Exhibit 10.4

ENGILITY HOLDINGS, INC.

AMENDED AND RESTATED

2012 LONG TERM PERFORMANCE PLAN

TABLE OF CONTENTS

 

          PAGE  

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.      7   

SECTION 6.

   Award Agreements.      9   

SECTION 7.

   Adjustments; Change in Control; Acquisitions.      11   

SECTION 8.

   Administration.      14   

SECTION 9.

   Amendment and Termination of this Plan.      16   

SECTION 10.

   Miscellaneous.      16   

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ENGILITY HOLDINGS, INC.

AMENDED AND RESTATED

2012 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.

“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), or the Board if the
Board takes an action in place of such Committee.

“Corporation” means Engility Holdings, Inc.

“Director” means a member of the Board of Directors of the Corporation.

“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

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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).

“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.

“First Quarter” shall mean the period of calendar days during a given
Performance Period that is equal to the lesser of (i) 25% of the full number of
calendar days falling within such Performance Period or (ii) 90 days.

“Insider” means any person who is subject to Section 16(b) of the Exchange Act.

“Minimum Ownership Stock” means any Award of shares of Stock of the Corporation
that are issued, in accordance with Section 4(a)(5), in lieu of cash
compensation in order to satisfy applicable stock ownership guidelines from time
to time in effect.

“Non-Employee Director” means a Director who is not an Employee.

“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 Goals” means one or more of the following criteria or any
combination thereof, as determined by the Committee: (i) consolidated income
before or after taxes (including income before interest, taxes, depreciation and
amortization); (ii) EBT, EBIT or EBITDA; (iii) operating income or operating
margin; (iv) net income; (v) net income or earnings per share of Stock;
(vi) book value per share of Stock; (vii) return on equity; (viii) expense
management (including without limitation, total general and

 

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administrative expense percentages); (ix) return on investment or on invested
capital; (x) improvements in capital structure; (xi) profitability of an
identifiable business unit or product; (xii) maintenance or improvement of
profit margins; (xiii) stock price; (xiv) market share; (xv) revenue or sales
(including, without limitation, net loans charged off, average finance
receivables and days sales outstanding); (xvi) costs (including, without
limitation, total general and administrative expense percentage); (xvii) cash
flow or net funds provided; (xviii) working capital; (xix) total debt
(including, without limitation, total debt as a multiple of EBIT or EBITDA),
(xx) orders and (xxi) total stockholder return. The foregoing criteria may
relate to the Corporation, one or more of its Subsidiaries, one or more of their
respective divisions or business units, or any combination of the foregoing, and
may be applied on an absolute basis and/or be relative to one or more peer group
companies or indices, or any combination thereof, and may be determined in
accordance with GAAP or a non-GAAP or adjusted GAAP basis, all as the Committee
shall determine.

“Performance Period” means, with respect to any Performance Goal, the time
period established by the Committee for the achievement of the performance
targets in respect thereof.

“Prior Directors Plan” means the Corporation’s 2012 Directors Stock Incentive
Plan.

“Restatement Effective Date” is defined in Section 10(c).

“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 (or portion thereof) 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 (or portion thereof) 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.

(b) 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.

 

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SECTION 3. Eligibility.

Any one or more Awards may be granted to any Employee, Director or any other
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 not be less than the Fair Market Value of
the Stock on the date that the Option is granted.

(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 not be 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 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 granted.

(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 not be less than the Fair Market Value of the underlying Stock on the date
the Stock Appreciation Right is granted.

(4) Restricted Stock. Restricted Stock is an Award of issued shares of Stock of
the Corporation (other than Minimum Ownership Stock) that are subject to
restrictions on transfer and/or such other restrictions on incidents of
ownership as the Committee may determine.

 

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(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, Minimum Ownership Stock, 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 applicable
to such Awards.

(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 may depend 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. Performance-Based Awards shall be subject to the requirements of clauses
(1) through (7) below, except that notwithstanding anything contained in this
Section 4(b) to the contrary, any Option or Stock Appreciation Right intended to
qualify as a Performance-Based Award shall not be subject to the requirements of
clauses (2), (4), (5) and (6) below (with such Awards hereinafter referred to as
a “Qualifying Option” or a “Qualifying Stock Appreciation Right”, respectively).
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 relative basis, one or more of the
Performance Goals. The Committee shall establish the Performance Goals and the
Performance Periods for which they must be satisfied in order for a Participant
to receive any portion of the Award. The specific performance target(s) with
respect to Performance Goal(s) must be established by the Committee no later
than the last day of the First Quarter of a given Performance Period (or such
other date as may be required or permitted under Section 162(m) of the Code) and
while the performance relating to the Performance Goal(s) remains substantially
uncertain. The Committee may establish different performance objectives for each
Performance Period, and may provide for multiple, overlapping Performance
Periods hereunder. The Committee may provide, at the time when performance
objectives are established with respect to a Performance Period (or at such
later date as may be permitted under Section 162(m) of the Code), for the
adjustment of such performance objectives as it deems equitable in recognition
of unusual or non-recurring events affecting the Corporation, changes in
applicable tax laws or accounting principles, or such other factors as the
Committee may determine to be appropriate, including, without limitation, the
gain or loss on disposal of a business segment.

