L-3 COMMUNICATIONS
CORPORATION
DEFERRED COMPENSATION PLAN
II
(Effective January 1,
2009)
PURPOSE AND INTENT OF THE
PLAN
1.
Purpose . The purpose of this L-3 Communications Corporation
Deferred Compensation Plan II is to provide certain key management
employees of the Company with the opportunity to elect to defer
receipt of ( a ) a portion of their Base Salary, and (
b ) all or a portion of their Incentive Bonus. Elections to
defer Base Salary and Incentive Bonuses and distributions of such
Deferred Base Salary and Deferred Incentive Bonuses that have been
made on or after January 1, 2005 and before the effective date
of this Plan have been made in accordance with the terms of this
Plan as in effect on January 1, 2009.
2.
Intent . The Plan is intended to comply with the
requirements of Section 409A of the Code and shall be
interpreted in a manner that is consistent with such intent. The
Plan also is intended to be a top-hat plan under the Employee
Retirement Income Security Act of 1974, as amended and shall be
interpreted in a manner consistent with such intent.
Unless the context
indicates otherwise, the following words and phrases shall have the
meanings hereinafter indicated:
Base
Salary — An Eligible Employee’s annual base
salary.
Beneficiary — The person or persons designated by the
Participant in his or her most recent beneficiary designation made
in accordance with procedures prescribed by the Company to receive
any benefits payable under this Plan as a result of the
Participant’s death. The Participant may change his or her
Beneficiary designation at any time by making a subsequent
designation in accordance with procedures prescribed by the
Company. If no Beneficiary has been designated, or no designated
Beneficiary survives the Participant, Beneficiary means the
Participant’s estate.
Board
— The Board of Directors of L-3 Communications
Corporation.
Code
— The Internal Revenue Code of 1986, as amended.
Committee
— The committee described in Article VIII,
Section 1, which administers the Plan.
Company
— L-3 Communications Corporation, including its divisions and
subsidiaries.
Deferral
Account — The bookkeeping account maintained by the
Company for each Participant which is credited with any ( a
) Deferred Base Salary and Deferred Incentive Bonus made on behalf
of the Participant, and ( b ) earnings on those
amounts.
Deferral
Agreement — The annual agreement executed or otherwise
acknowledged by an Eligible Employee under procedures prescribed by
the Company under which the Eligible Employee elects to defer Base
Salary and/or Incentive Bonus for a calendar year.
Deferred Base
Salary — The amount of Base Salary deferred and credited
to a Participant’s Deferral Account for a calendar
year.
Deferred
Incentive Bonus — The amount of Incentive Bonus deferred
and credited to a Participant’s Deferral Account for a
calendar year.
Eligible
Employee — An employee who is subject to U.S. income
taxes for a calendar year and who is eligible for an MIB award for
such calendar year and whose Base Salary for a calendar year equals
or exceeds the dollar amount in Code Section 414(q) shall be
an Eligible Employee for such year. The Committee shall limit
participation in this Plan to employees whom the Committee believes
to be a select group of management or highly compensated employees
within the meaning of Title I of the Employee Retirement Income
Security Act of 1974, as amended. Whether an individual is an
Eligible Employee shall be determined each calendar
year.
Incentive
Bonus — The incentive bonus amount awarded to an Eligible
Employee for a calendar year under the MIB.
MIB
— The formal or informal program of the Company under which
an employee receives an annual incentive bonus.
Open
Enrollment Period — The period of time during which an
Eligible Employee may make an election to participate in the Plan
for a calendar year as determined by the Company. The Open
Enrollment Period for an Employee who is a Participant shall end no
later than December 31 of the year preceding the calendar year
for which the Deferral Agreement is made. The Open Enrollment
Period for an employee who is first eligible to participate in the
Plan mid-year either because he or she is newly hired or newly
promoted shall begin on the date such individual is first notified
by the Company that he or she is eligible to participate and shall
end 30 days after such date.
Participant — An Eligible Employee who enters into a
Deferral Agreement. An Eligible Employee who enters into a Deferral
Agreement shall continue to participate in this Plan until his or
her Deferral Account balance has been fully distributed.
Plan
— This L-3 Communications Corporation Deferred Compensation
Plan II.
L-3 Communications Corporation
Deferred Compensation Plan II
2
Section 409A Change of Control Event — A change
in ownership or effective control of Holdings, or in the ownership
of a substantial portion of the assets of Holdings, within the
meaning of Section 409A(a)(2)(A)(v) of the Code.
Separate from
Service /Separation from Service; Separates from Service
— An Eligible Employee separates from service or experiences
a separation from service if he or she dies, retires, or otherwise
terminates employment as defined in Treasury Regulation
§1.409A-1(h).
Specified
Employee — A “specified employee” as defined
in Treasury Regulation § 1.409A-1(i).
Unforeseeable
Emergency —An “unforeseeable emergency” as
defined in Treasury Regulation § 1.409A-3(i)(3).
U.S. Prime
Rate — The U.S. prime rate as reported in the Wall Street
Journal or such other source as may be designated by the
Committee.
ELECTION OF DEFERRED
COMPENSATION
(a) An Eligible
Employee for a calendar year may elect to defer a portion of his or
her Base Salary and/or Incentive Bonus payable for services
performed during a calendar year by executing or otherwise
acknowledging under procedures prescribed by the Company a Deferral
Agreement during the Open Enrollment Period.
