Document:

EX-10.25

Exhibit 10.25

L-3 COMMUNICATIONS CORPORATION

DEFERRED COMPENSATION PLAN II

(Effective January 1, 2009)

ARTICLE I 

PURPOSE AND INTENT OF THE PLAN

     1. Purpose. The purpose of this L-3 Communications Corporation Deferred Compensation
Plan II is to provide certain key management employees of the Company with the opportunity to elect
to defer receipt of (a) a portion of their Base Salary, and (b) all or a portion of
their Incentive Bonus. Elections to defer Base Salary and Incentive Bonuses and distributions of
such Deferred Base Salary and Deferred Incentive Bonuses that have been made on or after January 1,
2005 and before the effective date of this Plan have been made in accordance with the terms of this
Plan as in effect on January 1, 2009.

     2. Intent. The Plan is intended to comply with the requirements of Section 409A of the
Code and shall be interpreted in a manner that is consistent with such intent. The Plan also is
intended to be a top-hat plan under the Employee Retirement Income Security Act of 1974, as amended
and shall be interpreted in a manner consistent with such intent.

ARTICLE II

DEFINITIONS

     Unless the context indicates otherwise, the following words and phrases shall have the
meanings hereinafter indicated:

     Base Salary — An Eligible Employee’s annual base salary.

     Beneficiary — The person or persons designated by the Participant in his or her most
recent beneficiary designation made in accordance with procedures prescribed by the Company to
receive any benefits payable under this Plan as a result of the Participant’s death. The
Participant may change his or her Beneficiary designation at any time by making a subsequent
designation in accordance with procedures prescribed by the Company. If no Beneficiary has been
designated, or no designated Beneficiary survives the Participant, Beneficiary means the
Participant’s estate.

     Board — The Board of Directors of L-3 Communications Corporation.

     Code — The Internal Revenue Code of 1986, as amended.

     Committee — The committee described in Article VIII, Section 1, which administers the Plan.

 

 

     Company — L-3 Communications Corporation, including its divisions and subsidiaries.

     Deferral Account — The bookkeeping account maintained by the Company for each
Participant which is credited with any (a) Deferred Base Salary and Deferred Incentive
Bonus made on behalf of the Participant, and (b) earnings on those amounts.

     Deferral Agreement — The annual agreement executed or otherwise acknowledged by an
Eligible Employee under procedures prescribed by the Company under which the Eligible Employee
elects to defer Base Salary and/or Incentive Bonus for a calendar year.

     Deferred Base Salary — The amount of Base Salary deferred and credited to a
Participant’s Deferral Account for a calendar year.

     Deferred Incentive Bonus — The amount of Incentive Bonus deferred and credited to a
Participant’s Deferral Account for a calendar year.

     Eligible Employee — An employee who is subject to U.S. income taxes for a calendar
year and who is eligible for an MIB award for such calendar year and whose Base Salary for a
calendar year equals or exceeds the dollar amount in Code Section 414(q) shall be an Eligible
Employee for such year. The Committee shall limit participation in this Plan to employees whom the
Committee believes to be a select group of management or highly compensated employees within the
meaning of Title I of the Employee Retirement Income Security Act of 1974, as amended. Whether an
individual is an Eligible Employee shall be determined each calendar year.

     Incentive Bonus — The incentive bonus amount awarded to an Eligible Employee for a
calendar year under the MIB.

     MIB — The formal or informal program of the Company under which an employee receives
an annual incentive bonus.

     Open Enrollment Period — The period of time during which an Eligible Employee may
make an election to participate in the Plan for a calendar year as determined by the Company. The
Open Enrollment Period for an Employee who is a Participant shall end no later than December 31 of
the year preceding the calendar year for which the Deferral Agreement is made. The Open Enrollment
Period for an employee who is first eligible to participate in the Plan mid-year either because he
or she is newly hired or newly promoted shall begin on the date such individual is first notified
by the Company that he or she is eligible to participate and shall end 30 days after such date.

     Participant — An Eligible Employee who enters into a Deferral Agreement. An Eligible
Employee who enters into a Deferral Agreement shall continue to participate in this Plan until his
or her Deferral Account balance has been fully distributed.

     Plan — This L-3 Communications Corporation Deferred Compensation Plan II.

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     Section 409A Change of Control Event — A change in ownership or effective control of
Holdings, or in the ownership of a substantial portion of the assets of Holdings, within the
meaning of Section 409A(a)(2)(A)(v) of the Code.

     Separate from Service /Separation from Service; Separates from Service — An Eligible
Employee separates from service or experiences a separation from service if he or she dies,
retires, or otherwise terminates employment as defined in Treasury Regulation §1.409A-1(h).