 

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(3) Individual Limits. The maximum number of shares of Stock subject to all
Qualifying Options and Qualifying Stock Appreciation Rights granted during a
calendar year to any Employee shall be 700,000, and the maximum number of shares
of Stock or Share Units that are issuable under other Performance-Based Awards
granted during a calendar year to an Employee shall be 700,000, in each case
subject to adjustment as provided in Section 7. Awards that are cancelled during
the year shall be counted against these limits 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 or permanent
disability 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). 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.

(6) Adjustments for Material Changes. To the extent set forth by the Committee
in an Award Agreement or otherwise, in the event of (i) a change in corporate
capitalization, a corporate transaction or a complete or partial corporate
liquidation, (ii) any extraordinary gain or loss or other event that is treated
for accounting purposes as an extraordinary item under generally accepted
accounting principles, (iii) any material change in accounting policies or
practices affecting the Corporation and/or the Performance Goals or targets, or
(iv) any other unusual or nonrecurring event, 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.

 

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(c) Non-Employee Directors. The Board may provide that all or a portion of a
Non-Employee Director’s annual retainer, meeting fees and/or other awards or
compensation as determined by the Board, be payable (either automatically or at
the election of a Non-Employee Director) in the form of Non-Qualified Stock
Options, Stock Appreciation Rights, Restricted Stock or Other Share-Based
Awards, including unrestricted Stock and Share Units. The Board shall determine
the terms and conditions of any such Awards, including the terms and conditions
which shall apply upon a termination of the Non-Employee Director’s service as a
member of the Board, and shall have full power and authority in its discretion
to administer such Awards, subject to the terms of the Plan and applicable law.

SECTION 5. Shares of Stock and Share Units Available Under Plan.

(a) Aggregate Limits on Shares and Share Units. (i) Subject to adjustment as
provided in Section 5(b), Section 5(c) or Section 7, as of the Restatement
Effective Date the maximum number of shares of Stock that may be granted
pursuant to all Awards under the plan is 2,570,000, minus any shares of Stock
subject to (x) Awards granted after March 26, 2013 under the Plan and (y) awards
granted after March 26, 2013 under the Prior Directors Plan (the “Share
Reserve”); and (ii) the maximum number of shares of Stock that may be issued
pursuant to all Awards of Incentive Stock Options is 2,570,000.

(b) Share Usage for Full Value Awards. Solely for purposes of calculating the
number of shares of Stock available for Award grants pursuant to
Section 5(a)(i), each share of Stock subject to Awards (or awards under the
Prior Directors Plan) granted after March 26, 2013 (other than Awards of Options
and Stock Appreciation Rights, which shall continue to be counted as one
(1) share) shall be counted as one and sixty eight one-hundredths (1.68) shares.

(c) Addbacks of Shares and Share Units. After March 26, 2013, any unexercised,
unconverted or undistributed portion of any expired, cancelled, terminated or
forfeited Award, or award under the Prior Directors Plan, shall again be
available for grants of Awards under Section 5(a), whether or not the
Participant has received benefits of ownership (such as dividends or dividend
equivalents or voting rights) during the period in which the Participant’s
ownership was restricted or otherwise not vested. After March 26, 2013, to the
extent an Award, or an award under the Prior Directors Plan, is settled in cash
in lieu of issuing shares of Stock subject thereto, such shares shall be deemed
to constitute Share Units (and not shares of Stock subject to or issued pursuant
to an Award) for purposes of the limits set forth in Section 5(a) and any shares
subject to such an Award may again be available for grants of Awards under the
Plan. In the event that after March 26, 2013, withholding tax liabilities
arising from an Award other than an Option or Stock Appreciation Right, or an
award other than an option or stock appreciation right under the Prior Plans,
are satisfied by the tendering of shares (either actually or by attestation) or
by the withholding of shares by the Corporation, the shares so tendered or
withheld shall again be available for grants of Awards under the Plan. The
foregoing provisions of this Section 5(c) shall be added back on the basis set
forth in Section 5(d) below. For the avoidance of doubt, after March 26, 2013,
the following shares of Stock shall not become available for Awards under the
Plan: (1) shares tendered by Participants or withheld by the Corporation as full
or partial payment to the Corporation upon exercise of Options or other Awards
granted under the Plan, or options or other awards under the Prior Directors
Plan; (2) shares of Stock reserved for issuance upon the grant of Stock
Appreciation Rights, to the extent the number of reserved shares exceeds

 

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the number of shares actually issued upon exercise of the Stock Appreciation
Rights under the Plan, or stock appreciation rights under the Prior Directors
Plan; (3) shares withheld by, or otherwise remitted to, the Corporation to
satisfy a Participant’s tax withholding obligations upon the exercise of Options
or Stock Appreciation Rights under the Plan, or options or stock appreciation
rights under the Prior Directors Plan; and (4) shares of Stock reacquired by the
Company on the open market or otherwise using cash proceeds from the exercise of
Options under the Plan or options granted under the Prior Directors Plan.

