L-3 COMMUNICATIONS HOLDINGS,
INC.
AMENDED AND RESTATED
CHANGE IN CONTROL SEVERANCE PLAN
THIS CHANGE IN
CONTROL SEVERANCE PLAN, originally adopted on August 15, 2006
(the “ Effective Date ”) by L-3 COMMUNICATIONS
HOLDINGS, INC., a Delaware corporation, as amended and restated as
of February 19, 2009, has been established to provide for the
payment of severance benefits to Employees (as defined
below).
Section 1.
Definitions . Unless the context clearly indicates
otherwise, when used in this Plan:
(a) “
Actual Bonus ” means any Bonus actually paid or
payable to an Eligible Employee (excluding any reduction in amount
resulting from an adverse change to the assumptions (including the
Employee’s Target Bonus) or calculation methodology for
determining the amount of such Bonus made on or after a Change in
Control).
(b) “
Affiliate ” means, with respect to any entity, any
other corporation, organization, association, partnership, sole
proprietorship or other type of entity, whether incorporated or
unincorporated, directly or indirectly controlling or controlled by
or under direct or indirect common control with such
entity.
(c) “
Annual Compensation ” means the sum of (x) the
greater of the Eligible Employee’s Base Salary in effect
(A) immediately prior to the date of the Change in Control or
(B) immediately prior to the date of termination of the
Eligible Employee (or, if the termination is for Good Reason,
immediately prior to the event set forth in the notice of
termination given in accordance with Section 15 of this Plan),
and (y) the Eligible Employee’s Average
Bonus.
(d) “
Anticipatory Termination ” means a termination of an
Employee made in connection with or in anticipation of a Change in
Control at the request of, or upon the initiative of, the acquiror
in the Change in Control transaction or otherwise in connection
with or anticipation of the Change in Control.
(e) “
Average Bonus ” means the average of all Bonuses paid
or payable to an Eligible Employee in respect of the three Fiscal
Years occurring prior to the Fiscal Year in which the employment of
the Eligible Employee is terminated (or, if the Eligible Employee
was not an Employee during each of such Fiscal Years, such lesser
number of Fiscal Years during which the Eligible Employee was an
Employee); provided , that for purposes of this calculation,
any Bonus awarded to the Eligible Employee for a Fiscal Year in
which the Employee was employed for less than the full Fiscal Year
shall be annualized; provided , further , that if the
Bonus for the last of the three Fiscal Years utilized in this
calculation (i) (x) has not been paid because the Employee was
terminated prior to the scheduled date for payment of such Bonus
and (y) is not determinable by way of a formula or calculation
applied on a basis consistent with past practice or (ii) has
been paid based on an adverse change to the assumptions (including
the Employee’s Target Bonus) or calculation methodology for
determining the amount of such Bonus made on
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or after a
Change in Control, then the Bonus for such year shall be
disregarded and the calculation shall be made on the basis of the
average of the other Fiscal Years; provided , further
, that if the Employee was not an Employee prior to the last of the
three Fiscal Years utilized in this calculation and the Bonus for
such last Fiscal Year is disregarded by operation of the
immediately preceding proviso, then the term “Average
Bonus” shall mean the Eligible Employee’s Target
Bonus.
(f) “
Base Salary ” means an Employee’s annual rate of
base salary in effect on the date in question, determined on a
“gross wages” basis (i.e. prior to reduction for any
employee-elected salary reduction contributions made to an
Employer-sponsored non-qualified deferred compensation plan or an
Employer-sponsored plan pursuant to Section 401(k) or 125 of
the Code), and excluding bonuses, overtime, allowances,
commissions, deferred compensation payments and any other
extraordinary remuneration.
(g) “
Board ” means the board of directors of the
Company.
(h) “
Bonus Fraction ” means, with respect to any Eligible
Employee, a fraction, the numerator of which shall equal the number
of days the Eligible Employee was employed by the Eligible
Employee’s Employer in the Fiscal Year in which the Eligible
Employer’s termination occurs and the denominator of which
shall equal 365.
(i) “
Bonus ” means the amount payable to an Employee under
the Employer’s applicable annual cash incentive bonus plan
with respect to a Fiscal Year.
(j) “
Cause ” means an Employee’s:
(1) intentional
failure to perform reasonably assigned duties;
(2) dishonesty or
willful misconduct in the performance of duties;
(3) engaging in a
transaction in connection with the performance of duties to the
Company or its Affiliates which transaction is adverse to the
interests of the Company and is engaged in for personal profit
or;
(4) willful
violation of any law, rule or regulation in connection with the
performance of duties (other than traffic violations or similar
offenses).