     Specified Employee — A “specified employee” as defined in Treasury Regulation
§ 1.409A-1(i).

     Unforeseeable Emergency —An “unforeseeable emergency” as defined in Treasury
Regulation § 1.409A-3(i)(3).

     U.S. Prime Rate — The U.S. prime rate as reported in the Wall Street Journal or such
other source as may be designated by the Committee.

ARTICLE III

ELECTION OF DEFERRED COMPENSATION

     1. Deferral Agreement.

     (a) An Eligible Employee for a calendar year may elect to defer a portion of his or her
Base Salary and/or Incentive Bonus payable for services performed during a calendar year by
executing or otherwise acknowledging under procedures prescribed by the Company a Deferral
Agreement during the Open Enrollment Period.

     (b) An Eligible Employee’s Deferral Agreement shall be irrevocable for the calendar
year for which it is made. Such Deferral Agreement shall not continue in effect for any
succeeding calendar year.

     (c) An individual who continues to be an Eligible Employee for a succeeding calendar
year may make a new Deferral Agreement with respect to such succeeding calendar year by
executing or otherwise acknowledging under procedures prescribed by the Company a new
Deferral Agreement during the Open Enrollment Period for such succeeding calendar year.

     (d) Notwithstanding subsection (b) above, an Eligible Employee may revoke his or her
Deferral Agreement in the event of an Unforeseeable Emergency, his or her disability as
defined in Treasury Regulation § 1.409A-3(j)(4)(xii), or following a financial hardship
distribution pursuant to Treasury Regulation § 1.401(k)-1(d)(3) with the consent of the
Company and subject to such procedures as the Company shall proscribe. If an Eligible
Employee revokes his or her Deferral Agreement, then he or she may not make a new Deferral
Agreement until the next Open Enrollment Period for the succeeding calendar year.

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     2. Amount of Deferral. An Eligible Employee may elect to defer (a) up to 50
percent of his or her Base Salary for a calendar year, and (b) up to 100 percent of his or
her Incentive Bonus for a calendar year; provided, however, that to be eligible to defer all or a
portion of his or her Incentive Bonus for a calendar year, the Incentive Bonus for such calendar
year must be at least $10,000 and the Deferred Incentive Bonus for such calendar year must be at
least $5,000.

     3. Time when Deferral Agreement Takes Effect. An Eligible Employee’s Deferral
Agreement shall take effect on January 1 of the calendar year following the year in which the
Deferral Agreement is made; provided, that the Deferral Agreement of an individual who becomes an
Eligible Employee mid-year and makes a Deferral Agreement during the applicable Open Enrollment
Period shall take effect as soon as administratively possible after such Deferral Agreement is
executed or otherwise acknowledged by the Eligible Employee under the procedures prescribed by the
Company. An individual shall first become eligible to participate in the Plan upon being notified
by Company that he or she is an Eligible Employee.

ARTICLE IV

DEFERRAL ACCOUNT

     1. Establishment of Deferral Account. A Deferral Account shall be established for
each Participant, which shall be credited with his or her Deferred Base Salary, Deferred Incentive
Bonus and earnings.

     2. Crediting of Deferred Amounts. Deferred Base Salary and Deferred Incentive Bonus
shall be credited to a Participant’s Deferral Account as of the fifteenth (15th) day (or
if such day is not a business day, the nearest prior business day) of the month following the date
on which such amounts would have been paid to the Participant if no Deferral Agreement were in
effect.

     3. Crediting of Earnings. Deferred Base Salary and Deferred Incentive Bonus shall be
credited with earnings beginning on the first day (or if such day is not a business day, the next
following business day) of the month following the month in which such amounts would have been paid
to the Participant if no Deferral Agreement were in effect and ending on the business day
immediately preceding the day on which such amounts are distributed or withdrawn. Earnings shall
be compounded and credited to a Participant’s Deferral Account each day based on the U.S. Prime
Rate in effect on the first business day of the calendar quarter preceding the date on which the
earnings are credited.

     4. Vesting of Deferral Account Balance. A Participant’s Deferral Account balance
shall be fully vested at all times.

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ARTICLE V

PAYMENT OF BENEFITS

     1. General. The Company’s liability to pay benefits to a Participant or Beneficiary
under this Plan shall be measured by, and in no event shall exceed, the Participant’s Deferral
Account balance. All benefit payments shall be made in cash.

     2. Payment of Deferral Account Balance.

     (a) At the time an Eligible Employee executes or otherwise acknowledges under
procedures prescribed by the Company a Deferral Agreement for a calendar year, he or she
shall irrevocably elect the date on which his or her Deferred Base Salary and Deferred
Incentive Bonus for that calendar year (as adjusted for earnings) shall be paid.