(d) Any shares of Stock that again become available for grant pursuant to
Section 5(c) after March 26, 2013 shall be added back as (i) one (1) share for
every one (1) share subject to Options or Stock Appreciation Rights granted
under the Plan or options or stock appreciation rights granted under the Prior
Directors Plan, and (ii) as 1.68 shares for every one (1) share subject to
Awards other than Options or Stock Appreciation Rights granted under the Plan or
awards other than options or stock appreciation rights granted under the Prior
Directors Plan.

(e) Treasury Shares; No Fractional Shares. The Stock which may be issued (which
term includes Stock reissued or otherwise delivered) pursuant to an Award under
this Plan may be treasury or authorized but unissued Stock or Stock acquired,
subsequently or in anticipation of a transaction under this Plan, in the open
market or in privately negotiated transactions to satisfy the requirements of
this Plan. No fractional shares shall be issued but fractional interests may be
accumulated and any such accumulated fractional interests shall be rounded down
to the nearest whole share.

(f) Consideration. The Stock issued under this Plan may be issued (subject to
Section 10(d)) for any lawful form of consideration, the value of which equals
the par value of the Stock or such greater or lesser value as the Committee,
consistent with Sections 10(d) and 4(a)(1), (2) and (3), may require.

(g) Purchase or Exercise Price; Withholding. The exercise or purchase price (if
any) of the Stock issuable pursuant to any Award and any withholding obligation
under applicable tax laws shall be paid at or prior to the time of the delivery
of such Stock in cash or, subject to the Committee’s express authorization and
the restrictions, conditions and procedures as the Committee may impose, any one
or combination of (i) cash, (ii) the delivery of shares of Stock, or (iii) a
reduction in the amount of Stock or other amounts otherwise issuable or payable
pursuant to such Award. In the case of a payment by the means described in
clause (ii) or (iii) above, the Stock to be so delivered or offset shall be
determined by reference to the Fair Market Value of the Stock on the date as of
which the payment or offset is made, and any shares of Stock so tendered or
withheld for taxes will be at the minimum statutory rate.

(h) Cashless Exercise. The Committee may also permit the exercise of the Award
and payment of any applicable withholding tax in respect of an Award by delivery
of written notice, subject to the Corporation’s receipt of a third party payment
in full in cash (or in such other form as permitted under Section 5(f)) for the
exercise price and the applicable withholding at or prior to the time of
issuance of Stock, in the manner and subject to the procedures as may be
established by the Committee.

 

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(i) Limitations on Director Grants. The maximum number of shares of Stock
subject to Awards granted during a calendar year to any Non-Employee Director,
excluding any cash fees deferred in the form of Restricted Stock or Other
Share-Based Awards during such calendar year, shall not exceed $400,000 in total
value (calculating the value of any such Awards based on the grant date fair
value of such Awards for financial reporting purposes).

SECTION 6. Award Agreements.

Each Award under this Plan shall be evidenced by an Award Agreement in a form
approved by the Committee setting forth the number of shares of Stock or Share
Units, as applicable, subject to the Award, and the price (if any) and term of
the Award and, in the case of Performance-Based Awards, the applicable
Performance Goals, if any. The Award Agreement shall also set forth (or
incorporate by reference) other material terms and conditions applicable to the
Award as determined by the Committee consistent with the limitations of this
Plan.

(a) Incorporated Provisions. Award Agreements shall be subject to the terms of
this Plan and shall be deemed to include the following terms:

(1) Transferability: Unless otherwise designated by the Committee, an Award
shall not be assignable or transferable, except by will or by the laws of
descent and distribution, and during the lifetime of a Participant the Award
shall be exercised only by such Participant or by his or her guardian or legal
representative; provided, that the Committee shall not have the authority to
provide for transfers for consideration to persons unrelated to the Participant.
An Award exercisable after the death of a Participant may be exercised by the
legatees, personal representatives or distributees of the Participant. The
designation of a Beneficiary hereunder shall not constitute a transfer
prohibited by the foregoing provisions.

(2) Rights as Stockholder: A Participant shall have no rights as a holder of
Stock with respect to any unissued securities covered by an Award until the date
the Participant becomes the holder of record of these securities. Except as
provided in Section 7, no adjustment or other provision shall be made for
dividends or other stockholder rights, except to the extent that the Award
Agreement provides for dividend equivalents or similar economic benefits.

