elected by the Board of Directors shall be elected annually at the first
meeting of the Board of Directors following the annual meeting of shareholders.
If the election of officers shall not be held at such meeting, such election
shall be held as soon thereafter as conveniently may be. Each officer shall hold
office until his successor shall have been duly elected or until his death or
until he shall resign or shall have been removed in the manner hereinafter
provided.
Section 3. RESIGNATION. An officer may resign at any time by delivering
written notice to the corporation. The resignation is effective when the notice
is delivered, unless the notice specifies a later effective date and the
corporation accepts the later effective date.
Section 4. REMOVAL. The Board of Directors may remove any officer and,
unless restricted by the By-Laws or by the Board of Directors, an officer may
remove any officer or assistant officer appointed by that officer, at any time,
with or without cause and notwithstanding the contract rights, if any, of the
officer removed. The appointment of an officer does not itself create contract
rights.
Section 5. PRESIDENT. The President shall be the Chief Executive
Officer of the Corporation and, subject to the control of the Board of
Directors, shall in general supervise and control the business and affairs of
the corporation. He shall have authority, subject to such rules as may be
prescribed by the Board of Directors, to appoint such agents and employees of
the corporation as he shall deem necessary, to prescribe their powers, duties,
and compensation and to delegate authority to them. He shall also have authority
to appoint one or more Assistant Secretaries of the Corporation from time to
time for limited purposes, which he shall do by giving the Secretary notice of
any such appointment. Such agents, employees and officers shall hold office at
the discretion of the President. He shall have authority to sign, execute and
acknowledge, on behalf of the corporation, all deeds, mortgages, bonds, stock
certificates, contracts, leases, reports and all other documents or instruments
necessary or proper to be executed in the course of the corporation's regular
business, or which shall be authorized by resolution of the Board of Directors,
and, except as otherwise provided by law or the Board of Directors, he may
authorize any
<PAGE>
Vice President or other officer or agent of the corporation to sign, execute and
acknowledge such documents or instruments in his place and stead. In general, he
shall perform all duties incident to the office of President and such other
duties as may be prescribed by the Board of Directors or by the Executive
Committee from time to time. In the absence of the Chairman of the Board, or the
event of his death, inability or refusal to act, the President shall preside at
meetings of the shareholders and of the Board of Directors.
Section 6. THE VICE PRESIDENTS. Any Vice President may sign deeds,
mortgages, stock certificates, contracts and other instruments in the absence of
the President and the execution of any instrument by any Vice President shall be
conclusive evidence of the absence of the President at the time of execution of
such instrument. The Vice Presidents shall perform such duties as usually
devolve upon such office and as may from time to time be assigned to them by the
Board of Directors or by the Executive Committee or by the Chief Executive
Officer.
At the request of the President, or in his absence or disability, the
Vice President designated by the President (or in the absence of such
designation, the Vice President designated by the Board of Directors or
Executive Committee or Chairman of the Board) shall perform the duties of the
President, and when so acting shall have all the powers of and be subject to all
the restrictions upon the President.
Section 7. THE SECRETARY. The Secretary shall: (a) keep as permanent
records any of the following that has been prepared: minutes of the
shareholders' and of the Board of Directors' meetings; records of actions taken
by the shareholders or the Board of Directors without a meeting; and records of
actions taken by a committee of the Board of Directors in place of the Board of
Directors and on behalf of the Corporation; (b) see that all notices are duly
given in accordance with the provisions of these By-Laws or as required by law;
(c) be custodian of the corporate records and of the seal of the corporation and
see that the seal of the corporation is affixed to all documents the execution
of which on behalf of the corporation under its seal is duly authorized; (d)
maintain or cause an authorized agent to maintain a record of the corporation's
shareholders, in a form that permits preparation of a list of the names and
addresses of all shareholders, by class or series of shares and showing the
number and class or series of shares held by each shareholder; (e) sign with the
Chairman or the President, or a Vice President, certificates for shares of the
corporation, the issuance of which shall have been authorized by resolution of
the Board of Directors; (f) have general charge of the stock transfer books of
the corporation; and (g) in general perform all duties incident to the office of
Secretary and have such other duties and exercise such authority as from time to
time may be delegated or assigned to him by the Chief Executive Officer or by
the Board of Directors.
Section 8. THE TREASURER. If required by the Board of Directors, the
Treasurer shall give a bond for the faithful discharge of his duties in such sum
and with such surety or sureties as the Board of Directors shall determine.
Subject to the review of and approval by the Chief Financial Officer of all acts
affecting his duties and responsibilities as Treasurer, he shall: (a) have
charge and custody of and be responsible for all funds and securities of the
corporation; receive and give receipts for moneys due and payable to the
corporation from any source whatsoever, and deposit all such moneys in the name
of the corporation in such banks, trust companies or other depositaries as shall
be selected in accordance with the provisions of Article V of these By-Laws; (b)
maintain appropriate accounting records for the Corporation; and (c) in general
perform all of the duties incident to the office of Treasurer and have such
other duties and exercise such other authority as from time to time may be
delegated or assigned to him by the Chief Executive Officer or by the Board of
Directors.
Section 9. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. There shall
be such number of Assistant Secretaries and Assistant Treasurers as the Board of
Directors may from time to time authorize and as these By-Laws or the Board of
Directors may from time to time authorize a duly appointed officer to appoint.
The Assistant Secretaries may sign with the President or a Vice President
certificates for shares of the corporation the issuance of which shall have been
authorized by a resolution of the Board of Directors. The Assistant Treasurers
shall respectively, if required by the Board of Directors, give bonds for the
faithful discharge of their duties in such sums and with such sureties as the
Board of Directors shall determine. The Assistant Secretaries and Assistant
Treasurers, in general, shall perform such duties and have such authority as
shall from time to time be delegated or assigned to them by the Secretary or the
Treasurer, respectively, or by the Chief Executive Officer or the Board of
Directors.
Section 10. OTHER ASSISTANTS AND ACTING OFFICERS. The Board of
Directors shall have the power to appoint any person to act as assistant to any
officer, or to perform the duties of such officer whenever for any reason it is
impracticable for such officer to act personally, and such assistant or acting
officer so appointed by the Board of Directors shall have the power to perform
all the duties of the office to which he is so appointed to be assistant, or as
to which he is so appointed to act, except as such power may be otherwise
defined or restricted by the Board of Directors.
<PAGE>
Section 11. SALARIES. The salaries of the officers shall be fixed from
time to time by the Board of Directors and no officer shall be prevented from
receiving such salary by reason of the fact that he is also a director of the
corporation.
ARTICLE V
CONTRACTS LOANS, CHECKS
AND DEPOSITS
Section 1. CONTRACTS. The Board of Directors may authorize any officer
or officers, agent or agents, to enter into any contract or execute and deliver
any instrument in the name of and on behalf of the corporation, and such
authorization may be general or confined to specific instances.
Section 2. LOANS. No loans shall be contracted on behalf of the
corporation and no evidences of indebtedness shall be issued in its name unless
authorized by or under the authority of a resolution of the Board of Directors.
Such authorization may be general or confined to specific instances.
Section 3. CHECKS, DRAFTS, ETC. All checks, drafts, or other orders for
the payment of money, notes or other evidences of indebtedness issued in the
name of the corporation shall be signed by such officer or officers, agent or
agents of the corporation, and in such manner as shall from time to time be
determined by resolution of the Board of Directors.
Section 4. DEPOSITS. All funds of the corporation not otherwise
employed shall be deposited from time to time to the credit of the corporation
in such banks, trust companies or other depositaries as may be selected by or
under the authority of the Board of Directors.
ARTICLE VI
CERTIFICATES FOR SHARES AND THEIR TRANSFER
Section 1. CERTIFICATES FOR SHARES. Certificates representing shares of
the corporation shall be in such form as shall be determined by the Board of
Directors. Such certificates shall be signed by the Chairman, the President or a
Vice President and by the Secretary or an Assistant Secretary and shall be
sealed with the seal of the corporation or a facsimile thereof. Such signatures
upon a certificate may be facsimiles if the certificate is countersigned by the
transfer agent, or registered by a registrar, other than the corporation itself
or an employee of the corporation. In case any officer who has signed or whose
facsimile signature has been placed upon such certificate shall have ceased to
be such officer before such certificate is issued, it may be issued by the
corporation with the same effect as if he were such officer at the date of its
issue. All certificates for shares shall be consecutively numbered or otherwise
identified. The name and address of the person to whom the shares represented
thereby are issued, with the number of shares and date of issue, shall be
entered on the stock transfer books of the corporation. All certificates
surrendered to the corporation for transfer shall be cancelled and no new
certificate shall be issued until the former certificate for a like number of
shares shall have been surrendered and cancelled, except that in case of a lost,
destroyed, or mutilated certificate a new one may be issued therefore upon such
terms and indemnity to the corporation as the Board of Directors may prescribe.
Section 2. UNCERTIFIED SHARES. The Board of Directors hereby authorizes
the issuance of any shares of its classes or series without certificates to the
full extent that the Secretary of the corporation determines that such issuance
is allowed by applicable law and rules of the New York Stock Exchange, any such
determination to be conclusively evidenced by the delivery to the corporation's
transfer agent and registrar by the Secretary of a certificate referring to this
bylaw and providing instructions of the Secretary to the transfer agent and
registrar to issue any such shares without certificates in accordance with
applicable law. In any event, the foregoing authorization does not affect shares
already represented by certificates until the certificates are surrendered to
the corporation.
Section 3. TRANSFER OF SHARES. Transfer of shares of the corporation
shall be made on the stock transfer books of the corporation by the holder of
record thereof or by his legal representative, who shall furnish proper evidence
of authority to transfer, or by his attorney thereunto authorized by power of
attorney duly executed and filed with the Secretary of the corporation and on
surrender for cancellation of the certificate for such
<PAGE>
shares if such shares are represented by certificates. The person in whose name
shares stand on the books of the corporation shall be deemed by the corporation
to be the owner thereof for all purposes.
The Board of Directors may appoint a registrar and/or transfer agent
for any stock of the corporation and may provide that all certificates of stock
issued be countersigned by such registrar and/or transfer agent.
Section 4. STOCK REGULATIONS. The Board of Directors shall have the
power and authority to make all such further rules and regulations not
inconsistent with the statutes of the State of Wisconsin as they may deem
expedient concerning the issue, transfer and registration of certificates
representing shares of the corporation.
ARTICLE VII
SEAL
The Board of Directors shall provide a corporate seal which shall be
circular in form and shall have inscribed thereon the words "JOHNSON CONTROLS,
INC., MILWAUKEE, WIS." Around the circumference, and the words, "CORPORATE SEAL"
in the center.
ARTICLE VIII
AMENDMENTS
Section 1. AMENDMENT BY SHAREHOLDERS. The affirmative vote of
shareholders possessing at least four-fifths of the voting power of the then
outstanding shares of all classes of stock of the Corporation generally
possessing voting rights in elections for directors, considered for this purpose
as one class (subject to the rights of holders of any class or series of stock
having a preference over the Common Stock of the Corporation as to dividends or
upon liquidation), shall be required to amend, alter, change or repeal Sections
4 and 13 of Article II of these By-Laws; Sections 1 and 7 of Article III of
these By-Laws; Section 2 of Article VIII of these By-Laws; and this Section, or
any provision of any of the foregoing. Subject to the foregoing and to any other
restriction contained in any specific By-Law, these By-Laws or any provision
hereof may be altered, amended or repealed by vote of the holders of a majority
interest of the stock of the corporation present or represented at a meeting of
the shareholders, annual or special (at which a quorum shall be present), where
the proposed action is properly brought before the meeting.
Section 2. AMENDMENT BY DIRECTORS. A Requisite Vote, as defined in
Section 1 of Article III of these By-Laws, shall be required to amend, alter,
change or repeal Sections 4 and 13 of Article II of these By-Laws; Sections 1
and 7 of Article III of these By-Laws; Section 1 of Article VIII of these
By-Laws; and this Section, or any provision of any of the foregoing. Subject to
the foregoing, to action by the shareholders prohibiting the exercise of such
power generally or in particular instances and to any restriction contained in
any Specific By-Law, the Board of Directors may alter, amend, or repeal these
By-Laws or any provision hereof or may enact additional By-Laws by a vote of the
majority of the whole Board at any meeting of the Board.
By-Laws altered, amended, repealed or enacted by the directors under
the power hereby conferred may be altered or repealed by the shareholders at any
annual meeting or at any special meeting thereof.
ARTICLE IX
NOTICES
Except as otherwise required by law or these By-Laws, any notice
required to be given by these By-Laws may be given orally or in writing, and
notice may be communicated in person, by telephone, telegraph, teletype,
facsimile or other form of wire or wireless communication, or by mail or private
carrier. Except where these By-Laws require a notice to be delivered to or
received by the recipient of the notice, written notice required to be given by
these By-Laws is effective, if communicated (i) by mail, when deposited in the
United States, if mailed postpaid and correctly addressed, (ii) by private
carrier, when delivered to the carrier, and (iii) by telegram, when the telegram
is delivered to the telegraph company.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.E
<SEQUENCE>4
<FILENAME>c66360ex10-e.txt
<DESCRIPTION>DEFERRED COMPENSATION PLAN
<TEXT>
<PAGE>
EXHIBIT 10.E
JOHNSON CONTROLS, INC.
DEFERRED COMPENSATION PLAN FOR CERTAIN DIRECTORS
ARTICLE 1.
PURPOSE AND DURATION
Section 1.1. Purpose. The purpose of the Johnson Controls, Inc. Deferred
Compensation Plan for Certain Directors is to advance the Company's growth and
success, and to advance the interests of its shareholders, by attracting and
retaining well-qualified directors upon whose judgment the Company is largely
dependent for the successful conduct of its operations.
Section 1.2. Duration. The Plan was originally effective on September 25, 1991.
The Plan was most recently amended and restated effective October 1, 2001. The
provisions of the Plan as amended and restated apply to each individual with an
interest hereunder on or after October 1, 2001; provided that no amendment
hereto shall adversely affect the right of any Participant with respect to an
election in effect prior to October 1, 2001, without the Participant's consent.
The Plan shall remain in effect until terminated pursuant to the provisions of
Article 9.
ARTICLE 2.
DEFINITIONS AND CONSTRUCTION
Section 2.1. Definitions. Wherever used in the Plan, the following terms shall
have the meanings set forth below and, when the meaning is intended, the initial
letter of the word is capitalized:
(a) "Account" means the record keeping account or accounts maintained
to record the interest of each Participant under the Plan, and shall include the
aggregate of the Participant's Share Unit Account and Interest Account. An
Account is established for record keeping purposes only and not to reflect the
physical segregation of assets on the Participant's behalf, and may consist of
such subaccounts or balances as the Committee may determine to be necessary or
appropriate.
(b) "Beneficiary" means the person or persons entitled to receive the
interest of a Participant in the event of the Participant's death as provided in
Section 5.5.
(c) "Board" means the Board of Directors of the Company.
(d) "Committee" means the committee appointed by the Board which shall
consist of not less than two members of the Board, each of whom shall be a
non-employee director within the meaning of Rule 16b-3 of the Exchange Act.
(e) "Company" means Johnson Controls, Inc., a Wisconsin corporation,
and any successor thereto as provided in Article 12.
(f) "Deferral" means the amount credited, in accordance with a
Participant's election, to the Participant's Account under the Plan in lieu of
payment in cash.
<PAGE>
JOHNSON CONTROLS, INC.
DEFERRED COMPENSATION PLAN FOR CERTAIN DIRECTORS
(g) "Fair Market Value" means with respect to a Share, except as
otherwise provided herein, the closing sales price on the New York Stock
Exchange on the date in question (or the immediately preceding trading day if
the date in question is not a trading day), and with respect to any other
property, such value as is determined by the Committee.
(h) "Inimical Conduct" means any act or omission that is inimical to
the best interests of the Company or any subsidiary, as determined by the
Committee in its sole discretion, including but not limited to: (1) divulging at
any time any confidential information, technical or otherwise, obtained by a
Participant in his capacity as a director, (2) taking any steps or doing
anything which would damage or negatively reflect on the reputation of the
Company or any subsidiary, or (3) refusing to furnish such advisory or
consulting services as the Company may reasonably request and as the
Participant's health may permit, provided that such services shall be rendered
as an independent contractor and not as an employee and that the Company shall
pay reasonable compensation for such services, as well as reimbursement for
expenses incurred in connection therewith.
(i) "Interest Account" means the hypothetical investment account
described in Section 4.2(a), which is eligible for fixed interest credits.
(j) "Outside Director" means a member of the Board who is not an
officer or employee of the Company or a subsidiary.
(k) "Participant" means an Outside Director who has elected to make
Deferrals hereunder.
(l) "Plan" means the arrangement described herein, as from time to time
amended and in effect.
(m) "Share" means a share of common stock of the Company.
(n) "Share Unit Account" means the account described in Section 4.2(b),
which is deemed invested in Shares.
(o) "Share Units" means the hypothetical Shares that are credited to
the Share Unit Accounts in accordance with Section 4.2.
Section 2.2. Gender and Number. Except where otherwise indicated by the context,
any masculine term used herein includes the feminine, the plural includes the
singular, and the singular the plural.
Section 2.3. Severability. In the event any provision of the Plan is held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the said illegal or invalid provision had not been included.
<PAGE>
JOHNSON CONTROLS, INC.
DEFERRED COMPENSATION PLAN FOR CERTAIN DIRECTORS
ARTICLE 3.
PARTICIPANTS
Each Outside Director may elect to become a Participant under
this Plan by providing a written election to make Deferrals to the Company on
such form, in such manner and subject to such procedures as the Committee may
establish.
ARTICLE 4.
DEFERRED COMPENSATION
Section 4.1. Deferral Election. An Outside Director may irrevocably elect,
during the 30-day period after the individual is first eligible to become a
Participant, to defer all or any part of his compensation as a director which is
earned after the date of said election as he may specify in his election.
Thereafter, an Outside Director may irrevocably elect, prior to the beginning of
each year and within such period as the Committee may specify, to defer all or
any part of his compensation as a director which is earned in such following
year as he may specify in his election. A Participant who fails to file a new
election for any year shall be deemed to have elected to continue his most
recent election in effect without change. Any such compensation deferred
pursuant to a valid election shall be credited by the Company to the
Participant's Account in accordance with Section 4.2 at the time it would have
otherwise been paid to the Participant in cash.
Section 4.2. Investment Election. At the time of making his Deferral election, a
Participant shall also elect whether the Deferrals shall be credited to an
Interest Account or Share Unit Account, as follows. In the absence of an
effective election, Deferrals shall be credited to the Share Unit Account.
(a) Credits to Interest Account. When a Participant has elected that
his Deferrals be credited to his Interest Account, the portion of his
compensation as to which such deferral election is in effect shall be credited
to his Interest Account as of the date such compensation would have otherwise
been paid to the Participant in cash. The Interest Account shall also be
credited on January 1 of each year with an amount equal to interest on the
unpaid balance of such account from time to time outstanding during the prior
year at the rate determined by adding together the prime rate in effect at the
Firstar Bank on the last banking day prior to such January 1 and the prime rate
in effect at said bank on the last banking days of each of the calendar months
of January through November of such year and dividing such total by 12. In the
event that the Interest Account shall be terminated for any reason prior to
January 1 of any year, such account shall upon such termination date be credited
with an amount equal to interest at the average prime rate determined as
aforesaid on the unpaid balance from time to time outstanding during that
portion of such year prior to the date of termination.
(b) Credits to Share Unit Account. When a Participant has elected that
his Deferrals be credited to his Share Unit Account, the portion of his
compensation as to which such deferral election is in effect shall be converted
to whole and fractional Share Units, with fractional units calculated to two
decimal places, and credited to his Share Unit Account as of the last day of the
calendar quarter in which cash payments would have otherwise been made to the
Participant.
<PAGE>
JOHNSON CONTROLS, INC.
DEFERRED COMPENSATION PLAN FOR CERTAIN DIRECTORS
Notwithstanding the foregoing, if the Participant ceases to be a
director before the last day of the calendar quarter, the Deferrals for such
quarter shall be credited instead to his Interest Account as of the date he
ceases to be a director. The Deferral shall be converted into Share Units in the
following manner:
(1) Determine the Fair Market Value of a Share on the last day of the
calendar quarter in which the Deferral is made.
(2) Divide the amount of the Deferral for such calendar quarter by such
Fair Market Value.
(3) The quotient resulting from such division indicates the number of
Share Units to be credited to the Participant's Share Unit Account.
If any dividends or other distributions are paid on Shares while a Participant
has Share Units credited to his Account, such Participant shall be credited with
a dividend award equal to the amount of the cash dividend paid or Fair Market
Value of other property distributed on one Share, multiplied by the number of
Share Units credited to his Share Unit Account on the date the dividend is
declared. The dividend award shall then be converted into additional Share Units
as provided above but using the Fair Market Value of a Share on the date the
dividend is paid. Any other provision of this Plan to the contrary
notwithstanding, if a dividend is declared on Shares in the form of a right or
rights to purchase shares of capital stock of the Company or any entity
acquiring the Company, no additional Share Units shall be credited to the
Participant's Share Unit Account with respect to such dividend, but each Share
Unit credited to a Participant's Share Unit Account at the time such dividend is
paid, and each Share Unit thereafter credited to the Participant's Share Unit
Account at a time when such rights are attached to Shares, shall thereafter be
valued as of any point in time on the basis of the aggregate of the then Fair
Market Value of one Share plus the then Fair Market Value of such right or
rights then attached to one Share.
Section 4.3. Changing Hypothetical Investment Options. A Participant may
irrevocably elect once each year, in such form and manner as the Committee may
prescribe and within the time periods the Committee may prescribe, to convert
all or part of his Interest Account to the Share Unit Account. Such conversion
shall be effective on the January 1 next following the date the election is
received by the Company, and shall be made in the same manner as set forth in
Section 4.2(b), as if the amount for which an election is made was a cash
payment being paid effective on the date of conversion. The Share Unit Account
is considered a "buy only" account under the Plan, and no amounts may be
transferred out of the Share Unit Account into the Interest Account.
Notwithstanding the foregoing, a Participant may not make a conversion election
after he ceases to be a director.
ARTICLE 5.
DISTRIBUTION
Section 5.1. General. A Participant, at the time he commences participation in
the Plan, shall make a distribution election with respect to his Account in such
form and manner as the Com-
<PAGE>
JOHNSON CONTROLS, INC.
DEFERRED COMPENSATION PLAN FOR CERTAIN DIRECTORS
mittee may prescribe and within the time periods the
Committee may prescribe. The election shall specify whether distributions shall
be made in a single lump sum or ten (10) annual installments. A distribution
election shall be effective only when it is received and approved by the
Committee, and shall remain in effect until modified by the Participant. A
Participant may from time to time modify his distribution election by filing a
revised distribution election, properly completed and signed, with the
Committee. However, a revised distribution election received by the Committee
within twelve (12) months prior to the date the Participant ceases to be a
director will be null and void, and the most recent prior distribution election
on file with the Committee will be given effect. If no valid election is in
effect, distributions shall be made in ten (10) annual installments.
Section 5.2. Manner of Distribution. The Participant's Account shall be paid in
cash in the following manner:
(a) Interest Account.
(1) If payment is to be made in a lump sum, payment shall be
made in January of the year following the year in which the
Participant ceased to be a director, and shall be in an amount
equal to the value of the total amount credited to the
Participant's Interest Account as of such January 1.
(2) If payment is to be made in annual installments, the first
annual payment shall be made in January of the year following
the year in which the Participant ceased to be a director, and
shall be in an amount equal to the value of 1/10th of the
total amount credited to the Participant's Interest Account as
of such January 1. A second annual payment shall be made in
January of the second year after the year in which the
Participant ceased to be a director, and shall be in an amount
equal to the value of 1/9th of the amount credited to the
Participant's Interest Account as of such January 1. Each
succeeding installment payment shall be determined in a
similar manner, until the tenth installment which shall equal
the then remaining balance of such account as of such January
1.
(b) Share Unit Account.
(1) If payment is to be made in a lump sum, payment shall be
made in January of the calendar year next following the year
in which the Participant ceased to be a director. The amount
of the payment shall be determined by multiplying the Fair
Market Value of a Share on the first trading day of such
January by the number of Share Units credited to the
Participant's Account on such day.
(2) If payment is to be made in annual installments, the first
annual payment shall be paid in January of the calendar year
next following the year in which the Participant ceased to be
a director, and shall be in an amount equal to the value of
1/10th of the number of Share Units credited to the
Participant's account as of the first trading day of such
January. The value of such Share Units shall be determined by
multiplying the Fair Market Value of a Share on the first
trading day of
<PAGE>
JOHNSON CONTROLS, INC.
DEFERRED COMPENSATION PLAN FOR CERTAIN DIRECTORS
such January by the number of such Share Units. After the
amount of the first installment has been determined, 1/10th of
the Share Units credited to the Participant's Account as of
the first trading day shall be cancelled as of such date. A
second annual payment shall be made in January of the second
year next following the year in which the Participant ceased
to be a director, and shall be in an amount equal to the value
of 1/9th of the number of Share Units credited to the
Participant's account on the first trading day of such
January. The value of such Share Units shall be determined by
multiplying the Fair Market Value of a Share on such first
trading day by the number of such Share Units. After the
amount of the second installment has been determined, 1/9th of
the Share Units credited to the Participant's account as of
such first trading day shall be cancelled as of such date.
Each succeeding installment payment shall be determined in a
similar manner, with the tenth annual installment being an
amount equal to the value of the total number of Share Units
then remaining in the Participant's Account as of the first
trading day of such year.
Section 5.3. Acceleration of Payments. Notwithstanding the foregoing provisions,
if the amount remaining in each of a Participant's Interest Account or Share
Unit Account at any time is less than $50,000 during the payout period, the
Board may elect by resolution to accelerate the payout thereafter in a lump sum
in such manner as the Board determines.
Section 5.4. Forfeiture of Distributions. If a Participant engages in Inimical
Conduct prior to the distribution of the balance of his Account, the remaining
balance of such Account shall be forfeited as of the date the Committee
determines the Participant has engaged in Inimical Conduct. The Committee may
suspend payments (without liability for interest thereon) pending its
determination of whether the Participant has engaged in Inimical Conduct.
Section 5.5. Distribution of Remaining Account Following Participant's Death.
Each Participant may file a beneficiary designation with the Company in such
form and manner as the Committee may prescribe and within the time periods the
Committee may prescribe. In the event of the Participant's death prior to
receiving all payments due hereunder, the remaining interest shall be paid to
the Participant's Beneficiary in accordance with the distribution election in
effect at the time of the Participant's death unless the Committee determines to
make payment in a lump sum. A Participant can change his beneficiary designation
at any time, provided that each beneficiary designation form filed with the
Company shall revoke the most recent form on file, and the last form received by
the Company while the Participant is alive shall be given effect. If a
Participant designates a beneficiary without providing in the designation that
the beneficiary must be living at the time of each distribution, the designation
shall vest in the beneficiary all of the distribution payable after the
beneficiary's death, and any distributions remaining upon the beneficiary's
death shall be made to the beneficiary's estate. In the event there is no valid
beneficiary designation form on file, or in the event the Participant's
designated beneficiary does not survive the Participant, the Participant's
estate will be deemed the Beneficiary and will be entitled to receive payment.
If a Participant designates his spouse as a beneficiary, such beneficiary
designation automatically shall become null and void on the date of the
Participant's divorce or legal separation from such spouse; provided the
Committee has notice of such divorce or legal separation prior to payment. If a
Participant maintains his primary residence in a state that has community or
marital property laws, then the Participant's
<PAGE>
JOHNSON CONTROLS, INC.
DEFERRED COMPENSATION PLAN FOR CERTAIN DIRECTORS
spouse, if any, must consent to the Participant's designation of any primary
beneficiary other than the spouse.
Section 5.6. Tax Withholding. The Company shall have the right to deduct from
any deferral or payment of cash made hereunder the amount of cash sufficient to
satisfy the Company's foreign, federal, state or local income tax withholding
obligations with respect to such deferral or payment.
Section 5.7. Offset. The Company shall have the right to offset from any amount
payable hereunder any amount that the Participant owes to the Company or any
subsidiary without the consent of the Participant (or his Beneficiary, in the
event of the Participant's death).
ARTICLE 6.
RULES WITH RESPECT TO SHARE UNITS
Section 6.1. Transactions Affecting Common Stock. In the event of any merger,
share exchange, reorganization, consolidation, recapitalization, stock dividend,
stock split or other change in corporate structure of the Company affecting
Shares, the Committee may make appropriate equitable adjustments with respect to
the Share Units credited to the Share Unit Accounts of each Participant,
including without limitation, adjusting the date as of which such units are
valued and/or distributed, as the Committee determines is necessary or desirable
to prevent the dilution or enlargement of the benefits intended to be provided
under the Plan.
Section 6.2. No Shareholder Rights With Respect to Share Units. Participants
shall have no rights as a stockholder pertaining to Share Units credited to
their Accounts.
ARTICLE 7.
ASSIGNMENT
Except as permitted in Section 5.5, neither the Participant,
nor his Beneficiary, nor his estate shall have any right or power to transfer,
assign, pledge, encumber, alienate, anticipate or otherwise dispose of any
rights or any distributions payable hereunder.
ARTICLE 8.
PARTICIPANTS' RIGHTS UNSECURED
Section 8.1. Unsecured Claim. The right of a Participant or his Beneficiary to
receive a distribution hereunder shall be an unsecured claim, and neither the
Participant nor any Beneficiary shall have any rights in or against any amount
credited to his Account or any other specific assets of the Company or a
subsidiary.
Section 8.2. Contractual Obligation. The Company may authorize the creation of a
trust or other arrangements to assist it in meeting the obligations created
under the Plan. However, any liability to any person with respect to the Plan
shall be based solely upon any contractual obligations that may be created
pursuant to the Plan. No obligation of the Company shall be deemed to be secured
by any pledge of, or other encumbrance on, any property of the Company or any
subsidiary. Nothing contained in this Plan and no action taken pursuant to its
terms shall create or
<PAGE>
JOHNSON CONTROLS, INC.
DEFERRED COMPENSATION PLAN FOR CERTAIN DIRECTORS
be construed to create a trust of any kind, or a fiduciary relationship
between the Company and any Participant or Beneficiary, or any other person.
ARTICLE 9.
AMENDMENT AND TERMINATION OF THE PLAN
Section 9.1. General Authority. The Board may at any time amend or terminate the
Plan, including but not limited to modifying the terms and conditions applicable
to (or otherwise eliminating) Deferrals to be made on or after the amendment or
termination date; provided, however, that no amendment or termination may reduce
or eliminate any Account balance accrued to the date of such amendment or
termination (except as such Account balance may be reduced as a result of
investment losses allocable to such Account) except as otherwise specifically
provided herein.
Section 9.2. Termination; Change of Control. Notwithstanding the foregoing, the
Board may make the following amendments to the Plan without obtaining the
consent of any individual with any interest hereunder:
(a) In the event of the Plan's termination, the Board may provide that
all Deferral elections then outstanding be cancelled and that all amounts
accrued to the date of termination be distributed to all Participants or
Beneficiaries, as applicable, in a single sum payment as soon as practicable
after the date of termination or on such other date as is specified by the
Board, regardless of any distribution election then in effect.
(b) The Board may amend the provisions of Article 10 prior to the
effective date of a Change of Control.
ARTICLE 10.
CHANGE OF CONTROL
Section 10.1. Acceleration of Payment of Accounts. Notwithstanding any other
provision of this Plan, within 30 days after a Change of Control (as defined in
Section 10.2), each Participant shall be entitled to receive a lump sum payment
in cash of all amounts accumulated in such Participant's Account. In determining
the amount accumulated in a Participant's Share Unit Account, each Share Unit
shall have a value equal to the higher of (a) the highest reported sales price,
regular way, of a share of the Company's common stock on the Composite Tape for
New York Stock Exchange Listed Stocks during the six-month period prior to the
date of the Change of Control of the Company and (b) the Fair Market Value of a
Share on the last trading day preceding the date of distribution.
Section 10.2. Definition of a Change of Control. A Change of Control means any
of the following events:
(a) The acquisition, other than from the Company, by any individual,
entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act) of beneficial ownership (within the meaning of Rule l3d-3
promulgated under the Exchange Act) of 20% or more of either:
<PAGE>
JOHNSON CONTROLS, INC.
DEFERRED COMPENSATION PLAN FOR CERTAIN DIRECTORS
(1) The then outstanding shares of common stock of the Company
(the "Outstanding Company Common Stock") or
(2) The combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the
election of directors (the "Company Voting Securities"),
provided, however, that any acquisition by (x) the Company or any of its
subsidiaries, or any employee benefit plan (or related trust) sponsored or
maintained by the Company or any of its subsidiaries or (y) any corporation with
respect to which, following such acquisition, more than 60% of, respectively,
the then outstanding shares of common stock of such corporation and the combined
voting power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is then beneficially
owned, directly or indirectly, by all or substantially all of the individuals
and entities who were the beneficial owners, respectively, of the Outstanding
Company Common Stock and Company Voting Securities immediately prior to such
acquisition in substantially the same proportion as their ownership, immediately
prior to such acquisition, of the Outstanding Company Common Stock and Company
Voting Securities, as the case may be, shall not constitute a Change of Control
of the Company; or
(b) Individuals who, as of May 24, 1989, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority of the
Board, provided that any individual becoming a director subsequent to May 24,
1989, whose election or nomination for election by the Company's shareholders
was approved by a vote of at least a majority of the directors then comprising
the Incumbent Board, shall be considered as though such individual were a member
of the Incumbent Board, but excluding, for this purpose, any such individual
whose initial assumption of office is in connection with an actual or threatened
election contest relating to the election of the Directors of the Company (as
such terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act); or
(c) Consummation of a reorganization, merger or consolidation (a
"Business Combination"), in each case, with respect to which all or
substantially all of the individuals and entities who were the respective
beneficial owners of the Outstanding Company Common Stock and Company Voting
Securities immediately prior to such Business Combination do not, following such
Business Combination, beneficially own, directly or indirectly, more than 60%
of, respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors as the case may be, of the corporation
resulting from such Business Combination in substantially the same proportion as
their ownership immediately prior to such Business Combination of the
Outstanding Company Common Stock and Company Voting Securities, as the case may
be; or
(d) A complete liquidation or dissolution of the Company or sale or
other disposition of all or substantially all of the assets of the Company other
than to a corporation with respect to which, following such sale or disposition,
more than 60% of, respectively, the then outstanding shares of common stock and
the combined voting power of the then outstanding voting securities entitled to
vote generally in the election of directors is then owned beneficially, directly
or indirectly, by all or substantially all of the individuals and entities who
were the beneficial owners,
<PAGE>
JOHNSON CONTROLS, INC.
DEFERRED COMPENSATION PLAN FOR CERTAIN DIRECTORS
respectively, of the Outstanding Company Common Stock and Company Voting
Securities immediately prior to such sale or disposition in substantially the
same proportion as their ownership of the Outstanding Company Common Stock and
Company Voting Securities, as the case may be, immediately prior to such sale or
disposition.
ARTICLE 11.
ADMINISTRATION
Section 11.1. General. The Committee shall administer the Plan. If at any time
the Committee shall not be in existence or not be composed of members of the
Board who qualify as "non-employee directors", then the Board shall administer
the Plan and all references herein to the Committee shall be deemed to include
the Board.
Section 11.2. Authority and Responsibility. In addition to the authority
specifically provided herein, the Committee shall have the discretionary
authority to take any action or make any determination it deems necessary for
the proper administration of its duties under the Plan, including but not
limited to: (a) prescribe rules and regulations for the administration of the
Plan; (b) prescribe forms for use with respect to the Plan; (c) interpret and
apply all of the Plan's provisions, reconcile inconsistencies or supply
omissions in the Plan's terms; and (d) make appropriate determinations,
including factual determinations, and calculations.
