Document:

exv10w1

 

Exhibit 10.1

JOHNSON CONTROLS, INC.

12,815,809 Shares

Common Stock

JOHNSON CONTROLS, INC. 2000 STOCK OPTION PLAN

January 1, 2000

(As Amended through March 21, 2006)

     This document sets forth information relating to participation in the Johnson Controls, Inc.
2000 Stock Option Plan (the “Plan”) and to shares of our common stock that we are offering under
the Plan. Each share of our common stock issued under the Plans will include one right to purchase
our common stock. In this document, unless the context otherwise requires, all references to our
common stock includes the accompanying rights. We are offering participation in the Plan to our
officers and other key employees and those of our subsidiaries.

     This document will be accompanied or preceded by our latest Annual Report to Shareholders. If
you have previously received a copy of our Annual Report to Shareholders but wish to have another
copy, then we will furnish an additional copy without charge upon written or oral request to us.

     Neither the Securities and Exchange Commission nor any state securities commission has
approved or disapproved of the securities offered pursuant to the Plan or determined if this
prospectus is truthful and complete. Any representation to the contrary is a criminal offense.

     You should rely only on the information contained in this document or to which we have
referred you. We have not authorized anyone to provide you with information that is different.
The information in this document may only be accurate on the date of the document. This document
may only be used where it is legal to sell these securities.

          This document may not be used for resales of shares acquired under the Plan.

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	Caption	 	Page
	THE COMPANY
	 	 	1	 
	 
	 	 	 	 
	THE PLAN
	 	 	1	 
	Establishment
	 	 	1	 
	Purpose
	 	 	1	 
	Effective Date of the Plan
	 	 	1	 
	Stock Subject to the Plan
	 	 	1	 
	Administration
	 	 	2	 
	Eligibility
	 	 	2	 
	Rights of Employees
	 	 	2	 
	Option Agreements
	 	 	3	 
	Option Price
	 	 	3	 
	Option Period
	 	 	3	 
	Maximum Value of Incentive Stock Options
	 	 	3	 
	Transferability of Option or Stock Appreciation Right
	 	 	3	 
	Exercise of Option
	 	 	4	 
	Withholding
	 	 	4	 
	Termination of Employment
	 	 	4	 
	Stock Appreciation Rights
	 	 	5	 
	Adjustment Provisions
	 	 	6	 
	Termination and Amendment of Plan
	 	 	6	 
	Rights of a Shareholder
	 	 	6	 
	Change of Control
	 	 	6	 
	Termination of Awards
	 	 	7	 
	Governing Law and Arbitration
	 	 	7	 
	Unfunded Plan
	 	 	8	 
	Repricing
	 	 	8	 
	Termination for Cause or Inimical Conduct
	 	 	8	 
	Offset
	 	 	9	 
	Severability
	 	 	9	 
	 
	 	 	 	 
	FEDERAL INCOME TAX CONSIDERATIONS
	 	 	10	 
	Incentive Stock Options
	 	 	10	 
	Nonqualified Options
	 	 	10	 
	Stock Appreciation Rights
	 	 	11	 
	Internal Revenue Code Section 162(m) and Section 280G
	 	 	11	 

 

 

THE COMPANY

          We are a global market leader in automotive systems and facility management and control. In
the automotive market, we are a major supplier of seating and interior systems, and batteries. For
nonresidential facilities, we provide building control systems and services, energy management and
integrated facility management. Our principal executive offices are located at 5757 North Green
Bay Avenue, P.O. Box 591, Milwaukee, Wisconsin 53201. Our telephone number is (414) 524-1200.

     1. Establishment. JOHNSON CONTROLS, INC. (the “Company”) hereby establishes a stock option
plan for certain officers and other key employees, as described herein, which shall be known as the
JOHNSON CONTROLS, INC. 2000 STOCK OPTION PLAN (the “Plan”). It is intended that certain of the
stock options issued pursuant to the Plan may constitute incentive stock options within the meaning
of Section 422 of the Internal Revenue Code (“Incentive Stock Options”) and the remainder of the
options issued pursuant to the Plan shall constitute nonqualified options. Incentive Stock Options
and nonqualified stock options are hereinafter jointly referred to as “Options.” The Committee may
also award stock appreciation rights apart from Options issued pursuant to the Plan.

     2. Purpose. The purpose of the Plan is to induce certain officers and other key employees to
remain in the employ of the Company or its subsidiaries and to encourage such employees to secure
or increase on reasonable terms their stock ownership in the Company. The Board of Directors of
the Company (the “Board of Directors”) believes that the Plan will promote continuity of management
and increased incentive and personal interest in the welfare of the Company by those who are
responsible for shaping and carrying out the long-range plans of the Company and securing its
continued growth and financial success.

     3. Effective Date of the Plan. The Plan was adopted by the Board of Directors on November 17,
1999, and, subject to the approval of the Plan by the shareholders of the Company within twelve
months of this date, the effective date of the Plan will be January 1, 2000. Any and all Options
granted prior to shareholder approval shall be subject to such approval.

     4. Stock Subject to the Plan. Subject to adjustment in accordance with the provisions of this
paragraph and paragraph 17, the total number of shares of the common stock of the Company (“Common
Stock”) available for awards during the term of the Plan shall be an amount calculated as follows:
(a) fifteen percent (15%) of the number of shares of Common Stock outstanding upon the effective
date of the Plan minus (b) the number of shares of Common Stock subject to awards made under any
prior stock option plan of the Company (a “Prior Plan”) and outstanding upon the effective date of
the Plan (“Prior Plan Awards”). Shares of Common Stock to be delivered upon exercise of Options or
settlement of stock appreciation rights under the Plan shall be made available from presently
authorized but unissued Common Stock or authorized and issued shares of Common Stock reacquired and
held as treasury shares, or a combination thereof. If any Option or stock appreciation right shall
be canceled, expire or terminate without having been exercised in full, or to the extent a stock
appreciation right is settled in cash, the shares of Common Stock allocable to the unexercised,
canceled, forfeited portion of such Option or stock appreciation right, or portion of such stock
appreciation right which is settled in cash, shall again be available for the purpose of the Plan.
The surrender of any Options (and the surrender of any related stock appreciation rights granted
under paragraph 16) in connection with the receipt of stock appreciation rights as provided in
paragraph 16 shall, as to such Options, have the same effect under this paragraph 4 as the
cancellation or termination of such Options without having been exercised. If any stock
appreciation rights are granted under the Plan (including any grant in connection with the
surrender of outstanding Options), as provided in paragraph 16, and shares of Common Stock may be
issuable in connection with such stock appreciation rights, then the grant of such stock
appreciation rights shall be deemed to have the same effect under this paragraph 4 as the grant of
Options; provided, however, if any such stock appreciation rights shall be canceled, expire or
terminate without having been exercised in full, or to the extent a stock appreciation right is
settled in cash, the shares of Common Stock allocable to the unexercised, canceled, forfeited
portion of such stock appreciation right, or portion of such stock appreciation right which is
settled in cash, shall again be available for the purpose of the Plan. If the exercise price of
any Option granted under the Plan is satisfied by tendering shares of Common Stock to the Company
(by either actual delivery or by attestation), only the number of shares of Common Stock issued net
of the shares of Common Stock tendered shall be deemed delivered for purposes of determining the
maximum number of shares of Common Stock available for delivery under the Plan. If any Participant
satisfies the Company’s withholding tax requirements upon the exercise of an Option by properly
electing to have the Company withhold shares of Common Stock, then the shares of

 

 

Common Stock so withheld shall again be available for the purpose of the Plan, except that
such shares shall not be available for the granting of Incentive Stock Options. After the
effective date of the Plan, if any event occurs as a result of which shares of Common Stock subject
to Prior Plan Awards would again become available for the purpose of the relevant Prior Plan if the
Prior Plan were still in effect and the Company could grant awards under the Prior Plan, then such
shares shall be available for the purpose of the Plan rather than such Prior Plan (subject to any
applicable limitation on the use of such shares for the granting of Incentive Stock Options) and
thereby increase the shares available under the Plan as determined under the first sentence of this
paragraph.

