|
State of Indiana
|
|
45-2083813
|
(State or Other Jurisdiction
of Incorporation or Organization)
|
|
(I.R.S. Employer
Identification Number)
|
Large accelerated filer
þ
|
|
Accelerated filer
¨
|
|
Non-accelerated filer
¨
|
|
Smaller reporting company
¨
|
(Do not check if a smaller reporting company)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|||||||||||
|
2013
|
|
2012
|
|
2013
|
2012
|
||||||||
Product revenue
|
$
|
518
|
|
|
$
|
620
|
|
|
$
|
1,017
|
|
$
|
1,273
|
|
Service revenue
|
733
|
|
|
759
|
|
|
1,419
|
|
1,527
|
|
||||
Total revenue
|
1,251
|
|
|
1,379
|
|
|
2,436
|
|
2,800
|
|
||||
Cost of product revenue
|
380
|
|
|
433
|
|
|
737
|
|
894
|
|
||||
Cost of service revenue
|
594
|
|
|
654
|
|
|
1,171
|
|
1,328
|
|
||||
Selling, general and administrative expenses
|
122
|
|
|
130
|
|
|
237
|
|
263
|
|
||||
Research and development expenses
|
15
|
|
|
16
|
|
|
28
|
|
30
|
|
||||
Restructuring charges, net
|
13
|
|
|
1
|
|
|
62
|
|
2
|
|
||||
Operating income
|
127
|
|
|
145
|
|
|
201
|
|
283
|
|
||||
Interest expense, net
|
10
|
|
|
11
|
|
|
18
|
|
20
|
|
||||
Other expense (income), net
|
(3
|
)
|
|
(1
|
)
|
|
(1
|
)
|
7
|
|
||||
Income from continuing operations before income tax expense
|
120
|
|
|
135
|
|
|
184
|
|
256
|
|
||||
Income tax expense
|
42
|
|
|
49
|
|
|
62
|
|
100
|
|
||||
Net income
|
$
|
78
|
|
|
$
|
86
|
|
|
$
|
122
|
|
$
|
156
|
|
Earnings Per Share
|
|
|
|
|
|
|
||||||||
Basic
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
0.41
|
|
|
$
|
0.46
|
|
|
$
|
0.65
|
|
$
|
0.83
|
|
Diluted
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
0.41
|
|
|
$
|
0.46
|
|
|
$
|
0.64
|
|
$
|
0.83
|
|
Weighted average common shares outstanding – basic
|
188.2
|
|
|
187.5
|
|
|
188.2
|
|
187.1
|
|
||||
Weighted average common shares outstanding – diluted
|
190.5
|
|
|
188.5
|
|
|
190.2
|
|
188.0
|
|
||||
Cash dividends declared per common share
|
$
|
0.10
|
|
|
$
|
0.10
|
|
|
$
|
0.21
|
|
$
|
0.21
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|||||||||||
|
2013
|
|
2012
|
|
2013
|
2012
|
||||||||
Net income
|
$
|
78
|
|
|
$
|
86
|
|
|
$
|
122
|
|
$
|
156
|
|
Other comprehensive income (loss), net of tax
|
|
|
|
|
|
|
||||||||
Net foreign currency translation adjustments
|
(2
|
)
|
|
(6
|
)
|
|
(12
|
)
|
(1
|
)
|
||||
Defined benefit plans
|
|
|
|
|
|
|
||||||||
Net actuarial gain arising during the period
|
116
|
|
|
—
|
|
|
116
|
|
—
|
|
||||
Amortization of actuarial loss included in net periodic benefit cost
|
18
|
|
|
13
|
|
|
36
|
|
26
|
|
||||
Amortization of prior service cost included in net periodic benefit cost
|
—
|
|
|
—
|
|
|
1
|
|
—
|
|
||||
Other comprehensive income (loss), net of tax
|
132
|
|
|
7
|
|
|
141
|
|
25
|
|
||||
Total comprehensive income
|
$
|
210
|
|
|
$
|
93
|
|
|
$
|
263
|
|
$
|
181
|
|
|
|
|
June 30, 2013
|
|
December 31, 2012
|
||||
Assets
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
259
|
|
|
$
|
292
|
|
Receivables, net
|
1,035
|
|
|
995
|
|
||
Inventories, net
|
297
|
|
|
283
|
|
||
Deferred tax asset
|
65
|
|
|
85
|
|
||
Other current assets
|
56
|
|
|
58
|
|
||
Total current assets
|
1,712
|
|
|
1,713
|
|
||
Plant, property and equipment, net
|
508
|
|
|
512
|
|
||
Goodwill
|
2,185
|
|
|
2,180
|
|
||
Other intangible assets, net
|
177
|
|
|
184
|
|
||
Deferred tax asset
|
470
|
|
|
556
|
|
||
Other non-current assets
|
65
|
|
|
67
|
|
||
Total non-current assets
|
3,405
|
|
|
3,499
|
|
||
Total assets
|
$
|
5,117
|
|
|
$
|
5,212
|
|
Liabilities and Shareholders’ Equity
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Accounts payable
|
$
|
368
|
|
|
$
|
444
|
|
Advance payments and billings in excess of costs
|
327
|
|
|
322
|
|
||
Compensation and other employee benefits
|
219
|
|
|
246
|
|
||
Other accrued liabilities
|
249
|
|
|
203
|
|
||
Total current liabilities
|
1,163
|
|
|
1,215
|
|
||
Defined benefit plans
|
1,924
|
|
|
2,203
|
|
||
Long-term debt
|
649
|
|
|
649
|
|
||
Deferred tax liability
|
3
|
|
|
1
|
|
||
Other non-current liabilities
|
130
|
|
|
128
|
|
||
Total non-current liabilities
|
2,706
|
|
|
2,981
|
|
||
Total liabilities
|
3,869
|
|
|
4,196
|
|
||
Commitments and contingencies (Note 15)
|
|
|
|
||||
Shareholders’ equity
|
|
|
|
||||
Common stock
|
2
|
|
|
2
|
|
||
Additional paid-in capital
|
2,590
|
|
|
2,575
|
|
||
Treasury stock
|
(5
|
)
|
|
—
|
|
||
Retained earnings
|
355
|
|
|
274
|
|
||
Accumulated other comprehensive loss
|
(1,694
|
)
|
|
(1,835
|
)
|
||
Total shareholders’ equity
|
1,248
|
|
|
1,016
|
|
||
Total liabilities and shareholders’ equity
|
$
|
5,117
|
|
|
$
|
5,212
|
|
|
|
|
Six Months Ended June 30,
|
||||||
|
2013
|
|
2012
|
||||
Operating activities
|
|
|
|
||||
Net income
|
$
|
122
|
|
|
$
|
156
|
|
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
|
|
|
|
||||
Depreciation and amortization
|
56
|
|
|
63
|
|
||
Stock-based compensation
|
16
|
|
|
13
|
|
||
Restructuring charges, net
|
62
|
|
|
2
|
|
||
Payments for restructuring
|
(23
|
)
|
|
(11
|
)
|
||
Defined benefit plans expense
|
48
|
|
|
24
|
|
||
Defined benefit plans payments
|
(75
|
)
|
|
(275
|
)
|
||
Change in assets and liabilities
|
|
|
|
||||
Change in receivables
|
(45
|
)
|
|
(114
|
)
|
||
Change in inventories
|
(13
|
)
|
|
(1
|
)
|
||
Change in other assets
|
(3
|
)
|
|
(2
|
)
|
||
Change in accounts payable
|
(76
|
)
|
|
(21
|
)
|
||
Change in advance payments and billings in excess of costs
|
6
|
|
|
(29
|
)
|
||
Change in deferred taxes
|
7
|
|
|
130
|
|
||
Change in other liabilities
|
(39
|
)
|
|
(44
|
)
|
||
Other, net
|
1
|
|
|
(1
|
)
|
||
Net cash provided by (used in) operating activities
|
44
|
|
|
(110
|
)
|
||
Investing activities
|
|
|
|
||||
Capital expenditures
|
(36
|
)
|
|
(50
|
)
|
||
Proceeds from the sale of assets
|
9
|
|
|
1
|
|
||
Acquisitions, net of cash acquired
|
(16
|
)
|
|
(24
|
)
|
||
Other, net
|
(1
|
)
|
|
2
|
|
||
Net cash used in investing activities
|
(44
|
)
|
|
(71
|
)
|
||
Financing activities
|
|
|
|
||||
Proceeds from commercial paper, net
|
—
|
|
|
257
|
|
||
Dividends paid
|
(19
|
)
|
|
(39
|
)
|
||
Common stock repurchased
|
(5
|
)
|
|
—
|
|
||
Proceeds from exercise of stock options
|
3
|
|
|
14
|
|
||
Other, net
|
(3
|
)
|
|
(2
|
)
|
||
Net cash (used in) provided by financing activities
|
(24
|
)
|
|
230
|
|
||
Exchange rate effects on cash and cash equivalents
|
(9
|
)
|
|
1
|
|
||
Net change in cash and cash equivalents
|
(33
|
)
|
|
50
|
|
||
Cash and cash equivalents – beginning of year
|
292
|
|
|
116
|
|
||
Cash and cash equivalents – end of period
|
$
|
259
|
|
|
$
|
166
|
|
|
|
Three months ended June 30, 2013
|
Six months ended June 30, 2013
|
||||||||||||
|
2013
|
|
2012
|
2013
|
|
2012
|
||||||||
By component
|
|
|
|
|
|
|
||||||||
Severance charges
|
$
|
7
|
|
|
$
|
1
|
|
$
|
52
|
|
|
$
|
2
|
|
Other restructuring charges
|
6
|
|
|
—
|
|
10
|
|
|
—
|
|
||||
Restructuring charges, net
|
$
|
13
|
|
|
$
|
1
|
|
$
|
62
|
|
|
$
|
2
|
|
By segment
|
|
|
|
|
|
|
||||||||
C4ISR Electronics and Systems
|
$
|
10
|
|
|
$
|
1
|
|
$
|
50
|
|
|
$
|
2
|
|
Information and Technical Services
|
3
|
|
|
—
|
|
12
|
|
|
—
|
|
||||
Restructuring charges, net
|
$
|
13
|
|
|
$
|
1
|
|
$
|
62
|
|
|
$
|
2
|
|
Balance at January 1, 2013
|
$
|
9
|
|
Charges for plans initiated during the year
|
62
|
|
|
Cash payments
|
(23
|
)
|
|
Balance at June 30, 2013
|
$
|
48
|
|
By accrual type
|
|
||
Severance accrual
|
$
|
37
|
|
Facility carrying and other costs accrual
|
11
|
|
|
By segment
|
|
||
C4ISR Electronics and Systems
|
$
|
38
|
|
Information and Technical Services
|
10
|
|
Planned reductions at January 1, 2013
|
46
|
|
Additional planned reductions
|
1,100
|
|
Actual reductions
|
(933
|
)
|
Planned reductions at June 30, 2013
|
213
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||
Weighted average common shares outstanding
|
188.2
|
|
|
186.7
|
|
|
188.0
|
|
|
186.0
|
|
Add: Weighted average restricted stock awards outstanding
(a)
|
—
|
|
|
0.8
|
|
|
0.2
|
|
|
1.1
|
|
Basic weighted average common shares outstanding
|
188.2
|
|
|
187.5
|
|
|
188.2
|
|
|
187.1
|
|
Add: Dilutive impact of stock options
|
0.5
|
|
|
0.5
|
|
|
0.4
|
|
|
0.5
|
|
Add: Dilutive impact of restricted stock units
|
1.8
|
|
|
0.5
|
|
|
1.6
|
|
|
0.4
|
|
Diluted weighted average common shares outstanding
|
190.5
|
|
|
188.5
|
|
|
190.2
|
|
|
188.0
|
|
(a)
|
Restricted stock awards containing rights to non-forfeitable dividends which participate in undistributed earnings with common shareholders are considered participating securities for purposes of computing earnings per share.
|
|
Net Foreign Currency
Translation
Adjustments
|
Unamortized Defined
Benefit
Plan Costs
|
|
Accumulated
Other Comprehensive
Loss
|
||||||
Balance at January 1, 2013
|
$
|
15
|
|
$
|
(1,850
|
)
|
|
$
|
(1,835
|
)
|
Other comprehensive income (loss) before reclassifications
|
(12
|
)
|
116
|
|
|
104
|
|
|||
Amounts reclassified from accumulated other comprehensive loss
|
—
|
|
37
|
|
(a)
|
37
|
|
|||
Net current period other comprehensive income (loss)
|
(12
|
)
|
153
|
|
|
141
|
|
|||
Balance at June 30, 2013
|
$
|
3
|
|
$
|
(1,697
|
)
|
|
$
|
(1,694
|
)
|
|
June 30, 2013
|
|
December 31, 2012
|
||||
Billed receivables
|
$
|
501
|
|
|
$
|
429
|
|
Unbilled contract receivables
|
530
|
|
|
562
|
|
||
Other
|
8
|
|
|
7
|
|
||
Receivables, gross
|
1,039
|
|
|
998
|
|
||
Allowance for doubtful accounts
|
(4
|
)
|
|
(3
|
)
|
||
Receivables, net
|
$
|
1,035
|
|
|
$
|
995
|
|
|
June 30, 2013
|
|
December 31, 2012
|
||||
Production costs of contracts in process
|
$
|
270
|
|
|
$
|
253
|
|
Less progress payments
|
(17
|
)
|
|
(22
|
)
|
||
Production costs of contracts in process, net
|
253
|
|
|
231
|
|
||
Product inventory
|
44
|
|
|
52
|
|
||
Inventories, net
|
$
|
297
|
|
|
$
|
283
|
|
|
June 30, 2013
|
|
December 31, 2012
|
||||||||||||||||||||
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Intangibles
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Intangibles
|
||||||||||||
Customer and distributor relationships
|
$
|
525
|
|
|
$
|
(360
|
)
|
|
$
|
165
|
|
|
$
|
524
|
|
|
$
|
(348
|
)
|
|
$
|
176
|
|
Proprietary technology
|
29
|
|
|
(20
|
)
|
|
9
|
|
|
25
|
|
|
(18
|
)
|
|
7
|
|
||||||
Trademark, patents and other
|
7
|
|
|
(4
|
)
|
|
3
|
|
|
5
|
|
|
(4
|
)
|
|
1
|
|
||||||
Total other intangible assets
|
$
|
561
|
|
|
$
|
(384
|
)
|
|
$
|
177
|
|
|
$
|
554
|
|
|
$
|
(370
|
)
|
|
$
|
184
|
|
Remaining 2013
|
$
|
13
|
|
2014
|
23
|
|
|
2015
|
21
|
|
|
2016
|
19
|
|
|
2017
|
16
|
|
|
2018 and thereafter
|
85
|
|
|
Total
|
$
|
177
|
|
|
June 30, 2013
|
|
December 31, 2012
|
||||
Long-term debt
|
$
|
650
|
|
|
$
|
650
|
|
Unamortized debt discount
|
(1
|
)
|
|
(1
|
)
|
||
Total long-term debt
|
$
|
649
|
|
|
$
|
649
|
|
|
|
|
June 30, 2013
|
|
December 31, 2012
|
|||||||||||||
|
Interest rate
|
|
Carrying
Value
|
|
Fair
Value
|
|
Carrying
Value
|
|
Fair
Value
|
|||||||||
Long-term debt
|
|
|
|
|
|
|
|
|
|
|||||||||
Senior notes (due 2016)
|
4.25
|
%
|
|
$
|
250
|
|
|
$
|
264
|
|
|
$
|
250
|
|
|
$
|
262
|
|
Senior notes (due 2021)
|
5.55
|
%
|
|
400
|
|
|
408
|
|
|
400
|
|
|
437
|
|
||||
Total
|
|
|
$
|
650
|
|
|
$
|
672
|
|
|
$
|
650
|
|
|
$
|
699
|
|
|
Three Months Ended June 30,
|
||||||||||||||||||||||
|
2013
|
|
2012
|
||||||||||||||||||||
|
Pension
|
|
Other
Benefits
|
|
Total
|
|
Pension
|
|
Other
Benefits
|
|
Total
|
||||||||||||
Net periodic benefit cost
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Service cost
|
$
|
19
|
|
|
$
|
—
|
|
|
$
|
19
|
|
|
$
|
19
|
|
|
$
|
1
|
|
|
$
|
20
|
|
Interest cost
|
60
|
|
|
4
|
|
|
64
|
|
|
66
|
|
|
5
|
|
|
71
|
|
||||||
Expected return on plan assets
|
(86
|
)
|
|
(5
|
)
|
|
(91
|
)
|
|
(95
|
)
|
|
(6
|
)
|
|
(101
|
)
|
||||||
Amortization of net actuarial loss
|
26
|
|
|
3
|
|
|
29
|
|
|
18
|
|
|
4
|
|
|
22
|
|
||||||
Amortization of prior service cost (credit)
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Net periodic benefit cost
|
$
|
20
|
|
|
$
|
2
|
|
|
$
|
22
|
|
|
$
|
8
|
|
|
$
|
4
|
|
|
$
|
12
|
|
|
Six Months Ended June 30,
|
||||||||||||||||||||||
|
2013
|
|
2012
|
||||||||||||||||||||
|
Pension
|
|
Other
Benefits
|
|
Total
|
|
Pension
|
|
Other
Benefits
|
|
Total
|
||||||||||||
Net periodic benefit cost
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Service cost
|
$
|
38
|
|
|
$
|
1
|
|
|
$
|
39
|
|
|
$
|
38
|
|
|
$
|
2
|
|
|
$
|
40
|
|
Interest cost
|
120
|
|
|
9
|
|
|
129
|
|
|
132
|
|
|
11
|
|
|
143
|
|
||||||
Expected return on plan assets
|
(171
|
)
|
|
(11
|
)
|
|
(182
|
)
|
|
(191
|
)
|
|
(11
|
)
|
|
(202
|
)
|
||||||
Amortization of net actuarial loss
|
54
|
|
|
6
|
|
|
60
|
|
|
36
|
|
|
7
|
|
|
43
|
|
||||||
Amortization of prior service cost (credit)
|
2
|
|
|
—
|
|
|
2
|
|
|
1
|
|
|
(1
|
)
|
|
—
|
|
||||||
Net periodic benefit cost
|
$
|
43
|
|
|
$
|
5
|
|
|
$
|
48
|
|
|
$
|
16
|
|
|
$
|
8
|
|
|
$
|
24
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Compensation cost for equity-based awards
|
$
|
8
|
|
|
$
|
7
|
|
|
$
|
13
|
|
|
$
|
12
|
|
Compensation cost for liability-based awards
|
3
|
|
|
1
|
|
|
3
|
|
|
1
|
|
||||
Total compensation costs, pre-tax
|
$
|
11
|
|
|
$
|
8
|
|
|
$
|
16
|
|
|
$
|
13
|
|
Future tax benefit
|
$
|
4
|
|
|
$
|
3
|
|
|
$
|
5
|
|
|
$
|
5
|
|
|
Stock Options
|
|
Restricted Stock
|
||||||||||
|
Shares
|
|
Weighted Average
Exercise Price
(a)
|
|
Shares
|
|
Weighted Average Grant
Date Fair value (a)
|
||||||
Outstanding at January 1, 2013
|
11.36
|
|
|
$
|
11.06
|
|
|
3.56
|
|
|
$
|
11.67
|
|
Granted
|
2.89
|
|
|
11.11
|
|
|
1.13
|
|
|
11.14
|
|
||
Exercised
|
(0.38
|
)
|
|
8.29
|
|
|
—
|
|
|
—
|
|
||
Vested
|
—
|
|
|
—
|
|
|
(0.79
|
)
|
|
12.00
|
|
||
Forfeited, canceled or expired
|
(0.61
|
)
|
|
11.96
|
|
|
(0.13
|
)
|
|
11.21
|
|
||
Outstanding at June 30, 2013
|
13.26
|
|
|
$
|
11.11
|
|
|
3.77
|
|
|
$
|
11.45
|
|
(a)
|
In whole dollars.