Section 11.3. Decisions Binding. The Committee's determinations shall be final
and binding on all parties with an interest hereunder.
Section 11.4. Procedures of the Committee. The Committee's determinations must
be made by not less than a majority of its members present at the meeting (in
person or otherwise) at which a quorum is present, or by written majority
consent, which sets forth the action, is signed by the members of the Committee
and filed with the minutes for proceedings of the Committee. A majority of the
entire Committee shall constitute a quorum for the transaction of business.
Service on the Committee shall constitute service as a director of the Company
so that the Committee members shall be entitled to indemnification, limitation
of liability and reimbursement of expenses with respect to their Committee
services to the same extent that they are entitled under the Company's By-laws
and Wisconsin law for their services as directors of the Company.
Section 11.5. Restrictions to Comply with Applicable Law. Notwithstanding any
other provision of the Plan to the contrary, the Company shall have no liability
to make any payment unless such payment would comply with all applicable laws
and the applicable requirements of any securities exchange or similar entity. In
addition, transactions under the Plan are intended to comply with all applicable
conditions of Rule 16b-3 under the Exchange Act. The Committee shall administer
the Plan so that transactions under the Plan will be exempt from or comply with
Section 16 of the Exchange Act, and shall have the right to restrict or rescind
any transaction, or impose other rules and requirements, to the extent it deems
necessary or desirable for such exemption or compliance to be met.
<PAGE>
JOHNSON CONTROLS, INC.
DEFERRED COMPENSATION PLAN FOR CERTAIN DIRECTORS
ARTICLE 12.
SUCCESSORS
All obligations of the Company under the Plan shall be binding
on any successor to the Company, whether the existence of such successor is the
result of a direct or indirect purchase, merger, consolidation or otherwise, of
all or substantially all of the business and/or assets of the Company. This Plan
shall be binding upon and inure to the benefit of the Participants,
Beneficiaries and their heirs, executors, administrators and legal
representatives.
ARTICLE 13.
DISPUTE RESOLUTION
Section 13.1. Governing Law. This Plan and the rights and obligations hereunder
shall be governed by and construed in accordance with the internal laws of the
State of Wisconsin (excluding any choice of law rules that may direct the
application of the laws of another jurisdiction), except as provided in Section
13.2 hereof.
Section 13.2. Arbitration.
(a) Application. If a Participant or Beneficiary brings a claim that
relates to benefits under this Plan, regardless of the basis of the claim, such
claim shall be settled by final binding arbitration in accordance with the rules
of the American Arbitration Association ("AAA") and judgment upon the award
rendered by the arbitrator may be entered in any court having jurisdiction
thereof.
(b) Initiation of Action. Arbitration must be initiated by serving or
mailing a written notice of the complaint to the other party. Normally, such
written notice should be provided the other party within one year (365 days)
after the day the complaining party first knew or should have known of the
events giving rise to the complaint. However, this time frame may be extended if
the applicable statute of limitations provides for a longer period of time. If
the complaint is not properly submitted within the appropriate time frame, all
rights and claims that the complaining party has or may have against the other
party shall be waived and void. Any notice sent to the Company shall be
delivered to:
Office of General Counsel
Johnson Controls, Inc.
5757 North Green Bay Avenue
P.O. Box 591
Milwaukee, WI 53201-0591
The notice must identify and describe the nature of all
complaints asserted and the facts upon which such complaints are based. Notice
will be deemed given according to the date of any postmark or the date of time
of any personal delivery.
(c) Compliance with Personnel Policies. Before proceeding to
arbitration on a complaint, the Participant or Beneficiary must initiate and
participate in any complaint resolution procedure identified in the Company's
personnel policies. If the claimant has not initiated the
<PAGE>
JOHNSON CONTROLS, INC.
DEFERRED COMPENSATION PLAN FOR CERTAIN DIRECTORS
complaint resolution procedure before initiating arbitration on a complaint, the
initiation of the arbitration shall be deemed to begin the complaint resolution
procedure. No arbitration hearing shall be held on a complaint until any
applicable Company complaint resolution procedure has been completed.
(d) Rules of Arbitration. All arbitration will be conducted by a single
arbitrator according to the Employment Dispute Arbitration Rules of the AAA. The
arbitrator will have authority to award any remedy or relief that a court of
competent jurisdiction could order or grant including, without limitation,
specific performance of any obligation created under policy, the awarding of
punitive damages, the issuance of any injunction, costs and attorney's fees to
the extent permitted by law, or the imposition of sanctions for abuse of the
arbitration process. The arbitrator's award must be rendered in a writing that
sets forth the essential findings and conclusions on which the arbitrator's
award is based.
(e) Representation and Costs. Each party may be represented in the
arbitration by an attorney or other representative selected by the party. The
Company shall be responsible for its own costs, the AAA filing fee and all other
fees, costs and expenses of the arbitrator and AAA for administering the
arbitration. The claimant shall be responsible for his attorney's or
representative's fees, if any. However, if any party prevails on a statutory
claim which allows the prevailing party costs and/or attorneys' fees, the
arbitrator may award costs and reasonable attorneys' fees as provided by such
statute.
(f) Discovery; Location; Rules of Evidence. Discovery will be allowed
to the same extent afforded under the Federal Rules of Civil Procedure.
Arbitration will be held at a location selected by the Company. AAA rules
notwithstanding, the admissibility of evidence offered at the arbitration shall
be determined by the arbitrator who shall be the judge of its materiality and
relevance. Legal rules of evidence will not be controlling, and the standard for
admissibility of evidence will generally be whether it is the type of
information that responsible people rely upon in making important decisions.
(g) Confidentiality. The existence, content or results of any
arbitration may not be disclosed by a party or arbitrator without the prior
written consent of both parties. Witnesses who are not a party to the
arbitration shall be excluded from the hearing except to testify.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.F
<SEQUENCE>5
<FILENAME>c66360ex10-f.txt
<DESCRIPTION>EXECUTIVE INCENTIVE COMPENSATION PLAN
<TEXT>
<PAGE>
EXHIBIT 10.F
JOHNSON CONTROLS, INC.
EXECUTIVE INCENTIVE COMPENSATION PLAN
ARTICLE 1.
PURPOSE AND DURATION
Section 1.1. Purpose. The purpose of the Johnson Controls, Inc. Executive
Incentive Compensation Plan is to provide incentive to the key executives of the
Company and its subsidiaries who have the prime responsibility for the
operations of the Company and its subsidiaries by making them participants in
their success. The Plan does not provide for the deferral of payments hereunder
and is not intended to qualify for the performance-based compensation exception
under Code Section 162(m).
Section 1.2. Duration. The Plan was originally effective on September 22, 1993.
The Plan was most recently amended and restated effective October 1, 2001. The
provisions of the Plan as amended and restated apply to each individual with an
interest hereunder on or after October 1, 2001; provided that no amendment
hereto shall adversely affect the right of any Participant with respect to an
award granted prior to October 1, 2001, without the Participant's consent. The
Plan shall remain in effect until terminated pursuant to the provisions of
Article 9.
ARTICLE 2.
DEFINITIONS AND CONSTRUCTION
Section 2.1. Definitions. Wherever used in the Plan, the following terms shall
have the meanings set forth below and, when the meaning is intended, the initial
letter of the word is capitalized:
(a) "Company" means Johnson Controls, Inc., a Wisconsin corporation,
and any successor thereto as provided in Article 14.
(b) "Plan" means the arrangement described herein, as from time to time
amended and in effect.
(c) "Plan Year" means a fiscal year of the Company.
(d) "Participant" means an executive of the Company or a subsidiary who
has been approved for participation in the Plan.
(e) "Board" means the Board of Directors of the Company.
(f) "Committee" means the members of management who have been appointed
by the Chief Executive Officer of the Company to carry out the responsibilities
of the Committee as set forth in the Plan.
<PAGE>
JOHNSON CONTROLS, INC.
EXECUTIVE INCENTIVE COMPENSATION PLAN
(g) "Compensation" means the Participant's annualized base salary at
the close of the Plan Year.
(h) "Beneficiary" means the person or persons entitled to receive the
interest of a Participant in the event of the Participant's death as provided in
Article 6.
(i) "Operating Profits" means the consolidated income determined
before:
(1) The incentive compensation awards under this Plan;
(2) Any taxes on income;
(3) Extraordinary credits and charges to income less the
related tax effect;
(4) The cumulative effect, less the related tax effect, on
prior years of any accounting change made during the year; and
(5) Company contributions to the Johnson Controls, Inc.
Savings and Investment (401(k)) Plan.
The calculation of such Operating Profits shall be examined by
the Company's independent public accountants who shall furnish their opinion
that such calculation has been made in accordance with generally accepted
accounting principles consistently applied and in compliance with the provisions
of this Plan.
Notwithstanding the foregoing, for purposes of comparing
Operating Profits for the Plan Year to Operating Profits for one or more prior
Plan Years in determining whether a performance goal has been met, if an
accounting change has occurred effective in the current Plan Year that affects
the calculation of Operating Profits, then the Operating Profits for the prior
year(s) shall be restated on a pro forma basis as if the accounting change
applied in those prior year(s).
(j) "Shareholders' Equity" for a Plan Year means the consolidated
shareholders' equity (sometimes referred to as net worth) of the Company at the
end of the preceding fiscal year of the Company, as set forth in the Company's
annual report for the preceding fiscal year, plus or minus a proportionate
allowance for any change during such Plan Year, based on the period of such
change, in the amount of shareholders' equity from newly-issued or
finally-retired capital stock.
(k) "Return on Shareholders' Equity" for a Plan Year means the
percentage that Operating Profits for the year is of Shareholders' Equity for
the year.
(l) "Division Return on Assets" for a Plan Year means division or
business unit EBIT (Earnings Before Interest and Taxes) for the year as a
percentage of average division or business unit assets employed. (See Corporate
Procedure Number 30-20.)
<PAGE>
JOHNSON CONTROLS, INC.
EXECUTIVE INCENTIVE COMPENSATION PLAN
(m) "Retirement" means termination of employment from the Company and
its subsidiaries (without Cause) on or after attainment of age 55 with at least
ten years of vesting service or age 65 with at least five years of vesting
service (such vesting service to be determined within the meaning of the Johnson
Controls Pension Plan or such other plan or methodology prescribed by the
Committee).
(n) "Total and Permanent Disability" means the Participant's inability
to perform the material duties of his occupation as a result of a
medically-determinable physical or mental impairment which can be expected to
result in death or which has lasted or can be expected to last for a period of
at least 12 months, as determined by the Committee. The Participant will be
required to submit such medical evidence or to undergo a medical examination by
a doctor selected by the Committee as the Committee determines is necessary in
order to make a determination hereunder.
(o) "Cause" means: (1) if the Participant is subject to an employment
agreement that contains a definition of "cause", such definition, or (2)
otherwise, any of the following as determined by the Committee: (a) violation of
the provisions of any employment agreement, non-competition agreement,
confidentiality agreement, or similar agreement with the Company or subsidiary,
or the Company's or subsidiary's code of ethics, as then in effect, (b) conduct
rising to the level of gross negligence or willful misconduct in the course of
employment with the Company or subsidiary, (c) commission of an act of
dishonesty or disloyalty involving the Company or subsidiary, (d) violation of
any federal, state or local law in connection with the Participant's employment,
or (e) breach of any fiduciary duty to the Company or a subsidiary.
(p) "Inimical Conduct" means any act or omission that is inimical to
the best interests of the Company or any subsidiary, as determined by the
Committee in its sole discretion, including but not limited to: (1) violation of
any employment, noncompete, confidentiality or other agreement in effect with
the Company or any subsidiary, (2) taking any steps or doing anything which
would damage or negatively reflect on the reputation of the Company or a
subsidiary, or (3) failure to comply with applicable laws relating to trade
secrets, confidential information or unfair competition.
Section 2.2. Gender and Number. Except where otherwise indicated by the context,
any masculine term used herein includes the feminine, the plural includes the
singular, and the singular the plural.
Section 2.3. Severability. In the event any provision of the Plan is held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the said illegal or invalid provision had not been included.
ARTICLE 3.
ELIGIBILITY AND PARTICIPATION
Section 3.1. Approval. Each executive of the Company or a subsidiary who is
approved for participation in the Plan by the Committee shall be a Participant
as of the date designated by the
<PAGE>
JOHNSON CONTROLS, INC.
EXECUTIVE INCENTIVE COMPENSATION PLAN
Committee. Written notice of such approval shall be given to each executive so
approved as soon as practicable following the date of approval. No employee
shall have any right to receive an award in any Plan Year even if an award has
been previously granted in prior Plan Years.
Section 3.2. Termination of Approval. The Committee may withdraw its approval
for participation for a Participant at any time. In the event of such
withdrawal, the executive concerned shall cease to be an active Participant as
of the date selected by the Committee, the executive shall not be entitled to
any payment unless the Committee determines otherwise, and the executive shall
be notified of such withdrawal as soon as practicable following such action.
Section 3.3. Notification. In general, it is expected that the Committee will
determine which executives are to be Participants for a Plan Year prior to the
beginning of such year and notify the executives of that fact before the
beginning of the Plan Year.
Section 3.4. Transfers In, Out and Between Eligible Positions. Notwithstanding
Section 3.3. above, the Committee may approve an executive for participation
during a portion of a Plan Year, subject to the limitations described below. In
such event, the executive shall be eligible to receive an award for the Plan
Year based on the number of full months as a Participant during such year.
(a) A person newly hired or transferred into an eligible executive
position shall have his participation prorated during the first Plan Year
provided employment or transfer occurs at least three months prior to the end of
the Plan Year.
(b) A person transferred out of an eligible executive position may
receive a prorated award at the discretion of the Committee provided he served
in the eligible executive position for at least three full months during the
Plan Year.
(c) Participants transferring between eligible executive positions that
have different award formulae will receive awards prorated to months served in
each eligible position.
Section 3.5. Termination of Employment. No Participant shall earn an incentive
award for a Plan Year unless the Participant is employed by the Company or
subsidiary (or is on an approved leave of absence) on the last day of such Plan
Year, unless employment was terminated during the year as a result of
Retirement, Total and Permanent Disability or death at a time when the
Participant could not have been terminated for Cause. Accordingly, no incentive
award shall be made for a Plan Year for a Participant whose employment with the
Company or subsidiary is terminated during such year for reasons other than
Retirement, Total and Permanent Disability, or death at a time when the
Participant could not have been terminated for Cause, unless approved by the
Committee after considering the cause of termination.
ARTICLE 4.
ANNUAL AWARDS TO PARTICIPANTS
Section 4.1. Awards Based on Formula. As of the end of each Plan Year, the
Committee shall determine the amount of the incentive award for each Participant
who is eligible to receive an
<PAGE>
JOHNSON CONTROLS, INC.
EXECUTIVE INCENTIVE COMPENSATION PLAN
award for the year. The amount of the award shall be expressed as a percentage
of Compensation resulting from a formula which is communicated individually to
the Participant at the time he is selected for Plan participation for the year
or as soon thereafter as practicable. The formula will be based on Return on
Shareholders' Equity and/or Division Return on Assets, as determined by the
Committee.
Section 4.2. Discretionary Adjustments to Formula Awards. The Committee may
adjust each Participant's authorized award percentage, based upon overall
individual performance and attainment of goals, up to a maximum of plus twenty
percent (+20%) or down to a maximum of minus twenty percent (-20%) based upon
the recommendation of the Participant's supervisor and approval by the Chief
Executive Officer of the Company.
ARTICLE 5.
PAYMENT OF INCENTIVE AWARDS
Section 5.1. Form and Timing. Subject to the provisions of Section 5.2. below, a
Participant's final award for a Plan Year shall be paid in cash to the
Participant, or his Beneficiary in the event of his death, by the 75th day
following the end of the Plan Year.
Section 5.2. Forfeiture. Notwithstanding the foregoing, no payment shall be made
to a Participant if, after the end of the Plan Year for which payment has
accrued, but before payment is made, either (a) the Company or subsidiary
terminates the Participant's employment for Cause or (b) the Participant engages
in Inimical Conduct. The Committee may suspend payment hereunder (without
liability for interest thereon) pending its determination of whether the
Participant was or should have been terminated for Cause or whether the
Participant has engaged in Inimical Conduct.
ARTICLE 6.
BENEFICIARY
Each Participant may file a beneficiary designation on the
form provided by the Committee. In the event of the Participant's death prior to
receiving any payment due hereunder, the payment shall be made to the
Participant's Beneficiary. A Participant can change his beneficiary designation
at any time, provided that each beneficiary designation form filed with the
Company shall revoke the most recent form on file, and the last form received by
the Company while the Participant was alive shall be given effect. In the event
there is no valid beneficiary designation form on file, or in the event the
Participant's designated Beneficiary is not alive at the time payment is to be
made, the Participant's estate will be deemed the Beneficiary and will be
entitled to receive payment. If a Participant designates his spouse as a
beneficiary, such beneficiary designation automatically shall become null and
void on the date of the Participant's divorce or legal separation from such
spouse; provided the Committee has notice of such divorce or legal separation
prior to payment. If a Participant maintains his primary residence in a state
that has community or marital property laws, then the Participant's spouse, if
any, must consent to the Participant's designation of any primary beneficiary
other than the spouse.
<PAGE>
JOHNSON CONTROLS, INC.
EXECUTIVE INCENTIVE COMPENSATION PLAN
ARTICLE 7.
RIGHTS OF PARTICIPANTS
Section 7.1. No Funding. No Participant or Beneficiary shall have any interest
in any fund or in any specific asset or assets of the Company (or any
subsidiary) by reason of any award under the Plan. It is intended that the
Company has merely a contractual obligation to make payments when due hereunder
and it is not intended that the Company (or any subsidiary) hold any funds in
reserve or trust to secure payments hereunder.
Section 7.2. No Transfer. No Participant may assign, pledge, or encumber his
interest under the Plan, or any part thereof, except that a Participant may
designate a Beneficiary as provided herein.
Section 7.3. No Implied Rights; Employment. Nothing contained in this Plan shall
be construed to:
(a) Give any employee or Participant any right to receive any award
other than in the sole discretion of the Committee;
(b) Limit in any way the right of the Company or subsidiary to
terminate a Participant's or other employee's employment at any time; or
(c) Be evidence of any agreement or understanding, express or implied,
that a Participant or other employee will be retained in any particular position
or at any particular rate of remuneration.
ARTICLE 8.
ADMINISTRATION
Section 8.1. General. The Plan shall be administered by the Company except to
the extent certain authority has been delegated herein to the Committee. If at
any time the Committee shall not be in existence, the Company shall assume the
Committee's functions and each reference to the Committee herein shall be deemed
to include the Company.
Section 8.2. Authority. The Company shall have full power and discretionary
authority to: (a) administer the Plan, including but not limited to the power
and authority to construe and interpret the Plan; (b) correct errors, supply
omissions or reconcile inconsistencies in the Plan; (c) establish, amend or
waive rules and regulations, and appoint such agents, as it deems appropriate
for the Plan's administration; and (d) make any other determinations, including
factual determinations, and take any other action as it determines is necessary
or desirable for the Plan's administration.
Section 8.3. Decision Binding. The Company's or Committee's determinations and
decisions made pursuant to the provisions of the Plan and all related orders or
resolutions of the Board shall be final, conclusive and binding on all persons
who have an interest in the Plan or an award, and such determinations and
decisions shall not be reviewable.
<PAGE>
JOHNSON CONTROLS, INC.
EXECUTIVE INCENTIVE COMPENSATION PLAN
Section 8.4. Procedures of the Committee. The Committee's determinations must be
made by not less than a majority of its members present at the meeting (in
person or otherwise) at which a quorum is present, or by written majority
consent, which sets forth the action, is signed by each member of the Committee
and filed with the minutes for proceedings of the Committee. A majority of the
entire Committee shall constitute a quorum for the transaction of business.
Section 8.5. Charge to Subsidiary. Each subsidiary shall be charged each year
with the amount, if any, awarded under the Plan to its employees for such year.
ARTICLE 9.
ADJUSTMENTS
In the event of any change in the outstanding shares of the
Company's Common Stock by reason of any stock dividend or split,
recapitalization, reclassification, merger, consolidation or exchange of shares
or other similar corporate change, then if the Committee shall determine, in its
sole discretion, that such change necessarily or equitably requires an
adjustment in the awards then held by Participants or the performance goals
thereunder, such adjustments shall be made by the Committee and shall be
conclusive and binding for all purposes of this Plan. No adjustment shall be
made in connection with the issuance by the Company of any warrants, rights, or
options to acquire additional shares of Common Stock or of securities
convertible into Common Stock.
ARTICLE 10.
AMENDMENT OR TERMINATION
The Board may modify or amend, in whole or in part, any or all
of the provisions of the Plan, or suspend or terminate it entirely; provided,
however, that no such modification, amendment, or suspension or termination may,
without the consent of the Participant, or his Beneficiary in the case of his
death, reduce the right of a Participant or his Beneficiary, as the case may be,
to any payment accrued under the Plan except as specifically provided herein.
Notwithstanding the foregoing, the Board may make the following amendments to
the Plan without the consent of any individual with an interest hereunder:
(a) In the event of the Plan's termination, the Board may provide that
all amounts accrued to the date of termination be distributed to all
Participants or Beneficiaries, as applicable, in a single sum payment as soon as
practicable after the date of termination or on such other date as is specified
by the Board.
(b) The Board may amend the provisions of Article 11 prior to the
effective date of a Change of Control.
ARTICLE 11.
CHANGE OF CONTROL
Section 11.1. Acceleration of Payment. Notwithstanding any other provision of
this Plan, within 30 days after a Change of Control (as defined below), each
Participant shall be entitled to
<PAGE>
JOHNSON CONTROLS, INC.
EXECUTIVE INCENTIVE COMPENSATION PLAN
receive a lump sum payment in cash equal to the product of (x) such
Participant's formula award for the year in which the Change of Control occurs,
based on maximum achievable award for such Participant under the Plan (but
without regard to any discretionary adjustments described in Section 4.2) and
(y) a fraction, the numerator of which is the number of days after the beginning
of the Plan Year in which the Change of Control occurs and the denominator of
which is 365. In addition, the Company shall pay to each Participant a lump sum
amount in cash within 30 days after the Change of Control of all amounts accrued
for the prior year but not yet paid, if any.
Section 11.2. Definition of Change of Control. A "Change of Control" means any
of the following events:
(a) The acquisition, other than from the Company, by any individual,
entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of 20% or more of either:
(1) The then outstanding shares of common stock of the Company
(the "Outstanding Company Common Stock") or
(2) The combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the
election of directors (the "Company Voting Securities");
provided, however, that any acquisition by (x) the Company or
any of its subsidiaries, or any employee benefit plan (or related trust)
sponsored or maintained by the Company or any of its subsidiaries or (y) any
corporation with respect to which, following such acquisition, more than 60% of,
respectively, the then outstanding shares of common stock of such corporation
and the combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Company Voting Securities immediately prior
to such acquisition in substantially the same proportion as their ownership,
immediately prior to such acquisition, of the Outstanding Company Common Stock
and Company Voting Securities, as the case may be, shall not constitute a Change
in Control of the Company; or
(b) Individuals who, as of May 24, 1989, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority of the
Board, provided that any individual becoming a director subsequent to May 24,
1989, whose election or nomination for election by the Company's shareholders
was approved by a vote of at least a majority of the directors then comprising
the Incumbent Board, shall be considered as though such individual were a member
of the Incumbent Board, but excluding, for this purpose, any such individual
whose initial assumption of office is in connection with an actual or threatened
election contest relating to the election of the Directors of the Company (as
such terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act); or
<PAGE>
JOHNSON CONTROLS, INC.
EXECUTIVE INCENTIVE COMPENSATION PLAN
(c) Consummation of a reorganization, merger or consolidation (a
"Business Combination"), in each case, with respect to which all or
substantially all of the individuals and entities who were the respective
beneficial owners of the Outstanding Company Common Stock and Company Voting
Securities immediately prior to such Business Combination do not, following such
Business Combination, beneficially own, directly or indirectly, more than 60%
of, respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Business Combination in substantially the same proportion as
their ownership immediately prior to such Business Combination of the
Outstanding Company Common Stock and Company Voting Securities, as the case may
be; or
(d) A complete liquidation or dissolution of the Company or sale or
other disposition of all or substantially all of the assets of the Company other
than to a corporation with respect to which, following such sale or disposition,
more than 60% of, respectively, the then outstanding shares of common stock and
the combined voting power of the then outstanding voting securities entitled to
vote generally in the election of directors is then owned beneficially, directly
or indirectly, by all or substantially all of the individuals and entities who
were the beneficial owners, respectively, of the Outstanding Company Common
Stock and Company Voting Securities immediately prior to such sale or
disposition in substantially the same proportion as their ownership of the
Outstanding Company Common Stock and Company Voting Securities, as the case may
be, immediately prior to such sale or disposition.
ARTICLE 12.
TAX WITHHOLDING
The Company shall have the right to deduct from all cash
payments made hereunder (or from any other payments due a Participant) any
foreign, federal, state, or local taxes required by law to be withheld with
respect to such cash payments.
ARTICLE 13.
OFFSET
The Company shall have the right to offset from the incentive
award payable hereunder any amount that the Participant owes to the Company or
any subsidiary without the consent of the Participant (or his Beneficiary, in
the event of the Participant's death).
ARTICLE 14.
SUCCESSORS
All obligations of the Company under the Plan with respect to
awards granted hereunder shall be binding on any successor to the Company,
whether the existence of such successor is the result of a direct or indirect
purchase, merger, consolidation or otherwise, of all or substantially all of the
business and/or assets of the Company. The Plan shall be binding upon and inure
to the benefit of the Participants, Beneficiaries, and their heirs, executors,
administrators and legal representatives.
<PAGE>
JOHNSON CONTROLS, INC.
EXECUTIVE INCENTIVE COMPENSATION PLAN
ARTICLE 15.
DISPUTE RESOLUTION
Section 15.1. Governing Law. This Plan and the rights and obligations hereunder
shall be governed by and construed in accordance with the internal laws of the
State of Wisconsin (excluding any choice of law rules that may direct the
application of the laws of another jurisdiction), except as provided in Section
15.2 hereof.
Section 15.2. Arbitration.
(a) Application. Notwithstanding any employee agreement in effect
between a Participant and the Company or any subsidiary employer, if a
Participant or Beneficiary brings a claim that relates to benefits under this
Plan, regardless of the basis of the claim (including but not limited to,
actions under Title VII, wrongful discharge, breach of employment agreement,
etc.), such claim shall be settled by final binding arbitration in accordance
with the rules of the American Arbitration Association ("AAA") and judgment upon
the award rendered by the arbitrator may be entered in any court having
jurisdiction thereof.
(b) Initiation of Action. Arbitration must be initiated by serving or
mailing a written notice of the complaint to the other party. Normally, such
written notice should be provided the other party within one year (365 days)
after the day the complaining party first knew or should have known of the
events giving rise to the complaint. However, this time frame may be extended if
the applicable statute of limitation provides for a longer period of time. If
the complaint is not properly submitted within the appropriate time frame, all
rights and claims that the complaining party has or may have against the other
party shall be waived and void. Any notice sent to the Company shall be
delivered to:
Office of General Counsel
Johnson Controls, Inc.
5757 North Green Bay Avenue
P.O. Box 591
Milwaukee, WI 53201-0591
The notice must identify and describe the nature of all
complaints asserted and the facts upon which such complaints are based. Notice
will be deemed given according to the date of any postmark or the date of time
of any personal delivery.
(c) Compliance with Personnel Policies. Before proceeding to
arbitration on a complaint, the Participant or Beneficiary must initiate and
participate in any complaint resolution procedure identified in the Company's or
subsidiary's personnel policies. If the claimant has not initiated the complaint
resolution procedure before initiating arbitration on a complaint, the
initiation of the arbitration shall be deemed to begin the complaint resolution
procedure. No arbitration hearing shall be held on a complaint until any
applicable Company or subsidiary complaint resolution procedure has been
completed.
<PAGE>
JOHNSON CONTROLS, INC.
EXECUTIVE INCENTIVE COMPENSATION PLAN
(d) Rules of Arbitration. All arbitration will be conducted by a single
arbitrator according to the Employment Dispute Arbitration Rules of the AAA. The
arbitrator will have authority to award any remedy or relief that a court of
competent jurisdiction could order or grant including, without limitation,
specific performance of any obligation created under policy, the awarding of
punitive damages, the issuance of any injunction, costs and attorney's fees to
the extent permitted by law, or the imposition of sanctions for abuse of the
arbitration process. The arbitrator's award must be rendered in a writing that
sets forth the essential findings and conclusions on which the arbitrator's
award is based.
(e) Representation and Costs. Each party may be represented in the
arbitration by an attorney or other representative selected by the party. The
Company or subsidiary shall be responsible for its own costs, the AAA filing fee
and all other fees, costs and expenses of the arbitrator and AAA for
administering the arbitration. The claimant shall be responsible for his
attorney's or representative's fees, if any. However, if any party prevails on a
statutory claim which allows the prevailing party costs and/or attorneys' fees,
the arbitrator may award costs and reasonable attorneys' fees as provided by
such statute.
(f) Discovery; Location; Rules of Evidence. Discovery will be allowed
to the same extent afforded under the Federal Rules of Civil Procedure.
Arbitration will be held at a location selected by the Company. AAA rules
notwithstanding, the admissibility of evidence offered at the arbitration shall
be determined by the arbitrator who shall be the judge of its materiality and
relevance. Legal rules of evidence will not be controlling, and the standard for
admissibility of evidence will generally be whether it is the type of
information that responsible people rely upon in making important decisions.
(g) Confidentiality. The existence, content or results of any
arbitration may not be disclosed by a party or arbitrator without the prior
written consent of both parties. Witnesses who are not a party to the
arbitration shall be excluded from the hearing except to testify.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.G
<SEQUENCE>6
<FILENAME>c66360ex10-g.txt
<DESCRIPTION>EXECUTIVE INCENTIVE COMPENSATION PLAN
<TEXT>
<PAGE>
EXHIBIT 10.G
JOHNSON CONTROLS, INC.
EXECUTIVE INCENTIVE COMPENSATION PLAN
(DEFERRED OPTION QUALIFIED)
ARTICLE 1.
PURPOSE AND DURATION
Section 1.1. Purpose. The purpose of the Johnson Controls, Inc. Executive
Incentive Compensation Plan (Deferred Option Qualified) is to provide incentive
to the key executives of the Company and its subsidiaries who have the prime
responsibility for the operations of the Company and its subsidiaries by making
them participants in their success. The Plan provides for deferral of payments
hereunder and is intended to qualify for the performance-based compensation
exception under Code Section 162(m).
Section 1.2. Duration. Effective October 1, 2001, the Plan was amended and
restated to reflect the merger of the Johnson Controls, Inc. Executive Incentive
Compensation Plan (Deferred Option) with and into this Plan, and to make certain
other changes, none of which affect the material terms of the performance goals
previously approved by shareholders. The provisions of the Plan as amended and
restated apply to each individual with an interest hereunder on or after October
1, 2001; provided that no amendment hereto shall adversely affect the right of
any Participant with respect to an award granted prior to October 1, 2001,
without the Participant's consent. The Plan shall remain in effect until
terminated pursuant to Article 9.
ARTICLE 2.
DEFINITIONS AND CONSTRUCTION
Section 2.1. Definitions. Wherever used in the Plan, the following terms shall
have the meanings set forth below and, when the meaning is intended, the initial
letter of the word is capitalized:
(a) "Company" means Johnson Controls, Inc., a Wisconsin corporation,
and any successor thereto as provided in Article 14.
(b) "Plan" means the arrangement described herein, as from time to time
amended and in effect.
(c) "Plan Year" means a fiscal year of the Company.
(d) "Participant" means an executive of the Company or a subsidiary who
has been approved for participation in the Plan.
(e) "Board" means the Board of Directors of the Company.
(f) "Committee" means the (i) with respect to employees who are or may
become subject to Code Section 162(m), the Compensation Committee of the Board,
which shall consist
<PAGE>
JOHNSON CONTROLS, INC.
EXECUTIVE INCENTIVE COMPENSATION PLAN
(DEFERRED OPTION QUALIFIED)
of not less than two (2) members of the Board each of whom is a "non-employee
director" as defined in Securities and Exchange Commission Rule 16b-3(b)(3), or
as such term may be defined in any successor regulation under Section 16 of the
Securities Exchange Act of 1934, as amended. In addition, each member of the
Committee shall be an outside director within the meaning of Section 162(m) of
the Code; and (ii) with respect to all other employees, a committee composed of
the Chairman and Chief Executive Officer of the Company.
(g) "Code" means the Internal Revenue Code of 1986, as amended.
Reference to any specific provision of the Code shall be deemed to include any
successor provision and all regulations promulgated thereunder.
(h) "Compensation" means the annualized base salary in effect for a
Participant at the close of the Plan Year (or such other date as the Committee
may specify by action taken within 90 days after the beginning of the Plan
Year), including salary being paid on a deferred basis as well as salary being
paid on a current basis.
(i) "Beneficiary" means the person or persons entitled to receive the
interest of a Participant in the event of the Participant's death as provided in
Article 6.
(j) "Operating Profits" means the consolidated income determined
before:
(1) The incentive compensation awards under this Plan;
(2) Any taxes on income;
(3) Extraordinary credits and charges to income less the
related tax effect;
(4) The cumulative effect, less the related tax effect, on
prior years of any accounting change made during the year; and
(5) Company contributions to the Johnson Controls, Inc.
Savings and Investment (401(k)) Plan.
The calculation of such Operating Profits shall be examined by
the Company's independent public accountants who shall furnish their opinion
that such calculation has been made in accordance with generally accepted
accounting principles consistently applied and in compliance with the provisions
of this Plan.
Notwithstanding the foregoing, for purposes of comparing
Operating Profits for the Plan Year to Operating Profits for one or more prior
Plan Years in determining whether a performance goal has been met, if an
accounting change has occurred effective in the current Plan Year that affects
the calculation of Operating Profits, then the Operating Profits for the prior
year(s) shall be restated on a pro forma basis as if the accounting change
applied in those prior year(s).
<PAGE>
JOHNSON CONTROLS, INC.
EXECUTIVE INCENTIVE COMPENSATION PLAN
(DEFERRED OPTION QUALIFIED)
(k) "Shareholders' Equity" for a Plan Year means the consolidated
shareholders' equity (sometimes referred to as net worth) of the Company at the
end of the preceding fiscal year of the Company, as set forth in the Company's
annual report for the preceding fiscal year, plus or minus a proportionate
allowance for any change during such Plan Year, based on the period of such
change, in the amount of shareholders' equity from newly-issued or
finally-retired capital stock.
(l) "Return on Shareholders' Equity" for a Plan Year means the
percentage that Operating Profits for the year is of Shareholders' Equity for
the year.
(m) "Division Return on Assets" for a Plan Year means division or
business unit EBIT (Earnings Before Interest and Taxes) for the year as a
percentage of average division or business unit assets employed. (See Corporate
Procedure Number 30-20).
(n) "Retirement" means termination of employment from the Company and
its subsidiaries (without Cause) on or after attainment of age 55 with at least
ten years of vesting service or age 65 with at least five years of vesting
service (such vesting service to be determined within the meaning of the Johnson
Controls Pension Plan or such other plan or methodology prescribed by the
Committee).
(o) "Total and Permanent Disability" means the Participant's inability
to perform the material duties of his occupation as a result of a
medically-determinable physical or mental impairment which can be expected to
result in death or which has lasted or can be expected to last for a period of
at least 12 months, as determined by the Committee. The Participant will be
required to submit such medical evidence or to undergo a medical examination by
a doctor selected by the Committee as the Committee determines is necessary in
order to make a determination hereunder.
