L-3 COMMUNICATIONS CORPORATION

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

(Restated January 1, 2000)

ARTICLE I

PURPOSE OF THE SERP

The purpose of this L-3 Communications Corporation Supplemental Executive
Retirement Plan is to provide supplemental retirement income for a select group
of management and highly compensated employees of L-3 Communications Corporation
and certain of its subsidiaries and divisions by providing benefits equal to
those benefits that can not be provided under certain tax-qualified pension
plans because of the limitations of Sections 401(a)(17) and 415 of the Internal
Revenue Code of 1986, as amended.

The Plan was effective as of May 1, 1997. It was amended and restated effective
as of January 1, 1999 to provide that the Company shall fund the benefits due
under this SERP within 30 days of a Change of Control.

The Plan is restated as of January 1, 2000 to provide that (a) an employee whose
annual compensation, including amounts deferred under a nonqualified plan,
exceeds the Section 401(a)(17) limits is eligible to participate in the Plan,
(b) in determining benefits under this SERP, compensation includes amounts
deferred under the L-3 Communications Corporation Deferred Compensation Plan,
and to clarify the benefits provided under Appendix B-1.

ARTICLE II

DEFINITIONS

Beneficiary — The Participant’s beneficiary with respect to the Pension Benefit
payable under the Pension Plan.

Board — The Board of Directors of L-3 Communications Corporation.

Code — The Internal Revenue Code of 1986, as amended.

Committee — The committee described in Section 6.1, which administers this SERP.

Company — L-3 Communications Corporation.

Participant — An employee of the Company (a) whose total compensation for a
calendar year, including all amounts deferred by the employee under the L-3
Communications Corporation Deferred Compensation Plan, exceeds the maximum
dollar amount for that year under Section 401(a)(17) of the Code, or (b) for
whom benefits under a Pension Plan are limited by Sections 401(a)(17) or 415 of
the Code, provided that the employee meets any other requirements as determined
by the Committee in its sole and exclusive discretion. An employee

 

 

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who satisfies the requirements for participation in this SERP for a calendar
year shall continue to be a Participant for all subsequent years regardless of
whether he meets the participation requirements of subsection (a) or (b) herein
for any such subsequent year. The Committee shall limit participation in this
SERP to 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, as determined by the Committee, in its sole and exclusive discretion.

Pension Plan — The tax-qualified defined benefit plan, among those listed in
Appendix A, in which the Participant participates.

Pension Plan Benefit — The Participant’s accrued benefit under the Pension Plan.

SERP — This L-3 Communications Corporation Supplemental Executive Retirement
Plan.

Supplemental Pension Benefit — The benefit, if any, to which a Participant is
entitled under the terms of this SERP.

ARTICLE III

ELIGIBILITY FOR AND AMOUNT OF BENEFITS

3.1 Eligibility for Benefits. A Participant who terminates employment and is
entitled to a Pension Benefit under the terms of the Pension Plan shall be
entitled to a Supplemental Pension Benefit in an amount determined in accordance
with Section 3.2 or any applicable Appendix and payable in accordance with
Sections 3.3 and 3.4.

3.2 Amount of Benefit. Except as otherwise provided in Appendix B-1, the
Supplemental Pension Benefit shall be equal to the excess, if any, of:

(a) the benefit that would have been paid under the Pension Plan to such
Participant (or his or her Spouse or Beneficiary), in the form elected by the
Participant (or his or her Spouse or Beneficiary) pursuant to the terms of the
Pension Plan, based on compensation as defined in subsection (c) below and
irrespective of the limitations of Sections 401(a)(17) and 415, less

(b) the Pension Benefit that is actually paid under the Pension Plan to such
Participant (or his or her Spouse or Beneficiary), in the form elected by the
Participant (or his or her Spouse or Beneficiary), based on compensation as
defined in the Pension Plan and taking into account the limitations of Sections
401(a)(17) and 415.

(c) Solely for purposes of this Section 3.2, compensation shall mean
“compensation” as defined in the applicable Pension Plan provided that (1) base
salary deferred by a Participant under the L-3 Communications Corporation
Deferred Compensation Plan shall be taken into account, (2) management incentive
bonuses, whether or not deferred by a Participant under the L-3 Communications
Deferred Compensation Plan, shall be taken into account, and (3) the limitations
under Section 401(a)(17) of the Code shall not apply.

 

 

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3.3 Form and Timing of Benefit Payments. Except as otherwise provided in Section
3.4, any Supplemental Pension Benefit to which a Participant is entitled under
this SERP shall be paid in the same form and at the same time, using the same
actuarial assumptions, as the Pension Benefit that is paid to the Participant
(or his or her Spouse or Beneficiary) under the terms of the Pension Plan.