     5. Administration.

	 	(a)	 	The Plan shall be administered by the Compensation Committee (the “Committee”) consisting
of not less than three members of the Board of Directors appointed from time to time by the
Board of Directors. No member of the Committee shall be, nor at any time during the
preceding one-year period have been, eligible to receive stock, stock options or stock
appreciation rights of the Company or of its subsidiaries pursuant to the Plan or any other
plan of the Company or its subsidiaries, other than a plan for directors of the Company who
are not officers or employees of the Company which provides for automatic grants without
exercise of discretion by any member of the Board of Directors, or by any officer or
employee of the Company.
	 
	 	(b)	 	Subject to the express provisions of the Plan, the Committee shall have authority to
establish such rules and regulations as it deems necessary or advisable for the proper
administration of the Plan, and in its discretion, to determine the individuals (the
“Participants”) to whom, and the time or times at which, Options and stock appreciation
rights shall be granted, the type of Options, the periods of Options or stock appreciation
rights, limitations on exercise of Options or stock appreciation rights, and the number of shares to be subject to each Option or award of stock appreciation rights. In making such
determinations, the Committee may take into account the nature of the services rendered by
the respective employees, their present and potential contributions to the success of the
Company or its subsidiaries, and such other factors as the Committee, in its discretion,
shall deem relevant.
	 
	 	(c)	 	Subject to the express provisions of the Plan, the Committee shall also have complete
authority to interpret the Plan, to prescribe, amend, and rescind rules and regulations
relating to it, to determine the terms and provisions of the respective Option Agreements
(which need not be identical) and to make all other determinations necessary or advisable
for the administration of the Plan. The Committee’s determinations on the matters referred
to in this paragraph 5 shall be conclusive and binding upon all parties.
	 
	 	(d)	 	Neither the Committee nor any member thereof shall be liable for any act, omission,
interpretation, construction or determination made in connection with the Plan in good
faith, and the members of the Committee shall be entitled to indemnification and
reimbursement by the Company in respect of any claim, loss, damage or expense (including
attorneys fees) arising therefrom to the full extent permitted by law and under any
directors and officers liability insurance that may be in effect from time to time.
	 
	 	(e)	 	A majority of the Committee shall constitute a quorum, and the acts of a majority of the
members present at any meeting at which a quorum is present, or acts approved in writing by
a majority of the Committee without a meeting, shall be the acts of the Committee.

     6. Eligibility. Options and stock appreciation rights may be granted to officers and other
key employees of the Company and of any of its present and future subsidiaries. The maximum number
of shares of Common Stock covered by Options which may be granted to any Participant within any two
consecutive calendar year periods shall not exceed 500,000 shares in the aggregate. No Option or
stock appreciation right shall be granted to any person who owns, directly or indirectly, shares of
stock possessing more than 10% of the total combined voting power of all classes of stock of the
Company. A director of the Company or of a subsidiary who is not also an employee of the Company
or of a subsidiary will not be eligible to receive any Option or stock appreciation right
hereunder.

     7. Rights of Employees. Nothing in this Plan or in any Option or stock appreciation right
shall interfere with or limit in any way the right of the Company and any of its subsidiaries to
terminate any Participant’s or employee’s employment at any time, nor confer upon any Participant
or employee any right to continue in the employ of the Company and its subsidiaries. No employee
shall have any right to be granted an award under this Plan, even if an

 

 

award was granted to such employee at any prior time, or if a similarly-situated employee is
or was granted an award under similar circumstances.

     8. Option Agreements. All Options and stock appreciation rights granted under the Plan shall
be evidenced by written agreements (an “Option Agreement”) in such form or forms as the Committee
shall determine.

     9. Option Price. The per share Option price for Options and the per share grant price for
stock appreciation rights granted under paragraph 16, as determined by the Committee, shall be an
amount not less than 100% of the fair market value of the stock on the date such Options or stock
appreciation rights are granted (or, if the Committee so determines, in the case of any stock
appreciation right granted under paragraph 16 upon the surrender of any outstanding Option, on the
date of grant of such Option). The fair market value of a share of stock on any date shall be the
average of the highest and lowest market prices of sales of the Common Stock on that date, or on
the next preceding trading day if such date was not a trading day as reported on the New York Stock
Exchange or as otherwise determined by the Committee.

     10. Option Period. The term of each Option and stock appreciation right shall be as
determined by the Committee but in no event shall the term of an Option or stock appreciation right
exceed a period of ten (10) years from the date of its grant. Each Option and stock appreciation
right granted hereunder may granted at any time on or after the effective date of the Plan, and
prior to its termination, provided that no Option or stock appreciation right may be granted later
than ten years after the date this Plan is adopted. The Committee shall determine whether any
Option or stock appreciation right shall become exercisable in cumulative or non-cumulative
installments or in full at any time. An exercisable Stock Option or stock appreciation right, or
portion thereof, may be exercised in whole or in part only with respect to whole shares of Common
Stock.

     11. Maximum Value of Incentive Stock Options. The aggregate fair market value (as defined in
paragraph 9) of the Common Stock for which any Incentive Stock Options are exercisable for the
first time by a Participant during any calendar year under the Plan or any other plan of the
Company or any subsidiary shall not exceed $100,000. To the extent the fair market value of the
shares of Common Stock attributable to Incentive Stock Options first exercisable in any calendar
year exceeds $100,000, the excess portion of the Incentive Stock Options shall be treated as
nonqualified options.

     12. Transferability of Option or Stock Appreciation Right. No Option or stock appreciation
right granted hereunder shall be transferable other than options specifically designated by the
Compensation Committee as such and meeting the following requirements of transfer:

	 	(a)	 	by will or by the laws of descent and distribution; or
	 
	 	(b)	 	in the case of a nonqualified option:

(i) pursuant to a “Qualified Domestic Relations Order” as defined in Section 414(p) of the
Internal Revenue Code; or

(ii) to (A) his or her spouse, children or grandchildren (“Immediate Family Members”), (B) a
partnership in which the only partners are the Participant’s Immediate Family Members, or (C)
a trust or trusts established solely for the benefit of one or more of the Participant’s
Immediate Family Members (collectively, the Permitted Transferees), provided that there may
be no consideration for any such transfer by a Participant.

          Following transfer (if applicable), such Options and stock appreciation rights shall continue
to be subject to the same terms and conditions as were applicable immediately prior to transfer,
provided that such Options and stock appreciation rights may be exercised during the life of the
Participant only by the Participant or, if applicable, by the alternate payee designated under a
Qualified Domestic Relations Order or the Participant’s Permitted Transferees.

 

 

	 	13.	 	Exercise of Option. The Committee shall prescribe the manner in which a Participant
may exercise an Option which is not inconsistent with the provisions of this Plan.
However, no Option shall be exercisable, in whole or in part, for a period of at least six
months commencing on the date of grant, except as provided in paragraph 20 in the event of
a Change in Control. An Option may be exercised, subject to limitations on its exercise
contained in the Option Agreement and in this Plan, in full, at any time, or in part, from
time to time, only by (A) written notice of intent to exercise the Option with respect to a
specified number of shares, and (B) by payment in full to the Company at the time of
exercise of the Option, of the option price of the shares being purchased. Payment of the
Option price may be made (i) in cash, (ii) if permitted by the applicable Option Agreement,
by tendering of shares of Common Stock equivalent in fair market value (as defined in
paragraph 9), or (iii) if permitted by the applicable Option Agreement, partly in cash and
partly in shares of Common Stock. Common Stock may be tendered either by actual delivery
of shares of Common Stock or by attestation.

     14. Withholding. If permitted by the applicable Option Agreement, a Participant may be
permitted to satisfy the Company’s withholding tax requirements by electing (i) to have the Company
withhold shares of Common Stock of the Company, or (ii) to deliver to the Company shares of Common
Stock of the Company having a fair market value on the date income is recognized on the exercise of
a nonqualified option equal to the minimum amount required to be withheld. The election shall be
made in writing and according to such rules and in such form as the Committee shall determine.

     Notwithstanding the foregoing, the election and satisfaction of any withholding requirement
through the withholding of Common Stock or the tender of shares of Company Stock may be made only
at such times as are permitted, without incurring liabilities, by Rule 16b-3 of the Securities
Exchange Act of 1934, as amended, or such other securities laws, rules or regulations as may be
applicable.

