Document:

Exhibit 10.39

 

L3 TECHNOLOGIES, INC.

AMENDED AND RESTATED

CHANGE IN CONTROL SEVERANCE PLAN

THIS L3 TECHNOLOGIES, INC. AMENDED AND RESTATED CHANGE IN CONTROL SEVERANCE PLAN, originally adopted on August 15, 2006 (the “Effective Date”) by L-3 Communications Holdings, Inc. (which subsequently merged with and into the Company (as defined below) (formerly known as L-3 Communications Corporation)), as amended and restated through December 31, 2016, 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 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.

 

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(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 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 L3 Technologies, 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 election of officers and prior to the date of the Change in Control (which election or appointment is not revoked prior to such date).

 

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(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 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 L3 Technologies, Inc. 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 Operating Officer, the Chief Financial Officer and the General Counsel of the Company, (ii) any Executive Vice President, Senior Vice President 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 Operating 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);

 

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(2)           any failure by acquiror to continue to provide employee benefits that are substantially similar in the aggregate to those afforded to the Employee 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 L3 TECHNOLOGIES, INC. AMENDED AND RESTATED 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, the Chief Operating Officer, the Chief Financial Officer, the 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 or Group President of the Company;

 

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(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

(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:

(a)           Severance Pay.

(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

 

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(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 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., 52 weeks of the Eligible Employee’s Annual Compensation).

(b)           Medical, Dental and Life Insurance Benefit Continuation.

(1)           For each Eligible Employee who is an Executive, for a period of years (or fractions thereof) equal to the Severance Multiple following the Eligible Employee’s termination of employment (the “Executive Welfare Continuation Period”), the Eligible Employee and such Eligible Employee’s spouse and dependents (each as defined under the applicable program) shall receive the following benefits: (x) medical and dental insurance coverages at the same benefit levels as provided to the Eligible Employee immediately prior to the Change in Control, for which the Company will (A) reimburse the Eligible Employee during the first 18 months of the Executive Welfare Continuation Period or, if shorter, the period of actual COBRA continuation coverage received by the Eligible Employee during the Executive Welfare Continuation Period, for the total amount of the monthly COBRA medical and dental insurance premiums payable by the Eligible Employee for such continued benefits in excess of the cost the Eligible Employee paid for such coverage (on a monthly premium basis) immediately prior to such termination of employment and (B) provide such coverage for any remaining portion of the Executive Welfare Continuation Period at the same cost to the Eligible Employee as is generally provided to similarly situated active employees of the Company (or, if it is not possible, or is cost-prohibitive for the Company to provide such coverage for such remaining portion, the Company will pay the Eligible Employee a cash lump sum payment equal to the premiums the Company would have paid if the Eligible Employee had remained an active employer), provided, however, that if, during the Executive Welfare Continuation Period, the Eligible Employee becomes employed by a new employer, continuing medical and dental coverage from the Company will become secondary to any coverage afforded by the new employer in which the Eligible Employee becomes enrolled); and (y) life insurance coverage at the same benefit level as provided to the Eligible Employee immediately prior to the Change in Control and at the same cost to the Eligible Employee as is generally provided to similarly situated active employees of the Company (or if such coverage is no longer provided by the Company, then at the Employee’s cost immediately prior to the Change in Control).

 

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(2)           For each Eligible Employee who is not an Executive, for a period not to exceed the number of weeks of Annual Compensation payable to the Eligible Employee pursuant to Section 2(a)(2) above, (the “Employee Welfare Continuation Period”), the Eligible Employee and such Eligible Employee’s spouse and dependents (each as defined under the applicable program) shall receive the following benefits: (x) medical and dental insurance coverages at the same benefit levels as provided to the Eligible Employee immediately prior to the Change in Control, for which the Company will reimburse the Eligible Employee during the first 52 weeks of the Employee Welfare Continuation Period or, if shorter, the period of actual COBRA continuation coverage received by the Eligible Employee during the Employee Welfare Continuation Period, for the total amount of the monthly COBRA medical and dental insurance premiums payable by the Eligible Employee for such continued benefits in excess of the cost the Eligible Employee paid for such coverage (on a monthly premium basis) immediately prior to such termination of employment, provided, however, that if, during the Employee Welfare Continuation Period, the Eligible Employee becomes employed by a new employer, continuing medical and dental coverage from the Company will become secondary to any coverage afforded by the new employer in which the Eligible Employee becomes enrolled); and (y) life insurance coverage at the same benefit level as provided to the Eligible Employee immediately prior to the Change in Control and at the same cost to the Eligible Employee as is generally provided to similarly situated active employees of the Company (or if such coverage is no longer provided by the Company, then at the Employee’s cost immediately prior to the Change in Control).

(c)           Outplacement. Such Eligible Employee shall receive reasonable outplacement services to be provided by a provider selected by such Eligible Employee, the cost of which shall be borne by the Company.

(d)           Accrued Benefits. Such Eligible Employee shall be entitled to receive any unpaid Base Salary through the date of such Eligible Employee’s termination, any Bonus earned but unpaid as of the date of such Eligible Employee’s termination for any previously completed Fiscal Year (which, if not determinable by way of a formula or calculation applied on a basis consistent with past practice, shall be an amount equal to the Eligible Employee’s Average Bonus), and all compensation previously deferred by such Eligible Employee but not yet paid as well as all accrued interest thereon. In addition, such Eligible Employee shall be entitled to prompt reimbursement of any unreimbursed expenses properly incurred by such Eligible Employee in accordance with Company policies prior to the date of such Eligible Employee’s termination. Such Eligible Employee shall also be able to receive and enjoy such other benefits, if any, to which such Eligible Employee may be entitled pursuant to the terms and conditions of (1) the employee compensation, incentive, equity, benefit or fringe benefit plans, policies or programs of the Company, other than any Company severance policy and as provided in Section 12(a) of this Plan, and (2) the indemnification and D&O insurance plans, policies or programs of the Company.

