Document:

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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, 2003.
The provisions of the Plan as amended and restated apply to each individual
with an interest hereunder on or after October 1, 2003; provided that no
amendment hereto shall adversely affect the right of any Participant with
respect to an election in effect prior to October 1, 2003.

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) “Administrator” means the Employee Benefits Policy Committee of the
Company.

     (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 Article 7.

     (c) “Board” means the Board of Directors of the Company.

     (d) “Committee” means the Corporate Governance Committee of the Board;
provided, however, that if the Corporate Governance 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.”

     (e) “Company” means Johnson Controls, Inc., a Wisconsin corporation, and
any successor thereto as provided in Article 14.

     (f) “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.

     (g) “Fair Market Value” means with respect to a Share, except as otherwise
provided herein, the closing sales price of a Share on the New York Stock
Exchange as of 4:00 p.m. EST 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
Administrator.

     (h) “Outside Director” means a member of the Company’s Board who is not an
officer or employee of the Company or a subsidiary.

     (i) “Participant” means each Outside Director who has a Retirement Account
under the Plan. Where the context so requires, a Participant also means a
former director who is entitled to a benefit hereunder.

     (j) “Plan” means the arrangement described herein, as from time to time
amended and in effect.

     (k) “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 Administrator may determine to be necessary or
appropriate.

     (l) “Share” means a share of the Company’s common stock, $0.16 par value.

     (m) “Share Units” means the hypothetical Shares that are credited to the
Participant’s Retirement Account in accordance with Article 5.

     (n) “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 Administrator. The Administrator may
require the Participant to submit such medical evidence or to undergo a medical
examination by a doctor selected by the Administrator as the Administrator
determines is necessary in order to make a determination hereunder.

     (o) “Valuation Date” means each day when the United States financial
markets are open for business, as of which the Administrator will determine the
value of each Retirement Account.

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 Committee shall have overall authority with respect
to administration of the Plan; provided that the Administrator shall have
responsibility for the general operation and daily administration of the Plan
as specified herein. 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 (with the assistance of
the Administrator) and all references herein to the Committee shall be deemed
to include the Board.

Section 3.2. Authority. In addition to the authority specifically provided
herein, the Committee and the Administrator shall have full power and
discretionary authority to take any action or make any determination it deems
necessary for the proper administration of its respective duties under the
Plan, including but not limited to the power and authority to: (a) 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. Any action taken by the Committee shall be controlling over
any contrary action of the Administrator. The Committee or Administrator may
delegate its ministerial duties to a third party and to the extent of such
delegation, references to the Committee or Administrator herein shall mean such
delegee.

Section 3.3. Decision Binding. The Committee’s and the Administrator’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 for Administration. 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. The Administrator’s
determinations shall be made in accordance with such procedures it establishes.

Section 3.5. Indemnification. Neither the Committee, nor the Administrator,
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 and the Administrator 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 and the Administrator 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 Administrator 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.

     (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 on such date and (ii) rounding the quotient to three
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 on
the date on 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 (a) dividing the amount of
the dividend award by the Fair Market Value of a Share on the date the dividend
is paid, and (b) rounding such quotient to three 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 Administrator 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 Administrator 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.

ARTICLE 6.

PAYMENT

Section 6.1. Distributions. A Participant’s Retirement Account shall become
payable after the earliest to occur of (a) the retirement date selected by the
Participant, (b) the Participant’s death, (c) the Participant’s Total and
Permanent Disability, or (d) 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 and within such time
periods as the Administrator may prescribe. The election shall specify whether
distributions shall be made in a single lump sum or annual installments of from
two (2) to ten (10) years. A distribution election shall be effective only when
it is received and approved by the Administrator, and shall remain in effect
until modified by the Participant. A Participant may from time to time modify
his distribution election by completing a revised distribution election in such
form and manner and within such time periods as the Administrator may
prescribe. The Administrator may refuse to honor a distribution election that
is not completed in the manner and in such time as is prescribed by the
Administrator. If no valid election is in effect, distributions shall be made
in ten (10) annual installments.

Section 6.3. Manner of Distribution. A Participant’s Retirement Account shall
be paid or begin to be paid in cash as follows:

 

 

     (a) If payment is to be made in a lump sum, payment shall be made in the
first calendar quarter of the year following the year in which the Payout Date
occurs (or on such earlier date after the Payout Date as is approved by the
Committee), and shall be in an amount equal to the balance of the Participant’s
Retirement Account as of the Valuation Date immediately preceding the
distribution date.

