SUPPLEMENTAL PENSION PLAN
FOR HOWARD L. LANCE
(Amended and Restated Effective January 1,
2009)
In order to
provide appropriate compensation to and ensure the retention of
Howard L. Lance (the “Employee”) as Chief Executive
Officer of Harris Corporation (the “Corporation”), the
Board of Directors determined that it was in the best interest of
the Corporation to adopt this Supplemental Pension Plan for Howard
L. Lance (the “SPP”), effective October 27,
2006.
The Corporation
and the Employee desire to amend and restate the SPP, effective
January 1, 2009, to assure its compliance with
Section 409A of the Internal Revenue Code of 1986, as amended
from time to time (the “ Code ”), and to make
certain clarifying changes thereto.
The Corporation
intends that the SPP shall be an unfunded plan maintained primarily
for the purpose of providing deferred compensation for a select
group of management or highly compensated employees within the
meaning of Sections 201, 301, and 401 of the Employee
Retirement Income Security Act of 1974
(“ERISA”).
When used herein,
the following words and phrases and any derivatives thereof shall
have the meanings set forth below unless the context clearly
indicates otherwise. Definitions of other words and phrases are set
forth throughout the SPP. Section references indicate Sections of
the SPP unless otherwise stated.
“Actuarial
Equivalent” means equal value computed on the basis of
(i) the “applicable mortality table” determined
from time to time under Section 417(e)(3) of the Code, and
(ii) a discount rate equal to 120% of the annual long-term
Applicable Federal Rate for purposes of Section 1274(d) of the Code
for the calendar month containing the Termination Date, compounded
annually.
“Cause”
has the meaning set forth in the Letter Agreement.
“Compensation
Committee” means the Management Development and Compensation
Committee of the Board of Directors of the Corporation.
“Corporation”
means Harris Corporation, a Delaware corporation.
“Disabled”
or “Disability” means that the Employee either
(i) is unable to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment
that can be expected to result in death or can be expected to last
for a continuous period of not less than twelve (12) months,
or (ii) by reason of any medically determinable physical or
mental impairment that can be expected to result in death or can be
expected to last for a continuous period of not less than twelve
(12) months, is receiving income replacement benefits for a
period of not less than three (3) months under an accident and
health plan covering employees of the Corporation.
“Disability
Date” means the date on which the Employee becomes
Disabled.
“Early
Retirement Eligibility Date” means the date the Employee has
attained age 55 and accrued 10 Years of Credited
Service.
“Employee”
means Howard L. Lance.
“Executive
Severance Agreement” means the Executive Severance Agreement
between the Employee and the Corporation dated December 19,
2008, and effective January 1, 2009.
“Final
Pay” means the sum of (i) the Employee’s base
salary paid during the one-year period ending with the last day the
Employee held the position of Chief Executive Officer of the
Corporation, plus (ii) the Employee’s annual cash
incentive (excluding any award under the Harris Corporation
Performance Reward Plan or any successor plan thereto) payable at
target, per the annual cash incentive arrangement in place for the
Employee on the last day the Employee held the position of Chief
Executive Officer of the Corporation; provided ,
however , that for purposes of determining “Final
Pay” in the event of the Employee’s Disability, the
Employee’s base salary and annual cash incentive shall be
determined as of the Disability Date, rather than on the last day
the Employee held the position of the Chief Executive Officer of
the Corporation.
“Good
Reason” has the meaning set forth in the Letter
Agreement.
“Late
Retirement Date” means the Employee’s Termination Date,
if the Termination Date occurs after the Employee’s Normal
Retirement Date.
“Letter
Agreement” means the Letter Agreement between the Employee
and the Corporation dated December 19, 2008, and effective
January 1, 2009.
“Normal
Retirement Date” means the date the Employee attains age
60.
“SPP”
means the Supplemental Pension Plan for Howard L. Lance, as
contained herein and as hereafter amended from time to
time.
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“SPP
Benefit” means any benefit to which the Employee is entitled
pursuant to Section 3 of this SPP.
“SPP
Commencement Date” means the date that payment of the SPP
Benefit hereunder actually commences.
“Surviving
Spouse” means the person to whom the Employee is legally
married on his SPP Commencement Date.
“Termination
Date” means the date of the Employee’s separation from
service with the Corporation and its affiliates within the meaning
of Treasury Regulation §1.409A-1(h) (without regard to any
permissible alternative definition thereunder). Notwithstanding any
other provision herein, “affiliate” for purposes of
determining whether the Employee has incurred a “separation
from service” shall be defined to include all entities that
would be treated as part of the group of entities comprising the
Corporation under Sections 414(b) and (c) of the Code and the
accompanying regulations, but substituting a 50% ownership level
for the 80% ownership level set forth therein.