|
Dividend yield
|
3.72
|
%
|
|
Expected volatility
|
27.0
|
%
|
|
Expected life (in years)
|
7.0
|
|
|
Risk-free rates
|
1.40
|
%
|
|
Grant date fair value (in whole dollars)
|
$
|
1.93
|
|
|
June 30, 2013
|
|
December 31, 2012
|
||||
Low-end range
|
$
|
24
|
|
|
$
|
24
|
|
High-end range
|
$
|
45
|
|
|
$
|
47
|
|
Number of active environmental investigations and remediation sites
|
21
|
|
|
22
|
|
|
Three Months Ended June 30,
|
||||||||||||||||||||||
|
2013
|
|
2012
|
||||||||||||||||||||
|
Product
Revenue
|
|
Service
Revenue
|
|
Total
Revenue
|
|
Product
Revenue
|
|
Service
Revenue
|
|
Total
Revenue
|
||||||||||||
C4ISR Electronics and Systems
|
$
|
518
|
|
|
$
|
—
|
|
|
$
|
518
|
|
|
$
|
620
|
|
|
$
|
—
|
|
|
$
|
620
|
|
Information and Technical Services
|
—
|
|
|
733
|
|
|
733
|
|
|
—
|
|
|
759
|
|
|
759
|
|
||||||
Total
|
$
|
518
|
|
|
$
|
733
|
|
|
$
|
1,251
|
|
|
$
|
620
|
|
|
$
|
759
|
|
|
$
|
1,379
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Six Months Ended June 30,
|
||||||||||||||||||||||
|
2013
|
|
2012
|
||||||||||||||||||||
|
Product
Revenue
|
|
Service
Revenue
|
|
Total
Revenue
|
|
Product
Revenue
|
|
Service
Revenue
|
|
Total
Revenue
|
||||||||||||
C4ISR Electronics and Systems
|
$
|
1,017
|
|
|
$
|
—
|
|
|
$
|
1,017
|
|
|
$
|
1,273
|
|
|
$
|
—
|
|
|
$
|
1,273
|
|
Information and Technical Services
|
—
|
|
|
1,419
|
|
|
1,419
|
|
|
—
|
|
|
1,527
|
|
|
1,527
|
|
||||||
Total
|
$
|
1,017
|
|
|
$
|
1,419
|
|
|
$
|
2,436
|
|
|
$
|
1,273
|
|
|
$
|
1,527
|
|
|
$
|
2,800
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Operating Income
|
|
|
|
|
|
|
|
||||||||
C4ISR Electronics and Systems
|
$
|
40
|
|
|
$
|
86
|
|
|
$
|
59
|
|
|
$
|
177
|
|
Information and Technical Services
|
87
|
|
|
59
|
|
|
142
|
|
|
106
|
|
||||
Total Operating Income
|
$
|
127
|
|
|
$
|
145
|
|
|
$
|
201
|
|
|
$
|
283
|
|
Operating Margin
|
|
|
|
|
|
|
|
||||||||
C4ISR Electronics and Systems
|
7.7
|
%
|
|
13.9
|
%
|
|
5.8
|
%
|
|
13.9
|
%
|
||||
Information and Technical Services
|
11.9
|
%
|
|
7.8
|
%
|
|
10.0
|
%
|
|
6.9
|
%
|
||||
Total Operating Margin
|
10.2
|
%
|
|
10.5
|
%
|
|
8.3
|
%
|
|
10.1
|
%
|
|
June 30, 2013
|
|
December 31, 2012
|
||||
Assets
|
|
|
|
||||
C4ISR Electronics and Systems
|
$
|
3,049
|
|
|
$
|
3,078
|
|
Information and Technical Services
|
1,261
|
|
|
1,186
|
|
||
Corporate and Other
|
807
|
|
|
948
|
|
||
Total Assets
|
$
|
5,117
|
|
|
$
|
5,212
|
|
•
|
“Adjusted net income” defined as net income, adjusted to exclude items that include, but are not limited to significant charges or credits that impact current results, but are not related to our ongoing operations, unusual and infrequent non-operating items and non-operating tax settlements or adjustments. A reconciliation of adjusted net income is provided below.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Net income
|
$
|
78
|
|
|
$
|
86
|
|
|
$
|
122
|
|
|
$
|
156
|
|
Separation costs, net of tax
|
—
|
|
|
1
|
|
|
—
|
|
|
15
|
|
||||
Separation related tax items
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
||||
Adjusted net income
|
$
|
78
|
|
|
$
|
87
|
|
|
$
|
122
|
|
|
$
|
175
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||
|
2013
|
|
2012
|
|
Change
|
|
2013
|
|
2012
|
|
Change
|
||||||||||
Product and service revenue
|
$
|
1,251
|
|
|
$
|
1,379
|
|
|
(9.3
|
)%
|
|
$
|
2,436
|
|
|
$
|
2,800
|
|
|
(13.0
|
)%
|
Cost of product and service revenue
|
974
|
|
|
1,087
|
|
|
(10.4
|
)%
|
|
1,908
|
|
|
2,222
|
|
|
(14.1
|
)%
|
||||
Operating expense
|
150
|
|
|
147
|
|
|
2.0
|
%
|
|
327
|
|
|
295
|
|
|
10.8
|
%
|
||||
Operating income
|
127
|
|
|
145
|
|
|
(12.4
|
)%
|
|
201
|
|
|
283
|
|
|
(29.0
|
)%
|
||||
Operating margin
|
10.2
|
%
|
|
10.5
|
%
|
|
|
|
8.3
|
%
|
|
10.1
|
%
|
|
|
||||||
Interest expense, net
|
10
|
|
|
11
|
|
|
(9.1
|
)%
|
|
18
|
|
|
20
|
|
|
(10.0
|
)%
|
||||
Other expense (income), net
|
(3
|
)
|
|
(1
|
)
|
|
200
|
%
|
|
(1
|
)
|
|
7
|
|
|
(114
|
)%
|
||||
Income tax expense
|
42
|
|
|
49
|
|
|
(14.3
|
)%
|
|
62
|
|
|
100
|
|
|
(38.0
|
)%
|
||||
Effective income tax rate
|
35.0
|
%
|
|
36.3
|
%
|
|
|
|
33.7
|
%
|
|
39.1
|
%
|
|
|
||||||
Net income
|
$
|
78
|
|
|
$
|
86
|
|
|
(9.3
|
)%
|
|
$
|
122
|
|
|
$
|
156
|
|
|
(21.8
|
)%
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||
|
2013
|
|
2012
|
|
Change
|
|
2013
|
|
2012
|
|
Change
|
||||||||||
C4ISR Electronics and Systems
|
$
|
518
|
|
|
$
|
620
|
|
|
(16.5
|
)%
|
|
$
|
1,017
|
|
|
$
|
1,273
|
|
|
(20.1
|
)%
|
Information and Technical Services
|
733
|
|
|
759
|
|
|
(3.4
|
)%
|
|
1,419
|
|
|
1,527
|
|
|
(7.1
|
)%
|
||||
Total Revenue
|
$
|
1,251
|
|
|
$
|
1,379
|
|
|
(9.3
|
)%
|
|
$
|
2,436
|
|
|
$
|
2,800
|
|
|
(13.0
|
)%
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||
|
2013
|
|
2012
|
|
Change
|
|
2013
|
|
2012
|
|
Change
|
||||||||||
Cost of product revenue
|
$
|
380
|
|
|
$
|
433
|
|
|
(12.2
|
)%
|
|
$
|
737
|
|
|
$
|
894
|
|
|
(17.6
|
)%
|
% of product revenue
|
73.4
|
%
|
|
69.8
|
%
|
|
|
|
72.5
|
%
|
|
70.2
|
%
|
|
|
||||||
Cost of service revenue
|
594
|
|
|
654
|
|
|
(9.2
|
)%
|
|
1,171
|
|
|
1,328
|
|
|
(11.8
|
)%
|
||||
% of service revenue
|
81.0
|
%
|
|
86.2
|
%
|
|
|
|
82.5
|
%
|
|
87.0
|
%
|
|
|
||||||
Selling, general and administrative expenses
|
122
|
|
|
130
|
|
|
(6.2
|
)%
|
|
237
|
|
|
263
|
|
|
(9.9
|
)%
|
||||
% of total revenue
|
9.8
|
%
|
|
9.4
|
%
|
|
|
|
9.7
|
%
|
|
9.4
|
%
|
|
|
||||||
Research and development expenses
|
15
|
|
|
16
|
|
|
(6.3
|
)%
|
|
28
|
|
|
30
|
|
|
(6.7
|
)%
|
||||
% of total revenue
|
1.2
|
%
|
|
1.2
|
%
|
|
|
|
1.1
|
%
|
|
1.1
|
%
|
|
|
||||||
Restructuring charges, net
|
13
|
|
|
1
|
|
|
1,200
|
%
|
|
62
|
|
|
2
|
|
|
3,000
|
%
|
||||
% of total revenue
|
1.0
|
%
|
|
0.1
|
%
|
|
|
|
2.5
|
%
|
|
0.1
|
%
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||
|
2013
|
|
2012
|
|
Change
|
|
2013
|
|
2012
|
|
Change
|
||||||||||
C4ISR Electronics and Systems
|
$
|
40
|
|
|
$
|
86
|
|
|
(53.5
|
)%
|
|
$
|
59
|
|
|
$
|
177
|
|
|
(66.7
|
)%
|
Operating margin
|
7.7
|
%
|
|
13.9
|
%
|
|
|
|
5.8
|
%
|
|
13.9
|
%
|
|
|
||||||
Information and Technical Services
|
87
|
|
|
59
|
|
|
47.5
|
%
|
|
142
|
|
|
106
|
|
|
34.0
|
%
|
||||
Operating margin
|
11.9
|
%
|
|
7.8
|
%
|
|
|
|
10.0
|
%
|
|
6.9
|
%
|
|
|
||||||
Total operating income
|
$
|
127
|
|
|
$
|
145
|
|
|
(12.4
|
)%
|
|
$
|
201
|
|
|
$
|
283
|
|
|
(29.0
|
)%
|
Total operating margin
|
10.2
|
%
|
|
10.5
|
%
|
|
|
|
8.3
|
%
|
|
10.1
|
%
|
|
|
(In billions)
|
June 30, 2013
|
|
December 31, 2012
|
||||
Funded backlog
|
$
|
2.9
|
|
|
$
|
2.9
|
|
Unfunded backlog
|
6.5
|
|
|
6.6
|
|
||
Total backlog
|
$
|
9.4
|
|
|
$
|
9.5
|
|
|
Six Months Ended June 30,
|
||||||
|
2013
|
|
2012
|
||||
Operating Activities
|
$
|
44
|
|
|
$
|
(110
|
)
|
Investing Activities
|
(44
|
)
|
|
(71
|
)
|
||
Financing Activities
|
(24
|
)
|
|
230
|
|
||
Foreign Exchange
|
(9
|
)
|
|
1
|
|
||
Net change in cash and cash equivalents
|
$
|
(33
|
)
|
|
$
|
50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
DOLLARS AND SHARE AMOUNTS IN MILLIONS, UNLESS OTHERWISE STATED
|
|
|||||||||||||||||||||
Period
|
|
Total
Number of
Shares
Purchased
|
|
|
Average Price Paid Per Share (in whole dollars)
|
|
|
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs
|
|
|
Amount
Available for
Future Share
Repurchases
Under the Plans or Programs
(a)
|
|
||||||||||
April 1, 2013 – April 30, 2013
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
||
May 1, 2013 – May 31, 2013
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
||
June 1, 2013 – June 30, 2013
|
|
|
0.43
|
|
|
|
|
$
|
12.62
|
|
|
|
|
0.43
|
|
|
|
|
$
|
94.6
|
|
|
Total
|
|
|
0.43
|
|
|
|
|
$
|
12.62
|
|
|
|
|
0.43
|
|
|
|
|
$
|
94.6
|
|
|
|
|
EXELIS INC.
|
|
|
(Registrant)
|
|
|
|
August 2, 2013
|
|
/s/ GREGORY P. KUDLA
|
(Date)
|
|
Gregory P. Kudla
|
|
|
Chief Accounting Officer
|
|
|
(Principal Accounting Officer)
|
EXHIBIT
NUMBER
|
|
DESCRIPTION
|
|
LOCATION
|
|
|
|
||
(3.1)
|
|
Amended and Restated Articles of Incorporation of Exelis Inc.
|
|
Incorporated by reference to Exhibit 3.1 of Exelis Inc.’s Form 8-K Current Report filed on October 14, 2011 (CIK No. 1524471, File No. 1-35228).
|
|
|
|
||
(3.2)
|
|
Amended and Restated By-laws of Exelis Inc.
|
|
Incorporated by reference to Exhibit 3.1 of Exelis Inc.’s Form 8-K Current Report filed on May 11, 2012 (CIK No. 1524471, File No. 1-35228).
|
|
|
|
||
(4.1)
|
|
Indenture, dated as of September 20, 2011, between Exelis Inc., ITT Corporation, as initial guarantor, and Union Bank, N.A., as trustee
|
|
Incorporated by reference to Exhibit 4.1 of ITT Corporation’s Form 8-K Current Report filed on September 21, 2011 (CIK No. 216228, File No. 1-5672).
|
|
|
|
||
(4.2)
|
|
Form of Exelis Inc. 4.250% Senior Notes due 2016
|
|
Incorporated by reference to Exhibit 4.5 of Exelis Inc.’s Form S-4 Registration Statement filed on May 25, 2012 (CIK No. 1524471, File No. 333-181682).
|
|
|
|
||
(4.3)
|
|
Form of Exelis Inc. 5.550% Senior Notes due 2021
|
|
Incorporated by reference to Exhibit 4.5 of Exelis Inc.’s Form S-4 Registration Statement filed on May 25, 2012 (CIK No. 1524471, File No. 333-181682).
|
|
|
|
|
|
(10.18)
|
|
Exelis Excess Pension Plan IA (formerly known as The ITT Excess Pension Plan IA and the ITT Industries excess Pension Plan IA). Originally effective as of July 1, 1975. Amended and restated as of December 31, 2008, and further amended and restated as of October 31, 2011.
|
|
Filed herewith.
|
|
|
|
||
(10.19)
|
|
Exelis Excess Pension Plan IB (formerly known as The ITT Excess Pension Plan IB and the ITT Industries excess Pension Plan IB). Originally effective as of January 1, 1996. Amended and restated as of December 31, 2008, and further amended and restated as of October 31, 2011.
|
|
Filed herewith.
|
|
|
|
|
|
(10.20)
|
|
Exelis Excess Pension Plan IIA (formerly known as the ITT Excess Pension Plan IIA, the ITT Excess Pension Plan II, and the ITT Industries Excess Pension Plan II, as amended and restated as of July 13, 2004). Originally effective as of January 1, 1998. Amended and restated as of December 31, 2008, and further amended and restated as of October 31, 2011.
|
|
Filed herewith.
|
|
|
|
|
|
(10.21)
|
|
Exelis Excess Pension Plan IIB (formerly known as the ITT Excess Pension Plan IIB). Effective as of January 1, 2008. Amended and restated as of December 21, 2008, and further amended and restated as of October 31, 2011.
|
|
Filed herewith.
|
|
|
|
|
|
EXHIBIT
NUMBER
|
|
DESCRIPTION
|
|
LOCATION
|
(11)
|
|
Statement re computation of per share earnings
|
|
Information required to be presented in Exhibit 11 is provided under “Earnings Per Share” in Note 4 to the Condensed Consolidated Financial Statements in Part I, Item 1 “Financial Statements” of Exelis Inc.’s Quarterly Report on Form 10-Q for the period ended June 30, 2013 in accordance with the provisions of Financial Accounting Standards Board Accounting Standards Codification 260,
Earnings Per Share
.
|
|
|
|
||
(12)
|
|
Statement re computation of ratios
|
|
Filed herewith.
|
|
|
|
|
|
(31.1)
|
|
Certification pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
Filed herewith.
|
|
|
|
|
|
(31.2)
|
|
Certification pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
Filed herewith.
|
|
|
|
|
|
(32.1)
|
|
Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
This Exhibit is intended to be furnished in accordance with Regulation S-K Item 601(b) (32) (ii) and shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934 or incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except as shall be expressly set forth by specific reference.
|
|
|
|
|
|
(32.2)
|
|
Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
This Exhibit is intended to be furnished in accordance with Regulation S-K Item 601(b) (32) (ii) and shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934 or incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except as shall be expressly set forth by specific reference.
|
|
|
|
||
(101)
|
|
The following materials from Exelis Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2013, formatted in XBRL (Extensible Business Reporting Language): (i) Condensed Consolidated Statements of Operations, (ii) Condensed Consolidated Statements of Comprehensive Income, (iii) Condensed Consolidated Balance Sheets, (iv) Condensed Consolidated Statements of Cash Flows and (v) Notes to Condensed Consolidated Financial Statements.
|
|
Submitted electronically with this Report.
|
|
|
|
|
|
Page
|
|
||
|
1.01
|
Acceleration Event
shall mean “Acceleration Event” as that term is defined under the provisions of the Plan as in effect on October 3, 2004.
|
1.02
|
Annuity Starting Date
shall mean, unless the Plan expressly provides otherwise, the first day of the first period for which an amount is due as an annuity or any other form. However, if a Change in Control occurs, the Annuity Starting Date of a Participant with regard to his 409A Supplemental Benefit shall be the date such Change in Control occurs.
|
1.03
|
Associated Company
shall mean any division, subsidiary or affiliated company of the Corporation not participating in the Plan which is an Associated Company, as defined in the Retirement Plan.
|
1.04
|
Beneficiary
shall mean the person designated pursuant to the provisions of the Retirement Plan to receive benefits under said Retirement Plan after a Participant’s death. In the absence of a beneficiary designation under the provisions of the Retirement Plan, the Participant’s Beneficiary shall be his spouse (or Registered Domestic Partner (as defined in the Retirement Plan)), if any, otherwise his estate. Notwithstanding the foregoing, with respect to any survivor benefit payable pursuant to the provision of Section 2.04(c)(ii) based on the Participant’s 409A Supplemental Benefit attributable to the Traditional Pension Plan (“TPP”) formula (as defined in Section 4.01(b) of the Retirement Plan), in the absence of a beneficiary designation under the provisions of the Retirement Plan, the Participant’s Beneficiary shall be his spouse (or Registered Domestic Partner), if any, otherwise the person or persons named as his beneficiary (or beneficiaries) under the Exelis Salaried Investment and Savings Plan, if any, or if none, then the person or persons named as his beneficiary (or beneficiaries) under the Company’s life insurance program.
|
1.05
|
Board of Directors
shall mean the Board of Directors of Exelis Inc. or any successor thereto.
|
1.06
|
Change in Control
shall mean “Change in Control” as such term is defined under the terms of the Exelis Excess Pension Plan IIA, as amended from time to time.
|
1.07
|
Code
shall mean the Internal Revenue Code of 1986, as amended from time to time.