     (b) If payment is to be made in annual installments, the first annual
payment shall be made in the first calendar quarter of the year following the
year in which the Payout Date occurs (or on such earlier date after the Payout
Date as is approved by the Committee), and shall be in an amount equal to the
value of 1/10th (or 1/9th, 1/8th, 1/7th, etc. depending on the number of
installments elected) of the balance of the Participant’s Retirement Account as
of the Valuation Date immediately preceding the distribution date. A second
annual payment shall be made in the first calendar quarter of the second year
after the year in which the Payout Date occurs (or on such earlier date as is
approved by the Committee), and shall be in an amount equal to the value of
1/9th (or 1/8th, 1/7th, 1/6th, etc. depending on the number of installments
elected) of the balance of the Participant’s Retirement Account as of the
Valuation Date immediately preceding the
distribution date. Each succeeding installment payment (if any) shall be
determined in a similar manner, until the final installment which shall equal
the then remaining balance of such account as of the Valuation Date immediately
preceding the final distribution date. Notwithstanding the foregoing
provisions, if the balance of a Participant’s Retirement Account at any time is
less than $50,000 during the payout period, the remaining balance shall
immediately be paid in the form of a lump sum.

     (c) Notwithstanding the foregoing, if the distribution under this Section
6.3 is made within six (6) months after the Participant ceases to be subject to
Section 16(b) of the Exchange Act, then the distribution shall be delayed until
the date that is six (6) months plus one day after the date such Participant
ceases to be subject to Section 16(b), unless the distribution is approved in
advance by the Committee or the distribution will not result in any liability
to the Participant under Section 16(b).

Section 6.4. Distribution in Event of Financial Emergency. If requested by a
Participant while a director of the Company or a subsidiary and if the
Administrator determines that a financial emergency has occurred in the
financial affairs of the Participant, all or part of the Participant’s
Retirement Account may be paid out to the Participant at the sole discretion of
the Administrator in a cash lump sum or in such installment payments as the
Administrator may specify. The amount to be distributed to the Participant
shall only be such amount as is needed to alleviate the Participant’s financial
hardship.

ARTICLE 7.

BENEFICIARY

          Each Participant may designate a beneficiary in such form and manner and
within such time periods as the Administrator may prescribe. 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, unless the Committee
determines that payments may continue to be made in accordance

 

 

with the
distribution election in effect at the time of the Participant’s death. A
Participant can change his beneficiary designation at any time, provided that
each beneficiary designation shall revoke the most recent designation, and the
last designation received by the Company (or its delegee) 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 payable after the Participant’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 in effect at
the time of the Participant’s death, in the event the Beneficiary does not
survive the Participant, or in the event that the beneficiary designation
provides that the Beneficiary must be living at the time of each distribution
and such designated Beneficiary does not survive to a distribution date, 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 Administrator has notice of such divorce or legal
separation prior to payment.

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 Administrator.

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 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. In addition, the Administrator may at
any time amend the Plan to make administrative changes and changes necessary to
comply with applicable law.

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 most recent Valuation Date preceding the occurrence of the Change of
Control.

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

     (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 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 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.exv10wp

 

EXHIBIT 10.P

JOHNSON CONTROLS, INC.

EXECUTIVE DEFERRED COMPENSATION PLAN

ARTICLE 1.

PURPOSE AND DURATION

     Section 1.1. Purpose. The Johnson Controls, Inc. Executive Deferred
Compensation Plan (the “Plan”) is established as an amendment, restatement and
consolidation of the various deferral options contained in the Johnson
Controls, Inc. Executive Incentive Compensation Plan (Deferred Option
Qualified), referred to as the EICP(DOQ), the Johnson Controls, Inc. Executive
Incentive Compensation Plan (Deferred Option), merged into the EICP(DOQ)
effective October 1, 2001, and the Johnson Controls, Inc. Long Term Performance
Plan and the policies adopted by the Committee under the Johnson Controls, Inc.
1992 Stock Option Plan. The Plan also implements the deferral provisions of
the Johnson Controls, Inc. 2000 Stock Option Plan, and the Johnson Controls,
Inc. Restricted Stock Plan.

     Section 1.2. Duration. The Plan is effective on October 1, 2001. The Plan was
most recently amended and restated effective October 1, 2003. The Plan shall
remain in effect until terminated by the Board pursuant to Section 9.5.