(3) Withholding: The Participant shall be responsible for payment of any taxes
or similar charges required by law to be withheld from an Award or an amount
paid in satisfaction of an Award and these obligations shall be paid by the
Participant on or prior to the payment of the Award. In the case of an Award
payable in cash, the withholding obligation shall be satisfied by withholding
the applicable amount and paying the net amount in cash to the Participant. In
the case of an Award paid in shares of Stock, a Participant shall satisfy the
withholding obligation as provided in Section 5(g).

(4) Maximum Term of Awards. No Option or Stock Appreciation Right may be
exercised or converted to any extent or remain outstanding and unexercised,
unconverted or unvested more than ten years after the date such Option or Stock

 

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Appreciation Right was initially granted. The Committee may provide, at or after
grant, that the period of time over which an Option, other than an Incentive
Stock Option, or Stock Appreciation Right may be exercised shall be
automatically extended if on the scheduled expiration of such Award, the
Participant’s exercise of such Award would violate applicable securities law;
provided, however, that during the extended exercise period the Option or Stock
Appreciation Right may only be exercised to the extent such Award was
exercisable in accordance with its terms immediately prior to such scheduled
expiration date; provided further, however, that such extended exercise period
shall end not later than thirty (30) days after the exercise of such Option or
Stock Appreciation Right first would no longer violate such laws.

(b) Other Provisions. Award Agreements may include other terms and conditions as
the Committee shall approve, including but not limited to the following:

(1) Termination of Employment: A provision describing the treatment of an Award
in the event of the retirement, disability, death or other termination of a
Participant’s employment with or services to the Corporation, including any
provisions relating to the vesting, exercisability, forfeiture or cancellation
of the Award in these circumstances, subject, in the case of Performance-Based
Awards, to the requirements for “performance-based compensation” under Code
Section 162(m).

(2) Vesting; Effect of Termination; Change in Control: Any other terms
consistent with the terms of this Plan as are necessary and appropriate to
effect the Award to the Participant, including but not limited to the vesting
provisions, any requirements for continued employment, any other restrictions or
conditions (including performance requirements) of the Award, and the method by
which (consistent with Section 7) the restrictions or conditions lapse, and the
effect on the Award of a Change in Control. Unless otherwise provided by the
Committee in the applicable Award Agreement, (1) the minimum vesting period for
Awards of Restricted Stock shall be three years from the date of grant (or one
year in the case of Restricted Stock Awards that are Performance-Based Awards)
and (2) the vesting period of an Award of Restricted Stock may not be
accelerated to a date that is within such minimum vesting period except in the
event of the Participant’s death, permanent disability or retirement or in the
event of a Change in Control; provided, however, that the foregoing limitations
shall not apply to Awards to Non-Employee Directors (in their capacity as such).

(3) Replacement and Substitution: Any provisions permitting or requiring the
surrender of outstanding Awards or securities held by the Participant in whole
or in part in order to exercise or realize rights under or as a condition
precedent to other Awards, or in exchange for the grant of new or amended Awards
under similar or different terms; provided, that except in connection with an
adjustment contemplated by Section 7, no such provisions of an Award Agreement
shall permit a “Repricing” as defined in Section 8(d).

(4) Dividends and Dividend Equivalents: Any provisions providing for the payment
of dividends or dividend equivalents on unissued shares of Stock or unpaid Share
Units underlying an Award, on either a current or deferred or contingent basis,
and

 

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either in cash or in additional shares of Stock; provided, however, that except
under the circumstances set forth in Section 7 below, dividend equivalents may
not be paid with respect to Awards of Options or Stock Appreciation Rights, and
any dividend or dividend equivalent rights granted with respect to Other
Share-Based Awards, including performance awards and restricted stock units,
shall not be paid unless and until the underlying shares of Stock to which such
dividend or dividend equivalent rights relate vest.

(c) Contract Rights, Forms and Signatures. Any obligation of the Corporation to
any Participant with respect to an Award shall be based solely upon contractual
obligations created by this Plan and an Award Agreement. No Award shall be
enforceable until the Award Agreement has been signed on behalf of the
Corporation by an Executive Officer (other than the recipient) or his or her
delegate. By accepting receipt of the Award Agreement, a Participant shall be
deemed to have accepted and consented to the terms of this Plan and any action
taken in good faith under this Plan by and within the discretion of the
Committee, the Board of Directors or their delegates, including but not limited
to the incorporation of any applicable clawback policy adopted by the Board or
the Committee at any time. Unless the Award Agreement otherwise expressly
provides, there shall be no third party beneficiaries of the obligations of the
Corporation to the Participant under the Award Agreement.

SECTION 7. Adjustments; Change in Control; Acquisitions.