     (b) The Participant may elect that his or her Deferred Base Salary and Deferred
Incentive Bonus for the calendar year be paid (i) on Separation from Service for
any reason or (ii) on the first business day of any calendar year that is at least
five full calendar years following the calendar year for which the Deferral Agreement is
made.

     (c) Notwithstanding subsection (b) above, if a Participant Separates from Service for
any reason prior to the date the Participant elected to have his or her Deferred Base Salary
and Deferred Incentive Bonus paid out, such amount shall be paid on the Participant’s
Separation from Service.

     (d) Notwithstanding any other provision in this Plan to the contrary, any payment to a
Specified Employee due to Separation from Service for any reason other than death shall be
delayed for six months following the date the payment is otherwise due. Earnings shall
continue to be credited to the Specified Employee’s Deferral Account in accordance with
Article IV, Section 3 above during the six-month delay period.

     (e) If a Participant fails to make an election with respect to the time of payment of
his or her Deferred Base Salary and Deferred Incentive Bonus for a calendar year, such
amount shall be paid on the Participant’s Separation from Service, or, with respect to a
Participant who is a Specified Employee, the date that is six months following the
Participant’s Separation from Service.

     (f) Any Deferred Base Salary and Deferred Incentive Bonus to be paid on Separation from
Service pursuant to subsection (b), (c) or (e) above shall be paid on or before December 31
of the year in which the Participant’s Separation from Service occurs or the 15th
day of the third month following the Participant’s Separation from Service date, whichever
is later.

     3. Form of Payment.

     (a) At the time an Eligible Employee executes or otherwise acknowledges under
procedures prescribed by the Company a Deferral Agreement for a calendar year,

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he or she shall irrevocably elect the form of payment of his or her Deferral Account
balance from among the following options:

     (1) A lump sum, or

     (2) Annual payments for a period of up to 20 years, as designated by the
Participant. The amount of each annual payment shall be determined by dividing the
Participant’s Deferral Account balance on the date such payment is processed by the
number of annual payments remaining in the designated installment period. If the
total value of the Participant’s Deferral Account balance is less than $5,000 at the
time an installment payment is due, the entire Deferral Account balance shall be
paid to the Participant (or Beneficiary) in a lump sum.

     (b) A Participant’s election as to the form of payment shall be irrevocable and may not
be changed. In the event a Participant fails to timely elect a form of payment, The
Participant shall be deemed to have elected a lump sup form of payment, which deemed
election shall be irrevocable and may not be changed.

     4. Death Benefits. Upon the death of a Participant, his or her unpaid Deferral
Account balance, if any, will be paid to the Participant’s Beneficiary in accordance with the
election made by the Participant, or, if the Participant fails to make a proper election form, in a
lump sum. Such payment shall be made on or before the later of December 31 of the year in which
the Participant’s death occurs or the 15th day of the third month following the
Participant’s date of death.

     5. Distribution on Account of Unforeseeable Emergency. A Participant, or a
Beneficiary upon the Participant’s death, may request a distribution or all or a portion of his or
her Deferral Account balance on account of an Unforeseeable Emergency, which request must be
approved by the Company and shall be subject to such procedures as the Company shall proscribe. A
distribution on account of an Unforeseeable Emergency shall meet the requirements of Treasury
Regulation § 1.409A-3(i)(3).

     6. Acceleration upon Change in Control.

     (a) Notwithstanding any other provision of this Plan, the Deferral Account balance of
each Participant shall be distributed in a single lump sum within 60 calendar days following
a “Change in Control.”

     (b) For purposes of this Plan, a Change in Control shall be deemed to occur upon a
Section 409A Change of Control Event that also constitutes one or more of the following:

          (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 Securities Exchange Act of 1934, as amended (the
“Exchange Act”)), other than L-3 Communications Holdings, Inc. (“Holdings”) or any of its
subsidiaries, of beneficial ownership (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) of a majority of the combined voting

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power of Holding’s then outstanding voting securities, other than by any employee
benefit plan maintained by the Company;

          (2) The sale of all or substantially all of the assets of Holdings and its subsidiaries
taken as a whole; or

          (3) The election, including the filling of vacancies, during any period of 24 months or
less, of 50 percent or more of the members of the Board of Directors of Holdings without the
approval of Continuing Directors, as constituted at the beginning of such period.
“Continuing Directors” shall mean any director of Holdings who either (i) is a member of the
Board on July 1, 1997, 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.