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. 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) “Act” means the Securities Act of 1933, 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 Act shall be deemed to
include reference to any successor provision thereto.

     (c) “Administrator” means the Employee Benefits Policy Committee of the
Company.

     (d) “Beneficiary” means the person(s) or entity(ies) designated by a
Participant to be his beneficiary for purposes of this Plan as provided in
Section 6.4.

     (e) “Board” means the Board of Directors of the Company.

 

 

     (f) “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.

     (g) “Committee” means the Compensation Committee of the Board, which shall
consist of not less than two members of the Board, each of whom is also a
director of the Company and qualifies as a “non-employee director” for purposes
of Rule 16b-3 of the Exchange Act.

     (h) “Company” means Johnson Controls, Inc., and its successors as provided
in Section 9.7.

     (i) “Deferral” means the amount credited, in accordance with a
Participant’s election or deemed election, to the Participant’s Account under
the Plan in lieu of the payment in cash thereof, or the issuance of Shares with
respect thereto. Deferrals include the following:

(1) Incentive Deferrals: A deferral of all or a
portion of a Participant’s performance cash award
under the Johnson Controls, Inc. Executive Incentive
Compensation Plan (Deferred Option Qualified), and the
Johnson Controls, Inc. Long Term Performance Plan.

(2) Option Deferrals: A deferral of all or a portion
of the Shares that would otherwise be issuable upon a
Participant’s exercise of his stock option under the
Johnson Controls, Inc. 1992 Stock Option Plan or 2000
Stock Option Plan.

(3) Restricted Stock Deferrals: A deferral of the
Shares that would otherwise be issuable to a
Participant in the form of restricted stock under the
Johnson Controls, Inc. Restricted Stock Plan.

(4) Dividend Deferrals: A deferral of the dividends
paid on restricted shares under the Johnson Controls,
Inc. Restricted Stock Plan while such shares are
subject to a period of restriction.

     (j) “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 to time. Any reference to a specific provision of
ERISA shall be deemed to include reference to any successor provision thereto.

     (k) “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.

     (l) “Fair Market Value” means with respect to a Share, except as otherwise
provided herein, the closing sales price on the New York Stock Exchange as of
4:00 p.m. EST 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 Administrator.

 

 

     (m) “Investment Options” means the investment options offered under the
Johnson Controls Savings and Investment (401k) Plan (excluding the Company
stock fund), the Share Unit Account, and any other alternatives made available
by the Administrator, which shall be used for the purpose of measuring
hypothetical investment experience attributable to a Participant’s Account.

     (n) “Participant” means an employee of the Company or any subsidiary who
is selected for participation under the Johnson Controls, Inc. Executive
Incentive Compensation Plan (Deferred Option Qualified), the Johnson Controls,
Inc. Long Term Performance Plan, the Johnson Controls, Inc. 1992 Stock Option
Plan, the Johnson Controls, Inc. 2000 Stock Option Plan, and/or the Johnson
Controls, Inc. Restricted Stock Plan, and who elected or is deemed to have
elected to make Deferrals hereunder. Notwithstanding the foregoing, 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.

     (o) “Plan Year” means the fiscal year of the Company.

     (p) “Share” means a share of common stock of the Company.

     (q) “Share Unit Account” means the account described in Section 5.1, which
is deemed invested in Shares.

     (r) “Share Units” means the hypothetical Shares that are credited to the
Share Unit Accounts in accordance with Section 5.1.

     (s) “Valuation Date” means each day when the United States financial
markets are open for business, as of which the Administrator will determine the
value of each Account and will make allocations to Accounts.

     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 use 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.

PARTICIPATION

     Section 3.1. Effective Date. Each individual for whom a deferral account was
maintained under the Johnson Controls, Inc. Executive Incentive Compensation
Plan (Deferred Option), the Johnson Controls, Inc. Executive Incentive
Compensation Plan (Qualified Deferred

 

 

Option), the Johnson Controls, Inc. Long
Term Performance Plan and the Johnson Controls, Inc. 1992 Stock Option Plan as
of September 30, 2001, shall automatically become a Participant hereunder on
the effective date.