 

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Section 3.               Form and Time of Payment. The cash severance pay benefits payable to an Eligible Employee under Section 2 above shall be paid to such Eligible Employee in a single lump sum less applicable withholdings under Section 4 of this Plan within 75 days after the Eligible Employee’s date of termination, except with respect to any additional bonus amount payable after such time period to the extent required pursuant to Section 2(d) above and except as provided pursuant to Section 5 of this Plan; provided, however, that the Company shall not be required to pay or continue to pay the cash severance pay benefits in the event such Eligible Employee does not sign a Release or such Eligible Employee revokes the Release during the time to revoke, if any.

Section 4.               Tax Withholding and Section 409A. Each Employer shall withhold from any amount payable to an Eligible Employee pursuant to this Plan, and shall remit to the appropriate governmental authority, any income, employment or other tax the Employer is required by applicable law to so withhold from and remit on behalf of such Eligible Employee. Notwithstanding any other provision of this Plan or certain compensation and benefit plans of the Employer, any payments or benefits due under this Plan or such Employer compensation and benefit plans upon or in connection with a termination of an Eligible Employee’s employment shall be paid, and this Plan shall be interpreted, in a manner that shall ensure that any such payments or benefits shall not be subject to any tax or interest under Section 409A of the Code (including, for the avoidance of doubt, by requiring that the payment of any severance due under Section 2 of this Plan to an Employee who is a “specified employee” within the meaning of the Section 409A of the Code be deferred until the date that is six months following such termination of the Employee’s employment, to the extent such delay is required to comply with Section 409A of the Code). Each payment made under this Plan shall be designated as a “separate payment” within the meaning of Section 409A of the Code. To the extent any reimbursements or in-kind benefits due to an Employee under this Plan constitute “deferred compensation” under Section 409A of the Code, any such reimbursements or in-kind benefits shall be paid to such Employee in a manner consistent with Treas. Reg. Section 1.409A-3(i)(1)(iv). Notwithstanding the foregoing, neither the Company nor any of its employees or representatives shall have any liability to any Eligible Employee to the extent that any payment or benefit hereunder is determined to be subject to any tax or interest under Section 409A of the Code.

Section 5.               Limitation of Certain Payments.

(a)           In the event the Company determines, based upon the advice of the independent public accountants for the Company, that part or all of the consideration, compensation or benefits to be paid to an Employee under this Plan constitute “parachute payments” under Section 280G(b)(2) of the Code, as amended, then, if the aggregate present value of such parachute payments, singularly or together with the aggregate present value of any consideration, compensation or benefits to be paid to Employee under any other plan, arrangement or agreement which constitute “parachute payments” (collectively, the “Parachute Amount”) exceeds 2.99 times the Employee’s “base amount,” as defined in Section 280G(b)(3) of the Code (the “Employee Base Amount”), the amounts constituting “parachute payments” which would otherwise be payable to or for the benefit of Employee shall be reduced to the extent necessary so that the Parachute Amount is equal to 2.99 times the Employee Base Amount (the “Reduced Amount”); provided that such amounts shall not be so reduced if the Company determines, based upon the advice of an independent nationally recognized public accounting firm (which may, but need not be the independent public accountants of the Company), that without such reduction Employee would be entitled to receive and retain, on a net after-tax basis (including, without limitation, any excise taxes payable under Section 4999 of the Code), an amount which is greater than the amount, on a net after tax basis, that the Employee would be entitled to retain upon his receipt of the Reduced Amount.

 

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(b)           If the determination made pursuant to clause (a) of this Section 5 results in a reduction of the payments that would otherwise be paid to Employee except for the application of clause (a) of this Section 5, the cash severance pay benefits payable under Section 2(a) shall be reduced. Within ten days following Employer’s notice to the Employee of its determination of the reduction in payments, the Company shall pay to or distribute to or for the benefit of Employee such amounts as are then due to Employee under this Plan and shall promptly pay to or distribute to or for the benefit of Employee in the future such amounts as become due to Employee pursuant to this Plan.

(c)           As a result of potential uncertainty in the application of Section 280G of the Code at the time of a determination hereunder, it is possible that payments will be made by the Employer which should not have been made under clause (a) of this Section 5 (“Overpayment”) or that additional payments which are not made by the Employer pursuant to clause (a) of this Section 5 should have been made (“Underpayment”). In the event that there is a final determination by the Internal Revenue Service, or a final determination by a court of competent jurisdiction, that an Overpayment has been made, any such Overpayment shall be repaid by Employee to the Employer together with interest at the applicable Federal rate provided for in Section 7872(f)(2) of the Code. In the event that there is a final determination by the Internal Revenue Service, a final determination by a court of competent jurisdiction or a change in the provisions of the Code or regulations pursuant to which an Underpayment arises under this Plan, any such Underpayment shall be promptly paid by the Employer to or for the benefit of Employee, together with interest at the applicable Federal rate provided for in Section 7872(f)(2) of the Code.

Section 6.               Plan Administration. This Plan shall be administered by the Compensation Committee of the Board or, following a Change in Control, such other successor body as is designated by the acquiror in the Change in Control transaction (the “Committee”). Subject to the provisions of Section 7 of this Plan, the Committee shall have discretionary and final authority to interpret and implement the provisions of this Plan and to determine eligibility for benefits under the Plan. The Committee shall perform all of the duties and exercise all of the powers and discretion that the Committee deems necessary or appropriate for the proper administration of this Plan. The Committee may adopt such rules and regulations for the administration of this Plan as are consistent with the terms hereof, and shall keep adequate records of its proceedings and acts. The Committee may employ such agents, accountants and legal counsel (who may be agents, accountants and legal counsel for an Employer) as may be appropriate for the administration of the Plan. All reasonable administration expenses incurred by the Committee in connection with the administration of the Plan shall be paid by the Employer.

 

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Section 7.              Dispute Resolution. Any dispute hereunder or with regard to any document or agreement referred to herein shall be resolved by arbitration before the American Arbitration Association in New York City, New York. The determination of the arbitrator shall be final and binding on the parties hereto and may be entered in any court of competent jurisdiction.

Section 8.              Applicable Law. This Plan shall be governed and construed in accordance with applicable federal law; provided, however, that wherever such law does not otherwise preempt state law, the laws of the State of New York shall govern.