(p) "Cause" means: (1) if the Participant is subject to an employment
agreement that contains a definition of "cause", such definition, or (2)
otherwise, any of the following as determined by the Committee: (a) violation of
the provisions of any employment agreement, non-competition agreement,
confidentiality agreement, or similar agreement with the Company or subsidiary,
or the Company's or subsidiary's code of ethics, as then in effect, (b) conduct
rising to the level of gross negligence or willful misconduct in the course of
employment with the Company or subsidiary, (c) commission of an act of
dishonesty or disloyalty involving the Company or subsidiary, (d) violation of
any federal, state or local law in connection with the Participant's employment,
or (e) breach of any fiduciary duty to the Company or a subsidiary.
(q) "Inimical Conduct" means any act or omission that is inimical to
the best interests of the Company or any subsidiary, as determined by the
Committee in its sole discretion, including but not limited to: (1) violation of
any employment, noncompete, confidentiality or other agreement in effect with
the Company or any subsidiary, (2) taking any steps or doing anything which
would damage or negatively reflect on the reputation of the Company or a
subsidiary, or (3) failure to comply with applicable laws relating to trade
secrets, confidential information or unfair competition.
<PAGE>
JOHNSON CONTROLS, INC.
EXECUTIVE INCENTIVE COMPENSATION PLAN
(DEFERRED OPTION QUALIFIED)
Section 2.2. Gender and Number. Except where otherwise indicated by the context,
any masculine term used herein includes the feminine, the plural includes the
singular, and the singular the plural.
Section 2.3. Severability. In the event any provision of the Plan is held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the said illegal or invalid provision had not been included.
ARTICLE 3.
ELIGIBILITY AND PARTICIPATION
Section 3.1. Approval. Each executive of the Company or a subsidiary who is
approved for participation in the Plan by the Committee shall be a Participant
as of the date designated by the Committee. Such executives shall include
corporate and other key senior managers who are or may become subject to Section
162(m) of the Code and who are approved for participation in the Plan by the
Committee. Written notice of such approval shall be given to each executive so
approved as soon as practicable following the date of approval. No employee
shall have any right to receive an award in any Plan Year even if an award has
been previously granted in prior Plan Years.
Section 3.2. Termination of Approval. The Committee may withdraw its approval
for participation for a Participant at any time. In the event of such
withdrawal, the executive concerned shall cease to be an active Participant as
of the date selected by the Committee, the executive shall not be entitled to
any payment unless the Committee determines otherwise, and the executive shall
be notified of such withdrawal as soon as practicable following such action.
Section 3.3. Notification. In general, it is expected that the Committee will
determine which executives are to be Participants for a Plan Year prior to the
beginning of such year and notify the executives of that fact before the
beginning of the Plan Year.
Section 3.4. Transfers In, Out and Between Eligible Positions. Notwithstanding
Section 3.3, the Committee may approve an executive for participation during a
portion of a Plan Year, subject to the limitations described below. In such
event, the executive shall be eligible to receive an award for the Plan Year
based on the number of full months as a Participant during such year.
(a) A person newly hired or transferred into an eligible executive
position shall have his participation prorated during the first Plan Year
provided the person's employment or transfer occurs at least three months prior
to the end of the Plan Year. Alternatively, and notwithstanding anything to the
contrary herein, the Committee may at any time grant a formula award to a
Participant who is newly hired or transferred into an eligible executive job
position during the Plan Year, and fix the terms of any such award, whether or
not such action qualifies for the performance-based exception under Section
162(m) of the Code.
<PAGE>
JOHNSON CONTROLS, INC.
EXECUTIVE INCENTIVE COMPENSATION PLAN
(DEFERRED OPTION QUALIFIED)
(b) A person transferred out of an eligible executive position may
receive a prorated award at the discretion of the Committee provided he served
in the eligible executive position for at least three full months during the
Plan Year.
(c) Participants transferring between eligible executive positions that
have a different award formulae will receive awards prorated to months served in
each eligible executive position.
Section 3.5. Termination of Employment. No Participant shall earn an incentive
award for a Plan Year unless the Participant is employed by the Company or
subsidiary (or is on an approved leave of absence) on the last day of such Plan
Year, unless employment was terminated during the year as a result of
Retirement, Total and Permanent Disability or death at a time when the
Participant could not have been terminated for Cause. Accordingly, no incentive
award shall be made for a Plan Year for a Participant whose employment with the
Company or subsidiary is terminated during such year for reasons other than
Retirement, Total and Permanent Disability or death at a time when the
Participant could not have been terminated for Cause, unless approved by the
Committee after considering the cause of the termination.
ARTICLE 4.
ANNUAL AWARDS TO PARTICIPANTS
Section 4.1. Awards Based On Formula. Prior to, or within 90 days after, the
beginning of each Plan Year, the Committee shall determine the formula award for
each Participant who is eligible to receive an award for the year. The amount of
the award shall be expressed as a percentage of Compensation resulting from a
formula which is communicated individually in writing to each Participant at the
time the formula is determined. The formula will be based on Return on
Shareholders' Equity and/or Division Return on Assets and growth in Operating
Profits. Irrespective of the formula, no amounts in excess of Two Million Five
Hundred Thousand Dollars ($2,500,000) may be paid to any one Participant for any
Plan Year. Payments are subject to certification in writing by the Committee
prior to payment that the performance goals and other material terms of the Plan
were in fact satisfied.
Section 4.2. Discretionary Reductions To Formula Awards. Upon recommendation by
the Chief Executive Officer of the Company, the Committee may adjust a
Participant's formula award based upon the individual's performance and
attainment of objectives during the Plan Year, as follows:
(a) with respect to an award that is designated by the Committee at the
time of grant as being subject to Code Section 162(m),the Committee may reduce
an award as much as minus twenty percent (-20%) of the award percentage; and
(b) with respect to all other awards, the Committee may increase an
award up to a maximum of 1.2 times the award percentage or reduce an award as
much as minus twenty percent (-20%) of the award percentage.
<PAGE>
JOHNSON CONTROLS, INC.
EXECUTIVE INCENTIVE COMPENSATION PLAN
(DEFERRED OPTION QUALIFIED)
ARTICLE 5.
PAYMENT OF INCENTIVE AWARDS
Section 5.1. Current Payment. Subject to the provisions of Section 5.3, a
Participant's final award for a Plan Year, which is not deferred in accordance
with the provisions of Section 5.2, and a Participant's final award, whether or
not he elected deferred payment thereof, for the Plan Year in which his
employment terminates, shall be paid in cash to the Participant, or his
Beneficiary in the event of his death, by the 75th day following the end of the
Plan Year. The Committee may elect to postpone the payments for any reason, and
in such event the Committee may, in its discretion, also elect to pay interest
at a reasonable rate for the period between the 75th day following the end of
the Plan Year and the day on which the payments are in fact made.
Section 5.2. Deferred Payment. Before the first day of each Plan Year, a
Participant may irrevocably elect in writing to have a part or all of his final
award for the year (but not less than $1,000) deferred under the Johnson
Controls, Inc. Executive Deferred Compensation Plan.
Section 5.3. Forfeiture. Notwithstanding the foregoing, no payment shall be made
or deferred with respect to a Participant if, after the end of the Plan Year for
which payment has accrued but before payment or deferral is made, either (a) the
Company or subsidiary terminates the Participant's employment for Cause or (b)
the Participant engages in Inimical Conduct. The Committee may suspend payment
or deferral (without liability for interest thereon) pending its determination
of whether the Participant was or should have been terminated for Cause or
whether the Participant has engaged in Inimical Conduct.
ARTICLE 6.
BENEFICIARY
Each Participant may file a beneficiary designation on the
form provided by the Committee. In the event of the Participant's death prior to
receiving payments due hereunder, the payment shall be made to the Participant's
Beneficiary. A Participant can change his beneficiary designation at any time,
provided that each beneficiary designation form filed with the Company shall
revoke the most recent form on file, and the last form received by the Company
while the Participant was alive shall be given effect. In the event there is no
valid beneficiary designation form on file, or in the event the Participant's
designated Beneficiary is not alive at the time payment is to be made, the
Participant's estate will be deemed the Beneficiary and will be entitled to
receive payment. If a Participant designates his spouse as a beneficiary, such
beneficiary designation automatically shall become null and void on the date of
the Participant's divorce or legal separation from such spouse; provided the
Committee has notice of such divorce or legal separation prior to payment. If a
Participant maintains his primary residence in a state that has community or
marital property laws, then the Participant's spouse, if any, must consent to
the Participant's designation of any primary beneficiary other than the spouse.
<PAGE>
JOHNSON CONTROLS, INC.
EXECUTIVE INCENTIVE COMPENSATION PLAN
(DEFERRED OPTION QUALIFIED)
ARTICLE 7.
RIGHTS OF PARTICIPANTS
Section 7.1. No Funding. No Participant or Beneficiary shall have any interest
in any fund or in any specific asset or assets of the Company (or any
subsidiary) by reason of any award under the Plan. It is intended that the
Company has merely a contractual obligation to make payments when due hereunder
and it is not intended that the Company (or any subsidiary) hold any funds in
reserve or trust to secure payments hereunder.
Section 7.2. No Transfer. No Participant may assign, pledge, or encumber his
interest under the Plan, or any part thereof, except that a Participant may
designate a Beneficiary as provided herein.
Section 7.3. No Implied Rights; Employment. Nothing contained in this Plan shall
be construed to:
(a) Give any employee or Participant any right to receive any award
other than in the sole discretion of the Committee;
(b) Limit in any way the right of the Company or subsidiary to
terminate a Participant's or other employee's employment at any time; or
(c) Be evidence of any agreement or understanding, express or implied,
that a Participant or other employee will be retained in any particular position
or at any particular rate of remuneration.
ARTICLE 8.
ADMINISTRATION
Section 8.1. General. The Plan shall be administered by the Committee. If at any
time the Committee shall not be in existence, the Board shall assume the
Committee's functions and each reference to the Committee herein shall be deemed
to include the Board.
Section 8.2. Authority. In addition to the authority specifically provided
herein, the Committee shall have full power and discretionary authority to: (a)
administer the Plan, including but not limited to the power and authority to
construe and interpret the Plan; (b) correct errors, supply omissions or
reconcile inconsistencies in the Plan's terms; (c) establish, amend or waive
rules and regulations, and appoint such agents, as it deems appropriate for the
Plan's administration; and (d) make any other determinations, including factual
determinations, and take any other action as it determines is necessary or
desirable for the Plan's administration.
Section 8.3. Decision Binding. The Committee's determinations and decisions made
pursuant to the provisions of the Plan and all related orders or resolutions of
the Board shall be final, conclusive and binding on all persons who have an
interest in the Plan or an award, and such determinations and decisions shall
not be reviewable.
<PAGE>
JOHNSON CONTROLS, INC.
EXECUTIVE INCENTIVE COMPENSATION PLAN
(DEFERRED OPTION QUALIFIED)
Section 8.4. Procedures of the Committee. The Committee's determinations must be
made by not less than a majority of its members present at the meeting (in
person or otherwise) at which a quorum is present, or by written majority
consent, which sets forth the action, is signed by each member of the Committee
and filed with the minutes for proceedings of the Committee. A majority of the
entire Committee shall constitute a quorum for the transaction of business.
Service on the Committee shall constitute service as a director of the Company
so that the Committee members shall be entitled to indemnification, limitation
of liability and reimbursement of expenses with respect to their Committee
services to the same extent that they are entitled under the Company's By-laws
and Wisconsin law for their services as directors of the Company.
Section 8.5. Charge to Subsidiary. Each subsidiary shall be charged each year
with the amount, if any, awarded under the Plan to its employees for such year.
ARTICLE 9.
ADJUSTMENTS
In the event of any change in the outstanding shares of the
Company's Common Stock by reason of any stock dividend or split,
recapitalization, reclassification, merger, consolidation or exchange of shares
or other similar corporate change, then if the Committee shall determine, in its
sole discretion, that such change necessarily or equitably requires an
adjustment in the awards then held by Participants or the performance goals
thereunder, such adjustments shall be made by the Committee and shall be
conclusive and binding for all purposes of this Plan. No adjustment shall be
made in connection with the issuance by the Company of any warrants, rights, or
options to acquire additional shares of Common Stock or of securities
convertible into Common Stock.
ARTICLE 10.
AMENDMENT OR TERMINATION
The Committee may modify or amend, in whole or in part, any or
all of the provisions of the Plan, or suspend or terminate it entirely;
provided, however, that no such modifications, amendment, or suspension or
termination may, without the consent of the Participant or his Beneficiary in
the case of his death, reduce the right of a Participant or his Beneficiary, as
the case may be, to any payment accrued under the Plan except as specifically
provided herein; and provided further that shareholder approval may be required
as provided under Code Section 162(m). Notwithstanding the foregoing, the
Committee may make the following amendments without obtaining the consent of any
individual with an interest hereunder:
(a) In the event of the Plan's termination, the Committee may provide
that all amounts accrued to the date of termination be distributed to all
Participants or Beneficiaries, as applicable, in a single sum payment as soon as
practicable after the date of termination or on such other date as is specified
by the Committee.
<PAGE>
JOHNSON CONTROLS, INC.
EXECUTIVE INCENTIVE COMPENSATION PLAN
(DEFERRED OPTION QUALIFIED)
(b) The Committee may amend the provisions of Article 11 prior to the
effective date of a Change of Control.
ARTICLE 11.
CHANGE OF CONTROL
Section 11.1. Acceleration of Payment. Notwithstanding any other provision of
this Plan, within 30 days after a Change of Control (as defined below), each
Participant shall be entitled to receive a lump sum payment in cash (regardless
of whether a deferral election is in effect) equal to the product of (x) such
Participant's formula award for the year in which the Change of Control occurs,
based on maximum achievable award for such Participant under the Plan (but
without regard to any discretionary adjustments described in Section 4.2) and
(y) a fraction, the numerator of which is the number of days after the beginning
of the Plan Year in which the Change of Control occurs and the denominator of
which is 365. In addition, the Company shall pay to each Participant a lump sum
amount in cash within 30 days after the Change of Control of all amounts accrued
for the prior year but not yet paid, if any, regardless of any deferral election
in effect for such prior year.
Section 11.2. Definition of Change of Control. A "Change of Control" means any
of the following events:
(a) The acquisition, other than from the Company, by any individual,
entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) of beneficial
ownership (within the meaning of Rule l3d-3 promulgated under the Exchange Act)
of 20% or more of either:
(1) The then outstanding shares of common stock of the Company
(the "Outstanding Company Common Stock") or
(2) The combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the
election of directors (the "Company Voting Securities");
provided, however, that any acquisition by (x) the Company or
any of its subsidiaries, or any employee benefit plan (or related trust)
sponsored or maintained by the Company or any of its subsidiaries or (y) any
corporation with respect to which, following such acquisition, more than 60% of,
respectively, the then outstanding shares of common stock of such corporation
and the combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Company Voting Securities immediately prior
to such acquisition in substantially the same proportion as their ownership,
immediately prior to such acquisition, of the Outstanding Company Common Stock
and Company Voting Securities, as the case may be, shall not constitute a Change
in Control of the Company; or
<PAGE>
JOHNSON CONTROLS, INC.
EXECUTIVE INCENTIVE COMPENSATION PLAN
(DEFERRED OPTION QUALIFIED)
(b) Individuals who, as of May 24, 1989, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority of the
Board, provided that any individual becoming a director subsequent to May 24,
1989, whose election or nomination for election by the Company's shareholders
was approved by a vote of at least a majority of the directors then comprising
the Incumbent Board, shall be considered as though such individual were a member
of the Incumbent Board, but excluding, for this purpose, any such individual
whose initial assumption of office is in connection with an actual or threatened
election contest relating to the election of the Directors of the Company (as
such terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act); or
(c) Consummation of a reorganization, merger or consolidation (a
"Business Combination"), in each case, with respect to which all or
substantially all of the individuals and entities who were the respective
beneficial owners of the Outstanding Company Common Stock and Company Voting
Securities immediately prior to such Business Combination do not, following such
Business Combination, beneficially own, directly or indirectly, more than 60%
of, respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Business Combination in substantially the same proportion as
their ownership immediately prior to such Business Combination of the
Outstanding Company Common Stock and Company Voting Securities, as the case may
be; or
(d) A complete liquidation or dissolution of the Company or sale or
other disposition of all or substantially all of the assets of the Company other
than to a corporation with respect to which, following such sale or disposition,
more than 60% of, respectively, the then outstanding shares of common stock and
the combined voting power of the then outstanding voting securities entitled to
vote generally in the election of directors is then owned beneficially, directly
or indirectly, by all or substantially all of the individuals and entities who
were the beneficial owners, respectively, of the Outstanding Company Common
Stock and Company Voting Securities immediately prior to such sale or
disposition in substantially the same proportion as their ownership of the
Outstanding Company Common Stock and Company Voting Securities, as the case may
be, immediately prior to such sale or disposition.
ARTICLE 12.
TAX WITHHOLDING
The Company shall have the right to deduct from all cash
payments made hereunder (or from any other payments due a Participant) any
foreign, federal, state, or local taxes required by law to be withheld with
respect to such cash payments.
ARTICLE 13.
OFFSET
The Company shall have the right to offset from the incentive
award payable hereunder any amount that the Participant owes to the Company or
any subsidiary without the consent of the Participant (or his Beneficiary, in
the event of the Participant's death).
<PAGE>
JOHNSON CONTROLS, INC.
EXECUTIVE INCENTIVE COMPENSATION PLAN
(DEFERRED OPTION QUALIFIED)
ARTICLE 14.
SUCCESSORS
All obligations of the Company under the Plan with respect to
awards granted hereunder shall be binding on any successor to the Company,
whether the existence of such successor is the result of a direct or indirect
purchase, merger, consolidation or otherwise, of all or substantially all of the
business and/or assets of the Company. The Plan shall be binding upon and inure
to the benefit of the Participants, Beneficiaries, and their heirs, executors,
administrators and legal representatives.
ARTICLE 15.
DISPUTE RESOLUTION
Section 15.1. Governing Law. This Plan and the rights and obligations hereunder
shall be governed by and construed in accordance with the internal laws of the
State of Wisconsin (excluding any choice of law rules that may direct the
application of the laws of another jurisdiction), except as provided in Section
15.2 hereof.
Section 15.2. Arbitration.
(a) Application. Notwithstanding any employee agreement in effect
between a Participant and the Company or any subsidiary employer, if a
Participant or Beneficiary brings a claim that relates to benefits under this
Plan, regardless of the basis of the claim (including but not limited to,
actions under Title VII, wrongful discharge, breach of employment agreement,
etc.), such claim shall be settled by final binding arbitration in accordance
with the rules of the American Arbitration Association ("AAA") and judgment upon
the award rendered by the arbitrator may be entered in any court having
jurisdiction thereof.
(b) Initiation of Action. Arbitration must be initiated by serving or
mailing a written notice of the complaint to the other party. Normally, such
written notice should be provided the other party within one year (365 days)
after the day the complaining party first knew or should have known of the
events giving rise to the complaint. However, this time frame may be extended if
the applicable statute of limitation provides for a longer period of time. If
the complaint is not properly submitted within the appropriate time frame, all
rights and claims that the complaining party has or may have against the other
party shall be waived and void. Any notice sent to the Company shall be
delivered to:
Office of General Counsel
Johnson Controls, Inc.
5757 North Green Bay Avenue
P.O. Box 591
Milwaukee, WI 53201-0591
<PAGE>
JOHNSON CONTROLS, INC.
EXECUTIVE INCENTIVE COMPENSATION PLAN
(DEFERRED OPTION QUALIFIED)
The notice must identify and describe the nature of all
complaints asserted and the facts upon which such complaints are based. Notice
will be deemed given according to the date of any postmark or the date of time
of any personal delivery.
(c) Compliance with Personnel Policies. Before proceeding to
arbitration on a complaint, the Participant or Beneficiary must initiate and
participate in any complaint resolution procedure identified in the Company's or
subsidiary's personnel policies. If the claimant has not initiated the complaint
resolution procedure before initiating arbitration on a complaint, the
initiation of the arbitration shall be deemed to begin the complaint resolution
procedure. No arbitration hearing shall be held on a complaint until any
applicable Company or subsidiary complaint resolution procedure has been
completed.
(d) Rules of Arbitration. All arbitration will be conducted by a single
arbitrator according to the Employment Dispute Arbitration Rules of the AAA. The
arbitrator will have authority to award any remedy or relief that a court of
competent jurisdiction could order or grant including, without limitation,
specific performance of any obligation created under policy, the awarding of
punitive damages, the issuance of any injunction, costs and attorney's fees to
the extent permitted by law, or the imposition of sanctions for abuse of the
arbitration process. The arbitrator's award must be rendered in a writing that
sets forth the essential findings and conclusions on which the arbitrator's
award is based.
(e) Representation and Costs. Each party may be represented in the
arbitration by an attorney or other representative selected by the party. The
Company or subsidiary shall be responsible for its own costs, the AAA filing fee
and all other fees, costs and expenses of the arbitrator and AAA for
administering the arbitration. The claimant shall be responsible for his
attorney's or representative's fees, if any. However, if any party prevails on a
statutory claim which allows the prevailing party costs and/or attorneys' fees,
the arbitrator may award costs and reasonable attorneys' fees as provided by
such statute.
(f) Discovery; Location; Rules of Evidence. Discovery will be allowed
to the same extent afforded under the Federal Rules of Civil Procedure.
Arbitration will be held at a location selected by the Company. AAA rules
notwithstanding, the admissibility of evidence offered at the arbitration shall
be determined by the arbitrator who shall be the judge of its materiality and
relevance. Legal rules of evidence will not be controlling, and the standard for
admissibility of evidence will generally be whether it is the type of
information that responsible people rely upon in making important decisions.
(g) Confidentiality. The existence, content or results of any
arbitration may not be disclosed by a party or arbitrator without the prior
written consent of both parties. Witnesses who are not a party to the
arbitration shall be excluded from the hearing except to testify.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.H
<SEQUENCE>7
<FILENAME>c66360ex10-h.txt
<DESCRIPTION>LONG-TERM PERFORMANCE PLAN
<TEXT>
<PAGE>
EXHIBIT 10.H
JOHNSON CONTROLS, INC.
LONG-TERM PERFORMANCE PLAN
ARTICLE 1.
PURPOSE AND DURATION
Section 1.1. Purpose. The purpose of the Johnson Controls, Inc. Long Term
Performance Plan is to motivate top executives to achieve longer term objectives
which will result in long term increased value to the shareholders of the
Company.
Section 1.2. Duration. The Plan was originally effective as of October 1, 1987.
The Plan was most recently amended and restated effective October 1, 2001. The
provisions of the Plan as amended and restated apply to each individual with an
interest hereunder on or after October 1, 2001; provided that no amendment
hereto shall adversely affect the right of any Participant with respect to an
award granted prior to October 1, 2001, without the Participant's consent. The
Plan shall terminate on, and no contingent Performance Awards may be granted
after, September 30, 2003; provided, however, that the Committee may terminate
the Plan or the assignment of contingent Performance Awards at any time prior to
that date as provided in Article 13.
ARTICLE 2.
DEFINITIONS AND CONSTRUCTION
Section 2.1. Definitions. Wherever used in the Plan, the following terms shall
have the meanings set forth below and, when the meaning is intended, the initial
letter of the word is capitalized:
(a) "Company" means Johnson Controls, Inc., a Wisconsin corporation,
and any successor thereto as provided in Article 16.
(b) "Plan" means the arrangement described herein, as from time amended
and in effect.
(c) "Board" means the Board of Directors of the Company.
(d) "Committee" means the Compensation Committee of the Board, which
shall consist of not less than two (2) members of the Board each of whom is a
"non-employee director" as defined in Securities and Exchange Commission Rule
16b-3(b)(3), or as such term may be defined in any successor regulation under
Section 16 of the Securities Exchange Act of 1934, as amended. In addition, each
member of the Committee shall be an outside director within the meaning of
Section 162(m) of the Internal Revenue Code.
(e) "Participant" means an executive of the Company or a subsidiary who
has been approved for participation in the Plan.
(f) "Base Salary" of a Participant means the annual rate of base pay in
effect for such Participant as of the last day of the Performance Period (or
such other date as the Committee may specify by action taken within 90 days
after the beginning of the Performance Period).
<PAGE>
JOHNSON CONTROLS, INC.
LONG-TERM PERFORMANCE PLAN
(g) "Beneficiary" means the person or persons entitled to receive any
amounts due to a Participant in the event of the Participant's death as provided
in Article 10.
(h) "Income" means consolidated income before income taxes and minority
interests, as stated in the "Consolidated Statement of Income" in the Company's
Annual Report.
(i) "Shareholders' Equity" for a fiscal year means the arithmetic
average of consolidated shareholders' equity of the Company, as set forth in the
Consolidated Statement of Financial Position in the Company's Quarterly and
Annual Reports to shareholders, over five points in time, which shall include
the end of the preceding year and the end of each quarter of the current fiscal
year.
(j) "Return on Shareholders' Equity (ROE)" means the percentage
relationship of Income to Shareholders' Equity for each fiscal year.
(k) "Performance Award" means an amount whose final value will be
earned and paid to a Participant if certain predetermined requirements are met.
(l) "Performance Period" means a period of three successive fiscal
years, as determined by the Committee, with respect to which an assignment of
Performance Awards is made pursuant to this Plan.
(m) "Retirement" means termination of employment from the Company and
its subsidiaries (without Cause) on or after attainment of age 55 with at least
ten years of vesting service or age 65 with at least five years of vesting
service (such vesting service to be determined within the meaning of the Johnson
Controls Pension Plan or such other plan or methodology prescribed by the
Committee).
(n) "Total and Permanent Disability" means the Participant's inability
to perform the material duties of his occupation as a result of a
medically-determinable physical or mental impairment which can be expected to
result in death or which has lasted or can be expected to last for a period of
at least 12 months, as determined by the Committee. The Participant will be
required to submit such medical evidence or to undergo a medical examination by
a doctor selected by the Committee as the Committee determines is necessary in
order to make a determination hereunder.
(o) "Cause" means: (1) if the Participant is subject to an employment
agreement that contains a definition of "cause", such definition, or (2)
otherwise, any of the following as determined by the Committee: (a) violation of
the provisions of any employment agreement, non-competition agreement,
confidentiality agreement, or similar agreement with the Company or subsidiary,
or the Company's or subsidiary's code of ethics, as then in effect, (b) conduct
rising to the level of gross negligence or willful misconduct in the course of
employment with the Company or subsidiary, (c) commission of an act of
dishonesty or disloyalty involving the Company or subsidiary, (d) violation of
any federal, state or local law in connection with the Participant's employment,
or (e) breach of any fiduciary duty to the Company or a subsidiary.
<PAGE>
JOHNSON CONTROLS, INC.
LONG-TERM PERFORMANCE PLAN
(p) "Inimical Conduct" means any act or omission that is inimical to
the best interests of the Company or any subsidiary, as determined by the
Committee in its sole discretion, including but not limited to: (1) violation of
any employment, noncompete, confidentiality or other agreement in effect with
the Company or any subsidiary, (2) taking any steps or doing anything which
would damage or negatively reflect on the reputation of the Company or a
subsidiary, or (3) failure to comply with applicable laws relating to trade
secrets, confidential information or unfair competition.
Section 2.2. Gender and Number. Except where otherwise indicated by the context,
any masculine term used herein includes the feminine, the plural includes the
singular, and the singular the plural.
Section 2.3. Severability. In the event any provision of the Plan is held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the said illegal or invalid provision had not been included.
ARTICLE 3.
ELIGIBILITY
Only officers and other key executives of the Company who have
a significant influence upon the long-term performance of the Company will be
eligible to participate in the Plan. Participation in one award, however, will
not automatically guarantee participation in subsequent years. It is
specifically intended that no employee shall have a right to a Performance Award
even if an award has been previously granted. Participation for each award under
the Plan will be approved by the Committee after consultation with the Chief
Executive Officer of the Company.
ARTICLE 4.
CONTINGENT PERFORMANCE AWARDS
Section 4.1. Award. The Committee shall award to each Participant a contingent
Performance Award (expressed as a percentage of the Participant's Base Salary)
that it deems appropriate prior to the commencement of the Performance Period to
which the Performance Award applies, or within 90 days following the beginning
of such Performance Period.
Section 4.2. Shareholder Approval Requirements. The Committee, in its
discretion, may make all or any portion of the grant of awards contingent upon
receiving subsequent shareholder approval sufficient to qualify payment
thereunder as deductible for the Company. The Committee may take such action
without the consent of Participants.
Section 4.3. New Hired and Transferred Employees. Notwithstanding anything to
the contrary herein, in the case of a person who is newly hired into an eligible
executive position or transferred into an eligible executive position after the
beginning of a Performance Period, the Committee may at any time grant a
contingent Performance Award to such person, and fix the terms of any such
award, whether or not such action qualifies for the performance-based exception
under Section 162(m) of the Code.
<PAGE>
JOHNSON CONTROLS, INC.
LONG-TERM PERFORMANCE PLAN
ARTICLE 5.
PERFORMANCE GOALS
Section 5.1. Criterion for Measuring Performance. The criteria to be used to
measure the financial performance of the Company shall be its Return on
Shareholders' Equity (ROE). The Company's Return on Shareholders' Equity shall
be compared to performance goals as established in Section 5.2.
Section 5.2. Establishment of ROE Performance Goals. The Committee shall
establish performance goals prior to, or within 90 days after the beginning of,
each Performance Period and set forth those goals in its meeting minutes.
ARTICLE 6.
PAYMENT
Section 6.1. Evaluating Performance and Computing Awards. As soon as practicable
following the close of the Performance Period, the Committee shall determine the
award amount applicable to that Performance Period, provided that the maximum
award amount for any Participant with respect to any Performance Period shall be
three million dollars ($3,000,000). All awards are subject to certification in
writing by the Committee prior to payment that the performance goals and other
material terms of the Plan were in fact satisfied.
Section 6.2. Computing Awards. Award amounts will be calculated from a table
which will be issued to each Participant at the time of grant.
Section 6.3. Timing and Form of Payment.
(a) When the payment due to the Participant has been determined, unless
otherwise deferred or to be paid on a current basis in accordance with Section
6.3(b), the payment due the Participant shall be credited to an Interest Account
established for the Participant under the Johnson Controls, Inc. Executive
Deferred Compensation Plan as of the date on which payment would have otherwise
been made in a cash lump sum.
(b) A Participant may elect that part or all of the payment due be
credited to his Share Unit Account or his Equity Fund Account under the Johnson
Controls, Inc. Executive Deferred Compensation Plan as of the date on which
payment would have otherwise been made in a cash lump sum. A Participant may
also elect, subject to the approval of the Committee, that part or all of the
payment due to such Participant with respect to any Performance Period shall be
paid to him on a current (rather than a deferred basis) in a lump sum by the
75th day following the close of the Performance Period.
(c) An election under subsection (b) with respect to any Performance
Period must be filed in writing with the Company not later than the last day of
the second fiscal year in such Performance Period. Any such election shall be
irrevocable.
<PAGE>
JOHNSON CONTROLS, INC.
LONG-TERM PERFORMANCE PLAN
ARTICLE 7.
TERMINATION AND FORFEITURE
Section 7.1. Termination for Death or Disability. If a Participant's employment
is terminated during a Performance Period by reason of death or Total and
Permanent Disability at a time when the Participant could not have been
terminated for Cause, payments shall be determined and paid as if the fiscal
year during which termination takes place is the last fiscal year of the
particular Performance Period.
Section 7.2. Termination for Retirement. If a Participant's employment is
terminated during a Performance Period by reason of Retirement, payments shall
be determined and paid as if the fiscal year during which such termination takes
place is the last fiscal year of the particular Performance Period. However,
before such determination is made, the Performance Award for such Performance
Period shall, as of the date of Retirement, be reduced to a number calculated by
multiplying the Performance Award by a fraction, the numerator of which is the
number of full months during which the Participant was an employee of the
Company during the Performance Period and the denominator of which is the number
of full months the Performance Period would have lasted had Retirement not
occurred.
Section 7.3. Termination for Cause. If the Participant is terminated for Cause
prior to payment or deferral of any Performance Award hereunder, such
Performance Award shall be automatically cancelled as of the date of such
termination, and no payment or deferral shall be made.
Section 7.4. Termination for Other Reasons. If the Participant is not employed
by the Company on the last day of the Performance Period for other than
Retirement, Total and Permanent Disability or death, or Cause, the Performance
Award with respect thereto shall be automatically cancelled as of the date of
such termination of employment. The Committee shall have the discretion to
reinstate such award, in whole or in part, after taking into consideration the
circumstances of the Participant's termination.
Section 7.5. Inimical Conduct. Notwithstanding the foregoing, if the Participant
engages in Inimical Conduct after the end of the Performance Period for which
the payment has accrued, but before payment or deferral is made, the Performance
Award shall be automatically cancelled and no payment or deferral shall be made.
The Committee may suspend payment or deferral (without liability for interest
thereon) pending the Committee's determination of whether the Participant was or
should have been terminated for Cause or whether the Participant has engaged in
Inimical Conduct.
ARTICLE 8.
CHANGE OF CONTROL
Section 8.1. Acceleration of Payment. Notwithstanding any other provision of
this Plan, within 30 days after a Change of Control (as defined below), each
Participant shall be entitled to receive a lump sum payment in cash equal to the
product of (x) such Participant's formula award for the Performance Period(s) in
which the Change of Control occurs, based on the maximum achievable award for
such Participant under the Plan and (y) a fraction, the numerator of which is
the number of days after the first day of the applicable Performance Period on
which the Change of
<PAGE>
JOHNSON CONTROLS, INC.
LONG-TERM PERFORMANCE PLAN
Control occurs and the denominator of which is the number of days in the
applicable Performance Period.
Section 8.2. Definition of Change of Control. A "Change of Control" means any of
the following events:
(a) The acquisition, other than from the Company, by any individual,
entity or group (within the meaning of Section 13(d) (3) or 14(d) (2) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") ) of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of 20% or more of either:
(1) The then outstanding shares of common stock of the Company
(the "Outstanding Company Common Stock") or
(2) The combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the
election of directors (the "Company Voting Securities");
provided, however, that any acquisition by (x) the Company or
any of its subsidiaries, or any employee benefit plan (or related trust)
sponsored or maintained by the Company or any of its subsidiaries or (y) any
corporation with respect to which, following such acquisition, more than 60% of,
respectively, the then outstanding shares of common stock of such corporation
and the combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Company Voting Securities immediately prior
to such acquisition in substantially the same proportion as their ownership,
immediately prior to such acquisition, of the Outstanding Company Common Stock
and Company Voting Securities, as the case may be, shall not constitute a Change
in Control of the Company; or
(b) Individuals who, as of May 24, 1989, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority of the
Board, provided that any individual becoming a director subsequent to May 24,
1989, whose election or nomination for election by the Company's shareholders,
was approved by a vote of at least a majority of the directors then comprising
the Incumbent Board, shall be considered as though such individual were a member
of the Incumbent Board, but excluding, for this purpose, any such individual
whose initial assumption of office is in connection with an actual or threatened
election contest relating to the election of the Directors of the Company (as
such terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act); or
(c) Consummation of a reorganization, merger or consolidation (a
"Business Combination"), in each case, with respect to which all or
substantially all of the individuals and entities who were the respective
beneficial owners of the Outstanding Company Common Stock and Company Voting
Securities immediately prior to such Business Combination do not, following such
Business Combination, beneficially own, directly or indirectly, more than 60%
of, respectively, the then outstanding shares of common stock and the combined
voting power of the then
<PAGE>
JOHNSON CONTROLS, INC.
LONG-TERM PERFORMANCE PLAN
outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such Business
Combination in substantially the same proportion as their ownership immediately
prior to such Business Combination of the Outstanding Company Common Stock and
Company Voting Securities, as the case may be; or
(d) A complete liquidation or dissolution of the Company or sale or
other disposition of all or substantially all of the assets of the Company other
than to a corporation with respect to which, following such sale or disposition,
more than 60% of, respectively, the then outstanding shares of common stock and
the combined voting power of the then outstanding voting securities entitled to
vote generally in the election of directors is then owned beneficially, directly
or indirectly, by all or substantially all of the individuals and entitles who
were the beneficial owners, respectively, of the outstanding Company Common
Stock and Company Voting Securities immediately prior to such sale or
disposition in substantially the same proportion as their ownership of the
Outstanding Company Common Stock and Company Voting Securities, as the case may
be, immediately prior to such sale or disposition.