     Section 3.2. New Participants. Each employee of the Company or a subsidiary
shall automatically become a Participant on the date he makes or is deemed to
make a deferral election under the Johnson Controls, Inc. Executive Incentive
Compensation Plan (Deferred Option Qualified), the Johnson Controls, Inc. Long
Term Performance Plan, the Johnson Control, Inc. 1992 Stock Option Plan, the
Johnson Controls, Inc. 2000 Stock Option Plan, and/or the Johnson Controls,
Inc. Restricted Stock Plan.

ARTICLE 4.

DEFERRALS OF COMPENSATION

     Section 4.1. Incentive Deferrals.

     (a) EICP Deferrals. A Participant may elect, in such form and manner and
within such time periods as the Administrator may prescribe, to have a part or
all of his incentive award payable under the Johnson Controls, Inc. Executive
Incentive Compensation Plan (Deferred Option Qualified) (but not less than
$1,000) deferred under this Plan. A Participant’s election to defer an annual
incentive award shall be effective only for the award to which the election
relates, and shall not carry over from award to award. Notwithstanding the
foregoing, a Participant’s election to defer all or a portion of an incentive
award shall not be effective with respect to any amount payable after the
Participant’s termination of employment.

     (b) LTPP Deferrals. A Participant may elect, in such form and manner and
within such time periods as the Administrator may prescribe, to have a part or
all of his incentive award payable under the Johnson Controls, Inc. Long-Term
Performance Plan (but not less than $1,000) deferred under this Plan. A
Participant’s election to defer a long-term incentive payment shall be
effective only for the award to which the election relates, and shall not carry
over from award to award. Notwithstanding the foregoing, a Participant’s
election to defer all or a portion of a long-term incentive award shall not be
effective with respect to any amount payable after the Participant’s
termination of employment.

     Section 4.2. Deferral of Option Exercise Shares. A Participant may elect, in
such form and manner and within such time periods as the Administrator may
prescribe, to defer delivery of the Shares otherwise issuable to the
Participant upon exercise of a stock option under the Johnson Controls, Inc.
1992 Stock Option Plan or 2000 Stock Option Plan. The election must be made
with respect to all unexercised option shares as of the date of the election.
A Participant’s election to defer option exercise Shares shall be effective
only for the Shares to which the election relates, and shall not carry over
from exercise to exercise. A Participant’s Option Deferrals will be
automatically credited to the Participant’s Share Unit Account.
Notwithstanding the foregoing, a Participant’s election to defer his option
exercise Shares shall not be effective with respect to an option exercised
after the Participant’s termination of employment.

 

 

     Section 4.3. Deferral of Restricted Stock. A Participant may elect, in such
form and manner and within such time periods as the Administrator may
prescribe, to defer all or any portion of the restricted stock awarded to such
Participant under the Johnson Controls, Inc. Restricted Stock Plan. A
Participant’s election to defer restricted shares shall be effective only for
the Shares to which the election relates, and shall not carry over from award
to award. A Participant’s Restricted Stock Deferrals will be automatically
credited to the Participant’s Share Unit Account. The portion of the Share
Unit Account attributable to Restricted Stock Deferrals shall be subject to the
same risk of forfeiture as the restricted shares to which such Deferrals
relate.

     Section 4.4. Deferral of Dividends on Restricted Stock. A Participant shall be
deemed to have elected to have all dividends or other distributions paid with
respect to restricted stock under the Johnson Controls, Inc. Restricted Stock
Plan while such stock is subject to a period of restriction, deferred to the
Participant’s Share Unit Account. The portion of the Participant’s Account
attributable to such Deferrals shall be subject to the same risk of forfeiture
as the restricted shares to which such Deferrals relate.

     Section 4.5. Involuntary Termination of Deferral Elections. If the
Administrator determines that the Participant is no longer eligible to
participate in the Plan or that revocation of a Participant’s eligibility is
necessary or desirable in order for the Plan to qualify under ERISA as a plan
of deferred compensation for a select group of management or highly compensated
employees, the Administrator may automatically revoke the Participant’s
deferral election or deemed deferral election.

ARTICLE 5.

