L-3 COMMUNICATIONS HOLDINGS, INC.
1999 LONG TERM PERFORMANCE PLAN
NONQUALIFIED STOCK OPTION AGREEMENT
(Version 0001)
THIS AGREEMENT, effective as of the Grant Date (as defined
below), is between L-3 Communications Holdings, Inc., a Delaware corporation
(the "Company"), and the Optionee (as defined below).
WHEREAS, the Company has adopted the 1999 Long Term Performance
Plan of L-3 Communications Holdings, Inc. (the "Plan") in order to provide
additional incentive to selected officers and employees of the Company and its
subsidiaries; and
WHEREAS, the Committee responsible for administration of the
Plan has determined to grant an option to the Optionee as provided herein and
the Company and the Optionee hereby wish to memorialize the terms and conditions
applicable to the Option (as defined below);
WHEREAS, the following terms shall have the following meanings
for purposes of this Option Agreement:
"Award Letter" shall mean the letter to the Optionee attached hereto as
Exhibit A;
"Common Stock" means the Company's Common Stock, par value $0.01 per share;
"Exercise Price" shall mean the "Xxxxx Xxxxx" listed in the Award Letter;
"Grant Date" shall mean the "Grant Date" listed in the Award Letter;
"Option Agreement" or this "Agreement" shall mean this agreement including
(unless the context otherwise requires) the Award Letter.
"Optionee" shall mean the "Plan Participant" listed in the Award Letter;
and
"Shares" shall mean that number of shares of Common Stock listed in the
Award Letter as "Awards Granted."
NOW, THEREFORE, the parties hereto agree as follows:
1. Grant of Option.
1.1 Effective as of the Grant Date, for good and
valuable consideration, the Company hereby irrevocably grants to the Optionee
the right and option (the "Option") to purchase all or any part of the Shares,
subject to, and in accordance with, the terms and conditions set forth in this
Option Agreement.
1.2 The Option is not intended to qualify as an
Incentive Stock Option within the meaning of Section 422 of the Code.
1.3 This Option Agreement shall be construed in
accordance and consistent with, and subject to, the terms of the Plan (the
provisions of which are incorporated hereby by reference); and, except as
otherwise expressly set forth herein, the capitalized terms used in this Option
Agreement shall have the same definitions as set forth in the Plan. In the event
of any conflict between one or more of this Option Agreement, the Award Letter
and the Plan, the Plan shall govern this Option Agreement and the Award Letter,
and the Option Agreement (to the extent not in conflict with the Plan) shall
govern the Award Letter.
2. Exercise Price.
The price at which the Optionee shall be entitled to purchase
the Shares upon the exercise of the Option shall be the Exercise Price per
share, subject to adjustment as provided in Section 9.
3. Duration of Option.
The Option shall be exercisable to the extent and in the
manner provided herein for a period of ten (10) years from the Grant Date (the
"Exercise Term"); provided, however, that the Option may be earlier terminated
as provided in Section 6 hereof.
4. Exercisability of Option.
Unless otherwise provided in this Option Agreement or the
Plan, the Option shall entitle the Optionee to purchase, in whole at any time or
in part from time to time, one-third (1/3rd) of the total number of shares
covered by the Option on the first anniversary of the Grant Date, an additional
one-third (1/3rd) of the total number of Shares covered by the Option on the
second anniversary of the Grant Date and the final one-third (1/3rd) of the
total number of Shares covered by the Option on the expiration of the third
anniversary of the Grant Date. Each such right of purchase shall be cumulative
and shall continue, unless sooner exercised or terminated as herein provided,
during the remaining period of the Exercise Term. Any fractional number of
shares resulting from the application of the foregoing percentages shall be
rounded to the next higher whole number of Shares (not to exceed the total
number of Shares granted as provided in Section 1.1).