ARTICLE 9.
ADJUSTMENTS
In the event of any change in the outstanding shares of
Company Common Stock by reason of any stock dividend or split, recapitalization,
reclassification, merger, consolidation or exchange of shares or other similar
corporate change, then if the Committee shall determine, in its sole discretion,
that such change necessarily or equitably requires an adjustment in the
Performance Awards then held by Participants or the performance goals
established thereunder, such adjustments shall be made by the Committee and
shall be conclusive and binding for all purposes of this Plan. No adjustment
shall be made in connection with the issuance by the Company of any warrants,
rights, or options to acquire additional shares of Common Stock or of securities
convertible into Common Stock.
ARTICLE 10.
BENEFICIARY
Each Participant may file a beneficiary designation on the
form provided by the Committee. In the event of the Participant's death prior to
receiving payments due hereunder, the payment shall be made to the Participant's
Beneficiary. A Participant can change his beneficiary designation at any time,
provided that each beneficiary designation form filed with the Company shall
revoke the most recent form on file, and the last form received by the Company
while the Participant was alive shall be given effect. In the event there is no
valid beneficiary designation form on file, or in the event the Participant's
designated Beneficiary is not alive at the time payment is to be made, the
Participant's estate will be deemed the Beneficiary and will be entitled to
receive payment. If a Participant designates his spouse as a beneficiary, such
beneficiary designation automatically shall become null and void on the date of
the Participant's divorce or legal separation from such spouse; provided the
Committee has notice of such divorce or legal separation prior to payment. If a
Participant maintains his primary residence in a state that has community or
marital property laws, then the Participant's spouse, if any, must consent to
the Participant's designation of any primary beneficiary other than the spouse.
<PAGE>
JOHNSON CONTROLS, INC.
LONG-TERM PERFORMANCE PLAN
ARTICLE 11.
RIGHTS OF PARTICIPANTS
Section 11.1. No Funding. No Participant or Beneficiary shall have any interest
in any fund or in any specific asset or assets of the Company (or any
subsidiary) by reason of any award under the Plan. It is intended that the
Company has merely a contractual obligation to make payments when due hereunder
and it is not intended that the Company (or any subsidiary) hold any funds in
reserve or trust to secure payments hereunder.
Section 11.2. No Transfer. No Participant may assign, pledge, or encumber his
interest under the Plan, or any part thereof, except that a Participant may
designate a Beneficiary as provided herein.
Section 11.3. No Implied Rights; Employment. Nothing contained in this Plan
shall be construed to:
(a) Give any employee or Participant any right to receive any award
other than in the sole discretion of the Committee;
(b) Limit in any way the right of the Company or subsidiary to
terminate a Participant's or other employee's employment at any time; or
(c) Be evidence of any agreement or understanding, express or implied,
that a Participant or other employee will be retained in any particular position
or at any particular rate of remuneration.
ARTICLE 12.
ADMINISTRATION
Section 12.1. General. The Plan shall be administered by the Committee. If at
any time the Committee shall not be in existence, the Board shall assume the
Committee's functions and each reference to the Committee herein shall be deemed
to include the Board.
Section 12.2. Authority. In addition to the authority specifically provided
herein, the Committee shall have full power and discretionary authority to: (a)
administer the Plan, including but not limited to the power and authority to
construe and interpret the Plan; (b) correct errors, supply omissions or
reconcile inconsistencies in the Plan's terms; (c) establish, amend or waive
rules and regulations, and appoint such agents, as it deems appropriate for the
Plan's administration; and (d) make any other determinations, including factual
determinations, and take any other action as it determines is necessary or
desirable for the Plan's administration.
Section 12.3. Decision Binding. The Committee's determinations and decisions
made pursuant to the provisions of the Plan and all related orders or
resolutions of the Board shall be final, conclusive and binding on all persons
who have an interest in the Plan or an award, and such determinations and
decisions shall not be reviewable.
Section 12.4. Procedures of the Committee. The Committee's determinations must
be made by not less than a majority of its members present at the meeting (in
person or otherwise) at which a
<PAGE>
JOHNSON CONTROLS, INC.
LONG-TERM PERFORMANCE PLAN
quorum is present, or by written majority consent, which sets forth the action,
is signed by each member of the Committee and filed with the minutes for
proceedings of the Committee. A majority of the entire Committee shall
constitute a quorum for the transaction of business. Service on the Committee
shall constitute service as a director of the Company so that the Committee
members shall be entitled to indemnification, limitation of liability and
reimbursement of expenses with respect to their Committee services to the same
extent that they are entitled under the Company's By-laws and Wisconsin law for
their services as directors of the Company.
ARTICLE 13.
AMENDMENT AND TERMINATION
The Committee may modify or amend, in whole or in part, any or
all of the provisions of the Plan, except as to those terms or provisions that
are required by Section 162(m) of the Internal Revenue Code to be approved by
the shareholders, or suspend or terminate the Plan entirely; provided, however,
that no such modification, amendment, suspension or termination may, without the
consent of the Participant or his or her Beneficiary in the case of his or her
death, reduce the right of a Participant, or his or her Beneficiary, as the case
may be, to any payment due under the Plan except as specifically provided
herein. Notwithstanding the foregoing, the Committee may make the following
amendments to the Plan without the consent of any individual with an interest
herein:
(a) In the event of the Plan's termination, the Committee may provide
that all amounts accrued to the date of termination (calculated as if the date
of termination were the last day of the Performance Period) be distributed to
all Participants or Beneficiaries, as applicable, in a single sum payment as
soon as practicable after the date of termination or on such other date as is
specified by the Committee.
(b) The Committee may amend the provisions of Article 8 prior to the
effective date of a Change of Control.
ARTICLE 14.
TAX WITHHOLDING
The Company shall have the right to deduct from all cash
payments made hereunder (or from any other payments due a Participant) any
foreign, federal, state, or local taxes required by law to be withheld with
respect to such cash payments.
ARTICLE 15.
OFFSET
The Company shall have the right to offset from the incentive
award payable hereunder any amount that the Participant owes to the Company or
any subsidiary without the consent of the Participant (or his Beneficiary, in
the event of the Participant's death).
<PAGE>
JOHNSON CONTROLS, INC.
LONG-TERM PERFORMANCE PLAN
ARTICLE 16.
SUCCESSORS
All obligations of the Company under the Plan with respect to
awards granted hereunder shall be binding on any successor to the Company,
whether the existence of such successor is the result of a direct or indirect
purchase, merger, consolidation or otherwise, of all or substantially all of the
business and/or assets of the Company. The Plan shall be binding upon and inure
to the benefit of the Participants, Beneficiaries, and their heirs, executors,
administrators and legal representatives.
ARTICLE 17.
DISPUTE RESOLUTION
Section 17.1. Governing Law. This Plan and the rights and obligations hereunder
shall be governed by and construed in accordance with the internal laws of the
State of Wisconsin (excluding any choice of law rules that may direct the
application of the laws of another jurisdiction), except as provided in Section
17.2 hereof.
Section 17.2. Arbitration.
(a) Application. Notwithstanding any employee agreement in effect
between a Participant and the Company or any subsidiary employer, if a
Participant or Beneficiary brings a claim that relates to benefits under this
Plan, regardless of the basis of the claim (including but not limited to,
actions under Title VII, wrongful discharge, breach of employment agreement,
etc.), such claim shall be settled by final binding arbitration in accordance
with the rules of the American Arbitration Association ("AAA") and judgment upon
the award rendered by the arbitrator may be entered in any court having
jurisdiction thereof.
(b) Initiation of Action. Arbitration must be initiated by serving or
mailing a written notice of the complaint to the other party. Normally, such
written notice should be provided the other party within one year (365 days)
after the day the complaining party first knew or should have known of the
events giving rise to the complaint. However, this time frame may be extended if
the applicable statute of limitation provides for a longer period of time. If
the complaint is not properly submitted within the appropriate time frame, all
rights and claims that the complaining party has or may have against the other
party shall be waived and void. Any notice sent to the Company shall be
delivered to:
Office of General Counsel
Johnson Controls, Inc.
5757 North Green Bay Avenue
P.O. Box 591
Milwaukee, WI 53201-0591
The notice must identify and describe the nature of all
complaints asserted and the facts upon which such complaints are based. Notice
will be deemed given according to the date of any postmark or the date of time
of any personal delivery.
<PAGE>
JOHNSON CONTROLS, INC.
LONG-TERM PERFORMANCE PLAN
(c) Compliance with Personnel Policies. Before proceeding to
arbitration on a complaint, the Participant or Beneficiary must initiate and
participate in any complaint resolution procedure identified in the Company's or
subsidiary's personnel policies. If the claimant has not initiated the complaint
resolution procedure before initiating arbitration on a complaint, the
initiation of the arbitration shall be deemed to begin the complaint resolution
procedure. No arbitration hearing shall be held on a complaint until any
applicable Company or subsidiary complaint resolution procedure has been
completed.
(d) Rules of Arbitration. All arbitration will be conducted by a single
arbitrator according to the Employment Dispute Arbitration Rules of the AAA. The
arbitrator will have authority to award any remedy or relief that a court of
competent jurisdiction could order or grant including, without limitation,
specific performance of any obligation created under policy, the awarding of
punitive damages, the issuance of any injunction, costs and attorney's fees to
the extent permitted by law, or the imposition of sanctions for abuse of the
arbitration process. The arbitrator's award must be rendered in a writing that
sets forth the essential findings and conclusions on which the arbitrator's
award is based.
(e) Representation and Costs. Each party may be represented in the
arbitration by an attorney or other representative selected by the party. The
Company or subsidiary shall be responsible for its own costs, the AAA filing fee
and all other fees, costs and expenses of the arbitrator and AAA for
administering the arbitration. The claimant shall be responsible for his
attorney's or representative's fees, if any. However, if any party prevails on a
statutory claim which allows the prevailing party costs and/or attorneys' fees,
the arbitrator may award costs and reasonable attorneys' fees as provided by
such statute.
(f) Discovery; Location; Rules of Evidence. Discovery will be allowed
to the same extent afforded under the Federal Rules of Civil Procedure.
Arbitration will be held at a location selected by the Company. AAA rules
notwithstanding, the admissibility of evidence offered at the arbitration shall
be determined by the arbitrator who shall be the judge of its materiality and
relevance. Legal rules of evidence will not be controlling, and the standard for
admissibility of evidence will generally be whether it is the type of
information that responsible people rely upon in making important decisions.
(g) Confidentiality. The existence, content or results of any
arbitration may not be disclosed by a party or arbitrator without the prior
written consent of both parties. Witnesses who are not a party to the
arbitration shall be excluded from the hearing except to testify.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.I
<SEQUENCE>8
<FILENAME>c66360ex10-i.txt
<DESCRIPTION>EXECUTIVE SURVIVOR BENEFITS PLAN
<TEXT>
<PAGE>
EXHIBIT 10.I
JOHNSON CONTROLS, INC.
EXECUTIVE SURVIVOR BENEFITS PLAN
ARTICLE 1.
PURPOSE AND DURATION
Section 1.1. Purpose. The purpose of the Johnson Controls, Inc. Executive
Survivor Benefits Plan is to permit eligible employees of Johnson Controls, Inc.
or its subsidiaries to elect to provide death benefits for their designated
beneficiaries under this Plan in lieu of the group term life insurance benefits
available under the Johnson Controls Group Life Insurance Plan.
Section 1.2. Duration. The Plan was originally effective as of January 1, 1982.
The Plan was most recently amended and restated effective October 1, 2001. The
provisions of the Plan as amended and restated apply to each individual with an
interest hereunder on or after October 1, 2001. The Plan shall remain in effect
until terminated pursuant to Article 9.
ARTICLE 2.
DEFINITIONS AND CONSTRUCTION
Section 2.1. Definitions. Wherever used in this Plan, the following terms shall
have the meanings set forth below and where the meaning is intended, the initial
letter of the word is capitalized:
(a) "Beneficiary" means the individual(s), trust(s) or other
entity(ies) entitled to receive benefits hereunder as determined under Article
6.
(b) "Board" means the Board of Directors of the Company.
(c) "Company" means Johnson Controls, Inc., a Wisconsin corporation,
and any successor thereto as provided in Article 13.
(d) "Committee" means the Compensation Committee of the Board.
(e) "Final Annual Pay" means the Participant's annualized base salary
rate in effect as of the date of his death, prior to reduction for any
deferrals. In the event the Participant is absent from employment as a result of
a Total and Permanent Disability on the date of his death, Final Annual Pay
shall be determined as of the date immediately preceding the date of his Total
and Permanent Disability.
(f) "Participant" means an executive of the Company or a subsidiary who
has been approved for participation in this Plan by the Committee and who has
elected coverage hereunder as provided in Article 4.
(g) "Plan" means the arrangement described herein, as from time to time
amended and in effect.
(h) "Retirement" means termination of employment from the Company and
its subsidiaries on or after attainment of age 55 with at least ten years of
vesting service or age 65 with
<PAGE>
JOHNSON CONTROLS, INC.
EXECUTIVE SURVIVOR BENEFITS PLAN
at least five years of vesting service (vesting service to be determined within
the meaning of the Johnson Controls Pension Plan or such other plan or
methodology prescribed by the Committee).
(i) "Total and Permanent Disability" means the Participant's inability
to perform the material duties of his occupation as a result of a
medically-determinable physical or mental impairment which can be expected to
result in death or which has lasted or can be expected to last for a period of
at least 12 months, as determined by the Committee. The Participant will be
required to submit such medical evidence or to undergo a medical examination by
a doctor selected by the Committee as the Committee determines is necessary in
order to make a determination hereunder.
Section 2.2. Gender and Number. Except where otherwise indicated by the context,
any masculine term used herein includes the feminine, the plural includes the
singular, and the singular the plural.
Section 2.3. Severability. In the event any provision of the Plan is held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the said illegal or invalid provision had not been included.
ARTICLE 3.
ADMINISTRATION
Section 3.1. General. The Plan shall be administered by the Committee. If at any
time the Committee shall not be in existence, the Board shall assume the
Committee's functions and each reference to the Committee herein shall be deemed
to include the Board.
Section 3.2. Authority. In addition to the authority specifically provided
herein, the Committee shall have full power and discretionary authority to: (a)
administer the Plan, including but not limited to the power and authority to
construe and interpret the Plan; (b) correct errors, supply omissions or
reconcile inconsistencies in the Plan's terms; (c) establish, amend or waive
rules and regulations, and appoint such agents, as it deems appropriate for the
Plan's administration; (d) determine the factors to be used to determine present
value lump sum payments; and (e) make any other determinations, including
factual determinations, and take any other action as it determines is necessary
or desirable for the Plan's administration.
Section 3.3. Decision Binding. The Committee's determinations and decisions made
pursuant to the provisions of the Plan and all related orders or resolutions of
the Board shall be final, conclusive and binding on all persons who have an
interest in the Plan or an award, and such determination and decisions shall not
be reviewable.
Section 3.4. Procedures of the Committee. The Committee's determinations must be
made by not less than a majority of its members present at the meeting (in
person or otherwise) at which a quorum is present, or by written majority
consent, which sets forth the action, is signed by the members of the Committee
and filed with the minutes for proceedings of the Committee. A majority of the
entire Committee shall constitute a quorum for the transaction of business.
Service on the Committee shall constitute service as a director of the Company
so that the Committee members shall be entitled to indemnification, limitation
of liability and reimbursement of
<PAGE>
JOHNSON CONTROLS, INC.
EXECUTIVE SURVIVOR BENEFITS PLAN
expenses with respect to their Committee services to the same extent that they
are entitled under the Company's By-laws and Wisconsin law for their services as
directors of the Company, except to the extent such indemnification is
prohibited by ERISA.
Section 3.5. Charge to Subsidiary. Each subsidiary shall be charged each year
with the amount, if any, payable under the Plan with respect to its employees
for such year.
ARTICLE 4.
PARTICIPATION AND ELECTION OF BENEFITS
Section 4.1. Participation. The Committee shall specify which executives of the
Company and its subsidiaries are eligible for participation in the Plan. Any
executive designated for participation in the Plan may elect, in the form and
manner and subject to such rules as the Committee may prescribe, to provide the
periodic survivor income described in Article 5 hereof in lieu of continuing
group life insurance coverage under the Company's Group Life Insurance Plan. No
benefits shall be provided under this Plan to any individual who does not elect
to be covered hereunder pursuant to this Paragraph. Accidental death and
dismemberment and travel accident insurance benefits shall remain in effect for
the Participant as provided under the Company's Group Life Insurance Plan.
Section 4.2. Cessation of Participation. Participation shall end on the date the
Participant terminates employment from the Company and its subsidiaries (other
than by reason of death) except as provided in Article 5. If a Participant is
transferred to a non-executive position or other position that is not eligible
for participation in the Plan, such individual shall cease to be a Participant
hereunder on the date of such transfer. In addition, a Participant may cancel
his election to participate hereunder at any time by filing a written notice to
the Company specifying the effective date of such cancellation.
ARTICLE 5.
SURVIVOR BENEFITS
In the event of the death of a Participant prior to his
termination of employment from the Company and its subsidiaries, benefits shall
be payable to his Beneficiary in the amounts indicated in the following table,
depending on the age of the Participant at the date of his death:
Percentage
Age Final Annual Pay
Before Age 55 100%
Age 55 or later 90%
Such benefits shall be payable annually, or at such more
frequent intervals as the Committee may determine, for a period of 10 years,
commencing with a payment due on the first day of the month next following the
Participant's death. For purposes of this Plan, the Participant shall be deemed
to continue in employment during a period of Total and Permanent Disability
prior to age 65.
<PAGE>
JOHNSON CONTROLS, INC.
EXECUTIVE SURVIVOR BENEFITS PLAN
Notwithstanding the foregoing, in the event a Participant who
Retired before 1989 dies after such Retirement, and provided no other
post-retirement death benefit has been paid by the Company, a one-time benefit
in an amount equal to 75 percent of the Participant's Final Annual Pay shall be
payable to his Beneficiary in a single lump sum as soon as practicable after the
Participant's death.
ARTICLE 6.
BENEFICIARIES
Each Participant shall designate one or more individuals,
trusts or other entities as Beneficiaries and/or contingent Beneficiaries to
receive the benefits due hereunder after his death. Such designations may be
changed from time to time, and shall be filed in writing with the Company on
such form and in such manner as the Committee may prescribe. Each beneficiary
designation form filed with the Company shall revoke the most recent form on
file, and the last form received by the Company while the Participant was alive
shall be given effect. In the event of the death of all designated primary and
contingent Beneficiaries prior to the date the first payment hereunder becomes
due, then the periodic benefits provided hereunder shall be due and payable to
the Participant's estate. In the event of the death of all designated primary
and contingent beneficiaries after the date the first payment hereunder becomes
due, the remaining payments shall be made to the estate of the last surviving
Beneficiary. If a Participant designates his spouse as a Beneficiary, such
beneficiary designation automatically shall become null and void on the date of
the Participant's divorce or legal separation from such spouse; provided the
Committee has notice of such divorce or legal separation prior to payment. If a
Participant maintains his primary residence in a state that has community or
marital property laws, then the Participant's spouse, if any, must consent to
the Participant's designation of any primary Beneficiary other than the spouse.
The Committee may direct that all payments to be made to a
Participant's or Beneficiary's estate shall be paid in a lump sum benefit that
equals the present value of the periodic payments due under Article 5.
ARTICLE 7.
NON-ALIENATION OF PAYMENTS
Benefits payable under this Plan shall not be subject in any
manner to alienation, sale, transfer, assignment, pledge, attachment,
garnishment or encumbrance of any kind, except as provided in Article 6. Any
attempt to alienate, sell, transfer, assign, pledge or otherwise encumber any
such benefit payment, whether currently or thereafter payable, shall not be
recognized by the Committee or the Company. Any benefit payment due hereunder
shall not in any manner be liable for or subject to the debts or liabilities of
any Beneficiary prior to the date such benefits become payable as provided in
Article 5.
ARTICLE 8.
RIGHTS OF PARTICIPANTS
Section 8.1. No Funding. No Participant or Beneficiary shall have any interest
in any fund or in any specific asset or assets of the Company (or any
subsidiary) by reason of any benefits pay-
<PAGE>
JOHNSON CONTROLS, INC.
EXECUTIVE SURVIVOR BENEFITS PLAN
able under the Plan. It is intended that the Company has merely a contractual
obligation to make payments when due hereunder and it is not intended that the
Company (or any subsidiary) hold any funds in reserve or trust to secure
payments hereunder.
Section 8.2. No Implied Rights; Employment. Nothing contained in this Plan shall
be construed to:
(a) Limit in any way the right of the Company or subsidiary to
terminate a Participant's or other employee's employment at any time; or
(b) Be evidence of any agreement or understanding, express or implied,
that a Participant or other employee will be retained in any particular position
or at any particular rate of remuneration or guaranteeing such person any right
to receive any other form or amount of remuneration from the Company.
ARTICLE 9.
AMENDMENT OR TERMINATION
The Board may amend, modify or terminate this Plan at any
time, provided that no such amendment or modification shall adversely affect a
Beneficiary's right to benefits arising out of the death of a Participant which
occurs prior to such amendment or termination, or out of the death of a
Participant whose Total and Permanent Disability occurred prior to such
amendment or termination, unless the Company shall have substituted therefor an
equivalent amount of survivor benefits protection under some other plan, program
or individual agreement with the Participant or his Beneficiary. Notwithstanding
the foregoing, the Board may amend the provisions of Article 10 prior to the
date of a Change of Control without obtaining the consent of any individual with
an interest hereunder.
ARTICLE 10.
CHANGE OF CONTROL
Section 10.1. Acceleration of Payment. Notwithstanding any other provision of
this Plan, within 30 days after a Change of Control (as defined below), each
Beneficiary who is then receiving benefits as a result of the death of a
Participant prior to the effective date of the Change of Control shall be paid a
lump sum payment in cash equal to the present value of all remaining payments
then due, and thereafter no further benefits shall be paid to such Beneficiary.
Section 10.2. Definition of Change of Control. A "Change of Control" means any
of the following events:
(a) The acquisition, other than from the Company, by any individual,
entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of 20% or more of either:
(1) The then outstanding shares of common stock of the Company
(the "Outstanding Company Common Stock") or
<PAGE>
JOHNSON CONTROLS, INC.
EXECUTIVE SURVIVOR BENEFITS PLAN
(2) The combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the
election of directors (the "Company Voting Securities");
provided, however, that any acquisition by (x) the Company or
any of its subsidiaries, or any employee benefit plan (or related trust)
sponsored or maintained by the Company or any of its subsidiaries or (y) any
corporation with respect to which, following such acquisition, more than 60% of,
respectively, the then outstanding shares of common stock of such corporation
and the combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Company Voting Securities immediately prior
to such acquisition in substantially the same proportion as their ownership,
immediately prior to such acquisition, of the Outstanding Company Common Stock
and Company Voting Securities, as the case may be, shall not constitute a Change
in Control of the Company; or
(b) Individuals who, as of May 24, 1989, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority of the
Board, provided that any individual becoming a director subsequent to May 24,
1989, whose election or nomination for election by the Company's shareholders
was approved by a vote of at least a majority of the directors then comprising
the Incumbent Board, shall be considered as though such individual were a member
of the Incumbent Board, but excluding, for this purpose, any such individual
whose initial assumption of office is in connection with an actual or threatened
election contest relating to the election of the Directors of the Company (as
such terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act); or
(c) Consummation of a reorganization, merger or consolidation (a
"Business Combination"), in each case, with respect to which all or
substantially all of the individuals and entities who were the respective
beneficial owners of the Outstanding Company Common Stock and Company Voting
Securities immediately prior to such Business Combination do not, following such
Business Combination, beneficially own, directly or indirectly, more than 60%
of, respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Business Combination in substantially the same proportion as
their ownership immediately prior to such Business Combination of the
Outstanding Company Common Stock and Company Voting Securities, as the case may
be; or
(d) A complete liquidation or dissolution of the Company or sale or
other disposition of all or substantially all of the assets of the Company other
than to a corporation with respect to which, following such sale or disposition,
more than 60% of, respectively, the then outstanding shares of common stock and
the combined voting power of the then outstanding voting securities entitled to
vote generally in the election of directors is then owned beneficially, directly
or indirectly, by all or substantially all of the individuals and entities who
were the beneficial owners, respectively, of the Outstanding Company Common
Stock and Company Voting Securities immediately prior to such sale or
disposition in substantially the same proportion as their ownership
<PAGE>
JOHNSON CONTROLS, INC.
EXECUTIVE SURVIVOR BENEFITS PLAN
of the Outstanding Company Common Stock and Company Voting Securities, as the
case may be, immediately prior to such sale or disposition.
ARTICLE 11.
TAX WITHHOLDING
The Company shall have the right to deduct from all cash
payments made hereunder (or from any other payments due a Participant) any
foreign, federal, state, or local taxes required by law to be withheld with
respect to such cash payments.
ARTICLE 12.
OFFSET
The Company shall have the right to offset from the benefits
payable hereunder any amount that the Participant owes to the Company or any
subsidiary without the consent of the Participant or the Participant's
Beneficiary.
ARTICLE 13.
SUCCESSORS
All obligations of the Company under the Plan shall be binding
on any successor to the Company, whether the existence of such successor is the
result of a direct or indirect purchase, merger, consolidation or otherwise, of
all or substantially all of the business and/or assets of the Company. This Plan
shall be binding upon and inure to the benefit of the Participants,
Beneficiaries and their heirs, executors, administrators and legal
representatives.
ARTICLE 14.
DISPUTE RESOLUTION
Section 14.1. Governing Law. This Plan and the rights and obligations hereunder
shall be governed by and construed in accordance with the internal laws of the
State of Wisconsin (excluding any choice of law rules that may direct the
application of the laws of another jurisdiction), except to the extent preempted
by ERISA.
Section 14.2. Claims Procedures.
(a) Initial Claim. If a Participant or Beneficiary (the "claimant")
believes that he is entitled to a right or benefit under the Plan that is not
provided, the claimant or his legal representative shall file a written claim
for such benefit with the Committee. The Committee shall review the claim within
90 days following the date of receipt of the claim; provided that the Committee
may determine that an additional 90-day extension is necessary due to
circumstances beyond the Committee's control, in which event the Committee shall
notify the claimant prior to the end of the initial period that an extension is
needed, the reason therefor and the date by which the Committee expects to
render a decision. If the claimant's claim is denied in whole or part, the
Committee shall provide written notice to the claimant of such denial. The
written notice shall include the specific reason(s) for the denial; reference to
specific Plan provisions upon which the denial is based; a description of any
additional material or information necessary for
<PAGE>
JOHNSON CONTROLS, INC.
EXECUTIVE SURVIVOR BENEFITS PLAN
the claimant to perfect the claim and an explanation of which such material or
information is necessary; and a description of the Plan's review procedures (as
set forth in subsection (b)) and the time limits applicable to such procedures,
including a statement of the claimant's right to bring a civil action under
section 502(a) of ERISA following an adverse determination upon review. If the
claimant does not receive a written decision within the time period(s) described
above, the claim shall be deemed denied on the last day of such period(s).
(b) Request for Appeal. The claimant has the right to appeal the
Committee's decision by filing a written appeal to the Committee within 60 days
after claimant's receipt of the decision or deemed denial. The claimant will
have the opportunity, upon request and free of charge, to have reasonable access
to and copies of all documents, records and other information relevant to the
claimant's appeal. The claimant may submit written comments, documents, records
and other information relating to his claim with the appeal. The Committee will
review all comments, documents, records and other information submitted by the
claimant relating to the claim, regardless of whether such information was
submitted or considered in the initial claim determination. The Committee shall
make a determination on the appeal within 60 days after receiving the claimant's
written appeal; provided that the Committee may determine that an additional
60-day extension is necessary due to circumstances beyond the Committee's
control, in which event the Committee shall notify the claimant prior to the end
of the initial period that an extension is needed, the reason therefor and the
date by which the Committee expects to render a decision. If the claimant's
appeal is denied in whole or part, the Committee shall provide written notice to
the claimant of such denial. The written notice shall include the specific
reason(s) for the denial; reference to specific Plan provisions upon which the
denial is based; a statement that the claimant is entitled to receive, upon
request and free of charge, reasonable access to and copies of all documents,
records, and other information relevant to the claimant's claim; and a statement
of the claimant's right to bring a civil action under section 502(a) of ERISA.
If the claimant does not receive a written decision within the time period(s)
described above, the appeal shall be deemed denied on the last day of such
period(s).
(c) ERISA Fiduciary. For purposes of ERISA, the Committee shall be
considered the named fiduciary under the Plan and the plan administrator.
Section 14.3. Limitation on Actions. Any action or other legal proceeding under
ERISA with respect to the Plan may be brought only after the claims and appeals
procedures of Section 14.2 are exhausted and only within the period ending on
the earlier of (i) one year after the date the claimant receives notice of a
denial or deemed denial upon appeal under Section 14.2(b), or (ii) the
expiration of the applicable statute of limitations period under applicable
federal law. Any action or other legal proceeding not adjudicated under ERISA
must be arbitrated in accordance with the provisions of Section 14.4.
<PAGE>
JOHNSON CONTROLS, INC.
EXECUTIVE SURVIVOR BENEFITS PLAN
Section 14.4. Arbitration.
(a) Application. Notwithstanding any employee agreement in effect
between a Participant and the Company or any subsidiary employer, if a
Participant or Beneficiary brings a claim that relates to benefits under this
Plan and that is not covered by ERISA, regardless of the basis of the claim,
such claim shall be settled by final binding arbitration in accordance with the
rules of the American Arbitration Association ("AAA") and judgment upon the
award rendered by the arbitrator may be entered in any court having jurisdiction
thereof.
(b) Initiation of Action. Arbitration must be initiated by serving or
mailing a written notice of the complaint to the other party. Normally, such
written notice should be provided to the other party within one year (365 days)
after the day the complaining party first knew or should have known of the
events giving rise to the complaint. However, this time frame may be extended if
the applicable statute of limitation provides for a longer period of time. If
the complaint is not properly submitted within the appropriate time frame, all
rights and claims that the complaining party has or may have against the other
party shall be waived and void. Any notice sent to the Company shall be
delivered to:
Office of General Counsel
Johnson Controls, Inc.
5757 North Green Bay Avenue
P.O. Box 591
Milwaukee, WI 53201-0591
The notice must identify and describe the nature of all
complaints asserted and the facts upon which such complaints are based. Notice
will be deemed given according to the date of any postmark or the date of time
of any personal delivery.
(c) Compliance with Personnel Policies. Before proceeding to
arbitration on a complaint, the Participant or Beneficiary must initiate and
participate in any complaint resolution procedure identified in the Company's or
subsidiary's personnel policies. If the claimant has not initiated the complaint
resolution procedure before initiating arbitration on a complaint, the
initiation of the arbitration shall be deemed to begin the complaint resolution
procedure. No arbitration hearing shall be held on a complaint until any
applicable Company or subsidiary complaint resolution procedure has been
completed.
(d) Rules of Arbitration. All arbitration will be conducted by a single
arbitrator according to the Employment Dispute Arbitration Rules of the AAA. The
arbitrator will have authority to award any remedy or relief that a court of
competent jurisdiction could order or grant including, without limitation,
specific performance of any obligation created under policy, the awarding of
punitive damages, the issuance of any injunction, costs and attorney's fees to
the extent permitted by law, or the imposition of sanctions for abuse of the
arbitration process. The arbitrator's award must be rendered in a writing that
sets forth the essential findings and conclusions on which the arbitrator's
award is based.
<PAGE>
JOHNSON CONTROLS, INC.
EXECUTIVE SURVIVOR BENEFITS PLAN
(e) Representation and Costs. Each party may be represented in the
arbitration by an attorney or other representative selected by the party. The
Company or subsidiary shall be responsible for its own costs, the AAA filing fee
and all other fees, costs and expenses of the arbitrator and AAA for
administering the arbitration. The claimant shall be responsible for his
attorney's or representative's fees, if any. However, if any party prevails on a
statutory claim which allows the prevailing party costs and/or attorneys' fees,
the arbitrator may award costs and reasonable attorneys' fees as provided by
such statute.
(f) Discovery; Location; Rules of Evidence. Discovery will be allowed
to the same extent afforded under the Federal Rules of Civil Procedure.
Arbitration will be held at a location selected by the Company. AAA rules
notwithstanding, the admissibility of evidence offered at the arbitration shall
be determined by the arbitrator who shall be the judge of its materiality and
relevance. Legal rules of evidence will not be controlling, and the standard for
admissibility of evidence will generally be whether it is the type of
information that responsible people rely upon in making important decisions.
(g) Confidentiality. The existence, content or results of any
arbitration may not be disclosed by a party or arbitrator without the prior
written consent of both parties. Witnesses who are not a party to the
arbitration shall be excluded from the hearing except to testify.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.J
<SEQUENCE>9
<FILENAME>c66360ex10-j.txt
<DESCRIPTION>EQUALIZATION BENEFIT PLAN
<TEXT>
<PAGE>
EXHIBIT 10.J
JOHNSON CONTROLS, INC.
EQUALIZATION BENEFIT PLAN
ARTICLE 1.
PURPOSE AND DURATION
Section 1.1. Purpose. The purpose of the Johnson Controls Equalization Benefit
Plan is to restore retirement benefits to certain participants in the Company's
pension or savings plans whose benefits under said plans are or will be limited
by reason of Code Sections 401(a)(17), 401(k), 401(m), 402(g) or 415 and/or by
reason of the election of such employees to defer income or reduce salary
pursuant to this Plan or the Johnson Controls, Inc. Incentive Compensation Plan
(Deferred Option Qualified). This Plan is completely separate from the
tax-qualified pension plans maintained by the Company and is not funded or
qualified for special tax treatment under the Code. The Plan is intended to be
an unfunded plan covering a select group of management and highly compensated
employees for purposes of ERISA.
Section 1.2. Duration of the Plan. The Plan became effective as of January 1,
1980, and was most recently amended and restated effective October 1, 2001. The
provisions of the Plan as amended and restated apply to each individual with an
interest hereunder on or after October 1, 2001. The Plan shall remain in effect
until terminated by the Board pursuant to Article 9.
ARTICLE 2.
DEFINITIONS AND CONSTRUCTION
Section 2.1. Definitions. Wherever used in the Plan, the following terms shall
have the meanings set forth below and, where the meaning is intended, the
initial letter of the word is capitalized:
(a) "Account" means the record keeping account or accounts maintained
to record the interest of each Participant under the Plan, and shall include the
aggregate of the Participant's Retirement Supplement Account and Savings
Supplement Account. An Account is established for record keeping purposes only
and not to reflect the physical segregation of assets on the Participant's
behalf, and may consist of such subaccounts or balances as the Committee may
determine to be necessary or appropriate.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as interpreted by
regulations and rulings issued pursuant thereto, all as amended and in effect
from time to time. Any reference to a specific provision of the Code shall be
deemed to include reference to any successor provision thereto.
(d) "Committee" means the Compensation Committee of the Board.
(e) "Company" means Johnson Controls, Inc., a Wisconsin corporation,
and its successors as provided in Article 14.
(f) "ERISA" means the Employee Retirement Income Security Act of 1974,
as interpreted by regulations and rulings issued pursuant thereto, all as
amended and in effect from time
<PAGE>
JOHNSON CONTROLS, INC.
EQUALIZATION BENEFIT PLAN
to time. Any reference to a specific provision of ERISA shall be deemed to
include reference to any successor provision thereto.
(g) "Exchange Act" means the Securities Exchange Act of 1934, as
interpreted by regulations and rules issued pursuant thereto, all as amended and
in effect from time to time. Any reference to a specific provision of the
Exchange Act shall be deemed to include reference to any successor provision
thereto.
