L-3 COMMUNICATIONS HOLDINGS, INC.
AMENDED AND RESTATED
1999 LONG TERM PERFORMANCE PLAN
TABLE OF CONTENTS
PAGE
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SECTION 1.
Purpose....................................................
1
SECTION 2.
Definitions; Rules of Construction.........................
1
SECTION 3.
Eligibility................................................
4
SECTION 4.
Awards.....................................................
4
SECTION 5.
Shares of Stock and Share Units Available Under Plan.......
8
SECTION 6.
Award Agreements...........................................
10
SECTION 7.
Adjustments; Change in Control; Acquisitions...............
12
SECTION 8.
Administration.............................................
15
SECTION 9.
Amendment and Termination of this Plan.....................
17
SECTION 10.
Miscellaneous..............................................
18
L-3 COMMUNICATIONS HOLDINGS, INC.
AMENDED AND RESTATED
1999 LONG TERM PERFORMANCE PLAN
SECTION 1. Purpose.
The purpose of this Plan is to benefit the Corporation's
stockholders by
encouraging high levels of performance by individuals who
contribute to the
success of the Corporation and its Subsidiaries and to enable the
Corporation
and its Subsidiaries to attract, motivate, retain and reward
talented and
experienced individuals. This purpose is to be accomplished by
providing
eligible individuals with an opportunity to obtain or increase a
proprietary
interest in the Corporation and/or by providing eligible
individuals with
additional incentives to join or remain with the Corporation and
its
Subsidiaries.
SECTION 2. Definitions; Rules of Construction.
(a) Defined Terms. The terms defined in this Section shall have the
following meanings for purposes of this Plan:
"Award" means an award granted pursuant to Section 4.
"Award Agreement" means an agreement described in Section 6 by the
Corporation for the benefit of a Participant, setting forth (or
incorporating by reference) the terms and conditions of an Award
granted to
a Participant.
"Beneficiary" means a person or persons (including a trust or
trusts)
validly designated by a Participant or, in the absence of a valid
designation, entitled by will or the laws of descent and
distribution, to
receive the benefits specified in the Award Agreement and under
this Plan
in the event of a Participant's death.
"Board of Directors" or "Board" means the Board of Directors of the
Corporation.
"Cash Flow" means cash and cash equivalents derived from either (i)
net cash flow from operations or (ii) net cash flow from
operations,
financings and investing activities, as determined by the Committee
at the
time an Award is granted.
"Change in Control" means change in control as defined in Section
7(c).
"Code" means the Internal Revenue Code of 1986, as amended from
time
to time.
"Committee" means the Committee described in Section 8(a).
"Corporation" means L-3 Communications Holdings, Inc.
"Employee" means any person, including an officer (whether or not
also
a director) in the regular full-time employment of the Corporation
or any
of its Subsidiaries who, in the opinion of the Committee is, or is
expected
to be, primarily responsible for the management, growth or
protection of
some part or all of the business of the Corporation or any of its
Subsidiaries, but excludes, in the case of an Incentive Stock
Option, an
Employee of any Subsidiary that is not a "subsidiary corporation"
of the
Corporation as defined in Code Section 424(f).
"EPS" means earnings per common share on a fully diluted basis
determined by dividing (a) net earnings, less dividends on
preferred stock
of the Corporation by (b) the weighted average number of common
shares and
common share equivalents outstanding.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended
from time to time.
"Executive Officer" means executive officer as defined in Rule 3b-7
under the Exchange Act. If the Board has designated the executive
officers
of the Corporation for purposes of reporting under the Exchange
Act, the
designation shall be conclusive for purposes of this Plan.
"Fair Market Value" means the closing price of the relevant
security
as reported on the composite tape of New York Stock Exchange issues
(or if,
at the date of determination, the security is not so listed or if
the
principal market on which it is traded is not the New York Stock
Exchange,
such other reporting system as shall be selected by the Committee)
on the
relevant date, or, if no sale of the security is reported for that
date,
the next preceding day for which there is a reported sale. The
Committee
shall determine the Fair Market Value of any security that is not
publicly
traded, using criteria as it shall determine, in its sole
direction, to be
appropriate for the valuation.
"Insider" means any person who is subject to Section 16(b) of the
Exchange Act.