     7. Acceleration of or Delay in Payments. The Committee, in its sole and absolute
discretion, may accelerate the time or form of payment of a benefit owed to a Participant, provided
such acceleration is permitted under Treasury Regulation § 1.409A-3(j)(4). The Committee may also,
in its sole and absolute discretion, delay the time for payment of a benefit owed to a Participant,
provided such delay is permitted under Treasury Regulation §1.409A-2(b)(7). If the Plan receives a
domestic relations order (within the meaning of Code Section 414(p)(1)(B)) directing that all or a
portion of a Participant’s Accounts be paid to an “alternate payee,” any amounts to be paid to the
alternate payee(s) shall be paid in a single lump sum.

     8. Change of Law. Notwithstanding anything to the contrary herein, if the Committee
determines in good faith, based on consultation with counsel, that the federal income tax treatment
or legal status of this Plan has or may be adversely affected by a change in the Internal Revenue
Code, Title I of the Employee Retirement Income Security Act of 1974, or other applicable law, or
by an administrative or judicial construction thereof, the Committee may direct that the Deferral
Account balances of affected Participants or of all Participants be distributed as soon as
practicable after such determination is made, to the extent deemed necessary or advisable by the
Committee and permitted by applicable law.

ARTICLE VI

PARTICIPANTS’ RIGHTS

     1. Unfunded Status of Plan. This Plan constitutes a contractual promise by the
Company to make payments in the future, and a Participant’s rights shall be those of a general,
unsecured creditor of the Company. A Participant shall not have any beneficial interest in this
Plan. Notwithstanding the foregoing, to assist the Company in meeting its obligations under this
Plan, the Company may set aside assets in a trust described in Revenue Procedure 92-64, 1992-2 C.B.
422 (generally known as a “rabbi trust”), and the Company may direct that its obligations under
this Plan be satisfied by payments out of such trust or trusts. It is the Company’s intention that
this Plan be unfunded for federal income tax purposes and for purposes of Title I of the Employee
Retirement Income Security Act of 1974.

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     2. Nonalienability of Benefits. A Participant’s rights to benefit payments under this
Plan shall not be subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, attachment, or garnishment by creditors of the Participant or the
Participant’s Beneficiary, except as set forth in Article VI, Section 7(a) except as otherwise
required by law.

ARTICLE VII

AMENDMENT OR TERMINATION

     1. Amendment. The Board or the Compensation Committee of the Board or, to the extent
permitted by Board resolution, any delegate of the Board or Compensation Committee, may amend,
modify, suspend or discontinue this Plan at any time; provided, however, that no such amendment,
modification, suspension or discontinuance shall have the effect of reducing a Participant’s
Deferral Account balance or postponing the time when a Participant is entitled to receive a
distribution of his or her Deferral Account balance.

     2. Termination. The Board or the Compensation Committee of the Board reserves the
right to terminate this Plan (by Plan amendment) at any time and to pay all Participants their
Deferral Account balances in a lump sum immediately following such termination or at such time
thereafter as the Board or the Compensation Committee of the Board may determine, provided that any
payments on termination of the Plan must comply with the requirements of Treasury Regulation
§1.409A-3(j)(4)(ix).

ARTICLE VIII

ADMINISTRATION

     1. The Committee. This Plan shall be administered by the Compensation Committee of
the Board or such other committee (whether of the Board or of executives of the Company) as may be
designated by the Board to administer this Plan. The Compensation Committee or such other
committee designated by the Board to administer this Plan is referred to in this document as the
“Committee.”

     2. Delegation and Reliance. The Committee may delegate to any officer or employee of
the Company the authority to execute and deliver those instruments and documents and to take, or
refrain from taking, all actions deemed necessary, advisable or convenient for the effective
administration of this Plan in accordance with its terms and purposes. The Committee may also
appoint a plan administrator or any other agent and delegate to such administrator or agent such
powers and duties in connection with the administration of the Plan as the Committee may deem
appropriate. In making any determination or in taking or not taking any action under this Plan, the
Committee may obtain and rely upon the advice of experts, including professional advisors to the
Company. No member of the Committee or officer or employee of the Company (or any of its divisions
or subsidiaries) who is a Participant may participate in any decision specifically relating to his
or her individual rights or benefits under this Plan.

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     3. Powers of the Committee. The Committee shall administer this Plan in accordance
with its terms. The Committee shall have full discretion to construe and interpret the terms and
provisions of this Plan, which interpretation or construction shall be final and binding on all
parties, including but not limited to the Company and any Participant or Beneficiary. The Committee
shall administer this Plan in a uniform and nondiscriminatory manner and in full accordance with
any and all laws applicable to the Plan. The Committee shall have all powers necessary to
administer the Plan, including without limitation, in addition to those powers set forth above, the
following:

          (a) to determine whether individuals qualify as the Participants in this Plan;

          (b) to determine the amount of benefits payable to Participants and their Beneficiaries;

          (c) to maintain all records that may be necessary for the administration of this Plan; and

          (d) to make and publish rules and procedures for the administration of this Plan.