(h) "Incentive Plan" means the Johnson Controls, Inc. Executive
Incentive Compensation Plan (Deferred Option Qualified) as from time to time
amended and in effect.
(i) "Participant" means an employee of the Company or a subsidiary who
is a participant in both the Incentive Plan and in the Retirement Plan or the
Savings Plan, and who is designated for participation herein by the Committee.
The Committee shall limit the foregoing group of eligible employees to a select
group of management and highly compensated employees, as determined by the
Committee in accordance with ERISA. Where the context so requires, a Participant
also means a former employee entitled to receive a benefit hereunder.
(j) "Retirement Plan" means the defined benefit pension plan maintained
by the Company known as the Johnson Controls Pension Plan and any successor to
such plan maintained by the Company or any successor or affiliate of the
Company.
(k) "Retirement Plan Benefits" means the aggregate monthly benefits
payable under the terms of the Retirement Plan.
(l) "Savings Plan" means the defined contribution plan maintained by
the Company pursuant to Section 401(k) of the Code known as the Johnson Controls
Savings and Investment (401(k)) Plan and any successor to such plan maintained
by the Company or any successor or affiliate of the Company.
Section 2.2. Construction. Wherever any words are used in the masculine, they
shall be construed as though they were used in the feminine in all cases where
they would so apply; and wherever any words are used in the singular or the
plural, they shall be construed as though they were used in the plural or the
singular, as the case may be, in all cases where they would so apply. Titles of
articles and sections are for general information only, and the Plan is not to
be construed by reference to such items.
Section 2.3. Severability. In the event any provision of the Plan is held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.
ARTICLE 3.
ADMINISTRATION
Section 3.1. General. The Committee shall administer the Plan. If at any time
the Committee shall not be in existence, then the administrative functions of
the Committee shall be assumed by the Board, and any references herein to the
Committee shall be deemed to include references to the Board.
<PAGE>
JOHNSON CONTROLS, INC.
EQUALIZATION BENEFIT PLAN
Section 3.2. Authority and Responsibility. In addition to the authority
specifically provided herein, the Committee shall have the discretionary
authority to take any action or make any determination it deems necessary for
the proper administration of the Plan, including but not limited to: (a)
prescribe rules and regulations for the administration of the Plan; (b)
prescribe forms for use with respect to the Plan; (c) interpret and apply all of
the Plan's provisions, reconcile inconsistencies or supply omissions in the
Plan's terms; (d) make appropriate determinations, including factual
determinations, and calculations; and (e) prepare all reports required by law.
Section 3.3. Decisions Binding. The Committee's determinations shall be final
and binding on all parties with an interest hereunder, unless determined to be
arbitrary and capricious.
Section 3.4. Procedures of the Committee. The Committee's determinations must be
made by not less than a majority of its members present at the meeting (in
person or otherwise) at which a quorum is present, or by written majority
consent, which sets forth the action, is signed by the members of the Committee
and filed with the minutes for proceedings of the Committee. A majority of the
entire Committee shall constitute a quorum for the transaction of business.
Service on the Committee shall constitute service as a director of the Company
so that the Committee members shall be entitled to indemnification, limitation
of liability and reimbursement of expenses with respect to their Committee
services to the same extent that they are entitled under the Company's By-laws
and Wisconsin law for their services as directors of the Company.
Section 3.5. Restrictions to Comply with Applicable Law. Notwithstanding any
other provision of the Plan to the contrary, the Company shall have no liability
to make any payment unless such payment would comply with all applicable laws
and the applicable requirements of any securities exchange or similar entity. In
addition, transactions under the Plan are intended to comply with all applicable
conditions of Rule 16b-3 under the Exchange Act. The Committee shall administer
the Plan so that transactions under the Plan will be exempt from or comply with
Section 16 of the Exchange Act, and shall have the right to restrict or rescind
any transaction, or impose other rules and requirements, to the extent it deems
necessary or desirable for such exemption or compliance to be met.
ARTICLE 4.
RETIREMENT PLAN SUPPLEMENT
Section 4.1. Eligibility for Retirement Plan Supplement. Any Participant who
retires under the Retirement Plan on or after January 1, 1980, or such
Participant's spouse or other beneficiary who is entitled to a benefit under the
Retirement Plan, shall be entitled to a benefit payable hereunder in accordance
with this Article 4.
Section 4.2. Amount of Retirement Plan Supplement. The amount of benefits to
which an eligible individual is entitled shall equal the excess, if any, of:
(a) The amount of such Participant's, surviving spouse's or other
beneficiary's Retirement Plan Benefits computed under the provisions of the
Retirement Plan, without regard to the limitations imposed by reason of Section
415 of the Code or the limit on considered compen-
<PAGE>
JOHNSON CONTROLS, INC.
EQUALIZATION BENEFIT PLAN
sation under Section 401(a)(17) of the Code, and on the assumption that all
amounts of cash compensation which the Participant elected to defer under the
Incentive Plan and/or under Article 5 of this Plan were paid as "Compensation"
as defined in the Retirement Plan (to the extent not already included in such
"Compensation" under the applicable Retirement Plan definition); over
(b) The amount of Retirement Plan Benefits actually payable to such
Participant, surviving spouse or other beneficiary for each month under the
Retirement Plan, as computed under the provisions of the Retirement Plan and
subject to the above mentioned limitations.
Section 4.3. Payment of Benefits. Retirement Plan supplement benefits under this
Article 4 shall become payable when a Participant or the Participant's spouse or
other beneficiary begins to receive Retirement Plan payments and shall be
payable in the same manner and subject to all the same options, conditions,
privileges and restrictions as are applicable to the benefits payable to the
Participant, his spouse or other beneficiary under the Retirement Plan.
ARTICLE 5.
SAVINGS PLAN SUPPLEMENT
Section 5.1. Election and Crediting of Account. For each calendar year beginning
on or after December 31, 1986, each Participant may elect, in such form and
manner and within such time periods as the Committee may prescribe, that, in the
event the Participant's ability to make Before-Tax Matched Contributions under
the Savings Plan is limited by reason of Sections 401(k), 402(g) or 415 of the
Code and/or the limit on considered compensation under Section 401(a)(17) of the
Code, then the difference between the Participant's actual Before-Tax Matched
Contributions under the Savings Plan for any calendar year and the amount that
would have been contributed as Before-Tax Matched Contributions but for such
limits shall be credited, as of December 31 of such year, to the Participant's
Savings Supplement Account; provided that, when determining a Participant's
compensation for purposes of this Article 5, the only bonus that may be included
is the amount a Participant receives under the Incentive Plan for the calendar
year. Such Savings Supplement Account shall also be credited as of each December
31 with an amount equal to the difference between the amount of Matching
Contributions actually credited to the Participant's Savings Plan Accounts for
the year and the amount of Matching Contributions that would have been so
credited if the amount determined under the preceding sentence had actually been
contributed to the Savings Plan (determined without regard to the limitations
imposed by Sections 401(m) and 415 of the Code); provided the Participant has
met the eligibility requirements to receive a Matching Contribution under the
Savings Plan for such year. An election under this Article 5 shall constitute an
election by the Participant to reduce the Participant's salary by the amount
determined under the first sentence of this Section 5.1, and shall remain in
effect from time to time unless and until terminated prospectively by the
Participant by written notice to the Committee in such form and manner and
within such time periods as the Committee may prescribe. The Matching
Contributions credited hereunder shall be subject to the same vesting
requirements as are imposed under the Savings Plan.
<PAGE>
JOHNSON CONTROLS, INC.
EQUALIZATION BENEFIT PLAN
Section 5.2. Termination of Election. A Participant's election to make
supplemental Before-Tax Contributions to this Plan shall terminate at the same
time as his election under the Savings Plan is terminated.
Section 5.3. Credits to Subaccounts. Amounts credited to a Participant's Savings
Supplement Account hereunder to the extent derived from Before-Tax Matched
Contributions will be credited to a before-tax contributions subaccount of the
Participant's Savings Supplement Account, and amounts derived from employer
contributions will be credited to an employer contributions subaccount of the
Participant's Savings Supplement Account.
Section 5.4. Credit of Earnings, Gains and Losses. An additional amount shall be
credited or charged to the Savings Supplement Account to reflect allocable
hypothetical earnings, gains and losses as provided herein.
(a) The additional credit (or charge) for employer contribution
subaccounts will be determined on a quarterly basis and will be equal to the
product of the sum of the number of equivalent shares of common stock and/or
preferred stock held in the Participant's account as of the last day of the
previous quarter plus additional shares acquired as the result of dividend
payments during the course of the quarter as determined by the total quarterly
dividend payments divided by the average cost of a share of Company stock during
the quarter, times the price of a share of Company stock as of the last business
day of the quarter. The credit (or charge) is the difference in net value of the
closing balance of the current quarter minus the closing balance of the previous
quarter. In the event that the Savings Plan Company Stock Fund should experience
a loss for a given quarter, employer contribution subaccounts will be reduced in
accordance with the procedures specified above to reflect such loss.
(b) The additional credit for before-tax contributions subaccounts
shall be determined in accordance with the following procedures.
(1) The additional credit (or charge) with respect to each
Participant's before-tax contributions subaccount will be
based upon the investment gain (or loss) that the Participant
would have realized had his before-tax contributions
subaccount been invested, in accordance with the Participant's
written election, in one or more of the Savings Plan Fixed
Income Fund, Saving Plan US Equity Index Commingled Pool or
Savings Plan Company Stock Fund. The additional credit (or
charge) shall be the sum, separately calculated for each of
the available investment options, of the product obtained by
multiplying the portion (if any) of the Participant's Prior
Balance of the before-tax contributions subaccount that is
deemed to have been invested in each investment option and the
rate of return experience by that investment option under the
Savings Plan during the quarter.
The credit (or charge) with respect to the Savings Plan
Company Stock Fund will be determined on a quarterly basis and
will be equal to the product of the sum of the number of
equivalent shares of common stock held in the participant's
before-tax contributions subaccount as of the last day of the
previous quarter plus any additional shares acquired as the
result of employee contributions during the
<PAGE>
JOHNSON CONTROLS, INC.
EQUALIZATION BENEFIT PLAN
quarter plus dividend payments received during the quarter
divided by the average cost of a share of stock during the
quarter, times the price of a share of stock as of the last
business day of the quarter. The credit (or charge) is the
difference in net value of the closing balance of the current
quarter minus the closing balance of the previous quarter.
(2) In accordance with uniform rules prescribed by the
Committee, each Participant shall designate in writing the
investment option or options in which his before-tax
contributions subaccount is deemed to be invested for purposes
of paragraph (1) above. When selecting more than one
investment option, the Participant shall designate, in whole
multiples of ten percent (10%), the percentage of his
before-tax contributions subaccount that is deemed to be
invested in each investment option. If the Participant fails
to make a timely and properly completed investment
designation, he shall be deemed to have elected that one
hundred percent (100%) of his before-tax contributions
subaccount be deemed to have been invested in the Fixed Income
Fund. A Participant's election or deemed election (or revision
to a prior election or deemed election) made in any calendar
year shall, unless superceded by a subsequent election made
during the same calendar year, become effective on January 1
of the following calendar year, and shall remain in effect
unless and until modified by a subsequent election that
becomes effective in accordance with the rules of this
paragraph (2). An effective investment election shall operate
both (A) to reallocate the Participant's existing before-tax
contributions subaccount as of the effective date of the
election among the available investment options and (B) to
determine the allocation of future before-tax contributions
credited to the Participant's before-tax contributions
subaccount on or after the effective date of the designation.
Other than the reallocation of a Participant's before-tax
contributions subaccount pursuant to a revised investment
election submitted by the Participant, the deemed investment
allocation to the Participant's before-tax contributions
subaccount will not be adjusted to reflect differences in the
relative investment return realized by the various
hypothetical investment options that the Participant has
designated.
(3) In the event that the Savings Plan Fixed Income Fund,
Savings Plan US Equity Index Commingled Pool or Savings Plan
Company Stock Fund should experience a loss for a given year,
the before-tax contributions subaccounts of Participants who
have elected a deemed investment in any such option will be
reduced in accordance with the procedures specified above to
reflect such losses.
(4) A Participant who has terminated employment from the
Company and its subsidiaries, or a beneficiary entitled to
payment of a Participant's Savings Supplement Account, may not
make deemed investment election changes as prescribed herein
after the date of the Participant's termination of employment.
Section 5.5. Payment of Benefits. Payment of the amounts credited to a
Participant's Savings Supplement Account hereunder shall commence during the
month of January immediately following the Participant's termination of
employment with the Company and its subsidiaries and
<PAGE>
JOHNSON CONTROLS, INC.
EQUALIZATION BENEFIT PLAN
shall be made in ten (10) annual installments, provided that the minimum annual
installment shall be $10,000. The first such installment shall equal the total
value of the Savings Supplement Account as of the date of distribution divided
by ten (10). Each subsequent installment shall be paid each January in an
equivalent amount, plus any additional amount credited for the preceding
calendar year on the unpaid balance in the Savings Supplement Account in
accordance with Section 5.4 above. Each payment shall be drawn from each
subaccount on a pro-rata basis.
Section 5.6. Death Benefit. Each Participant may file a beneficiary designation
with the Company in such form and manner as the Committee may prescribe and
within the time periods the Committee may prescribe. In the event of the
Participant's death prior to receiving all payments due from his Savings
Supplement Account hereunder, the remaining interest shall be paid to the
Participant's beneficiary in a lump sum as soon as practicable after the
Participant's death. A Participant can change his beneficiary designation at any
time, provided that each beneficiary designation form filed with the Company
shall revoke the most recent form on file, and the last form received by the
Company while the Participant was alive shall be given effect. If a Participant
designates a beneficiary without providing in the designation that the
beneficiary must be living at the time of each distribution, the designation
shall vest in the beneficiary all of the distribution whether payable before or
after the beneficiary's death, and any distributions remaining upon the
beneficiary's death shall be made to the beneficiary's estate. In the event
there is no valid beneficiary designation form on file, or in the event the
Participant's designated beneficiary does not survive the Participant, the
Participant's estate will be deemed the Beneficiary and will be entitled to
receive payment. If a Participant designates his spouse as a beneficiary, such
beneficiary designation automatically shall become null and void on the date of
the Participant's divorce or legal separation from such spouse, provided the
Committee has notice of such divorce or legal separation prior to payment. If a
Participant maintains his primary residence in a state that has community or
marital property laws, then the Participant's spouse, if any, must consent to
the Participant's designation of any primary beneficiary other than the spouse.
ARTICLE 6.
EQUALIZATION BENEFIT PLAN ACCOUNTS
Section 6.1. Establishment of Accounts. The Company shall establish book keeping
reserve Accounts on behalf of each Participant with respect to each type of
benefit offered under this Plan. The first such reserve shall be known as the
"Retirement Supplement Account" and shall relate to the benefits to be paid
pursuant to Article 4 above. The second such reserve shall be known as the
"Savings Supplement Account" and shall be comprised of the individual
Participant Savings Supplement Accounts (and subaccounts) described in Article
5.
Section 6.2. Administration of Accounts. Each Account will be administered as
follows:
(a) The Account shall serve solely as a device for determining the
amount of the accrued deferred liability for the benefit payments provided
herein, and shall not constitute or be treated as a trust fund of any kind, it
being expressly provided that the amounts credited to the Account shall be and
remain the sole property of the Company and that no Participant shall have any
proprietary rights of any nature whatsoever with respect thereto or with respect
to any investments the Company may make to aid it in meeting its obligations
hereunder.
<PAGE>
JOHNSON CONTROLS, INC.
EQUALIZATION BENEFIT PLAN
(b) With respect to each fiscal year of the Company while the Plan is
in effect, the Retirement Supplement Account shall be credited or charged with
such annual amounts as shall be determined to be appropriate based upon
assumptions acceptable to the Committee, and the Savings Supplement Account
shall be credited or charged with such amounts as are prescribed in Article 5.
(c) No funds or other assets of the Company shall be segregated and
attributable to the amounts that may from time to time be credited to the
Accounts. Benefit payments under the Plan shall be made from the general assets
of the Company at the time any such payment becomes due and payable. To the
extent that any person acquires a right to receive payments from the Company
hereunder, such right shall be no greater than the right of an unsecured
creditor.
ARTICLE 7.
NON-ALIENATION OF PAYMENTS
Except as specifically provided herein, benefits payable under
the Plan shall not be subject in any manner to alienation, sale, transfer,
assignment, pledge, attachment, garnishment or encumbrance of any kind. Any
attempt to alienate, sell, transfer, assign, pledge or otherwise encumber any
such benefit payment, whether currently or thereafter payable, shall not be
recognized by the Committee or the Company. Any benefit payment due hereunder
shall not in any manner be liable for or subject to the debts or liabilities of
any Participant or other person entitled thereto. If any such person shall
attempt to alienate, sell, transfer, assign, pledge or encumber any benefit
payments to be made to that person under the Plan or any part thereof, or if by
reason of such person's bankruptcy or other event happening at any time, such
payments would devolve upon anyone else or would not be enjoyed by such person,
then the Committee, in its discretion, may terminate such person's interest in
any such benefit payment, and hold or apply it to or for the benefit of that
person, the spouse, children or other dependents thereof, or any of them, in
such manner as the Committee deems proper.
ARTICLE 8.
LIMITATION OF RIGHTS AGAINST THE COMPANY
Participation in this Plan, or any modifications thereof, or
the payments of any benefits hereunder, shall not be construed as giving to any
person any right to be retained in the service of the Company, limiting in any
way the right of the Company to terminate such person's employment at any time,
evidencing any agreement or understanding that the Company will employ such
person in any particular position or at any particular rate of compensation or
guaranteeing such person any right to receive any other form or amount of
remuneration from the Company.
ARTICLE 9.
AMENDMENT OR TERMINATION
Section 9.1. Amendment or Termination. The Board may amend or terminate this
Plan at any time, provided that, except as provided in Section 9.3, no such
amendment or modification shall adversely affect the rights of any Participant,
spouse or other beneficiary then receiving benefits
<PAGE>
JOHNSON CONTROLS, INC.
EQUALIZATION BENEFIT PLAN
under this Plan or deprive any such person of the right to receive amounts
previously credited to the Participant's Savings Supplement Account (except as
such account balance may be reduced as a result of investment losses allocable
to such Account), unless the Company shall have substituted therefor an
equivalent amount of immediate or deferred compensation under some other plan,
program or individual agreement with such individual.
Section 9.2. Entitlement to Benefits. It is understood that an individual's
entitlement to retirement supplement benefits under Article 4 of this Plan may
be automatically reduced as the result of an increase in his Retirement Plan
Benefits. Nothing herein shall be construed in any way to limit the right of the
Company to amend or modify the Retirement Plan or Savings Plan.
Section 9.3. Termination; Change of Control. Notwithstanding the foregoing, the
Board may take the following actions without obtaining the consent of any
Participant, spouse or Beneficiary:
(a) In the event of the Plan's termination, the Board may provide that
all elections under this Plan then outstanding be cancelled and that all amounts
accrued to the date of termination be distributed to all Participants, their
spouses or beneficiaries, as applicable, in a single sum payment as soon as
practicable after the date of termination or on such other date as is specified
by the Board, regardless of any distribution election then in effect. In such
event, the Board shall specify the actuarial assumptions and other factors to be
used to determine a single sum value of any Retirement Supplement benefits
accrued hereunder as of the effective date of the Plan's termination.
(b) The Board may amend the provisions of Article 10 prior to the
effective date of a Change of Control.
ARTICLE 10.
SPECIAL RULES APPLICABLE IN THE EVENT OF A
CHANGE OF CONTROL OF THE COMPANY
Section 10.1. Acceleration of Payments. Notwithstanding any other provision of
this Plan, all amounts credited to a Participant's Accounts under the Plan shall
be paid to the Participant, spouse or beneficiary entitled thereto, in a lump
sum in cash within 30 days after a Change of Control. In such event, the
Committee shall specify the actuarial assumptions and other factors to be used
to determine the single sum value of any Retirement Supplement benefits accrued
hereunder as of the date of the Change of Control.
Section 10.2. Definition of a Change of Control. A "Change of Control" shall
mean any of the following events:
(a) The acquisition, other than from the Company, by any individual,
entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 20% or more of either:
<PAGE>
JOHNSON CONTROLS, INC.
EQUALIZATION BENEFIT PLAN
(1) The then outstanding shares of common stock of the Company
(the "Outstanding Company Common Stock") or
(2) The combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the
election of directors (the "Company Voting Securities")
provided, however, that any acquisition by (x) the Company or
any of its subsidiaries, or any employee benefit plan (or related trust)
sponsored or maintained by the Company or any of its subsidiaries or (y) any
corporation with respect to which, following such acquisition, more than 60% of,
respectively, the then outstanding shares of common stock of such corporation
and the combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors is then
beneficially owned directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Company Voting Securities immediately prior
to such acquisition in substantially the same proportion as their ownership,
immediately prior to such acquisition, of the Outstanding Company Common Stock
and Company Voting Securities, as the case may be, shall not constitute a Change
of Control; or
(b) Individuals who, as of May 24, 1989, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority of the
Board, provided that any individual becoming a director subsequent to May 24,
1989, whose election or nomination for election by the Company's shareholders
was approved by a vote of at least a majority of the directors then comprising
the Incumbent Board, shall be considered as though such individual were a member
of the Incumbent Board, but excluding, for this purpose, any such individual
whose initial assumption of office is in connection with an actual or threatened
election contest relating to the election of the Directors of the Company (as
such terms are used in Rule 14a-ll of Regulation l4A promulgated under the
Exchange Act); or
(c) Consummation of a reorganization, merger or consolidation (a
"Business Combination"), in each case, with respect to which all or
substantially all of the individuals and entities who were the respective
beneficial owners of the Outstanding Company Common Stock and Company Voting
Securities immediately prior to such Business Combination do not, following such
Business Combination, beneficially own, directly or indirectly, more than 60%
of, respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Business Combination in substantially the same proportion as
their ownership immediately prior to such Business Combination of the
Outstanding Company Common Stock and Company Voting Securities, as the case may
be; or
(d) A complete liquidation or dissolution of the Company or sale or
other disposition of all or substantially all of the assets of the Company other
than to a corporation with respect to which, following such sale or disposition,
more than 60% of, respectively, the then outstanding shares of common stock and
the combined voting power of the then outstanding voting securities entitled to
vote generally in the election of directors is then owned beneficially, directly
or indirectly, by all or substantially all of the individuals and entities who
were the beneficial own-
<PAGE>
JOHNSON CONTROLS, INC.
EQUALIZATION BENEFIT PLAN
ers, respectively, of the Outstanding Company Common Stock and Company Voting
Securities immediately prior to such sale or disposition in substantially the
same proportion as their ownership of the Outstanding Company Common Stock and
Company Voting Securities, as the case may be, immediately prior to such sale or
disposition.
Section 10.3. Maximum Payment Limitations.
(a) Limit on Payments. Except as provided in subsection (b) below, if
any portion of the payments or benefits described in this Plan or under any
other agreement with or plan of the Company or a subsidiary (in the aggregate,
"Total Payments"), would constitute an "excess parachute payment", then the
Total Payments to be made to the Participant shall be reduced such that the
value of the aggregate Total Payments that the Participant is entitled to
receive shall be one dollar ($1) less than the maximum amount which the
Participant may receive without becoming subject to the tax imposed by Section
4999 of the Code or which the Company may pay without loss of deduction under
Section 280G(a) of the Code; provided that this Section shall not apply in the
case of a Participant who has in effect a valid employment contract providing
that the Total Payments to the Participant shall be determined without regard to
the maximum amount allowable under Section 280G of the Code. The terms "excess
parachute payment" and "parachute payment" shall have the meanings assigned to
them in Section 280G of the Code, and such "parachute payments" shall be valued
as provided therein. Present value shall be calculated in accordance with
Section 280G(d)(4) of the Code. Within forty (40) days following delivery of
notice by the Company to the Participant of its belief that there is a payment
or benefit due the Participant which will result in an excess parachute payment,
the Participant and the Company, at the Company's expense, shall obtain the
opinion (which need not be unqualified) of nationally recognized tax counsel
selected by the Company's independent auditors and acceptable to the Participant
in his sole discretion (which may be regular outside counsel to the Company),
which opinion sets forth (A) the amount of the Base Period Income, (B) the
amount and present value of Total Payments and (C) the amount and present value
of any excess parachute payments determined without regard to the limitations of
this Section. As used in this Section, the term "Base Period Income" means an
amount equal to the Participant's "annualized includible compensation for the
base period" as defined in Section 280G(d)(1) of the Code. For purposes of such
opinion, the value of any noncash benefits or any deferred payment or benefit
shall be determined by the Company's independent auditors in accordance with the
principles of Sections 280G(d)(3) and (4) of the Code, which determination shall
be evidenced in a certificate of such auditors addressed to the Company and the
Participant. Such opinion shall be addressed to the Company and the Participant
and shall be binding upon the Company and the Participant. If such opinion
determines that there would be an excess parachute payment, the payments
hereunder that are includible in Total Payments or any other payment or benefit
determined by such counsel to be includible in Total Payments shall be reduced
or eliminated as specified by the Participant in writing delivered to the
Company within thirty days of his receipt of such opinion or, if the Participant
fails to so notify the Company, then as the Company shall reasonably determine,
so that under the bases of calculations set forth in such opinion there will be
no excess parachute payment. If such legal counsel so requests in connection
with the opinion required by this Section, the Participant and the Company shall
obtain, at the Company's expense, and the legal counsel may rely on in providing
the opinion, the advice of a firm of recognized executive compensation
consultants as to the reasonableness of any item of compensation to be
<PAGE>
JOHNSON CONTROLS, INC.
EQUALIZATION BENEFIT PLAN
received by the Participant. If the provisions of Sections 280G and 4999 of the
Code are repealed without succession, then this Section shall be of no further
force or effect.
(b) Employment Contract Governs. The provisions of subsection (a) above
shall not apply to a Participant whose employment is governed by an employment
contract that provides for Total Payments in excess of the limitation described
in subsection (a) above.
ARTICLE 11.
ERISA PROVISIONS
Section 11.1. Claims Procedures.
(a) Initial Claim. If a Participant, spouse or beneficiary (the
"claimant") believes that he is entitled to a benefit under the Plan that is not
provided, the claimant or his legal representative shall file a written claim
for such benefit with the Committee. The Committee shall review the claim within
90 days following the date of receipt of the claim; provided that the Committee
may determine that an additional 90-day extension is necessary due to
circumstances beyond the Committee's control, in which event the Committee shall
notify the claimant prior to the end of the initial period that an extension is
needed, the reason therefor and the date by which the Committee expects to
render a decision. If the claimant's claim is denied in whole or part, the
Committee shall provide written notice to the claimant of such denial. The
written notice shall include the specific reason(s) for the denial; reference to
specific Plan provisions upon which the denial is based; a description of any
additional material or information necessary for the claimant to perfect the
claim and an explanation of why such material or information is necessary; and a
description of the Plan's review procedures (as set forth in subsection (b)) and
the time limits applicable to such procedures, including a statement of the
claimant's right to bring a civil action under section 502(a) of ERISA following
an adverse determination upon review. If the claimant does not receive a written
decision within the time period(s) described above, the claim shall be deemed
denied on the last day of such period(s).
(b) Request for Appeal. The claimant has the right to appeal the
Committee's decision by filing a written appeal to the Committee within 60 days
after claimant's receipt of the decision or deemed denial. The claimant will
have the opportunity, upon request and free of charge, to have reasonable access
to and copies of all documents, records and other information relevant to the
claimant's appeal. The claimant may submit written comments, documents, records
and other information relating to his claim with the appeal. The Committee will
review all comments, documents, records and other information submitted by the
claimant relating to the claim, regardless of whether such information was
submitted or considered in the initial claim determination. The Committee shall
make a determination on the appeal within 60 days after receiving the claimant's
written appeal; provided that the Committee may determine that an additional
60-day extension is necessary due to circumstances beyond the Committee's
control, in which event the Committee shall notify the claimant prior to the end
of the initial period that an extension is needed, the reason therefor and the
date by which the Committee expects to render a decision. If the claimant's
appeal is denied in whole or part, the Committee shall provide written notice to
the claimant of such denial. The written notice shall include the specific
reason(s) for the denial; reference to specific Plan provisions upon which the
denial is based; a statement that
<PAGE>
JOHNSON CONTROLS, INC.
EQUALIZATION BENEFIT PLAN
the claimant is entitled to receive, upon request and free of charge, reasonable
access to and copies of all documents, records, and other information relevant
to the claimant's claim; and a statement of the claimant's right to bring a
civil action under section 502(a) of ERISA. If the claimant does not receive a
written decision within the time period(s) described above, the appeal shall be
deemed denied on the last day of such period(s).
Section 11.2. ERISA Fiduciary. For purposes of ERISA, the Committee shall be
considered the named fiduciary under the Plan and the plan administrator.
ARTICLE 12.
TAX WITHHOLDING
The Company shall have the right to deduct from any payment
made hereunder or from any other payments due a Participant, any foreign,
federal, state, or local taxes required by law to be withheld with respect to
such cash payments, any deferrals or the vesting of any amounts hereunder.
ARTICLE 13.
OFFSET
The Company shall have the right to offset from the benefits
payable hereunder any amount that the Participant owes to the Company or any
subsidiary without the consent of the Participant (or his spouse or beneficiary,
in the event of the Participant's death).
ARTICLE 14.
SUCCESSORS
All obligations of the Company under the Plan shall be binding
on any successor to the Company, whether the existence of such successor is the
result of a direct or indirect purchase, merger, consolidation or otherwise, of
all or substantially all of the business and/or assets of the Company.
ARTICLE 15.
DISPUTE RESOLUTION
Section 15.1. Governing Law. This Plan is intended to be a plan of deferred
compensation maintained for a select group of management or highly compensated
employees as that term is used in ERISA, and shall be interpreted so as to
comply with the applicable requirements thereof. In all other respects, the Plan
is to be construed and its validity determined according to the laws of the
State of Wisconsin to the extent such laws are not preempted by federal law.
Section 15.2. Limitation on Actions. Any action or other legal proceeding under
ERISA with respect to the Plan may be brought only after the claims and appeals
procedures of Article 11 are exhausted and only within the period ending on the
earlier of (i) one year after the date the claimant receives notice of a denial
or deemed denial upon appeal under Section 11.1(b), or (ii) the expiration of
the applicable statute of limitations period under applicable federal law. Any
<PAGE>
JOHNSON CONTROLS, INC.
EQUALIZATION BENEFIT PLAN
action or other legal proceeding not adjudicated under ERISA must be arbitrated
in accordance with the provisions of Section 15.3.
Section 15.3. Arbitration.
(a) Application. Notwithstanding any employee agreement in effect
between a Participant and the Company or any subsidiary employer, if a
Participant, spouse or beneficiary brings a claim that relates to benefits under
this Plan that is not covered under ERISA, and regardless of the basis of the
claim (including but not limited to, actions under Title VII, wrongful
discharge, breach of employment agreement, etc.), such claim shall be settled by
final binding arbitration in accordance with the rules of the American
Arbitration Association ("AAA") and judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof.
(b) Initiation of Action. Arbitration must be initiated by serving or
mailing a written notice of the complaint to the other party. Normally, such
written notice should be provided the other party within one year (365 days)
after the day the complaining party first knew or should have known of the
events giving rise to the complaint. However, this time frame may be extended if
the applicable statute of limitation provides for a longer period of time. If
the complaint is not properly submitted within the appropriate time frame, all
rights and claims that the complaining party has or may have against the other
party shall be waived and void. Any notice sent to the Company shall be
delivered to:
Office of General Counsel
Johnson Controls, Inc.
5757 North Green Bay Avenue
P.O. Box 591
Milwaukee, WI 53201-0591
The notice must identify and describe the nature of all
complaints asserted and the facts upon which such complaints are based. Notice
will be deemed given according to the date of any postmark or the date of time
of any personal delivery.
(c) Compliance with Personnel Policies. Before proceeding to
arbitration on a complaint, the Participant, spouse or beneficiary must initiate
and participate in any complaint resolution procedure identified in the
Company's or subsidiary's personnel policies. If the claimant has not initiated
the complaint resolution procedure before initiating arbitration on a complaint,
the initiation of the arbitration shall be deemed to begin the complaint
resolution procedure. No arbitration hearing shall be held on a complaint until
any applicable Company or subsidiary complaint resolution procedure has been
completed.
(d) Rules of Arbitration. All arbitration will be conducted by a single
arbitrator according to the Employment Dispute Arbitration Rules of the AAA. The
arbitrator will have authority to award any remedy or relief that a court of
competent jurisdiction could order or grant including, without limitation,
specific performance of any obligation created under policy, the awarding of
punitive damages, the issuance of any injunction, costs and attorney's fees to
the
<PAGE>
JOHNSON CONTROLS, INC.
EQUALIZATION BENEFIT PLAN
extent permitted by law, or the imposition of sanctions for abuse of the
arbitration process. The arbitrator's award must be rendered in a writing that
sets forth the essential findings and conclusions on which the arbitrator's
award is based.
(e) Representation and Costs. Each party may be represented in the
arbitration by an attorney or other representative selected by the party. The
Company or subsidiary shall be responsible for its own costs, the AAA filing fee
and all other fees, costs and expenses of the arbitrator and AAA for
administering the arbitration. The claimant shall be responsible for his/her
attorney's or representative's fees, if any. However, if any party prevails on a
statutory claim which allows the prevailing party costs and/or attorneys' fees,
the arbitrator may award costs and reasonable attorneys' fees as provided by
such statute.
(f) Discovery; Location; Rules of Evidence. Discovery will be allowed
to the same extent afforded under the Federal Rules of Civil Procedure.
Arbitration will be held at a location selected by the Company. AAA rules
notwithstanding, the admissibility of evidence offered at the arbitration shall
be determined by the arbitrator who shall be the judge of its materiality and
relevance. Legal rules of evidence will not be controlling, and the standard for
admissibility of evidence will generally be whether it is the type of
information that responsible people rely upon in making important decisions.
(g) Confidentiality. The existence, content or results of any
arbitration may not be disclosed by a party or arbitrator without the prior
written consent of both parties. Witnesses who are not a party to the
arbitration shall be excluded from the hearing except to testify.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.K
<SEQUENCE>10
<FILENAME>c66360ex10-k.txt
<DESCRIPTION>FORM OF EMPLOYMENT AGREEMENT
<TEXT>
<PAGE>
EXHIBIT 10.K
JOHNSON CONTROLS, INC.
EXECUTIVE EMPLOYMENT AGREEMENT
In consideration of the employment of the undersigned employee
("Executive") by Johnson Controls, Inc., or its affiliated companies
("Company"), it is agreed between Executive and Company as follows in lieu of
any other agreements or commitments relating to such employment, whether written
or oral and whether past or present, unless expressly included or incorporated
herein:
1. DUTIES. The Company agrees to employ Executive as a manager with
duties and responsibilities which the Company acting either through its Board of
Directors or its Chief Executive Officer, in its sole discretion believes are
appropriate to Executive's skills, training and experience. Executive agrees to
perform such assigned duties by devoting full time, due care, loyalty and best
efforts thereto and complying with all applicable laws and the requirements of
the Company's policies and procedures on employee conduct, including but not
limited to the Ethics and no-harassment policies.
2. TERM. This Agreement will be for an initial period of one year, and
will thereafter automatically renew for successive one-year periods unless
terminated as provided in Section 4, replaced or amended as provided in Section
5, or superceded as provided in Section 6.
3. COMPENSATION. Executive shall be paid the base salary, bonuses, and
benefits set forth in Exhibit A, subject to the terms and conditions set forth
in this Section and in Section 4. The salary, benefits, and bonuses will be
reviewed and adjusted periodically in accordance with the Company's policies
then in existence. Those policies and any benefit and bonus programs may be
amended from time to time at the Company's discretion.