|
1.08
|
Committee
shall mean the Benefits Administration Committee under the Retirement Plan.
|
1.09
|
Company
shall mean, effective October 31, 2011, Exelis Inc. or any successor by merger or purchase or otherwise and any Participating Unit (as that term is defined in the Retirement Plan) authorized by the Corporation to participate in the Plan with respect to its employees. When used herein, the term Company shall collectively include Exelis Inc. and, for the period prior to October 31, 2011, ITT Corporation, and any Participating Unit.
|
1.10
|
Company Pension Plan
shall mean any tax qualified defined benefit plan other than the Retirement Plan maintained by the Company or an Associated Company.
|
1.11
|
Corporation
shall mean, effective October 31, 2011, Exelis Inc., an Indiana corporation, or any successor by merger, purchase or otherwise. When used herein, the term Corporation shall collectively include Exelis Inc. and, for the period prior to October 31, 2011, ITT Corporation.
|
1.12
|
Disability or Disabled
shall mean “Disability” or “Disabled” as such terms are defined under the terms of the Exelis Excess Pension Plan IIA, as amended from time to time.
|
1.13
|
Eligible Employee
shall mean a member of the Retirement Plan who occupied on or prior to December 31, 2007, a position of senior management with the Corporation at the Vice President level or higher.
|
1.14
|
ERISA
shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time.
|
1.15
|
Excess Benefit Portion
shall mean the portion of the Plan which is intended to constitute an unfunded excess benefit plan under Sections 3(36) and 4(b)(5) of Title I of ERISA which provides benefits not otherwise payable under the Retirement Plan due to restrictions imposed by Section 415 of the Code.
|
1.16
|
Grandfathered Pre-2005 Benefit
shall mean the portion of the Participant’s Supplemental Benefit, if any, that was accrued and vested before January 1, 2005, determined under the provisions of the Plan without regard to any amendments after October 3, 2004, which would cause a material modification for purposes of Section 409A of the Code, adjusted for the passage of time based on actuarial equivalent assumptions and procedures established by the Committee in accordance with the provisions of Treas. Reg. § 1.409A-6(a)(3)(iv).
|
1.17
|
Participant
shall mean an Eligible Employee who is participating in the Plan pursuant to Section 2.01 hereof.
|
1.18
|
Plan
shall mean the Exelis Excess Pension Plan IA, as set forth herein or as amended from time to time.
|
1.19
|
Plan Administrator
shall mean the Benefits Administration Committee (as defined in the Retirement Plan) or in the case of an appeal under Section 3.13(c), the Appeals Committee (as defined in the Retirement Plan).
|
1.20
|
Retirement Plan
shall mean the Exelis Salaried Retirement Plan, which was formerly known prior to October 31, 2011, as the ITT Salaried Retirement Plan and prior to that the ITT Industries Salaried Retirement Plan, as amended from time to time.
|
1.21
|
Select Management Portion
shall mean the portion of the Plan, other than the Excess Benefit Portion, which is intended to constitute an unfunded deferred compensation plan for a select group of management or highly compensated employees under Title I of ERISA.
|
1.22
|
Supplemental Benefit
shall mean the monthly benefit payable to a Participant as determined under Section 2.02, which shall include a Participant’s Excess Benefit Portion and Select Management Portion as determined pursuant to Section 2.02 of this Plan.
|
1.23
|
409A Supplemental Benefit
shall mean the portion of a Participant’s Supplemental Benefit, if any, in excess of his Grandfathered Pre-2005 Benefit.
|
1.24
|
Termination of Employment
shall mean a “Separation from Service” as such term is defined in the Exelis Excess Pension Plan IIA, as amended from time to time.
|
2.01
|
Participation
|
(a)
|
Each Eligible Employee who is a Participant in the Plan as of October 31, 2011, shall continue to be a Participant in the Plan, subject to the provisions of paragraph (d) below. Effective as of January 1, 2008, participation in the Plan was frozen and the admission of new Participants in the Plan on or after that date was prohibited.
|
(b)
|
Each Eligible Employee’s annual retirement allowance or vested benefit which at the time of payment under the Retirement Plan exceeds the limitations imposed by Section 415(b) of the Code (or prior to January 1, 2000, Section 415(e) of the Code) shall be payable from the Excess Benefit Portion of the Plan.
|
(c)
|
Each Eligible Employee’s annual retirement allowance or vested benefit which at the time of payment under the Retirement Plan is limited by reason of the limitation on Compensation (as that term is defined in the Retirement Plan) under Section 401(a)(17) of the Code shall be payable from the Select Management Portion of the Plan.
|
(d)
|
A Participant’s participation in the Plan shall terminate upon the Participant’s death or other Termination of Employment with the Company and all Associated Companies, unless a benefit is payable under the Plan with respect to the Participant or his Beneficiary under the provisions of this Article II.
|
2.02
|
Amount of Supplemental Benefits
|
(a)
|
A Participant’s Supplemental Benefit under this Article II shall be equal to the excess, if any, of (i) over (ii) as determined below:
|
(i)
|
the monthly retirement allowance or vested benefit determined as of such Participant’s Termination of Employment which would have been payable to the Participant under Section 4.02, 4.03, 4.04, 4.05 or 4.06 of the Retirement Plan, whichever is applicable, assuming such benefit commences on the date set forth in Section 2.04(a)(i), (ii) or (iv) of this Plan, whichever is applicable, and
|
(1)
|
prior to the application of any offset required pursuant to Section 4.10 or to an applicable Appendix of the Retirement Plan with regard to benefits payable under any other Company Pension Plan;
|
(2)
|
without regard to the provisions contained in Section 415 of the Code relating to the maximum limitation on benefits, as incorporated into the Retirement Plan; and
|
(3)
|
without regard to the annual limitation on Compensation contained in Section 401(a)(17) of the Code, as incorporated into the Retirement Plan;
|
(ii)
|
the monthly retirement allowance or vested benefit which would have been payable for the Participant’s lifetime under Section 4.02, 4.03, 4.04, 4.05 or 4.06 of the Retirement Plan, whichever is applicable, assuming such benefit commences on the date set forth in Section 2.04(a)(i), (ii) or (iv), whichever is applicable, and determined
|
(1)
|
prior to the application of any offset required pursuant to Section 4.10 or an applicable Appendix of the Retirement Plan with regard to benefits payable under any other Company Pension Plan;
|
(2)
|
with regard to the provisions contained in Section 415 of the Code relating to maximum limitation benefits as incorporated into the Retirement Plan; and
|
(3)
|
with regard to the annual limitation on Compensation contained in Section 401(a)(17) of the Code, as incorporated into the Retirement Plan.
|
(b)
|
Except as otherwise provided below, if, after a Participant’s Annuity Starting Date, changes to the Code or ERISA permit the Retirement Plan to provide for payment of a Participant’s monthly retirement allowance or vested benefit in an amount greater than that permissible at that particular Annuity Starting Date, the Participant’s monthly benefit under this Plan shall be reduced by the portion of his retirement allowance or vested benefit actually paid from the Retirement Plan. This provision shall not be applicable to any portion of a Participant’s Supplemental Benefit received in the form of a lump-sum payment.
|
(c)
|
Notwithstanding anything to the contrary in Section 2.01 or Section 2.02(a), a Participant who on October 31, 2011, continued in employment with ITT Corporation or commenced employment with Xylem Inc. shall be treated for purposes of determining his Supplemental Benefit as though he earns Eligibility Service (as defined in the Retirement Plan) for Plan purposes until the earlier of October 31, 2016, the date such Participant terminates employment with ITT Corporation or Xylem Inc., the date on which the benefits under the Retirement Plan attributable to the TPP Formula commence, the date of his death or a Change in Control of ITT Corporation or Xylem Inc., as the case may be.
|
(d)
|
Notwithstanding anything to the contrary in Section 2.01 or 2.01(a), effective as of October 31, 2011, with respect to a Participant who on October 31, 2011, continued in employment with ITT Corporation or commenced employment with Xylem Inc.,
|
(e)
|
Notwithstanding anything to the contrary in Section 2.01 or this Section 2.02, effective December 31, 2016, Benefit Service (as defined under the Retirement Plan) and Compensation used to determine a Participant’s Supplemental Benefits under this Plan shall be frozen.
|
2.03
|
Vesting
|
2.04
|
Payment of Benefits
|
(a)
|
Timing of Payment
|
(i)
|
Subject to the provisions of clause (iii) below, the portion of any Participant’s 409A Supplemental Benefit payable under Section 2.02 attributable to the TPP formula, to the extent vested pursuant to Section 2.03, shall commence as of the first day of the month following (1) the Participant’s Termination of Employment or (2) if the Participant is not at least age 50 on such date of Termination of Employment and his age and Eligibility Service as of such date does not equal 80 or more, the Participant’s attainment of age 55, if later.
|
(ii)
|
Notwithstanding the foregoing provisions of clause (i) above and subject to the provisions of clause (iii) below, the portion of any Participant’s 409A Supplemental Benefit payable under Section 2.02 attributable to the PEP formula, to the extent vested pursuant to Section 2.03, shall commence as of the first day of the month following the Participant’s Termination of Employment.
|
(iii)
|
Notwithstanding the foregoing, the actual payment of a 409A Supplemental Benefit payable under Section 2.02 due to the Participant’s Termination of Employment for reasons other than death or Disability shall not commence prior to the first day of the seventh month following the Participant’s Termination of Employment. Any payment due the Participant which he would have otherwise received under Section 2.02 during the six-month period immediately following such Participant’s Termination of Employment shall be accumulated, with interest, at the IRS Interest Rate (as defined in the Retirement Plan) in accordance with procedures
|
(iv)
|
Notwithstanding the foregoing, in the event a Participant who incurred a Termination of Employment prior to January 1, 2009, has not commenced payment of his 409A Supplemental Benefit as of January 1, 2009, such Participant’s 409A Supplemental Benefit shall commence as of January 1, 2009, or, if later, the date specified in clause (i), (ii) or (iii) above, whichever is applicable.
|
(v)
|
A Participant’s Grandfathered Pre-2005 Benefit shall commence in accordance with the provisions of the Plan as in effect on October 3, 2004, modified as set forth in Appendix A and without regard to any amendments after October 3, 2004, which would constitute a material modification for purposes of Section 409A of the Code.
|
(b)
|
Form of Benefit
|
(i)
|
Unless a Participant has a valid election under clause (ii) or (iii) below in effect, the portion of the Participant’s 409A Supplemental Benefit determined under Section 2.02 attributable to the TPP formula shall be paid in the form of a single life annuity for the life of the Participant, if the Participant is not married on his Annuity Starting Date, or in the form of a 50% joint & survivor annuity, if the Participant is married (or has a Registered Domestic Partner) on his Annuity Starting Date.
|
(ii)
|
Subject to the provisions of clause (iv) below, a Participant may elect to convert his 409A Supplemental Benefit payable under Section 2.02 attributable to the TPP formula into an optional annuity of equivalent actuarial value available to that Participant under the provisions of Section 4.07(b) of the Retirement Plan as of his Annuity Starting Date, provided said optional annuity satisfies the definition of “life annuity” as provided in Treas. Reg. § 1.409A-(2)(b)(2)(ii) and any further guidance thereto. Such equivalent actuarial value shall be based on the applicable factors set forth in Appendix A of the Retirement Plan.
|
(iii)
|
Notwithstanding the foregoing provisions of clauses (i) and (ii) above, a Participant may, subject to the timing limitations and other restrictions as shall be prescribed by the Committee, elect, by written notice received by the Committee, to receive the portion of his entire Supplemental Benefit payable under this Plan attributable to the TPP formula in the form of a single lump-sum payment if upon his Termination of Employment he retires under the provisions of the Retirement Plan at his Postponed Retirement Date, Normal Retirement Date, Standard Early Retirement Date or Special
|
(iv)
|
Notwithstanding the foregoing and subject to the provisions of Section 409A of the Code, a Participant’s election to receive his 409A Supplemental Benefit attributable to the TPP formula in an optional annuity form of payment as described in clause (ii) above shall be effective as of the Participant’s Annuity Starting Date applicable to that portion of his 409A Supplemental Benefit, provided the Participant makes and submits to the
|
(v)
|
Notwithstanding the foregoing provisions of this Section 2.04(b), the portion of a Participant’s 409A Supplemental Benefit payable under Section 2.02 attributable to the PEP formula shall be payable in the form of a single lump-sum payment. Such lump-sum payment shall be calculated on the same basis as provided in Section 4.07(b)(v) of the Retirement Plan except as otherwise provided in Section 2.02(d).
|
(vi)
|
The portion of the Participant’s Grandfathered Pre-2005 Benefit payable under Section 2.02 attributable to the TPP formula shall commence and the form of payment of such benefit shall be determined in accordance with the provisions of the Plan as in effect on October 3, 2004, modified as set forth in Appendix A and without regard to any Plan amendments after that date which would constitute a material modification for purposes of Section 409A of the Code, unless a Participant has a valid election under clause (iii) above in effect as of his date of Termination of Employment. The portion of the Participant’s Grandfathered Pre-2005 Benefit payable under Section 2.02 attributable to the PEP formula shall be payable in accordance with the provisions of the Plan as in effect on October 3, 2004, modified as set forth in Appendix A and without regard to any amendments after October 3, 2004, which would constitute a material modification for purposes of Section 409A of the Code.
|
(c)
|
Death Prior to a Participant’s Annuity Starting Date
|
(i)
|
If a Participant entitled to a vested benefit under the Retirement Plan dies (1) before meeting the eligibility requirements for an Automatic Pre-Retirement Survivor’s Benefit under Section 4.08(b) of the Retirement Plan and while in active service with the Company or any Associated Company or while Disabled but before his Annuity Starting Date, or (2) after Termination of Employment with entitlement to a vested benefit hereunder but prior to his Annuity Starting Date, the Participant’s spouse (or Registered Domestic Partner) shall receive a monthly payment for life equal to the monthly income which would have been payable to such spouse (or Registered Domestic Partner) under Section 4.08(a) of the Retirement Plan based on the hypothetical benefit attributable to his Supplemental Benefit as calculated under Section 2.02 hereof assuming payments commence as of the first day of the month following the Participant’s date of death, or attainment of age 55, if later. The portion of such survivor benefit attributable
|
(ii)
|
Except as otherwise provided below or in clause (iii) of this Section 2.04(c), in the event a Participant who has satisfied the eligibility requirements for the Automatic Pre-Retirement Survivor’s Benefit under Section 4.08(b) of the Retirement Plan, dies (1) while in active service with the Company or any Associated Company or (2) after his Termination of Employment or the date he becomes Disabled, if earlier, but prior to his Annuity Starting Date, the Participant’s Beneficiary, if any, shall receive a monthly payment for the life of the Beneficiary equal to the monthly income which would have been payable to such Beneficiary under Section 4.08(b) of the Retirement Plan based on the hypothetical retirement benefit attributable to his Supplemental Benefit as calculated under Section 2.02 hereof assuming payments commence on the first day of the month following the Participant’s death (or the date specified in clause (iv), if later). Notwithstanding the foregoing, the portion of any benefit payable under this clause (ii) attributable to the PEP formula portion of the benefit which would have been payable to the Beneficiary based on the hypothetical 409A Supplemental Benefit as calculated under Section 2.02 hereof shall be payable in the form of a single lump-sum payment. This lump-sum payment shall be calculated on the same basis as provided in Section 4.08(b)(iii) of the Retirement Plan except as otherwise provided in Section 2.02(d). The portion of any benefit payable under this clause (ii) attributable to a Participant’s 409A Supplemental Benefit as calculated under Section 2.02
|
(iii)
|
Notwithstanding the foregoing, in the event a Participant, who has satisfied the eligibility requirements to retire under the Retirement Plan with an early, normal or postponed retirement allowance, has filed a valid election to receive a lump-sum payment of benefits under the provisions of Section 2.04(b)(iii), dies on or after age 55 and prior to his Annuity Starting Date, the Beneficiary of such Participant shall receive a single lump-sum amount determined as follows:
|
(A)
|
In the event of the Participant’s death (i) prior to his Termination of Employment or (ii) after he becomes Disabled but prior to his Annuity Starting Date, the lump-sum payment shall be equal to the value of the Participant’s benefit attributable to his Supplemental Benefit, if any, accrued to his date of death as determined under the provisions of Section 2.02 hereof.
|
(B)
|
In the event of any other Participant’s death after his Termination of Employment and prior to his Annuity Starting Date, the lump-sum payment shall be equal to the value of the Participant’s Supplemental Benefit accrued to the Participant’s Termination of Employment as determined under the provisions of Section 2.02 hereof.
|
(iv)
|
Notwithstanding the foregoing, in the event the survivor benefit payable under this Section 2.04(c) to the spouse or Beneficiary of a Participant who died prior to January 1, 2009, has not commenced as of January 1, 2009, such survivor benefit shall commence as of January 1, 2009, or, if later, the date specified in clauses (i), (ii) or (iii) above, whichever is applicable.
|
(d)
|
Disability prior to Termination of Employment
|
(i)
|
Notwithstanding any Plan provision to the contrary, in the event a Participant becomes Disabled prior to his Termination of Employment, the Participant shall be entitled to a Disability Supplemental Benefit equal to the amount determined under the provisions of Section 2.02(a) based on his years of Benefit Service, accrued under the Retirement Plan to the date he became Disabled plus the years of Benefit Service, if any, such Participant accrues under the terms of the Retirement Plan after the date he becomes Disabled and prior to the earlier of his attainment of age 65 or December 31, 2016.
|
(ii)
|
The portion of the Disability Supplemental Benefit determined under the provisions of clause (i) in excess of the Participant’s Grandfathered Pre-2005 Benefit shall be paid in accordance with the provisions of paragraph (b) above and payments shall commence on the first day of the month following the month in which the Participant attains age 65.
|
(iii)
|
Notwithstanding the foregoing, the portion of the Disability Supplemental Benefit attributable to the Participant’s Grandfathered Pre-2005 Benefit shall be paid in accordance with the provisions of the Plan as in effect on October 3, 2004, modified as set forth in Appendix A, and without regard to any amendments after October 3, 2004, which would constitute a material modification for purposes of Section 409A of the Code.
|
2.05
|
Payment Upon the Occurrence of a Change in Control
|
2.06
|
Reemployment of Former Participant or Retired Participant
|
3.01
|
Funding
|
(f)
|
All amounts payable in accordance with this Plan shall constitute a general unsecured obligation of the Corporation. Such amounts, as well as any administrative costs relating to the Plan, shall be paid out of the general assets of the Corporation, to the extent not paid from the assets of any trust established pursuant to paragraph (b) below.
|
(g)
|
The Corporation may, for administrative reasons, establish a grantor trust for the benefit of Participants in the Plan. The assets placed in said trust shall be held separate and apart from other Corporation funds and shall be used exclusively for the purposes set forth in the Plan and the applicable trust agreement, subject to the following conditions:
|
(i)
|
the creation of said trust shall not cause the Plan to be other than “unfunded” for purposes of Title I of ERISA;
|
(ii)
|
the Corporation shall be treated as “grantor” of said trust for purposes of Section 677 of the Code; and
|
(iii)
|
the agreement of said trust shall provide that its assets may be used upon the insolvency or bankruptcy of the Corporation to satisfy claims of the Company’s general creditors and that the rights of such general creditors are enforceable by them under federal and state law.
|
(h)
|
To the extent that any person acquires a right to receive payments under the Plan, such right shall be no greater than the right of any unsecured creditor of the Corporation.