     4. Exculpation and Indemnity. To the extent permitted by applicable law, the Company
shall indemnify and hold harmless the Committee and each member thereof and delegates of the
Committee who are employees of the Company against any and all expenses, liabilities and claims,
including legal fees to defend against such liabilities and claims, arising out of their discharge
of responsibilities under or incident to the Plan, other than expenses, liabilities and claims
arising out of their willful misconduct. This indemnity shall not preclude such further indemnities
as may be available under insurance purchased by the Company or provided by the Company under any
bylaw, agreement or otherwise, as such indemnities are permitted under applicable law.

     5. Facility of Payment. If a minor, person declared incompetent, or person incapable
of handling the disposition of his or her property, is entitled to receive a benefit, make an
application, or make an election hereunder, the Committee may direct that such benefits be paid to,
or such application or election be made by, the guardian, legal representative, or person having
the care and custody of such minor, incompetent, or incapable person. Any payment made,
application allowed, or election implemented in accordance with this Section shall completely
discharge the Company and the Committee from all liability with respect thereto.

     6. Proof of Claims. The Committee may require proof of the death, disability,
competency, minority, or incapacity of any Participant or Beneficiary and of the right of a person
to receive any benefit or make any application or election.

     7. Claim Procedure.

          (a) Any person claiming a benefit, requesting an interpretation or ruling under this Plan, or
requesting information under this Plan shall present the request in writing to the Committee, which
shall respond in writing within 90 days. The Committee may, however, extend the reply period for
an additional ninety 90 days for special circumstances. If the claim or

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request is denied, the written notice of denial shall state (1) the reason for denial, with
specific reference to the plan provisions on which the denial is based, (2) a description of any
additional material or information required and an explanation of why it is necessary, and (3) an
explanation of the claims review procedure.

          (b) Within 60 days after the receipt by a claimant of the written decision described above or
the expiration of the claims review period described above including any extension, the claimant
may request review by giving written notice to the Committee. The claim or request shall be
reviewed by the Committee, which may, but shall not be required to, grant the claimant a hearing.
On review, the claimant may have representation, examine pertinent documents, and submit issues and
comments in writing. If the claimant does not request a review within such sixty-day period, he or
she shall be barred from challenging the original determination.

          (c) The decision on review shall normally be made within 60 days after the Committee’s receipt
of a request for review. If an extension of time is required for a hearing or other special
circumstances, the claimant shall be notified and the time limit shall be 120 days. The decision
shall be in writing and shall state the reason and the relevant plan provisions. All decisions on
review shall be final and binding on all parties concerned.

          (d) In the event of any dispute over benefits under this Plan, all remedies available to the
disputing individual under this Section 7 must be exhausted, within the specified deadlines, before
legal recourse of any type is sought.

ARTICLE IX

GENERAL PROVISIONS

     1. No Guarantee of Employment. This Plan shall in no way obligate the Company (or any
of its affilites) to continue the employment of a Participant with the Company (or its affiliates)
or limit the right of the Company (or its affiliates) at any time and for any reason to terminate
the Participant’s employment. In no event shall this Plan constitute an employment contract
between the Company (or its affiliates) and a Participant or in any way limit the right of the
Company (and its affiliates) to change a Participant’s compensation or other benefits.

     2. Other Plan Benefits. No amount credited to a Participant’s Deferral Account under
this Plan shall be treated as compensation for purposes of calculating the amount of a
Participant’s benefits or contributions under any pension, retirement, or other plan maintained by
the Company, except as provided in such other plan.

     3. Tax Withholding; Section 409A. To the extent required by law, the Company shall
withhold from benefit payments hereunder any Federal, state, or local income or payroll taxes
required to be withheld and shall furnish the recipient and the applicable government agency or
agencies with such reports, statements, or information as may be legally required. This Plan shall
be interpreted in a manner that is intended to ensure that any such payments or benefits shall not
be subject to any tax or interest under Section 409A of the Code; provided, that neither
the Company, the Committee nor any employee or representative thereof shall have any

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liability to a Participant or a Beneficiary with respect thereto. Each payment made under
this Plan shall be designated as a “separate payment” within the meaning of Section 409A of the
Code.

     4. Missing Payees. If all or portion of a Participant’s Plan benefit becomes payable
and the Committee after a reasonable search cannot locate the Participant (or his or her
Beneficiary if such Beneficiary is entitled to payment), the Committee may forfeit the
Participant’s Plan benefit. If the Participant (or his or her Beneficiary) subsequently presents
a valid claim for benefits to the Committee, the Committee shall restore and pay the appropriate
Plan benefit.