     15. Termination of Employment.

	 	(a)	 	In the event a Participant’s employment with the Company or any of its subsidiaries shall
be terminated for any reason, except early or normal retirement, death or total and
permanent disability, a Participant may exercise his or her Options and stock appreciation
rights (to the extent vested and exercisable as of the date of the Participant’s termination
of employment) for a period of thirty (30) days after the date of the Participant’s
termination of employment, unless such Option or stock appreciation right expires earlier
under the terms of the award agreement. Thereafter, all rights to exercise an Option or
stock appreciation right shall terminate.
	 
	 	(b)	 	If the Participant should die while employed by the Company or any subsidiary prior to
the expiration of the term of the Option or stock appreciation right, the Option or stock
appreciation right shall be exercisable immediately to the extent it would have been
exercisable had the Participant remained employed for twelve months after the date of death
and may be exercised by the person to whom it is transferred by will or by the applicable
laws of descent and distribution by giving notice as provided in paragraph 13, at any time
within twelve months after the date of death unless such Option or stock appreciation right
expires earlier under the terms of the Option Agreement. For purposes of this paragraph,
the six-month limitation imposed pursuant to paragraph 13 shall not be applicable.
	 
	 	(c)	 	In the event of a Participant’s termination of employment with the Company due to early
or normal retirement, or due to total and permanent disability, prior to the expiration of
the term of an Option or stock appreciation right, the Option or stock appreciation right:
(i) shall be exercisable in full without regard to any vesting requirements; provided that
an Option or stock appreciation right of a Participant who retires shall be exercisable in
full only if the Participant retires on or after the last day of the calendar year following
the calendar year in which such Option or stock appreciation right was granted, unless the
Committee determines otherwise, and (ii) may be exercised by the Participant at any time
within thirty-six months after the date of such early or normal retirement or termination
due to total and permanent disability, as the case may be, unless such Option or stock
appreciation right expires earlier under the terms of the award agreement. Provided,
however, that for certain participants who are officers of the Company or who are selected
by the Compensation Committee of the Board, nonqualified stock options may be exercised by
the Participant for up to ten (10) years after the date of such early or normal retirement,
or for five (5) years

 

 

	 	 	 	after the date of such total and permanent disability, as the case may be, in the event of
termination of employment with the Company due to early or normal retirement, or due to total
and permanent disability, prior to the expiration of the term of the Option or stock
appreciation right, unless such Option or stock appreciation right expires earlier under the
terms of the Option Agreement. For purposes hereof, a Participant’s employment shall be
deemed to have terminated due to (a) early or normal retirement if such Participant is then
eligible to receive immediate early or normal retirement benefits under the provisions of any
of the Company’s or its subsidiaries defined benefit pension plans; or, in the absence of a
defined benefit plan, provided such Participant retires with ten years of service and is at
least 55 years old or retires with five years of service and is at least 65 years old and (b)
total and permanent disability if he is permanently disabled within the meaning of Section
22(e)(3) of the Internal Revenue Code, as in effect from time to time.
	 
	 	 	 	For purposes of this Plan: (a) a transfer of an employee from the Company to a 50% or more
owned subsidiary, partnership, joint venture or other affiliate (whether or not incorporated)
or vice versa, or from one subsidiary, partnership, joint venture or other affiliate to
another or (b) a leave of absence duly authorized in writing by the Company, provided the
employee’s right to re-employment is guaranteed either by statute or by contract, shall not
be deemed a termination of employment under the Plan, notwithstanding the foregoing, from and
after a Change of Control, as defined in paragraph 20, Options and stock appreciation rights
shall continue to be exercisable for three months after a Participant’s termination of
employment.

     16. Stock Appreciation Rights. Stock appreciation rights may be granted separate from any
Option granted under the Plan to any Participant. Such stock appreciation rights may be exercised
by a Participant by written notice of intent to exercise the stock appreciation rights delivered to
the Committee, which notice shall state the number of shares of stock in respect of which the stock
appreciation rights are being exercised. Upon such exercise, the Participant shall be entitled to
receive the economic value of such stock appreciation rights determined in the manner described in
subparagraph (b) of this paragraph 16 and in the form prescribed in subparagraph (c) of this
paragraph 16.

     Stock appreciation rights shall be subject to terms and conditions not inconsistent with other
provisions of the Plan as shall be determined by the Committee, which shall include the following:

	 	(a)	 	Stock appreciation rights granted in connection with the surrender of an Option shall be
exercisable or transferable at such time or times and only to the extent that the Option to
which they related was exercisable or transferable. The Committee shall have complete
authority to determine the terms and conditions applicable to other stock appreciation
rights, including the periods applicable to such rights, limitations on exercise and the
number of shares of stock in respect to which such stock appreciation rights are
exercisable.
	 
	 	(b)	 	Upon the exercise of stock appreciation rights, a Participant shall be entitled to
receive the economic value thereof, which value shall be equal to the excess of the fair
market value of one share of Common Stock on the date of exercise over the grant price per
share, multiplied by the number of shares in respect of which the stock appreciation rights
shall have been exercised. Stock appreciation rights which have been so exercised shall no
longer be exercisable in respect of such number of shares.
	 
	 	(c)	 	The Committee shall have the sole discretion either (i) to determine the form in which
payment of such economic value will be made (i.e., cash, stock, or any combination thereof)
or (ii) to consent to or disapprove the election of the Participant to receive cash in full
or partial payment of such economic value.
	 
	 	(d)	 	The exercise of stock appreciation rights by a Participant pursuant to the Plan may be
made only at such times as are permitted by Rule 16b-3 of the Securities Exchange Act of
1934, without liabilities, or such other securities laws or rules as may be applicable.
	 
	 	(e)	 	Stock appreciation rights shall be exercisable only when the fair market value of the
Common Stock to which the stock appreciation rights relate exceeds the grant price of such
stock appreciation rights.

 

 

     17. Adjustment Provisions. In the event of any change in the shares of the Common Stock of
the Company by reason of a declaration of a stock dividend (other than a stock dividend declared in
lieu of an ordinary cash dividend), spin-off, merger, consolidation recapitalization, or split-up,
combination or exchange of shares, or otherwise, the aggregate number and class of shares available
under this Plan, the number and class of shares subject to each outstanding Option and stock
appreciation right, the option price for shares subject to each outstanding Option, and the option
price or grant price and economic value of any stock appreciation rights shall be appropriately
adjusted by the Committee, whose determination shall be conclusive.

     18. Termination and Amendment of Plan. The Plan shall terminate on December 31, 2009, unless
sooner terminated as hereinafter provided. The Board of Directors may at any time terminate the
Plan, or amend the Plan as it shall deem advisable including (without limiting the generality of
the foregoing) any amendments deemed by the Board of Directors to be necessary or advisable to
assure conformity of the Plan and any Incentive Stock Options granted thereunder to the
requirements of Section 422 of the Internal Revenue Code as now or hereafter in effect and to
assure conformity with any requirements of other state and federal laws or regulations now or
hereafter in effect; provided, however, that the Board of Directors may not, without further
approval by the shareholders of the Company, amend paragraph 24 or make any modifications to the
Plan which, by applicable law, require such approval. No termination or amendment of the Plan may,
without the consent of the Participant to whom any Option or stock appreciation rights shall have
been granted, adversely affect the rights of such Participant under such Option or stock
appreciation rights. The Board of Directors may also, in its discretion, permit any Option or
stock appreciation right to be exercised prior to the earliest date fixed for exercise thereof
under the Option Agreement. Notwithstanding the foregoing, the Board specifically reserves the
right to amend the provisions of Sections 20 and 21 prior to the effective date of a Change of
Control without the need to obtain the consent of the Participants or any other individual with a
right to an award granted hereunder.

     19. Rights of a Shareholder. A Participant shall have no rights as a shareholder with respect
to shares covered by his or her Option until the date of issuance of the stock to the participant
and only after such shares are fully paid or with respect to stock appreciation rights. No
adjustment will be made for dividends or other rights for which the record date is prior to the
date such stock is issued.