For purposes of
this definition, an act, or failure to act, on Employee’s
part shall be deemed “willful” if done, or omitted to
be done, by Employee in bad faith and without reasonable belief
that Employee’s action or omission was in the best interest
of the Company.
(k) “
Change in Control ” means:
(1) the
acquisition by any person or group (including a group within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act),
other than the Company or any of its subsidiaries, of beneficial
ownership (within the meaning
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of
Rule 13d-3 promulgated under the Exchange Act) of a majority
of the combined voting power of the Company’s then
outstanding voting securities, other than by any employee benefit
plan maintained by the Company;
(2) the sale of
all or substantially all the assets of the Company and its
subsidiaries taken as a whole; or
(3) the election,
including the filling of vacancies, during any period of 24 months
or less, of 50% or more of the members of the Board, without the
approval of Continuing Directors, as constituted at the beginning
of such period.
For purposes of
this definition, “Continuing Directors” shall mean,
with respect to any date, any director of the Company who either
(i) is a member of the Board on such date, or (ii) is
subsequently nominated for election to the Board by a majority of
the Board which is comprised of directors who were, at the time of
such nomination, Continuing Directors.
(l) “
COBRA ” means the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended.
(m) “
Code ” means the Internal Revenue Code of 1986, as
amended.
(n) “
Committee ” means the committee designated pursuant to
Section 6 to administer this Plan.
(o) “
Company ” means L-3 Communications Holdings, Inc., a
Delaware corporation and, after a Change in Control, any successor
or successors thereto.
(p) “
Director ” means (a) any Director of the Company
and (b) any other Employee who participates in the Executive
Benefits Plan of the Company at the benefit level provided to
Directors of the Company generally. For the avoidance of doubt, the
phrase “Director of the Company” as used in clause
(a) of this definition refers to an Employee serving with a
title of Director, and not to a member of the Board.
(q) “
Disability ” means an Employee, as a result of
incapacity due to physical or mental illness, becomes eligible for
benefits under the long-term disability plan or policy of the
Company or a subsidiary in which the Employee is eligible to
participate.
(r) “
Elected Officer ” means a person who is elected or
appointed as an officer of the Company pursuant to any resolution
adopted by Board on or after the date of the most recent annual
meeting of Company stockholders and prior to the date of the Change
in Control (which election or appointment is not revoked prior to
such date).
(s) “
Eligible Employee ” means an Employee whose employment
with Employee’s Employer (i) is terminated by the
Employer for any reason other than Cause, Disability or death
(A) as an Anticipatory Termination, but only (x) if an
anticipated Change in Control actually occurs during the period in
which this Plan is effective and (y) to the extent such Change
in Control also constitutes a change in ownership or
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effective
control, or in the ownership of a substantial portion of the
assets, within the meaning of Section 409A(a)(2)(A)(v) of the
Code or (B) during the two-year period beginning on the
effective date of a Change in Control, or (ii) terminates
during the two-year period beginning on the effective date of a
Change in Control on account of such Employee’s resignation
for Good Reason within six months from the date the Employee first
becomes actually aware of the existence of Good Reason.
(t) “
Employee ” means (1) any Elected Officer of the
Company and (2) any other employee of the Company or any of
its wholly-owned subsidiaries, whose payroll expenses are primarily
allocated and recorded as a corporate expense of L-3 Communications
Corporation or any successor entity (and not as an expense of
a group, division or subsidiary thereof) for financial
reporting purposes, as applied immediately prior to the date of a
Change in Control.
(u) “
Employer ” means, with respect to any Employee, the
legal entity that employed such Employee prior to any termination
of employment contemplated hereunder.
(v) “
Exchange Act ” means the Securities Exchange Act of
1934, as amended.
(w) “
Executive ” means a person qualifying as any of
following immediately prior to the date of a Change in Control:
(i) the Chief Executive Officer, the Chief Financial Officer
and the General Counsel of the Company, (ii) any Executive
Vice President, Senior Vice President, Chief Operating Officer or
Group President of the Company and (iii) any Vice President or
Director of the Company (as such positions are defined in this
Section 1). For the avoidance of doubt, the term
“Executive” shall not include any Employee who holds a
title of Chief Executive Officer, Chief Financial Officer, General
Counsel, Executive Vice President, Senior Vice President, Vice
President or Director solely with respect to a Company group,
division or subsidiary and not with respect to the Company
generally.
(x) “
Fiscal Year ” means any given fiscal year of the
Company.