3.4 Payment on Change of Control.

(a) Notwithstanding any other provision of this SERP to the contrary, in the
event of a Change of Control, a Participant who has not begun receiving benefits
under this SERP shall be entitled to receive a Supplemental Pension Benefit in
the amount determined under Section 3.2 as of the date immediately preceding the
Change of Control, which benefit shall be paid in a lump sum within 30 days
following the date of the Change of Control. A Participant who began to receive
benefits under this SERP prior to a Change of Control shall continue to receive
payment of benefits in the same amount and in the same form as such benefits
were paid prior to the Change of Control.

(b) For purposes of this SERP, a Change in Control shall include and be deemed
to occur upon the following events:

(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 Securities Exchange Act of 1934
(“Exchange Act”), other than the Company or any of its subsidiaries, of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 51 percent or more of the combined voting power of the
Company’s then outstanding voting securities, other than (i) pursuant to a
transfer by Lehman Brothers Capital Partners III, L.P. to any of its affiliates,
or (ii) by any employee benefit plan maintained by the Company;

(2) The sale of all or substantially all of the assets of the Company or its
subsidiaries; or

(3) The election, including the filling of vacancies, during any period of 24
months or less, of 50 percent or more of the members of the Board without the
approval of Continuing Directors, as constituted at the beginning of such
period. “Continuing Directors” shall mean any director of the Company who either
(i) is a member of the Board on July 1, 1997, or (ii) is 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.

(c) This Section shall apply only to a Change in Control of the Company and
shall not cause immediate payout of any Supplemental Pension Benefit in any
transaction involving the Company’s sale, liquidation, merger, or other
disposition of any subsidiary.

(d) The Company reserves the right to change or modify the definition of Change
of Control set forth in this Section, and any such change or modification shall
be binding on the Participants.

 

 

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3.5 Forfeiture of Benefits.

(a) Notwithstanding any other provision of this SERP to the contrary, a
Participant shall forfeit any and all benefits under this SERP (including
benefits that are to be paid in the future and benefits that have already
commenced payment) if the Participant (1) is “Dismissed for Cause,” (2) becomes
employed by another employer (or becomes self-employed) in substantial
competition with the Company, or (3) engages in conduct detrimental or contrary
to the best interests of the Company. “Dismissed for Cause” means termination of
employment because of (i) theft, embezzlement, or malicious destruction of the
Company’s property, (ii) fraud or other wrongdoing against the Company, or (iii)
improper disclosure of the Company’s trade secrets.

(b) The Committee shall have full discretionary authority to make determinations
under this Section 3.5. Any forfeiture determination made by the Committee shall
be final and binding. The Committee may make a retroactive determination that a
Participant’s SERP benefits are forfeited under this Section 3.5 after payment
of SERP benefits has commenced. Such a forfeiture shall be effective as of the
date that the Committee determines the events of forfeiture have occurred. Any
SERP benefits that have been paid after the effective date of the retroactive
forfeiture determination shall be considered a mistaken payment under Section
7.5.

ARTICLE IV

UNFUNDED PLAN

4.1 Unfunded Status of SERP.

(a) This SERP constitutes a contractual promise by the Company to make payments
in the future, and a Participant’s rights shall be those of a general, unsecured
creditor of the Company. A Participant shall not have any beneficial interest in
this SERP. Notwithstanding the foregoing, to assist the Company in meeting its
obligations under this SERP, the Company may set aside assets in a trust
described in Revenue Procedure 92-64, 1992-2 C.B. 422 (generally known as a
“rabbi trust”), and the Company may direct that its obligations under this SERP
be satisfied by payments out of such trust or trusts. It is the Company’s
intention that this SERP be unfunded for federal income tax purposes and for
purposes of Title I of the Employee Retirement Income Security Act of 1974.

(b) Notwithstanding the above, in the event of a Change of Control, the Company
shall fund all benefits due under this SERP, determined as of the date of the
Change of Control, by making a contribution to an irrevocable trust established
to pay benefits under this SERP.

4.2 Nonalienability of Benefits. A Participant’s rights to benefit payments
under this SERP shall not be subject in any manner to anticipation, alienation,
sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by
creditors of the Participant or his or her Spouse or Beneficiary.