HYPOTHETICAL INVESTMENT OPTIONS

     Section 5.1. Investment Election. Amounts credited to a Participant’s Account shall reflect the investment
experience of the Investment Options selected by the Participant, or the
investment experience of the required Investment Option (as described above
under Sections 4.2, 4.3 and 4.4). The Participant may make an initial
investment election at the time of enrollment in the Plan (or with respect to a
Participant who has an Account balance on the restatement effective date,
within such period of time after such effective date as is specified by the
Administrator) in whole increments of one percent (1%). A Participant may also
elect to reallocate his or her Account, and may elect to allocate any future
Deferrals, among the various Investment Options in whole increments of one
percent (1%) from time to time as prescribed by the Administrator; provided
that Option Deferrals, Restricted Stock Deferrals and Dividend Deferrals shall
not be eligible for re-allocation out of the Share Unit Account. Such
investment elections shall remain in effect until changed by the Participant.
All investment elections shall become effective as soon as practicable after
receipt of such election by the Administrator, and must be made in the form and
manner and within such time periods as the Administrator prescribes in order to
be effective. In the absence of an effective election, the Participant’s
Account (to the extent the Plan does not require Deferrals to be allocated to
the Share Unit Account) shall be deemed invested in the default fund specified
for the Johnson Controls Inc. Savings and Investment (401k) Plan.

 

 

On each Valuation Date, the Administrator or its designee shall credit the
deemed investment experience with respect to the selected (or required)
Investment Options to each Participant’s Account. Notwithstanding anything
herein to the contrary, the Company retains the right to allocate actual
amounts hereunder without regard to a Participant’s request.

     Section 5.2. Allocations to Investment Options.

     (a) Incentive Deferrals. Incentive Deferrals will be deemed invested in
an Investment Option as of the date on which the Deferrals would have otherwise
been paid to the Participant.

     (b) Option Deferrals. An Option Deferral will be credited to a
Participant’s Share Unit Account as of the date of exercise.

     (c) Restricted Stock Deferrals. A Restricted Stock Deferral will be
credited to a Participant’s Share Unit Account as of the date the Participant
would have otherwise been issued shares of restricted stock.

     (d) Dividends Deferrals. Whenever the Company declares a dividend on its
Shares, in cash or in property, at a time when a Participant is deemed to have
made a Dividend Deferral election hereunder, a dividend award shall be made to
all such Participants as of the date the dividend is paid or distributed. The
dividend award for a Participant shall be determined by multiplying the number
of restricted shares held by such Participant on the date the dividend is
declared by the amount or Fair Market Value of the dividend paid or distributed
on one Share. All such dividend awards shall be credited to a Participant’s
Share Unit Account as of the date of the dividend payment or distribution.

     Section 5.3. Securities Law Restrictions. Notwithstanding anything to the contrary herein, all elections under Article
5 or 6 by a Participant who is subject to Section 16 of the Exchange Act are
subject to review by the Administrator prior to implementation. In accordance
with Section 9.2, the Administrator may restrict additional transactions,
rescind transactions, or impose other rules and procedures, to the extent
deemed desirable by the Administrator in order to comply with the Exchange Act,
including, without limitation, application of the review and approval
provisions of this Section 5.3 to Participants who are not subject to Section
16 of the Exchange Act.

     Section 5.4. Accounts are For Record Keeping Purposes Only. Plan Accounts and
the record keeping procedures described herein serve solely as a device for
determining the amount of benefits accumulated by a Participant under the Plan,
and shall not constitute or imply an obligation on the part of the Company or
any subsidiary to fund such benefits. In any event, the Company or a
subsidiary may, in its discretion, set aside assets equal to part or all of
such Account balances and invest such assets in Company stock, life insurance
or any other investment deemed appropriate. Any such assets, including Company
stock, shall be and remain the sole property of the employer that set aside
such assets, and a Participant shall have no proprietary rights of any nature
whatsoever with respect to such assets.

 

 

ARTICLE 6.

DISTRIBUTION OF ACCOUNTS

     Section 6.1. Distribution Election.

     (a) General. Subject to the provisions of subsections (b) and (c), a
Participant, at the time he commences participation in the Plan, shall make a
distribution election with respect to each of the following types of deferrals:

(1) Deferrals under the Johnson Controls, Inc.
Executive Incentive Compensation Plan, including
interest, earnings or losses thereon.

(2) Deferrals under the Johnson Controls, Inc. Long
Term Performance Plan, including interest, earnings or
losses thereon.

(3) Deferrals under the Johnson Controls, Inc. 1992
Stock Option Plan or 2002 Stock Option Plan, including
dividends, interest, earnings or losses thereon.

(4) Deferrals under the Johnson Controls, Inc.
Restricted Stock Plan, plus interest, earnings or
losses thereon.