(y) “
Good Reason ” means any of the following actions on or
after a Change in Control, without Employee’s express prior
written approval, other than due to Employee’s Disability or
death:
(1) (A) any
reduction in Base Salary or annual or long-term incentive
opportunity (including Target Bonus, if applicable) or (B) any
adverse change to the calculation methodology for determining
Bonuses or long-term incentives which is reasonably likely to have
an adverse impact on the amounts the Eligible Employee has the
potential to earn under such programs (which for the avoidance of
doubt shall not be deemed to have occurred if an acquiror fails to
continue or provide any equity-based incentive plan);
(2) any failure by
acquiror to continue to provide employee benefits that are
substantially similar in the aggregate to those afforded to the
Employee
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immediately
prior to the Change in Control; for this purpose employee benefits
shall mean pension and retirement, fringe and welfare
benefits;
(3) any material
adverse change in Employee’s duties or
responsibilities;
(4) any relocation
of Employee’s principal place of business of 50 miles or
more, provided that such relocation also increases
Employee’s commute by at least 25 miles; or
(5) any failure to
pay Employee’s Base Salary and other amounts earned by
Employee within ten (10) days after the date such compensation
is due;
(6) the failure of
any successor or assignee (whether direct or indirect, by purchase,
merger, consolidation, or otherwise) to all or substantially all of
the business and/or assets of the Company in connection with any
Change in Control, by agreement in writing in form and substance
reasonably satisfactory to Employee, expressly, absolutely and
unconditionally to assume and agree to perform all obligations
under this Plan.
(z) “
Plan ” means the L-3 COMMUNICATIONS HOLDINGS, INC.
CHANGE IN CONTROL SEVERANCE PLAN, as in effect from time to
time.
(aa) “
Plan Year ” means the calendar year.
(bb) “
Release ” means a release to be signed by an Eligible
Employee in such form as the Company shall reasonably determine,
which shall, to the extent permitted by law, waive all claims and
actions against the Employers and such other related parties and
entities as the Company reasonably chooses to include in the
release except for claims and actions for benefits provided under
(or contemplated by) the terms of this Plan (which Release is not
revoked by the Eligible Employee).
(cc) “
Severance Multiple ” means, with respect to any
Eligible Employee, the highest of the following multiples
applicable to such person:
(1) the multiple
of three (3), for each of the Chief Executive Officer, Chief
Financial Officer, General Counsel and any Executive Vice President
of the Company;
(2) the multiple
of two and one-half (2.5), for each Senior Vice President, Chief
Operating Officer or Group President of the Company;
(3) the multiple
of two (2), for each Vice President of the Company who is also an
Elected Officer;
(4) the multiple
of one and one-half (1.5), for each Vice President of the Company
who is not also an Elected Officer; and
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(5) the multiple
of one (1), for each Director of the Company.
(dd) “
Target Bonus ” means the greater of (1) an
Employee’s target Bonus in effect immediately prior to the
date of the Change in Control or (2) an Employee’s
target Bonus in effect immediately prior to the date on which the
Eligible Employee is terminated (or, if the termination is for Good
Reason, immediately prior to the event set forth in the notice of
termination given in accordance with Section 15).
(ee) “
Vice President ” means (a) any Vice President of
the Company and (b) any other Employee who participates in the
Executive Benefits Plan of the Company at the benefit level
provided to Vice Presidents of the Company generally.
Section 2.
Severance Benefits . Each Eligible Employee who executes a
Release in the manner prescribed by the Company within 45 days
following such Eligible Employee’s date of termination and
additionally, for each Eligible Employee who is also an Elected
Officer, who agrees at such time to be subject to the restrictive
covenants set forth on Exhibit A shall be entitled to the
following:
(1) Each such
Eligible Employee who is an Executive shall be entitled to receive
severance pay from his or her Employer in a lump sum amount equal
to the sum of:
(i) the Eligible
Employee’s Severance Multiple, multiplied by the
Eligible Employee’s Annual Compensation; and
(ii) the Average
Bonus (or, if determinable on the date of termination (i.e., by way
of a formula or calculation applied on a basis consistent with past
practice), the Actual Bonus for the year of termination),
multiplied by the Bonus Fraction.
(2) Each such
Eligible Employee who is not an Executive shall be entitled to
receive severance pay from his or her Employer in a lump sum amount
equal to the sum of:
(i) the Average
Bonus (or, if determinable on the date of termination (i.e., by way
of a formula or calculation applied on a basis consistent with past
practice), the Actual Bonus for the year of termination),
multiplied by the Bonus Fraction; plus
(ii) four
(4) weeks of the Eligible Employee’s Annual
Compensation; plus
(iii) two
(2) or three (3) weeks (as determined by the Chief
Executive Officer of the Company on or prior to the date of the
Change in Control) of the Eligible Employee’s Annual
Compensation for each completed year of service by the Eligible
Employee with the Company, its
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Affiliates and
any of their respective predecessor entities; provided ,
however , that the sum of the amounts determined under
clauses (ii) and (iii) above shall be limited to the
amount of the Eligible Employee’s Annual Compensation
(i.e.,
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