Exhibit 10.9
L-3 COMMUNICATIONS HOLDING INC.
1997 OPTION PLAN FOR KEY EMPLOYEES
NONQUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT, effective as of the 1st day of July, 1997
(the Grant Date"), between L-3 Communications Holdings, Inc., a Delaware
corporation (the "Company"), and (the "Optionee").
WHEREAS, the Company has adopted the 1997 Option Plan for
Key Employees 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);
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 an
aggregate of shares (the "Shares") of the Company's Class A Common
Stock, par value $0.01 per share, 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.
2. Exercise Price.
The price at which the Optionee shall be entitled to
purchase the Shares upon the exercise of the Option shall be $6.47 per Share
subject to adjustment as provided in Section 9, without commission or other
charge.
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, 20% of the total number of shares covered by the
Option on the business day following the first anniversary of the Grant Date,
an additional 50% of the total number of Shares covered by the Option on the
second anniversary of the Grant Date and the final 30% of the total number of
Shares covered by the Option after the expiration of the third anniversary of
the Grant Date; provided that, if the initial public offering (the "IPO") of
the Company's stock pursuant to an effective registration statement (other
than a registration statement on S-8 or any similar or successor form) filed
under the Securities Act of 1933 (the "Securities Act") shall be completed
prior to the second anniversary of the Grant Date, 15% of the total number of
shares covered by the Option (which would otherwise become excercisable on the
second anniversary of the Grant Date) will become excercisable on the later of
(i) the date of completion of the IPO and (ii) the business day following the
first anniversary of the Grant Date, and the shares that become excercisable
on the second anniversary of the Grant Date shall be reduced to 35% of the
total number of shares covered by the Option. 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, 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. 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 Class A Common
Stock only. If requested by the Committee, such person or persons shall (i)
deliver this Agreement 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 (x) either (i) payment of the full purchase price for the
Shares in respect of which the Option is being exercised, in cash, by check or
a combination thereof or (ii) subject to the consent of the Committee,
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 which is made in accordance with such
requirements and procedures as are acceptable to the Committee in its sole
discretion and (y) full payment of all applicable Withholding Taxes (as
defined in Section 11) pursuant to Section 11 hereof.
5.3 Upon receipt of the notice of exercise and any payment
or other documentation as may be necessary pursuant to Section 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.
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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 certificates representing such
Shares to the Optionee.
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 shall be terminated for any reason, 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.
6.2 If, on or after the Initial Vesting Date, the Optionee's
employment with the Company shall be terminated for any reason other than
death, permanent disability or for Cause, 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 accrued 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. 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 which transaction is adverse to the interests of the
Company 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).
6.3 If the Optionee shall die within the three-month period
referred to in 6.2 above, or shall die or become permanently disabled while in
the employ of the Company on or after the Initial Vesting Date, 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 or permanent disability, 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.
6.4 Whether employment has been terminated and the
determination of the Termination Date for the purposes of this Agreement shall
be determined by the Committee whose good faith determination shall be final,
binding and conclusive. If the IPO is not completed before the Initial Vesting
Date, the Company reserves the right, prior to the completion of the IPO, to
modify the provisions governing the rights of the Optionee upon termination of
employment to provide the Company with an option to repurchase any Shares
purchased pursuant to this Option Agreement and to terminate any vested
portion of the Option for a cash payment equal to the fair market value of
such Shares or the Shares represented by the vested portion of the Option
(less, for the Shares represented by the vested portion of Option, the
aggregate exercise price for such Shares) and such modification shall be
binding on the Optionee.
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7. Nontransferability.
The Option shall not be transferable other than by will or
by the laws of descent and distribution or by such other means explicitly
permitted pursuant to Rule 16b-3 under the Exchange Act. During the lifetime
of the Optionee, the Option shall be exercisable only by the Optionee. After
the death of the Optionee, any exercisable portion of the Option may, prior to
the time when the Option becomes unexercisable under Section 6.3, 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 Class A
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 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.