Section 9.              Legal Fees. All reasonable legal fees and expenses incurred by an Eligible Employee in connection with any non-frivolous claim made pursuant to this Plan shall be borne by the Company.

Section 10.             Plan Amendment and Termination. Prior to the occurrence of a Change in Control, each of the Board and the Committee shall have the right and power at any time, and from time to time, subject to ninety (90) days advance written notice to all Employees, to amend or terminate this Plan, in whole or in part; provided, that no such amendment or termination shall be effective if 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. After the occurrence of a Change in Control and during the two-year period beginning on the effective date of the Change in Control, this Plan may not be amended or terminated without the consent of a majority of the Employees who are employed by an Employer at the time of the proposed amendment or termination or who are Eligible Employees receiving severance benefits pursuant to Section 2 of this Plan at such time. Any action to amend or terminate this Plan on or after the date on which a Change in Control occurs, without the foregoing consent, shall not be effective prior to the end of the two-year period beginning on the effective date of the Change in Control.

Section 11.            Nature of Plan and Rights. This Plan is an unfunded employee welfare benefit plan and no provision of this Plan shall be deemed or construed to create a trust fund of any kind or to grant a property interest of any kind to any Employee or former Employee. Any payment which becomes due under this Plan to an Eligible Employee shall be made by his or her Employer out of its general assets, and the right of any Eligible Employee to receive a payment hereunder from his or her Employer shall be no greater than the right of any unsecured general creditor of such Employer.

Section 12.            Entire Agreement; Offset; No Interference.

(a)           This Plan constitutes the entire agreement between the parties and, except as expressly provided herein, supersedes the provisions of all other prior agreements expressly concerning the payment of severance benefits upon a termination of employment in connection with or following a Change in Control; provided, that in no event shall payments or benefits provided pursuant to any other severance agreement or policy entitle Employee to a duplication of payments and benefits pursuant to this Plan and, in the event of an Anticipatory Termination, any amount payable hereunder shall be offset and reduced by the amount of any termination payments or benefits previously provided to Employee under any other severance arrangement with the Company.

 

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(b)           Except as expressly provided herein, this Plan shall not interfere in any way with the right of the Company to reduce Employee’s compensation or other benefits or terminate Employee’s employment, with or without Cause. Any rights that Employee shall have in that regard shall be as set forth in any applicable employment agreement between Employee and the Company.

Section 13.            Anticipatory Changes. Notwithstanding any provision in this Agreement to the contrary, no Employee shall suffer any reduction in the level of protections or benefits that would otherwise be enjoyed by the Employee hereunder as a result of any adverse change (including without limitation any such change in Base Salary; Target Bonus; assumptions or calculation methodology used for determining Actual Bonus; insurance coverages; or rank or status as an Elected Officer, Executive or 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 (each, an “Anticipatory Change”). In the event of any such Anticipatory Change, the provisions of this Agreement shall be applied, and any amounts under this Agreement shall be calculated, as if such Anticipatory Change had not occurred.

Section 14.            Spendthrift Provision. No right or interest of an Eligible Employee under this Plan may be assigned, transferred or alienated, in whole or in part, either directly or by operation of law, and no such right or interest shall be liable for or subject to any debt, obligation or liability of such Eligible Employee.

Section 15.            Notice. Notice of termination for Cause or for Good Reason shall be given in accordance with this Section, and shall indicate the specific termination provision under the Plan relied upon, the relevant facts and circumstances and the effective date of termination. For the purpose of this Plan, any notice and all other communication provided for in this Plan shall be in writing and shall be deemed to have been duly given when received at the respective addresses set forth below, or to such other address as the Company or the Eligible Employee may have furnished to the other in writing in accordance herewith.

If to the Company:

L3 Technologies, Inc.

600 Third Avenue

New York, New York 10016

If to Employee:

To the most recent address of Employee set forth in the personnel records of the Company.

 

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Section 16.            Effectiveness. This Plan shall be effective as of the Effective Date and shall remain in effect until terminated pursuant to Section 10 of this Plan.

 

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Exhibit A

CONFIDENTIALITY AND NON-COMPETITION RESTRICTIVE COVENANTS

I.             While employed by the Company, and at any time thereafter, no Eligible Employee shall, without the prior written consent of the Company, use, divulge, disclose or make accessible to any other person, firm, partnership, corporation or other entity any Confidential Information pertaining to the business of the Company or any of its affiliates, except when required to do so by applicable law, by a court, by any governmental agency, or by any administrative body or legislative body (including a committee thereof); provided, however, that the Eligible Employee shall give reasonable notice under the circumstances to the Company that he or she has been notified that he or she will be required to so disclose as soon as possible after receipt of such notice in order to permit the Company to take whatever action it reasonably deems necessary to prevent such disclosure and the Eligible Employee shall cooperate with the Company to the extent that it reasonably requests him or her to do so. For purposes of this paragraph I, "Confidential Information" shall mean non-public information concerning the financial data, strategic business plans, product development (or other proprietary product data), customer lists, marketing plans and other non-public, proprietary and confidential information of the Company, its subsidiaries, its affiliates or customers, that, in any case, is not otherwise available to the public (other than by the Eligible Employee’s breach of the terms hereof).

II.            In consideration of the Company’s obligations under the Plan to which this Exhibit A is attached, each Eligible Employee agrees that for a period of twelve (12) months after termination of employment with his or her Employer, without the prior written consent of the Board, (A) he or she will not, directly or indirectly, either as principal, manager, agent, consultant, officer, stockholder, partner, investor, lender or employee or in any other capacity, carry on, be engaged in or have any financial interest in, any (i) entity which is in Competition with the business of the Company or its subsidiaries or (ii) Competitive Activity and (B) he or she shall not, on his or her own behalf or on behalf of any person, firm or company, directly or indirectly, solicit or offer employment to any person who is or has been employed by the Company or its subsidiaries at any time during the twelve (12) months immediately preceding such solicitation. For purposes of this paragraph II: (a) an entity shall be deemed to be in “Competition” with the Company or its subsidiaries if it is principally involved in the purchase, sale or other dealing in any property or the rendering of any service purchased, sold, dealt in or rendered by the Company or its subsidiaries as a part of the business of the Company or its subsidiaries within the same geographic area in which the Company effects such sales or dealings or renders such services at the Relevant Date; and (b) “Competitive Activity” shall mean any business into which the Company or any of its subsidiaries has taken substantial steps to engage, as of the Relevant Date, which would be deemed to be in Competition with the business of the Company or its subsidiaries if such steps had been completed prior to the Relevant Date; and (c) the term “Relevant Date” shall mean the effective date of termination of Employee’s employment with his or her Employer.