     5. Mistaken Payment. No Participant or Beneficiary shall have any right to any
payment made in error or in contravention of the terms of this Plan, the Code, or ERISA. The
Committee shall have full rights under the law to recover any such mistaken payment, and the right
to recover attorney’s fees and other costs incurred with respect to such recovery. Recovery shall
be made from future Plan payments, or by any other available means.

     6. Receipt and Release for Payments. Any payment to a Participant, Beneficiary, or to
any such person’s legal representative, parent, guardian, or any person or entity specified in
Section 5 of Article VIII shall be in full satisfaction of all claims that can be made under the
Plan against the Company (and its affiliates). The Company may require such Participant,
Beneficiary, legal representative, or any other person or entity specified in Section 5 of Article
VIII, as a condition precedent to such payment, to execute a receipt and release thereof in such
form as shall be determined by the Company.

     7. Successors. The provisions of this Plan shall be binding upon and inure to the
benefit of the Company, its successors, and its assigns, and to the Participants and their heirs,
executors, administrators, and legal representatives.

     8. Governing Law. The validity of this Plan and any of its provisions shall be
construed, administered, and governed in all respects under and by the laws of the State of New
York (including its statute of limitations and all substantive and procedural law, and without
regard to its conflict of laws provisions), except as to matters of Federal law. If any provision
of this instrument shall be held by a court of competent jurisdiction to be invalid or
unenforceable, the remaining provisions hereof shall continue to be fully effective.

     IN WITNESS WHEREOF, this L-3 Communications Corporation Deferred Compensation Plan II is
hereby adopted effective as of January 1, 2009.

	 	 	 	 	 	 	 
	 	 	L-3 COMMUNICATIONS CORPORATION	 	 
	 
	 	 	 	 	 	 
	Date:
12/19/2008
	 	By:	 	/s/ Kenneth W. Manne 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Title:
	 	Vice President, Human Resources	 	 

L-3 Communications Corporation

Deferred Compensation Plan II

11EX-10.26

Exhibit 10.26

MPRI Long Term Deferred Incentive Plan

(Restated Effective January 1, 2009)

1. Introduction.

     The MPRI division of L-3 Services, Inc. offers the MPRI Long Term Deferred Incentive Plan for
the individuals listed on Appendix A. This plan document reflects the terms of the Plan and is
effective January 1, 2009.

     The Plan is frozen. The last and final Annual Award Credit was made on January 1, 2007.

2. Definitions.

     (a) “Account” means an account established solely for recordkeeping purposes on behalf of each
Participant to reflect the Annual Bonus Award.

     (b) “Annual Award Credit” means the annual amount, if any, credited to the Account maintained
for each Participant based on the formula set forth in Section 3.

     (c) “Board” means the Board of Directors of L-3 Services, Inc.

     (d) “Code” means the Internal Revenue Code of 1986, as amended.

     (e) “Committee” means the committee described in Section 7, which administers this Plan.

     (f) “Company” means the MPRI division of L-3 Services, Inc., and its predecessors.

     (g) “EBIT” means the earnings before interest and taxes for the Company for each twelve-month
period beginning on July 1 and ending on June 30 or such other period specified in the applicable
Employment Agreement.

     (h) “Employment Agreement” means, with respect to each Participant, the employment
agreement(s) entered into between each Participant and the Company on the date(s) indicated on
Appendix A.

     (i) “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

     (j) “Participant” means the individuals listed on Appendix A.

 

 

     (k) “Plan” means this MPRI Long Term Deferred Incentive Plan as restated effective January 1,
2009.

3. Annual Award Credit.

     (a) Amount of Annual Award Credit. No Annual Award Credits have been, or will be,
made after January 1, 2007. The amount of a Participant’s Annual Award Credit made prior to that
date was determined under the terms of the Participant’s Employment Agreement and was conditioned
on the Company’s EBIT exceeding the amount set forth in the Employment Agreement. The Annual
Award Credit, if any, for a twelve-month period was credited to the Participant’s Account on the
July 1st immediately following the end of such twelve-month period. The Annual Award
Credit, if any, for a period of less than twelve months was credited to the Participant’s Account
on the day immediately following the end of the period.

     (b) Interest on Annual Award Amount. Each Annual Award Amount shall be credited with
interest beginning on the day (or if such day is not a business day, the next following business
day) on which the Annual Award Amount was credited to the Participant’s Account and ending on the
last business day of the month immediately preceding the day on which such Annual Award Amount is
distributed. Earnings shall be compounded and credited to a Participant’s Deferral Account each
day based on the U.S. Prime Rate in effect on the first business day of each calendar quarter
preceding the date on which the earnings are credited as reported in the Wall Street Journal or
such other source as may be designated by the Committee.