4. TERMINATION. Executive's employment with the Company may be
terminated as follows, and Executive's sole right to receive compensation,
benefits, or bonuses after the termination shall be exclusively as set forth
below.
a. DEATH. If Executive dies during the term of this Agreement,
this Agreement shall terminate and the Company shall be obligated to
make payments of six (6) months of Executive's base salary to the
beneficiaries set out in Exhibit A or to his estate if no beneficiaries
have been designated. However, all benefit plans or bonuses in effect
upon Executive's death shall operate in accordance with their terms
covering death of the Executive or terminate immediately if silent.
b. DISABILITY. If Executive becomes disabled during the term
hereof, Executive's sole remedy shall be to the Company's Short and
Long Term Disability Policies in effect at that time and Executive's
"disability" shall be determined in accordance with such plan
provisions. All other bonuses and benefits in effect at that time shall
operate in accordance with their provisions relating to disability or
terminate if there is no such provision.
<PAGE>
JOHNSON CONTROLS, INC.
EXECUTIVE EMPLOYMENT AGREEMENT
c. BY EMPLOYEE. Executive may terminate this Agreement at any
time for any reason, including resignation or retirement. All
compensation, bonuses, or benefits in effect at that time shall cease
as of the date of termination, unless specifically provided otherwise
with respect to voluntary terminations in the applicable bonus or
benefit policies. The Company specifically reserves the right to grant
or not grant stock options and bonuses to an employee who has
voluntarily terminated employment.
d. FOR CAUSE. The Company may terminate Executive for theft,
dishonesty, fraudulent misconduct, violation of Section 7 or 8 of this
Agreement, gross dereliction of duty, grave misconduct injurious to the
Company or serious violation of the law or the Company's policies and
procedures on employee conduct. In the event the Company terminates
Executive for cause hereunder, the Executive shall not be due any
compensation, bonuses or benefits after the Termination Date unless
earned in full prior to such date in accordance with the applicable
provisions of the plan or plans. The Company, if allowed by law, may
set off losses, fines or damages the Executive has caused it as a
result of such misconduct.
e. WITHOUT CAUSE. The Company, acting through its Board of
Directors or through its Chief Executive Officer, may terminate
Executive for any reason other than as set out in Sec. 4. a. - d. In
such an event, Executive shall receive a severance allowance under the
Company's severance policy in effect at that time; however, in no event
shall such benefits be less than Executive's base salary for one (1)
year or twice the severance payments provided under the then current
severance policy, whichever is greater. Executive shall also receive
any bonus or benefits in effect at that time under plan provisions for
terminations without cause or none if such plans are silent.
5. AMENDMENT. The Company may at any time in its discretion amend,
modify or replace this Agreement; however, such changes shall not reduce the
benefits provided Executive for termination without cause under Sec. 4.e.
6. CHANGE OF CONTROL. In the event there is a "change of control" in
the Company, as such term is defined in the Agreement attached as Exhibit B,
then the Agreement set forth in Exhibit B shall supersede and replace this
Agreement in all respects.
7. NONCOMPETITION. Executive agrees that for a period of one year after
the termination of active employment hereunder, he shall not, except as
permitted by the Company's prior written consent, in any capacity in which
Confidential Information or Trade Secrets of the Company would reasonably be
regarded as useful, engage in, be employed by, or in any way advise or act for
any business which is a competitor of the Company with respect to the products
or services provided by any division or group within the Company to which
Executive devoted substantial attention in the year preceding termination of
employment with the Company, and within the national and international
geographic markets served by any such division or group. This restriction shall
also apply to any ownership or other financial interest in such a competitor
except the
<PAGE>
JOHNSON CONTROLS, INC.
EXECUTIVE EMPLOYMENT AGREEMENT
ownership of less than five percent of the shares of any corporation whose
shares are listed on a recognized stock exchange or trade in an over-the-counter
market. Depending on the scope of Executive's responsibilities in the year
preceding termination of employment with the Company, this covenant could
potentially apply to a geographic area coextensive with the Company's
operations, including but not limited to all of North America and the European
Economic Community. Executive agrees that the scope of this covenant is
reasonably necessary for the Company's protection from unfair competition. This
covenant shall survive the termination of this Agreement.
8. CONFIDENTIAL INFORMATION. (a) The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or any of its affiliated
companies, and their respective businesses, which shall have been obtained by
the Executive during the Executive's employment by the Company or any of its
affiliated companies and which shall not be or become public knowledge (other
than by acts by the Executive or representatives of the Executive in violation
of this Agreement). During employment and for two years after termination of the
Executive's employment with the Company, the Executive, except as may otherwise
be required by law or legal process, shall not use any such information except
on behalf of the Company and shall not communicate or divulge any such
information, knowledge or data to anyone other than the Company and those
designated by it. This covenant shall survive the termination of this Agreement.
Nothing in this paragraph is intended or shall be construed to limit in any way
Executive's independent duty not to misappropriate Trade Secrets of the Company.
(b) "Trade Secret" means information of the Company, including a formula,
pattern, compilation, program, device, method, technique or process, that
derives independent economic value, actual or potential, from not being
generally known to, and not being readily ascertainable by proper means by,
other persons who can obtain economic value from its disclosure or use, and that
is the subject of efforts by the Company to maintain its secrecy that are
reasonable under the circumstances. During employment with the Company,
Executive shall preserve and protect Trade Secrets of the Company from
unauthorized use or disclosure, and after termination of such employment,
Executive shall not use or disclose any Trade Secret of the Company until such
time as that Trade Secret is no longer a secret as a result of circumstances
other than a misappropriation involving the Executive.
9. MANDATORY ARBITRATION. As a condition of his employment with the
Company, and in consideration for that employment, Executive agrees that if he
has any legal disputes with the Company or its supervisors, managers, directors,
or agents concerning his employment or termination of employment, those disputes
will be brought and resolved exclusively through binding arbitration. For
example, any claims by the Executive that he has been demoted, denied promotion,
or discharged because of age discrimination, race discrimination, or unlawful
retaliation will be resolved through binding arbitration. Arbitrations involving
employment issues under this provision will be conducted pursuant to the terms
and conditions of the Company's Employment Dispute Resolution Program (copy
attached), except that use of arbitration under the Program to resolve
employment disputes will be mandatory rather than voluntary. Arbitrations un-
<PAGE>
JOHNSON CONTROLS, INC.
EXECUTIVE EMPLOYMENT AGREEMENT
der this agreement will be conducted pursuant to the procedural rules
established for resolving employment disputes by the American Arbitration
Association (copy available). By signing this Agreement, Executive releases and
waives any right he has to resolve employment disputes (including claims of
unlawful discharge) through filing a lawsuit in court, and agrees instead that
the disputes will be resolved exclusively though binding arbitration. Because
Executive is giving up the legal right to file a lawsuit against the Company or
its supervisors, managers, directors, or agents involving any and all legal
disputes arising from his employment or termination of employment, the Company
encourages him to consult with an attorney prior to signing this Agreement.
Executive understands that he has twenty-one days to consider whether to sign
this agreement. If he signs it, for a period of seven days following the signing
he may revoke the agreement. In order to make the revocation effective, he must
deliver a signed revocation to the Company within the seven-day revocation
period. Notwithstanding the foregoing, Executive agrees that the Company may
seek enforcement of paragraphs 7-8 of this Agreement by filing an action in a
court of competent jurisdiction seeking temporary, preliminary and permanent
injunctive relief and such other relief as may be necessary to protect the
Company from threatened, imminent, or existing irreparable harm.
10. MISCELLANEOUS. a. This Agreement is personal to the Executive and
without the prior written consent of the Company shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.
b. This Agreement shall inure to the benefit of and be binding
upon the Company and its successors and assigns. Executive hereby
grants the Company unlimited authority to assign its rights under this
Agreement and consents to any and all such assignments.
c. The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and at
the same extent that the Company would be required to perform it if no
such succession had taken place. As used in this Agreement, "Company"
shall mean the Company as hereinbefore defined and any successor its
business and/or assets as aforesaid which assumes and agrees to perform
this Agreement by operation of law, or otherwise.
d. This Agreement shall be governed by and construed in
accordance with the laws of the State of Wisconsin, without reference
to principles of conflict of laws. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect.
e. All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
If to the Executive:
<PAGE>
JOHNSON CONTROLS, INC.
EXECUTIVE EMPLOYMENT AGREEMENT
To the address appearing immediately below Executive's signature.
If to the Company
Johnson Controls, Inc.
5757 North Green Bay Avenue
Milwaukee, WI 53209
Attention: General Counsel
or to such other address as either party shall have furnished to the
other in writing in accordance herewith. Notice and communications
shall be effective when actually received by the addressee.
f. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
g. The Company may withhold from any amounts payable under
this Agreement such Federal, state or local taxes as shall be required
to be withheld pursuant to any applicable law or regulation.
IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's hand and, pursuant to the authorization from its Board of Directors,
the Company has caused these presents to be executed in its name on its behalf,
all as of the day and year written below.
Dated:
-------------------------------------------
Executive:
Address:
JOHNSON CONTROLS, INC.
By:
----------------------------------------
Date:
--------------------------------------
<PAGE>
JOHNSON CONTROLS, INC.
EXECUTIVE EMPLOYMENT AGREEMENT
EXHIBIT A
EXECUTIVE:
BASE SALARY:
BENEFITS: Executive is a participant in the following benefits provided
by Johnson Controls, Inc., in addition to those benefits
provided all salary employees. However, Executive is not
assured an award under any such benefit in any year. Each
award will be granted each year in accordance with the terms
of the benefit plan.
The Company reserves the right, at its discretion, to pay all,
some, or no stock options and/or bonuses if the Executive
voluntarily resigns his/her employment or is discharged for
cause prior to the end of the applicable fiscal year.
BENEFICIARIES: The following beneficiaries will receive death benefits
provided under the above benefits unless beneficiaries have
been designated under a specific Benefit plan by the
Executive.
Name:______________________Relationship_______________________
Name:______________________Relationship_______________________
Name:______________________Relationship_______________________
Name:______________________Relationship_______________________
<PAGE>
EXHIBIT B
JOHNSON CONTROLS, INC.
CHANGE OF CONTROL
EXECUTIVE EMPLOYMENT AGREEMENT
AGREEMENT by and between Johnson Controls, Inc. a Wisconsin
corporation (the "Company") and ________________ (the "Executive"), dated as of
the ______ day of _______.
The Board of Directors of the Company (the "Board"), has
determined that it is in the best interests of the Company and its shareholders
to assure that the Company will have the continued dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a Change of Control (as
defined below) of the Company. The Board believes it is imperative to diminish
the inevitable distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Change of Control and
to encourage the Executive's full attention and dedication to the Company
currently and in the event of any threatened or pending Change of Control, and
to provide the Executive with compensation and benefits arrangements upon a
Change of Control which ensure that the compensation and benefits expectations
of the Executive will be satisfied and which are competitive with those of other
corporations. Therefore, in order to accomplish these objectives, the Board has
caused the Company to enter into this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Certain Definitions. (a) The "Effective Date" shall mean
the first date during the Change of Control Period (as defined in Section 1(b))
on which a Change of Control (as defined in Section 2) occurs. Anything in this
Agreement to the contrary notwithstanding, if a Change of Control occurs and if
the Executive's employment with the Company is terminated or the Executive
ceases to be an officer of the Company prior to the date on which the Change of
Control occurs, and if it is reasonably demonstrated by the Executive that such
termination of employment or cessation of status as an officer (i) was at the
request of a third party who has taken steps reasonably calculated to effect the
Change of Control or (ii) otherwise arose in connection with or anticipation of
the Change of Control, then for all purposes of this Agreement the "Effective
Date" shall mean the date immediately prior to the date of such termination of
employment or cessation of status as an officer.
(b) The "Change of Control Period" shall mean the period
commencing on the date hereof and ending on the second anniversary of such date;
provided, however, that commencing on the date one year after the date hereof,
and on each annual anniversary of such date (such date and each annual
anniversary thereof shall be hereinafter referred to as the "Renewal Date"), the
Change of Control Period shall be automatically extended so as to terminate two
years from such Renewal Date, unless at least 60 days prior to the Renewal Date
the Company shall give notice to the Executive that the Change of Control Period
shall not be so extended.
2. Change of Control. For the purpose of this Agreement, a
"Change of Control" shall mean:
<PAGE>
EXHIBIT B
JOHNSON CONTROLS, INC.
CHANGE OF CONTROL
EXECUTIVE EMPLOYMENT AGREEMENT
(a) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of
either (i) the then outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (ii) the combined voting power of the
then outstanding voting securities of the Company entitled to vote generally in
the election of directors (the "Outstanding Company Voting Securities");
provided, however, that the following acquisitions shall not constitute a Change
of Control: (i) any acquisition directly from the Company, (ii) any acquisition
by the Company or any of its subsidiaries, (iii) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company or any of
its subsidiaries or (iv) any acquisition by any corporation with respect to
which, following such acquisition, more than 60% of, respectively, the then
outstanding shares of common stock of such corporation and the combined voting
power of the then outstanding voting securities of such corporation entitled to
vote generally in the election of directors is then beneficially owned, directly
or indirectly, by all or substantially all of the individuals and entities who
were the beneficial owners, respectively, of the Outstanding Company Common
Stock and Company Voting Securities immediately prior to such acquisition in
substantially the same proportions as their ownership, immediately prior to such
acquisition, of the Outstanding Company Common Stock and Outstanding Company
voting Securities, as the case may be; or
(b) Individuals who, as of the date hereof, constitute the
Board (the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming a
director subsequent to the date hereof whose election, or nomination for
election by the Company's shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of either an actual or threatened election contest (as
such terms are used in Rule l4a-11 of Regulation 14A promulgated under the
Exchange Act) or other actual or threatened solicitation of proxies or consents;
or
(c) Consummation of a reorganization, merger or consolidation,
in each case, with respect to which all or substantially all of the individuals,
and entities who were the beneficial owners, respectively, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities immediately prior
to such reorganization, merger or consolidation do not, following such
reorganization, merger or consolidation, beneficially own, directly or
indirectly, more than 60% of, respectively, the then outstanding shares of
common stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such reorganization, merger or
consolidation in substantially the same proportions as their ownership,
immediately prior to such reorganization, merger or consolidation of the
Outstanding Company Common Stock and Outstanding Company Voting Securities, as
the case may be; or
<PAGE>
EXHIBIT B
JOHNSON CONTROLS, INC.
CHANGE OF CONTROL
EXECUTIVE EMPLOYMENT AGREEMENT
(d) Consummation of (i) a complete liquidation or dissolution
of the Company or (ii) the sale or other disposition of all or substantially
all, of the assets of the Company, other than to a corporation, with respect to
which following such sale or other disposition, more than 60% of, respectively,
the then outstanding shares of common stock of such Corporation and the combined
voting power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is then beneficially
owned, directly or indirectly, by all or substantially all of the individuals
and entities who were the beneficial owners, respectively, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities immediately prior
to such sale or other disposition in substantially the same proportion as their
ownership, immediately prior to such sale or other disposition, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities, as
the case may be.
3. Employment Period. The Company hereby agrees to continue
the Executive in its employ, and the Executive hereby agrees to remain in the
employ of the Company, for the period commencing on the Effective Date and
ending on the second anniversary of such date (the "Employment Period").
4. Terms of Employment. (a) Position and Duties. (i) During
the Employment Period, (A) the Executive's position (including status, offices,
titles and reporting requirements), authority, duties and responsibilities shall
be at least commensurate in all material respects with the most significant of
those held, exercised and assigned at any time during the 90-day period
immediately preceding the Effective Date and (B) the Executive's services shall
be performed at the location where the Executive was employed immediately
preceding the Effective Date or any office or location less than 35 miles from
such location.
(ii) During the Employment Period, and excluding any periods
of vacation and sick leave to which the Executive is entitled, the Executive
agrees to devote reasonable attention and time during normal business hours to
the business and affairs of the Company and, to the extent necessary to
discharge the responsibilities assigned to the Executive hereunder, to use the
Executive's reasonable best efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period it shall not be a violation of
this Agreement for the Executive to (A) serve on corporate, civic or charitable
boards or committees, (B) deliver lectures, fulfill speaking engagements or
teach at educational institutions and (C) manage personal investments, so long
as such activities do not significantly interfere with the performance of the
Executive's responsibilities as an employee of the Company in accordance with
this Agreement. It is expressly understood and agreed that to the extent that
any such activities have been conducted by the Executive prior to the Effective
Date, the continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the Executive's
responsibilities to the Company.
<PAGE>
EXHIBIT B
JOHNSON CONTROLS, INC.
CHANGE OF CONTROL
EXECUTIVE EMPLOYMENT AGREEMENT
(b) Compensation. (i) Base Salary. During the Employment
Period, the Executive shall receive an annual base salary ("Annual Base
Salary"), which shall be paid at a monthly rate, at least equal to twelve times
the highest monthly base salary paid or payable to the Executive by the Company
and its affiliated companies in respect of the twelve-month period immediately
preceding the month in which the Effective Date occurs. During the Employment
Period, the Annual Ease Salary shall be reviewed at least annually and shall be
increased at any time and from time to time as shall be substantially consistent
with increases in base salary generally awarded in the ordinary course of
business to other peer executives of the Company and its affiliated companies.
Any increase in Annual Base Salary shall not serve to limit or reduce any other
obligation to the Executive under this Agreement. Annual Base Salary shall not
be reduced after any such increase and the term Annual Base Salary as utilized
in this Agreement shall refer to Annual Base Salary as so increased. As used in
this Agreement, the term "affiliated companies" shall include any company
controlled by, controlling or under common control with the Company.
(ii) Annual Bonus. In addition to Annual Base Salary, the
Executive shall be awarded, for each fiscal year ending during the Employment
Period, an annual bonus (the "Annual Bonus") in cash at least equal to the
average annualized (for any fiscal year consisting of less than twelve full
months or with respect to which the Executive has been employed by the Company
for less than twelve full months) bonuses paid or payable, including by reason
of any deferral, including the Executive Incentive Compensation Plan and the
Long Term Performance Plan or any counterpart or successor plans thereto, to the
Executive by the Company and its affiliated companies in respect of the three
fiscal years immediately preceding the fiscal year in which the Effective Date
occurs (the "Recent Average Bonus"). Each such Annual Bonus shall be paid no
later than the end of the third month of the fiscal year next following the
fiscal year for which the Annual Bonus is awarded, unless the Executive shall
elect to defer the receipt of such Annual Bonus.
(iii) Incentive, Savings and Retirement Plans. During the
Employment Period, the Executive shall be entitled to participate in all
incentive, savings and retirement plans, practices, policies and programs
applicable generally to other peer executives of the Company and its affiliated
companies, but in no event shall such plans, practices, policies and programs
provide the Executive with incentive opportunities (measured with respect to
both regular and special incentive opportunities, to the extent, if any, that
such distinction is applicable), savings opportunities and retirement benefit
opportunities, in each case, less favorable, in the aggregate, than the most
favorable of those provided by the Company and its affiliated companies for the
Executive under such plans, practices, policies and programs as in effect at any
time during the 90-day period immediately preceding the Effective Date or if
more favorable to the Executive, those provided generally at any time after the
Effective Date to other peer executives of the Company and its affiliated
companies.
<PAGE>
EXHIBIT B
JOHNSON CONTROLS, INC.
CHANGE OF CONTROL
EXECUTIVE EMPLOYMENT AGREEMENT
(iv) Welfare Benefit Plans. During the Employment Period, the
Executive and/or the Executive's family, as the case may be, shall be eligible
for participation in and shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company and its affiliated
companies (including, without limitation, medical, prescription, dental,
disability, salary continuance, employee life, group life, accidental death and
travel, accident insurance plans and programs) to the extent applicable
generally to other peer executives of the Company and its affiliated companies,
but in no event shall such plans, practices, policies and programs provide the
Executive with benefits which are less favorable, in the aggregate, than the
most favorable of such plans, practices, policies and programs in effect for the
Executive at any time during the 90-day period immediately preceding the
Effective Date or, if more favorable to the Executive, those provided generally
at any time after the Effective Date to other peer executives of the Company and
its affiliated companies.
(v) Expenses. During the Employment Period, the Executive
shall be entitled to receive prompt reimbursement for all reasonable expenses
incurred by the Executive in accordance with the most favorable policies,
practices and procedures of the Company and its affiliated companies in effect
for the Executive at any time during the 90-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect generally at
any time thereafter with respect to other peer executives of the Company and its
affiliated companies.
(vi) Fringe Benefits. During the Employment Period, the
Executive shall be entitled to fringe benefits in accordance with the most
favorable plans, practices, programs and policies of the Company and its
affiliated companies in effect for the Executive at any time during the 90-day
period immediately preceding the Effective Date or, if more favorable to the
Executive, as in effect generally at any time thereafter with respect to other
peer executives of the Company and its affiliated companies.
(vii) Office and Support Staff. During the Employment Period,
the Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to exclusive personal secretarial and
other assistance, at least equal to the most favorable of the foregoing provided
to the Executive by the Company and its affiliated companies at any time during
the 90-day period immediately preceding the Effective Date or, if more favorable
to the Executive, as provided generally at any time thereafter with respect to
other peer executives of the Company and its affiliated companies.
(viii) Vacation. During the Employment Period, the Executive
shall be entitled to paid vacation in accordance with the most favorable plans,
policies, programs and practices of the Company and its affiliated companies as
in effect for the Executive at any time during the 90-day period immediately
preceding the Effective Date or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to other peer incentives of
the Company and its affiliated companies.
<PAGE>
EXHIBIT B
JOHNSON CONTROLS, INC.
CHANGE OF CONTROL
EXECUTIVE EMPLOYMENT AGREEMENT
5. Termination of Employment. (a) Death or Disability. The
Executive's employment shall terminate automatically upon the Executive's death
during the Employment Period. If the Company determines in good faith that the
Disability of the Executive has occurred during the Employment Period (pursuant
to the definition of Disability set forth below), it may give to the Executive
written notice in accordance with Section 12(b) of this Agreement of its
intention to terminate the Executive's employment. In such event, the
Executive's employment with the Company shall terminate effective on the 30th
day after receipt of such notice by the Executive (the "Disability Effective
Date"), provided that, within the 30 days after such receipt, the Executive
shall not have returned to full-time performance of the Executive's duties. For
purposes of this Agreement, "Disability" shall mean the absence of the Executive
from the Executive's duties with the Company on a full-time basis for 180
consecutive business days as a result of incapacity due to mental or physical
illness which is determined to be total and permanent by a physician selected by
the Company or its insurers and acceptable to the Executive or the Executive's
legal representative (such agreement as to acceptability not to be withheld
unreasonably).
(b) Cause. The Company may terminate the Executive's
employment during the Employment Period for Cause. For purposes of this
Agreement, "Cause" shall mean (i) repeated violations by the Executive of the
Executive's obligations under Section 4(a) of this Agreement (other than as a
result of incapacity due to physical or mental illness) which are demonstrably
willful and deliberate on the Executive's part, which are committed in bad faith
or without reasonable belief that such violations are in the best interests of
the Company and which are not remedied in a reasonable period of time after
receipt of written notice from the Company specifying such violations or (ii)
the conviction of the Executive of a felony involving moral turpitude.
(c) Good Reason. The Executive's employment may be terminated
by the Executive for Good Reason. For purposes of this Agreement, "Good Reason"
shall mean
(i) the assignment to the Executive of any duties inconsistent
in any respect with the Executive's position (including status, offices, titles
and reporting requirements), authority, duties or responsibilities as
contemplated by Section 4(a) of this Agreement, or any other action by the
Company which results in a diminution in such position, authority, duties or
responsibilities, excluding for this purpose an isolated, insubstantial and
inadvertent action not taken in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by the Executive,
(ii) any failure by the Company to comply with any of the
provisions of Section 4(b) of this Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith and which is
remedied by the Company promptly after receipt of notice thereof given by the
Executive;
<PAGE>
EXHIBIT B
JOHNSON CONTROLS, INC.
CHANGE OF CONTROL
EXECUTIVE EMPLOYMENT AGREEMENT
(iii) the Company's requiring the Executive to be based at any
office or location other than that described in Section 4(a)(i)(B) hereof;
(iv) any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted by this Agreement;
or
(v) any failure by the Company to comply with and satisfy
Section 11(c) of this Agreement; or,
(vi) the Company's request that the Executive perform any
illegal, or wrongful act in violation of the Company's code of conduct
policies.
For purposes of this Section 5(c), any good faith determination of "Good Reason"
made by the Executive shall be conclusive. Anything in this Agreement to the
contrary notwithstanding, a termination by the Executive for any reason or no
reason during the 30-day period immediately following the first anniversary of
the Effective Date shall be deemed to be a termination by the Executive for Good
Reason for all purposes of this Agreement.
(d) Notice of Termination. Any termination by the Company for
Cause, or by the Executive for Good Reason, shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 12(b) of
this Agreement. For purposes of this Agreement, a "Notice of Termination" means
a written notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Executive's employment under the provision so indicated and (iii) if the
Date of Termination (as defined below) is other than the date of receipt of such
notice, specifies the termination date (which date shall be not more than
fifteen days after the giving of such notice). The failure by the Executive or
the Company to set forth in the Notice of Termination any fact or circumstance
which contributes to a showing of Good Reason or Cause shall not waive any right
of the Executive or the Company hereunder or preclude the Executive or the
Company from asserting such fact or circumstance in enforcing the Executive's or
the Company's rights hereunder.
(e) Date of Termination. "Date of Termination" means (i) if
the Executive's employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the Notice of Termination or
any later date specified therein, as the case may be, (ii) if the Executive's
employment is terminated by the Company other than for Cause or Disability, the
Date of Termination shall be the date on which the Company notifies the
Executive of such termination and (iii) if the Executive's employment is
terminated by reason of death or Disability, the Date of Termination shall be
the date of death of the Executive or the Disability Effective Date, as the case
may be.
6. Obligations of the Company upon Termination. (a) Good
Reason: Other Than for Cause, Death or Disability. If, during the Employment
Period, the Com-
<PAGE>
EXHIBIT B
JOHNSON CONTROLS, INC.
CHANGE OF CONTROL
EXECUTIVE EMPLOYMENT AGREEMENT
pany shall terminate the Executive's employment other than for Cause or
Disability or the Executive shall terminate employment for Good Reason:
(i) the Company shall pay to the Executive in a lump sum in
cash within 30 days after the Date of Termination the aggregate of the following
amounts (such aggregate shall be hereinafter referred to as the "Special
Termination Amount"):
A. the sum of (1) the Executive's Annual Base Salary through
the Date of Termination to the extent not theretofore paid, (2) the
product of (x) the higher of (I) the Recent Average Bonus and (II) the
Annual Bonus paid or payable, including by reason of deferral, (and
annualized for any fiscal year consisting of less than twelve full
months or for which the Executive has been employed for less than
twelve full months) for the most recently completed fiscal year during
the Employment Period, if any (the "Employment Period") and (y) a
fraction, the numerator of which is the number of days in the current
fiscal year through the Date of Termination, and the denominator of
which is 365 and (3) any compensation previously deferred by the
Executive (together with any accrued interest or earnings thereon) and
any accrued vacation pay, in each case to the extent not theretofore
paid (the sum of the amounts described in clauses (1), (2), and (3)
shall be hereinafter referred to as the "Accrued Obligations"); and
B. the amount equal to the product of (1) two and (2) the sum
of (x) the Executive's Annual Base Salary and (y) the Highest Annual
Bonus; and
C. a separate lump-sum supplemental retirement benefit equal
to the difference between (1) the actuarial equivalent (utilizing for
this purpose the actuarial assumptions utilized with respect to the
Johnson Controls Pension Plan for Salaried Employees (or any successor
plan thereto) (the "Retirement Plan") during the 90-day period
immediately preceding the Effective Date) of the benefit payable under
the Retirement Plan and any supplemental and/or excess retirement plan
providing benefits for the Executive (the "SERP") which the Executive
would receive if the Executive's employment continued at the
compensation level provided for in Sections 4(b)(i) and 4(b)(ii) of
this Agreement for the remainder of the Employment Period, assuming for
this purpose that all accrued benefits are fully vested and that
benefit accrual formulas are no less advantageous to the Executive than
those in effect during the 90-day period immediately proceeding the
Effective Date, and (2) the actuarial equivalent (utilizing for this
purpose the actuarial assumptions utilized with respect to the
Retirement Plan during the 90-day period immediately preceding the
Effective Date) of the Executive's actual benefit (paid or payable), if
any, under the Retirement Plan and the SERP; and
(ii) for the remainder of the Employment Period, or such
longer period as any plan, program, practice or policy may provide, the Company
shall continue benefits to the Executive and/or the Executive's family at least
equal to those which would have been provided to them in accordance with the
plans, programs, practices
<PAGE>
EXHIBIT B
JOHNSON CONTROLS, INC.
CHANGE OF CONTROL
EXECUTIVE EMPLOYMENT AGREEMENT
and policies described in Section 4(b)(iv) of this Agreement if the Executive's
employment had not been terminated in accordance with the most favorable plans,
practices, programs or policies of the Company and its affiliated companies
applicable generally to other peer executives and their families during the
90-day period immediately preceding the Effective Date or, if more favorable to
the Executive, as in effect generally at any time thereafter with respect to
other peer executives of the Company and its affiliated companies and their
families, provided, however, that if the Executive becomes reemployed with
another employer and is eligible to receive medical or other welfare benefits
under another employer provided plan, the medical and other welfare benefits
described herein shall be secondary to those provided under such other plan
during such applicable period of eligibility. For purposes of determining
eligibility of the Executive for retiree benefits pursuant to such plans,
practices, programs and policies, the Executive shall be considered to have
remained employed until the end of the Employment Period and to have retired on
the last day of such period; and
(iii) to the extent not theretofore paid or provided, the
Company shall timely pay or provide to the Executive any other amounts or
benefits required to be paid or provided or which the Executive is eligible to
receive pursuant to this Agreement under any plan, program, policy or practice
or contract or agreement of the Company and its affiliated companies (such other
amounts and benefits shall be hereinafter referred to as the "Other Benefits").
(b) Death. If the Executive's employment is terminated by
reason of the Executive's death during the Employment Period, this Agreement
shall terminate without further obligations to the Executive's legal
representatives under this Agreement, other than for payment of the Special
Termination Amount and the timely payment or provision of Other Benefits. The
Special Termination Amount shall be paid to the Executive's estate or
beneficiary, as applicable, in a lump sum in cash within 30 days of the Date of
Termination. With respect to the provision of Other Benefits, the term Other
Benefits as utilized in this Section 6(b) shall include, and the Executive's
family shall be entitled to receive, benefits at least equal to the most
favorable benefits provided by the Company and any of its affiliated companies
to surviving families of peer executives of the Company and such affiliated
companies under such plans, programs, practices and policies relating to family
death benefits, if any, as in effect with respect to other peer executives and
their families at any time during the 90-day period immediately preceding the
Effective Date or, if more favorable to the Executive and/or the Executive's
family, as in effect on the date of the Executive's death with respect to other
peer executives of the Company and its affiliated companies and their families.
(c) Disability. If the Executive's employment is terminated by
reason of the Executive's Disability during the Employment Period, this
Agreement shall terminate without further obligations to the Executive, other
than for payment of the Special Termination Amount and the timely payment or
provision of Other Benefits. The Special Termination Amount shall be paid to the
Executive in a lump sum in cash within 30 days of the Date of Termination. With
respect to the provision of Other Benefits, the term
<PAGE>
EXHIBIT B
JOHNSON CONTROLS, INC.
CHANGE OF CONTROL
EXECUTIVE EMPLOYMENT AGREEMENT
Other Benefits as utilized in this Section 6(c) shall include, and the Executive
shall be entitled after the Disability Effective Date to receive, disability and
other benefits at least equal to the most favorable of those generally provided
by the Company and its affiliated companies to disabled executives and/or their
families in accordance with such plans, programs, practices and policies
relating to disability, if any, as in effect generally with respect to other
peer executives and their families at any time during the 90-day period
immediately preceding the Effective Date or, if more favorable to the Executive
and/or the Executive's family, as in effect at any time thereafter generally
with respect to other peer executives of the Company and its affiliated
companies and their families.
(d) Cause; Other than for Good Reason. If the Executive's
employment shall be terminated for Cause during the Employment Period, this
Agreement shall terminate without further obligations to the Executive other
than the obligation to pay to the Executive Annual Base Salary through the Date
of Termination plus the amount of any compensation previously deferred by the
Executive, in each case to the extent theretofore unpaid. If the Executive
voluntarily terminates employment during the Employment Period, excluding a
termination for Good Reason, this Agreement shall terminate without further
obligations to the Executive, other than for Accrued Obligations and the timely
payment or provision of Other Benefits. In such case, all Accrued Obligations
shall be paid to the Executive in a lump sum in cash within 30 days of the Date
of Termination.
7. Non-Exclusivity of Rights. Nothing in this Agreement shall
prevent or limit the Executive's continuing or future participation in any plan,
program, policy or practice provided by the Company or any of its affiliated
companies and for which the Executive may qualify, nor shall anything herein
limit or otherwise affect such rights as the Executive may have under any
contract or agreement with the Company or any of its affiliated companies.
Amounts which are vested benefits or which the Executive is otherwise entitled
to receive under any plan, policy, practice or program of or any contract or
agreement with the Company or any of its affiliated companies at or subsequent
to the Date of Termination shall be payable in accordance with such plan,
policy, practice or program or contract or agreement except as explicitly
modified by this Agreement.
8. Full Settlement. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Executive or others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement and such amounts
shall not be reduced whether or not the Executive obtains other employment. The
Company agrees to pay, to the full extent permitted by law, all legal fees and
expenses which the Executive may reasonably incur as a result of any contest
(regardless of the outcome thereof) by the Company, the Executive or others of
the validity or enforceability of, or liability under, any provision of this
Agree-
<PAGE>
EXHIBIT B
JOHNSON CONTROLS, INC.
CHANGE OF CONTROL
EXECUTIVE EMPLOYMENT AGREEMENT
ment or any guarantee of performance thereof (including as a result of any
contest by the Executive about the amount of any payment pursuant to this
Agreement), plus in each case interest on any delayed payment at the applicable
Federal rate provided for in Section 7872(f)(2)(A) of the Internal Revenue Code
of 1986, as amended (the "Code").
9. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any payment or
distribution by the Company to or for the benefit of the Executive (whether paid
or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise, but determined without regard to any additional payments
required under this Section 9) (a "Payment") would be subject to the excise tax
imposed by Section 4999 of the Code or any interest or penalties are incurred by
the Executive with respect to such excise tax (such excise tax, together with
any such interest and penalties, are hereinafter collectively referred to as the
"Excise Tax"), then the Executive shall be entitled to receive an additional
payment (a "Gross-Up Payment") in an amount such that after payment by the
Executive of all taxes (including any interest or penalties imposed with respect
to such taxes), including, without limitation, any income taxes (and any
interest and penalties imposed with respect thereto) and Excise Tax imposed upon
the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments.
(b) Subject to the provisions of Section 9(c), all
determinations required to be made under this Section 9, including whether and
when a Gross-Up Payment is required and the amount of such Gross-Up Payment and
the assumptions to be utilized in arriving at such determination, shall be made
by PricewaterhouseCoopers LLP or such other certified public accounting firm as
may be designated by the Executive (the "Accounting Firm") which shall provide
detailed supporting calculations both to the Company and the Executive within 15
business days of the receipt of notice from the Executive that there has been a
Payment, or such earlier time as is requested by the Company. In the event that
the Accounting Firm is serving as accountant or auditor for the individual,
entity or group effecting the Change of Control, the Executive shall appoint
another nationally recognized accounting firm to make the determinations
required hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall
be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to
this Section 9, shall be paid by the Company to the Executive within five days
of the receipt of the Accounting Firm's determination. If the Accounting Firm
determines that no Excise Tax is payable by the Executive, it shall furnish the
Executive with a written opinion that failure to report the Excise Tax on the
Executive's applicable federal income tax return would not result in the
imposition of a negligence or similar penalty. Any determination by the
Accounting Firm shall be binding upon the Company and the Executive. As a result
of the uncertainty in the application of Section 4999 of the Code at the time of
the initial determination by the Accounting Firm hereunder it is possible that
Gross-Up Payments which
<PAGE>
EXHIBIT B
JOHNSON CONTROLS, INC.