     20. Change of Control. Notwithstanding the foregoing, upon Change of Control, all previously
granted Options and stock appreciation rights shall immediately become exercisable to the full
extent of the original grant. For purposes of this Plan, a “Change of Control” means any of the
following events: (i) the acquisition, other than from the Company, by any individual, entity or
group (within the meaning of Section 13(d) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended from time to time) (the “Exchange Act”) of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 20% or more of either (A) the then outstanding shares
of common stock of the Company (the “Outstanding Company Common Stock”) or (B) the combined voting
power of the then outstanding voting securities of the Company entitled to vote generally in the
election of directors (the “Company Voting Securities”), provided, however, that any acquisition by
(x) the Company of any of its subsidiaries, or any employee benefit plan (or related trust)
sponsored or maintained by the Company or any of its subsidiaries or (y) any corporation with
respect to which, following such acquisition, more than 60% of respectively, the then outstanding
shares of common stock of such corporation and the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally in the election of directors is
then beneficially owned, directly or indirectly, by all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and
Company Voting Securities immediately prior to such acquisition in substantially the same
proportion as their ownership, immediately prior to such acquisition of the Outstanding Company
Common Stock and Company Voting Securities, as the case may be, shall not constitute a change in
control of the Company; or (ii) individuals who, as of September 28, 1994, constitute the Board of
Directors of the Company (the “Incumbent Board”) cease for any reason to constitute at least a
majority of the Board, provided that any individual becoming a director subsequent to September 28,
1994, whose election or nomination for election by the Company’s shareholders was approved by a
vote of at least a majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office is in connection with an actual or
threatened election contest relating to the election of the Directors of the Company (as such terms
are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act); or (iii) approval by
the shareholders of the Company of consummation of a reorganization, merger or consolidation (a
“Business Combination”), in each case, with respect to which all or substantially all of the of the
individuals and entities who

 

 

were the respective beneficial owners of the Outstanding Company Common Stock and Company
Voting Securities immediately prior to such Business Combination do not, following such Business
Combination, beneficially own, directly or indirectly, more than 60% of, respectively, the then
outstanding shares of common stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as the case may be, of the
corporations resulting from such Business Combination in substantially the same proportion as their
ownership immediately prior to such Business Combination or the Outstanding Company Common Stock
and Company Voting Securities, as the case may be; or (iv) (A) a complete liquidation or
dissolution of the company or a (B) sale or other disposition of all or substantially all of the
assets of the Company other than to a corporation with respect to which, following such sale or
disposition, more than 60% of, respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities entitled to vote generally in the
election of directors is then owned beneficially, directly or indirectly, by all or substantially
all of the individuals and entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Company Voting Securities immediately prior to such sale or
disposition in substantially the same proportion as their ownership of the Outstanding Company
Common Stock and Company Voting Securities, as the case may be, immediately prior to such sale or
disposition.

     21. Termination of Awards. Notwithstanding the foregoing, upon a Change in Control, the
Committee may in its discretion, commencing at the time of a Change in Control and continuing for a
period of sixty days thereafter, cancel each outstanding Option or stock appreciation right in
exchange for a cash payment to the holder thereof in an amount equal to the number of Options or
stock appreciation rights that have not been exercised multiplied by the excess of the fair market
value per Share on the date of the Change in Control (or, if the Change in Control is the result of
a transaction or a series of transactions described in paragraphs (i) or (ii) of the definition of
Change in Control and the Option or stock appreciation right is cancelled on the date of the Change
in Control, the highest price per Share paid in such transaction or series of transactions on the
date of the Change in Control) over the exercise price of the Option or the grant price of the
stock appreciation right, as the case may be.

     22. Governing Law and Arbitration. The Plan, and all awards hereunder, and all determinations
made and actions taken pursuant to the Plan, shall be governed by the internal laws of the State of
Wisconsin (without reference to conflict of law principles thereof) and construed in accordance
therewith, to the extent not otherwise governed by the laws of the United States or as otherwise
provided hereinafter. Notwithstanding anything to the contrary herein, if any individual brings a
claim that relates to benefits under this Plan, regardless of the basis of the claim (including but
not limited to wrongful discharge or Title VII discrimination), such claim shall be settled by
final binding arbitration in accordance with the rules of the American Arbitration Association
(“AAA”) and the following provisions, and judgment upon the award rendered by the arbitrator may be
entered in any court having jurisdiction thereof.

	 	(a)	 	Initiation of Action. Arbitration must be initiated by serving or mailing a
written notice of the complaint to the other party. Normally, such written notice should be
provided to the other party within one year (365 days) after the day the complaining party
first knew or should have known of the events giving rise to the complaint. However, this
time frame may be extended if the applicable statute of limitation provides for a longer
period of time. If the complaint is not properly submitted within the appropriate time
frame, all rights and claims that the complaining party has or may have against the other
party shall be waived and void. Any notice sent to the Company shall be delivered to:

	 	 	 
	 

	 	Office of General Counsel
	 

	 	Johnson Controls, Inc.
	 

	 	5757 North Green Bay Avenue
	 

	 	P.O. Box 591
	 

	 	Milwaukee, WI 53201-0591

	 	 	 	The notice must identify and describe the nature of all complaints asserted and the facts
upon which such complaints are based. Notice will be deemed given according to the date of
any postmark or the date of time of any personal delivery.
	 
	 	(b)	 	Compliance with Personnel Policies. Before proceeding to arbitration on a
complaint, the claimant must initiate and participate in any complaint resolution procedure
identified in the Company’s or subsidiary’s

 

 

	 	 	 	personnel policies. If the claimant has not initiated the complaint resolution procedure
before initiating arbitration on a complaint, the initiation of the arbitration shall be
deemed to begin the complaint resolution procedure. No arbitration hearing shall be held on
a complaint until any applicable Company or subsidiary complaint resolution procedure has
been completed.

	 	(c)	 	Rules of Arbitration. All arbitration will be conducted by a single arbitrator
according to the Employment Dispute Arbitration Rules of the AAA. The arbitrator will have
authority to award any remedy or relief that a court of competent jurisdiction could order
or grant including, without limitation, specific performance of any obligation created under
the award or policy, the awarding of punitive damages, the issuance of any injunction, costs
and attorney’s fees to the extent permitted by law, or the imposition of sanctions for abuse
of the arbitration process. The arbitrator’s award must be rendered in a writing that sets
forth the essential findings and conclusions on which the arbitrator’s award is based.
	 
	 	(d)	 	Representation and Costs. Each party may be represented in the arbitration by an
attorney or other representative selected by the party. The Company or subsidiary shall be
responsible for its own costs, the AAA filing fee and all other fees, costs and expenses of
the arbitrator and AAA for administering the arbitration. The claimant shall be responsible
for his attorney’s or representative’s fees, if any. However, if any party prevails on a
statutory claim which allows the prevailing party costs and/or attorneys’ fees, the
arbitrator may award costs and reasonable attorneys’ fees as provided by such statute.
	 
	 	(e)	 	Discovery; Location; Rules of Evidence. Discovery will be allowed to the same
extent afforded under the Federal Rules of Civil Procedure. Arbitration will be held at a
location selected by the Company. AAA rules notwithstanding, the admissibility of evidence
offered at the arbitration shall be determined by the arbitrator who shall be the judge of
its materiality and relevance. Legal rules of evidence will not be controlling, and the
standard for admissibility of evidence will generally be whether it is the type of
information that responsible people rely upon in making important decisions.
	 
	 	(f)	 	Confidentiality. The existence, content or results of any arbitration may not be
disclosed by a party or arbitrator without the prior written consent of both parties.
Witnesses who are not a party to the arbitration shall be excluded from the hearing except
to testify.

     23. Unfunded Plan. This Plan shall be unfunded. No person shall have any rights greater than
those of a general creditor of the Company.

     24. Repricing. Except for adjustments pursuant to paragraph 17, neither the per share Option
price for any outstanding Option granted under the Plan nor the per share grant price for stock
appreciation rights granted under the Plan may be decreased after the date of grant nor may an
outstanding Option or stock appreciation right granted under the Plan or a Prior Plan be
surrendered to the Company as consideration for the grant of a new Option or stock appreciation
right with a lower exercise or grant price.