2
"Option" means a Nonqualified Stock Option or an Incentive Stock
Option as described in Section 4(a)(1) or (2).
"Participant" means a person who is granted an Award, pursuant to
this
Plan, that remains outstanding.
"Performance-Based Awards" is defined in Section 4(b).
"Performance Goal" means EPS or ROE or Cash Flow or Total
Stockholder
Return or such other performance goal that the Committee in its
sole
discretion establishes in accordance with the requirements of
Section
162(m) of the Code for which applicable shareholder approval
requirements
are met, and "Performance Goals" means any combination thereof.
"ROE" means consolidated net income of the Corporation (less
preferred
dividends), divided by the average consolidated common
stockholders'
equity.
"Rule 16b-3" means Rule 16b-3 under Section 16 of the Exchange Act,
as
amended from time to time.
"Share Units" means the number of units under an Award that is
payable
solely in cash or is actually paid in cash, determined by reference
to the
number of shares of Stock by which the Award is measured.
"Stock" means shares of Common Stock of the Corporation, par value
$0.01 per share, subject to adjustments made under Section 7 or by
operation of law.
"Subsidiary" means, as to any person, any corporation, association,
partnership, joint venture or other business entity of which 50% or
more of
the voting stock or other equity interests (in the case of entities
other
than corporations), is owned or controlled (directly or indirectly)
by that
entity, or by one or more of the Subsidiaries of that entity, or by
a
combination thereof.
"Total Stockholder Return" means with respect to the Corporation or
other entities (if measured on a relative basis), the (1) change in
the
market price of its common stock (as quoted in the principal market
on
which it is traded as of the beginning and ending of the period)
plus
dividends and other distributions paid, divided by (ii) the
beginning
quoted market price, all of which is adjusted for any changes in
equity
structure, including, but not limited to, stock splits and stock
dividends.
3
(b) Financial and Accounting Terms. Except as otherwise expressly
provided
or the context otherwise requires, financial and accounting terms,
including
terms defined herein as Performance Goals, are used as defined for
purposes of,
and shall be determined in accordance with, generally accepted
accounting
principles and as derived from the audited consolidated financial
statements of
the Corporation, prepared in the ordinary course of business.
(c) Rules of Construction. For purposes of this Plan and the Award
Agreements, unless otherwise expressly provided or the context
otherwise
requires, the terms defined in this Plan include the plural and the
singular,
and pronouns of either gender or neuter shall include, as
appropriate, the other
pronoun forms.
SECTION 3. Eligibility.
Any one or more Awards may be granted to any Employee, or any
non-Employee
who provides services to or on behalf of the Corporation or any of
its
Subsidiaries, who is designated by the Committee to receive an
Award.
SECTION 4. Awards.
(a) Type of Awards. The Committee may from time to time grant any
of the
following types of Awards, either singly, in tandem or in
combination with other
Awards:
(1) Nonqualified Stock Options. A Nonqualified Stock Option is an
Award in the form of an option to purchase Stock that is not
intended to
comply with the requirements of Code Section 422. The exercise
price of
each Nonqualified Stock Option granted under this Plan shall be not
less
than the Fair Market Value of the Stock on the date that the Option
is
granted. All Nonqualified Stock Options granted in accordance with
this
clause (1) shall be treated as Performance-Based Awards subject to
the
applicable restrictions of Section 4(b).
(2) Incentive Stock Options. An Incentive Stock Option is an Award
in
the form of an option to purchase Stock that is intended to comply
with the
requirements of Code Section 422 or any successor section thereof.
