EX-10.5






Exhibit 10.5




Exhibit A




Performance Unit Award Notice




	 	 	 
	A. Participant:

	 	                                        
	 
	 	 
	B. Grant Date:

	 	July 29, 2008
	 
	 	 
	C. Performance Period:

	 	6/28/2008 through 12/31/2010
	 
	 	 
	D. Aggregate Target Dollar Award:

	 	                                        
	 
	 	 
	E. Initial Value Per Performance Unit:

	 	                                        
	 
	 	 
	F. Aggregate Target Performance Units:

	 	                                        
	 
	 	 
	G. Performance Measures:
	 	 







	 	1.	 	Growth in Diluted Earnings per Share: The compounded annual growth rate in
L-3’s Diluted EPS. “Diluted EPS” means earnings per common share on a fully diluted
basis, determined in accordance with generally accepted accounting principles and as
derived from L-3’s audited consolidated financial statements prepared in the ordinary
course of business. Diluted EPS shall be adjusted as contemplated by the terms of the
Performance Unit Agreement to exclude certain unusual or nonrecurring items.
	 
	 	 	 	Portion of Aggregate Target Award for this Performance Measure: 50%

Target Units for this Performance Measure:                     
	 
	 	 	 	Performance Scale:





	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Diluted	 	 	 	 
	 	 	EPS	 	Cumulative	 	 
	Performance	 	Growth	 	Diluted	 	Unit
	Levels	 	Rate	 	EPS Required	 	Multiplier
	 
	Maximum
	 	3 	15	%	 	3 $	20.48	 	 	 	200	%
	 
	 	 	12	%	 	$	19.28	 	 	 	150	%
	Target
	 	 	10	%	 	$	18.52	 	 	 	100	%
	 
	 	 	9	%	 	$	18.14	 	 	 	75	%
	Threshold
	 	 	8	%	 	$	17.77	 	 	 	50	%
	Below Threshold
	 	< 	 8	%	 	<$	17.77	 	 	 	0	%






 





Note: Cumulative Diluted EPS based on 2007 Diluted EPS of $5.99 excluding certain unusual
or nonrecurring items contemplated by the Performance Unit Agreement.



 









 






	 	 	 	In the event that the level of actual performance exceeds the Threshold and falls between
two of the stated performance levels listed above, the Unit Multiplier will be calculated
on a straight-line basis between the two stated Unit Multipliers for those performance
levels.
	 
	 	 	 	Payment Method: Shares of L-3 stock. Subject to the terms of the Performance Unit
Agreement, the number of shares will be determined by multiplying (1) the Target Units for
this Performance Measure, by (2) the applicable Unit Multiplier.
	 
	 	2.	 	Relative Total Stockholder Return: L-3’s TSR compared to the returns of a
comparison group of companies (see Appendix 1). “TSR” means, with respect to a particular
company for particular time period, (a) the change in the per-share market price of the
company’s common stock (as quoted in the principal market on which it is traded as of the
beginning and ending of the period) plus dividends and other distributions paid per share
during such period, divided by (b) the per-share market price of the company’s common
stock as quoted as of the beginning of such period, all of which is adjusted for any
changes in company’s equity structure, including but not limited to stock splits and stock
dividends. This measure will be assessed by determining L-3’s relative percentile
positioning on TSR versus companies included in the comparison group.
	 
	 	 	 	Portion of Aggregate Target Award for this Performance Measure: 50%

Target Units for this Performance Measure:                     
	 
	 	 	 	Performance Scale:





	 	 	 	 	 	 	 	 	 
	Performance	 	Relative	 	Unit
	Levels	 	TSR	 	Multiplier
	 
	Maximum
	 	>74th percentile	 	 	200	%
	 
	 	63rd percentile	 	 	150	%
	Target
	 	50th percentile	 	 	100	%
	Threshold
	 	40th percentile	 	 	50	%
	Below Threshold
	 	< 40th percentile	 	 	0	%







In the event that the level of actual performance exceeds the Threshold and falls between
two of the stated performance levels listed above, the Unit Multiplier will be calculated
on a straight-line basis between the two stated Unit Multipliers for those performance
levels.




Payment Method: Cash. Subject to the terms of the Performance Unit Agreement, the cash
amount will be determined by multiplying (1) the Target Units for this Performance Measure,
by (2) the applicable Unit Multiplier, by (3) the fair market value per share of L-3 common
stock at end of the Performance Period.



 









 





Appendix 1




The companies included for the Relative Total Stockholder Return assessment are those in the S&P
1500 Aerospace & Defense Index, excluding L-3. This list will be modified by the Compensation
Committee to reflect any changes to companies included in the Index.



     S&P 1500 Aerospace & Defense Index




	 	 	 	 	 
	 	 	Company	 	Ticker
	 
	1.

	 	AAR CORP
	 	AIR
	2.

	 	ALLIANT TECHSYSTEMS INC
	 	ATK
	3.

	 	APPLIED SIGNAL TECHNOLOGY
	 	APSG
	4.

	 	BE AEROSPACE INC
	 	BEAV
	5.

	 	BOEING CO
	 	BA
	6.

	 	CERADYNE INC
	 	CRDN
	7.

	 	CUBIC CORP
	 	CUB
	8.

	 	CURTISS-WRIGHT CORP
	 	CW
	9.

	 	DRS TECHNOLOGIES INC
	 	DRS
	10.

	 	ESTERLINE TECHNOLOGIES CORP
	 	ESL
	11.

	 	GENCORP INC
	 	GY
	12.

	 	GENERAL DYNAMICS CORP
	 	GD
	13.

	 	GOODRICH CORP
	 	GR
	14.

	 	HONEYWELL INTERNATIONAL INC
	 	HON
	15.

	 	LOCKHEED MARTIN CORP
	 	LMT
	16.

	 	MOOG INC
	 	MOG.A
	17.

	 	NORTHROP GRUMMAN CORP
	 	NOC
	18.

	 	ORBITAL SCIENCES CORP.
	 	ORB
	19.

	 	PRECISION CASTPARTS CORP
	 	PCP
	20.

	 	RAYTHEON CO
	 	RTN
	21.

	 	ROCKWELL COLLINS INC
	 	COL
	22.

	 	TELEDYNE TECHNOLOGIES INC
	 	TDY
	23.

	 	TRIUMPH GROUP INC
	 	TGI
	24.

	 	UNITED TECHNOLOGIES CORP
	 	UTX