(a) Adjustments. If there shall occur any recapitalization, stock split
(including a stock split in the form of a stock dividend), reverse stock split,
merger, combination, consolidation, or other reorganization or any extraordinary
dividend or other extraordinary distribution in respect of the Stock (whether in
the form of cash, Stock or other property), or any split-up, spin-off,
extraordinary redemption, or exchange of outstanding Stock, or there shall occur
any other similar corporate transaction or event in respect of the Stock, or a
sale of substantially all the assets of the Corporation as an entirety, then the
Committee shall, in the manner and to the extent, if any, as it deems
appropriate and equitable to the Participants and consistent with the terms of
this Plan, and taking into consideration the effect of the event on the holders
of the Stock:

(1) proportionately adjust any or all of:

(A) the number and type of shares of Stock and Share Units which thereafter may
be made the subject of Awards (including the specific maximum limits and numbers
of shares of Stock or Share Units set forth elsewhere in this Plan),

(B) the number and type of shares of Stock, other property, Share Units or cash
subject to any or all outstanding Awards,

(C) the grant, purchase or exercise price, or conversion ratio of any or all
outstanding Awards, or of the Stock, other property or Share Units underlying
the Awards,

 

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(D) the securities, cash or other property deliverable upon exercise or
conversion of any or all outstanding Awards,

(E) subject to Section 4(b), the performance targets or standards appropriate to
any outstanding Performance-Based Awards, or

(F) any other terms as are affected by the event; and/or

(2) provide for:

(A) an appropriate and proportionate cash settlement or distribution, or

(B) the substitution or exchange of any or all outstanding Awards, or the cash,
securities or property deliverable on exercise, conversion or vesting of the
Awards.

The Committee shall act prior to an event described in this paragraph
(a) (including at the time of an Award by means of more specific provisions in
the Award Agreement) if deemed necessary or appropriate to permit the
Participant to realize the benefits intended to be conveyed by an Award in
respect of the Stock in the case of an event described in paragraph (a).

(b) Change in Control. The Committee may, in the Award Agreement, provide for
the effect of a Change in Control on an Award. Such provisions may include, but
are not limited to any one or more of the following with respect to any or all
Awards: (i) the specific consequences of a Change in Control on the Awards;
(ii) a reservation of the Committee’s right to determine in its discretion at
any time that there shall be full acceleration or no acceleration of benefits
under the Awards; (iii) that only certain or limited benefits under the Awards
shall be accelerated; (iv) that the Awards shall be accelerated for a limited
time only; or (v) that acceleration of the Awards shall be subject to additional
conditions precedent (such as a termination of employment following a Change in
Control).

In addition to any action required or authorized by the terms of an Award, the
Committee may take any other action it deems appropriate to ensure the equitable
treatment of Participants in the event of a Change in Control, including but not
limited to any one or more of the following with respect to any or all Awards:
(i) the acceleration or extension of time periods for purposes of exercising,
vesting in, or realizing gain from, the Awards; (ii) the waiver of conditions on
the Awards that were imposed for the benefit of the Corporation, (iii) provision
for the cash settlement of the Awards for their equivalent cash value (based
solely on the Fair Market Value of the Award), as determined by the Committee,
as of the date of the Change in Control; or (iv) such other modification or
adjustment to the Awards as the Committee deems appropriate to maintain and
protect the rights and interests of Participants upon or following the Change in
Control, including the cancellation of any Options or Stock Appreciation Rights
whose exercise price (or base price, as the case may be) is less than the Fair
Market Value of a share of Stock on the date of the Change in Control. The
Committee also may accord any Participant a right to refuse any acceleration of
exercisability, vesting or benefits, whether pursuant to the Award Agreement or
otherwise, in such circumstances as the Committee may approve.

 

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Notwithstanding the foregoing provisions of this Section 7(b) or any provision
in an Award Agreement to the contrary, if any Award to any Insider is
accelerated to a date that is less than six months after the date of the Award,
the Committee may prohibit a sale of the underlying Stock (other than a sale by
operation or law in exchange for or through conversion into other securities),
and the Corporation may impose legend and other restrictions on the Stock to
enforce this prohibition.

(c) Change in Control Definition. For purposes of this Plan, with respect to any
Award other than an Award issued pursuant to an Award Agreement that separately
defines the term “change in control,” a change in control shall include and be
deemed to occur upon the following events:

(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 under the Exchange Act) of a majority 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 of the assets of the Corporation or of
Engility Corporation or any successor thereto;

(3) The consummation of a merger, combination, consolidation, recapitalization,
or other reorganization of the Corporation with one or more other entities that
are not Subsidiaries if, as a result of the consummation of such transaction
less than 50 percent of the outstanding voting securities of the surviving or
resulting corporation shall immediately after the event be beneficially owned in
the aggregate by the stockholders of the Corporation immediately prior to the
event;

(4) The election, including the filling of vacancies, during any period of 24
months or less, of 50 percent or more, of the members of the Board, 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 on July 18, 2012, or (ii) is nominated for
election to the Board by a majority of the Board which is comprised of Directors
who were, at the time of such nomination, Continuing Directors; or

(5) In the Committee’s sole discretion on a case-by-case basis and solely with
respect to Awards granted to Employees of a Subsidiary of the Corporation, or of
a business unit or division of the Corporation or such Subsidiary, (i) the sale
of all or substantially all of the assets of such Subsidiary, business unit or
division or (ii) the sale (including without limitation by way of merger) of a
majority of the combined voting power of such Subsidiary’s then outstanding
voting securities.