 

 

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ARTICLE V

AMENDMENT OR TERMINATION

5.1 Amendment. The Board may amend, modify, suspend or discontinue this SERP at
any time; provided, however, that no such amendment, modification, suspension or
discontinuance of the SERP shall have the effect of reducing a Participant’s
Supplemental Pension Benefit determined as though the Participant had terminated
employment with the Company on the date of the amendment, modification,
suspension or discontinuance.

5.2 Termination. The Board reserves the right to terminate this SERP at any time
and to pay any benefits under this SERP in a lump sum immediately following such
termination or at such time thereafter as the Board may determine.

ARTICLE VI

ADMINISTRATION

6.1 The Committee. This SERP shall be administered by the Compensation Committee
of the Board or such other committee of the Board as may be designated by the
Board. The members of the Committee shall be designated by the Board. A majority
of the members of the Committee (but not fewer than three) shall constitute a
quorum. The vote of a quorum or the unanimous written consent of the Committee
shall constitute action by the Committee. The Committee shall have full
authority to interpret this SERP, and interpretations of this SERP by the
Committee shall be final and binding on all parties.

6.2 Delegation and Reliance. The Committee may delegate to any officer or
employee of the Company the authority to execute and deliver those instruments
and documents and to take, or refrain from taking, all actions deemed necessary,
advisable or convenient for the effective administration of this SERP in
accordance with its terms and purposes. In making any determination or in taking
or not taking any action under this SERP, the Committee may obtain and rely upon
the advice of experts, including professional advisors to the Company. No member
of the Committee or officer of the Company who is a Participant may participate
in any decision specifically relating to his or her individual rights or
benefits under this SERP.

6.3 Exculpation and Indemnity. Neither the Company nor any member of the Board
or of the Committee, nor any other person participating in any determination of
any question under this SERP, or in the interpretation, administration or
application thereof, shall have any liability to any party for any action taken
or not taken in good faith under this SERP or for the failure of the SERP to
achieve intended tax consequences, or to comply with any other law, compliance
with which is not required on the part of the Company.

6.4 Facility of Payment. If a minor person declared incompetent, or person
incapable of handling the disposition of his or her property, is entitled to
receive a benefit, make an application, or make an election hereunder, the
Committee may direct that such benefits be paid to, or such application or
election be made by, the guardian, legal representative, or person having the
care and custody of such minor, incompetent, or incapable person. Any payment

 

 

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made, application allowed, or election implemented in accordance with this
Section shall completely discharge the Company and the Committee from all
liability with respect thereto.

6.5 Proof of Claims. The Committee may require proof of the death, disability,
competency, minority, or incapacity of any Participant or Beneficiary and of the
right of a person to receive any benefit or make any application or election.

6.6 Claim Procedure.

(a) Any person claiming a benefit, requesting an interpretation or ruling under
this SERP, or requesting information under this SERP shall present the request
in writing to the Committee which shall respond in writing within 60 days. If
the claim or request is denied, the written notice of denial shall state (1) the
reason for denial, with specific reference to the plan provisions on which the
denial is based, (2) a description of any additional material or information
required and an explanation of why it is necessary, and (3) an explanation of
the claims review procedure.

(b) Any person whose claim or request is denied or who has not received a
response within 60 days may request review by giving written notice to the
Committee. The claim or request shall be reviewed by the Committee who may, but
shall not be required to, grant the claimant a hearing. On review, the claimant
may have representation, examine pertinent documents, and submit issues and
comments in writing.

(c) The decision on review shall normally be made within 60 days after the
Committee’s receipt of a request for review. If an extension of time is required
for a hearing or other special circumstances, the claimant shall be notified and
the time limit shall be 120 days. The decision shall be in writing and shall
state the reason and the relevant plan provisions. All decisions on review shall
be final and binding on all parties concerned.

(d) In the event of any dispute over benefits under this SERP, all remedies
available to the disputing individual under this Section 6.6 must be exhausted,
within the specified deadlines, before legal recourse of any type is sought.

ARTICLE VII

GENERAL PROVISIONS

7.1 No Guarantee of Employment. This SERP shall in no way obligate the Company
to continue the employment of a Participant with the Company or limit the right
of the Company at any time and for any reason to terminate the Participant’s
employment. In no event shall the SERP constitute an employment contract between
the Company and a Participant or in any way limit the right of the Company to
change a Participant’s compensation or other benefits.

7.2 Other SERP Benefits. Amounts under this SERP shall not be treated as
compensation for purposes of calculating the amount of a Participant’s benefits
or contributions under any pension, retirement, or other plan maintained by the
Company (or a subsidiary or division of the Company), except as provided in such
other plan.