III.           Notwithstanding anything contained in this Exhibit A, nothing herein shall (i) prohibit any Eligible Employee from serving as an officer, employee or independent consultant of any business unit or subsidiary which would not otherwise be in Competition with the Company or its subsidiaries or a Competitive Activity, but which business unit is a part of, or which subsidiary is controlled by, or under common control with, an entity that would be in competition with the Company or its subsidiaries, so long as the Eligible Employee does not engage in any activity which is in Competition with any business of the Company or its subsidiaries or is otherwise a Competitive Activity or (ii) be construed so as to preclude the Eligible Employee from investing in any publicly or privately held company, provided the Eligible Employee’s beneficial ownership of any class of such company’s securities does not exceed 5% of the outstanding securities of such class.

 

A-1

IV.           In the event the Company determines that an Eligible Employee has breached the covenants contained in this Exhibit A, the Company may, in addition to pursuing any other remedies it may have in law or in equity, cease making any payments otherwise required by this Plan and/or obtain an injunction against the Eligible Employee from any court having jurisdiction over the matter restraining any further violation of this Exhibit A by the Eligible Employee. Further, if in the opinion of any court of competent jurisdiction any of the restraints identified herein is not reasonable in any respect, such court shall have the right, power and authority to excise or modify such provision or provisions of this covenant as to the court shall appear not reasonable and to enforce the remainder of the covenant as so amended.

 

A-2Exhibit 10.40

 

L3 TECHNOLOGIES, INC.

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

(Restated January 1, 2017)

ARTICLE I

PURPOSE OF THE SERP

The purpose of this L3 Technologies, Inc. Supplemental Executive Retirement Plan is to provide supplemental retirement income for a select group of management and highly compensated employees of L3 Technologies, Inc. and certain of its subsidiaries and divisions by providing benefits equal to those benefits that cannot 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 in 1999 and 2000. The Plan was amended and restated effective January 1, 2005 to comply with the requirements of Section 409A of the Code, except for Sections 3.4 and 3.5 which were amended effective January 1, 2009.

Effective after the close of business on December 31, 2016, L-3 Communications Corporation changed its name to L3 Technologies, Inc. Accordingly, the name of the Plan was changed from the L-3 Communications Corporation Supplemental Executive Retirement Plan to the L3 Technologies, Inc. Supplemental Executive Retirement Plan effective January 1, 2017.

The Plan is amended and restated effective January 1, 2017.

ARTICLE II

DEFINITIONS

Additional SERP Participant – An employee of a Participating Company who is not eligible to participate in a Participating Company sponsored defined benefit pension plan and designated by the Board or the Compensation Committee thereof as eligible to participate in the SERP.

Adjusted Compensation – The Participant’s “compensation” as defined in the applicable Pension Plan provided that (1) base salary deferred by a Participant under any deferred compensation plan sponsored by the Company shall be taken into account, (2) management incentive bonuses, whether or not deferred by a Participant under any deferred compensation plan sponsored by the Company shall be taken into account, and (3) the limitations under Section 401(a)(17) of the Code shall not apply.

Beneficiary – The Participant’s beneficiary with respect to the Pension Benefit payable under the Pension Plan or such Beneficiary elected at the time of benefit commencement.

 

Board – With respect to periods beginning on or after January 1, 2017, the Board of Directors of L3 Technologies, Inc. and with respect to periods ending on or before December 31, 2016, the Board of Directors of L-3 Communications Holdings, Inc.

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

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

Company – L3 Technologies, Inc.

Participant – The individuals who are described in (a) or (b) below:

(a)           An employee of a Participating Company who participates in a Pension Plan and (1) whose Adjusted Compensation for a calendar year, including all amounts deferred by the employee under any deferred compensation plan sponsored by the Company, exceeds the maximum dollar amount for that year under Section 401(a)(17) of the Code, or (2) for whom benefits under the 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 who satisfies the requirements for participation in this SERP for any calendar year shall continue to be a Participant for all subsequent years regardless of whether he or she meets the participation requirements of this paragraph for any such subsequent year.

(b)           An employee who is an Additional SERP Participant.

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.

Participating Company – The Company and any affiliate thereof that maintains a Pension Plan listed in Appendix A.

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

Pension Plan – The tax-qualified defined benefit plan, among those listed in Appendix A, in which the Participant participates (or, in the case of an Additional SERP Participant, would have been eligible to participate had he or she been an employee of the Participating Company on the date prior to the date the Pension Plan was frozen to newly hired employees).

Section 409A Change of Control Event – A change in ownership or effective control of the Company, or in the ownership of a substantial portion of the assets of the Company, within the meaning of Section 409A(a)(2)(A)(v) of the Code.

SERP – This L3 Technologies, Inc. Supplemental Executive Retirement Plan.

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

 

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Supplemental Executive Retirement Plan

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 (or, in the case of an Additional SERP Participant, would have been entitled to a Pension Benefit had he or she been an employee of the Participating Company on the date prior to the date the Pension Plan was frozen to newly hired employees) 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 3.4 , 3.5 and 3.6.

3.2           Amount of Benefit for General SERP Participants. Except as otherwise provided in Section 3.3, Appendix B-1 or B-2, the Supplemental Pension Benefit shall be equal to the excess, if any, of:

(a)           the benefit that would have been paid under the applicable Pension Plan to such Participant (or his or her Beneficiary), in the normal form of benefit payable to a single participant pursuant to the terms of the Pension Plan, based on Adjusted Compensation and irrespective of the limitations of Sections 401(a)(17) and 415 of the Code, less

(b)           the Pension Benefit that is actually payable under the Pension Plan to such Participant (or his or her Beneficiary), in the normal form of benefit payable to a single participant, based on “compensation” as defined in the Pension Plan and taking into account the limitations of Sections 401(a)(17) and 415 of the Code.