|
3.02
|
Duration of Benefits
|
3.03
|
Discontinuance and Amendment
|
3.04
|
Termination of Plan
|
(a)
|
the benefits of any Participant or Beneficiary whose benefit payments have commenced shall continue to be paid, but only to the extent such benefits are not otherwise payable under the Retirement Plan because of the limitations referred to in Section 2.02; and
|
(b)
|
no further benefits shall accrue on behalf of any Participant whose benefits have not commenced, and such Participant and his Beneficiary shall retain the right to benefits hereunder; provided that, on or after the effective date of termination,
|
(v)
|
the Participant is vested under the Retirement Plan or pursuant to Section 2.03(b) or (c) above; and
|
(vi)
|
such benefits are not at any time otherwise payable under the Retirement Plan because of the limitations imposed by Sections 415 or 401(a)(17) of the Code.
|
3.05
|
Plan Not a Contract of Employment
|
3.06
|
Facility of Payment
|
3.07
|
Withholding Taxes
|
3.08
|
Nonalienation
|
3.09
|
Forfeiture for Cause
|
3.10
|
Transfers
|
(a)
|
Notwithstanding any Plan provision to the contrary, in the event the Corporation (i) sells, causes the sale of, or sold the stock or assets of any employing company in the controlled group of the Corporation to a third party or (ii) distributes or distributed to the holders of shares of the Corporation’s common stock all of the outstanding shares of common stock of a subsidiary or subsidiaries of the Corporation, and, as a result of such sale or distribution, such company (or subsidiary) or its employees are no longer eligible to participate hereunder, the liabilities with respect to the benefits accrued under this Plan for a Participant who, as a result of such sale or distribution, is no longer eligible to participate in this Plan, shall, at the discretion and direction of the Corporation (and approval by the new employer), be transferred to a similar plan of such new employer and become a liability thereunder. Upon such transfer (and acceptance thereof by such new employer) the liabilities for such transferred benefits shall become the obligation of the new employer and the liability under this Plan for such benefits shall then cease.
|
(b)
|
Notwithstanding any Plan provision to the contrary, at the discretion and direction of the Corporation, liabilities with respect to benefits accrued by a Participant under a plan maintained by such Participant’s former employer may be transferred to this Plan and upon such transfer shall become the obligation of the Corporation.
|
3.11
|
Acceleration of or Delay in Payments
|
3.12
|
Indemnification
|
(a)
|
the act or failure to act shall have occurred
|
(i)
|
in the course of the person’s service as an officer, employee or agent of the Company or as a member of the Committee, or as the Plan Administrator; or
|
(ii)
|
in connection with a service provided with or without charge to the Plan or to the Participants or Beneficiaries of the Plan, if such service was requested by the Committee or the Plan Administrator; and
|
(b)
|
the act or failure to act is in good faith and in, or not opposed to, the best interests of the Corporation.
|
3.13
|
Claims Procedure
|
(a)
|
Submission of Claims
|
(b)
|
Denial of Claim
|
(i)
|
the specific reason or reasons for the denial;
|
(ii)
|
specific reference to pertinent Plan provisions on which the denial is based;
|
(iii)
|
a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary; and
|
(iv)
|
an explanation of the Plan’s claim review procedure, including information as to the steps to be taken if the claimant wishes to submit the claim for review and the time limits for requesting a review.
|
(c)
|
Claim Review Procedure
|
(d)
|
Exhaustion of Remedy
|
3.14
|
Construction
|
(a)
|
The Plan is intended to constitute both an excess benefit arrangement and an unfunded deferred compensation arrangement maintained for a select group of management or highly compensated employees within the meaning of Sections 201(2), 301(a)(3), and 401(a)(1) of ERISA, and all rights under this Plan shall be governed by ERISA. Subject to the preceding sentence, the Plan shall be construed, regulated and administered under the laws of the State of New York, to the extent such laws are not superseded by applicable federal law.
|
(b)
|
The masculine pronoun shall mean the feminine wherever appropriate.
|
(c)
|
The illegality of any particular provision of this document shall not affect the other provisions and the document shall be construed in all respects as if such invalid provision were omitted.
|
(d)
|
The headings and subheadings in the Plan have been inserted for convenience of reference only, and are to be ignored in any construction of the provisions thereof.
|
(e)
|
The Plan shall be construed, regulated and administered in accordance with the laws of the State of New York, subject to the provisions of applicable federal laws.
|
4.01
|
Responsibility for Benefit Determination
|
4.02
|
Duties of Committee
|
4.03
|
Procedure for Payment of Benefits Under the Plan
|
4.04
|
Compliance
|
(a)
|
Retirement or Termination of Employment Effective on and After December 31, 1995
|
(i)
|
Following a Participant’s retirement or termination of employment with the Company and all Associated Companies other than by reason of death, a Participant shall receive his Grandfathered Pre-2005 Benefit in the same form and at the same time as the Participant receives his corresponding retirement allowance or vested benefit under the Retirement Plan, except as otherwise provided below.
|
(ii)
|
Notwithstanding the foregoing provisions of clause (i) above, the portion of his Grandfathered Pre-2005 Benefit attributable to the PEP formula shall be payable in the form of a lump-sum payment and effective as of January 1, 2008 the Participant’s right to convert such PEP formula portion of his Grandfathered Pre-2005 Benefit into a form of life annuity is eliminated.
|
(iii)
|
Notwithstanding any provisions the of Plan to the contrary, the provisions of clause (iii) of Section 2.04(a) shall only apply if the Participant completed
|
(b)
|
Death Prior to a Participant’s Annuity Starting Date
|
(i)
|
The portion of the death benefit determined under Section 2.04(b)(i) of the foregoing provisions of this Plan attributable to a Participant’s Grandfathered Pre-2005 Benefit payable to a Participant’s spouse (or Registered Domestic Partner) shall be paid in the same form and at the same time said spouse (or Registered Domestic Partner) receives payment under the Automatic Vested Spouse Benefit of the Retirement Plan. Notwithstanding the foregoing, effective on and after January 1, 2008, the portion of any benefit payable under this clause (i) attributable to the PEP formula based on his Grandfathered Pre-2005 Benefit shall be payable in a single lump-sum payment and effective as of January 1, 2008, the spouse’s (or Registered Domestic Partner’s) right to convert such PEP formula portion of his Grandfathered Pre-2005 Benefit into a form of life annuity is eliminated.
|
(ii)
|
Except as therein provided in clause (iii) of this Section 2.04(b), the portion of the death benefit determined under Section 2.04(b)(ii) of the foregoing provisions of the Plan attributable to a Participant’s Grandfathered Pre-2005 Benefit shall be payable to the Participant’s Beneficiary at the same time said Beneficiary would have received a Pre-Retirement Survivor’s Benefit under Section 4.08(b) of the Retirement Plan, provided, however, the portion of such survivor benefit attributable to the PEP formula shall be paid in a single lump-sum payment and effective as of January 1, 2008, the Beneficiary’s right to convert such PEP formula portion of his Grandfathered Pre-2005 Benefit into a form of life annuity is eliminated.
|
|
|
Page
|
|
||
|
1.01
|
Acceleration Event
shall mean “Acceleration Event” as that term is defined under the provisions of the Plan as in effect on October 3, 2004.
|
1.02
|
Annuity Starting Date
shall mean, unless the Plan expressly provides otherwise, the first day of the first period for which an amount is due as an annuity or any other form. However, if a Change in Control occurs, the Annuity Starting Date of a Participant with regard to his 409A Supplemental Benefit shall be the date such Change in Control occurs.
|
1.03
|
Associated Company
shall mean any division, subsidiary or affiliated company of the Corporation not participating in the Plan which is an Associated Company, as defined in the Retirement Plan.
|
1.04
|
Beneficiary
shall mean the person designated pursuant to the provisions of the Retirement Plan to receive benefits under said Retirement Plan after a Participant’s death. In the absence of a beneficiary designation under the provisions of the Retirement Plan, the Participant’s Beneficiary shall be his spouse (or Registered Domestic Partner (as defined in the Retirement Plan)), if any, otherwise his estate. Notwithstanding the foregoing, with respect to any survivor benefit payable pursuant to the provision of Section 2.04(c)(ii) based on the Participant’s 409A Supplemental Benefit attributable to the Traditional Pension Plan (“TPP”) formula (as defined in Section 4.01(b) of the Retirement Plan), in the absence of a beneficiary designation under the provisions of the Retirement Plan, the Participant’s Beneficiary shall be his spouse (or Registered Domestic Partner), if any, otherwise the person or persons named as his beneficiary (or beneficiaries) under the Exelis Salaried Investment and Savings Plan, if any, or if none, then the person or persons named as his beneficiary (or beneficiaries) under the Company’s life insurance program.
|
1.05
|
Board of Directors
shall mean the Board of Directors of Exelis Inc. or any successor thereto.
|
1.06
|
Change in Control
shall mean “Change in Control” as such term is defined under the terms of the Exelis Excess Pension Plan IIA, as amended from time to time.
|
1.07
|
Code
shall mean the Internal Revenue Code of 1986, as amended from time to time.
|
1.08
|
Committee
shall mean the Benefits Administration Committee under the Retirement Plan.
|
1.09
|
Company
shall mean, effective October 31, 2011, Exelis Inc. or any successor by merger or purchase or otherwise, and any Participating Unit (as that term is defined in the Retirement Plan) authorized by the Corporation to participate in the Plan with respect to its employees. When used herein, the term Company shall collectively include Exelis Inc. and, for the period prior to October 31, 2011, ITT Corporation and any Participating Unit.
|
1.10
|
Company Pension Plan
shall mean any tax qualified defined benefit plan other than the Retirement Plan maintained by the Company or an Associated Company.
|
1.11
|
Corporation
shall mean, effective October 31, 2011, Exelis Inc., an Indiana corporation, or any successor by merger, purchase or otherwise. When used herein, the term Corporation shall collectively include Exelis Inc. and, for the period prior to October 31, 2011, ITT Corporation.
|
1.12
|
Deferred Compensation Program
shall mean any nonqualified deferred compensation plan maintained by the Company or an Associated Company.
|
1.13
|
Disability or Disabled
shall mean “Disability” or “Disabled” as such terms are defined in the Exelis Excess Pension Plan IIA as amended from time to time.
|
1.14
|
Eligible Employee
shall mean a member of the Retirement Plan who occupied on or prior to December 31, 2007, a position of senior management with the Corporation at the Vice President level or higher.
|
1.15
|
ERISA
shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time.
|
1.16
|
Grandfathered Pre-2005 Benefit
shall mean the portion of the Participant’s Supplemental Benefit, if any, that was accrued and vested before January 1, 2005, determined under the provisions of the Plan without regard to any amendments after October 3, 2004, which would cause a material modification for purposes of Section 409A of the Code, adjusted for the passage of time based on actuarial equivalent assumptions and procedures established by the Committee in accordance with the provisions of Treas. Reg. § 1.409A-6(a)(3)(iv).
|
1.17
|
Participant
shall mean an Eligible Employee who is participating in the Plan pursuant to Section 2.01 hereof.
|
1.18
|
Plan
shall mean the Exelis Excess Pension Plan IB, as set forth herein or as amended from time to time.
|
1.19
|
Plan Administrator
shall mean the Benefits Administration Committee (as defined in the Retirement Plan) or in the case of an appeal under Section 3.13(c), the Appeals Committee (as defined in the Retirement Plan).
|
1.20
|
Retirement Plan
shall mean the Exelis Salaried Retirement Plan, which was formerly known prior to October 31, 2011, as the ITT Salaried Retirement Plan and prior to that the ITT Industries Salaried Retirement Plan, as amended from time to time.
|
1.21
|
Supplemental Benefit
shall mean the monthly benefit payable to a Participant as determined under Section 2.02.
|
1.22
|
409A Supplemental Benefit
shall mean the portion of a Participant’s Supplemental Benefit, if any, in excess of his Grandfathered Pre-2005 Benefit.
|
1.23
|
Termination of Employment
shall mean a “Separation from Service” as such term is defined in the Exelis Excess Pension Plan IIA.
|
2.01
|
Participation
|
(a)
|
Each Eligible Employee who is a Participant in the Plan as of October 31, 2011, shall continue to be a Participant in the Plan, subject to the provisions of paragraph (b) below. Effective as of January 1, 2008, participation in the Plan was frozen and the admission of new Participants in the Plan on or after that date was prohibited.
|
(b)
|
A Participant’s participation in the Plan shall terminate upon the Participant’s death or other Termination of Employment with the Company and all Associated Companies, unless a benefit is payable under the Plan with respect to the Participant or his Beneficiary under the provisions of this Article II.
|
2.02
|
Amount of Supplemental Benefits
|
(a)
|
A Participant’s Supplemental Benefit under this Article II shall be equal to the excess, if any, of (i) over (ii) as determined below:
|
(i)
|
the monthly retirement allowance or vested benefit determined as of such Participant’s Termination of Employment which would have been payable to the Participant under Section 4.02, 4.03, 4.04, 4.05 or 4.06 of the Retirement Plan, whichever is applicable, assuming such benefit commences on the date set forth in Section 2.04(a)(i), (ii) or (iv) of this Plan, whichever is applicable, and
|
(1)
|
prior to the application of any offset required pursuant to Section 4.10 or to an applicable Appendix of the Retirement Plan with regard to benefits payable under any other Company Pension Plan;
|
(2)
|
without regard to the provisions contained in Section 415 of the Code relating to the maximum limitation on benefits, as incorporated into the Retirement Plan;
|
(3)
|
without regard to the annual limitation on Compensation (as defined in the Retirement Plan) contained in Section 401(a)(17) of the Code, as incorporated into the Retirement Plan; and
|
(4)
|
without regard to deferrals of compensation made pursuant to the Deferred Compensation Program.
|
(ii)
|
the monthly retirement allowance or vested benefit which would have been payable for the Participant’s lifetime under Section 4.02, 4.03, 4.04, 4.05 or 4.06 of the Retirement Plan, whichever is applicable, assuming such benefit commences on the date set forth in Section 2.04(a)(i), (ii) or (iv), whichever is applicable, and determined
|
(1)
|
prior to the application of any offset required pursuant to Section 4.10 or an applicable Appendix of the Retirement Plan with regard to benefits payable under any other Company Pension Plan;
|
(2)
|
without regard to the provisions contained in Section 415 of the Code relating to maximum limitation benefits as incorporated into the Retirement Plan; and
|
(3)
|
without regard to the annual limitation on Compensation contained in Section 401(a)(17) of the Code, as incorporated into the Retirement Plan.
|
(b)
|
Notwithstanding anything to the contrary in Section 2.01 or Section 2.02(a), a Participant who on October 31, 2011, continued in employment with ITT Corporation or commenced employment with Xylem Inc. shall be treated for purposes of determining his Supplemental Benefit as though he earns Eligibility Service (as defined in the Retirement Plan) for Plan purposes until the earlier of October 31, 2016, the date such Participant terminates employment with ITT Corporation or Xylem Inc., the date on which the benefits under the Retirement Plan attributable to the TPP Formula commence, the date of his death or a Change in Control of ITT Corporation or Xylem Inc., as the case may be.
|
(c)
|
Notwithstanding anything to the contrary in Section 2.01 or 2.01(a), effective as of October 31, 2011, with respect to a Participant who on October 31, 2011, continued in employment with ITT Corporation or commenced employment with Xylem Inc., the interest rate credited per annum on the Pension Equity Plan (“PEP”) (as defined in Section 4.01(c) of the Retirement Plan) lump-sum value of the portion of a Participant’s Supplemental Benefit payable under Section 2.02 attributable to the PEP formula during the period beginning on October 31, 2011 and ending on the Participant’s Annuity Starting Date shall be the greater of the 10-year Treasury rate as in effect on December 31 of the prior calendar year or 3.25 percent.
|
(d)
|
Notwithstanding anything to the contrary in Section 2.01 or this Section 2.02, effective December 31, 2016, Benefit Service (as defined under the Retirement Plan) and Compensation used to determine a Participant’s Supplemental Benefits under this Plan shall be frozen.
|
2.03
|
Vesting
|
2.04
|
Payment of Benefits
|
(a)
|
Timing of Payment
|
(i)
|
Subject to the provisions of clause (iii) below, the portion of any Participant’s 409A Supplemental Benefit payable under Section 2.02 attributable to the TPP formula, to the extent vested pursuant to Section 2.03, shall commence as of the first day of the month following (1) the Participant’s Termination of Employment or (2) if the Participant is not at least age 50 on such date of Termination of Employment and his age and Eligibility Service as of such date does not equal 80 or more, the Participant’s attainment of age 55, if later.
|
(ii)
|
Notwithstanding the foregoing provisions of clause (i) above and subject to the provisions of clause (iii) below, the portion of any Participant’s 409A Supplemental Benefit payable under Section 2.02 attributable to the PEP, to the extent vested pursuant to Section 2.03, shall commence as of the first day of the month following the Participant’s Termination of Employment.
|
(iii)
|
Notwithstanding the foregoing, the actual payment of a 409A Supplemental Benefit payable under Section 2.02 due to the Participant’s Termination of Employment for reasons other than death or Disability shall not commence prior to the first day of the seventh month following the Participant’s Termination of Employment. Any payment due the Participant which he would have otherwise received under Section 2.02 during the six-month period immediately following such Participant’s Termination of Employment shall be accumulated, with interest, at the IRS Interest Rate (as defined in the Retirement Plan) in accordance with procedures established by the Committee. For the avoidance of doubt, the provisions of this clause (iii) shall not apply to a 409A Supplemental Benefit payable under (1) Section 2.04(c) due to the death of the Participant or (2) Section 2.04(d) due to the Participant’s Disability.
|
(iv)
|
Notwithstanding the foregoing, in the event a Participant who incurred a Termination of Employment prior to January 1, 2009, has not commenced payment of his 409A Supplemental Benefit as of January 1, 2009, such Participant’s 409A Supplemental Benefit shall commence as of January 1, 2009, or, if later, the date specified in clause (i), (ii) or (iii) above, whichever is applicable.
|
(v)
|
A Participant’s Grandfathered Pre-2005 Benefit shall commence in accordance with the provisions of the Plan as in effect on October 3, 2004, modified as set forth in Appendix A and without regard to any amendments
|
(b)
|
Form of Benefit
|
(i)
|
Notwithstanding any provisions of the Plan to the contrary, the portion of the Participant’s 409A Supplemental Benefit determined under Section 2.02 attributable to the TPP formula shall be paid in the same form as the Participant’s supplemental benefit determined under the provisions of the Exelis Excess Pension Plan IA attributable to the TPP formula, if any, is paid. However, if the Participant is not entitled to a supplemental benefit under the provisions of the Exelis Excess Pension Plan IA attributable to the TPP formula, then unless the Participant has a valid election under clause (ii) or (iii) below in effect, the portion of the Participant’s 409A Supplemental Benefit determined under Section 2.02 attributable to the TPP formula shall be paid in the form of a single life annuity for the life of the Participant, if the Participant is not married on his Annuity Starting Date, or in the form of a 50% joint & survivor annuity, if the Participant is married (or has a Registered Domestic Partner) on his Annuity Starting Date.
|
(ii)
|
Subject to the provisions of clause (iv) below, a Participant who is not entitled to a supplemental benefit under the provisions of the Exelis Excess Pension Plan IA attributable to the TPP formula may elect to convert his 409A Supplemental Benefit payable under Section 2.02 attributable to the TPP formula into an optional annuity of equivalent actuarial value available to that Participant under the provisions of Section 4.07(b) of the Retirement Plan as of his Annuity Starting Date, provided said optional annuity satisfies the definition of “life annuity” as provided in Treas. Reg. § 1.409A-(2)(b)(2)(ii) and any further guidance thereto. Such equivalent actuarial value shall be based on the applicable factors set forth in Appendix A of the Retirement Plan.
