L-3 COMMUNICATIONS HOLDINGS,
INC.
2008 LONG TERM PERFORMANCE PLAN
PERFORMANCE UNIT AGREEMENT
(Version 0002)
This Performance
Unit Agreement (this “Agreement”), effective as of the
Grant Date (as defined below), is between L-3 Communications
Holdings, Inc., a Delaware corporation (the
“Corporation” or “L-3”), and the
Participant (as defined below).
1.
Definitions . Capitalized terms not otherwise defined herein
shall have the respective meanings ascribed to them in the L-3
Communications Holdings, Inc. 2008 Long Term Performance Plan (the
“Plan”). The following terms shall have the following
meanings for purposes of this Agreement:
(a)
“Applicable Unit Multiplier” shall mean, with respect
to each Performance Measure, the “Unit Multiplier”
calculated pursuant to the Award Letter based on the actual level
of achievement for the Performance Period; provided , that
in the event of a Change in Control, the “Applicable Unit
Multiplier” shall mean 100%, subject to upward adjustment
(but not above 200%) to the extent (if any) that the Committee is
able, in its sole discretion, to assess that the
Corporation’s progress, at or prior to the Change in Control,
towards the achievement levels set forth in the Award Letter for
such Performance Measure exceeds the “Target”
performance level as adjusted to account for the reduced period of
actual performance.
(b)
“Award Letter” shall mean the award notice to the
Participant attached hereto as Exhibit A.
(c)
“Cause” shall mean the Participant’s
(1) intentional failure to perform reasonably assigned duties,
(2) dishonesty or willful misconduct in the performance of
duties, (3) engaging in a transaction in connection with the
performance of duties to the Corporation or its subsidiaries which
transaction is adverse to the interests of the Corporation and is
engaged in for personal profit or (4) willful violation of any
law, rule or regulation in connection with the performance of
duties (other than traffic violations or similar
offenses).
(d)
“Change in Control” shall mean:
(1) the
acquisition by any person or group (including a group within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act),
other than the Corporation or any of its subsidiaries, of
beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of a majority more of the
combined voting power of the Corporation’s then outstanding
voting securities, other than by any employee benefit plan
maintained by the Corporation;
(2) the sale of
all or substantially all the assets of the Corporation and its
subsidiaries taken as a whole; or
(3) the election,
including the filling of vacancies, during any period of 24 months
or less, of 50% or more of the members of the Board of Directors,
without the approval of Continuing Directors, as constituted at the
beginning of such period. “Continuing Directors” shall
mean any director of the Corporation who either (i) is a
member of the Board of Directors on the Grant Date, or (ii) is
nominated for election to
the Board of
Directors by a majority of the Board which is comprised of
directors who were, at the time of such nomination, Continuing
Directors.
(e)
“Committee” or “Compensation Committee”
shall mean the Compensation Committee of the Board of Directors of
the Corporation.
(f)
“Disability” shall mean that the Participant, as a
result of incapacity due to physical or mental illness, becomes
eligible for benefits under the long-term disability plan or policy
of the Corporation or a subsidiary in which the Participant is
eligible to participate.
(g)
“Fair Market Value” shall mean, with respect to any
security, the closing price of the 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.
(h)
“Final Cash Performance Units” shall mean the number of
Total Earned Performance Units attributable to Performance Measures
the payment of which are to be made in cash as specified in the
Award Letter.
(i)
“Final Stock Performance Units” shall mean the number
of Total Earned Performance Units attributable to Performance
Measures the payment of which are to be made in shares of L-3 stock
as specified in the Award Letter.
(j)
“Grant Date” shall mean the “Grant Date”
listed in the Award Letter.
(k)
“Participant” shall mean the “Participant”
listed in the Award Letter.
(l)
“Performance Measures” shall mean the performance
measures set forth in the Award Letter.
(m)
“Performance Period” shall mean the “Performance
Period” set forth in the Award Letter, subject to adjustment
in accordance with Section 5 hereof.
(n)
“Performance Units” shall mean the number of
performance units equal to the Total Target Performance Units or,
when finally determined in accordance with this Agreement, the
Total Earned Performance Units.