 

 

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7.3 Tax Withholding. To the extent required by law, the Company shall withhold
from benefit payments hereunder any Federal, state, or local income or payroll
taxes required to be withheld and shall furnish the recipient and the applicable
government agency or agencies with such reports, statements, or information as
may be legally required.

7.4 Missing Payees. If all or portion of a Participant’s SERP benefit becomes
payable and the Committee after a reasonable search cannot locate the
Participant (or his or her Beneficiary if such Beneficiary is entitled to
payment), the Committee may, upon advice of counsel, forfeit the Participant’s
SERP benefit. If the Participant (or his or her Beneficiary) subsequently
presents a valid claim for benefits to the Committee, the Committee shall
restore and pay the appropriate SERP benefit.

7.5 Mistaken Payment. No Participant or Beneficiary shall have any right to any
payment made in error or in contravention of the terms of the SERP, the Code, or
ERISA. The Committee shall have full rights under the law to recover any such
mistaken payment, and the right to recover attorney’s fees and other costs
incurred with respect to such recovery. Recovery shall be made from future SERP
payments, or by any other available means.

7.6 Receipt and Release for Payments. Any payment to a Participant, Beneficiary,
or to any such person’s legal representative, parent, guardian, or any person or
entity specified in Section 6.4, shall be in full satisfaction of all claims
that can be made under the SERP against the Company. The Company may require
such Participant, Beneficiary, legal representative, or any other person or
entity described in Section 6.4, as a condition precedent to such payment, to
execute a receipt and release thereof in such form as shall be determined by the
Company.

7.7 Successors. The provisions of this SERP shall be binding upon and inure to
the benefit of the Company, its successors, and its assigns, and to the
Participants and their heirs, executors, administrators, and legal
representatives.

7.8 Governing Law. The validity of this SERP and any of its provisions shall be
construed, administered, and governed in all respects under and by the laws of
the State of New York (including its statute of limitations and all substantive
and procedural law, and without regard to its conflict of laws provisions),
except as to matters of Federal law. If any provision of this instrument shall
be held by a court of competent jurisdiction to be invalid or unenforceable, the
remaining provisions hereof shall continue to be fully effective.

IN WITNESS WHEREOF, this L-3 Communications Corporation Supplemental Executive
Retirement Plan is hereby restated effective January 1, 2000.

 

 

 

L-3 COMMUNICATIONS CORPORATION

 

By: 

/s/ Ken Manne

       

 

 

Title:

 

 

 

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Appendix A – Pension Plans

L-3 Communications Corporation Pension Plan

The Narda Microwave - East Pension Plan

L-3 Communication Systems - East Retirement Income Plan

L-3 Aviation Recorders Retirement Plan

L-3 Aviation Recorders Retirement Plan II

L-3 Communication Systems - West Retirement Plan

L-3 Communication Systems - West Retirement Plan II

L-3 Link Simulation and Training Retirement Plan

L-3 Communications Pension Plan For Certain Divisions – Ocean Systems and Space
& Navigation Divisions only

 

 

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Appendix B – 1

Special Provisions for the Narda Microwave - East Division

This Appendix B-1 contains additional terms of the SERP that apply to employees
of the Narda Microwave - East Division of the Company (“Narda East”).

1. Participation. An employee of Narda East is eligible to participate in the
SERP if he or she is an officer of Narda East (regardless of the amount of his
or her annual base compensation).

2. Supplemental Pension Benefit. A Participant shall be entitled to a
Supplemental Pension Benefit equal to the greater of the amount determined under
subsection (a) or (b) below:

(a) the excess, if any, of:

(1) the benefit that would have been paid under the Pension Plan to such
Participant (or his or her Spouse or Beneficiary), in the form elected by the
Participant (or his or her Spouse or Beneficiary) pursuant to the terms of the
Pension Plan, based on Compensation as defined in Section 4(d) of this Appendix
B-1 and irrespective of the limitations of Sections 401(a)(17) and 415, less

(2) the Pension Benefit that is actually paid under the Pension Plan to such
Participant (or his or her Spouse or Beneficiary), in the form elected by the
Participant (or his or her Spouse or Beneficiary), based on “compensation” as
defined in the Pension Plan and taking into account the limitations of Sections
401(a)(17) and 415.

(b) the excess, if any, of:

(1) the benefit that would have been paid to the Participant (or his or her
Spouse or Beneficiary) in the form elected by the Participant (or his or her
Spouse or Beneficiary) based on the Basic Plan Benefit Formula under the Basic
Plan and based on compensation as defined in Section 4(d) of this Appendix B-1
and without regard to the limitations of Section 401(a)(17) and 415 of the
Internal Revenue Code of 1986, as amended, less

(2) the Pension Benefit that is actually paid under the Pension Plan to such
Participant (or his or her Spouse or Beneficiary), in the form elected by the
Participant (or his or her Spouse or Beneficiary), based on “compensation” as
defined in the Pension Plan and taking into account the limitations of Sections
401(a)(17) and 415.