|
(iii)
|
Notwithstanding the foregoing provisions of clause (ii) above, a Participant who is not entitled to a supplemental benefit under the provisions of the Exelis Excess Pension Plan IA attributable to the TPP formula may, subject to the timing limitations and other restrictions as shall be prescribed by the Committee, elect, by written notice received by the Committee, to receive the portion of his entire Supplemental Benefit payable under this Plan attributable to the TPP formula in the form of a single lump-sum payment if upon his Termination of Employment he retires under the provisions of the Retirement Plan at his Postponed Retirement Date, Normal Retirement Date, Standard Early Retirement Date or Special Early Retirement Date (as such terms are defined under the Retirement Plan). Such election must have been completed and filed with the Plan Committee no later than December 31, 2008, and became irrevocable as of January 1, 2009.
|
(iv)
|
Notwithstanding the foregoing and subject to the provisions of Section 409A of the Code, a Participant’s election to receive his 409A Supplemental Benefit attributable to the TPP formula in an optional annuity form of payment as described in clause (ii) above shall be effective as of the Participant’s Annuity Starting Date applicable to that portion of his 409A Supplemental Benefit, provided the Participant makes and submits to the Committee in the manner prescribed by the Committee, his election of such optional annuity form prior to such applicable Annuity Starting Date. Unless
|
(v)
|
Notwithstanding the foregoing provisions of this Section 2.04(b), the portion of a Participant’s 409A Supplemental Benefit payable under Section 2.02 attributable to the PEP formula shall be payable in the form of a single lump-sum payment. Such lump-sum payment shall be calculated on the same basis as provided in Section 4.07(b)(v) of the Retirement Plan except as otherwise provided in Section 2.02(d).
|
(vi)
|
The portion of the Participant’s Grandfathered Pre-2005 Benefit payable under Section 2.02 attributable to the TPP formula shall commence and the form of payment of such benefit shall be determined in accordance with the provisions of the Plan as in effect on October 3, 2004, modified as set forth in Appendix A and without regard to any Plan amendments after that date which would constitute a material modification for purposes of Section 409A of the Code, unless a Participant has a valid election under either clause (iii) above or Section 2.04(b)(ii) of the Exelis Excess Pension Plan IA in effect as of his date of Termination of Employment. The portion of the Participant’s Grandfathered Pre-2005 Benefit payable under Section 2.02 attributable to the PEP formula shall be payable in accordance with the provisions of the Excess Plan II as in effect on October 3, 2004, modified as set forth in Appendix A and without regard to any amendments after October 3, 2004, which would constitute a material modification for purposes of Section 409A of the Code.
|
(c)
|
Death Prior to a Participant’s Annuity Starting Date
|
(i)
|
If a Participant entitled to a vested benefit under the Retirement Plan dies (1) before meeting the eligibility requirements for an Automatic Pre-Retirement Survivor’s Benefit under Section 4.08(b) of the Retirement Plan and while in active service with the Company or any Associated Company or while Disabled but before his Annuity Starting Date, or (2) after Termination of Employment with entitlement to a vested benefit hereunder but prior to his Annuity Starting Date, the Participant’s spouse (or Registered Domestic Partner) shall receive a monthly payment for life equal to the monthly income which would have been payable to such spouse (or Registered Domestic Partner) under Section 4.08(a) of the Retirement Plan based on the hypothetical benefit attributable to his Supplemental Benefit as calculated under Section 2.02 hereof assuming payments commence as of the first day of the month following the Participant’s date of death or attainment of age 55, if later. The portion of such survivor benefit attributable to the Participant’s 409A Supplemental Benefit shall commence as of the
|
(ii)
|
Except as otherwise provided below or in clause (iii) of this Section 2.04(c), in the event a Participant who has satisfied the eligibility requirements for the Automatic Pre-Retirement Survivor’s Benefit under Section 4.08(b) of the Retirement Plan, dies (1) while in active service with the Company or any Associated Company or (2) after his Termination of Employment or the date he becomes Disabled, if earlier, but prior to his Annuity Starting Date, the Participant’s Beneficiary, if any, shall receive a monthly payment for the life of the Beneficiary equal to the monthly income which would have been payable to such Beneficiary under Section 4.08(b) of the Retirement Plan based on the hypothetical retirement benefit attributable to his Supplemental Benefit as calculated under Section 2.02 hereof assuming payments commence on the first day of the month following the Participant’s death (or the date specified in clause (iv), if later). Notwithstanding the foregoing, the portion of any benefit payable under this clause (ii) attributable to the PEP formula portion of the benefit which would have been payable to the Beneficiary based on the hypothetical 409A Supplemental Benefit as calculated under Section 2.02 hereof shall be payable in the form of a single lump-sum payment. This lump-sum payment shall be calculated on the same basis as provided in Section 4.08(b)(iii) of the Retirement Plan except as otherwise provided in Section 2.02(d). The portion of any benefit payable under this clause (ii) attributable to a Participant’s 409A Supplemental Benefit as calculated under Section 2.02
|
(iii)
|
Notwithstanding the foregoing, in the event a Participant, who has satisfied the eligibility requirements to retire under the Retirement Plan with an early, normal or postponed retirement allowance, has filed a valid election to receive a lump-sum payment of benefits under the provisions of (1) Section 2.04(b)(iii) above or (2) Section 2.04(b)(iii) of the Exelis Excess Pension Plan IA, dies on or after age 55 and prior to his Annuity Starting Date, the Beneficiary of such Participant shall receive a single lump-sum amount determined as follows:
|
(A)
|
In the event of the Participant’s death (i) prior to his Termination of Employment or (ii) after he becomes Disabled but prior to his Annuity Starting Date, the lump-sum payment shall be equal to the value of the Participant’s benefit attributable to his Supplemental Benefit, if any, accrued to his date of death as determined under the provisions of Section 2.02 hereof.
|
(B)
|
In the event of any other Participant’s death after his Termination of Employment and prior to his Annuity Starting Date, the lump-sum payment shall be equal to the value of the Participant’s Supplemental Benefit accrued to the Participant’s Termination of Employment as determined under the provisions of Section 2.02 hereof.
|
(iv)
|
Notwithstanding the foregoing, in the event the survivor benefit payable under this Section 2.04(c) to the spouse or Beneficiary of a Participant who died prior to January 1, 2009, has not commenced as of January 1, 2009, such survivor benefit shall commence as of January 1, 2009, or, if later, the date specified in clauses (i), (ii) or (iii) above, whichever is applicable.
|
(d)
|
Disability prior to Termination of Employment
|
(i)
|
Notwithstanding any Plan provision to the contrary, in the event a Participant becomes Disabled prior to his Termination of Employment, the Participant shall be entitled to a Disability Supplemental Benefit equal to the amount determined under the provisions of Section 2.02(a) based on his years of Benefit Service, accrued under the Retirement Plan to the date he became Disabled plus the years of Benefit Service, if any, the Participant accrues
|
(ii)
|
The portion of the Disability Supplemental Benefit determined under the provisions of clause (i) in excess of the Participant’s Grandfathered Pre-2005 Benefit shall be paid in accordance with the provisions of paragraph (b) above and payments shall commence on the first day of the month following the month in which the Participant attains age 65.
|
(iii)
|
Notwithstanding the foregoing, the portion of the Disability Supplemental Benefit attributable to the Participant’s Grandfathered Pre-2005 Benefit shall be paid in accordance with the provisions of the Excess Plan II as in effect on October 3, 2004, modified as set forth in Appendix A, and without regard to any amendments after October 3, 2004, which would constitute a material modification for purposes of Section 409A of the Code.
|
2.05
|
Payment Upon the Occurrence of a Change in Control
|
2.06
|
Reemployment of Former Participant or Retired Participant
|
3.01
|
Funding
|
(e)
|
All amounts payable in accordance with this Plan shall constitute a general unsecured obligation of the Corporation. Such amounts, as well as any administrative costs relating to the Plan, shall be paid out of the general assets of the Corporation, to the extent not paid from the assets of any trust established pursuant to paragraph (b) below.
|
(f)
|
The Corporation may, for administrative reasons, establish a grantor trust for the benefit of Participants in the Plan. The assets placed in said trust shall be held separate and apart from other Corporation funds and shall be used exclusively for the purposes set forth in the Plan and the applicable trust agreement, subject to the following conditions:
|
(iv)
|
the creation of said trust shall not cause the Plan to be other than “unfunded” for purposes of Title I of ERISA;
|
(v)
|
the Corporation shall be treated as “grantor” of said trust for purposes of Section 677 of the Code; and
|
(vi)
|
the agreement of said trust shall provide that its assets may be used upon the insolvency or bankruptcy of the Corporation to satisfy claims of the Company’s general creditors and that the rights of such general creditors are enforceable by them under federal and state law.
|
(g)
|
To the extent that any person acquires a right to receive payments under the Plan, such right shall be no greater than the right of any unsecured creditor of the Corporation.
|
3.02
|
Duration of Benefits
|
3.03
|
Discontinuance and Amendment
|
3.04
|
Termination of Plan
|
(a)
|
the benefits of any Participant or Beneficiary whose benefit payments have commenced shall continue to be paid, but only to the extent such benefits are not otherwise payable under the Retirement Plan because of the limitations referred to in Section 2.02; and
|
(b)
|
no further benefits shall accrue on behalf of any Participant whose benefits have not commenced, and such Participant and his Beneficiary shall retain the right to benefits hereunder; provided that, on or after the effective date of termination:
|
(v)
|
the Participant is vested under the Retirement Plan or pursuant to Section 2.03(b) or (c) above; and
|
(vi)
|
such benefits are not at any time otherwise payable under the Retirement Plan because of the deferral of compensation under a Deferred Compensation Program.
|
3.05
|
Plan Not a Contract of Employment
|
3.06
|
Facility of Payment
|
3.07
|
Withholding Taxes
|
3.08
|
Nonalienation
|
3.09
|
Forfeiture for Cause
|
3.10
|
Transfers
|
(a)
|
Notwithstanding any Plan provision to the contrary, in the event the Corporation (i) sells, causes the sale of, or sold the stock or assets of any employing company in the controlled group of the Corporation to a third party or (ii) distributes or distributed to the holders of shares of the Corporation’s common stock all of the outstanding shares of common stock of a subsidiary or subsidiaries of the Corporation, and, as a result of such sale or distribution, such company (or subsidiary) or its employees are no longer eligible to participate hereunder, the liabilities with respect to the benefits accrued under this Plan for a Participant who, as a result of such sale or distribution, is no longer eligible to participate in this Plan, shall, at the discretion and direction of the Corporation (and approval by the new employer), be transferred to a similar plan of such new employer and become a liability thereunder. Upon such transfer (and acceptance thereof by such new employer) the liabilities for such transferred benefits shall become the obligation of the new employer and the liability under this Plan for such benefits shall then cease.
|
(b)
|
Notwithstanding any Plan provision to the contrary, at the discretion and direction of the Corporation, liabilities with respect to benefits accrued by a Participant under a plan maintained by such Participant’s former employer may be transferred to this Plan and upon such transfer shall become the obligation of the Corporation.
|
3.11
|
Acceleration of or Delay in Payments
|
3.12
|
Indemnification
|
(a)
|
the act or failure to act shall have occurred
|
(i)
|
in the course of the person’s service as an officer, employee or agent of the Company or as a member of the Committee, or as the Plan Administrator; or
|
(ii)
|
in connection with a service provided with or without charge to the Plan; or to the Participants or Beneficiaries of the Plan, if such service was requested by the Committee or the Plan Administrator; and
|
(b)
|
the act or failure to act is in good faith and in, or not opposed to, the best interests of the Corporation.
|
3.13
|
Claims Procedure
|
(a)
|
Submission of Claims
|
(b)
|
Denial of Claim
|
(i)
|
the specific reason or reasons for the denial;
|
(ii)
|
specific reference to pertinent Plan provisions on which the denial is based;
|
(iii)
|
a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary; and
|
(iv)
|
an explanation of the Plan’s claim review procedure, including information as to the steps to be taken if the claimant wishes to submit the claim for review and the time limits for requesting a review.
|
(c)
|
Claim Review Procedure
|
(d)
|
Exhaustion of Remedy
|
3.14
|
Construction
|
(a)
|
The Plan is intended to constitute both an excess benefit arrangement and an unfunded deferred compensation arrangement maintained for a select group of management or highly compensated employees within the meaning of Sections 201(2), 301(a)(3), and 401(a)(1) of ERISA, and all rights under this Plan shall be governed by ERISA. Subject to the preceding sentence, the Plan shall be construed, regulated and administered under the laws of the State of New York, to the extent such laws are not superseded by applicable federal law.
|
(b)
|
The masculine pronoun shall mean the feminine wherever appropriate.
|
(c)
|
The illegality of any particular provision of this document shall not affect the other provisions and the document shall be construed in all respects as if such invalid provision were omitted.
|
(d)
|
The headings and subheadings in the Plan have been inserted for convenience of reference only, and are to be ignored in any construction of the provisions thereof.
|
(e)
|
The Plan shall be construed, regulated and administered in accordance with the laws of the State of New York, subject to the provisions of applicable federal laws.
|
4.01
|
Responsibility for Benefit Determination
|
4.02
|
Duties of Committee
|
4.03
|
Procedure for Payment of Benefits Under the Plan
|
4.04
|
Compliance
|
(b)
|
Retirement or Termination of Employment Effective on or After January 1, 1996
|
(i)
|
Following a Participant’s retirement or termination of employment with the Company and all Associated Companies other than by reason of death, a Participant shall receive his Grandfathered Pre-2005 Benefit in the same form and at the same time as the Participant receives his corresponding retirement allowance or vested benefit under the Retirement Plan, except as otherwise provided below.
|
(ii)
|
Notwithstanding the foregoing provisions of clause (i) above, the portion of his Grandfathered Pre-2005 Benefit attributable to the PEP formula shall be payable in the form of a lump-sum payment and effective as of January 1, 2008, the Participant’s right to convert such PEP formula portion of his Grandfathered Pre-2005 Benefit into a form of life annuity is eliminated.
|
(iii)
|
Notwithstanding any provisions the of Plan to the contrary, the provisions of clause (iii) of Section 2.04(b) shall only apply if the Participant completed and filed a lump-sum election pursuant to either the forgoing provisions of this Plan or Section 2.04(b)(iii) of the Exelis Excess Pension Plan IA, whichever is applicable, with the Committee on or prior to December 31, 2008, in accordance with procedures established by the Committee of the
|
(c)
|
Death Prior to a Participant’s Annuity Starting Date
|
(i)
|
The portion of the death benefit determined under Section 2.04(c)(i) of the foregoing provisions of this Plan attributable to a Participant’s Grandfathered Pre-2005 Benefit payable to a Participant’s spouse (or Registered Domestic Partner) shall be paid in the same form and at the same time said spouse (or Registered Domestic Partner) receives payment under the Automatic Vested Spouse Benefit of the Retirement Plan.
|
(ii)
|
Except as therein provided in clause (iii) of this Section 2.04(c), the portion of the death benefit determined under Section 2.04(c)(ii) of the foregoing provisions of the Plan attributable to a Participant’s Grandfathered Pre-2005 Benefit shall be payable to the Participant’s Beneficiary at the same time said Beneficiary would have received a Pre-Retirement Survivor’s Benefit under Section 4.08(b) of the Retirement Plan, provided, however, the portion of such survivor benefit attributable to the PEP formula shall be paid in a single lump-sum payment and effective as of January 1, 2008, the Beneficiary’s right to convert such PEP formula portion of his Grandfathered Pre-2005 Benefit into a form of life annuity is eliminated.
|
|
|
Page
|
|
||
|
||
|
1.01
|
Acceleration Event
shall mean “Acceleration Event” as that term is defined under the provisions of the Plan as in effect on October 3, 2004.
|
1.02
|
Annuity Starting Date
shall mean, unless the Plan expressly provides otherwise, the first day of the first period for which an amount is due as an annuity or any other form. However, if a Change in Control occurs, the Annuity Starting Date of a Participant with regard to his 409A Supplemental Benefit shall be the date such Change in Control occurs.
|
1.03
|
Associated Company
shall mean any division, subsidiary or affiliated company of the Corporation not participating in the Plan which is an Associated Company, as defined in the Retirement Plan.
|
1.04
|
Beneficiary
shall mean the person designated pursuant to the provisions of the Retirement Plan to receive benefits under said Retirement Plan after a Participant’s death. In the absence of a beneficiary designation under the provisions of the Retirement Plan, the Participant’s Beneficiary shall be his spouse (or Registered Domestic Partner (as defined in the Retirement Plan)), if any, otherwise his estate. Notwithstanding the foregoing, with respect to any survivor benefit payable pursuant to the provision of Section 2.04(c)(ii) based on the Participant’s 409A Supplemental Benefit attributable to the Traditional Pension Plan (“TPP”) formula (as defined in Section 4.01(b) of the Retirement Plan), in the absence of a beneficiary designation under the provisions of the Retirement Plan, the Participant’s Beneficiary shall be his spouse (or Registered Domestic Partner), if any, otherwise the person or persons named as his beneficiary (or beneficiaries) under the Exelis Salaried Investment and Savings Plan, if any, or if none, then the person or persons named as his beneficiary (or beneficiaries) under the Company’s life insurance program.
|
1.05
|
Board of Directors
shall mean the Board of Directors of Exelis Inc. or any successor thereto.
|
1.06
|
Change in Control
shall mean an event which shall occur if there is: (i) a change in the ownership of the Corporation; (ii) a change in the effective control of the Corporation; or (iii) a change in the ownership of a substantial portion of the assets of the Corporation.
|
1.07
|
Code
shall mean the Internal Revenue Code of 1986, as amended from time to time.
|
1.08
|
Committee
shall mean the Benefits Administration Committee under the Retirement Plan.
|
1.09
|
Company
shall mean, effective October 31, 2011, Exelis Inc. or any successor by merger or purchase or otherwise and any Participating Unit (as that term is defined in the Retirement Plan) authorized by the Corporation to participate in the Plan with respect to its employees. When used herein, the term Company shall collectively include Exelis Inc. and, for the period prior to October 31, 2011, ITT Corporation, and any Participating Unit.
|
1.10
|
Company Pension Plan
shall mean any tax qualified defined benefit plan other than the Retirement Plan maintained by the Company or an Associated Company.
|
1.11
|
Corporation
shall mean, effective October 31, 2011, Exelis Inc., an Indiana corporation, or any successor by merger, purchase or otherwise. When used herein, the term Corporation shall collectively include Exelis Inc. and, for the period prior to October 31, 2011, ITT Corporation.
|
1.12
|
Disability or Disabled
shall mean “Disability” as defined under Treas. Reg. § 1.409A-3(i)(4)(i) and (ii) and any subsequent guidance thereto.
|
1.13
|
Eligible Employee
shall mean a member of the Retirement Plan who is not eligible to participate in the Exelis Excess Pension Plan IA or IB.
|
1.14
|
ERISA
shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time.