     25. Termination for Cause or Inimical Conduct. Notwithstanding any provisions of the Plan or
an award agreement to the contrary, a Participant’s Option or stock appreciation right shall be
immediately cancelled and forfeited, regardless of vesting, and any pending exercises shall be
cancelled, on the date that: (a) the Company or subsidiary terminates the Participant’s employment
for Cause, (b) the date that the Committee determines that the Participant’s employment could have
been terminated for Cause if the Company or subsidiary had all relevant facts in its possession as
of the date of the Participant’s termination, or (c) the Committee determines the Participant has
engaged in Inimical Conduct. The Committee may suspend all exercises or delivery of cash or
shares (without liability for interest thereon) pending its determination of whether the
Participant has been or should have been terminated for Cause or has engaged in Inimical Conduct.
For purposes hereof:

	 	(a)	 	“Cause” means: (1) if the Participant is subject to an employment agreement that
contains a definition of “cause,” such definition, or (2) otherwise, any of the following as
determined by the Committee: (a) violation of the provisions of any employment agreement,
non-competition agreement, confidentiality agreement, or similar agreement with the Company
or subsidiary, or the Company’s or subsidiary’s code of ethics, as then in effect, (b)
conduct rising to the level of gross negligence or willful misconduct in the course of
employment with the Company or subsidiary, (c) commission of an act of dishonesty or
disloyalty

 

 

	 	 	 	involving the Company or subsidiary, (d) violation of any federal, state or local law in
connection with the Participant’s employment, or (e) breach of any fiduciary duty to the
Company or a subsidiary.
	 
	 	(b)	 	“Inimical Conduct” means any act or omission that is inimical to the best of interests of
the Company or any subsidiary, as determined by the Committee in its sole discretion,
including but not limited to: (1) violation of any employment, noncompete, confidentiality
or other agreement in effect with the Company or any subsidiary, (2) taking any steps or
doing anything which would damage or negatively reflect on the reputation of the Company or
a subsidiary, or (3) failure to comply with applicable laws relating to trade secrets,
confidential information or unfair competition.

     26. Offset. The Company shall have the right to offset, from any amount payable or stock
deliverable hereunder, any amount that the Participant owes to the Company or any subsidiary
without the consent of the Participant or any individual with a right to the Participant’s award.

     27. Severability. In the event any provision of the Plan or any award agreement is held
illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining
parts of the Plan or such award agreement, and the Plan or award agreement shall be construed and
enforced as if the said illegal or invalid provision had not been included.

 

 

Federal Income Tax Consequences

The Federal income tax consequences described in this section are based on laws and regulations in
effect on the date of this proxy statement and future changes in those laws and regulations may
affect the tax consequences described below. No discussion of state income tax treatment has been
included.

Incentive Stock Options

Options granted under the Plan which constitute ISOs will, in general, be subject to the following
Federal income tax treatment:

	 	•	 	The grant of an ISO does not give rise to any income tax consequences to either the
Company or the Participant.
	 
	 	•	 	No deduction is allowed to the Company on a Participant’s exercise of an ISO.
	 
	 	•	 	Participant’s exercise of an ISO does not result in ordinary income to the Participant
for regular tax purposes, but may result in the imposition of or an increase in alternative
minimum tax. If shares acquired upon exercise of an ISO are not disposed of within the same
taxable year of the ISO exercise, the excess of the fair market value of the shares at the
time the ISO is exercised over the option price is included in the Participant’s computation
of alternative minimum taxable income in the year of exercise.
	 
	 	•	 	If shares acquired upon the exercise of an ISO are disposed of within two years of the
date of the option grant, or within one year of the date of the option exercise, the
Participant recognizes ordinary taxable income at the time of the disposition to the extent
that the fair market value of the shares at the time of exercise exceeds the option price,
but not in an amount greater than the excess, if any, of the amount realized on the
disposition over the option price. Capital gain (long-term or short-term depending upon
the holding period) is recognized by the Participant at the time of such a disposition to
the extent that the amount of proceeds from the sale exceeds the fair market value at the
time of the exercise of the ISO. Capital loss (long-term or short-term depending upon the
holding period) is recognized by the Participant at the time of such a disposition to the
extent that the fair market value at the time of the exercise of the ISO exceeds the amount
of proceeds from the sale. The Company is entitled to a deduction in the taxable year in
which the disposition is made in an amount equal to the amount of ordinary income
recognized by the Participant.
	 
	 	•	 	If shares acquired upon the exercise of an ISO are disposed of after the later of two
years from the date of the option grant or one year from the date of the option exercise in
a taxable transaction, the Participant recognizes long-term capital gain or loss at the
time of the disposition in an amount equal to the difference between the amount realized by
the Participant on the disposition and the Participant’s basis in the shares. The Company
will not be entitled to any income tax deduction with respect to the ISO.

Nonqualified Stock Options

Options granted under the Plan which do not qualify as ISOs will, in general, be subject to the
following Federal income tax treatment:

	 	•	 	The grant of a nonqualified option does not give rise to any income tax consequences to
either the Company or the Participant.
	 
	 	•	 	The exercise of a nonqualified option generally results in ordinary taxable income to
the Participant in the amount equal to the excess of the fair market value of the shares at
the time of exercise over the option price. A deduction from taxable income is allowed to
the Company in an amount equal to the amount of ordinary income recognized by the
Participant.

 

 

	 	•	 	Upon a subsequent taxable disposition of shares, a Participant recognizes short-term or
long-term capital gain (or loss) depending on the holding period, equal to the difference
between the amount received and the tax basis of the shares, usually the fair market value
at the time of exercise.

Stock Appreciation Rights

Any SAR granted under the Plan, will in general, be subject to the following Federal income tax
treatment:

	 	•	 	The grant of a SAR does not give rise to any income tax consequences to either the
Company or the Participant.
	 
	 	•	 	Upon the exercise of a SAR, the Participant recognizes ordinary income equal to the
amount of any cash plus the fair market value of any shares of Common Stock received. The
Company is generally allowed a deduction in an amount equal to the income recognized by the
Participant.

Internal Revenue Code Sections 162(M) and 280G

Section 162(m) of the Internal Revenue Code limits the Company’s income tax deduction for
compensation paid in any taxable year to certain executive officers to $1,000,000 per individual.
Amounts in excess of $1,000,000 are not deductible unless one of several exceptions apply. The
Committee intends to grant awards under the Plan that are designated, in most cases, to qualify for
one such exception, the performance-based compensation exception. Grants of Options and SARs can
be structured so as to qualify for this exception. The Company does not anticipate that Section
162(m) will have a material impact on its ability to deduct compensation payable under the Plan.
Section 280G of the Internal Revenue Code limits the Company’s income tax deduction in the event
there is a change in control of the Company. Accordingly, all or some of the amount which would
otherwise be deductible may not be deductible with respect to those Options and SARs that could be
exchanged for a cash payment in the event of a change in control of the Company.exv10w2

 

Exhibit 10.2

JOHNSON CONTROLS, INC.

RESTRICTED STOCK PLAN

Amended March 21, 2006

ARTICLE 1.

PURPOSE AND DURATION

          Section 1.1 Purpose. The Johnson Controls, Inc. Restricted Stock Plan has two
complementary purposes: (a) to promote the success of the Company by providing incentives to the
Company’s and subsidiary’s officers and other key employees that will link their personal interests
to the long-term financial success of the Company and to growth in value; and (b) to permit the
Company and its subsidiaries to attract, motivate and retain experienced and knowledgeable
employees upon whose judgment, interest, and special efforts the successful conduct of the
Company’s operations is largely dependent.

          Section 1.2 Duration. The Plan will become effective on October 1, 2001. The
Plan shall remain in effect, subject to the right of the Board to terminate the Plan at any time
pursuant to Article 11 herein, until all Shares reserved for issuance under the Plan have been
issued.

ARTICLE 2.

DEFINITIONS AND CONSTRUCTION

          Section 2.1 Definitions. Wherever used in the Plan, the following terms shall
have the meanings set forth below and, when the meaning is intended, the initial letter of the word
is capitalized:

          (a) “Act” means the Securities Act of 1933, as interpreted by rules and regulations
issued pursuant thereto, all as amended and in effect from time to time. Any reference to a
specific provision of the Act shall be deemed to include reference to any successor provision
thereto.