Notwithstanding the foregoing, unless otherwise provided in the applicable Award
Agreement, with respect to Awards constituting a “deferral of compensation”
subject to Section 409A of the Code, a Change in Control shall mean a “change in
the ownership of the Company,” a “change

 

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in the effective control of the Company,” or a “change in the ownership of a
substantial portion of the assets of the Company” as such terms are defined in
Section 1.409A-3(i)(5) of the Treasury Regulations.

(d) Business Acquisitions. Awards may be granted under this Plan on the terms
and conditions as the Committee considers appropriate, which may differ from
those otherwise required by this Plan to the extent necessary to reflect a
substitution for or assumption of stock incentive awards held by employees of
other entities who become employees of the Corporation or a Subsidiary as the
result of a merger of the employing entity with, or the acquisition of the
property or stock of the employing entity by, the Corporation or a Subsidiary
(an “Acquisition”), directly or indirectly (such awards, “Substitute Awards”).
Substitute Awards shall not be counted against the limitations set forth in
Section 5(a) nor be added back pursuant to Section 5(c), provided that
Substitute Awards issued in connection with the assumption of, or in
substitution for, Incentive Stock Options shall be counted against the limits
set forth in Section 5(a)(ii) of the Plan. Without limiting the foregoing, the
Corporation has assumed under the Plan (and will or has issued Stock under the
Plan in respect of) certain equity-based Awards originally granted by L-3
Communications Holdings, Inc. to certain current and former employees of the
Corporation in connection with the tax-free spin-off transaction on July 17,
2012 that resulted in the Corporation becoming an independent, publicly-traded
company, and such Awards are treated as Awards made hereunder, and not as
Substitute Awards. Additionally, in the event that a company acquired by the
Company or any Subsidiary or with which the Company or any Subsidiary combines
has shares available under a pre-existing plan approved by stockholders and not
adopted in contemplation of such acquisition or combination, the shares
available for grant pursuant to the terms of such pre-existing plan (as
adjusted, to the extent appropriate, using the exchange ratio or other
adjustment or valuation ratio or formula used in such acquisition or combination
to determine the consideration payable to the holders of common stock of the
entities party to such acquisition or combination) may be used for Awards under
the Plan and shall not reduce the Shares authorized for grant under the Plan;
provided that Awards using such available shares shall not be made after the
date awards or grants could have been made under the terms of the pre-existing
plan, absent the acquisition or combination, and shall only be made to
individuals who were not Employees or Directors prior to such acquisition or
combination.

SECTION 8. Administration.

(a) Committee Authority and Structure. This Plan and all Awards granted under
this Plan shall be administered by the Compensation Committee of the Board or
such other committee of the Board or subcommittee of the Compensation Committee
as may be designated by the Board and constituted so as to permit this Plan to
comply with the disinterested administration requirements of Rule 16b-3 under
the Exchange Act and the “outside director” requirement of Code Section 162(m).
The members of the Committee shall be designated by the Board. A majority of the
members of the Committee (but not fewer than two) shall constitute a quorum. The
vote of a majority of a quorum or the unanimous written consent of the Committee
shall constitute action by the Committee.

(b) Selection and Grant. The Committee shall have the authority to determine the
individuals (if any) to whom Awards will be granted under this Plan, the type of
Award or Awards to be made, and the nature, amount, pricing, timing, and other
terms of Awards to be made to any one or more of these individuals, subject to
the terms of this Plan.

 

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(c) Construction and Interpretation. The Committee shall have the power to
interpret and administer this Plan and Award Agreements, and to adopt, amend and
rescind related rules and procedures. All questions of interpretation and
determinations with respect to this Plan, the number of shares of Stock,
Options, Stock Appreciation Rights, or units or other Awards granted, and the
terms of any Award Agreements, the adjustments required or permitted by
Section 7, and other determinations hereunder shall be made by the Committee and
its determination shall be final and conclusive upon all parties in interest. In
the event of any conflict between an Award Agreement and any non-discretionary
provisions of this Plan, the terms of this Plan shall govern.