5. Manner of Exercise and Payment.
5.1 Subject to the terms and conditions of this Option
Agreement and the Plan, the Option may be exercised by delivery of written
notice to the Secretary of the Company (or his or her designee), at its
principal executive office. Such notice shall state that the Optionee or other
authorized person is electing to exercise the Option and the number of Shares in
respect of which the Option is being exercised and shall be signed by the person
or persons exercising the Option. In the event the Company has designated an
Award Administrator (as defined below), the Option may also be exercised by
giving notice (including through electronic means) in accordance with the
procedures established from time to time by the Award Administrator. Any
exercisable portion of the Option or the entire Option, if then wholly
exercisable, may be exercised in whole or in part, provided that partial
exercise shall be for whole shares of Common Stock only. If requested by the
Committee, such person or persons shall (i) deliver this Agreement (including
the Award Letter) to the Secretary of the Company who shall endorse thereon a
notation of such exercise and (ii) provide satisfactory proof as to the right of
such person or persons to exercise the Option.
5.2 The notice of exercise described in Section 5.1 shall be
accompanied by either (i) payment of the full purchase price for the Shares in
respect of which the Option is being exercised and of all applicable Withholding
Taxes (as defined in Section 11) pursuant to Section 11 hereof, in cash (or,
subject to the discretion of the Committee, by check, by withholding or
delivering a portion of the Shares otherwise issuable, or by any combination of
cash, check and/or withholding or delivery of Shares) or (ii) instructions from
the Optionee to the Company directing the Company to deliver a specified number
of Shares directly to a designated broker or dealer pursuant to a cashless
exercise election, in which case the Company must receive in cash (or, subject
to the Plan and to the discretion of the Committee, by check, by withholding or
delivering a portion of the Shares otherwise issuable, or by any combination of
cash, check and/or withholding or delivering of Shares), prior to the issuance
of the Shares in respect of which the
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Option is being exercised, the full purchase price for the Shares in respect of
which the Option is being exercised and all applicable Withholding Taxes
pursuant to Section 11 hereof. The value of any Shares withheld or delivered in
satisfaction of the purchase price for the Shares in respect of which the Option
is being exercised and/or Withholding Taxes shall be determined by reference to
the Fair Market Value of such Shares as of the date of such withholding or
delivery.
5.3 Upon receipt of the notice of exercise and any payment
or other documentation as may be necessary pursuant to Sections 5.1 and 5.2
relating to the Shares in respect of which the Option is being exercised, the
Company shall, subject to the Plan and this Option Agreement, take such action
as may be necessary to effect the transfer to the Optionee of the number of
Shares as to which such exercise was effective.
5.4 The Optionee shall not be deemed to be the holder of, or
to have any of the rights and privileges of a stockholder of the Company in
respect of, Shares purchased upon exercise of the Option until (i) the Option
shall have been exercised pursuant to the terms of this Option Agreement and the
Optionee shall have paid the full purchase price for the number of Shares in
respect of which the Option was exercised and any applicable Withholding Taxes
and (ii) the Company shall have issued the Shares in connection with such
exercise.
6. Termination of Employment.
6.1 If, prior to the date of the initial vesting of the
Option pursuant to Section 4 hereof (the "Initial Vesting Date"), the
Optionee's employment with the Company and its subsidiaries shall be terminated
for any reason, other than death or permanent disability (as herein defined),
the Optionee's right to exercise the Option shall terminate as of the effective
date of termination (the "Termination Date") and all rights hereunder shall
cease (unless otherwise provided for by the Committee in accordance with the
Plan).For purposes hereof, "permanent disability" means incapacity due to
physical or mental illness as a result of which the Optionee became eligible
for benefits under the applicable long-term disability plan or policy of the
Company or the applicable subsidiary of the Company which is in effect at the
time Optionee becomes incapacitated.
6.2 If the Optionee's employment with the Company and its
subsidiaries shall be terminated by reason of death or permanent disability, the
Option shall become immediately fully exercisable as to 100% of the Shares
subject to the Option, and the Optionee or the executor or administrator of the
estate of the Optionee or the person or persons to whom the Option shall have
been validly transferred by the executor or the administrator pursuant to will
or the laws of descent or distribution shall have the right, within one year
from the date of the Optionee's death or permanent disability, to exercise the
Option, subject to any other limitation contained herein on the exercise of the
Option in effect at the date of exercise.