     Such election shall be made in such form and manner and within such time
periods as the Administrator may prescribe. The election shall specify whether
distributions shall be made in a
single lump sum or from two (2) to ten (10) annual installments. No
election shall be made with respect to Dividend Deferrals, which are
automatically paid in a lump sum.

     (b) Form and Timing of Election. A distribution election shall be
effective only when it is received and approved by the Administrator, and shall
remain in effect until modified by the Participant. A Participant may from time
to time modify his distribution election by completing a revised distribution
election in such form and manner and within such time periods as the
Administrator may prescribe. The Administrator may refuse to honor a
distribution election that is not completed in the manner and in such time as
is prescribed by the Administrator. If no valid election is in effect,
distributions shall be made in ten (10) annual installments.

     (c) Initial Distribution Elections. Notwithstanding the foregoing, a
Participant who is employed by the Company or its subsidiaries when the Company
provides the distribution election with respect to each type of deferral after
July 1, 2003, may make elections as described above, and such elections shall
become immediately effective on the date received by the Company, provided the
election is received by the Company within thirty (30) days after the election
is made available to currently employed Participants. Any change in such
election shall be governed by the provisions of subsection (b).

 

 

     Section 6.2. Time of Distribution.

     (a) Termination of Employment. Except as provided in subsection (c), upon
termination of a Participant’s employment with the Company or subsidiary for
any reason, the Participant, or his Beneficiary in the event of his death,
shall be entitled to payment of the amount accumulated in such Participant’s
Account.

     (b) Certain Transfers of Employment. If directed by the Administrator, a
Participant whose employment is transferred to a corporation or other entity
(the “Transferee Employer”) that is not the Company or a subsidiary, but in
which the Company or a subsidiary holds an ownership interest, then until the
earliest to occur of (1) the date on which the Participant ceases to be
employed by such Transferee Employer, (2) the date on which the Company or a
subsidiary no longer holds an ownership interest in the Transferee Employer, or
(3) such other date determined by the Administrator, the Participant shall be
treated as if he or she were still actively employed by the Company or a
subsidiary. The foregoing rule shall apply only for the purpose of determining
whether the Participant has terminated employment for purposes of the
distribution provisions of this Article 6; it shall not apply, and the
Participant shall not be entitled to make additional Deferrals, with respect to
remuneration attributable to services rendered with the Transferee Employer.
The Administrator may promulgate such additional rules as may be necessary or
desirable in connection with any such transfer of employment.

     (c) Payment of Dividend Deferrals. Notwithstanding anything herein to the
contrary, the portion of the Participant’s Share Unit Account that is related
to Dividend Deferrals shall be paid to the Participant at the time the shares
of restricted stock to which such deferrals relate are no longer subject to a
period of restriction.

     Section 6.3. Manner of Distribution. The Participant’s Account shall be paid
in cash in the following manner:

     (a) If payment is to be made in a lump sum, payment shall be made in the
first calendar quarter of the year following the year in which the date of
termination of employment occurs (or on such earlier date after the
Participant’s termination of employment as is approved by the Committee with
respect to Participants who are subject to Section 16(b) of the Exchange Act,
or approved by the Administrator with respect to all other Participants), and
shall be in an amount equal to the balance of the Participant’s Account as of
the Valuation Date immediately preceding the distribution date.
Notwithstanding the foregoing, the portion of the Participant’s Share Unit
Account related to Dividend Deferrals shall be paid as provided in Section
6.2(c).

     (b) If payment is to be made in annual installments, the first annual
payment shall be made in the first calendar quarter of the year following the
year in which the date of termination of employment occurs (or on such earlier
date after the Participant’s termination of employment as is approved by the
Committee with respect to Participants who are subject to Section 16(b) of the
Exchange Act, or approved by the Administrator with respect to all other
Participants), and shall be in an amount equal to the value of 1/10th (or
1/9th, 1/8th, 1/7th, etc. depending on the number of installments elected) of
the balance of the Participant’s Account as of the Valuation Date immediately
preceding the distribution date. A second annual payment shall be made in the
first calendar quarter of the second calendar year following the year during
which the Participant

 

 

terminated employment (or on such earlier date as is
approved by the Committee with respect to Participants who are subject to
Section 16(b) of the Exchange Act, or approved by the Administrator with
respect to all other Participants), and shall be in an amount equal to the
value of 1/9th (or 1/8th, 1/7th, 1/6th, etc. depending on the number of
installments elected) of the balance of the Participant’s Account as of the
Valuation Date immediately preceding the distribution date. 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
the Valuation Date preceding such final payment date. Notwithstanding the
foregoing provisions, if the balance of a Participant’s Account at any time is
less than $50,000 during the payout period, the remaining balance shall
immediately be paid in the form of a lump sum.