(b) An Eligible
Employee’s Deferral Agreement shall be irrevocable for the
calendar year for which it is made. Such Deferral Agreement shall
not continue in effect for any succeeding calendar year.
(c) An individual
who continues to be an Eligible Employee for a succeeding calendar
year may make a new Deferral Agreement with respect to such
succeeding calendar year by executing or otherwise acknowledging
under procedures prescribed by the Company a new Deferral Agreement
during the Open Enrollment Period for such succeeding calendar
year.
(d)
Notwithstanding subsection (b) above, an Eligible Employee may
revoke his or her Deferral Agreement in the event of an
Unforeseeable Emergency, his or her disability as defined in
Treasury Regulation § 1.409A-3(j)(4)(xii), or following a
financial hardship distribution pursuant to Treasury Regulation
§ 1.401(k)-1(d)(3) with the consent of the Company and subject
to such procedures as the Company shall proscribe. If an Eligible
Employee revokes his or her Deferral Agreement, then he or she may
not make a new Deferral Agreement until the next Open Enrollment
Period for the succeeding calendar year.
L-3 Communications Corporation
Deferred Compensation Plan II
3
2. Amount
of Deferral . An Eligible Employee may elect to defer (
a ) up to 50 percent of his or her Base Salary for a
calendar year, and ( b ) up to 100 percent of his or
her Incentive Bonus for a calendar year; provided, however, that to
be eligible to defer all or a portion of his or her Incentive Bonus
for a calendar year, the Incentive Bonus for such calendar year
must be at least $10,000 and the Deferred Incentive Bonus for such
calendar year must be at least $5,000.
3. Time
when Deferral Agreement Takes Effect . An Eligible
Employee’s Deferral Agreement shall take effect on January 1
of the calendar year following the year in which the Deferral
Agreement is made; provided, that the Deferral Agreement of an
individual who becomes an Eligible Employee mid-year and makes a
Deferral Agreement during the applicable Open Enrollment Period
shall take effect as soon as administratively possible after such
Deferral Agreement is executed or otherwise acknowledged by the
Eligible Employee under the procedures prescribed by the Company.
An individual shall first become eligible to participate in the
Plan upon being notified by Company that he or she is an Eligible
Employee.
1.
Establishment of Deferral Account . A Deferral Account shall
be established for each Participant, which shall be credited with
his or her Deferred Base Salary, Deferred Incentive Bonus and
earnings.
2.
Crediting of Deferred Amounts . Deferred Base Salary and
Deferred Incentive Bonus shall be credited to a Participant’s
Deferral Account as of the fifteenth (15 th )
day (or if such day is not a business day, the nearest prior
business day) of the month following the date on which such amounts
would have been paid to the Participant if no Deferral Agreement
were in effect.
3.
Crediting of Earnings . Deferred Base Salary and Deferred
Incentive Bonus shall be credited with earnings beginning on the
first day (or if such day is not a business day, the next following
business day) of the month following the month in which such
amounts would have been paid to the Participant if no Deferral
Agreement were in effect and ending on the business day immediately
preceding the day on which such amounts are distributed or
withdrawn. Earnings shall be compounded and credited to a
Participant’s Deferral Account each day based on the U.S.
Prime Rate in effect on the first business day of the calendar
quarter preceding the date on which the earnings are
credited.
4.
Vesting of Deferral Account Balance . A Participant’s
Deferral Account balance shall be fully vested at all
times.
L-3 Communications Corporation
Deferred Compensation Plan II
4
1.
General . The Company’s liability to pay benefits to a
Participant or Beneficiary under this Plan shall be measured by,
and in no event shall exceed, the Participant’s Deferral
Account balance. All benefit payments shall be made in
cash.
2.
Payment of Deferral Account Balance .
(a) At the time an
Eligible Employee executes or otherwise acknowledges under
procedures prescribed by the Company a Deferral Agreement for a
calendar year, he or she shall irrevocably elect the date on which
his or her Deferred Base Salary and Deferred Incentive Bonus for
that calendar year (as adjusted for earnings) shall be
paid.
(b) The
Participant may elect that his or her Deferred Base Salary and
Deferred Incentive Bonus for the calendar year be paid ( i )
on Separation from Service for any reason or ( ii ) on the
first business day of any calendar year that is at least five full
calendar years following the calendar year for which the Deferral
Agreement is made.
(c)
Notwithstanding subsection (b) above, if a Participant
Separates from Service for any reason prior to the date the
Participant elected to have his or her Deferred Base Salary and
Deferred Incentive Bonus paid out, such amount shall be paid on the
Participant’s Separation from Service.
(d)
Notwithstanding any other provision in this Plan to the contrary,
any payment to a Specified Employee due to Separation from Service
for any reason other than death shall be delayed for six months
following the date the payment is otherwise due. Earnings shall
continue to be credited to the Specified Employee’s Deferral
Account in accordance with Article IV, Section 3 above
during the six-month delay period.
(e) If a
Participant fails to make an election with respect to the time of
payment of his or her Deferred Base Salary and Deferred Incentive
Bonus for a calendar year, such amount shall be paid on the
Participant’s Separation from Service, or, with respect to a
Participant who is a Specified Employee, the date that is six
months following the Participant’s Separation from
Service.
(f) Any Deferred
Base Salary and Deferred Incentive Bonus to be paid on Separation
from Service pursuant to subsection (b), (c) or (e) above
shall be paid
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