The Supplemental Pension Benefit resulting from (a) less (b) in this Section 3.2 is then further reduced based upon early commencement and optional form elected, if any. The reduction factors utilized for an early commencement are equivalent to the early reduction factors provided under the Pension Plan. For a surviving spouse Beneficiary where the Participant is deceased prior to commencement of the Pension Plan or Supplemental Pension Plan Benefit the Supplemental Pension Benefit will be reduced for early commencement, if applicable, and payable as a survivor benefit of a 50% joint and survivor annuity.

3.3           Amount of Benefit for Additional SERP Participants. The Supplemental Pension Benefit for an Additional SERP Participant shall be the benefit that would have been paid under the Pension Plan to such Participant (or his or her Beneficiary), based on Adjusted Compensation and irrespective of the limitations of Sections 401(a)(17) and 415 of the Code, if the Additional SERP Participant had been eligible to participate in the Pension Plan had it not been frozen to newly hired employees (but without regard to the Pension Plan provisions reflecting the limitations of Sections 401(a)(17) and 415 of the Code). Notwithstanding the foregoing, the Committee may determine in its discretion, at the time an employee is designated as an Additional SERP Participant, the period during which benefit accrual service, vesting service and compensation will be taken into account in determining the Supplemental Pension Benefit for an Additional SERP Participant.

 

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Supplemental Executive Retirement Plan

3.4           Form of Benefit Payments.

(a)           Except as otherwise provided in subsections (b) or (c) below, any Supplemental Pension Benefit to which a Participant is entitled under this SERP shall be paid in the form of a life annuity.

(b)           A Participant may elect not more than 90 days prior to the event that gives rise to the right to benefit payments to receive any Supplemental Pension Benefit to which he or she is entitled in the form of a 50%, 75% or 100% joint and survivor annuity, or a life annuity with ten years certain, each of which shall be the actuarial equivalent of the Participant’s Supplemental Pension Benefit payable as a life annuity using a 6% interest rate and the mortality table under Rev. Rul. 2001-62. Upon the death of a Participant who has commenced a Supplemental Pension Benefit and has elected a 50%, 75% or 100% joint and survivor annuity or a life annuity with ten years certain, benefits shall continue to be paid to the Participant’s Beneficiary, provided that such Beneficiary survives the Participant.

(c)           If the present value of the Participant’s Supplemental Pension Benefit is $5,000 or less at the time payments are to commence, the entire amount of such Supplemental Pension Benefit, payable as a life annuity, shall be paid to the Participant in one payment. The present value of the Participant’s Supplement Pension Benefit shall be determined using the actuarial assumptions under Section 417(e) of the Code as such actuarial assumptions are incorporated in the Pension Plan and in effect on the date of payment.

3.5           Time of Benefit Payments.

(a)           Except as otherwise provided in subsection (b) or (c) below, a Supplemental Pension Benefit to which a Participant is entitled under this SERP shall be payable on the later of Participant’s termination of employment date or the Participant’s earliest retirement date under the applicable Pension Plan. The Participant’s earliest retirement date under the applicable Pension Plan shall mean the earliest date on which the Participant may begin to receive payment of his Pension Benefit.

(b)           If the Supplemental Pension Benefit becomes payable due to termination of employment (other than due to death), the first payment shall be made on the date that is six months following the termination of employment date. In such case, the amount of Supplemental Pension Benefit shall be determined as of the termination of employment date but actuarially increased to reflect the six-month delay in payment using the actuarial factors set forth in Section 3.4(b) or (c) (as applicable) or, with respect to a Supplemental Pension Benefit payable in the form set forth in Section 3.4(a), the same actuarial assumptions provided for under Section 3.4(b).

(c)           Notwithstanding the foregoing, if a Participant elects on or after January 1, 2008 and on or before December 31, 2008, in accordance with Notice 2007-86, 2007-46 IRB 990, the date on which benefit payments are to commence, payment of his or her Supplemental Pension Benefit shall be paid in accordance with such election. Such election will be effective only if it applies to amounts that would not otherwise be payable in 2008 and does not cause any amount to be paid prior to January 1, 2009.

 

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Supplemental Executive Retirement Plan

3.6           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 and either (1) has a vested right to a Pension Benefit under the terms of the Pension Plan at the time of the Change of Control or (2) in the case of an Additional SERP Participant has completed five years of service with the Company at the time of the Change of Control shall be entitled to receive a Supplemental Pension Benefit in the amount determined under Section 3.2 or 3.3 or Appendix B-1 or B-2, in each case as of the date immediately preceding the Change of Control, which benefit shall be paid in a lump sum within 60 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. The lump sum value of the Participant’s Supplement Pension Benefit shall be determined using the actuarial assumptions under Section 417(e) of the Code as such actuarial assumptions are incorporated in the Pension Plan and in effect on the day of payment.

(b)           For purposes of this SERP, a Change in Control shall be deemed to occur upon a Section 409A Change of Control Event that also constitutes one or more of the following:

(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, as amended (the “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 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 of 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 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 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.

3.7           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 a Participating Company, or (3) engages in conduct detrimental or contrary to the best interests of a Participating Company. “Cause” means an Employee’s:

 

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Supplemental Executive Retirement Plan

(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 an Employee’s part shall be deemed “willful” if done, or omitted to be done, by an Employee in bad faith and without reasonable belief that Employee’s action or omission was in the best interest of the Company.

(b)           The Committee shall have full discretionary authority to make determinations under this Section 3.7. 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 3.7 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 each Participating Company to make payments in the future, and a Participant’s rights shall be those of a general, unsecured creditor of the Participating Company. A Participant shall not have any beneficial interest in this SERP. Notwithstanding the foregoing, to assist each Participating Company in meeting its obligations under this SERP, the Committee 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 Committee may direct that its obligations under this SERP be satisfied by payments out of such trust or trusts. It is each Participating 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, each Participating Company shall promptly fund all benefits due under this SERP to those Participants who are current employees or former employees with vested rights of such Participating Company, 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.