|
1.15
|
Excess Benefit Portion
shall mean the portion of the Plan which is intended to constitute an unfunded excess benefit plan under Sections 3(36) and 4(b)(5) of Title I of ERISA which
|
1.16
|
Grandfathered Pre-2005 Benefit
shall mean, with respect to a Participant who (i) terminated employment on or prior to December 31, 2008, or (ii) was employed by the Company or an Associated Company on October 1, 2008, and signs and submits his acknowledgement of termination to the ITT HQ Compensation Department on or before December 31, 2008, formalizing his date of Termination of Employment in 2009, the portion of such Participant’s Supplemental Benefit, if any, which was accrued and vested before January 1, 2005, determined under the provisions of the Plan without regard to any amendments after October 3, 2004, which would cause a material modification for purposes of Section 409A of the Code, adjusted for the passage of time based on actuarial equivalent assumptions and procedures established by the Committee in accordance with the provisions of Treas. Reg. § 1.409A-6(a)(3)(iv).
|
1.17
|
Participant
shall mean an Eligible Employee who is participating in the Plan pursuant to Section 2.01 hereof.
|
1.18
|
Plan
shall mean the Exelis Excess Pension Plan IIA, as set forth herein or as amended from time to time.
|
1.19
|
Plan Administrator
shall mean the Benefits Administration Committee (as defined in the Retirement Plan) or in the case of an appeal under Section 3.13(c), the Appeals Committee (as defined in the Retirement Plan).
|
1.20
|
Retirement Plan
shall mean the Exelis Salaried Retirement Plan, which was formerly known prior to October 31, 2011, as the ITT Salaried Retirement Plan and prior to that the ITT Industries Salaried Retirement Plan, as amended from time to time.
|
1.21
|
Select Management Portion
shall mean the portion of the Plan, other than the Excess Benefit Portion, which is intended to constitute an unfunded deferred compensation plan for a select group of management or highly compensated employees under Title I of ERISA.
|
1.22
|
Specified Employee
shall mean a “specified employee” as such term is defined in the Treasury Regulation promulgated pursuant to Section 409A of the Code, as modified by the rules set forth below:
|
(a)
|
For purposes of determining whether a Participant is a Specified Employee, the compensation of the Participant shall be determined in accordance with the definition of compensation provided under Treas. Reg. § 1.415(c)-2(d)(3) (wages within the meaning of Section 3401(a) of the Code for purposes of income tax withholding at the source, plus amounts excludible from gross income under Sections 125(a), 132(f)(4), 402(e)(3), 402(h)(1)(B), 402(k) or 457(b) of the Code, without regard to rules that limit the remuneration included in wages based on the nature or location of the employment or the services performed).
|
(b)
|
The “Specified Employee Identification Date” means December 31, unless the Compensation and Personnel Committee of the Board has elected a different date through action that is legally binding with respect to all nonqualified deferred compensation plans maintained by the Company or any Associated Company.
|
(c)
|
The “Specified Employee Effective Date” means the first day of the fourth month following the Specified Employee Identification Date or such earlier date as is selected by the Compensation and Personnel Committee of the Board.
|
1.23
|
Supplemental Benefit
shall mean the monthly benefit payable to a Participant as determined under Section 2.02, which shall include a Participant’s Excess Benefit Portion and Select Management Portion as determined pursuant to Section 2.02 of this Plan.
|
1.24
|
409A Supplemental Benefit
shall mean the portion of a Participant’s Supplemental Benefit, if any, in excess of his Grandfathered Pre-2005 Benefit.
|
1.25
|
Termination of Employment
shall mean a “Separation from Service” as such term is defined in the Treasury Regulation promulgated pursuant to Section 409A of the Code, as modified by the rules described below:
|
(a)
|
A Participant who is absent from work due to military leave, sick leave, or other bona fide leave of absence pursuant to Company policies shall incur a Termination of Employment on the first date immediately following the later of (i) the six-month anniversary of the commencement of the leave (18-month anniversary for a disability leave of absence) or (ii) the expiration of the Employee’s right, if any, to reemployment under statute or contract or pursuant to Company policies. For this purpose, a “disability leave of absence” is an absence due to any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 6 months, where such impairment causes the Participant to be unable to perform the duties of his job or a substantially similar job.
|
(b)
|
For purposes of determining whether another organization is an Associated Company of the Corporation, common ownership of at least 50% shall be determinative.
|
(c)
|
The Corporation specifically reserves the right to determine whether a sale or other disposition of substantial assets to an unrelated party constitutes a Termination of Employment with respect to the Participant providing services to the seller immediately prior to the transaction and providing services to the buyer after the transaction. Such determination shall be made in accordance with the requirements of Section 409A of the Code.
|
(d)
|
A Participant who on October 31, 2011, continued in employment with ITT Corporation or commenced employment with Xylem Inc. shall be treated as though he has not experienced a Termination of Employment until he has incurred a
|
2.01
|
Participation
|
(a)
|
Each Eligible Employee who is a Participant in the Plan as of October 31, 2011, shall continue to be a Participant in the Plan, subject to the provisions of paragraph (d) below. An Eligible Employee whose retirement allowance or vested benefit under the Retirement Plan exceeds the limitations imposed by Sections 415(b) or 401(a)(17) of the Code shall become a Participant in the Plan.
|
(b)
|
Each Eligible Employee’s annual retirement allowance or vested benefit which at the time of payment under the Retirement Plan exceeds the limitations imposed by Section 415(b) of the Code (or prior to January 1, 2000, Section 415(e) of the Code) shall be payable from the Excess Benefit Portion of the Plan.
|
(c)
|
Each Eligible Employee’s annual retirement allowance or vested benefit which at the time of payment under the Retirement Plan is limited by reason of the limitation on Compensation (as that term is defined in the Retirement Plan) under Section 401(a)(17) of the Code shall be payable from the Select Management Portion of the Plan.
|
(d)
|
A Participant’s participation in the Plan shall terminate upon the Participant’s death or other Termination of Employment with the Company and all Associated Companies, unless a benefit is payable under the Plan with respect to the Participant or his Beneficiary under the provisions of this Article II.
|
2.02
|
Amount of Supplemental Benefits
|
(a)
|
A Participant’s Supplemental Benefit under this Article II shall be equal to the excess, if any, of (i) over (ii) as determined below:
|
(i)
|
the monthly retirement allowance or vested benefit determined as of such Participant’s Termination of Employment which would have been payable to the Participant under Section 4.02, 4.03, 4.04, 4.05 or 4.06 of the Retirement Plan, whichever is applicable, assuming such benefit commences on the date set forth in Section 2.04(a)(i), (ii) or (iv) of this Plan, whichever is applicable, and
|
(1)
|
prior to the application of any offset required pursuant to Section 4.10 or to an applicable Appendix of the Retirement Plan with regard to benefits payable under any other Company Pension Plan;
|
(2)
|
without regard to the provisions contained in Section 415 of the Code relating to the maximum limitation on benefits, as incorporated into the Retirement Plan; and
|
(3)
|
without regard to the annual limitation on Compensation contained in Section 401(a)(17) of the Code, as incorporated into the Retirement Plan;
|
(ii)
|
the monthly retirement allowance or vested benefit which would have been payable for the Participant’s lifetime under Section 4.02, 4.03, 4.04, 4.05 or 4.06 of the Retirement Plan, whichever is applicable, assuming such benefit commences on the date set forth in Section 2.04(a)(i), (ii) or (iv), whichever is applicable, and determined
|
(1)
|
prior to the application of any offset required pursuant to Section 4.10 or an applicable Appendix of the Retirement Plan with regard to benefits payable under any other Company Pension Plan;
|
(2)
|
with regard to the provisions contained in Section 415 of the Code relating to maximum limitation benefits as incorporated into the Retirement Plan; and
|
(3)
|
with regard to the annual limitation on Compensation contained in Section 401(a)(17) of the Code, as incorporated into the Retirement Plan.
|
(b)
|
Except as otherwise provided below, if, after a Participant’s Annuity Starting Date, changes to the Code or ERISA permit the Retirement Plan to provide for payment of a Participant’s monthly retirement allowance or vested benefit in an amount greater than that permissible at that particular Annuity Starting Date, the Participant’s monthly benefit under this Plan shall be reduced by the portion of his retirement allowance or vested benefit actually paid from the Retirement Plan. This provision shall not be applicable to any portion of a Participant’s Supplemental Benefit received in the form of a lump-sum payment.
|
(c)
|
Notwithstanding anything to the contrary in Section 2.01 or Section 2.02(a), a Participant who on October 31, 2011, continued in employment with ITT Corporation or commenced employment with Xylem Inc. shall be treated for purposes of determining his Supplemental Benefit as though he earns Eligibility Service (as defined in the Retirement Plan) for Plan purposes until the earlier of October 31, 2016, the date such Participant terminates employment with ITT Corporation or Xylem Inc., the date on which the benefits under the Retirement Plan attributable to the TPP Formula commence, the date of his death or a Change in Control of ITT Corporation or Xylem Inc., as the case may be.
|
(d)
|
Notwithstanding anything to the contrary in Section 2.01 or 2.01(a), effective as of October 31, 2011, with respect to a Participant who on October 31, 2011, continued in employment with ITT Corporation or commenced employment with Xylem Inc., the interest rate credited per annum on the Pension Equity Plan (“PEP”) (as defined in Section 4.01(c) of the Retirement Plan) lump-sum value of the portion of a Participant’s Supplemental Benefit payable under Section 2.02 attributable to the PEP formula during the period beginning on October 31, 2011, and ending on the Participant’s Annuity Starting Date shall be the greater of the 10-year Treasury rate as in effect on December 31 of the prior calendar year or 3.25 percent.
|
(e)
|
Notwithstanding anything to the contrary in Section 2.01 or this Section 2.02, effective December 31, 2016, Benefit Service (as defined under the Retirement Plan) and Compensation used to determine a Participant’s Supplemental Benefits under this Plan shall be frozen.
|
2.03
|
Vesting
|
(a)
|
Each Participant shall be vested in, and have a nonforfeitable right to, the benefit payable under this Article II to the same extent as the Participant is vested in his Accrued Benefit (as that term is defined in the Retirement Plan) under the provisions of the Retirement Plan.
|
(b)
|
Notwithstanding any provision of this Plan to the contrary, in the event of an Acceleration Event, all Participants and their Beneficiaries shall become fully vested in the benefits provided under this Plan.
|
(c)
|
Notwithstanding any provision of this Plan to the contrary, a Participant who on October 31, 2011, was credited for purposes of the Retirement Plan with at least one year of Eligibility Service and continued in employment with ITT Corporation or commenced employment with Xylem Inc. shall become 100 percent vested in and have a nonforfeitable right to benefits under this Plan as of October 31, 2011.
|
2.04
|
Payment of Benefits
|
(a)
|
Timing of Payment
|
(i)
|
Subject to the provisions of clause (iii) below, the portion of any Participant’s 409A Supplemental Benefit payable under Section 2.02 attributable to the TPP formula, to the extent vested pursuant to Section 2.03, shall commence as of the first day of the month following (1) the Participant’s Termination of Employment or (2) if the Participant is not at least age 50 on such date of Termination of Employment and his age and Eligibility Service as of such date does not equal 80 or more, the Participant’s attainment of age 55, if later. Notwithstanding the foregoing and subject to the provisions of Treas. Reg. § 1.409A-2(b), with respect to a Participant who is first employed by the Company or an Associated Company on or after January 1, 2000, the
|
(ii)
|
Notwithstanding the foregoing provisions of clause (i) above and subject to the provisions of clause (iii) below, the portion of any Participant’s 409A Supplemental Benefit payable under Section 2.02 attributable to the PEP formula, to the extent vested pursuant to Section 2.03, shall commence as of the first day of the month following the Participant’s Termination of Employment.
|
(iii)
|
Notwithstanding the foregoing, if a Participant is classified as a “Specified Employee” on his date of Termination of Employment, the actual payment of a 409A Supplemental Benefit payable under Section 2.02 due to the Participant’s Termination of Employment for reasons other than death or Disability shall not commence prior to the first day of the seventh month following the Participant’s Termination of Employment. Any payment due the Participant which he would have otherwise received under Section 2.02 during the six-month period immediately following such Participant’s Termination of Employment shall be accumulated, with interest, at the IRS Interest Rate (as defined in the Retirement Plan) in accordance with procedures established by the Committee. For the avoidance of doubt, the provisions of this clause (iii) shall not apply to a 409A Supplemental Benefit payable under (1) Section 2.04(c) due to the death of the Participant or (2) Section 2.04(d) due to the Participant’s Disability.
|
(iv)
|
Notwithstanding the foregoing, in the event a Participant who incurred a Termination of Employment prior to January 1, 2009, has not commenced payment of his 409A Supplemental Benefit as of January 1, 2009, such Participant’s 409A Supplemental Benefit shall commence as of April 1, 2009, (January 1, 2009, with respect to a Participant listed on Appendix B) or, if later, the date specified in clause (i), (ii) or (iii) above, whichever is applicable.
|
(v)
|
A Participant’s Grandfathered Pre-2005 Benefit shall commence in accordance with the provisions of the Plan as in effect on October 3, 2004, modified as set forth in Appendix A and without regard to any amendments after October 3, 2004, which would constitute a material modification for purposes of Section 409A of the Code.
|
(b)
|
Form of Benefit
|
(i)
|
Unless a Participant has a valid election under clause (ii) below in effect, the portion of the Participant’s 409A Supplemental Benefit determined
|
(ii)
|
Subject to the provisions of clause (iii) below, a Participant may elect to convert his 409A Supplemental Benefit payable under Section 2.02 attributable to the TPP formula into an optional annuity of equivalent actuarial value available to that Participant under the provisions of Section 4.07(b) of the Retirement Plan as of his Annuity Starting Date, provided said optional annuity satisfies the definition of “life annuity” as provided in Treas. Reg. § 1.409A-(2)(b)(2)(ii) and any further guidance thereto. Such equivalent actuarial value shall be based on the applicable factors set forth in Appendix A of the Retirement Plan.
|
(iii)
|
Notwithstanding the foregoing and subject to the provisions of Section 409A of the Code, a Participant’s election to receive his 409A Supplemental Benefit attributable to the TPP formula in an optional annuity form of payment as described in clause (ii) above shall be effective as of the Participant’s Annuity Starting Date applicable to that portion of his 409A Supplemental Benefit, provided the Participant makes and submits to the Committee in the manner prescribed by the Committee, his election of such optional annuity form prior to such applicable Annuity Starting Date. A Participant who fails to elect an optional annuity form of benefit applicable to the TPP formula portion of his 409A Supplemental Benefit in a timely manner shall receive such benefit in accordance with the provisions of clause (i) above.
|
(iv)
|
Notwithstanding the foregoing provisions of this Section 2.04(b), the portion of a Participant’s 409A Supplemental Benefit payable under Section 2.02 attributable to the PEP formula shall be payable in the form of a single lump-sum payment. Such lump-sum payment shall be calculated on the same basis as provided in Section 4.07(b)(v) of the Retirement Plan except as otherwise provided in Section 2.02(d).
|
(v)
|
The portion of the Participant’s Grandfathered Pre-2005 Benefit payable under Section 2.02 attributable to the TPP formula shall commence and the form of payment of such benefit shall be determined in accordance with the provisions of the Plan as in effect on October 3, 2004, modified as set forth in Appendix A and without regard to any Plan amendments after that date which would constitute a material modification for purposes of Section 409A of the Code. The portion of the Participant’s Grandfathered Pre-2005 Benefit payable under Section 2.02 attributable to the PEP formula shall be payable in accordance with the provisions of the Plan as in effect on October
|
(c)
|
Death Prior to a Participant’s Annuity Starting Date
|
(i)
|
If a Participant entitled to a vested benefit under the Retirement Plan dies (1) before meeting the eligibility requirements for an Automatic Pre-Retirement Survivor’s Benefit under Section 4.08(b) of the Retirement Plan and while in active service with the Company or any Associated Company or while Disabled but before his Annuity Starting Date, or (2) after Termination of Employment with entitlement to a vested benefit hereunder but prior to his Annuity Starting Date, the Participant’s spouse (or Registered Domestic Partner) shall receive a monthly payment for life equal to the monthly income which would have been payable to such spouse (or Registered Domestic Partner) under Section 4.08(a) of the Retirement Plan based on the hypothetical benefit attributable to his Supplemental Benefit as calculated under Section 2.02 hereof assuming payments commence as of the first day of the month following the Participant’s date of death, or attainment of age 55, if later. The portion of such survivor benefit attributable to the Participant’s 409A Supplemental Benefit shall commence as of the first day of the month following the later of the Participant’s date of death, or the Participant’s attainment of age 55 (or in the event clause (iii) is applicable, the date specified in clause (iii)). Notwithstanding the foregoing, the portion of any benefit payable under this clause (i) attributable to the PEP formula portion of the benefit which would have been payable to the spouse (or Registered Domestic Partner) based on the hypothetical 409A Supplemental Benefit as calculated under Section 2.02 shall be determined assuming that portion of the survivor benefit commences as of the first day of the month following the Participant’s date of death (or the date specified in clause (iii), if later) and such benefit shall be payable in the form of a single lump-sum payment as of the first day of the month following the Participant’s date of death. This lump-sum payment shall be calculated on the same basis as provided in Section 4.08(a)(iii) of the Retirement Plan using the IRS Mortality Table (as defined in the Retirement Plan) and IRS Interest Rate. Notwithstanding any Plan provision to the contrary, the portion of any survivor benefit payable under this clause (i) attributable to the Participant’s Grandfathered Pre-2005 Benefit shall be payable in accordance with the provisions of the Plan as in effect on October 3, 2004, modified as set forth in Appendix A, and without regard to any Plan amendments after October 3, 2004, which would constitute a material modification for purposes of Section 409A of the Code.
|
(ii)
|
Except as otherwise provided below, in the event a Participant who has satisfied the eligibility requirements for the Automatic Pre-Retirement
|
(iii)
|
Notwithstanding the foregoing, in the event the survivor benefit payable under this Section 2.04(c) to the spouse or Beneficiary of a Participant who died prior to January 1, 2009, has not commenced as of January 1, 2009, such survivor benefit shall commence as of April 1, 2009, or, if later, the date specified in clauses (i) or (ii) above, whichever is applicable.
|
(d)
|
Disability prior to Termination of Employment
|
(i)
|
Notwithstanding any Plan provision to the contrary, in the event a Participant becomes Disabled prior to his Termination of Employment, the Participant shall be entitled to a Disability Supplemental Benefit equal to the amount determined under the provisions of Section 2.02(a) based on his years of Benefit Service, accrued under the Retirement Plan to the date he became Disabled plus the years of Benefit Service, if any, such Participant accrues under the terms of the Retirement Plan after the date he becomes Disabled and prior to the earlier of his attainment of age 65 or December 31, 2016.
|
(ii)
|
The portion of the Disability Supplemental Benefit determined under the provisions of clause (i) in excess of the Participant’s Grandfathered Pre-2005 Benefit shall be paid in accordance with the provisions of paragraph (b) above and payments shall commence on the first day of the month following the month in which the Participant attains age 65.
|
(iii)
|
Notwithstanding the foregoing, the portion of the Disability Supplemental Benefit attributable to the Participant’s Grandfathered Pre-2005 Benefit shall be paid in accordance with the provisions of the Plan as in effect on October 3, 2004, modified as set forth in Appendix A, and without regard to any amendments after October 3, 2004, which would constitute a material modification for purposes of Section 409A of the Code.
|
2.05
|
Payment Upon the Occurrence of a Change in Control
|
2.06
|
Reemployment of Former Participant or Retired Participant
|
3.01
|
Funding
|
(f)
|
All amounts payable in accordance with this Plan shall constitute a general unsecured obligation of the Corporation. Such amounts, as well as any administrative costs relating to the Plan, shall be paid out of the general assets of the Corporation, to the extent not paid from the assets of any trust established pursuant to paragraph (b) below.