     (c) Notwithstanding the foregoing, if the distribution under this Section
6.3 is made within six (6) months after the Participant ceases to be subject to
Section 16(b) of the Exchange Act, then the distribution shall be delayed until
the date that is six (6) months plus one day after the date such Participant
ceases to be subject to Section 16(b), unless the distribution is approved in
advance by the Committee or the distribution will not result in any liability
to the Participant under Section 16(b).

     Section 6.4. Distribution of Remaining Account Following Participant’s Death.
Each Participant may designate a beneficiary in such form and manner and within
such time periods as the Administrator 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 a lump
sum, unless the Committee (with respect to Participants who are subject to
Section 16(b) of the Exchange Act) or Administrator (with respect to all other
Participants)
determines that payments may continue in accordance with the distribution
election in effect at the time of the Participant’s death. A Participant can
change his beneficiary designation at any time, provided that each beneficiary
designation shall revoke the most recent designation, and the last designation
received by the Company (or its delegee) 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
distributions 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 in effect at
the time of the Participant’s death, in the event the Participant’s designated
Beneficiary does not survive the Participant, or in the event that the
beneficiary designation provides that the Beneficiary must be living at the
time of each distribution and such designated Beneficiary does not survive to a
distribution date, 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 Administrator receives notice of such divorce or legal
separation prior to payment.

     Section 6.5. Distribution in Event of Financial Emergency. If requested by a
Participant while in the employ of the Company or a subsidiary and if the
Administrator determines that a financial emergency has occurred in the
financial affairs of the Participant, all or part of the Participant’s Account
(other than any non-vested portion) may be paid out to the Participant at the
sole discretion of the Administrator in a cash lump sum or in such installment

 

 

payments as the Administrator may specify. The amount to be distributed to the
Participant shall only be such amount as is needed to alleviate the
Participant’s financial hardship.

     Section 6.6. Tax Withholding. The Company shall have the right to deduct from
any deferral or payment of cash made hereunder, or from any other amount due a
Participant, the amount of cash and/or Fair Market Value of Shares sufficient
to satisfy the Company’s or subsidiary’s foreign, federal, state or local
income tax withholding obligations with respect to such deferral (or vesting
thereof) or payment.

     Section 6.7. Offset. The Company or subsidiary 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 7.

RULES WITH RESPECT TO SHARE UNITS

     Section 7.1. Valuation of Share Unit Account.
When any amounts are to be allocated to a Share Unit Account (whether in the
form of Deferrals or amounts that are deemed re-allocated from another
Investment Option), such amount shall be converted to whole and fractional
Share Units, with fractional units calculated to three decimal places, by
dividing the amount to be allocated by the Fair Market Value of a Share on the
effective date of such allocation. 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 be
converted into additional Share Units as provided above using the Fair Market
Value of a Share on the date the dividend is paid or distributed. Any other
provision of this Plan to the contrary notwithstanding, if a dividend is paid
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 7.2. 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 7.3. 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 8.

SPECIAL RULES APPLICABLE IN THE EVENT OF A CHANGE OF CONTROL OF THE COMPANY

     Section 8.1. Acceleration of Payment of Accounts. Notwithstanding any other
provision of this Plan, within 30 days after a Change of Control (as defined in
Section 8.2), 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 (the
“Composite Tape”) during the sixty-day period prior to the date of the Change
of Control of the Company and (b) if the Change of Control of the Company is
the result of a transaction or series of transactions described in Section
8.2(a) or (c), the highest price per Share of the Company paid in such
transaction or series of transactions.

     Section 8.2. 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:

(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

     (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.

     Section 8.3. Maximum Payment Limitation.

     (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 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 9.

GENERAL PROVISIONS

     Section 9.1. Administration.