 

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Supplemental Executive Retirement Plan

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 Beneficiary except as otherwise required by law.

ARTICLE V

AMENDMENT OR TERMINATION

5.1           Amendment. The Board, the Compensation Committee of the Board or, to the extent permitted by resolution of the Board or the Compensation Committee, any delegate of the Board or Compensation Committee 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 Participating Company on the date of the amendment, modification, suspension or discontinuance.

5.2           Termination. The Board or the Compensation Committee of the Board reserves the right to terminate this SERP (by amendment to the 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 it may determine, provided that any payments on termination of the Plan must comply with the requirements of Treasury Regulation §1.409A-3(j)(4)(ix).

ARTICLE VI

ADMINISTRATION

6.1           The Committee. This SERP shall be administered by the Compensation Committee of the Board or such other committee (whether of the Board or of executives of the Company) as may be designated by the Board to administer this SERP. The Compensation Committee or such other committee designated by the Board to administer this SERP is referred to in this document as the “Committee.”

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. The Committee may also appoint a plan administrator or any other agent and delegate to such administrator or agent such powers and duties in connection with the administration of the SERP as the Committee may deem appropriate. 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 any Participating Company who is a Participant may participate in any decision specifically relating to his or her individual rights or benefits under this SERP.

 

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Supplemental Executive Retirement Plan

6.3           Powers of the Committee. The Committee shall administer this SERP in accordance with its terms. The Committee shall have full discretion to construe and interpret the terms and provisions of this SERP, which interpretation or construction shall be final and binding on all parties, including but not limited to the Company, the Participating Companies and any Participant or Beneficiary. The Committee shall administer this SERP in a uniform and nondiscriminatory manner and in full accordance with any and all laws applicable to the SERP. The Committee shall have all powers necessary to administer the SERP, including without limitation, in addition to those powers set forth above, the following:

(a)           to determine whether individuals qualify as the Participants in the SERP;

(b)           to determine the amount of benefits payable to Participants and their Beneficiaries;

(c)           to maintain all records that may be necessary for the administration of the SERP; and

(d)           to make and publish rules and procedures for the administration of the SERP.

6.4           Exculpation and Indemnity. To the extent permitted by applicable law, the Company shall indemnify and hold harmless the Committee and each member thereof and delegates of the Committee who are employees of the Company or a Participating Company against any and all expenses, liabilities and claims, including legal fees to defend against such liabilities and claims, arising out of their discharge of responsibilities under or incident to the SERP, other than expenses, liabilities and claims arising out of their willful misconduct. This indemnity shall not preclude such further indemnities as may be available under insurance purchased by the Company or provided by the Company under any bylaw, agreement or otherwise, as such indemnities are permitted under applicable law.

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

6.6           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.

6.7           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 90 days. The Committee may, however, extend the reply period for an additional ninety 90 days for special circumstances. 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.

 

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Supplemental Executive Retirement Plan

(b)           Within 60 days after the receipt by a claimant of the written decision described above or the expiration of the claims review period described above including any extension, the claimant may request review by giving written notice to the Committee. The claim or request shall be reviewed by the Committee, which 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. If the claimant does not request a review within such sixty-day period, he or she shall be barred from challenging the original determination.

(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 6.7 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 any Participating Company to continue the employment of a Participant with the Participating Company or limit the right of the Participating 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 Participating Company and a Participant or in any way limit the right of the Participating 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 Participating Company (or a subsidiary or division of the Participating Company), except as provided in such other plan.

7.3           Tax Withholding. To the extent required by law, the Participating 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 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.

 

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Supplemental Executive Retirement Plan

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 6.5, shall be in full satisfaction of all claims that can be made under the SERP against the Participating Company. The Participating Company may require such Participant, Beneficiary, legal representative, or any other person or entity described in Section 6.5, as a condition precedent to such payment, to execute a receipt and release thereof in such form as shall be determined by the Participating Company.

7.7           Successors. The provisions of this SERP shall be binding upon and inure to the benefit of each Participating 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 L3 Technologies, Inc. Supplemental Executive Retirement Plan is hereby restated as of January 1, 2017.

	 	 	 	
L3 TECHNOLOGIES, INC.

	 
	 	 	 	 	 	 
	
Date:

	
February 2, 2017

	 	
By:

	
/s/ Kevin Weiss

	 
	 	 	 	 	
Kevin Weiss

	 
	 	 	 	 	
Vice President – Human Resources.

	 

 

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Supplemental Executive Retirement Plan

Appendix A – Pension Plans

Pension Plans

L3 Technologies, Inc. Pension Plan

The Narda MITEQ Pension Plan

L3 Communication Systems - East Retirement Income Plan

L3 Aviation Products Retirement Plan

L3 Aviation Products Retirement Plan II

L3 Communication Systems West Retirement Plan

L3 Communication Systems West Retirement Plan II

L3 Link Simulation & Training Retirement Plan

L3 Pension Plan For Certain Divisions – Ocean Systems and Space & Navigation Divisions only

L-3 Communications Integrated Systems Retirement Plan

L-3 Communications Infrared Products Retirement Plan (prior to January 1, 2013)

Hycor Pension Plan (prior to October 2000)

 

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Supplemental Executive Retirement Plan

Appendix B-1

Special Provisions for the Narda - East Division

This Appendix B-1 contains additional terms of the SERP that apply to Participants who are employees of the Narda - 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 became an officer of Narda East prior to January 1, 2003 (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 Beneficiary), in the normal form of benefit payable to a single participant 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 of the Code, less

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

(b)           the excess, if any, of:

(1)           the benefit that would have been paid to the Participant (or his or her Beneficiary) in the normal form of benefit payable to a single participant 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 Code, less

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

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, 3.5 and 3.6.

 

	 	B-1-1	
L3 Technologies, Inc.

	 	 	
Supplemental Executive Retirement Plan

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 ceases to be a Participant.

(b)           “Basic Plan” means The Narda MITEQ Pension Plan, as amended and restated effective as of January 1, 2017.