The
exercise price of each Incentive Stock Option granted under this
Plan shall
be not less than the Fair Market Value of the Stock on the date the
Option
is granted. If a Participant on the date an Incentive Stock Option
is
granted owns, directly or indirectly within the meaning of Code
Section
424(d), stock possessing more than ten percent (10%) of the total
combined
voting power of all classes of stock of the Corporation, the
exercise price
per share of the
4
Incentive Stock Option shall not be less than one hundred and ten
percent
(110%) of the Fair Market Value per share of the Stock at the time
of
grant, and such Incentive Stock Option shall not be exercisable
after the
expiration of five (5) years from the date such Incentive Stock
Option is
granted. To the extent that the aggregate "fair market value" of
Stock with
respect to which one or more incentive stock options first become
exercisable by a Participant in any calendar year exceeds $100,000,
taking
into account both Stock subject to Incentive Stock Options under
this Plan
and stock subject to incentive stock options under all other plans
of the
Corporation or of other entities referenced in Code Section
422(d)(1), the
options shall be treated as Nonqualified Stock Options. For this
purpose,
the "fair market value" of the Stock subject to options shall be
determined
as of the date the Options were awarded. All Incentive Stock
Options
granted in accordance with this clause (2) shall be treated as
Performance-Based Awards subject to the applicable restrictions of
Section
4(b).
(3) Stock Appreciation Rights. A Stock Appreciation Right is an
Award
in the form of a right to receive, upon surrender of the right, but
without
other payment, an amount based on the appreciation in the value of
the
Stock or the Option over a base price established in the Award,
payable in
cash, Stock or such other form or combination of forms of payout,
at times
and upon conditions (which may include a Change in Control), as may
be
approved by the Committee. The minimum base price of a Stock
Appreciation
Right granted under this Plan shall be not less than the Fair
Market Value
of the underlying Stock on the date the Stock Appreciation Right is
granted
or, in the case of a Stock Appreciation Right related to an Option
(whether
already outstanding or concurrently granted), the exercise price of
the
related Option. All Stock Appreciation Rights granted in accordance
with
this clause (3) shall be treated as Performance-Based Awards
subject to the
applicable restrictions under Section 4(b).
(4) Restricted Stock. Restricted Stock is an Award of shares of
Stock
of the Corporation that are issued, but subject to restrictions on
transfer
and/or such other restrictions on incidents of ownership as the
Committee
may determine. Restricted Stock Awards to Executive Officers that
are
either granted or vest upon attainment of one or more of the
Performance
Goals shall only be granted as Performance-Based Awards under
Section 4(b).
The minimum vesting period for Awards of Restricted Stock made
after April
27, 2004 shall be three years following date of grant, except that
Restricted Stock Awards made after such date that are
Performance-Based
Awards
5
shall have a minimum vesting period of one year following date of
grant,
and provided that the vesting schedule of any Award of Restricted
Stock
(whether or not a Performance-Based Award) made after April 27,
2004 may
not be accelerated.
(5) Other Share-Based Awards. The Committee may from time to time
grant Awards under this Plan that provide the Participants with
Stock or
the right to purchase Stock, or provide other incentive Awards
(including,
but not limited to, phantom stock or units, performance stock or
units,
bonus stock, dividend equivalent units, or similar securities or
rights)
that have a value derived from the value of, or an exercise or
conversion
privilege at a price related to, or that are otherwise payable in
shares of
Stock. The Awards shall be in a form determined by the Committee,
provided
that the Awards shall not be inconsistent with the other express
terms of
this Plan. Awards under this Section 4(a)(5) to Executive Officers
that are
either granted or become vested, exercisable or payable based on
attainment
of one or more of the Performance Goals shall only be granted as
Performance-Based Awards under Section 4(b).
(b) Special Performance-Based Awards. Without limiting the
generality of
the foregoing, any of the type of Awards listed in Section 4(a) may
be granted
as awards that satisfy the requirements for "performance-based
compensation"
within the meaning of Code Section 162(m) ("Performance-Based
Awards"), the
grant, vesting, exercisability or payment of which depends on the
degree of
achievement of the Performance Goals relative to preestablished
targeted levels
for the Corporation or any of its Subsidiaries, divisions or other
business
units. Notwithstanding anything contained in this Section 4(b) to
the contrary,
any Option or Stock Appreciation Right granted in accordance with
paragraph (a)
shall be subject only to the requirements of clauses (1) and (3)
below in order
for such Awards to satisfy the requirements for Performance-Based
Awards under
this Section 4(b) (with such Awards hereinafter referred to as a
"Qualifying
Option" or a "Qualifying Stock Appreciation Right", respectively).
With the
exception of any Qualifying Option or Qualifying Stock Appreciation
Right, an
Award that is intended to satisfy the requirements of this Section
4(b) shall be
designated as a Performance-Based Award at the time of grant.