4. Vesting.

     The Annual Award Credit for each year shall become vested at the rate of one-third on the
first anniversary of the date the Annual Award Credit is credited to the Participant’s Account,
one-third on the second anniversary of the date the Annual Award Credit is credited to the
Participant’s Account, and one-third on the third anniversary of the date the Annual Award Credit
is credited to the Participant’s Account.

     5. Payment of Annual Award Credit.

     (a) Time of Payment. Each Annual Award Credit will be distributed on termination of
employment or a specified date as elected by the Participant in accordance with Notice 2007-86,
2007- 46 IRB 990, which election is irrevocable. In the event that a Participant failed to make a
valid election with respect to an Annual Award Credit in accordance with Notice 2007-86, 2007- 46
IRB 990, the Participant shall be deemed to have elected to receive such Annual Award Credit on
termination of employment. With respect to each Annual Award Credit that is payable on
termination of employment, the amount payable shall be paid on the date that is six months
following the termination of employment date.

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     (b) Form of Payment. Each Annual Award Credit will be distributed either in a lump
sum or annual installments over five, ten, fifteen or twenty years as elected by the Participant in
accordance with Notice 2007-86, 2007- 46 IRB 990, which election is irrevocable. In the event that
a Participant failed to make a valid election with respect to an Annual Award Credit in accordance
with Notice 2007-86, 2007- 46 IRB 990, the Participant shall be deemed to have elected to receive
such Annual Award Credit in a lump sum.

     (c) Payment on Death. Each Participant must designate a beneficiary to receive a
distribution of his vested Account balance if the Participant dies before such amount is fully
distributed to him. In the absence of a valid or effective beneficiary designation, the
Participant’s surviving spouse will be his beneficiary or, if there is no surviving spouse, the
Participant’s estate will be his beneficiary. Upon the Participant’s death prior to full
distribution of his Account balance, the vested Account balance shall be paid to the Participant’s
beneficiary in accordance with the Participant’s election or deemed election under this Section 5.

6. Employment Termination.

     In the event of a voluntary termination of employment with the Company and its affiliates, or
in the event of a termination by the Company other than for Cause, as defined in the Employment
Agreement or due to Disability, as defined in the Employment Agreement, or death, any unvested
Annual Award Credit will continue to vest in accordance with Section 4, provided that the
Participant abides by the covenants set forth in Section 7 of the Employment Agreement. In the
event of a termination by the Company for Cause, any unvested Annual Award Credit shall be
forfeited. No additional Annual Award Credits will be credited to the Participant’s Account
following the termination of employment date.

7. Administration.

     (a) This Plan shall be administered by the L-3 Retirement Plan Administrative Committee of L-3
Communications Corporation or such other committee (comprised of members of the Board or executives
of the Company) as may be designated by the Board to administer this Plan. The committee that
administers this Plan is referred to in this document as the “Committee”.

     (b) The Committee has the full and exclusive discretion to interpret and administer the Plan.
All actions, interpretations and decisions of the Committee are conclusive and binding on all
persons, and will be given the maximum possible deference allowed by law. Neither the Committee
nor any member thereof shall be liable to any person for any action taken or omitted in connection
with the interpretation or administration of the Plan.

     (c) The Committee may delegate to any officer or employee of the Company or its affiliates the
authority to execute and deliver those instruments and documents and

3

 

to take, or refrain from taking, all actions deemed necessary, advisable or convenient for the
effective administration of the Plan in accordance with its terms and purposes. The Committee may
also appoint any other agent and delegate to such agent such powers and duties in connection with
the administration of the Plan as the Committee may deem appropriate. In making any determination
or in taking or not taking any action under the Plan, the Committee may obtain and rely upon the
advice of experts, including professional advisors to the Committee or the Company or its
affiliates. No individual who is a Participant may participate in any decision specifically
relating to his or her individual rights or benefits under the Plan.

8. Amendment or Termination.

     The Committee may amend or terminate the Plan provided that any such amendment does not reduce
or increase any benefit to which a Participant has accrued and is otherwise entitled to under the
terms of the Plan, nor accelerate the timing of any payment under the Plan, except as permitted
under Code Section 409A. The Plan shall

     terminate on the date when no Participant (or Beneficiary) has any right to or expectation of
payment of further benefits under the Plan.

9. Claims Procedure.

     (a) Any person claiming a benefit, requesting an interpretation or ruling under this Plan, or
requesting information under this Plan shall present the request in writing to the Committee, which
shall respond in writing within 90 days. The Committee may, however, extend the reply period for
an additional ninety 90 days for special circumstances. If the claim or request is denied, the
written notice of denial shall state (1) the reason for denial, with specific reference to the plan
provisions on which the denial is based, (2) a description of any additional material or
information required and an explanation of why it is necessary, and (3) an explanation of the
claims review procedure.