(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 year of Credited Service, including annual cash bonuses, and amounts deferred under the L3 Technologies, Inc. Deferred Compensation Plan and L3 Technologies, Inc. Deferred Compensation Plan II, 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.

 

	 	B-1-2	
L3 Technologies, Inc.

	 	 	
Supplemental Executive Retirement Plan

Appendix B-2

Special Provisions for the L3 Communication Systems - East Division

This Appendix B-2 contains additional terms of the SERP that apply to Participants who are employees of the L3 Communication Systems – East division of the Company (“CS-East Participants”). The L3 Communications Systems – East Retirement Income Plan (the “Pension Plan”) has been amended to freeze the benefit accruals of participants who are not subject to a collective bargaining agreement and have compensation in excess of specified amounts (the “Frozen HCE Amendments”) effective January 1, 2010 and January 1, 2017. Any participant in the Pension Plan whose benefits under the Pension Plan are affected by the Frozen HCE Amendments and who is not already a Participant in the SERP will become Participant in the SERP effective as of the first day of the Plan Year immediately following the date on which such individual ceases to accrue benefits under the Pension Plan as a result of the Frozen HCE Amendments. As a result, a Participant may be a CS-East Participant either as a result of the Frozen HCE Amendments (a “Frozen HCE”) or having been designated as a Participant in the SERP without regard to the Frozen HCE Amendments (a “Designated CS-East SERP Participant”). Accordingly, there are two categories of CS-East Participants: (1) CS-East Participants who are both Designated SERP Participants and Frozen HCEs, and (2) CS-East Participants who are Frozen HCEs but not Designated SERP Participants.

Except as otherwise specifically set forth in this Appendix B-2, the SERP benefits of CS-East Participants shall be calculated in accordance with other provisions of this SERP; provided, however, that:

(i)           Section 3.7 of the SERP shall not be applicable to any benefits payable to CS-East Participants under the SERP that would have been payable under the Pension Plan if the Frozen HCE Amendments had not been adopted; and

(ii)           a CS-East Participant who becomes a Participant in the SERP solely because of the Frozen HCE Amendments may commence to receive benefit payments under the SERP on a date elected by such Participant if the individual makes a written election of an alternate benefit commencement date no later than 30 days following the effective date of such individual’s participation in the SERP and the date elected is at least six months following the date of the Participant’s termination of employment.

1.           The Supplemental Pension Benefit of a CS-East Participant who is both a Designated SERP Participant and a Frozen HCE 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 Beneficiary), in the normal form of benefit payable to a single participant pursuant to the terms of the Pension Plan, if the Frozen HCE Amendments had not been adopted, based on final average pensionable earnings, as defined in subsection (c) below and irrespective of the limitations of Sections 401(a)(17) and 415 of the Code, over

 

	 	B-2-1	
L3 Technologies, Inc.

	 	 	
Supplemental Executive Retirement Plan

(b)           the Pension Benefit that is actually payable under the Pension Plan to such Participant (or his or her Beneficiary), in the normal form of benefit payable to a single participant, taking into account the limitations of Sections 401(a)(17) and 415 of the Code and the Frozen HCE Amendments.

(c)           Solely for purposes of subsection (a) above, the benefit that would have been payable under the Pension Plan to such Participant (or his or her Beneficiary), shall be based on “final average pensionable earnings”, which shall be defined as the sum of:

(1)           The average rate of Pensionable Earnings as defined in the Pension Plan but excluding management incentive bonuses, determined by taking the amount of such Pensionable Earnings of an Employee (excluding management incentive bonuses) during the three calendar years selected from the most recent ten calendar years of his Period of Employment as defined in Section III(1) of the Pension Plan in respect of which he shall have the greatest aggregate amount of Pensionable Earnings (excluding management incentive bonuses), and dividing such amount by three; and

(2)           The average rate of the Participant’s management incentive bonuses, determined by taking the amount of such management incentive bonuses of the Employee during the three calendar years selected from the most recent ten calendar years of his Period of Employment as defined in Section III(1) of the Pension Plan in respect of which he shall have the greatest aggregate amount of management incentive bonuses, and dividing such amount by three.

(d)           Except as otherwise provided in subsection (c), final average pensionable earnings shall have the meaning provided in the Pension Plan.

2.           The Supplemental Pension Benefit of a CS-East Participant who is a Frozen HCE but not a Designated CS-East Participant 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 Beneficiary), in the normal form of benefit payable to a single participant pursuant to the terms of the Pension Plan, if the Frozen HCE Amendments had not been adopted, based on final average pensionable earnings as defined in the Pension Plan and taking into account the limitations of Sections 401(a)(17) and 415 of the Code, over

(b)           the Pension Benefit that is actually payable under the Pension Plan to such Participant (or his or her Beneficiary), in the normal form of benefit payable to a single participant, taking into account the limitations of Sections 401(a)(17) and 415 of the Code and the Frozen HCE Amendments.

3.           Additional Benefit. In addition to the Supplemental Pension Benefit described in Sections 1 and 2 above, a Designated SERP Participant who is an employee of the L3 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.

 

	 	B-2-2	
L3 Technologies, Inc.

	 	 	
Supplemental Executive Retirement Plan

4.           Additional Death Benefit to Beneficiary. If a Designated SERP 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. Such payment shall be made no later than March 15 of the calendar year following the calendar year in which the death occurred. Notwithstanding the foregoing, if the calculation of the amount of a payment is not administratively feasible due to events beyond the control of the Participant or Beneficiary, the payment will be treated as made upon the date specified in the prior sentence if the payment is made during the first taxable year of the Participant or Beneficiary in which the calculation of the amount is administratively feasible.

5.           Additional Death Benefit to Spouse. If a Designated SERP 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. If the Participant has attained age 55 at the time of death, such annuity shall commence to be paid no later than March 15 of the calendar year following the calendar year in which the death occurred. If the Participant has not attained age 55 at the time of death, such annuity shall commence to be paid no later than March 15 of the calendar year following the calendar year in which the Participant’s 55th birthday would have occurred. Notwithstanding the foregoing, if the calculation of the amount of a payment is not administratively feasible due to events beyond the control of the Participant or Beneficiary, the payment will be treated as made upon the date specified in the applicable prior sentence if the payment is made during the first taxable year of the Participant or Beneficiary in which the calculation of the amount is administratively feasible.