|
(g)
|
The Corporation may, for administrative reasons, establish a grantor trust for the benefit of Participants in the Plan. The assets placed in said trust shall be held separate and apart from other Corporation funds and shall be used exclusively for the purposes set forth in the Plan and the applicable trust agreement, subject to the following conditions:
|
(i)
|
the creation of said trust shall not cause the Plan to be other than “unfunded” for purposes of Title I of ERISA;
|
(ii)
|
the Corporation shall be treated as “grantor” of said trust for purposes of Section 677 of the Code; and
|
(iii)
|
the agreement of said trust shall provide that its assets may be used upon the insolvency or bankruptcy of the Corporation to satisfy claims of the Company’s general creditors and that the rights of such general creditors are enforceable by them under federal and state law.
|
(h)
|
To the extent that any person acquires a right to receive payments under the Plan, such right shall be no greater than the right of any unsecured creditor of the Corporation.
|
3.02
|
Duration of Benefits
|
3.03
|
Discontinuance and Amendment
|
3.04
|
Termination of Plan
|
(a)
|
the benefits of any Participant or Beneficiary whose benefit payments have commenced shall continue to be paid, but only to the extent such benefits are not otherwise payable under the Retirement Plan because of the limitations referred to in Section 2.02; and
|
(b)
|
no further benefits shall accrue on behalf of any Participant whose benefits have not commenced, and such Participant and his Beneficiary shall retain the right to benefits hereunder; provided that, on or after the effective date of termination,
|
(iv)
|
the Participant is vested under the Retirement Plan; and
|
(v)
|
such benefits are not at any time otherwise payable under the Retirement Plan because of the limitations imposed by Sections 415 or 401(a)(17) of the Code.
|
3.05
|
Plan Not a Contract of Employment
|
3.06
|
Facility of Payment
|
3.07
|
Withholding Taxes
|
3.08
|
Nonalienation
|
3.09
|
Forfeiture for Cause
|
3.10
|
Transfers
|
(a)
|
Notwithstanding any Plan provision to the contrary, in the event the Corporation (i) sells, causes the sale of, or sold the stock or assets of any employing company in the controlled group of the Corporation to a third party or (ii) distributes or distributed to the holders of shares of the Corporation’s common stock all of the outstanding shares of common stock of a subsidiary or subsidiaries of the Corporation, and, as a result of such sale or distribution, such company (or subsidiary) or its employees are no longer eligible to participate hereunder, the liabilities with respect to the benefits accrued under this Plan for a Participant who, as a result of such sale or distribution, is no longer eligible to participate in this Plan, shall, at the discretion and direction of the Corporation (and approval by the new employer), be transferred to a similar plan of such new employer and become a liability thereunder. Upon such transfer (and acceptance thereof by such new employer) the liabilities for such transferred benefits shall become the obligation of the new employer and the liability under this Plan for such benefits shall then cease.
|
(b)
|
Notwithstanding any Plan provision to the contrary, at the discretion and direction of the Corporation, liabilities with respect to benefits accrued by a Participant under a plan maintained by such Participant’s former employer may be transferred to this Plan and upon such transfer shall become the obligation of the Corporation.
|
3.11
|
Acceleration of or Delay in Payments
|
3.12
|
Indemnification
|
(a)
|
the act or failure to act shall have occurred
|
(i)
|
in the course of the person’s service as an officer, employee or agent of the Company or as a member of the Committee, or as the Plan Administrator; or
|
(ii)
|
in connection with a service provided with or without charge to the Plan or to the Participants or Beneficiaries of the Plan, if such service was requested by the Committee or the Plan Administrator; and
|
(b)
|
the act or failure to act is in good faith and in, or not opposed to, the best interests of the Corporation.
|
3.13
|
Claims Procedure
|
(a)
|
Submission of Claims
|
(b)
|
Denial of Claim
|
(i)
|
the specific reason or reasons for the denial;
|
(ii)
|
specific reference to pertinent Plan provisions on which the denial is based;
|
(iii)
|
a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary; and
|
(iv)
|
an explanation of the Plan’s claim review procedure, including information as to the steps to be taken if the claimant wishes to submit the claim for review and the time limits for requesting a review.
|
(c)
|
Claim Review Procedure
|
(d)
|
Exhaustion of Remedy
|
3.14
|
Construction
|
(a)
|
The Plan is intended to constitute both an excess benefit arrangement and an unfunded deferred compensation arrangement maintained for a select group of management or highly compensated employees within the meaning of Sections 201(2), 301(a)(3), and 401(a)(1) of ERISA, and all rights under this Plan shall be governed by ERISA. Subject to the preceding sentence, the Plan shall be construed, regulated and administered under the laws of the State of New York, to the extent such laws are not superseded by applicable federal law.
|
(b)
|
The masculine pronoun shall mean the feminine wherever appropriate.
|
(c)
|
The illegality of any particular provision of this document shall not affect the other provisions and the document shall be construed in all respects as if such invalid provision were omitted.
|
(d)
|
The headings and subheadings in the Plan have been inserted for convenience of reference only, and are to be ignored in any construction of the provisions thereof.
|
(e)
|
The Plan shall be construed, regulated and administered in accordance with the laws of the State of New York, subject to the provisions of applicable federal laws.
|
4.01
|
Responsibility for Benefit Determination
|
4.02
|
Duties of Committee
|
4.03
|
Procedure for Payment of Benefits Under the Plan
|
4.04
|
Compliance
|
(a)
|
Retirement or Termination of Employment Effective on and After December 31, 1995
|
(i)
|
Following a Participant’s retirement or termination of employment with the Company and all Associated Companies other than by reason of death, a Participant shall receive his Grandfathered Pre-2005 Benefit in the same form and at the same time as the Participant receives his corresponding retirement allowance or vested benefit under the Retirement Plan, except as otherwise provided below.
|
(ii)
|
Notwithstanding the foregoing provisions of clause (i) above, the portion of his Grandfathered Pre-2005 Benefit attributable to the PEP formula shall be payable in the form of a lump-sum payment and effective as of January 1, 2008, the Participant’s right to convert such PEP formula portion of his Grandfathered Pre-2005 Benefit into a form of life annuity is eliminated.
|
(b)
|
Death Prior to a Participant’s Annuity Starting Date
|
(i)
|
The portion of the death benefit determined under Section 2.04(b)(i) of the foregoing provisions of this Plan attributable to a Participant’s Grandfathered Pre-2005 Benefit payable to a Participant’s spouse (or Registered Domestic Partner) shall be paid in the same form and at the same time said spouse (or Registered Domestic Partner) receives payment under the Automatic Vested Spouse Benefit of the Retirement Plan. Notwithstanding the foregoing, effective on and after January 1, 2008, the portion of any benefit payable under this clause (i) attributable to the PEP formula based on his Grandfathered Pre-2005 Benefit shall be payable in a single lump-sum payment and effective as of January 1, 2008, the spouse’s (or Registered Domestic Partner’s) right to convert such PEP formula portion of his Grandfathered Pre-2005 Benefit into a form of life annuity is eliminated.
|
(ii)
|
The portion of the death benefit determined under Section 2.04(b)(ii) of the foregoing provisions of the Plan attributable to a Participant’s Grandfathered Pre-2005 Benefit shall be payable to the Participant’s Beneficiary at the same time said Beneficiary would have received a Pre-Retirement Survivor’s Benefit under Section 4.08(b) of the Retirement Plan, provided, however, the portion of such survivor benefit attributable to the PEP formula shall be paid in a single lump-sum payment and effective as of January 1, 2008, the Beneficiary’s right to convert such PEP formula portion of his Grandfathered Pre-2005 Benefit into a form of life annuity is eliminated.
|
|
|
Page
|
|
||
|
||
|
1.01
|
Acceleration Event
shall mean “Acceleration Event” as that term is defined under the provisions of the Excess Plan II as in effect on October 3, 2004.
|
1.02
|
Annuity Starting Date
shall mean, unless the Plan expressly provides otherwise, the first day of the first period for which an amount is due as an annuity or any other form. However, if a Change in Control occurs, the Annuity Starting Date of a Participant with regard to his 409A Supplemental Benefit shall be the date such Change in Control occurs.
|
1.03
|
Associated Company
shall mean any division, subsidiary or affiliated company of the Corporation not participating in the Plan which is an Associated Company, as defined in the Retirement Plan.
|
1.04
|
Beneficiary
shall mean the person designated pursuant to the provisions of the Retirement Plan to receive benefits under said Retirement Plan after a Participant’s death. In the absence of a beneficiary designation under the provisions of the Retirement Plan, the Participant’s Beneficiary shall be his spouse (or Registered Domestic Partner (as defined in the Retirement Plan)), if any, otherwise his estate. Notwithstanding the foregoing, with respect to any survivor benefit payable pursuant to the provision of Section 2.04(c)(ii) based on the Participant’s 409A Supplemental Benefit attributable to the Traditional Pension Plan (“TPP”) formula (as defined in Section 4.01(b) of the Retirement Plan), in the absence of a beneficiary designation under the provisions of the Retirement Plan, the Participant’s Beneficiary shall be his spouse (or Registered Domestic Partner), if any, otherwise the person or persons named as his beneficiary (or beneficiaries) under the Exelis Salaried Investment and Savings Plan, if any, or if none, then the person or persons named as his beneficiary (or beneficiaries) under the Company’s life insurance program.
|
1.05
|
Board of Directors
shall mean the Board of Directors of Exelis Inc. or any successor thereto.
|
1.06
|
Change in Control
shall mean “Change in Control” as such term is defined under the terms of the Exelis Excess Pension Plan IIA, as amended from time to time.
|
1.07
|
Code
shall mean the Internal Revenue Code of 1986, as amended from time to time.
|
1.08
|
Committee
shall mean the Benefits Administration Committee under the Retirement Plan.
|
1.09
|
Company
shall mean, effective October 31, 2011, Exelis Inc. or any successor by merger or purchase or otherwise, and any Participating Unit (as that term is defined in the Retirement Plan) authorized by the Corporation to participate in the Plan with respect to its employees. When used herein, the term Company shall collectively include Exelis Inc. and, for the period prior to October 31, 2011, ITT Corporation and any Participating Unit.
|
1.10
|
Company Pension Plan
shall mean any tax qualified defined benefit plan other than the Retirement Plan maintained by the Company or an Associated Company.
|
1.11
|
Corporation
shall mean, effective October 31, 2011, Exelis Inc., an Indiana corporation, or any successor by merger, purchase or otherwise. When used herein, the term Corporation shall collectively include Exelis Inc. and, for the period prior to October 31, 2011, ITT Corporation.
|
1.12
|
Deferred Compensation Program
shall mean any nonqualified deferred compensation plan maintained by the Company or an Associated Company.
|
1.13
|
Disability or Disabled
shall mean “Disability” or “Disabled” as such terms are defined under the terms of the Exelis Excess Pension Plan IIA, as amended from time to time.
|
1.14
|
Eligible Employee
shall mean a member of the Retirement Plan who is not eligible to participate in the Exelis Excess Pension Plan IA or IB.
|
1.15
|
ERISA
shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time.
|
1.16
|
Excess Plan II
shall mean the ITT Excess Pension Plan II (formerly known as the ITT Industries Excess Pension Plan II).
|
1.17
|
Grandfathered Pre-2005 Benefit
shall mean, with respect to a Participant who (i) terminated employment on or prior to December 31, 2008, or (ii) was employed by the Company or an Associated Company on October 1, 2008, and signs and submits his acknowledgement of termination to the ITT HQ Compensation Department on or before December 31, 2008, formalizing his date of Termination of Employment in 2009 the portion of such Participant’s Supplemental Benefit, if any, that was accrued and vested before January 1, 2005, determined under the provisions of Excess Plan II without regard to any amendments after October 3, 2004, which would cause a material modification for purposes of Section 409A of the Code, adjusted for the passage of time based on actuarial equivalent assumptions and procedures established by the Committee in accordance with the provisions of Treas. Reg. § 1.409A-6(a)(3)(iv).
|
1.18
|
Participant
shall mean an Eligible Employee who is participating in the Plan pursuant to Section 2.01 hereof.
|
1.19
|
Plan
shall mean the Exelis Excess Pension Plan IIB, as set forth herein or as amended from time to time.
|
1.20
|
Plan Administrator
shall mean the Benefits Administration Committee (as defined in the Retirement Plan) or in the case of an appeal under Section 3.13(c), the Appeals Committee (as defined in the Retirement Plan).
|
1.21
|
Retirement Plan
shall mean the Exelis Salaried Retirement Plan, which was formerly known prior to October 31, 2011, as the ITT Salaried Retirement Plan and prior to that the ITT Industries Salaried Retirement Plan, as amended from time to time.
|
1.22
|
Specified Employee
shall mean a “specified employee” as such term is defined in the Exelis Excess Pension Plan IIA.
|
1.23
|
Supplemental Benefit
shall mean the monthly benefit payable to a Participant as determined under Section 2.02.
|
1.24
|
409A Supplemental Benefit
shall mean the portion of a Participant’s Supplemental Benefit, if any, in excess of his Grandfathered Pre-2005 Benefit.
|
1.25
|
Termination of Employment
shall mean a “Separation from Service” as such term is defined in the Exelis Excess Pension Plan IIA.
|
2.01
|
Participation
|
(a)
|
Each individual who is an Eligible Employee on October 31, 2011, whose annual retirement allowance or vested benefit under the Retirement Plan is reduced as a result of:
|
(i)
|
deferrals of compensation under a Deferred Compensation Program; or
|
(ii)
|
such other restrictions imposed by the Board of Directors with respect to the determination of a Participant’s retirement allowance or vested benefit under the Retirement Plan
|
(b)
|
Effective on and after October 31, 2011, each other Eligible Employee whose annual retirement allowance or vested benefit under the Retirement Plan is reduced as a result of:
|
(i)
|
deferrals of compensation under a Deferred Compensation Program; or
|
(ii)
|
such other restrictions imposed by the Board of Directors with respect to the determination of a Participant’s retirement allowance or vested benefit under the Retirement Plan,
|
(c)
|
A Participant’s participation in the Plan shall terminate upon the Participant’s death or other Termination of Employment with the Company and all Associated Companies, unless a benefit is payable under the Plan with respect to the Participant or his Beneficiary under the provisions of this Article II.
|
2.02
|
Amount of Supplemental Benefits
|
(a)
|
A Participant’s Supplemental Benefit under this Article II shall be equal to the excess, if any, of (i) over (ii) as determined below:
|
(iii)
|
the monthly retirement allowance or vested benefit determined as of such Participant’s Termination of Employment which would have been payable to the Participant under Section 4.02, 4.03, 4.04, 4.05 or 4.06 of the Retirement Plan, whichever is applicable, assuming such benefit commences on the date set forth in Section 2.04(a)(i), (ii) or (iv), of this Plan, whichever is applicable, and
|
(1)
|
prior to the application of any offset required pursuant to Section 4.10 or to an applicable Appendix of the Retirement Plan with regard to benefits payable under any other Company Pension Plan;
|
(2)
|
without regard to the provisions contained in Section 415 of the Code relating to the maximum limitation on benefits, as incorporated into the Retirement Plan;
|
(3)
|
without regard to the annual limitation on Compensation (as defined in the Retirement Plan) contained in Section 401(a)(17) of the Code, as incorporated into the Retirement Plan; and
|
(4)
|
without regard to deferrals of compensation made pursuant to the Deferred Compensation Program.
|
(iv)
|
the monthly retirement allowance or vested benefit which would have been payable for the Participant’s lifetime under Section 4.02, 4.03, 4.04, 4.05 or 4.06 of the Retirement Plan, whichever is applicable, assuming such benefit commences on the date set forth in Section 2.04(a)(i), (ii) or (iv), whichever is applicable, and determined
|
(1)
|
prior to the application of any offset required pursuant to Section 4.10 or an applicable Appendix of the Retirement Plan with regard to benefits payable under any other Company Pension Plan;
|
(2)
|
without regard to the provisions contained in Section 415 of the Code relating to maximum limitation benefits, as incorporated into the Retirement Plan; and
|
(3)
|
without regard to the annual limitation on Compensation contained in Section 401(a)(17) of the Code, as incorporated into the Retirement Plan.
|
(b)
|
Notwithstanding anything to the contrary in Section 2.01 or Section 2.02(a), a Participant who on October 31, 2011, continued in employment with ITT Corporation or commenced employment with Xylem Inc. shall be treated for purposes of determining his Supplemental Benefit as though he earns Eligibility Service (as defined in the Retirement Plan) for Plan purposes until the earlier of October 31, 2016, the date such Participant terminates employment with ITT Corporation or Xylem Inc., the date on which the benefits under the Retirement Plan attributable to the TPP Formula commence, the date of his death or a Change in Control of ITT Corporation or Xylem Inc., as the case may be.
|
(c)
|
Notwithstanding anything to the contrary in Section 2.01 or 2.01(a), effective as of October 31, 2011, with respect to a Participant who on October 31, 2011, continued in employment with ITT Corporation or commenced employment with Xylem Inc., the interest rate credited per annum on the Pension Equity Plan (“PEP”) formula (as defined in Section 4.01(c) of the Retirement Plan) lump-sum value of the portion of a Participant’s 409A Supplemental Benefit payable under Section 2.02 attributable to the PEP formula during the period beginning on October 31, 2011, and ending on the Participant’s Annuity Starting Date shall be the greater of the 10-year Treasury rate as in effect on December 31 of the prior calendar year or 3.25 percent.
|
(d)
|
Notwithstanding anything to the contrary in Section 2.01 or this Section 2.02, effective December 31, 2016, Benefit Service and Compensation used to determine a Participant’s Supplemental Benefits under this Plan shall be frozen.
|
2.03
|
Vesting
|
(a)
|
Each Participant shall be vested in, and have a nonforfeitable right to, the benefit payable under this Article II to the same extent as the Participant is vested in his Accrued Benefit (as that term is defined in the Retirement Plan) under the provisions of the Retirement Plan.
|
(b)
|
Notwithstanding any provision of this Plan to the contrary, in the event of an Acceleration Event, all Participants and their Beneficiaries shall become fully vested in the benefits provided under this Plan.
|
(c)
|
Notwithstanding any provision of this Plan to the contrary, a Participant who on October 31, 2011, was credited for purposes of the Retirement Plan with at least one year of Eligibility Service and continued in employment with ITT Corporation or Xylem Inc. shall become 100 percent vested in and have a nonforfeitable right to benefits under this Plan as of October 31, 2011.
|
2.04
|
Payment of Benefits
|
(a)
|
Timing of Payment
|
(i)
|
Subject to the provisions of clause (iii) below, the portion of any Participant’s 409A Supplemental Benefit payable under Section 2.02 attributable to the TPP formula, to the extent vested pursuant to Section 2.03, shall commence as of the first day of the month following (1) the Participant’s Termination of Employment or (2) if the Participant is not at least age 50 on such date of Termination of Employment and his age and Eligibility Service as of such date does not equal 80 or more, the Participant’s attainment of age 55, if later. Notwithstanding the foregoing and subject to the provisions of Treas. Reg. § 1.409A-2(b), with respect to a Participant who is first employed by the Company or an Associated Company on or after January 1, 2000, the portion of such Participant’s 409A Supplemental Benefit payable under
|
(ii)
|
Notwithstanding the foregoing provisions of clause (i) above and subject to the provisions of clause (iii) below, the portion of any Participant’s 409A Supplemental Benefit payable under Section 2.02 attributable to the PEP formula, to the extent vested pursuant to Section 2.03, shall commence as of the first day of the month following the Participant’s Termination of Employment.