6.3 If, on or after the Initial Vesting Date, the Optionee's
employment with the Company and its subsidiaries shall be terminated for any
reason other than for Cause or death or permanent disability, the Optionee shall
have the right within three months after the Termination Date to exercise the
Option to the extent that installments thereof shall have been or become
exercisable at the Termination Date and shall not have been exercised, subject
to any other limitation contained herein on the exercise of the Option in effect
at the date of exercise, and (unless otherwise provided for by the Committee in
accordance with the Plan) the Optionee's right to exercise any installments of
the Option that were not exercisable at the Termination Date (if any) shall
terminate as of the Termination Date. If the Optionee's employment is terminated
for Cause, the Option shall terminate as of the Termination Date, whether or not
exercisable. For purposes hereof, "Cause" means the Optionee's (i) intentional
failure to perform reasonably assigned duties, (ii) dishonesty or willful
misconduct in the performance of duties, (iii) engaging in a transaction in
connection with the performance of duties to the Company or its subsidiaries
which transaction is adverse to the interests of the Company or its subsidiaries
and is engaged in for personal profit or (iv) willful violation of any law, rule
or regulation in connection with the performance of duties (other than traffic
violations or similar offenses).
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6.4 If the Optionee shall die within the three-month period
referred to in 6.3 above, the Optionee or the executor or administrator of the
estate of the Optionee or the person or persons to whom the Option shall have
been validly transferred by the executor or administrator pursuant to will or
the laws of descent and distribution shall have the right, within one year from
the date of the Optionee's death, to exercise the Option to the extent that the
Option was exercisable at the date of death, subject to any other limitation
contained herein on the exercise of the Option in effect at the date of
exercise.
6.5 Whether employment has been terminated and the
determination of the Termination Date for the purposes of this Agreement shall
be determined by the Committee or (with respect to any employee other than an
"Executive Officer" as defined under the Plan) its designee (who, at the date of
this Agreement, shall be the Company's Vice President of Human Resources), whose
good faith determination shall be final, binding and conclusive; provided, that
such designee may not make any such determination with respect to his or her own
employment.
7. Nontransferability.
The Option shall not be transferable other than by will or by
the laws of descent and distribution, and during the lifetime of the Optionee,
the Option shall be exercisable only by the Optionee, except that the Option may
be transferred to and exercised by a family member or family members of the
Optionee, or transferred to an irrevocable trust or trusts established for the
benefit of the Optionee's family members during this Optionee's lifetime. After
the death of the Optionee, any exercisable portion of the Option may, prior to
the time when the Option becomes unexercisable under Section 6.4, be exercised
by the Optionee's personal representative or by any person empowered to do so
under the Optionee's will or under the then applicable laws of descent and
distribution.
8. No Right to Continued Employment.
Nothing in this Option Agreement or the Plan shall be
interpreted or construed to confer upon the Optionee any right to continue
employment by the Company or any of its subsidiaries, nor shall this Agreement
or the Plan interfere in any way with the right of the Company or any of its
subsidiaries to terminate the Optionee's employment at any time for any reason
whatsoever, whether or not with Cause.
9. Adjustments.
In the event that the outstanding shares of the Common Stock
are, from time to time, changed into or exchanged for a different number or kind
of shares of the capital stock of the Company or other securities of the Company
by reason of a merger, consolidation, recapitalization, reclassification, stock
split, stock dividend, combination of capital stock, or other similar increase
or decrease in the number of shares outstanding without receiving compensation
therefor, the Committee shall, in accordance with the terms of the Plan, make an
appropriate and equitable adjustment in the number and kind of Shares or other
consideration as to which such Option, or portions thereof then unexercised,
shall be exercisable and the exercise price therefor. Any such adjustment made
by the Committee shall be final, binding and conclusive upon the Optionee, the
Company and all other interested persons. Any such adjustment may provide for
the elimination of any fractional share which might otherwise become subject to
the Option. This paragraph shall also apply with respect to any extraordinary
dividend or other extraordinary distribution in respect of the Common Stock
(whether in the form of cash or other property).