(d) Express Authority to Change Terms of Awards. The Committee may, at any time,
alter or amend any or all Award Agreements under this Plan in any manner that
would be authorized for a new Award under this Plan, including but not limited
to any manner set forth in Section 9 (subject to any applicable limitations
thereunder), except that no amendment or cancellation of an Award may effect a
Repricing of such Award, except in connection with an adjustment pursuant to
Section 7 or with the prior approval of the Corporation’s shareholders. A
“Repricing” means any of the following: (i) changing the terms of an Award to
lower its exercise price or base price, (ii) cancelling an Award with an
exercise price or base price in exchange for other Awards with a lower exercise
price or base price, or (iii) cancelling an Award with an exercise price or base
price at a time when such price is equal to or greater than the Fair Market
Value of the underlying Stock in exchange for other Awards, cash or property.
Without limiting the Committee’s authority under this plan (including Sections 7
and 9), but subject to any express limitations of this Plan (including the
prohibitions on Repricing set forth in this Section 8(d)), the Committee shall
have the authority to accelerate the exercisability or vesting of an Award, to
extend the term or waive early termination provisions of an Award (subject to
the maximum ten-year term under Section 6(a)(5)), and to waive the Corporation’s
rights with respect to an Award or restrictive conditions of an Award (including
forfeiture conditions), in any case in such circumstances as the Committee deems
appropriate.

(e) Rule 16b-3 Conditions; Bifurcation of Plan. It is the intent of the
Corporation that this Plan and Awards hereunder satisfy and be interpreted in a
manner, that, in the case of Participants who are or may be Insiders, satisfies
any applicable requirements of Rule 16b-3, so that these persons will be
entitled to the benefits of Rule 16b-3 or other exemptive rules under Section 16
under the Exchange Act and will not be subjected to avoidable liability
thereunder as to Awards intended to be entitled to the benefits of Rule 16b-3.
If any provision of this Plan or of any Award would otherwise frustrate or
conflict with the intent expressed in this Section 8(e), that provision to the
extent possible shall be interpreted and deemed amended so as to avoid such
conflict. To the extent of any remaining irreconcilable conflict with this
intent, the provision shall be deemed disregarded as to Awards intended as Rule
16b-3 exempt Awards. Notwithstanding anything to the contrary in this Plan, the
provisions of this Plan may at any time be bifurcated by the Board or the
Committee in any manner so that certain provisions of this Plan or any Award
Agreement intended (or required in order) to satisfy the applicable requirements
of Rule 16b-3 are only applicable to Insiders and to those Awards to Insiders
intended to satisfy the requirements of Rule 16b-3.

 

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(f) Delegation and Reliance. The Committee may delegate to the officers or
employees of the Corporation the authority to make grants hereunder and to
otherwise execute and deliver those instruments and documents, to do all acts
and things, and to take all other steps deemed necessary, advisable or
convenient for the effective administration of this Plan in accordance with its
terms and purpose, except that the Committee may not delegate any discretionary
authority to grant or amend an award or with respect to substantive decisions or
functions regarding this Plan or Awards as these relate to the material terms of
Performance-Based Awards to Executive Officers or to the timing, eligibility,
pricing, amount or other material terms of Awards to Insiders. In making any
determination or in taking or not taking any action under this Plan, the Board
and the Committee may obtain and may rely upon the advice of experts, including
professional advisors to the Corporation. No director, officer, employee or
agent of the Corporation shall be liable for any such action or determination
taken or made or omitted in good faith.

(g) Exculpation and Indemnity. Neither the Corporation nor any member of the
Board of Directors or of the Committee, nor any other person participating in
any determination of any question under this Plan, or in the interpretation,
administration or application of this Plan, shall have any liability to any
party for any action taken or not taken in good faith under this Plan or for the
failure of an Award (or action in respect of an Award) to satisfy Code
requirements as to incentive stock options or to realize other intended tax
consequences, to qualify for exemption or relief under Rule 16b-3 or to comply
with any other law, compliance with which is not required on the part of the
Corporation.

SECTION 9. Amendment and Termination of this Plan.

The Board of Directors may at any time amend, suspend or discontinue this Plan,
subject to any stockholder approval that may be required under applicable law.
Notwithstanding the foregoing, no such action by the Board or the Committee
shall, in any manner adverse to a Participant other than as expressly permitted
by the terms of an Award Agreement, affect any Award then outstanding and
evidenced by an Award Agreement without the consent in writing of the
Participant or, to the extent applicable, a Beneficiary, a Participant’s family
member or a trust (or similar estate planning entity) established for the
benefit of a Participant and/or one or more of the Participant’s family members
entitled to an Award. Notwithstanding the above, any amendment that would
(i) materially increase the aggregate number of shares of Stock or other equity
interest(s) that may be issued hereunder, (ii) materially modify the
requirements as to eligibility for participation in this Plan, (iii) effect a
Repricing, or (iv) otherwise require shareholder approval under the listing
standards of the New York Stock Exchange (or such other principal market in
which the Company’s shares are traded) or any other law or regulation, shall be
subject to shareholder approval.

SECTION 10. Miscellaneous.

(a) Unfunded Plans. This Plan shall be unfunded. Neither the Corporation nor the
Board of Directors nor the Committee shall be required to segregate any assets
that may at any time be represented by Awards made pursuant to this Plan.
Neither the Corporation, the Committee, nor the Board of Directors shall be
deemed to be a trustee of any amounts to be paid or securities to be issued
under this Plan.