CHANGE OF CONTROL
EXECUTIVE EMPLOYMENT AGREEMENT
will not have been made by the Company should have been made ("Underpayment"),
consistent with the calculations required to be made hereunder. In the event
that the Company exhausts its remedies pursuant to Section 9(c) and the
Executive thereafter is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that has occurred
and any such Underpayment shall be promptly paid by the Company to or for the
benefit of the Executive.
(c) The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Company of the Gross-Up Payment. Such notification shall be given
as soon as practicable but no later than ten business days after the Executive
is informed in writing of such claim and shall apprise the Company of the nature
of such claim and the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of the 30-day period
following the date on which it gives such notice to the Company (or such shorter
period ending on the date that any payment of taxes with respect to such claim
is due). If the Company notifies the Executive in writing prior to the
expiration of such period that it desires to contest such claim, the Executive
shall:
(i) give the Company any information reasonably requested by
the Company relating to such claim,
(ii) take such action in connection with contesting such claim
as the Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this Section 9(c), the Company shall control all proceedings taken in connection
with such contest and, at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, at its sole option, either direct
the Executive to pay the tax claimed and sue for a refund or contest the claim
in any permissible manner, and the Executive agrees to prosecute such contest to
a determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs
<PAGE>
EXHIBIT B
JOHNSON CONTROLS, INC.
CHANGE OF CONTROL
EXECUTIVE EMPLOYMENT AGREEMENT
the Executive to pay such claim and sue for a refund, the Company shall advance
the amount of such payment to the Executive, on an interest-free basis and shall
indemnify and hold the Executive harmless, on an after-tax basis, from any
Excise Tax or income tax (including interest or penalties with respect thereto)
imposed with respect to such advance or with respect to any imputed income with
respect to such advance; and further provided that any extension of the statute
of limitations relating to payment of taxes for the taxable year of the
Executive with respect to which such contested amount is claimed to be due is
limited solely to such contested amount. Furthermore, the Company's control of
the contest shall be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.
(d) If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 9(c), the Executive becomes entitled
to receive any refund with respect to such claim, the Executive shall (subject
to the Company's complying with the requirements of Section 9(c)) promptly pay
to the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the receipt by the
Executive of an amount advanced by the Company pursuant to Section 9(c), a
determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund prior to the expiration
of 30 days after such determination, then such advance shall be forgiven and
shall not be required to be repaid and the amount of such advance shall offset,
to the extent thereof, the amount of Gross-Up Payment required to be paid.
10. Confidential Information. (a) The Executive shall hold in
a fiduciary capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or any of its affiliated
companies, and their respective businesses, which shall have been obtained by
the Executive during the Executive's employment by the Company or any of its
affiliated companies and which shall not be or become public knowledge (other
than by acts by the Executive or representatives of the Executive in violation
of this Agreement). During employment and for two years after termination of the
Executive's employment with the Company, the Executive, except as may otherwise
be required by law or legal process, shall not use any such information except
on behalf of the Company and shall not communicate or divulge any such
information, knowledge or data to anyone other than the Company and those
designated by it. This covenant shall survive the termination of this Agreement.
Nothing in this paragraph is intended or shall be construed to limit in any way
Executive's independent duty not to misappropriate Trade Secrets of the Company.
(b) "Trade Secret" means information of the Company, including
a formula, pattern, compilation, program, device, method, technique or process,
that derives independent economic value, actual or potential, from not being
generally known to, and
<PAGE>
EXHIBIT B
JOHNSON CONTROLS, INC.
CHANGE OF CONTROL
EXECUTIVE EMPLOYMENT AGREEMENT
not being readily ascertainable by proper means by, other persons who can obtain
economic value from its disclosure or use, and that is the subject of efforts by
the Company to maintain its secrecy that are reasonable under the circumstances.
During employment with the Company, Executive shall preserve and protect Trade
Secrets of the Company from unauthorized use or disclosure, and after
termination of such employment, Executive shall not use or disclose any Trade
Secret of the Company until such time as that Trade Secret is no longer a secret
as a result of circumstances other than a misappropriation involving the
Executive.
11. Successors. (a) This Agreement is personal to the
Executive and without the prior written consent of the Company shall not be
assignable by the Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable by
the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
12. Miscellaneous. (a) This Agreement shall be governed by and
construed in accordance with the laws of the State of Wisconsin, without
reference to principles of conflict of laws. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and legal
representatives.
(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Executive:
<PAGE>
EXHIBIT B
JOHNSON CONTROLS, INC.
CHANGE OF CONTROL
EXECUTIVE EMPLOYMENT AGREEMENT
If to the Company:
Johnson Controls, Inc.
5757 North Green Bay Avenue
Milwaukee, Wisconsin 53201
Attention: General Counsel
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(d) The Company may withhold from any amounts payable under
this Agreement such Federal, state or local taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to insist upon
strict compliance with any provision hereof or any other provision of this
Agreement or the failure to assert any right the Executive or the Company may
have hereunder, including, without limitation, the right of the Executive to
terminate employment for Good Reason pursuant to Section 5(c)(i)-(v) of this
Agreement, shall not be deemed to be a waiver of such provision or right or any
other provision or right of this Agreement.
(f) The Executive and the Company acknowledge that, except as
may otherwise be provided under any other written agreement between the
Executive and the Company, the employment of the Executive by the Company is "at
will" and, prior to the Effective Date, may be terminated by either the
Executive or the Company at any time. Moreover, if prior to the Effective Date,
(i) the Executive's employment with the Company terminates or (ii) the Executive
ceases to be an officer of the Company, then the Executive shall have no further
rights under this Agreement. From and after the Effective Date this Agreement
shall supersede any other agreement between the parties with respect to the
subject matter hereof.
IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's hand and, pursuant to the authorization from its Board of Directors,
the Company has caused these presents to be executed in its name on its behalf,
all as of the day and year first above written.
-------------------------------------------
[Executive]
JOHNSON CONTROLS, INC.
By
----------------------------------------
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.M
<SEQUENCE>11
<FILENAME>c66360ex10-m.txt
<DESCRIPTION>DIRECTOR SHARE UNIT PLAN
<TEXT>
<PAGE>
EXHIBIT 10.M
JOHNSON CONTROLS, INC.
DIRECTOR SHARE UNIT PLAN
ARTICLE 1.
PURPOSE AND DURATION
Section 1.1. Purpose. The purpose of the Johnson Controls, Inc. Director Share
Unit Plan is to advance the Company's growth and success, and to advance the
interests of its shareholders, by attracting and retaining well-qualified
Outside Directors upon whose judgment the Company is largely dependent for the
successful conduct of its operations and by providing such individuals with
incentives to put forth maximum effort for the long-term success of the
Company's business, thereby aligning their interests more closely with the
interests of shareholders.
Section 1.2. Duration. The Plan was originally effective on November 18, 1998.
The Plan was most recently amended and restated effective October 1, 2001. The
provisions of the Plan as amended and restated apply to each individual with an
interest hereunder on or after October 1, 2001; provided that no amendment
hereto shall adversely affect the right of any Participant with respect to an
election in effect prior to October 1, 2001.
ARTICLE 2.
DEFINITIONS AND CONSTRUCTION
Section 2.1. Definitions. Wherever used in the Plan, the following terms shall
have the meanings set forth below and, when the meaning is intended, the initial
letter of the word is capitalized:
(a) "Beneficiary" means the person or persons entitled to receive the
interest of a Participant in the event of the Participant's death as provided in
Article 7.
(b) "Board" means the Board of Directors of the Company.
(c) "Committee" means the Directors Committee of the Board; provided,
however, that if the Directors Committee does not include two or more
"non-employee directors" within the meaning of Rule 16b-3 of the Exchange Act,
then the term "Committee" means such other committee appointed by the Board
consisting of two or more "non-employee directors."
(d) "Company" means Johnson Controls, Inc., a Wisconsin corporation,
and any successor thereto as provided in Article 14.
(e) "Exchange Act" means the Securities Exchange Act of 1934, as
interpreted by regulations and rules issued pursuant thereto, all as amended and
in effect from time to time. Any reference to a specific provision of the
Exchange Act shall be deemed to include reference to any successor provision
thereto.
(f) "Fair Market Value" means with respect to a Share, except as
otherwise provided herein, the closing sales price on the New York Stock
Exchange on the date in question (or the immediately preceding trading day, if
the date in question is not a trading day), and with respect to any other
property, such value as is determined by the Committee.
<PAGE>
JOHNSON CONTROLS, INC.
DIRECTOR SHARE UNIT PLAN
(g) "Outside Director" means a member of the Company's Board who is not
an officer or employee of the Company or a subsidiary.
(h) "Participant" means each Outside Director who has a Retirement
Account under the Plan.
(i) "Plan" means the arrangement described herein, as from time to time
amended and in effect.
(j) "Retirement Account" means the record keeping account maintained to
record the interest of each Participant under the Plan. A Retirement Account is
established for record keeping purposes only and not to reflect the physical
segregation of assets on the Participant's behalf, and may consist of such
subaccounts or balances as the Committee may determine to be necessary or
appropriate.
(k) "Share" means a share of the Company's common stock, $0.16 par
value.
(l) "Share Units" means the hypothetical Shares that are credited to
the Participant's Retirement Account in accordance with Article 5.
(m) "Total and Permanent Disability" means the Participant's inability
to perform the material duties of a Board member as a result of a
medically-determinable physical or mental impairment which can be expected to
result in death or which has lasted or can be expected to last for a period of
at least 12 months, as determined by the Committee. The Committee may require
the Participant to submit such medical evidence or to undergo a medical
examination by a doctor selected by the Committee as the Committee determines is
necessary in order to make a determination hereunder.
Section 2.2. Gender and Number. Except where otherwise indicated by the context,
any masculine term used herein includes the feminine, the plural includes the
singular, and the singular the plural.
Section 2.3. Severability. In the event any provision of the Plan is held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the said illegal or invalid provision had not been included.
ARTICLE 3. ADMINISTRATION
Section 3.1. General. The Plan shall be administered by the Committee. If at any
time the Committee shall not be in existence, the Board shall assume the
Committee's functions and each reference to the Committee herein shall be deemed
to include the Board.
Section 3.2. Authority. In addition to the authority specifically provided
herein, the Committee shall have full power and discretionary authority to: (a)
administer the Plan, including but not limited to the power and authority to
construe and interpret the Plan; (b) correct errors, supply omissions or
reconcile inconsistencies in the Plan's terms; (c) establish, amend or waive
rules and regulations, and appoint such agents, as it deems appropriate for the
Plan's administration;
<PAGE>
JOHNSON CONTROLS, INC.
DIRECTOR SHARE UNIT PLAN
and (d) make any other determinations, including factual determinations, and
take any other action as it determines is necessary or desirable for the Plan's
administration.
Section 3.3. Decision Binding. The Committee's determinations and decisions made
pursuant to the provisions of the Plan and all related orders or resolutions of
the Board shall be final, conclusive and binding on all persons who have an
interest in the Plan, and such determinations and decisions shall not be
reviewable.
Section 3.4. Procedures of the Committee. The Committee's determinations must be
made by not less than a majority of its members present at the meeting (in
person or otherwise) at which a quorum is present, or by written majority
consent, which sets forth the action, is signed by the members of the Committee
and filed with the minutes for proceedings of the Committee. A majority of the
entire Committee shall constitute a quorum for the transaction of business.
Section 3.5. Indemnification. Neither the Committee nor any member thereof shall
be liable for any act, omission, interpretation, construction or determination
made in connection with the Plan in good faith and the members of the Committee
shall be entitled to indemnification and reimbursement by the Company in respect
of any claim, loss, damage or expense (including attorneys' fees) arising
therefrom to the full extent permitted by law and under any directors' and
officers' liability insurance that may be in effect from time to time.
Section 3.6. Restrictions to Comply with Applicable Law. Notwithstanding any
other provision of the Plan to the contrary, the Company shall have no liability
to make any payment unless such payment would comply with all applicable laws
and the applicable requirements of any securities exchange or similar entity. In
addition, transactions under the Plan are intended to comply with all applicable
conditions of Rule 16b-3 under the Exchange Act. The Committee shall administer
the Plan so that transactions under the Plan will be exempt from or comply with
Section 16 of the Exchange Act, and shall have the right to restrict or rescind
any transaction, or impose other rules and requirements, to the extent it deems
necessary or desirable for such exemption or compliance to be met.
ARTICLE 4.
RETIREMENT ACCOUNTS
Section 4.1. Establishment of Retirement Account. Each Outside Director shall
have a Retirement Account established under this Plan on his behalf. A
Participant's Retirement Account shall be credited with "Share Units" and
otherwise subject to adjustment as follows:
(a) Conversion of Accrued Benefits. For each Outside Director of the
Company as of December 1, 1998, the Committee shall calculate the value of such
Outside Director's accrued benefits under the Company's Director Retirement Plan
as of September 30, 1998. Each such Outside Director's Retirement Account shall
be credited with a number of Share Units equal to the result obtained by (i)
dividing (A) the value of such Outside Director's accrued benefits under the
Company's Director Retirement Plan as of September 30, 1998 by (B) the Fair
Market Value of a Share as of the first trading day in December 1998 and (ii)
rounding the quotient to two decimal places.
<PAGE>
JOHNSON CONTROLS, INC.
DIRECTOR SHARE UNIT PLAN
(b) Annual Credit of Share Units. On the date of each regular meeting
of the Board held in November, the Retirement Account of each Participant who is
then an Outside Director shall be credited with a number of additional Share
Units equal to the result obtained by (i) dividing (A) $25,000 by (B) the Fair
Market Value of a Share as of the first trading day in the following December
and (ii) rounding the quotient to two decimal places (the "Annual Credit").
Section 4.2. Interim Election. Any Outside Director whose election to the Board
is first effective at any time other than the regular meeting of the Board held
in November shall have credited to his or her Retirement Account a proportionate
share of the Annual Credit at the time of effectiveness of his election. Such
credit shall be based on the Fair Market Value of a Share as of the first
trading day of the month following the month in which his election is effective.
Section 4.3. Dividends. Whenever the Company declares a dividend on its Shares,
in cash or in property, at a time when Participants have Share Units credited to
their Retirement Accounts, a dividend award shall be made to all such
Participants as of the date of payment of the dividend. The dividend award for a
Participant shall be determined by multiplying the Share Units credited to the
Participant's Account as of the date the dividend is declared by the amount or
Fair Market Value of the dividend paid or distributed on one Share. The dividend
award shall be credited to the Participant's Retirement Account by converting
such award into Share Units by (i) dividing the amount of the dividend award by
the Fair Market Value of a Share on the date the dividend is paid, and (ii)
rounding such quotient to two decimal places. Any other provision of this Plan
to the contrary notwithstanding, if a dividend is declared on Shares in the form
of a right or rights to purchase shares of capital stock of the Company or of
any entity acquiring the Company, such dividend award shall not be credited to
the Participant's Retirement Account, but each Share Unit credited to a
Participant's Retirement Account at the time such dividend is paid, and each
Share Unit thereafter credited to the Participant's Retirement Account at a time
when such rights are attached to Shares, shall thereafter be valued as of any
point in time on the basis of the aggregate of the then Fair Market Value of one
Share plus the then Fair Market Value of such right or rights then or previously
attached to one Share.
ARTICLE 5.
RULES WITH RESPECT TO SHARE UNITS
Section 5.1. Transactions Affecting Common Stock. In the event of any merger,
share exchange, reorganization, consolidation, recapitalization, stock dividend,
stock split or other change in corporate structure of the Company affecting
Shares, the Committee may make appropriate equitable adjustments with respect to
the Share Units credited to the Retirement Account of each Participant,
including without limitation, adjusting the date as of which such units are
valued and/or distributed, as the Committee determines is necessary or desirable
to prevent the dilution or enlargement of the benefits intended to be provided
under the Plan.
Section 5.2. No Shareholder Rights With Respect to Share Units. Participants
shall have no rights as a stockholder pertaining to Share Units credited to
their Retirement Accounts.
<PAGE>
JOHNSON CONTROLS, INC.
DIRECTOR SHARE UNIT PLAN
ARTICLE 6.
PAYMENT
Section 6.1. Distributions. A Participant's Retirement Account shall become
payable after the earliest to occur of (i) the retirement date selected by the
Participant, (ii) the Participant's death, (iii) the Participant's Total and
Permanent Disability, or (iv) any other event whereby the Participant ceases to
serve on the Board (the earliest such date, the "Payout Date").
Section 6.2. Election of Form of Distribution. A Participant, at the time he
commences participation in the Plan, shall make a distribution election with
respect to his Retirement Account in such form and manner as the Committee may
prescribe and within the time periods the Committee may prescribe. The election
shall specify whether distributions shall be made in a single lump sum or ten
(10) annual installments. A distribution election shall be effective only when
it is received and approved by the Committee, and shall remain in effect until
modified by the Participant. A Participant may from time to time modify his
distribution election by filing a revised distribution election, properly
completed and signed, with the Committee. However, a revised distribution
election received by the Committee within twelve (12) months prior to the Payout
Date will be null and void, and the most recent prior distribution election on
file with the Committee will be given effect. If no valid election is in effect,
distributions shall be made in ten (10) annual installments. Notwithstanding the
foregoing, and regardless of any election in effect, if a Participant dies
before receiving a distribution of his entire Retirement Account, any remaining
balance of such account shall be paid in a single lump sum to the Participant's
Beneficiary as soon as practicable after the Participant's death.
Section 6.3. Manner of Distribution. A Participant's Retirement Account shall be
paid or begin to be paid in cash in the month of January that next follows the
calendar year in which the Payout Date occurs, as follows:
(a) If payment is to be made in a lump sum, the amount of the payment
shall be determined by multiplying the Fair Market Value of a Share on the first
trading day of such January (the "First Trading Day") by the number of Share
Units credited to the Participant's Retirement Account as of the First Trading
Day.
(b) If payment is to be made in ten (10) annual installments, the
amount of the first annual payment shall equal the value of 1/10th of the number
of Share Units credited to the Participant's Retirement Account as of the First
Trading Day. The value of such Share Units shall be determined by multiplying
the Fair Market Value of a Share on the First Trading Day by the number of such
Share Units. After the amount of the first installment has been determined,
1/10th of the Share Units credited to the Participant's Retirement Account shall
be cancelled as of the First Trading Day. A second annual payment shall be made
in January of the second calendar year that next follows the calendar year in
which the Payout Date occurred, and shall be in an amount equal to the value of
1/9th of the number of Share Units credited to the Participant's Retirement
Account as of the first trading day of such January. The value of such Share
Units shall be determined by multiplying the Fair Market Value of a Share on the
such trading day by the number of such Share Units. After the amount of the
second installment has been determined, 1/9th of the Share Units credited to the
Participant's Retirement Account on the first trading day
<PAGE>
JOHNSON CONTROLS, INC.
DIRECTOR SHARE UNIT PLAN
of the second year shall be cancelled as of such date. Each succeeding
installment payment shall be determined in a similar manner, the tenth annual
installment being an amount equal to the value of the total number of Share
Units credited to the Participant's Retirement Account on the first trading day
of the tenth calendar year after the year in which the Payout Date occurred.
ARTICLE 7.
BENEFICIARY
Each Participant may file a beneficiary designation on the
form provided by the Committee. In the event of the Participant's death prior to
receiving payment of his entire Retirement Account due hereunder, the balance
remaining in such Retirement Account shall be paid to the Participant's
Beneficiary in a lump sum as soon as practicable after the Participant's death.
A Participant can change his beneficiary designation at any time, provided that
each beneficiary designation form filed with the Company shall revoke the most
recent form on file, and the last form received by the Company while the
Participant was alive shall be given effect. In the event there is no valid
beneficiary designation form on file, or in the event the Participant's
designated Beneficiary is not alive at the time payment is to be made, the
Participant's estate will be deemed the Beneficiary and will be entitled to
receive payment. If a Participant designates his spouse as a beneficiary, such
beneficiary designation automatically shall become null and void on the date of
the Participant's divorce or legal separation from such spouse; provided the
Committee has notice of such divorce or legal separation prior to payment. If a
Participant maintains his primary residence in a state that has community or
marital property laws, then the Participant's spouse, if any, must consent to
the Participant's designation of any primary beneficiary other than the spouse.
ARTICLE 8.
TERMS AND CONDITIONS
Section 8.1. No Funding. No stock, cash or other property will be deliverable to
a Participant or his or her Beneficiary in respect of the Participant's
Retirement Account until the date or dates identified pursuant to Article 6 or
Article 7, and all Retirement Accounts shall be reflected in one or more
unfunded accounts established for the Participant by the Company. Payment of the
Company's obligation will be from general funds, and no special assets (stock,
cash or otherwise) have been or will be set aside as security for this
obligation, unless otherwise provided by the Committee.
Section 8.2. No Transfers. Except as permitted by Article 7, a Participant's
rights to payments under this Plan are not subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance by a
Participant or his Beneficiary, or garnishment by a Participant's creditors or
the creditors of his or her beneficiaries, whether by operation of law or
otherwise, and any attempted sale, transfer, assignment, pledge, or encumbrance
with respect to such payment shall be null and void, and shall be without legal
effect and shall not be recognized by the Company.
Section 8.3. Unsecured Creditor. The right of a Participant or Beneficiary to
receive payments under this Plan is that of a general, unsecured creditor of the
Company, and the obligation of the
<PAGE>
JOHNSON CONTROLS, INC.
DIRECTOR SHARE UNIT PLAN
Company to make payments constitutes a mere promise by the Company to pay such
benefits in the future. Further, the arrangements contemplated by this Plan are
intended to be unfunded for tax purposes and for purposes of Title I of ERISA.
Section 8.4. Retention as Director. Nothing contained in the Plan shall
interfere with or limit in any way the right of the shareholders of the Company
to remove any Director from the Board, nor confer upon any Director any right to
continue in the service of Company as a Director.
ARTICLE 9.
TERMINATION AND AMENDMENT OF PLAN
Section 9.1. General. The Board may at any time amend or terminate the Plan;
provided, however, that (a) the Board may not amend the Plan more than once
every six months, other than amendments the Board deems necessary or advisable
to assure the conformity of the Plan with any requirements of state and federal
law or regulations now or hereafter in effect, and (b) except as provided in
Section 9.2, no amendment shall affect adversely any of the rights of any
Outside Director, without such Outside Director's consent, under any election
theretofore in effect under the Plan.
Section 9.2. Termination; Change of Control. Notwithstanding the foregoing, the
Board may make the following amendments to the Plan without the consent of any
individual with an interest herein:
(a) In the event of the Plan's termination, the Board may provide that
all amounts accrued to the date of termination be distributed to all
Participants or Beneficiaries, as applicable, in a single sum payment as soon as
practicable after the date of termination or on such other date as is specified
by the Board.
(b) The Board may amend the provisions of Article 11 prior to the
effective date of a Change of Control.
ARTICLE 10.
WITHHOLDING
The Company shall have the right to deduct from all amounts
deferred pursuant to this Plan and/or payments made under the Plan any foreign,
Federal, state, or local income taxes required to be withheld with respect to
such compensation.
ARTICLE 11.
CHANGE OF CONTROL
Section 11.1. Acceleration of Payment. Anything in this Plan to the contrary
notwithstanding, each Participant's Retirement Account shall be paid in cash in
a lump sum within 30 days following the occurrence of a Change of Control. The
amount of the cash payment shall be determined by multiplying the number of
Share Units in the Retirement Account by the Fair Market Value of a Share as of
the last trading day prior to the occurrence of Change of Control.
<PAGE>
JOHNSON CONTROLS, INC.
DIRECTOR SHARE UNIT PLAN
Section 11.2. Definition of a Change of Control. A "Change of Control" means any
of the following events:
(a) The acquisition, other than from the Company, by any individual,
entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 20% or more of either:
(1) The then outstanding shares of common stock of the Company
(the "Outstanding Company Common Stock") or
(2) The combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the
election of directors (the "Company Voting Securities");
provided, however, that any acquisition by (x) the Company or any of
its subsidiaries, or any employee benefit plan (or related trust) sponsored or
maintained by the Company or any of its subsidiaries or (y) any corporation with
respect to which, following such acquisition, more than 60% of, respectively,
the then outstanding shares of common stock of such corporation and the combined
voting power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is then beneficially
owned, directly or indirectly, by all or substantially all of the individuals
and entities who were the beneficial owners, respectively, of the Outstanding
Company Common Stock and Company Voting Securities immediately prior to such
acquisition in substantially the same proportion as their ownership, immediately
prior to such acquisition, of the Outstanding Company Common Stock and Company
Voting Securities, as the case may be, shall not constitute a Change in Control
of the Company; or
(b) Individuals who, as of May 24, 1989, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority of the
Board, provided that any individual becoming a director subsequent to May 24,
1989, whose election or nomination for election by the Company's shareholders
was approved by a vote of at least a majority of the directors then comprising
the Incumbent Board, shall be considered as though such individual were a member
of the Incumbent Board, but excluding, for this purpose, any such individual
whose initial assumption of office is in connection with an actual or threatened
election contest relating to the election of the Directors of the Company (as
such terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act); or
(c) Consummation of a reorganization, merger or consolidation (a
"Business Combination"), in each case, with respect to which all or
substantially all of the individuals and entities who were the respective
beneficial owners of the Outstanding Company Common Stock and Company Voting
Securities immediately prior to such Business Combination do not, following such
Business Combination, beneficially own, directly or indirectly, more than 60%
of, respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Business Combination in substantially the same proportion as
their ownership immediately prior to such Business Combination of the
Outstanding Company Common Stock and Company Voting Securities, as the case may
be; or
<PAGE>
JOHNSON CONTROLS, INC.
DIRECTOR SHARE UNIT PLAN
(d) A complete liquidation or dissolution of the Company or sale or
other disposition of all or substantially all of the assets of the Company other
than to a corporation with respect to which, following such sale or disposition,
more than 60% of, respectively, the then outstanding shares of common stock and
the combined voting power of the then outstanding voting securities entitled to
vote generally in the election of directors is then owned beneficially, directly
or indirectly, by all or substantially all of the individuals and entities who
were the beneficial owners, respectively, of the Outstanding Company Common
Stock and Company Voting Securities immediately prior to such sale or
disposition in substantially the same proportion as their ownership of the
Outstanding Company Common Stock and Company Voting Securities, as the case may
be, immediately prior to such sale or disposition.
ARTICLE 12.
OFFSET
The Company shall have the right to offset from any amount
payable hereunder any amount that the Participant owes to the Company or any
subsidiary without the consent of the Participant (or his Beneficiary, in the
event of the Participant's death).
ARTICLE 13.
SUCCESSORS
All obligations of the Company under the Plan shall be binding
on any successor to the Company, whether the existence of such successor is the
result of a direct or indirect purchase, merger, consolidation or otherwise, of
all or substantially all of the business and/or assets of the Company. This Plan
shall be binding upon and inure to the benefit of the Participants,
Beneficiaries, and their heirs, executors, administrators and legal
representatives.
ARTICLE 14.
DISPUTE RESOLUTION
Section 14.1. Governing Law. This Plan and the rights and obligations hereunder
shall be governed by and construed in accordance with the internal laws of the
State of Wisconsin (excluding any choice of law rules that may direct the
application of the laws of another jurisdiction), except as provided in Section
14.2 hereof.
Section 14.2. Arbitration.
(a) Application. Notwithstanding anything to the contrary herein, if a
Participant or Beneficiary brings a claim that relates to benefits under this
Plan, regardless of the basis of the claim, such claim shall be settled by final
binding arbitration in accordance with the rules of the American Arbitration
Association ("AAA") and judgment upon the award rendered by the arbitrator may
be entered in any court having jurisdiction thereof.
(b) Initiation of Action. Arbitration must be initiated by serving or
mailing a written notice of the complaint to the other party. Normally, such
written notice should be provided to the other party within one year (365 days)
after the day the complaining party first knew or should have known of the
events giving rise to the complaint. However, this time frame may be
<PAGE>
JOHNSON CONTROLS, INC.
DIRECTOR SHARE UNIT PLAN
extended if the applicable statute of limitation provides for a longer period of
time. If the complaint is not properly submitted within the appropriate time
frame, all rights and claims that the complaining party has or may have against
the other party shall be waived and void. Any notice sent to the Company shall
be delivered to:
Office of General Counsel
Johnson Controls, Inc.
5757 North Green Bay Avenue
P.O. Box 591
Milwaukee, WI 53201-0591
The notice must identify and describe the nature of all complaints
asserted and the facts upon which such complaints are based. Notice will be
deemed given according to the date of any postmark or the date of time of any
personal delivery.
(c) Compliance with Personnel Policies. Before proceeding to
arbitration on a complaint, the Participant or Beneficiary must initiate and
participate in any complaint resolution procedure identified in the Company's
personnel policies. If the claimant has not initiated the complaint resolution
procedure before initiating arbitration on a complaint, the initiation of the
arbitration shall be deemed to begin the complaint resolution procedure. No
arbitration hearing shall be held on a complaint until any applicable Company
complaint resolution procedure has been completed.
(d) Rules of Arbitration. All arbitration will be conducted by a single
arbitrator according to the Employment Dispute Arbitration Rules of the AAA. The
arbitrator will have authority to award any remedy or relief that a court of
competent jurisdiction could order or grant including, without limitation,
specific performance of any obligation created under policy, the awarding of
punitive damages, the issuance of any injunction, costs and attorney's fees to
the extent permitted by law, or the imposition of sanctions for abuse of the
arbitration process. The arbitrator's award must be rendered in a writing that
sets forth the essential findings and conclusions on which the arbitrator's
award is based.
(e) Representation and Costs. Each party may be represented in the
arbitration by an attorney or other representative selected by the party. The
Company shall be responsible for its own costs, the AAA filing fee and all other
fees, costs and expenses of the arbitrator and AAA for administering the
arbitration. The claimant shall be responsible for his attorney's or
representative's fees, if any. However, if any party prevails on a statutory
claim which allows the prevailing party costs and/or attorneys' fees, the
arbitrator may award costs and reasonable attorneys' fees as provided by such
statute.
(f) Discovery; Location; Rules of Evidence. Discovery will be allowed
to the same extent afforded under the Federal Rules of Civil Procedure.
Arbitration will be held at a location selected by the Company. AAA rules
notwithstanding, the admissibility of evidence offered at the arbitration shall
be determined by the arbitrator who shall be the judge of its materiality and
relevance. Legal rules of evidence will not be controlling, and the standard for
admissibility of
<PAGE>
JOHNSON CONTROLS, INC.
DIRECTOR SHARE UNIT PLAN
evidence will generally be whether it is the type of information that
responsible people rely upon in making important decisions.
(g) Confidentiality. The existence, content or results of any arbitration may
not be disclosed by a party or arbitrator without the prior written consent of
both parties. Witnesses who are not a party to the arbitration shall be excluded
from the hearing except to testify.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.N
<SEQUENCE>12
<FILENAME>c66360ex10-n.txt
<DESCRIPTION>2000 STOCK OPTION PLAN
<TEXT>
<PAGE>
EXHIBIT 10.N
JOHNSON CONTROLS, INC.
12,815,809 Shares
Common Stock
JOHNSON CONTROLS, INC. 2000 STOCK OPTION PLAN
JANUARY 1, 2000
(AMENDED OCTOBER 1, 2001)
This document sets forth information relating to participation in the
Johnson Controls, Inc. 2000 Stock Option Plan (the "Plan") and to shares of our
common stock that we are offering under the Plan. Each share of our common stock
issued under the Plans will include one right to purchase our common stock. In
this document, unless the context otherwise requires, all references to our
common stock includes the accompanying rights. We are offering participation in
the Plan to our officers and other key employees and those of our subsidiaries.
This document will be accompanied or preceded by our latest Annual
Report to Shareholders. If you have previously received a copy of our Annual
Report to Shareholders but wish to have another copy, then we will furnish an
additional copy without charge upon written or oral request to us.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE SECURITIES OFFERED PURSUANT TO THE
PLAN OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL AND COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
You should rely only on the information contained in this document or
to which we have referred you. We have not authorized anyone to provide you with
information that is different. The information in this document may only be
accurate on the date of the document. This document may only be used where it is
legal to sell these securities.
This document may not be used for resales of shares acquired
under the Plan.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Caption Page
- ------- ----
<S> <C>
THE COMPANY.......................................................................................................1
THE PLAN..........................................................................................................1
Establishment............................................................................................1
Purpose..................................................................................................1
Effective Date of the Plan...............................................................................1
Stock Subject to the Plan................................................................................1
Administration...........................................................................................2
Eligibility..............................................................................................2
Rights of Employees......................................................................................2
Option Agreements........................................................................................3
Option Price.............................................................................................3
Option Period............................................................................................3
Maximum Value of Incentive Stock Options.................................................................3
Transferability of Option or Stock Appreciation Right....................................................3
Exercise of Option; Deferral of Shares...................................................................4
Withholding..............................................................................................4
Termination of Employment................................................................................4
Stock Appreciation Rights................................................................................5
Adjustment Provisions....................................................................................5
Termination and Amendment of Plan........................................................................6
Rights of a Shareholder..................................................................................6
Change of Control........................................................................................6
LSARs....................................................................................................7
Governing Law and Arbitration............................................................................7
Unfunded Plan............................................................................................8
Repricing................................................................................................8
Termination for Cause or Inimical Conduct................................................................8
Offset...................................................................................................9
Severability.............................................................................................9
FEDERAL INCOME TAX CONSIDERATIONS................................................................................10
Incentive Stock Options.................................................................................10
Nonqualified Options....................................................................................10
Stock Appreciation Rights...............................................................................11
Internal Revenue Code Section 162(m) and Section 280G...................................................11
</TABLE>
<PAGE>
THE COMPANY
We are a global market leader in automotive systems and facility
management and control. In the automotive market, we are a major supplier of
seating and interior systems, and batteries. For nonresidential facilities, we
provide building control systems and services, energy management and integrated
facility management. Our principal executive offices are located at 5757 North
Green Bay Avenue, P.O. Box 591, Milwaukee, Wisconsin 53201. Our telephone number
is (414) 524-1200.
1. ESTABLISHMENT. JOHNSON CONTROLS, INC. (the "Company") hereby establishes
a stock option plan for certain officers and other key employees, as described
herein, which shall be known as the JOHNSON CONTROLS, INC. 2000 STOCK OPTION
PLAN (the "Plan"). It is intended that certain of the stock options issued
pursuant to the Plan may constitute incentive stock options within the meaning
of Section 422 of the Internal Revenue Code ("Incentive Stock Options") and the
remainder of the options issued pursuant to the Plan shall constitute
nonqualified options. Incentive Stock Options and nonqualified stock options are
hereinafter jointly referred to as "Options." The Committee may also award stock
appreciation rights apart from Options issued pursuant to the Plan.
2. PURPOSE. The purpose of the Plan is to induce certain officers and other
key employees to remain in the employ of the Company or its subsidiaries and to
encourage such employees to secure or increase on reasonable terms their stock
ownership in the Company. The Board of Directors of the Company (the "Board of
Directors") believes that the Plan will promote continuity of management and
increased incentive and personal interest in the welfare of the Company by those
who are responsible for shaping and carrying out the long-range plans of the
Company and securing its continued growth and financial success.
3. EFFECTIVE DATE OF THE PLAN. The Plan was adopted by the Board of
Directors on November 17, 1999, and, subject to the approval of the Plan by the
shareholders of the Company within twelve months of this date, the effective
date of the Plan will be January 1, 2000. Any and all Options granted prior to
shareholder approval shall be subject to such approval.