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 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 after termination, but in no event beyond the Exercise Term. In the case
of a Change in Control which is intended to be treated as a "pooling of
interests" under generally accepted accounting principals (a "Pooling
Transaction"), the Board of Directors may take such actions which it
determines after consultation with its advisors that are reasonably necessary
in order to assure that the Pooling Transaction will qualify as such. 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.
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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
(i) pursuant to a transfer by Xxxxxx Brothers Capital
Partners III, L.P. to any of its affiliates or (ii) by
any employee benefit plan maintained by the Company;
b. The sale of all or substantially all the assets of the
Company or its subsidiaries; 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 July 1, 1997, 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 prior to the issuance of the
Shares. In 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. For withholding tax
purposes, the Shares should be valued on the date the withholding obligation
is incurred, provided that to the extent applicable, such election is made in
accordance with Rule 16b-3(e) of the Act.
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 6.4 and 10.1, only by a written instrument executed by the parties
hereto.
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.
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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 such 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. Optionee Representations.
In connection with any exercise of the Option and
corresponding purchase of the Shares occurring prior to the completion of the
IPO, the Optionee represents and warrants to the Company as of the time of
exercise of the Option, as follows:
(a) The Optionee is aware of the Company's business affairs
and financial condition and has acquired sufficient information about the
Company to reach an informed and knowledgeable decision to acquire the Shares
for the investment for the Optionee's own account only and not with a view to,
or for resale in connection with, any `distribution" thereof within the
meaning of the Securities Act.
(b) The Optionee acknowledges and understands that the
Shares issued upon exercise of the Option constitute "restricted securities"
under the Securities Act and must be held indefinitely unless they are
subsequently registered under the Securities Act or an exemption from such
registration is available. The Optionee further acknowledges and understands
that the Company is under no obligation to register the Shares. The Optionee
understands that (x) the transfer of the Shares will be restricted pursuant to
the terms of paragraph 20 of this Option Agreement and (y) the certificate
evidencing the Shares will be imprinted with a legend which prohibits the
transfer of the Shares without complying with the transfer restrictions in
this Option Agreement and unless the Shares are registered or such
registration is not required in the opinion of counsel satisfactory to the
Company.
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20. RESTRICTION ON SALE OF SHARES.
PRIOR TO COMPLETION OF THE IPO, THE OPTIONEE, BY ACCEPTING
THE OPTION, AGREES NOT TO OFFER, PLEDGE, SELL OR CONTRACT TO SELL ANY SHARES
PURCHASED PURSUANT TO THIS OPTION AGREEMENT WITHOUT FIRST OFFERING SUCH SHARES
TO THE COMPANY, WHICH SHALL BE ENTITLED TO PURCHASE SUCH SHARES AT THEIR THEN
FAIR MARKET VALUE AS DETERMINED IN GOOD FAITH BY THE COMMITTEE OR THE BOARD OF
DIRECTORS. DURING THE PERIOD OF 180 DAYS COMMENCING ON THE DATE OF THE
COMPLETION OF THE IPO, THE OPTIONEE, BY ACCEPTING THE OPTION, AGREES NOT TO
OFFER, PLEDGE, SELL OR CONTRACT TO SELL ANY SHARES PURCHASED PURSUANT TO THE
OPTION AGREEMENT WITHOUT THE PRIOR APPROVAL OF THE LEAD REPRESENTATIVE OF THE
UNITED STATES UNDERWRITERS OF THE IPO.
By: /s/ Xxxxxxxxxxx X. Xxxxxxx
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Xxxxxxxxxxx X. Xxxxxxx
Vice President, Secretary &
General Counsel
Attests: /s/ Xxxxxx Xxxxxx
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Assistant Secretary
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Employee Signature
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Employee Social Security Number
CURRENT EMPLOYEE ADDRESS
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