 

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(b) Rights of Employees.

(1) No Right to an Award. Status as an Employee shall not be construed as a
commitment that any one or more Awards will be made under this Plan to an
Employee or to Employees generally. Status as a Participant shall not entitle
the Participant to any additional Award.

(2) No Assurance of Employment or Other Service Relationship. Nothing contained
in this Plan (or in any other documents related to this Plan or to any Award)
shall confer upon any Employee or Participant any right to continue in the
employ or other service of the Corporation or any Subsidiary or constitute any
contract (of employment or otherwise) or limit in any way the right of the
Corporation or any Subsidiary to change a person’s compensation or other
benefits or to terminate the employment or services of a person with or without
cause.

(c) Effective Date; Duration. This Plan has been adopted by the Board of
Directors of the Corporation and will amend and restate the previous plan as set
forth herein effective as of the date on which the Corporation’s public
shareholders approve the Plan (the “Restatement Effective Date”). This Plan
shall remain in effect until any and all Awards under this Plan have been
exercised, converted or terminated under the terms of this Plan and applicable
Award Agreements. Notwithstanding the foregoing, no Award may be granted under
this Plan after the tenth anniversary of the date on which the Corporation’s
public shareholders approve the Plan; provided, however, that any Award granted
prior to such date may be amended after such date in any manner that would have
been permitted hereunder prior to such date.

(d) Compliance with Laws. This Plan, Award Agreements, and the grant, exercise,
conversion, operation and vesting of Awards, and the issuance and delivery of
shares of Stock and/or other securities or property or the payment of cash under
this Plan, Awards or Award Agreements, are subject to compliance with all
applicable federal and state laws, rules and regulations (including but not
limited to state and federal insider trading, registration, reporting and other
securities laws and federal margin requirements) and to such approvals by any
listing, regulatory or governmental authority as may be necessary or, in the
opinion of counsel for the Corporation, advisable in connection therewith. Any
securities delivered under this Plan shall be subject to such restrictions (and
the person acquiring such securities shall, if requested by the Corporation,
provide such evidence, assurance and representations to the Corporation as to
compliance with any of such restrictions) as the Corporation may deem necessary
or desirable to assure compliance with all applicable legal requirements.

(e) Awards to Non-U.S. Participants. The Committee shall have the power and
authority to determine which service providers outside the United States shall
be eligible to participate in the Plan. Without amending the Plan, the Committee
may grant Awards to eligible persons who are foreign nationals and/or reside
outside the United States on such terms and conditions different from those
specified in this Plan as may in the judgment of the Committee be necessary or
desirable to foster and promote achievement of the purposes of this Plan. The
Committee may adopt, amend or rescind rules, procedures or sub-plans relating to
the operation and administration of the Plan to accommodate the specific
requirements of local laws, procedures, and practices.

 

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(f) Section 409A. Notwithstanding other provisions of the Plan or any Award
Agreements thereunder, no Award shall be granted, deferred, accelerated,
extended, paid out or modified under this Plan in a manner that would result in
the imposition of an additional tax under Section 409A of the Code upon a
Participant. In the event that it is reasonably determined by the Board or
Committee that, as a result of Section 409A of the Code, payments in respect of
any Award under the Plan may not be made at the time contemplated by the terms
of the Plan or the relevant Award agreement, as the case may be, without causing
the Participant holding such Award to be subject to taxation under Section 409A
of the Code, the Corporation will make such payment on the first day that would
not result in the Participant incurring any tax liability under Section 409A of
the Code; which, if the Participant is a “specified employee” within the meaning
of the Section 409A, shall be the first day following the six-month period
beginning on the date of Participant’s termination of Employment.
Notwithstanding the foregoing, each Participant is solely responsible and liable
for the satisfaction of all taxes and penalties that may be imposed on him or
her, or in respect of any payment or benefit delivered in connection with the
Plan (including any taxes and penalties under Section 409A of the Code), and the
Company shall not have any obligation to indemnify or otherwise hold any
Participant harmless from any or all such taxes or penalties.

(g) Applicable Law. This Plan, Award Agreements and any related documents and
matters shall be governed by, and construed in accordance with, the laws of the
State of Delaware and applicable Federal law.

(h) Non-Exclusivity of Plan. Nothing in this Plan shall limit or be deemed to
limit the authority of the Corporation, the Board or the Committee to grant
awards or authorize any other compensation, with or without reference to the
Stock, under any other plan or authority.

(i) Company Clawback Policy. Notwithstanding any provision of the Plan or any
Award Agreement to the contrary, the Company may require the Participant to
return shares of Stock (or the value of such Stock when originally released to
Participant), dividends paid thereon and any other amount required by law to be
returned, in the event that such repayment is required in order to comply with
any Company compensation recovery (or other clawback) policy as then in effect
or any laws or regulations relating to restatements of the Company’s
publicly-reported financial results.

 

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