          (b) “Award” means a grant of Restricted Shares or Restricted Share Units.

          (c) “Beneficial Owner” (or derivatives thereof) shall have the meaning ascribed to
such term in Rule 13d-3 of the General Rules and Regulations under the Exchange Act.

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

          (e) “Cause” means: (1) if the Participant is subject to an employment agreement
that contains a definition of “cause”, such definition, or (2) otherwise, any of the following as
determined by the Committee: (a) violation of the provisions of any employment agreement,
non-competition agreement, confidentiality agreement, or similar agreement with the Company or
subsidiary, or the Company’s or subsidiary’s code of ethics, as then in effect, (b) conduct rising
to the level of gross negligence or willful misconduct in the course of employment with the Company
or subsidiary, (c) commission of an act of dishonesty or disloyalty involving the Company or
subsidiary, (d) violation of any federal, state or local law in connection with the Participant’s
employment, or (e) breach of any fiduciary duty to the Company or a subsidiary.

          (f) “Change of Control” means the occurrence of any one of the following:

	 	(i)	 	The acquisition, other than from the Company, by any Person of
Beneficial Ownership of 20% or more of either (A) the then outstanding
shares of common stock of the Company (the “Outstanding Company Common
Stock”) or (B) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors (the “Company

 

 

	 	 	 	Voting Securities”); provided, however, that any acquisition by (x)
the Company 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.
	 
	 	(ii)	 	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).
	 
	 	(iii)	 	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.
	 
	 	(iv)	 	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 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 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.

 

 

          (g) “Code” means the Internal Revenue Code of 1986, as interpreted by rules and
regulations issued pursuant thereto, all as amended and in effect from time to time. Any reference
to a specific provision of the Code shall be deemed to include reference to any successor provision
thereto.

          (h) “Committee” means the Compensation Committee of the Board, or such other
committee appointed by the Board to administer the Plan pursuant to Article 3 herein.

          (i) “Company” means Johnson Controls, Inc., a Wisconsin corporation, and any
successor as provided in Article 13.

          (j) “Deferred Compensation Plan” means the Johnson Controls, Inc. Executive Deferred
Compensation Plan, as from time to time amended and in effect.

          (k) “Eligible Employee” means a current management or highly compensated employee of
the Company or subsidiary.

          (l) “Exchange Act” means the Securities Exchange Act of 1934, as interpreted by
rules and regulations issued pursuant thereto, all as amended and in effect from time to time. Any
reference to a specific provision of the Exchange Act shall be deemed to include reference to any
successor provision thereto.

          (m) “Fair Market Value” means with respect to a Share, the closing sales price on
the New York Stock Exchange on the date in question (or the immediately preceding trading day if
the date in question is not a trading day), and with respect to any other property, such value as
is determined by the Committee.

          (n) “Inimical Conduct” means any act or omission that is inimical to the best
interests of the Company or any subsidiary, as determined by the Committee in its sole discretion,
including but not limited to: (1) violation of any employment, noncompete, confidentiality or
other agreement in effect with the Company or any subsidiary, (2) taking any steps or doing
anything which would damage or negatively reflect on the reputation of the Company or a subsidiary,
or (3) failure to comply with applicable laws relating to trade secrets, confidential information
or unfair competition.

          (o) “Participant” means an Eligible Employee who has been granted an Award.

          (p) “Period of Restriction” means the period during which Shares or Share Units may
not be transferred and are subject to a substantial risk of forfeiture.

          (q) “Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the
Exchange Act and used in Sections 13(d) and 14(d) thereof, including a “group” as defined in
Section 13(d) thereof.

          (r) “Plan” means this Johnson Controls, Inc. Restricted Stock Plan, as from time to
time amended and in effect.

          (s) “Restricted Shares” means Shares that are subject to a Period of Restriction.

          (t) “Restricted Share Units” means Share Units that are subject to a Period of
Restriction.

          (u) “Retirement” means a voluntary termination of employment from the Company and
its subsidiaries (for other than Cause) on or after age 55 and completion of at least ten years of
vesting service, or age 65 and completion of at least five years of vesting service (such vesting
service to be determined within the meaning of the Johnson Controls Pension Plan or such other plan
or methodology specified by the Committee).

          (v) “Rule 16b-3” means Rule 16b-3 under the Exchange Act.

 

 

          (w) “Share” means the common stock of the Company, or such other securities
specified in Section 4.3.

          (x) “Share Unit” means a measure of compensation having a value equal to the Fair
Market Value of a single Share.

          (y) “Total and Permanent Disability” means the Participant’s inability to perform
the material duties of his occupation as a result of a medically-determinable physical or mental
impairment which can be expected to result in death or which has lasted or can be expected to last
for a period of at least 12 months, as determined by the Committee. The Participant will be
required to submit such medical evidence or to undergo a medical examination by a doctor selected
by the Committee as the Committee determines is necessary in order to make a determination
hereunder.

          Section 2.2 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 said illegal or invalid
provision had not been included.

ARTICLE 3.

ADMINISTRATION

          Section 3.1 The Committee. The Plan shall be administered by the Committee.
If at any time the Committee shall not be in existence, the Plan shall be administered by the Board
and each reference to the Committee herein shall be deemed to include the Board.

          Section 3.2 Authority of the Committee. In addition to the authority
specifically granted to the Committee in the Plan, and subject to the provisions of the Plan, the
Committee shall have full power and discretionary authority to: (a) select Participants, grant
Awards, and determine the terms and conditions of each such Award, including but not limited to the
Period of Restriction and the number of Shares to which the Award will relate; (b) administer the
Plan, including but not limited to the power and authority to construe and interpret the Plan and
any award agreement; (c) correct errors, supply omissions or reconcile inconsistencies in the terms
of the Plan and any award agreement; (d) establish, amend or waive rules and regulations, and
appoint such agents, as it deems appropriate for the Plan’s administration; and (e) make any other
determinations, including factual determinations, and take any other action as it determines is
necessary or desirable for the Plan’s administration.

          Notwithstanding the foregoing, the Committee shall have no authority to act to adversely
affect the rights or benefits granted under any outstanding Award without the consent of the person
holding such Award (other than as specifically provided herein).

          Section 3.3 Decision Binding. The Committee’s determination and decisions
made pursuant to the provisions of the Plan and all related orders or resolutions of the Board
shall be final, conclusive and binding on all persons who have an interest in the Plan or an Award,
and such determinations and decisions shall not be reviewable.

          Section 3.4 Procedures of the Committee. The Committee’s determinations must
be made by not less than a majority of its members present at the meeting (in person or otherwise)
at which a quorum is present, or by written majority consent, which sets forth the action, is
signed by each member of the Committee and filed with the minutes for proceedings of the Committee.
A majority of the entire Committee shall constitute a quorum for the transaction of business.
Service on the Committee shall constitute service as a director of the Company so that the

 

 

Committee members shall be entitled to indemnification, limitation of liability and
reimbursement of expenses with respect to their Committee services to the same extent that they are
entitled under the Company’s By-laws and Wisconsin law for their services as directors of the
Company.

          Section 3.5 Award Agreements. The Committee shall evidence the grant of each
Award by an award agreement which shall be signed by an authorized officer of the Company and by
the Participant, and shall contain such terms and conditions as may be approved by the Committee,
subject to the terms of the Plan. Terms and conditions of such Awards need not be the same in all
cases.

ARTICLE 4.

SHARES SUBJECT TO THE PLAN

          Section 4.1 Number of Shares. Subject to adjustment as provided in Section
4.3, the aggregate number of Shares that may be issued under the Plan or to which an Award may
relate shall not exceed 250,000 Shares. Shares delivered under the Plan shall consist solely of
treasury Shares.

          Section 4.2 Lapsed Awards. If any Award is forfeited or terminated for any
reason, the Restricted Shares or Restricted Share Units subject to such Award that are forfeited
shall be available for the grant of a new Award under the Plan.