4. STOCK SUBJECT TO THE PLAN. Subject to adjustment in accordance with the
provisions of this paragraph and paragraph 17, the total number of shares of the
common stock of the Company ("Common Stock") available for awards during the
term of the Plan shall be an amount calculated as follows: (a) fifteen percent
(15%) of the number of shares of Common Stock outstanding upon the effective
date of the Plan minus (b) the number of shares of Common Stock subject to
awards made under any prior stock option plan of the Company (a "Prior Plan")
and outstanding upon the effective date of the Plan ("Prior Plan Awards").
Shares of Common Stock to be delivered upon exercise of Options or settlement of
stock appreciation rights under the Plan shall be made available from presently
authorized but unissued Common Stock or authorized and issued shares of Common
Stock reacquired and held as treasury shares, or a combination thereof. If any
Option or stock appreciation right shall be canceled, expire or terminate
without having been exercised in full, or to the extent a stock appreciation
right is settled in cash, the shares of Common Stock allocable to the
unexercised, canceled, forfeited portion of such Option or stock appreciation
right, or portion of such stock appreciation right which is settled in cash,
shall again be available for the purpose of the Plan. The surrender of any
Options (and the surrender of any related stock appreciation rights granted
under paragraph 16) in connection with the receipt of stock appreciation rights
as provided in paragraph 16 shall, as to such Options, have the same effect
under this paragraph 4 as the cancellation or termination of such Options
without having been exercised. If any stock appreciation rights are granted
under the Plan (including any grant in connection with the surrender of
outstanding Options), as provided in paragraph 16, and shares of Common Stock
may be issuable in connection with such stock appreciation rights, then the
grant of such stock appreciation rights shall be deemed to have the same effect
under this paragraph 4 as the grant of Options; provided, however, if any such
stock appreciation rights shall be canceled, expire or terminate without having
been exercised in full, or to the extent a stock appreciation right is settled
in cash, the shares of Common Stock allocable to the unexercised, canceled,
forfeited portion of such stock appreciation right, or portion of such stock
appreciation right which is settled in cash, shall again be available for the
purpose of the Plan. If the exercise price of any Option granted under the Plan
is satisfied by tendering shares of Common Stock to the Company (by either
actual delivery or by attestation), only the number of shares of Common Stock
issued net of the shares of Common Stock tendered shall be deemed delivered for
purposes of determining the maximum number of shares of Common Stock available
for delivery under the Plan. If any Participant satisfies the Company's
withholding tax requirements upon the exercise of an Option by properly electing
to have the Company withhold shares of Common Stock, then the shares of
<PAGE>
Common Stock so withheld shall again be available for the purpose of the Plan,
except that such shares shall not be available for the granting of Incentive
Stock Options. After the effective date of the Plan, if any event occurs as a
result of which shares of Common Stock subject to Prior Plan Awards would again
become available for the purpose of the relevant Prior Plan if the Prior Plan
were still in effect and the Company could grant awards under the Prior Plan,
then such shares shall be available for the purpose of the Plan rather than such
Prior Plan (subject to any applicable limitation on the use of such shares for
the granting of Incentive Stock Options) and thereby increase the shares
available under the Plan as determined under the first sentence of this
paragraph.
5. ADMINISTRATION.
(a)The Plan shall be administered by the Compensation Committee (the
"Committee") consisting of not less than three members of the Board of
Directors appointed from time to time by the Board of Directors. No
member of the Committee shall be, nor at any time during the preceding
one-year period have been, eligible to receive stock, stock options or
stock appreciation rights of the Company or of its subsidiaries pursuant
to the Plan or any other plan of the Company or its subsidiaries, other
than a plan for directors of the Company who are not officers or
employees of the Company which provides for automatic grants without
exercise of discretion by any member of the Board of Directors, or by any
officer or employee of the Company.
(b)Subject to the express provisions of the Plan, the Committee shall have
authority to establish such rules and regulations as it deems necessary
or advisable for the proper administration of the Plan, and in its
discretion, to determine the individuals (the "Participants") to whom,
and the time or times at which, Options and stock appreciation rights
shall be granted, the type of Options, the periods of Options or stock
appreciation rights, limitations on exercise of Options or stock
appreciation rights, and the number of shares to be subject to each
Option or award of stock appreciation rights. In making such
determinations, the Committee may take into account the nature of the
services rendered by the respective employees, their present and
potential contributions to the success of the Company or its
subsidiaries, and such other factors as the Committee, in its discretion,
shall deem relevant.
(c)Subject to the express provisions of the Plan, the Committee shall also
have complete authority to interpret the Plan, to prescribe, amend, and
rescind rules and regulations relating to it, to determine the terms and
provisions of the respective Option Agreements (which need not be
identical) and to make all other determinations necessary or advisable
for the administration of the Plan. The Committee's determinations on the
matters referred to in this paragraph 5 shall be conclusive and binding
upon all parties.
(d)Neither the Committee nor any member thereof shall be liable for any
act, omission, interpretation, construction or determination made in
connection with the Plan in good faith, and the members of the Committee
shall be entitled to indemnification and reimbursement by the Company in
respect of any claim, loss, damage or expense (including attorneys fees)
arising therefrom to the full extent permitted by law and under any
directors and officers liability insurance that may be in effect from
time to time.
(e)A majority of the Committee shall constitute a quorum, and the acts of a
majority of the members present at any meeting at which a quorum is
present, or acts approved in writing by a majority of the Committee
without a meeting, shall be the acts of the Committee.
6. ELIGIBILITY. Options and stock appreciation rights may be granted to
officers and other key employees of the Company and of any of its present and
future subsidiaries. The maximum number of shares of Common Stock covered by
Options which may be granted to any Participant within any two consecutive
calendar year periods shall not exceed 500,000 shares in the aggregate. No
Option or stock appreciation right shall be granted to any person who owns,
directly or indirectly, shares of stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company. A director of the
Company or of a subsidiary who is not also an employee of the Company or of a
subsidiary will not be eligible to receive any Option or stock appreciation
right hereunder.
7. RIGHTS OF EMPLOYEES. Nothing in this Plan or in any Option or stock
appreciation right shall interfere with or limit in any way the right of the
Company and any of its subsidiaries to terminate any Participant's or employee's
employment at any time, nor confer upon any Participant or employee any right to
continue in the employ of the Company and its subsidiaries. No employee shall
have any right to be granted an award under this Plan, even if an
<PAGE>
award was granted to such employee at any prior time, or if a similarly-situated
employee is or was granted an award under similar circumstances.
8. OPTION AGREEMENTS. All Options and stock appreciation rights granted
under the Plan shall be evidenced by written agreements (an "Option Agreement")
in such form or forms as the Committee shall determine.
9. OPTION PRICE. The per share Option price for Options and the per share
grant price for stock appreciation rights granted under paragraph 16, as
determined by the Committee, shall be an amount not less than 100% of the fair
market value of the stock on the date such Options or stock appreciation rights
are granted (or, if the Committee so determines, in the case of any stock
appreciation right granted under paragraph 16 upon the surrender of any
outstanding Option, on the date of grant of such Option). The fair market value
of a share of stock on any date shall be the average of the highest and lowest
market prices of sales of the Common Stock on that date, or on the next
preceding trading day if such date was not a trading day as reported on the New
York Stock Exchange or as otherwise determined by the Committee.
10. OPTION PERIOD. The term of each Option and stock appreciation right
shall be as determined by the Committee but in no event shall the term of an
Option or stock appreciation right exceed a period of ten (10) years from the
date of its grant. Each Option and stock appreciation right granted hereunder
may granted at any time on or after the effective date of the Plan, and prior to
its termination, provided that no Option or stock appreciation right may be
granted later than ten years after the date this Plan is adopted. The Committee
shall determine whether any Option or stock appreciation right shall become
exercisable in cumulative or non-cumulative installments or in full at any time.
An exercisable Stock Option or stock appreciation right, or portion thereof, may
be exercised in whole or in part only with respect to whole shares of Common
Stock.
11. MAXIMUM VALUE OF INCENTIVE STOCK OPTIONS. The aggregate fair market
value (as defined in paragraph 9) of the Common Stock for which any Incentive
Stock Options are exercisable for the first time by a Participant during any
calendar year under the Plan or any other plan of the Company or any subsidiary
shall not exceed $100,000. To the extent the fair market value of the shares of
Common Stock attributable to Incentive Stock Options first exercisable in any
calendar year exceeds $100,000, the excess portion of the Incentive Stock
Options shall be treated as nonqualified options.
12. TRANSFERABILITY OF OPTION OR STOCK APPRECIATION RIGHT. No Option or
stock appreciation right granted hereunder shall be transferable other than
options specifically designated by the Compensation Committee as such and
meeting the following requirements of transfer:
(a) by will or by the laws of descent and distribution; or
(b) in the case of a nonqualified option:
(i) pursuant to a "Qualified Domestic Relations Order" as defined in
Section 414(p) of the Internal Revenue Code; or
(ii) to (A) his or her spouse, children or grandchildren ("Immediate
Family Members"), (B) a partnership in which the only partners are the
Participant's Immediate Family Members, or (C) a trust or trusts
established solely for the benefit of one or more of the Participant's
Immediate Family Members (collectively, the Permitted Transferees),
provided that there may be no consideration for any such transfer by a
Participant.
Following transfer (if applicable), such Options and stock appreciation
rights shall continue to be subject to the same terms and conditions as were
applicable immediately prior to transfer, provided that such Options and stock
appreciation rights may be exercised during the life of the Participant only by
the Participant or, if applicable, by the alternate payee designated under a
Qualified Domestic Relations Order or the Participant's Permitted Transferees.
<PAGE>
13. EXERCISE OF OPTION; DEFERRAL OF SHARES.
(a) The Committee shall prescribe the manner in which a Participant may
exercise an Option which is not inconsistent with the provisions of this
Plan. However, no Option shall be exercisable, in whole or in part, for
a period of at least six months commencing on the date of grant, except
as provided in paragraph 20 in the event of a Change in Control. An
Option may be exercised, subject to limitations on its exercise
contained in the Option Agreement and in this Plan, in full, at any
time, or in part, from time to time, only by (A) written notice of
intent to exercise the Option with respect to a specified number of
shares, and (B) by payment in full to the Company at the time of
exercise of the Option, of the option price of the shares being
purchased. Payment of the Option price may be made (i) in cash, (ii) if
permitted by the applicable Option Agreement, by tendering of shares of
Common Stock equivalent in fair market value (as defined in paragraph
9), or (iii) if permitted by the applicable Option Agreement, partly in
cash and partly in shares of Common Stock. Common Stock may be tendered
either by actual delivery of shares of Common Stock or by attestation.
(b) The Committee may provide one or more means to enable Participants and
the Company to defer delivery of shares of Common Stock deliverable upon
exercise of an Option, on such terms and conditions as the Committee may
determine, including by way of example the manner and timing of making a
deferral election, the treatment of dividends paid on shares of Common
Stock during the deferral period and the permitted distribution dates or
events. No such deferral means may result in any increase in the number
of shares of Common Stock issuable hereunder other than as contemplated
by paragraph 4 or paragraph 17 hereof.
14. WITHHOLDING. If permitted by the applicable Option Agreement, a
Participant may be permitted to satisfy the Company's withholding tax
requirements by electing (i) to have the Company withhold shares of Common Stock
of the Company, or (ii) to deliver to the Company shares of Common Stock of the
Company having a fair market value on the date income is recognized on the
exercise of a nonqualified option equal to the minimum amount required to be
withheld. The election shall be made in writing and according to such rules and
in such form as the Committee shall determine.
Notwithstanding the foregoing, the election and satisfaction of any
withholding requirement through the withholding of Common Stock or the tender of
shares of Company Stock may be made only at such times as are permitted, without
incurring liabilities, by Rule 16b-3 of the Securities Exchange Act of 1934, as
amended, or such other securities laws, rules or regulations as may be
applicable.
15. TERMINATION OF EMPLOYMENT.
(a) In the event a Participant's employment with the Company or any of its
subsidiaries shall be terminated for any reason, except early or normal
retirement, death or total and permanent disability, all rights to
exercise an Option or stock appreciation right shall terminate
immediately.
(b) If the Participant should die while employed by the Company or any
subsidiary prior to the expiration of the term of the Option or stock
appreciation right, the Option or stock appreciation right shall be
exercisable immediately to the extent it would have been exercisable had
the Participant remained employed for twelve months after the date of
death and may be exercised by the person to whom it is transferred by
will or by the applicable laws of descent and distribution by giving
notice as provided in paragraph 13, at any time within twelve months
after the date of death unless such Option or stock appreciation right
expires earlier under the terms of the Option Agreement. For purposes of
this paragraph, the six-month limitation imposed pursuant to paragraph
13 shall not be applicable.
(c) In the event of termination of employment with the Company due to early
or normal retirement, or due to total and permanent disability, prior to
the expiration of the term of an Option or stock appreciation right, the
Option or stock appreciation right shall be exercisable in full without
regard to any vesting requirement and may be exercised by the
Participant at any time within thirty-six months (except Incentive Stock
Options which may be exercised within three months) after the date of
such early or normal retirement or total and permanent disability, as
the case may be, unless such Option or stock appreciation right expires
earlier under
<PAGE>
the terms of the Option Agreement. Provided, however, that for certain
participants who are officers of the Company or who are selected by the
Compensation Committee of the Board, nonqualified stock options may be
exercised by the Participant for ten (10) years after the date of such
early or normal retirement, or for five (5) years after the date of such
total and permanent disability, as the case may be, in the event of
termination of employment with the Company due to early or normal
retirement, or due to total and permanent disability, prior to the
expiration of the term of the Option or stock appreciation right, unless
such Option or stock appreciation right expires earlier under the terms
of the Option Agreement. For purposes hereof, a Participant's employment
shall be deemed to have terminated due to (a) early or normal retirement
if such Participant is then eligible to receive immediate early or
normal retirement benefits under the provisions of any of the Company's
or its subsidiaries defined benefit pension plans; or, in the absence of
a defined benefit plan, provided such Participant retires with ten years
of service and is at least 55 years old and (b) total and permanent
disability if he is permanently disabled within the meaning of Section
22(e)(3) of the Internal Revenue Code, as in effect from time to time.
For purposes of this Plan: (a) a transfer of an employee from the
Company to a 50% or more owned subsidiary, partnership, joint venture or
other affiliate (whether or not incorporated) or vice versa, or from one
subsidiary, partnership, joint venture or other affiliate to another or
(b) a leave of absence duly authorized in writing by the Company,
provided the employee's right to re-employment is guaranteed either by
statute or by contract, shall not be deemed a termination of employment
under the Plan, notwithstanding the foregoing, from and after a Change
of Control, as defined in paragraph 20, Options and stock appreciation
rights shall continue to be exercisable for three months after a
Participant's termination of employment.
16. STOCK APPRECIATION RIGHTS. Stock appreciation rights may be granted
separate from any Option granted under the Plan to any Participant. Such stock
appreciation rights may be exercised by a Participant by written notice of
intent to exercise the stock appreciation rights delivered to the Committee,
which notice shall state the number of shares of stock in respect of which the
stock appreciation rights are being exercised. Upon such exercise, the
Participant shall be entitled to receive the economic value of such stock
appreciation rights determined in the manner described in subparagraph (b) of
this paragraph 16 and in the form prescribed in subparagraph (c) of this
paragraph 16.
Stock appreciation rights shall be subject to terms and conditions not
inconsistent with other provisions of the Plan as shall be determined by the
Committee, which shall include the following:
(a) Stock appreciation rights granted in connection with the surrender of an
Option shall be exercisable or transferable at such time or times and
only to the extent that the Option to which they related was exercisable
or transferable. The Committee shall have complete authority to
determine the terms and conditions applicable to other stock
appreciation rights, including the periods applicable to such rights,
limitations on exercise and the number of shares of stock in respect to
which such stock appreciation rights are exercisable.
(b) Upon the exercise of stock appreciation rights, a Participant shall be
entitled to receive the economic value thereof, which value shall be
equal to the excess of the fair market value of one share of Common
Stock on the date of exercise over the grant price per share, multiplied
by the number of shares in respect of which the stock appreciation
rights shall have been exercised. Stock appreciation rights which have
been so exercised shall no longer be exercisable in respect of such
number of shares.
(c) The Committee shall have the sole discretion either (i) to determine the
form in which payment of such economic value will be made (i.e., cash,
stock, or any combination thereof) or (ii) to consent to or disapprove
the election of the Participant to receive cash in full or partial
payment of such economic value.
(d) The exercise of stock appreciation rights by a Participant pursuant to
the Plan may be made only at such times as are permitted by Rule 16b-3
of the Securities Exchange Act of 1934, without liabilities, or such
other securities laws or rules as may be applicable.
<PAGE>
(e) Stock appreciation rights shall be exercisable only when the fair market
value of the Common Stock to which the stock appreciation rights relate
exceeds the grant price of such stock appreciation rights.
17. ADJUSTMENT PROVISIONS. In the event of any change in the shares of the
Common Stock of the Company by reason of a declaration of a stock dividend
(other than a stock dividend declared in lieu of an ordinary cash dividend),
spin-off, merger, consolidation recapitalization, or split-up, combination or
exchange of shares, or otherwise, the aggregate number and class of shares
available under this Plan, the number and class of shares subject to each
outstanding Option and stock appreciation right, the option price for shares
subject to each outstanding Option, and the option price or grant price and
economic value of any stock appreciation rights shall be appropriately adjusted
by the Committee, whose determination shall be conclusive.
18. TERMINATION AND AMENDMENT OF PLAN. The Plan shall terminate on December
31, 2009, unless sooner terminated as hereinafter provided. The Board of
Directors may at any time terminate the Plan, or amend the Plan as it shall deem
advisable including (without limiting the generality of the foregoing) any
amendments deemed by the Board of Directors to be necessary or advisable to
assure conformity of the Plan and any Incentive Stock Options granted thereunder
to the requirements of Section 422 of the Internal Revenue Code as now or
hereafter in effect and to assure conformity with any requirements of other
state and federal laws or regulations now or hereafter in effect; provided,
however, that the Board of Directors may not, without further approval by the
shareholders of the Company, amend paragraph 24 or make any modifications to the
Plan which, by applicable law, require such approval. No termination or
amendment of the Plan may, without the consent of the Participant to whom any
Option or stock appreciation rights shall have been granted, adversely affect
the rights of such Participant under such Option or stock appreciation rights.
The Board of Directors may also, in its discretion, permit any Option or stock
appreciation right to be exercised prior to the earliest date fixed for exercise
thereof under the Option Agreement. Notwithstanding the foregoing, the Board
specifically reserves the right to amend the provisions of Sections 20 and 21
prior to the effective date of a Change of Control without the need to obtain
the consent of the Participants or any other individual with a right to an award
granted hereunder.
19. RIGHTS OF A SHAREHOLDER. A Participant shall have no rights as a
shareholder with respect to shares covered by his or her Option until the date
of issuance of the stock certificate to the participant and only after such
shares are fully paid or with respect to stock appreciation rights. No
adjustment will be made for dividends or other rights for which the record date
is prior to the date such stock is issued.
20. CHANGE OF CONTROL. Notwithstanding the foregoing, upon Change of
Control, all previously granted Options and stock appreciation rights shall
immediately become exercisable to the full extent of the original grant. For
purposes of this Plan, a "Change of Control" means any of the following events:
(i) the acquisition, other than from the Company, by any individual, entity or
group (within the meaning of Section 13(d) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended from time to time) (the "Exchange Act") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of either (A) the then outstanding shares of common
stock of the Company (the "Outstanding Company Common Stock") or (B) the
combined voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the "Company Voting
Securities"), provided, however, that any acquisition by (x) the Company of any
of its subsidiaries, or any employee benefit plan (or related trust) sponsored
or maintained by the Company or any of its subsidiaries or (y) any corporation
with respect to which, following such acquisition, more than 60% of
respectively, the then outstanding shares of common stock of such corporation
and the combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Company Voting Securities immediately prior
to such acquisition in substantially the same proportion as their ownership,
immediately prior to such acquisition of the Outstanding Company Common Stock
and Company Voting Securities, as the case may be, shall not constitute a change
in control of the Company; or (ii) individuals who, as of September 28, 1994,
constitute the Board of Directors of the Company (the "Incumbent Board") cease
for any reason to constitute at least a majority of the Board, provided that any
individual becoming a director subsequent to September 28, 1994, whose election
or nomination for election by the Company's shareholders was approved by a vote
of at least a majority of the directors then comprising the Incumbent Board
shall be considered as though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such individual whose initial
assumption of office is in connection with an actual or threatened election
contest relating to the election of the Directors of the Company (as
<PAGE>
such terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act); or (iii) approval by the shareholders of the Company of
consummation of a reorganization, merger or consolidation (a "Business
Combination"), in each case, with respect to which all or substantially all of
the of the individuals and entities who were the respective beneficial owners of
the Outstanding Company Common Stock and Company Voting Securities immediately
prior to such Business Combination do not, following such Business Combination,
beneficially own, directly or indirectly, more than 60% of, respectively, the
then outstanding shares of common stock and the combined voting power of the
then outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporations resulting from such Business
Combination in substantially the same proportion as their ownership immediately
prior to such Business Combination or the Outstanding Company Common Stock and
Company Voting Securities, as the case may be; or (iv) (A) a complete
liquidation or dissolution of the company or a (B) sale or other disposition of
all or substantially all of the assets of the Company other than to a
corporation with respect to which, following such sale or disposition, more than
60% of, respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities entitled to vote
generally in the election of directors is then owned beneficially, directly or
indirectly, by all or substantially all of the individuals and entities who were
the beneficial owners, respectively, of the Outstanding Company Common Stock and
Company Voting Securities immediately prior to such sale or disposition in
substantially the same proportion as their ownership of the Outstanding Company
Common Stock and Company Voting Securities, as the case may be, immediately
prior to such sale or disposition.
21. LSARS. Notwithstanding the foregoing, during the sixty-day period from
and after a Change in Control of the Company, each optionee shall have the right
(the "LSAR") with respect to any Option, in lieu of the payment of the full
Option price for the shares of Common Stock ("Shares") subject to such Option,
to elect (within such sixty-day period) to surrender all or a part of the Option
to the Company and to receive in lieu thereof cash in the amount by which the
fair market value per Share on the date of such election shall exceed the option
price per Share under the Option multiplied by the number of Shares granted
under the Option as to which a LSAR granted hereunder shall have been exercised.
As used in this paragraph 21, the fair market value of a Share on the date of
exercise shall mean with respect to an election by an optionee to receive cash
in respect of a Stock Option, the higher of (x) the highest reported sales
price, regular way, of a Share on the Composite Tape for New York Stock Exchange
Listed Stocks (the "Composite Tape") during the sixty-day period prior to the
date of the Change in Control of the Company and (y) if the Change in Control of
the Company is the result of a transaction or a series of transactions described
in paragraphs (i) or (ii) of the definition of Change in Control of the Company
set forth in paragraph 20, the highest price per Share paid in such transaction
or series of transactions.
22. GOVERNING LAW AND ARBITRATION. The Plan, and all awards hereunder, and
all determinations made and actions taken pursuant to the Plan, shall be
governed by the internal laws of the State of Wisconsin (without reference to
conflict of law principles thereof) and construed in accordance therewith, to
the extent not otherwise governed by the laws of the United States or as
otherwise provided hereinafter. Notwithstanding anything to the contrary herein,
if any individual brings a claim that relates to benefits under this Plan,
regardless of the basis of the claim (including but not limited to wrongful
discharge or Title VII discrimination), such claim shall be settled by final
binding arbitration in accordance with the rules of the American Arbitration
Association ("AAA") and the following provisions, and judgment upon the award
rendered by the arbitrator may be entered in any court having jurisdiction
thereof.
(a) Initiation of Action. Arbitration must be initiated by serving or
mailing a written notice of the complaint to the other party. Normally,
such written notice should be provided to the other party within one
year (365 days) after the day the complaining party first knew or should
have known of the events giving rise to the complaint. However, this
time frame may be extended if the applicable statute of limitation
provides for a longer period of time. If the complaint is not properly
submitted within the appropriate time frame, all rights and claims that
the complaining party has or may have against the other party shall be
waived and void. Any notice sent to the Company shall be delivered to:
<PAGE>
Office of General Counsel
Johnson Controls, Inc.
5757 North Green Bay Avenue
P.O. Box 591
Milwaukee, WI 53201-0591
The notice must identify and describe the nature of all complaints
asserted and the facts upon which such complaints are based. Notice will
be deemed given according to the date of any postmark or the date of
time of any personal delivery.
(b) Compliance with Personnel Policies. Before proceeding to arbitration on
a complaint, the claimant must initiate and participate in any complaint
resolution procedure identified in the Company's or subsidiary's
personnel policies. If the claimant has not initiated the complaint
resolution procedure before initiating arbitration on a complaint, the
initiation of the arbitration shall be deemed to begin the complaint
resolution procedure. No arbitration hearing shall be held on a
complaint until any applicable Company or subsidiary complaint
resolution procedure has been completed.
(c) Rules of Arbitration. All arbitration will be conducted by a single
arbitrator according to the Employment Dispute Arbitration Rules of the
AAA. The arbitrator will have authority to award any remedy or relief
that a court of competent jurisdiction could order or grant including,
without limitation, specific performance of any obligation created under
the award or policy, the awarding of punitive damages, the issuance of
any injunction, costs and attorney's fees to the extent permitted by
law, or the imposition of sanctions for abuse of the arbitration
process. The arbitrator's award must be rendered in a writing that sets
forth the essential findings and conclusions on which the arbitrator's
award is based.
(d) Representation and Costs. Each party may be represented in the
arbitration by an attorney or other representative selected by the
party. The Company or subsidiary shall be responsible for its own costs,
the AAA filing fee and all other fees, costs and expenses of the
arbitrator and AAA for administering the arbitration. The claimant shall
be responsible for his attorney's or representative's fees, if any.
However, if any party prevails on a statutory claim which allows the
prevailing party costs and/or attorneys' fees, the arbitrator may award
costs and reasonable attorneys' fees as provided by such statute.
(e) Discovery; Location; Rules of Evidence. Discovery will be allowed to the
same extent afforded under the Federal Rules of Civil Procedure.
Arbitration will be held at a location selected by the Company. AAA
rules notwithstanding, the admissibility of evidence offered at the
arbitration shall be determined by the arbitrator who shall be the judge
of its materiality and relevance. Legal rules of evidence will not be
controlling, and the standard for admissibility of evidence will
generally be whether it is the type of information that responsible
people rely upon in making important decisions.
(f) Confidentiality. The existence, content or results of any arbitration
may not be disclosed by a party or arbitrator without the prior written
consent of both parties. Witnesses who are not a party to the
arbitration shall be excluded from the hearing except to testify.
23. UNFUNDED PLAN. This Plan shall be unfunded. No person shall have any
rights greater than those of a general creditor of the Company.
24. REPRICING. Except for adjustments pursuant to paragraph 17, neither the
per share Option price for any outstanding Option granted under the Plan nor the
per share grant price for stock appreciation rights granted under the Plan may
be decreased after the date of grant nor may an outstanding Option or stock
appreciation right granted under the Plan or a Prior Plan be surrendered to the
Company as consideration for the grant of a new Option or stock appreciation
right with a lower exercise or grant price.
25. TERMINATION FOR CAUSE OR INIMICAL CONDUCT. Notwithstanding any
provisions of the Plan or an award agreement to the contrary, a Participant's
Option or stock appreciation right shall be immediately cancelled and forfeited,
regardless of vesting, and any pending exercises shall be cancelled, on the date
that: (a) the Company or subsidiary terminates the Participant's employment for
Cause, (b) the date that the Committee determines that the
<PAGE>
Participant's employment could have been terminated for Cause if the Company or
subsidiary had all relevant facts in its possession as of the date of the
Participant's termination, or (c) the Committee determines the Participant has
engaged in Inimical Conduct. The Committee may suspend all exercises or delivery
of cash or shares (without liability for interest thereon) pending its
determination of whether the Participant has been or should have been terminated
for Cause or has engaged in Inimical Conduct. For purposes hereof:
(a) "Cause" means: (1) if the Participant is subject to an employment
agreement that contains a definition of "cause," such definition, or (2)
otherwise, any of the following as determined by the Committee: (a)
violation of the provisions of any employment agreement, non-competition
agreement, confidentiality agreement, or similar agreement with the
Company or subsidiary, or the Company's or subsidiary's code of ethics,
as then in effect, (b) conduct rising to the level of gross negligence
or willful misconduct in the course of employment with the Company or
subsidiary, (c) commission of an act of dishonesty or disloyalty
involving the Company or subsidiary, (d) violation of any federal, state
or local law in connection with the Participant's employment, or (e)
breach of any fiduciary duty to the Company or a subsidiary.
(b) "Inimical Conduct" means any act or omission that is inimical to the
best of interests of the Company or any subsidiary, as determined by the
Committee in its sole discretion, including but not limited to: (1)
violation of any employment, noncompete, confidentiality or other
agreement in effect with the Company or any subsidiary, (2) taking any
steps or doing anything which would damage or negatively reflect on the
reputation of the Company or a subsidiary, or (3) failure to comply with
applicable laws relating to trade secrets, confidential information or
unfair competition.
26. OFFSET. The Company shall have the right to offset, from any amount
payable or stock deliverable hereunder, any amount that the Participant owes to
the Company or any subsidiary without the consent of the Participant or any
individual with a right to the Participant's award.
27. SEVERABILITY. In the event any provision of the Plan or any award
agreement is held illegal or invalid for any reason, the illegality or
invalidity shall not affect the remaining parts of the Plan or such award
agreement, and the Plan or award agreement shall be construed and enforced as if
the said illegal or invalid provision had not been included.
<PAGE>
FEDERAL INCOME TAX CONSEQUENCES
The Federal income tax consequences described in this section are based on laws
and regulations in effect on the date of this proxy statement and future changes
in those laws and regulations may affect the tax consequences described below.
No discussion of state income tax treatment has been included.
INCENTIVE STOCK OPTIONS
Options granted under the Plan which constitute ISOs will, in general, be
subject to the following Federal income tax treatment:
- The grant of an ISO does not give rise to any income tax consequences to
either the Company or the Participant.
- No deduction is allowed to the Company on a Participant's exercise of an
ISO.
- Participant's exercise of an ISO does not result in ordinary income to
the Participant for regular tax purposes, but may result in the
imposition of or an increase in alternative minimum tax. If shares
acquired upon exercise of an ISO are not disposed of within the same
taxable year of the ISO exercise, the excess of the fair market value of
the shares at the time the ISO is exercised over the option price is
included in the Participant's computation of alternative minimum taxable
income in the year of exercise.
- If shares acquired upon the exercise of an ISO are disposed of within
two years of the date of the option grant, or within one year of the
date of the option exercise, the Participant recognizes ordinary taxable
income at the time of the disposition to the extent that the fair market
value of the shares at the time of exercise exceeds the option price,
but not in an amount greater than the excess, if any, of the amount
realized on the disposition over the option price. Capital gain
(long-term or short-term depending upon the holding period) is
recognized by the Participant at the time of such a disposition to the
extent that the amount of proceeds from the sale exceeds the fair market
value at the time of the exercise of the ISO. Capital loss (long-term or
short-term depending upon the holding period) is recognized by the
Participant at the time of such a disposition to the extent that the
fair market value at the time of the exercise of the ISO exceeds the
amount of proceeds from the sale. The Company is entitled to a deduction
in the taxable year in which the disposition is made in an amount equal
to the amount of ordinary income recognized by the Participant.
- If shares acquired upon the exercise of an ISO are disposed of after the
later of two years from the date of the option grant or one year from
the date of the option exercise in a taxable transaction, the
Participant recognizes long-term capital gain or loss at the time of the
disposition in an amount equal to the difference between the amount
realized by the Participant on the disposition and the Participant's
basis in the shares. The Company will not be entitled to any income tax
deduction with respect to the ISO.
NONQUALIFIED STOCK OPTIONS
Options granted under the Plan which do not qualify as ISOs will, in general, be
subject to the following Federal income tax treatment:
- The grant of a nonqualified option does not give rise to any income tax
consequences to either the Company or the Participant.
- The exercise of a nonqualified option generally results in ordinary
taxable income to the Participant in the amount equal to the excess of
the fair market value of the shares at the time of exercise over the
option price. A deduction from taxable income is allowed to the Company
in an amount equal to the amount of ordinary income recognized by the
Participant.
<PAGE>
- Upon a subsequent taxable disposition of shares, a Participant
recognizes short-term or long-term capital gain (or loss) depending on
the holding period, equal to the difference between the amount received
and the tax basis of the shares, usually the fair market value at the
time of exercise.
STOCK APPRECIATION RIGHTS
Any SAR and LSAR granted under the Plan, will in general, be subject to the
following Federal income tax treatment:
- The grant of a SAR or LSAR does not give rise to any income tax
consequences to either the Company or the Participant.
- Upon the exercise of a SAR or LSAR, the Participant recognizes ordinary
income equal to the amount of any cash plus the fair market value of any
shares of Common Stock received. The Company is generally allowed a
deduction in an amount equal to the income recognized by the
Participant.
INTERNAL REVENUE CODE SECTIONS 162(M) AND 280G
Section 162(m) of the Internal Revenue Code limits the Company's income tax
deduction for compensation paid in any taxable year to certain executive
officers to $1,000,000 per individual. Amounts in excess of $1,000,000 are not
deductible unless one of several exceptions apply. The Committee intends to
grant awards under the Plan that are designated, in most cases, to qualify for
one such exception, the performance-based compensation exception. Grants of
Options and SARs can be structured so as to qualify for this exception. The
Company does not anticipate that Section 162(m) will have a material impact on
its ability to deduct compensation payable under the Plan. Section 280G of the
Internal Revenue Code limits the Company's income tax deduction in the event
there is a change in control of the Company. Accordingly, all or some of the
amount which would otherwise be deductible may not be deductible with respect to
those Options, SARs and LSARs that become immediately exercisable in the event
of a change in control of the Company.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.O
<SEQUENCE>13
<FILENAME>c66360ex10-o.txt
<DESCRIPTION>RESTRICTED STOCK PLAN
<TEXT>
<PAGE>
EXHIBIT 10.O
JOHNSON CONTROLS, INC.
RESTRICTED STOCK PLAN
ARTICLE 1.
PURPOSE AND DURATION
Section 1.1 Purpose. The Johnson Controls, Inc. Restricted
Stock Plan has two complementary purposes: (a) to promote the success of the
Company by providing incentives to the Company's and subsidiary's officers and
other key employees that will link their personal interests to the long-term
financial success of the Company and to growth in value; and (b) to permit the
Company and its subsidiaries to attract, motivate and retain experienced and
knowledgeable employees upon whose judgment, interest, and special efforts the
successful conduct of the Company's operations is largely dependent.
Section 1.2 Duration. The Plan will become effective on
October 1, 2001. The Plan shall remain in effect, subject to the right of the
Board to terminate the Plan at any time pursuant to Article 11 herein, until all
Shares reserved for issuance under the Plan have been issued.
ARTICLE 2.
DEFINITIONS AND CONSTRUCTION
Section 2.1 Definitions. Wherever used in the Plan, the
following terms shall have the meanings set forth below and, when the meaning is
intended, the initial letter of the word is capitalized:
(a) "Act" means the Securities Act of 1933, as interpreted by
rules and regulations issued pursuant thereto, all as amended and in effect from
time to time. Any reference to a specific provision of the Act shall be deemed
to include reference to any successor provision thereto.
(b) "Award" means a grant of Restricted Shares or Restricted
Share Units.
(c) "Beneficial Owner" (or derivatives thereof) shall have the
meaning ascribed to such term in Rule 13d-3 of the General Rules and Regulations
under the Exchange Act.
(d) "Board" means the Board of Directors of the Company.
(e) "Cause" means: (1) if the Participant is subject to an
employment agreement that contains a definition of "cause", such definition, or
(2) otherwise, any of the following as determined by the Comm