     (b) Within 60 days after the receipt by a claimant of the written decision described above or
the expiration of the claims review period described above including any extension, the claimant
may request review by giving written notice to the Committee. The claim or request shall be
reviewed by the Committee, which may, but shall not be required to, grant the claimant a hearing.
On review, the claimant may have representation, examine pertinent documents, and submit issues and
comments in writing. If the claimant does not request a review within such sixty-day period, he or
she shall be barred from challenging the original determination.

     (c) The decision on review shall normally be made within 60 days after the Committee’s receipt
of a request for review. If an extension of time is required for a hearing or other special
circumstances, the claimant shall be notified and the time limit shall be 120 days. The decision
shall be in writing and shall state the reason and the relevant plan provisions. All decisions on
review shall be final and binding on all parties concerned.

4

 

     (d) In the event of any dispute over benefits under this Plan, all remedies available to the
disputing individual under this Section 9 must be exhausted, within the specified deadlines, before
legal recourse of any type is sought.

10. Unfunded Status of the Plan.

     This Plan constitutes a contractual promise by the Company to make payments in the future, and
a Participant’s rights shall be those of a general, unsecured creditor of the Company. A
Participant shall not have any beneficial interest in this Plan. Notwithstanding the foregoing, to
assist the Company in meeting its obligations under this Plan, the Company may set aside assets in
a trust described in Revenue Procedure 92-64, 1992-2 C.B. 422 (generally known as a “rabbi trust”),
and the Committee may direct that the Company’s obligations under this Plan be satisfied by
payments out of such trust or trusts. It is the Company’s intention that this Plan be unfunded for
federal income tax purposes and for purposes of Title I of the Employee Retirement Income Security
Act of 1974.

11. Nonalienability of Benefits.

     A Participant’s rights to benefit payments under this Plan shall not be subject in any manner
to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or
garnishment by creditors of the Participant or his Beneficiary.

12. No Guarantee of Employment.

     This Plan shall in no way obligate the Company to continue the employment of a Participant
with the Company or limit the right of the Company at any time and for any reason to terminate the
Participant’s employment. In no event shall this Plan constitute an employment contract between
the Company and a Participant or in any way limit the right of the Company to change a
Participant’s compensation or other benefits.

13. Other Plan Benefits.

     Amounts under this Plan shall not be treated as compensation for purposes of calculating the
amount of a Participant’s benefits or contributions under any pension, retirement, or other plan
maintained by the Company (or affiliate), except as provided in such other plan.

14. Tax Withholding.

     To the extent required by law, the Company shall withhold from benefit payments hereunder any
Federal, state, or local income or payroll taxes required to be withheld and shall furnish the
recipient and the applicable government agency or agencies with such reports, statements, or
information as may be legally required.

15. Receipt and Release for Payments.

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     Any payment to a Participant, Beneficiary, or to any such person’s legal representative shall
be in full satisfaction of all claims that can be made under the Plan against the Company. The
Company may require such Participant, Beneficiary, or legal representative as a condition precedent
to such payment, to execute a receipt and release thereof in such form as shall be determined by
the Company.

16. Successors.

     The provisions of this Plan shall be binding upon and inure to the benefit of the Company, its
successors, and its assigns, and to the Participants and their heirs, executors, administrators,
and legal representatives.

17. Governing Law.

     The validity of this Plan and any of its provisions shall be construed, administered, and
governed in all respects under and by the laws of the Commonwealth of Virginia (including its
statute of limitations and all substantive and procedural law, and without regard to its conflict
of laws provisions), except as to matters of Federal law. If any provision of this instrument
shall be held by a court of competent jurisdiction to be invalid or unenforceable, the remaining
provisions hereof shall continue to be fully effective.

18. Status of Plan as ERISA “Top Hat” Plan.

     The Plan is intended to be an unfunded plan maintained primarily for the purpose of providing
deferred compensation for a select group of management or highly compensated employees and
individuals within the meaning of Title I of the ERISA. The Plan will be administered and
construed to effectuate this intent.

     IN WITNESS WHEREOF, the Company, by its duly authorized officer, has
 executed this MPRI Long Term Deferred Incentive Plan on the date indicated below.

	 	 	 	 	 	 	 
	 

	 	 	 	L-3 Services, Inc.	 	 
	 
	 	 	 	 	 	 
	Date:
12/22/2008
	 	By:	 	/s/ Kenneth W. Manne 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Title:	 	Vice President 	 	 
	 

	 	 	 	 

	 	 

6

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