          Section 4.3 Adjustments in Authorized Shares. In the event of any merger,
reorganization, consolidation, recapitalization, separation, liquidation, stock dividend, split-up,
share combination, or other change in the corporate structure of the Company affecting the Shares,
the Committee shall adjust: (a) the number and class of Shares which may be delivered under the
Plan; and (b) the number and class of Shares or Share Units subject to outstanding Awards, as it
determines to be appropriate and equitable to prevent dilution or enlargement of the rights
intended to be granted hereunder and under any Award; provided that the number of Shares subject to
any Award shall always be a whole number.

ARTICLE 5.

PARTICIPATION

          Subject to the provisions of the Plan, the Committee shall have the authority to select the
Employees to receive an Award. No Employee shall have any right to be granted an Award even if
previously granted an Award.

ARTICLE 6.

TERMS AND CONDITIONS OF AWARDS

          Section 6.1 Grant of Award. Subject to the terms and provisions of the Plan,
the Committee shall have the authority to determine the number of Shares or Share Units to which an
Award shall relate, the term of the Restriction Period and conditions for lapse thereof, and any
other terms and conditions of an Award. Notwithstanding the foregoing, and subject to such rules
as are established by the Committee, a Participant who has been selected to receive an Award from
the Committee may elect, prior to or within thirty (30) days after the grant date, to receive the
Award either in the form of Restricted Shares or Restricted Share Units; provided that if the
Participant fails to make a valid election, the Award shall be made in the form of Restricted
Shares.

          Section 6.2 Terms and Conditions of Restricted Share Awards.

          (a) Period of Restriction. Restricted Shares may not be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated, and shall be subject to a substantial
risk of forfeiture, until the termination of the applicable Period of Restriction as set forth in
the Participant’s award agreement or provided herein. During the Period of Restriction, the
Company shall have the right to hold the Restricted Shares in escrow.

 

 

          (b) Certificate Legend. Each certificate representing Restricted Shares
shall bear the following legend:

	 	 	“The sale or other transfer of the shares of stock represented by
this certificate, whether voluntary, involuntary, or by operation of
law, is subject to certain restrictions on transfer set forth in the
Johnson Controls, Inc. Restricted Stock Plan, in the rules and
administrative procedures adopted pursuant to such Plan, and in a
Restricted Stock Agreement dated ___. A copy of the Plan,
such rules and procedures, and such Restricted Stock Agreement may
be obtained from the Secretary of Johnson Controls, Inc.”

          (c) Removal of Restrictions. Except as otherwise provided in this Article,
Restricted Shares shall become vested in, and freely transferable by, the Participant after the
last day of the Period of Restriction. Once the Shares are released from the restrictions, the
Participant shall be entitled to have the legend required by subsection (b) removed from his stock
certificate.

          (d) Voting Rights. Unless determined otherwise by the Committee, during the
Period of Restriction, Participants holding Restricted Shares may exercise full voting rights with
respect to those Shares.

          (e) Dividends and Other Distributions. Any dividends or other distributions
paid or delivered with respect to Restricted Shares will be subject to the same terms and
conditions (including risk of forfeiture) as the Restricted Shares to which they relate and payment
or delivery thereof will be deferred accordingly. Unless otherwise determined by the Committee,
all dividends or other distributions paid or delivered with respect to Restricted Shares shall be
allocated to a Share Unit account or other investment account under the Deferred Compensation Plan.

          Section 6.3 Terms and Conditions of Restricted Share Units.

          (a) Establishment of Account. Upon the grant of Restricted Share Units to a
Participant, the Company shall establish a bookkeeping account under the Deferred Compensation Plan
to which shall be credited the number of Share Units granted.

          (b) Alienation of Account. A Participant (or beneficiary) shall not have
any right to assign, hypothecate, pledge, encumber or otherwise alienate his Share Unit account.

          (c) Dividends and Other Distributions. Each Participant with a Share Unit
account shall be entitled to receive a credit to such account for any dividends or other
distributions delivered on Shares, whether in the form of cash or in property, in accordance with
the terms of the Deferred Compensation Plan; provided that such credit shall be subject to the same
terms and conditions (including risk of forfeiture) as the Restricted Share Units to which they
relate.

          (d) Payment of Account. The value of the Participant’s Share Unit account
as to which the Restriction Period has lapsed shall be paid to the Participant (or his beneficiary)
in accordance with the terms of the Deferred Compensation Plan.

          Section 6.4 Termination of Employment. Upon a Participant’s termination of
employment from the Company and its subsidiaries, the following rules shall apply:

          (a) Retirement. If the Participant terminates employment due to Retirement
on or after the last day of the calendar year following the calendar year in which the Award of
Restricted Shares or Restricted Share Units is made, any remaining Period of Restriction shall
continue as if the Participant continued in active employment; provided, however, that for awards
granted on January 3, 2006, if the Participant terminates employment due to retirement on or after
December 31, 2006, any remaining Period of Restriction shall continue as

 

 

of the Participant continued in active employment. Notwithstanding the foregoing, if the
Participant engages in Inimical Conduct after his Retirement, any Restricted Shares and/or
Restricted Share Units still subject to a Period of Restriction shall automatically be forfeited as
of the date of the Committee’s determination.

          (b) Death or Disability. If the Participant’s employment terminates because
of death or Total and Permanent Disability at a time when the Participant could not have been
terminated for Cause, or if the Participant dies after Retirement while holding an Award that is
subject to a Period of Restriction, any remaining Period of Restriction shall automatically lapse
as of the date of such termination of employment or death, as applicable.

          (c) Termination for Other Reasons. If the Participant’s employment
terminates for any reason not described above, then any Restricted Shares and/or Restricted Share
Units still subject to a Period of Restriction as of the date of such termination shall
automatically be forfeited and returned to the Company; provided, however, that in the event of an
involuntary termination of the employment of an Employee by the Company or a subsidiary for other
than Cause, the Committee may waive the automatic forfeiture of any or all such Shares or Share
Units and may add such new restrictions to such Restricted Shares or Restricted Share Units as it
deems appropriate.

          (d) Suspension. The Committee may suspend payment or delivery of Shares
(without liability for interest thereon) pending its determination of whether the Participant was
or should have been terminated for Cause or whether the Participant has engaged in Inimical
Conduct.

          Section 6.5 Other Restrictions. The Committee may impose such other
restrictions on any Awards granted pursuant to the Plan (including after the Period of Restriction
lapses) as it may deem advisable including, without limitation, restrictions under applicable
Federal or state securities laws, and the Committee may legend certificates to give appropriate
notice of such restrictions.

ARTICLE 7.

RIGHTS OF ELIGIBLE INDIVIDUALS

          Section 7.1 Employment. Nothing in the Plan shall interfere with or limit in
any way the right of the Company or subsidiary to terminate any Participant’s employment at any
time, nor confer upon any Participant any right to continue in the employ of the Company or
subsidiary.

          Section 7.2 No Implied Rights; Rights on Termination of Service. Neither the
establishment of the Plan nor any amendment thereof shall be construed as giving any Participant or
any other person any legal or equitable right unless such right shall be specifically provided for
in the Plan or conferred by specific action of the Committee in accordance with the terms and
provisions of the Plan.

          Section 7.3 No Funding. Neither the Participant nor any other person shall
acquire, by reason of the Plan or any Award, any right in or title to any assets, funds or property
of the Company and its subsidiaries whatsoever including, without limiting the generality of the
foregoing, any specific funds, assets, or other property which the Company or its subsidiaries may,
in their sole discretion, set aside in anticipation of a liability hereunder. Any benefits which
become payable hereunder shall be paid from the general assets of the Company and its subsidiaries,
as applicable. The Participant shall have only a contractual right to the amounts, if any, payable
hereunder unsecured by any asset of the Company or its subsidiaries. Nothing contained in the Plan
constitutes a guarantee by the Company or its subsidiaries that the assets of the Company or its
subsidiaries shall be sufficient to pay any benefit to any person.

          Section 7.4 Other Restrictions. As a condition to the issuance of any Shares,
the Committee may require the Participant to enter into a restrictive stock transfer or other
shareholder’s agreement with the Company.

 

 

ARTICLE 8.

CHANGE OF CONTROL

          If a Change of Control occurs, any Period of Restriction of any outstanding Award shall lapse
upon the date of the Change of Control.

ARTICLE 9.