“Trust”
means any trust created under Section 7.2(b) pursuant to an
agreement by and between the Corporation and the trustee, under
which assets are held in connection with paying benefits under the
SPP.
“Years of
Credited Service” shall be measured on the basis of twelve
(12) consecutive month periods commencing on the
Employee’s effective date of employment and subsequent annual
anniversaries thereof, and ending on the Employee’s
Termination Date. Any period of less than twelve
(12) consecutive months shall be rounded to the nearest whole
month. Paid and authorized leaves of absence shall not cause a
break in consecutive employment periods.
SECTION 2
ELIGIBILITY TO PARTICIPATE
The only
participant in the SPP shall be the Employee.
SECTION 3
ELIGIBILITY FOR AND AMOUNT OF BENEFIT
3.1 Normal
Retirement Benefit . If the Employee retires on his Normal
Retirement Date, then the Employee shall be entitled to a Normal
Retirement Benefit. The “ Normal Retirement Benefit
” shall be a benefit, calculated as a single life annuity for
the Employee’s life, equal to Thirty–Two Percent (32%)
of the Employee’s Final Pay.
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3.2 Late
Retirement Benefit . If the Employee retires on his Late
Retirement Date, then the Employee shall be entitled to a Late
Retirement Benefit. The “ Late Retirement Benefit
” shall be a benefit, calculated as a single life annuity for
the Employee’s life, equal to the product of the Late
Retirement Benefit Percentage and the Employee’s Final Pay.
The “ Late Retirement Benefit Percentage ” shall
be Thirty-Two Percent (32%), reduced Two-Twelfths (2/12
ths ) of One Percent (1%) for each month by which
the Employee’s age as of the last day the Employee held the
position of Chief Executive Officer of the Corporation exceeds age
sixty (60), with any partial month rounded to the nearest whole
month ( e.g. , 30% if the Employee is age 61 as of such
date, 29% if the Employee is age 61 1 / 2
as of such date and 28% if the
Employee is age 62 as of such date).
3.3 Early
Retirement Benefit . If the Employee retires on or after his
Early Retirement Eligibility Date, but before his Normal Retirement
Date, then the Employee shall be entitled to an Early Retirement
Benefit. The “ Early Retirement Benefit ” shall
be a benefit, calculated as a single life annuity for the
Employee’s life, equal to the product of Thirty-Two Percent
(32%) and the Employee’s Final Pay, with the result reduced
Five-Twelfths (5/12 ths )
of One Percent (1%) for each month by which age sixty
(60) exceeds the Employee’s age as of the Termination
Date, with any partial month rounded to the nearest whole month.
Notwithstanding the foregoing, if the Employee elects pursuant to
Sections 5.1(b) and 5.2(a)(2) that payment of the Early
Retirement Benefit commence on a date later than the Termination
Date, then the Early Retirement Benefit shall be the Actuarial
Equivalent of the Early Retirement Benefit that would have been
paid to the Employee had payment thereof commenced on the
Termination Date.
3.4 Termination
without Cause or for Good Reason prior to Early Retirement
Eligibility Date . If before his Early Retirement Eligibility
Date the Employee is terminated without Cause or terminates for
Good Reason, then the Employee shall be entitled to a Termination
Benefit. The “ Termination Benefit ” shall be a
benefit, calculated as a single life annuity for the
Employee’s life, equal to the Employee’s Final Pay
times the product of (w) times (x), with the result reduced by
(y). For this purpose, (w) is Two and One-Half Percent (2.5%),
(x) is the Employee’s Years of Credited Service as of
his Termination Date and (y) is Six-Twelfths (6/12
ths ) of One Percent (1%) for each month by which
age fifty-seven (57) exceeds the Employee’s age as of
the Termination Date, with any partial month rounded to the nearest
whole month. Notwithstanding the foregoing, if the Employee elects
pursuant to Sections 5.1(b) and 5.2(a)(2) that payment of the
Termination Benefit commence on a date later than the Termination
Date, then the Termination Benefit shall be the Actuarial
Equivalent of the Termination Benefit that would have been paid to
the Employee had payment thereof commenced on the Termination
Date.
3.5 Disability
Retirement Benefit .
(a) If
the Employee becomes Disabled before his Early Retirement
Eligibility Date, then the Employee shall be entitled to a
Disability Retirement Benefit. The “ Disability Retirement
Benefit ” shall be a benefit, calculated as a single life
annuity for the Employee’s life, equal to the
Employee’s Final Pay times the product of (w) times (x),
with the result reduced by (y). For this purpose, (w) is Two
and One-Half Percent (2.5%), (x) is the Employee’s Years
of
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Credited
Service as of his Disability Date and (y) is Six-Twelfths
(6/12 ths
) of One Percent (1%) for each month
by which age fifty-seven (57) exceeds the Employee’s age
as of the Disability Date, with any partial month rounded to the
nearest whole month.