3. Payment of Supplemental Pension Benefit. The Supplemental Pension Benefit
payable under this Appendix B-1 shall be subject to all of the terms of the SERP
including, but not limited to, Sections 3.3, 3.4 and 3.5.

 

 

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4. Definitions. The following definitions shall apply solely for purposes of
this Appendix B-1:

(a) “Average Compensation” means the Compensation, as defined in this Appendix
B-1, of a Participant averaged over the five consecutive years which produce the
highest annual average during the ten-year period (or the number of years of
Plan participation, if less than ten) ending on the date on which the
Participant attains age 65 or ceases to be a Participant, if earlier.

(b) “Basic Plan” means The Microwave Corporation Pension Plan, as amended and
restated effective as of January 1, 1984.

(c) “Basic Plan Benefit” means a benefit expressed as a single life annuity
beginning at age 65 determined under the following formula:

20% of the Participant’s Average Compensation not in excess of his or her
Covered Compensation, plus 50% of the Participant’s Average Compensation in
excess of his or her Covered Compensation, reduced by 1/15th for each year of
service, determined under the “elapsed time” method, less than 15 years
determined as of the Participant’s 65th birthday, and further reduced by a
fraction, the numerator of which is the Participant’s years of Credited Service
at termination of employment and the denominator of which is the Participant’s
years of Credited Service if he continued in employment with Narda East until
age 65.

(d) “Compensation” means the aggregate basic rate of annual remuneration paid by
the Narda East division of the Company during the applicable calendar year,
including annual cash bonuses, and amounts deferred under the L-3 Communications
Corporation Deferred Compensation Plan, and without regard to the limitations
under Section 401(a)(17) of the Code.

(e) “Covered Compensation” means the amount of compensation with respect to
which old age and survivors insurance benefits would be provided under the
Social Security Act computed as though for each year until the Participant
reaches age 65 his annual compensation is at least equal to the taxable wage
base, as set for in Revenue Ruling 99-47, 1999-47 I.R.B. 588 or any successor
ruling thereto.

(f) “Credited Service” means the full years and months of employment beginning
with the first day of the month in which the Participant first became employed
by Narda East (or its predecessor, The Narda Microwave Corporation) and ending
on the Participant’s last day of employment with Narda East.

 

 

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Appendix B-2

Special Provisions for the L-3 Communication Systems - East Division

This Appendix B-2 contains additional terms of the SERP that apply to
Participants who are employees of the L-3 Communication Systems - East division
of the Company:

1. Additional Benefit. In addition to the Supplemental Pension Benefit described
in Section 3.2, a Participant who is an employee of the L-3 Communication
Systems - East division of the Company shall receive a retirement benefit from
this SERP equal to the excess, if any, of the pension benefit calculated based
on the formula described in Article V(1)(B) of the January 1, 1995 Martin
Marietta Corporation Retirement Income Plan without regard to the limitation
described in Article 5(1)(c), reduced by the greater of the pension benefits
described in Article 5(1)(d)(i)(A) or (B) of that Plan.

2. Additional Death Benefit to Beneficiary. If a Participant dies prior to
retirement, his designated Beneficiary under the Pension Plan shall receive a
lump sum pre-retirement death benefit from this SERP equal to the excess, if
any, of (a) the lump sum pre-retirement death benefit which would have been paid
to such designated Beneficiary under the Pension Plan if such payment were not
limited by Code Sections 401(a)(17) and the incidental death benefit rules of
Treasury Regulation 1.401-1(b)(1)(i), over (b) the lump sum pre-retirement death
benefit actually payable under the Pension Plan.

3. Additional Death Benefit to Spouse. If a Participant dies prior to retirement
and after having attained five years of vesting service under the Pension Plan,
his surviving spouse shall receive a pre-retirement surviving spouse annuity
from this SERP equal to the excess, if any, of (a) the pre-retirement surviving
spouse annuity benefit which would have been paid to such surviving spouse under
the Pension Plan if such payment were not limited by Code Sections 401(a)(17)
and 415 and the incidental death benefit rules of Treasury Regulation
1.401-1(b)(1)(i), over (b) the pre-retirement surviving spouse annuity benefit
actually payable under the Pension Plan.

 

 

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