AMENDMENT, MODIFICATION, AND TERMINATION

          Section 9.1 Amendment, Modification, and Termination of the Plan. At any time
and from time to time, the Board may terminate, amend, or modify the Plan. However, the approval
of any such amendment by the shareholders of the Company shall be obtained if required by the Code,
by the insider trading rules of Section 16 of the Exchange Act, by any national securities exchange
or system on which the Shares are then listed or reported, or by any regulatory body having
jurisdiction with respect hereto. Further, no termination, amendment or modification of the Plan
shall in any manner adversely affect any Award theretofore granted under the Plan, without the
written consent of the Participant, except as specifically provided herein.

          Section 9.2 Amendment of Award Agreements. The Committee may at any time
amend any outstanding award agreement; provided, however, that any amendment that decreases or
impairs the rights of a Participant under such agreement shall not be effective unless consented to
by the Participant in writing, except that Participant consent shall not be required in the event
an Award is amended, adjusted or cancelled under Section 4.3 or paid as provided in Article 8, and
Participant consent shall not be required with respect to any amendment of the Deferred
Compensation Plan that affects a Participant’s Share Unit account to the extent such plan does not
require Participant consent.

          Section 9.3 Survival Following Termination. Notwithstanding the foregoing, to
the extent provided in the Plan, the authority of (a) the Committee to amend, alter, adjust,
suspend, discontinue or terminate any Award, waive any conditions or restrictions with respect to
any Award, and otherwise administer the Plan and any Award and (b) the Board to amend the Plan,
shall extend beyond the date of the Plan’s termination. Termination of the Plan shall not affect
the rights of Participants with respect to Awards previously granted to them, and all unexpired
Awards shall continue in force and effect after termination of the Plan except as they may lapse or
be terminated by their own terms and conditions, subject to the terms of the Deferred Compensation
Plan.

ARTICLE 10.

WITHHOLDING

          Section 10.1 Tax Withholding. The Company shall have the power and the right
to deduct or withhold, or require a Participant to remit to the Company, an applicable amount
sufficient to satisfy foreign, Federal, state and local taxes (including the Participant’s FICA
obligation) required by law to be withheld with respect to the issuance of Shares, the lapse of the
Period of Restriction, or the distribution of the Participant’s Share Unit account. The Company
shall also have the right to withhold Shares as to which the Period of Restriction has lapsed and
which have a Fair Market Value equal to the Participants’ minimum tax withholding liability, to
satisfy any withholding obligations.

          Section 10.2 Stock Delivery or Withholding. Participants may elect, subject
to the approval of the Committee and such rules as it shall prescribe, to satisfy the withholding
requirement, in whole or in part, by tendering to the Company previously acquired Shares in an
amount having a Fair Market Value equal to the amount required to be withheld to satisfy the
minimum tax withholding obligations described in Section 10.1. The value of the Shares to be
tendered is to be based on the Fair Market Value of the Shares on the date that the amount of tax
to be withheld is determined.

ARTICLE 11.

LEGENDS; PAYMENT OF EXPENSES

          Section 11.1 Legends. The Company may endorse such legend or legends upon the
certificates for Shares issued under the Plan and may issue such “stop transfer” instructions to
its transfer agent in respect of such Shares as it determines to be necessary or appropriate to (a)
prevent a violation of, or to perfect an exemption from, the registration requirements of the
Securities Act, applicable state securities laws or other legal requirements,

 

 

or (b) implement the provisions of the Plan or any agreement between the Company and the
Participant with respect to such Shares.

          Section 11.2 Payment of Expenses. The Company shall pay for all issuance
taxes with respect to the issuance of Shares under the Plan, as well as all fees and expenses
incurred by the Company in connection with such issuance.

ARTICLE 12.

SUCCESSORS

          All obligations of the Company under the Plan with respect to Awards granted hereunder shall
be binding on any successor to the Company, whether the existence of such successor is the result
of a direct or indirect purchase, merger, consolidation or otherwise, of all or substantially all
of the business and/or assets of the Company. The Plan shall be binding upon and inure to the
benefit of the Participants and their heirs, executors, administrators or legal representatives.

ARTICLE 13.

REQUIREMENTS OF LAW

          Section 13.1 Requirements of Law. The granting of Awards and the issuance of
Shares under this Plan shall be subject to all applicable laws, rules, and regulations, and to such
approvals by any governmental agencies or national securities exchanges as may be required.

          Section 13.2 Governing Law. This Plan and the rights and obligations
hereunder shall be governed by and construed in accordance with the internal laws of the State of
Wisconsin (excluding any choice of law rules that may direct the application of the laws of another
jurisdiction), except as provided in Section 13.3 hereof.

          Section 13.3 Arbitration.

          (a) Application. Notwithstanding any employee agreement in effect between a
Participant and the Company or any subsidiary employer, if a Participant brings a claim that
relates to benefits under this Plan, regardless of the basis of the claim (including but not
limited to, actions under Title VII, wrongful discharge, breach of employment agreement, etc.),
such claim shall be settled by final binding arbitration in accordance with the rules of the
American Arbitration Association (“AAA”) and judgment upon the award rendered by the arbitrator may
be entered in any court having jurisdiction thereof.

          (b) Initiation of Action. Arbitration must be initiated by serving or
mailing a written notice of the complaint to the other party. Normally, such written notice should
be provided the other party within one year (365 days) after the day the complaining party first
knew or should have known of the events giving rise to the complaint. However, this time frame may
be extended if the applicable statute of limitation provides for a longer period of time. If the
complaint is not properly submitted within the appropriate time frame, all rights and claims that
the complaining party has or may have against the other party shall be waived and void. Any notice
sent to the Company shall be delivered to:

Office of General Counsel

Johnson Controls, Inc.

5757 North Green Bay Avenue

P.O. Box 591

Milwaukee, WI 53201-0591

          The notice must identify and describe the nature of all complaints asserted and the facts upon
which such complaints are based. Notice will be deemed given according to the date of any postmark
or the date of time of any personal delivery.

 

 

          (c) Compliance with Personnel Policies. Before proceeding to arbitration on
a complaint, the Participant or Beneficiary must initiate and participate in any complaint
resolution procedure identified in the Company’s or subsidiary’s personnel policies. If the
claimant has not initiated the complaint resolution procedure before initiating arbitration on a
complaint, the initiation of the arbitration shall be deemed to begin the complaint resolution
procedure. No arbitration hearing shall be held on a complaint until any applicable Company or
subsidiary complaint resolution procedure has been completed.

          (d) Rules of Arbitration. All arbitration will be conducted by a single
arbitrator according to the Employment Dispute Arbitration Rules of the AAA. The arbitrator will
have authority to award any remedy or relief that a court of competent jurisdiction could order or
grant including, without limitation, specific performance of any obligation created under policy,
the awarding of punitive damages, the issuance of any injunction, costs and attorney’s fees to the
extent permitted by law, or the imposition of sanctions for abuse of the arbitration process. The
arbitrator’s award must be rendered in a writing that sets forth the essential findings and
conclusions on which the arbitrator’s award is based.

          (e) Representation and Costs. Each party may be represented in the
arbitration by an attorney or other representative selected by the party. The Company or
subsidiary shall be responsible for its own costs, the AAA filing fee and all other fees, costs and
expenses of the arbitrator and AAA for administering the arbitration. The claimant shall be
responsible for his attorney’s or representative’s fees, if any. However, if any party prevails on
a statutory claim which allows the prevailing party costs and/or attorneys’ fees, the arbitrator
may award costs and reasonable attorneys’ fees as provided by such statute.

          (f) Discovery; Location; Rules of Evidence. Discovery will be allowed to
the same extent afforded under the Federal Rules of Civil Procedure. Arbitration will be held at a
location selected by the Company. AAA rules notwithstanding, the admissibility of evidence offered
at the arbitration shall be determined by the arbitrator who shall be the judge of its materiality
and relevance. Legal rules of evidence will not be controlling, and the standard for admissibility
of evidence will generally be whether it is the type of information that responsible people rely
upon in making important decisions.

          (g) Confidentiality. The existence, content or results of any arbitration
may not be disclosed by a party or arbitrator without the prior written consent of both parties.
Witnesses who are not a party to the arbitration shall be excluded from the hearing except to
testify.

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