     (a) General. The Committee shall have overall authority with respect to
administration of the Plan; provided that the Administrator shall have
responsibility for the general operation and daily administration of the Plan
as specified herein. 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 all determinations affecting Participants who are subject to
Section 16 of the Exchange Act shall be made by the full Board, and all
determinations affecting other Participants shall be made by the Board or an
officer of the Company or other committee appointed by the Board (with the
assistance of the Administrator). The Committee or Administrator may, in its
discretion, delegate any or all of its authority and responsibility; provided
that the Committee shall not delegate authority and responsibility with respect
to non-

 

 

ministerial functions that relate to the participation by Participants
who are subject to Section 16 of the Exchange Act at the time any such
delegated authority or responsibility is exercised. To the extent of any such
delegation, any references herein to the Committee or Administrator, as
applicable, shall be deemed references to such delegee. Interpretation of the
Plan shall be within the sole discretion of the Committee or the Administrator
with respect to their respective duties hereunder. If any delegee of the
Committee or the Administrator shall also be a Participant or Beneficiary, any
determinations affecting the delegee’s participation in the Plan shall be made
by the Committee or Administrator, as applicable.

     (b) Authority and Responsibility. In addition to the authority
specifically provided herein, the Committee and Administrator shall have the
discretionary authority to take any action or make any determination it deems
necessary for the proper administration of its respective 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; (d) make appropriate
determinations, including factual determinations, and calculations; and (e)
prepare all reports required by law. Any action taken by the Committee shall
be controlling over any contrary action of the Administrator. The Committee or
Administrator may delegate its ministerial duties to a third party and to the
extent such delegation, references to the Committee or Administrator herein
shall mean such delegee.

     (c) Decisions Binding. The Committee’s and Administrator’s determination
shall be final and binding on all parties with an interest hereunder, unless
determined to be arbitrary and capricious.

     (d) 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 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. The
Administrator’s determinations shall be made in accordance with such procedures
it establishes.

     (e) Indemnification. Service on the Committee or as an Administrator
shall constitute service as a director or officer of the Company so that the
Committee and Administrator members shall be entitled to indemnification,
limitation of liability and reimbursement of expenses with respect to their
Committee or Administrator services to the same extent that they are entitled
under the Company’s By-laws and Wisconsin law for their services as directors
or officers of the Company.

     Section 9.2. Restrictions to Comply with Applicable Law. Notwithstanding any
other provision of the Plan, 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 and
Administrator 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.

     Section 9.3. Claims Procedures.

     (a) Initial Claim. If a Participant 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 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 9.4. Participant Rights Unsecured.

     (a) 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. The right of a
Participant or Beneficiary to the payment of benefits under this Plan shall not
be assigned, encumbered, or transferred, except as permitted under Section 6.4.
The rights of a Participant hereunder are exercisable during the Participant’s
lifetime only by him or his guardian or legal representative.

     (b) Contractual Obligation. The Company or a subsidiary 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 or a
subsidiary 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 be construed to
create a trust of any kind, or a fiduciary relationship between the Company or
a subsidiary and any Participant or Beneficiary, or any other person.

     Section 9.5. Amendment or Termination of Plan.

     (a) 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) without a
Participant’s consent except as otherwise specifically provided herein. In
addition, the Administrator may at any time amend the Plan to make
administrative changes and changes necessary to comply with applicable law.

     (b) Termination; Change of Control. Notwithstanding the foregoing, the
Board may make the following amendments to the Plan without the consent of an
individual with an interest hereunder:

(1) 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.

(2) The Board may amend the provisions of Article 8
prior to the effective date of a Change of Control.

 

 

     Section 9.6. Administrative Expenses. Costs of establishing and administering
the Plan will be paid by the Company and participating subsidiaries.

     Section 9.7. Successors and Assigns. This Plan shall be binding upon and inure
to the benefit of the Company, its successors and assigns and the Participants
and their heirs, executors, administrators, and legal representatives.

     Section 9.8. Governing Law; Limitation on Actions; Dispute Resolution.

     (a) 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 (without reference to conflict of law principles
thereof) to the extent such laws are not preempted by federal law.

     (b) Limitation on Actions. Any action or other legal proceeding with
respect to the Plan may be brought only after the claims and appeals procedures
of Section 9.3 are exhausted and only within period ending on the earlier of
(i) one year after the date claimant receives notice or deemed notice of a
denial upon appeal under Section 9.3(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 subsection (c).

     (c) Arbitration.

(1) 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 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.

(2) 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.

(3) 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 complaint
resolution procedure has been completed.

(4) 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.

(5) 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.

 

 

(6) 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.

(7) 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.

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