(b) If
the Employee becomes Disabled on or after his Early Retirement
Eligibility Date, then no Disability Retirement Benefit shall be
payable under the SPP and the Employee’s SPP Benefit shall be
determined under Section 3.1, 3.2, or 3.3, as
applicable.
(a) If
the Employee dies before his SPP Commencement Date, then no benefit
shall be paid to any person or entity under this SPP.
(b) If
the Employee dies after his SPP Commencement Date, then the SPP
Benefit, if any, after the Employee’s death shall be
determined by the form of life annuity that was in force on the
Employee’s date of death.
3.7 Resignation
or Termination for Cause prior to Early Retirement Eligibility
Date . If before his Early Retirement Eligibility Date the
Employee resigns or is terminated for Cause, then no benefit shall
be paid to any person or entity under this SPP.
(a) If
(i) the Corporation undergoes a “change in
control” (as defined in the Executive Severance Agreement),
and (ii) the Employee terminates employment before his Early
Retirement Eligibility Date under the circumstances that entitle
the Employee to benefits under Section 3 of the Executive
Severance Agreement, then the Employee shall be entitled to a
Change in Control Retirement Benefit. The “ Change in
Control Retirement Benefit ” shall be a benefit,
calculated as a single life annuity for the Employee’s life,
equal to the Employee’s Final Pay times the product of
(w) times (x), with the result reduced by (y). For this
purpose, (w) is Two and One-Half Percent (2.5%), (x) is
the Employee’s Years of Credited Service as of his
Termination Date, plus two (2) additional Years of Credited
Service, as though the Employee had terminated employment with the
Corporation on the second anniversary of his actual Termination
Date and (y) is Six-Twelfths (6/12 ths )
of One Percent (1%) for each month by which age fifty-seven (57)
exceeds the Employee’s age as of the Termination Date, with
any partial month rounded to the nearest whole month;
provided , however , that under no circumstances
shall the Change in Control Retirement Benefit exceed the Early
Retirement Benefit that would have been payable to the Employee
pursuant to Section 3.3 had the Employee attained age
fifty-five (55) and accrued ten (10) Years of Credited
Service as of the Termination Date. Notwithstanding the foregoing,
if the Employee elects pursuant to Sections 5.1(b) and
5.2(a)(2) that payment of the Change in Control Retirement Benefit
commence on a date later than the Termination Date, then the Change
in Control Retirement Benefit shall be the Actuarial Equivalent of
the Change in Control Retirement Benefit that would have been paid
to the Employee had payment thereof commenced on the Termination
Date.
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(b) If
(i) the Corporation undergoes a “change in
control” (as defined in the Executive Severance Agreement),
and (ii) the Employee terminates employment on or after his
Early Retirement Eligibility Date under the circumstances that
entitle the Employee to benefits under Section 3 of the
Executive Severance Agreement, then no Change in Control Retirement
Benefit shall be payable under the SPP and the Employee’s SPP
Benefit shall be determined under Section 3.1, 3.2, or 3.3, as
applicable.
3.9 Reduction
in SPP Benefit for Disability Payments . If the Employee
receives an SPP Benefit under this Section 3, then during the
period from the Employee’s SPP Commencement Date to the date
that the Employee attains age 65 there shall be deducted from the
SPP Benefit the amount of payments made to the Employee under any
and all long-term disability plan(s) (broad-based and executive)
sponsored by the Corporation.
4.1 In
General . The Employee’s entitlement to an SPP Benefit is
described in Section 3. For example, as provided in
Section 3.7, if before his Early Retirement Eligibility Date
the Employee resigns or is terminated for Cause, then no benefit
shall be paid to any person or entity under this SPP. However, and
notwithstanding anything to the contrary in Section 3 or the
SPP, if the Employee violates the provisions of either
Section 4.2 or 4.3 below, then no benefit shall be paid to any
person or entity under this SPP, or, if SPP payments have commenced
as of the date of such violation, then payments shall cease
immediately and no further SPP payments shall be made.
4.2
Non-Competition Provision . During the Employee’s
employment with the Corporation and continuing thereafter while the
Employee is entitled to receive or is receiving benefits under the
SPP (provided, however, that if the Employee is terminated by the
Corporation without Cause or if the Employee terminates employment
for Good Reason, then this Section&nbs
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