(1) Eligible Class. The eligible class of persons for Awards under
this Section 4(b) shall be all Employees.
(2) Performance Goals. The performance goals for any Awards under
this
Section 4(b) (other than Qualifying Options and Qualifying Stock
Appreciation Rights) shall be, on an absolute or
6
relative basis, one or more of the Performance Goals. The specific
performance target(s) with respect to Performance Goal(s) must be
established by the Committee in advance of the deadlines applicable
under
Code Section 162(m) and while the performance relating to the
Performance
Goal(s) remains substantially uncertain.
(3) Individual Limits. The maximum number of shares of Stock or
Share
Units that are issuable under Options, Stock Appreciation Rights,
Restricted Stock or other Awards (described under Section 4(a)(5))
that are
granted as Performance-Based Awards to any Participant shall not
exceed
five percent of the total shares outstanding of the Corporation
during the
life of the Plan, either individually or in the aggregate, subject
to
adjustment as provided in Section 7. Awards that are cancelled or
repriced
during the year shall be counted against this limit to the extent
required
by Code Section 162(m).
(4) Committee Certification. Before any Performance-Based Award
under
this Section 4(b) (other than Qualifying Options and Qualifying
Stock
Appreciation Rights) is paid, the Committee must certify in writing
(by
resolution or otherwise) that the applicable Performance Goal(s)
and any
other material terms of the Performance-Based Award were satisfied;
provided, however, that a Performance-Based Award may be paid
without
regard to the satisfaction of the applicable Performance Goal in
the event
of the Participant's death, permanent disability or retirement or
in the
event of a Change in Control as provided in Section 7(b).
(5) Terms and Conditions of Awards; Committee Discretion to Reduce
Performance Awards. The Committee shall have discretion to
determine the
conditions, restrictions or other limitations, in accordance with
the terms
of this Plan and Code Section 162(m), on the payment of individual
Performance-Based Awards under this Section 4(b). To the extent set
forth
in an Award Agreement, the Committee may reserve the right to
reduce the
amount payable in accordance with any standards or on any other
basis
(including the Committee's discretion), as the Committee may
impose.
Notwithstanding anything to the contrary above, the minimum vesting
period
of any Performance-Based Award granted after April 27, 2004 shall
be one
year following date of grant, and, to the extent that any such
Performance-Based Award is comprised of Restricted Stock, the
vesting
schedule of such Award, once outstanding, may not be accelerated.
7
(6) Adjustments for Material Changes. In the event of (i) a change
in
corporate capitalization, a corporate transaction or a complete or
partial
corporate liquidation, or (ii) any extraordinary gain or loss or
other
event that is treated for accounting purposes as an extraordinary
item
under generally accepted accounting principles, or (iii) any
material
change in accounting policies or practices affecting the
Corporation and/or
the Performance Goals or targets, then, to the extent any of the
foregoing
events (or a material effect thereof) was not anticipated at the
time the
targets were set, the Committee shall make adjustments to the
Performance
Goals and/or targets, applied as of the date of the event, and
based solely
on objective criteria, so as to neutralize, in the Committee's
judgment,
the effect of the event on the applicable Performance-Based Award.
(7) Interpretation. Except as specifically provided in this Section
4(b), the provisions of this Section 4(b) shall be interpreted and
administered by the Committee in a manner consistent with the
requirements
for exemption of Performance-Based Awards granted to Executive
Officers as
"performance-based compensation" under Code Section 162(m) and
regulations
and other interpretations issued by the Internal Revenue Service
thereunder.
(8) Maximum Term of Awards. No Award that contemplates exercise or
conversion may be exercised or converted to any extent, and no
other Award
that defers vesting, shall remain outstanding and unexercised,
unconverted
or unvested more than ten years after the date the Award was
initially
granted.
SECTION 5. Shares of Stock and Share Units Available Under Plan.
(a) Aggregate Share Limit. (i) The maximum number of shares of
Stock that
may be issued pursuant to all Awards under the Plan is 14,500,000
and (ii) the
maximum number of such shares of Stock that may be issued pursuant
to all Awards
of Incentive Stock Options is 3,000,000, in each case subject to
adjustment as
provided in this Section 5 or Secti