|
(iii)
|
Notwithstanding the foregoing, if a Participant is classified as a “Specified Employee” on his date of Termination of Employment, the actual payment of a 409A Supplemental Benefit payable under Section 2.02 due to the Participant’s Termination of Employment for reasons other than death or Disability shall not commence prior to the first day of the seventh month following the Participant’s Termination of Employment. Any payment due the Participant which he would have otherwise received under Section 2.02 during the six-month period immediately following such Participant’s Termination of Employment shall be accumulated, with interest, at the IRS Interest Rate (as defined in the Retirement Plan) in accordance with procedures established by the Committee. For the avoidance of doubt, the provisions of this clause (iii) shall not apply to a 409A Supplemental Benefit payable under (1) Section 2.04(c) due to the death of the Participant or (2) Section 2.04(d) due to the Participant’s Disability.
|
(iv)
|
Notwithstanding the foregoing, in the event a Participant who incurred a Termination of Employment prior to January 1, 2009, has not commenced payment of his 409A Supplemental Benefit as of April 1, 2009, (January 1, 2009, with respect to Participants listed in Appendix B), such Participant’s 409A Supplemental Benefit shall commence as of January 1, 2009, or, if later, the date specified in clause (i), (ii) or (iii) above, whichever is applicable.
|
(v)
|
A Participant’s Grandfathered Pre-2005 Benefit shall commence in accordance with the provisions of the Excess Plan II as in effect on October 3, 2004, modified as set forth in Appendix A and without regard to any amendments after October 3, 2004, which would constitute a material modification for purposes of Section 409A of the Code.
|
(b)
|
Form of Benefit
|
(i)
|
Notwithstanding any provisions of the Plan to the contrary, the portion of the Participant’s 409A Supplemental Benefit determined under Section 2.02 attributable to the TPP formula shall be paid in the same form as the
|
(ii)
|
Subject to the provisions of clause (iii) below, a Participant who is not entitled to a supplement benefit under the provisions of the Exelis Excess Pension Plan IIA attributable to the TPP formula may elect to convert his 409A Supplemental Benefit payable under Section 2.02 attributable to the TPP formula into an optional annuity of equivalent actuarial value available to that Participant under the provisions of Section 4.07(b) of the Retirement Plan as of his Annuity Starting Date, provided said optional annuity satisfies the definition of “life annuity” as provided in Treas. Reg. § 1.409A-(2)(b)(2)(ii) and any further guidance thereto. Such equivalent actuarial value shall be based on the applicable factors set forth in Appendix A of the Retirement Plan.
|
(iii)
|
Notwithstanding the foregoing and subject to the provisions of Section 409A of the Code, a Participant’s election to receive his 409A Supplemental Benefit attributable to the TPP formula in an optional annuity form of payment as described in clause (ii) above shall be effective as of the Participant’s Annuity Starting Date applicable to that portion of his 409A Supplemental Benefit, provided the Participant makes and submits to the Committee in the manner prescribed by the Committee, his election of such optional annuity form prior to such applicable Annuity Starting Date. A Participant who fails to elect an optional annuity form of benefit applicable to the TPP formula portion of his 409A Supplemental Benefit in a timely manner shall receive such benefit in accordance with the provisions of clause (i) above.
|
(iv)
|
Notwithstanding the foregoing provisions of this Section 2.04(b), the portion of a Participant’s 409A Supplemental Benefit payable under Section 2.02 attributable to the PEP formula shall be payable in the form of a single lump-sum payment. Such lump-sum payment shall be calculated on the same basis as provided in Section 4.07(b)(v) of the Retirement Plan except as otherwise provided in Section 2.02(c).
|
(v)
|
The portion of the Participant’s Grandfathered Pre-2005 Benefit payable under Section 2.02 attributable to the TPP formula shall commence and the form of payment of such benefit shall be determined in accordance with the provisions of the Excess Plan II as in effect on October 3, 2004, modified as set forth in Appendix A and without regard to any Plan amendments after that date which would constitute a material modification for purposes of Section 409A of the Code. The portion of the Participant’s Grandfathered Pre-2005 Benefit payable under Section 2.02 attributable to the PEP formula shall be payable in accordance with the provisions of the Excess Plan II as in effect on October 3, 2004, modified as set forth in Appendix A and without regard to any amendments after October 3, 2004, which would constitute a material modification for purposes of Section 409A of the Code.
|
(c)
|
Death Prior to a Participant’s Annuity Starting Date
|
(i)
|
If a Participant entitled to a vested benefit under the Retirement Plan dies (1) before meeting the eligibility requirements for an Automatic Pre-Retirement Survivor’s Benefit under Section 4.08(b) of the Retirement Plan and while in active service with the Company or any Associated Company or while Disabled but before his Annuity Starting Date, or (2) after Termination of Employment with entitlement to a vested benefit hereunder but prior to his Annuity Starting Date, the Participant’s spouse (or Registered Domestic Partner) shall receive a monthly payment for life equal to the monthly income which would have been payable to such spouse (or Registered Domestic Partner) under Section 4.08(a) of the Retirement Plan based on the hypothetical benefit attributable to his Supplemental Benefit as calculated under Section 2.02 hereof assuming payments commence as of the first day of the month following the Participant’s date of death or attainment of age 55, if later. The portion of such survivor benefit attributable to the Participant’s 409A Supplemental Benefit shall commence as of the first day of the month following the later of the Participant’s date of death or the Participant’s attainment of age 55 (or in the event clause (iii) is applicable, the date specified in clause (iii)). Notwithstanding the foregoing, the portion of any benefit payable under this clause (i) attributable to the PEP formula portion of the benefit which would have been payable to the spouse (or Registered Domestic Partner) based on the hypothetical 409A Supplemental Benefit as calculated under Section 2.02 shall be determined assuming that portion of the survivor benefit commences as of the first day of the month following the Participant’s date of death (or the date specified in clause (iii), if later) and such benefit shall be payable in the form of a single lump-sum payment as of the first day of the month following the Participant’s date of death. This lump-sum payment shall be calculated on the same basis as provided in Section 4.08(a)(iii) of the Retirement Plan using the IRS Mortality Table and IRS Interest Rate. Notwithstanding any Plan provision to the contrary, the portion of any survivor benefit payable
|
(ii)
|
In the event a Participant who has satisfied the eligibility requirements for the Automatic Pre-Retirement Survivor’s Benefit under Section 4.08(b) of the Retirement Plan, dies (1) while in active service with the Company or any Associated Company or (2) after his Termination of Employment or the date he becomes Disabled, if earlier, but prior to his Annuity Starting Date, the Participant’s Beneficiary, if any, shall receive a monthly payment for the life of the Beneficiary equal to the monthly income which would have been payable to such Beneficiary under Section 4.08(b) of the Retirement Plan based on the hypothetical retirement benefit attributable to his Supplemental Benefit as calculated under Section 2.02 hereof assuming payments commence on the first day of the month following the Participant’s death (or the date specified in clause (iii), if later). Notwithstanding the foregoing, the portion of any benefit payable under this clause (ii) attributable to the PEP formula portion of the benefit which would have been payable to the Beneficiary based on the hypothetical 409A Supplemental Benefit as calculated under Section 2.02 hereof shall be payable in the form of a single lump-sum payment. This lump-sum payment shall be calculated on the same basis as provided in Section 4.08(b)(iii) of the Retirement except as otherwise required by Section 2.02(c). The portion of any benefit payable under this clause (ii) attributable to a Participant’s 409A Supplemental Benefit as calculated under Section 2.02 hereof shall commence on the first day of the month following the Participant’s death.
|
(iii)
|
Notwithstanding the foregoing, in the event the survivor benefit payable under this Section 2.04(c) to the spouse or Beneficiary of a Participant who died prior to January 1, 2009, has not commenced as of January 1, 2009, such survivor benefit shall commence as of January 1, 2009, or, if later, the date specified in clauses (i) or (ii) above, whichever is applicable.
|
(d)
|
Disability prior to Termination of Employment
|
(i)
|
Notwithstanding any Plan provision to the contrary, in the event a Participant becomes Disabled prior to his Termination of Employment, the Participant shall be entitled to a Disability Supplemental Benefit equal to the amount determined under the provisions of Section 2.02(a) based on his years of Benefit Service, accrued under the Retirement Plan to the date he became Disabled plus the years of Benefit Service, if any, such Participant accrues under the terms of the Retirement Plan after the date he becomes Disabled and prior to the earlier of his attainment of age 65 or December 31, 2016.
|
(ii)
|
The portion of the Disability Supplemental Benefit determined under the provisions of clause (i) in excess of the Participant’s Grandfathered Pre-2005 Benefit shall be paid in accordance with the provisions of paragraph (b) above and payments shall commence on the first day of the month following the month in which the Participant attains age 65.
|
(iii)
|
Notwithstanding the foregoing, the portion of the Disability Supplemental Benefit attributable to the Participant’s Grandfathered Pre-2005 Benefit shall be paid in accordance with the provisions of the Excess Plan II as in effect on October 3, 2004, modified as set forth in Appendix A, and without regard to any amendments after October 3, 2004, which would constitute a material modification for purposes of Section 409A of the Code.
|
2.05
|
Payment Upon the Occurrence of a Change in Control
|
2.06
|
Reemployment of Former Participant or Retired Participant
|
3.01
|
Funding
|
(e)
|
All amounts payable in accordance with this Plan shall constitute a general unsecured obligation of the Corporation. Such amounts, as well as any administrative costs relating to the Plan, shall be paid out of the general assets of the Corporation, to the extent not paid from the assets of any trust established pursuant to paragraph (b) below.
|
(f)
|
The Corporation may, for administrative reasons, establish a grantor trust for the benefit of Participants in the Plan. The assets placed in said trust shall be held separate and apart from other Corporation funds and shall be used exclusively for the purposes set forth in the Plan and the applicable trust agreement, subject to the following conditions:
|
(iv)
|
the creation of said trust shall not cause the Plan to be other than “unfunded” for purposes of Title I of ERISA;
|
(v)
|
the Corporation shall be treated as “grantor” of said trust for purposes of Section 677 of the Code; and
|
(vi)
|
the agreement of said trust shall provide that its assets may be used upon the insolvency or bankruptcy of the Corporation to satisfy claims of the Company’s general creditors and that the rights of such general creditors are enforceable by them under federal and state law.
|
(g)
|
To the extent that any person acquires a right to receive payments under the Plan, such right shall be no greater than the right of any unsecured creditor of the Corporation.
|
3.02
|
Duration of Benefits
|
3.03
|
Discontinuance and Amendment
|
3.04
|
Termination of Plan
|
(a)
|
the benefits of any Participant or Beneficiary whose benefit payments have commenced shall continue to be paid, but only to the extent such benefits are not otherwise payable under the Retirement Plan because of the limitations referred to in Section 2.02; and
|
(b)
|
no further benefits shall accrue on behalf of any Participant whose benefits have not commenced, and such Participant and his Beneficiary shall retain the right to benefits hereunder; provided that, on or after the effective date of termination:
|
(iv)
|
the Participant is vested under the Retirement Plan or pursuant to Section 2.03(b) or (c) above; and
|
(v)
|
such benefits are not at any time otherwise payable under the Retirement Plan because of the deferral of compensation under a Deferred Compensation Program.
|
3.05
|
Plan Not a Contract of Employment
|
3.06
|
Facility of Payment
|
3.07
|
Withholding Taxes
|
3.08
|
Nonalienation
|
3.09
|
Forfeiture for Cause
|
3.10
|
Transfers
|
(a)
|
Notwithstanding any Plan provision to the contrary, in the event the Corporation (i) sells, causes the sale of, or sold the stock or assets of any employing company in the controlled group of the Corporation to a third party or (ii) distributes or distributed to the holders of shares of the Corporation’s common stock all of the outstanding shares of common stock of a subsidiary or subsidiaries of the Corporation, and, as a result of such sale or distribution, such company (or subsidiary) or its employees are no longer eligible to participate hereunder, the liabilities with respect to the benefits accrued under this Plan for a Participant who, as a result of such sale or distribution, is no longer eligible to participate in this Plan, shall, at the discretion and direction of the Corporation (and approval by the new employer), be transferred to a similar plan of such new employer and become a liability thereunder. Upon such transfer (and acceptance thereof by such new employer) the liabilities for such transferred benefits shall become the obligation of the new employer and the liability under this Plan for such benefits shall then cease.
|
(b)
|
Notwithstanding any Plan provision to the contrary, at the discretion and direction of the Corporation, liabilities with respect to benefits accrued by a Participant under a plan maintained by such Participant’s former employer may be transferred to this Plan and upon such transfer shall become the obligation of the Corporation.
|
3.11
|
Acceleration of or Delay in Payments
|
3.12
|
Indemnification
|
(a)
|
the act or failure to act shall have occurred
|
(i)
|
in the course of the person’s service as an officer, employee or agent of the Company or as a member of the Committee, or as the Plan Administrator; or
|
(ii)
|
in connection with a service provided with or without charge to the Plan or; to the Participants or Beneficiaries of the Plan, if such service was requested by the Committee or the Plan Administrator; and
|
(b)
|
the act or failure to act is in good faith and in, or not opposed to, the best interests of the Corporation.
|
3.13
|
Claims Procedure
|
(a)
|
Submission of Claims
|
(b)
|
Denial of Claim
|
(i)
|
the specific reason or reasons for the denial;
|
(ii)
|
specific reference to pertinent Plan provisions on which the denial is based;
|
(iii)
|
a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary; and
|
(iv)
|
an explanation of the Plan’s claim review procedure, including information as to the steps to be taken if the claimant wishes to submit the claim for review and the time limits for requesting a review.
|
(c)
|
Claim Review Procedure
|
(d)
|
Exhaustion of Remedy
|
3.14
|
Construction
|
(a)
|
The Plan is intended to constitute both an excess benefit arrangement and an unfunded deferred compensation arrangement maintained for a select group of management or highly compensated employees within the meaning of Sections 201(2), 301(a)(3), and 401(a)(1) of ERISA, and all rights under this Plan shall be governed by ERISA. Subject to the preceding sentence, the Plan shall be construed, regulated and administered under the laws of the State of New York, to the extent such laws are not superseded by applicable federal law.
|
(b)
|
The masculine pronoun shall mean the feminine wherever appropriate.
|
(c)
|
The illegality of any particular provision of this document shall not affect the other provisions and the document shall be construed in all respects as if such invalid provision were omitted.
|
(d)
|
The headings and subheadings in the Plan have been inserted for convenience of reference only, and are to be ignored in any construction of the provisions thereof.
|
(e)
|
The Plan shall be construed, regulated and administered in accordance with the laws of the State of New York, subject to the provisions of applicable federal laws.
|
4.01
|
Responsibility for Benefit Determination
|
4.02
|
Duties of Committee
|
4.03
|
Procedure for Payment of Benefits Under the Plan
|
4.04
|
Compliance
|
(b)
|
Retirement or Termination of Employment Effective on or After January 1, 1996
|
(i)
|
Following a Participant’s retirement or termination of employment with the Company and all Associated Companies other than by reason of death, a Participant shall receive his Grandfathered Pre-2005 Benefit in the same form and at the same time as the Participant receives his corresponding retirement allowance or vested benefit under the Retirement Plan, except as otherwise provided below.
|
(ii)
|
Notwithstanding the foregoing provisions of clause (i) above, the portion of his Grandfathered Pre-2005 Benefit attributable to the PEP formula shall be payable in the form of a lump-sum payment and effective as of January 1, 2008, the Participant’s right to convert such PEP formula portion of his Grandfathered Pre-2005 Benefit into a form of life annuity is eliminated.
|
(c)
|
Death Prior to a Participant’s Annuity Starting Date
|
(i)
|
The portion of the death benefit determined under Section 2.04(c)(i) of the foregoing provisions of this Plan attributable to a Participant’s Grandfathered Pre-2005 Benefit payable to a Participant’s spouse (or Registered Domestic Partner) shall be paid in the same form and at the same time said spouse (or Registered Domestic Partner) receives payment under the Automatic Vested Spouse Benefit of the Retirement Plan. Notwithstanding the foregoing, effective on and after January 1, 2008, the portion of any benefit payable under this clause (i) attributable to the PEP formula based on his Grandfathered Pre-2005 Benefit shall be payable in a single lump-sum payment and effective as of January 1, 2008, the spouse’s (or Registered Domestic Partner’s) right to convert such PEP formula portion of his Grandfathered Pre-2005 Benefit into a form of life annuity is eliminated.
|
(ii)
|
The portion of the death benefit determined under Section 2.04(c)(ii) of the foregoing provisions of the Plan attributable to a Participant’s Grandfathered Pre-2005 Benefit shall be payable to the Participant’s Beneficiary at the same time said Beneficiary would have received a Pre-Retirement Survivor’s Benefit under Section 4.08(b) of the Retirement Plan, provided, however, the portion of such survivor benefit attributable to the PEP formula shall be paid in a single lump-sum payment and effective as of January 1, 2008, the Beneficiary’s right to convert such PEP formula portion of his Grandfathered Pre-2005 Benefit into a form of life annuity is eliminated.
|
|
|
|
|
|
|
|
||||||||||||
|
Six months ended June 30,
|
Year Ended December 31,
|
||||||||||||||||
(IN MILLIONS, EXCEPT RATIO)
|
2013
|
2012
|
2011
|
2010
|
2009
|
2008
|
||||||||||||
Earnings
|
|
|
|
|
|
|
||||||||||||
Income from continuing operations before income tax expense
|
$
|
184
|
|
$
|
521
|
|
$
|
537
|
|
$
|
696
|
|
$
|
700
|
|
$
|
657
|
|
Add Fixed Charges
|
|
|
|
|
|
|
||||||||||||
Interest expense
|
18
|
|
38
|
|
10
|
|
—
|
|
1
|
|
2
|
|
||||||
Interest component of rental expense (a)
|
8
|
|
16
|
|
15
|
|
14
|
|
14
|
|
13
|
|
||||||
Total earnings available for fixed charges
|
$
|
210
|
|
$
|
575
|
|
$
|
562
|
|
$
|
710
|
|
$
|
715
|
|
$
|
672
|
|
Total Fixed Charges
|
$
|
26
|
|
$
|
54
|
|
$
|
25
|
|
$
|
14
|
|
$
|
15
|
|
$
|
15
|
|
Ratio of earnings to fixed charges
|
8.1
|
|
10.6
|
|
22.5
|
|
50.7
|
|
47.7
|
|
44.8
|
|
(a)
|
Represents the portion of operating leases which management believes is a reasonable representation of an interest factor.
|
August 2, 2013
|
|
/S/ DAVID F. MELCHER
|
(Date)
|
|
David F. Melcher
|
|
|
Chief Executive Officer and President
|
August 2, 2013
|
|
/S/ PETER J. MILLIGAN
|
(Date)
|
|
Peter J. Milligan
|
|
|
Senior Vice President
|
|
|
and Chief Financial Officer
|
August 2, 2013
|
|
/S/ DAVID F. MELCHER
|
(Date)
|
|
David F. Melcher
|
|
|
Chief Executive Officer and President
|
August 2, 2013
|
|
/S/ PETER J. MILLIGAN
|
(Date)
|
|
Peter J. Milligan
|
|
|
Senior Vice President
|
|
|
and Chief Financial Officer
|