6.           Contributions to Rabbi Trust. The Company will contribute to the L3 Technologies Supplemental Executive Retirement Plan Trust an amount equal to the amount required under the governmental Cost Accounting Standards (CAS) reimbursement rules. To the extent appropriate, the same cost methods and procedures will be used that would have applied had such benefits accrued under the Pension Plan.

 

	 	B-2-3	
L3 Technologies, Inc.

	 	 	
Supplemental Executive Retirement Plan

7.           Benefit Accruals beginning January 1, 2011. Notwithstanding any provision of the foregoing, the benefit calculations under Section 1(a) and 2(a) above shall be made with respect to benefits accrued on or before December 31, 2010 taking into account only final average pensionable earnings, as defined in Sections 1(a) and 2(a) respectively, determined through that date. With respect to benefits accrued on and after January 1, 2011, the benefit calculations under Section 1(a) and 2(a) shall be made in accordance with those provisions, except taking into account pensionable earnings, as defined in the Pension Plan, with respect to each full and partial year of Credited Service commencing on or after that date, instead of final average pensionable earnings. The benefit calculations under Section 1(a) above as modified by this Section 7 shall be computed without regard to the limitations of Code Sections 401(a)(17) and 415 and the benefit calculations under Section 2(a) above as modified by this Section 7 shall be computed taking into account such limitations.

 

	 	B-2-4	
L3 Technologies, Inc.

	 	 	
Supplemental Executive Retirement Plan

Appendix B-3

Special Provisions for the L3 Communication Systems - West Division

This Appendix B-3 contains additional terms of the SERP that apply to Participants who are employees of the L3 Communication Systems – West division of the Company (“CS-West Participants”). The L3 Communications Systems – West Retirement Plan and the L3 Communications Systems – West Retirement Plan II (each a “Pension Plan” and collectively the “Pension Plans”) have been amended to freeze the benefit accruals of participants who have more than $180,000 in compensation (the “Frozen HCE Amendments”) effective January 1, 2016. Any participant in a Pension Plan whose benefits under the Pension Plan are affected by the Frozen HCE Amendments and who is not already a Participant in the SERP will become Participant in the SERP effective as of the first day of the Plan Year immediately following the date on which such individual ceases to accrue benefits under a Pension Plan as a result of the Frozen HCE Amendments. As a result, a Participant may be a CS-West Participant either as a result of a Frozen HCE Amendment (a “Frozen HCE”) or having been designated as a Participant in the SERP without regard to the Frozen HCE Amendment (a “Designated CS-West SERP Participant”). Accordingly, there are two categories of CS-West Participants: (1) CS-West Participants who are both Designated SERP Participants and Frozen HCEs, and (2) CS-West Participants who are Frozen HCEs but not Designated SERP Participants. References to the “Pension Plan” herein mean the Pension Plan in which the CS-West Participant was a participant.

Except as otherwise specifically set forth in this Appendix B-3, the SERP benefits of CS-West Participants shall be calculated in accordance with other provisions of this SERP; provided, however, that:

(i)           Section 3.7 of the SERP shall not be applicable to any benefits payable to CS-West Participants under the SERP that would have been payable under a Pension Plan if the Frozen HCE Amendments had not been adopted; and

(ii)           a CS-West Participant who becomes a Participant in the SERP solely because of a Frozen HCE Amendment may commence to receive benefit payments under the SERP on a date elected by such Participant if the individual makes a written election of an alternate benefit commencement date no later than 30 days following the effective date of such individual’s participation in the SERP and the date elected is at least six months following the date of the Participant’s termination of employment.

1.           The Supplemental Pension Benefit of a CS-West Participant who is both a Designated SERP Participant and a Frozen HCE shall be equal to the excess, if any, of:

(a)           the benefit that would have been paid to such Participant under the Pension Plan in which the CS-West Participant participated, in the normal form of benefit payable to a single participant pursuant to the terms of the Pension Plan, if the Frozen HCE Amendment had not been adopted, and irrespective of the limitations of Sections 401(a)(17) and 415 of the Code, over

 

	 	B-3-1	
L3 Technologies, Inc.

	 	 	
Supplemental Executive Retirement Plan

(b)           the Pension Benefit that is actually payable under the Pension Plan to such Participant, in the normal form of benefit payable to a single participant, taking into account the limitations of Sections 401(a)(17) and 415 of the Code and the Frozen HCE amendment.

2.           The Supplemental Pension Benefit of a CS-West Participant who is a Frozen HCE but not a Designated CS-West Participant shall be equal to the excess, if any, of:

(a)           the benefit that would have been paid to such Participant under the Pension Plan in which the CS-West Participant participated, in the normal form of benefit payable to a single participant pursuant to the terms of the Pension Plan, if the Frozen HCE amendment had not been adopted, and taking into account the limitations of Sections 401(a)(17) and 415 of the Code, over

(b)           the Pension Benefit that is actually payable under the Pension Plan to such Participant, in the normal form of benefit payable to a single participant, taking into account the limitations of Sections 401(a)(17) and 415 of the Code and the Frozen HCE amendment.

3.           Additional Death Benefit to Beneficiary. Upon the death of a CS-West Participant who was a Frozen HCE at the time of the Participant’s termination of employment with the Company, an amount equal to the Additional Death Benefit that would have been payable under Appendix A of the Pension Plan in which the CS-West Participant participated if it had not been amended by a Frozen HCE Amendment will be payable to the CS-West Participant’s designated beneficiary as determined under the Pension Plan.

4.           Contributions to Rabbi Trust. For each year commencing on or after January 1, 2016, the Company will contribute to the L3 Technologies Supplemental Executive Retirement Plan Trust an amount equal to the amount required under the governmental Cost Accounting Standards (CAS) reimbursement rules. To the extent appropriate, the same cost methods and procedures will be used that would have applied had such benefits accrued under the Pension Plans.

 

 

	 	B-3-2	
L3 Technologies, Inc.

	 	 	
Supplemental Executive Retirement Plan

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