10. Effect of a Change in CONTROL.
10.1 Notwithstanding anything contained in the Plan or this
Agreement to the contrary, in the event of a Change in Control, (a) the Option
becomes immediately and fully exercisable as to 100% of the Shares subject to
the Option, and (b) upon termination of an Optionee's employment with the
Company, following a Change in Control, the Option shall remain exercisable
until one year
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after termination, but in no event beyond the Exercise Term. The Company
reserves the right to change or modify in any way the definition of Change of
Control set forth in this Option Agreement and any such change or modification
shall be binding on the Optionee.
10.2 For the purposes of this Option Agreement, "Change in
Control shall mean the first to occur of the following:
a. The acquisition by any person or group (including a
group within the meaning of Section 13(d)(3) or
14(d)(2) of the Exchange Act), other than the Company
or any of its subsidiaries, of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 51% or more of the combined voting
power of the Company's then outstanding voting
securities, other than by any employee benefit plan
maintained by the Company;
b. The sale of all or substantially all the assets of the
Company and its subsidiaries taken as a whole; or
c. 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 Company 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.
11. Withholding of Taxes.
The Company shall have the right to deduct from any
distribution of cash to the Optionee an amount equal to the federal, state and
local income taxes and other amounts as may be required by law to be withheld
(the "Withholding Taxes") with respect to the Option. The Optionee shall pay the
Withholding Taxes to the Company in cash (or, subject to the Plan and to the
discretion of the Committee, by check, by delivery of Shares, by withholding of
Shares pursuant to the Tax Election (as defined below) or by any combination of
cash, check and/or delivery or withholding of Shares) prior to the issuance of
the Shares. In connection with the satisfaction of the Withholding Taxes, the
Optionee may make a written election (the "Tax Election"), which may be accepted
or rejected in the discretion of the Committee, to have withheld a portion of
the Shares issuable to him or her upon exercise of the Option.
12. Optionee bound by the Plan.
The Optionee hereby acknowledges receipt of a copy of the Plan
and agrees to be bound by all the terms and provisions thereof.
13. Modification of Agreement.
This Agreement may be modified, amended, suspended or
terminated, and any terms or conditions may be waived, but, subject to
paragraphs 6.5 and 10.1 and to the terms and conditions of the Plan, only by a
written instrument executed by the parties hereto.
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14. Severability.
Should any provision of this Agreement be held by a court of
competent jurisdiction to be unenforceable or invalid for any reason, the
remaining provisions of this Agreement shall not be affected by such holding and
shall continue in full force in accordance with their terms.
15. Governing Law.
The validity, interpretation, construction and performance of
this Agreement shall be governed by the laws of the State of New York without
giving effect to the conflicts of laws principles thereof.
16. Successors in Interest.
This Agreement shall inure to the benefit of and be binding
upon any successor to the Company. This Agreement shall inure to the benefit of
the Optionee or the Optionee's legal representatives. All obligations imposed
upon the Optionee and all rights granted to the Company under this Agreement
shall be final, binding and conclusive upon the Optionee's heirs, executors,
administrators and successors.
17. Administration.
The Committee shall have the power to interpret the Plan and
this Option Agreement and to adopt such rules for the administration,
interpretation and application of the Plan as are consistent therewith and to
interpret or revoke any such rules. All actions taken and all interpretations
and determinations made by the Committee shall be final and binding upon the
Optionee, the Company and all other interested persons. No member of the
Committee shall be personally liable for any action determination or
interpretation made in good faith with respect to the Plan or the Options. In
its absolute discretion, the Board of Directors may at any time and from time to
time exercise any and all rights and duties of the Committee under the Plan and
this Option Agreement.
18. Resolution of Disputes.
Any dispute or disagreement which may arise under, or as a
result of, or in any way related to, the interpretation, construction or
application of this Agreement shall be determined by the Committee. Any
determination made hereunder shall be final, binding and conclusive on the
Optionee and Company for all purposes.