(o)
“Retirement” shall mean that the Participant
(A) terminates employment with the Corporation and its
subsidiaries other than for Cause (and is not subject to
termination for Cause at the time of such termination), (B) is
available for consultation with the Corporation or its subsidiaries
at the reasonable request of the Corporation or its subsidiaries
and (C) terminates employment on or after attaining age 65 and
completing at least five years of service in the aggregate with the
Corporation and its subsidiaries (which service must be continuous
through the date of termination except for a single break in
service that does not exceed one year in length).
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(p)
“Segmented Target Performance Units” shall mean, with
respect to each Performance Measure, the number of “Target
Units” set forth in the Award Letter for the Performance
Measure, subject to adjustment pursuant to the terms
hereof.
(q)
“Segmented Earned Performance Units” shall mean, with
respect to each Performance Measure, the number of Segmented Target
Performance Units multiplied by the Applicable Unit
Multiplier.
(r)
“Subsidiary” or “subsidiary” shall mean, 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.
(s)
“Total Earned Performance Units” shall mean the sum the
Segmented Earned Performance Units for all Performance
Measures.
(t)
“Total Target Performance Units” shall mean the sum of
the Segmented Target Performance Units for all Performance
Measures.
2.
Target and Final Awards . Subject to the terms,
conditions and restrictions set forth in the Plan and this
Agreement, the Corporation hereby grants the Performance Units to
the Participant. The initial amount of Performance Units granted
hereunder represent a target award to the Participant in respect of
the Performance Measures for the Performance Period. The final
award to the Participant, and the amount of any payments to the
Participant hereunder, shall be based on the actual level of
achievement of the Performance Measures for the Performance Period
subject to the terms of this Agreement.
3.
Performance Unit Account . The Corporation shall
cause an account (the “Account”) to be established and
maintained on the books of the Corporation to record the number of
Performance Units credited to the Participant under the terms of
this Agreement. The Participant’s interest in the Account
shall be that of a general, unsecured creditor of the Corporation.
For the avoidance of doubt, neither this Agreement nor the grant of
Performance Units hereunder shall create or be construed to create
a trust or separate fund of any kind or a fiduciary relationship
between the Corporation and a Participant or any other
person.
4.
Restrictions on Transfer During Performance Period .
The Performance Units shall not be sold, assigned, transferred,
pledged, hypothecated, loaned, or otherwise disposed of, and during
the Participant’s lifetime, the Participant’s rights
with respect to the Performance Units may be exercised only by such
Participant or by his or her guardian or legal representative,
except that the Performance Units may be transferred in the event
of death: (a) to any beneficiar(ies) previously designated in
writing by the Participant to the Corporate Secretary of the
Corporation or (b) otherwise by will or by the laws of descent
and distribution. Any sale, assignment, transfer, pledge,
hypothecation, loan or other disposition other than in accordance
with this Section 4 shall be null and void ab
initio.
5.
Change in Control During Performance Period . In the
event of a Change in Control, (a) the Segmented Target
Performance Units for each Performance Measure shall automatically
be adjusted on a pro-rata basis to reflect the number of completed
months out of the entire Performance Period as of the date of the
Change in Control and (b) the Performance Period shall
automatically be deemed to have terminated and the provisions of
Section 10 hereof shall become applicable.
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6.
Termination of Employment During Performance Period
.
(a) If
the Participant’s employment with the Corporation and its
subsidiaries is terminated during the Performance Period:
(1) by reason of death or Disability, (2) by Retirement
at least one year after the first day of the Performance Period, or
(3) by the Company without Cause (each, a “Qualified
Termination”), the Segmented Target Performance Units for
each Performance Measure shall automatically be adjusted on a
pro-rata basis to reflect the number of completed months out of the
entire Performance Period as of the date of the termination of
employment. Thereafter, the Participant (or his/her transferee(s)
under Section 4 as the case may be) shall be entitled to any
amounts payable under Section 10 following the termination of
the Performance Period in accordance with the terms
hereof.
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