19. Data Privacy Consent.
As a condition of the grant of the Option, the Optionee hereby
consents to the collection, use and transfer of personal data as described in
this paragraph. The Optionee understands that the Company and its subsidiaries
hold certain personal information about the Optionee, including name, home
address and telephone number, date of birth, social security number, salary,
nationality, job title, ownership interests or directorships held in the Company
or its subsidiaries, and details of all stock options or other equity awards or
other entitlements to shares of common stock awarded, cancelled, exercised,
vested or unvested ("Data"). The Optionee further understands that the Company
and its subsidiaries will transfer Data among themselves as necessary for the
purposes of implementation, administration and management of the Optionee's
participation in the Plan, and that the Company and any of its subsidiaries may
each further transfer Data to any third parties assisting the Company in the
implementation, administration and management of the Plan. The Optionee
understands that these recipients may be located in the European Economic Area
or elsewhere, such as the United States. The Optionee hereby authorizes them to
receive, possess, use, retain and transfer such Data as may be required for the
administration of the Plan or the subsequent holding of shares of common stock
on the
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Optionee's behalf, in electronic or other form, for the purposes of
implementing, administering and managing the Optionee's participation in the
Plan, including any requisite transfer to a broker or other third party with
whom the Optionee may elect to deposit any shares of common stock acquired under
the Plan. The Optionee may, at any time, view such Data or require any necessary
amendments to it.
20. Limitation on Rights; No Right to Future Grants; Extraordinary Item of
Compensation.
By accepting this Agreement and the grant of the Options
evidenced hereby, the Optionee expressly acknowledges that (a) the Plan is
discretionary in nature and may be suspended or terminated by the Company at any
time; (b) the grant of Options is a one-time benefit that does not create any
contractual or other right to receive future grants of options, or benefits in
lieu of options; (c) all determinations with respect to future options grants,
if any, including the grant date, the number of Shares granted, the exercise
price and the exercise date or dates, will be at the sole discretion of the
Company; (d) the Optionee's participation in the Plan is voluntary; (e) the
value of the Options is an extraordinary item of compensation that is outside
the scope of the Optionee's employment contract, if any, and nothing can or must
automatically be inferred from such employment contract or its consequences; (f)
Options are not part of normal or expected compensation for any purpose and are
not to be used for calculating any severance, resignation, redundancy, end of
service payments, bonuses, long-service awards, pension or retirement benefits
or similar payments, and the Optionee waives any claim on such basis; and (g)
the future value of the underlying Shares is unknown and cannot be predicted
with certainty. In addition, the Optionee understands, acknowledges and agrees
that the Optionee will have no rights to compensation or damages related to
option proceeds in consequence of the termination of the Optionee's employment
for any reason whatsoever and whether or not in breach of contract.
21. Subsidiary.
As used herein, the term "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.
22. Award Administrator.
The Company may from time to time to designate a third party
(an "Award Administrator") to assist the Company in the implementation,
administration and management of the Plan and any Options granted thereunder,
including by sending Award Letters on behalf of the Company to Optionees, and by
facilitating through electronic means acceptance of Option Agreements by
Optionees and Option exercises by Optionees.
23. Book Entry Delivery of Shares.
Whenever reference in this Agreement is made to the issuance
or delivery of certificates representing one or more Shares, the Company may
elect to issue or deliver such Shares in book entry form in lieu of
certificates.
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24. Acceptance.
This Agreement shall not be enforceable until it has been
executed by the Optionee. In the event the Company has designated an Award
Administrator, the acceptance (including through electronic means) of the Option
contemplated by this Option Agreement in accordance with the procedures
established from time to time by the Award Administrator shall be deemed to
constitute the Optionee's acknowledgment and agreement to the terms and
conditions of this Option Agreement and shall have the same legal effect in all
respects of the Optionee having executed this Option Agreement by hand.
By: L-3 COMMUNICATIONS HOLDINGS, INC.
/s/ Xxxxxxx X. Xxxxxxxxx
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Xxxxxxx X. Xxxxxxxxx
Interim Chief Executive Officer, Chief Financial Officer
and Chief Ethics Officer
/s/ Xxxxxxxxxxx X. Xxxxxxx
----------------------------------------
Xxxxxxxxxxx X. Xxxxxxx
Senior Vice President, General Counsel and Secretary
Acknowledged and Agreed
as of the date first written above:
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Optionee Signature
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