Frank C. Lanza

 

                               EMPLOYMENT AGREEMENT

 

         AGREEMENT, made April 30, 1997 by and between L-3 Communications

Holdings, Inc., a Delaware corporation (the "Company") and Frank C. Lanza (the

"Executive").

 

 

                                    RECITALS

 

 

         In order to induce Executive to serve as the Chairman and Chief

Executive Officer of the Company, the Company desires to provide Executive with

compensation and other benefits on the terms and conditions set forth in this

Agreement.

 

         Executive is willing to accept such employment and perform services

for the Company, on the terms and conditions hereinafter set forth.

 

         It is therefore hereby agreed by and between the parties as follows:

 

         1. Employment.

 

         1.1 Subject to the terms and conditions of this Agreement, the Company

agrees to employ Executive during the Term hereof as its Chairman and Chief

Executive Officer. In his capacity as the Chairman and Chief Executive Officer

of the Company, Executive shall report to the Board of Directors of the Company

(the "Board") and shall have the customary powers, responsibilities and

authorities of chairmen and chief executive officers of corporations of the

size, type and nature of the Company, as it exists from time to time, and as

are assigned by the Board.

 

         1.2 Subject to the terms and conditions of this Agreement, Executive

hereby accepts employment as the Chairman and Chief Executive Officer of the

Company commencing as of the date hereof (the "Commencement Date") and agrees

to devote his full business time and efforts to the

 

                                       1

 

<PAGE>

 

performance of services, duties and responsibilities in connection therewith,

subject at all times to review and control of the Board. In addition, during

the Initial Term and any Renewal Term, (i) the Company agrees to nominate

Executive for election to the Board and use its best efforts to cause his

election to the Board and Executive agrees to serve on the Board of the Company

and (ii) during the Term of Employment, Executive also agrees to serve, if

elected, as an officer and/or director of any Subsidiary of the Company,

without the payment of any additional compensation therefor. Upon the

termination of Executive's employment for any reason, Executive shall resign as

a member of the Board of the Company or any Subsidiary of the Company.

 

         1.3 Nothing in this Agreement shall preclude Executive from engaging

in charitable work and community affairs, from managing any investment made by

him with respect to which Executive is not substantially involved with the

management or operation of the entity in which Executive has invested (provided

that no such investment in publicly traded equity securities or other property

may exceed 5% of the equity of any entity, without the prior approval of the

Board) or from serving, subject to the prior approval of the Board, as a member

of boards of directors or as a trustee of any other corporation, association or

entity, to the extent that any of the above activities do not materially

interfere with the performance of his duties hereunder. For purposes of the

preceding sentence, any approval by the Board required therein shall not be

unreasonably withheld.

 

         2. Term of Employment. Executive's term of employment under this

Agreement (the "Term of Employment") shall commence on the Commencement Date

and, subject to the terms hereof, shall terminate on the earlier of (i) the

fifth anniversary of the Commencement Date (the "Initial Term") or (ii)

termination of Executive's employment pursuant to this Agreement.

Notwithstanding the foregoing, subsequent to the Initial Term, Executive's

 

                                       2

 

<PAGE>

 

Term of Employment under this Agreement shall automatically renew annually for

one year renewal terms (the "Renewal Term") unless either party shall deliver

to the other written notice, at least 90 days prior to the expiration of the

Initial Term or any Renewal Term, that the Term of Employment shall not be

extended. In such event, the Term of Employment will end at its then scheduled

expiration date and shall not be further extended except by written agreement

of the Company and Executive.

 

         3. Compensation.

 

         3.1 Salary. During the Initial Term of Executive's employment under

the terms of this Agreement, the Company shall pay Executive a base salary

("Base Salary") at an initial rate of $750,000 per annum. Base Salary shall be

payable in accordance with the ordinary payroll practices of the Company.

During the Term of Employment, the Board shall, in good faith, review, at least

annually, the Executive's Base Salary in accordance with the Company's

customary procedures and practices regarding the salaries of senior executives

and may, if determined by the Board to be appropriate, increase Executive's

Base Salary following such review. Increases in the rate of salary, once

granted, shall not be subject to revocation or decrease thereafter, and "Base

Salary" for all purposes herein shall be deemed to be a reference to such

higher amount.

 

         4. Employee Benefits.

 

         4.1 Equity and Stock Options. Simultaneously with the execution of

this Agreement, the Company and Executive are entering into the Subscription

Agreement, the Option Agreement and the Stockholders' Agreement in the forms

attached hereto as Exhibits A, B and C, respectively (the "Ancillary

Documents"). Executive shall not be eligible to receive any stock option or

other equity incentive other than as set forth in the Ancillary Documents.

 

                                       3

 

<PAGE>

 

         4.2 Employee Benefit Programs, Plans and Practices. The Company shall

provide Executive while employed hereunder with coverage under such employee

benefits (commensurate with his position in the Company and to the extent

permitted under any employee benefit plan) in accordance with the terms

thereof, which the Company makes available to its senior executives.

 

         4.3 Vacation. Executive shall be entitled to twenty (20) business days

paid vacation each calendar year, which shall be taken at such times as are

consistent with Executive's responsibilities hereunder. Any vacation days not

taken during the calendar year in which they are accrued may be carried over

into the next subsequent year.

 

         5. Expenses. Subject to prevailing Company policy or such guidelines

as may be established by the Board, the Company will reimburse Executive for

all reasonable expenses incurred by Executive in carrying out his duties.

 

         6. Termination of Employment.

 

         6.1 Termination Not for Cause or for Good Reason. (a) The Company or

Executive may terminate Executive's Term of Employment at any time for any

reason by written notice at least thirty (30) days in advance. If Executive's

employment is terminated (i) by the Company other than for Cause (as defined in

Section 6.2(b) hereof), Disability (as defined in Section 6.3 hereof) or death

or (ii) by Executive for Good Reason (as defined in Section 6.1(b) hereof)

prior to the end of the Initial Term or any Renewal Term, the Company shall

continue to pay Executive's Base Salary through the end of the Initial Term or

the Renewal Term (the "Continuation Period"), as the case may be, with such

payments to be made in accordance with the terms of Section 3.1. (the

"Severance Payments"). In addition, the Company shall continue to provide

Executive during the Continuation Period with life insurance, medical and

hospitalization benefits (collectively, the "Continuation Benefits") comparable

to those provided to other senior executives; provided, however,

 

                                       4

 

<PAGE>

 

that any such coverage shall terminate to the extent that Executive is offered

or obtains comparable life insurance, medical or hospitalization benefits

coverage from any other employer during the Continuation Period.

Notwithstanding the foregoing, if Executive breaches any provision of Section

11 hereof, the remaining balance of the Severance Payments and any Continuation

Benefits shall be forfeited. Executive shall be entitled to receive the

benefits, if any, provided under the employee benefit programs, plans and

practices referred to in Section 4.2, in accordance with their terms.

 

         (b) For purposes of this Agreement, "Good Reason" shall mean any of

the following (without Executive's express prior written consent):

 

         (i) A reduction by the Company in Executive's Base Salary (in which

     event Severance Payments shall be made based upon Executive's Base Salary

     in effect prior to any such reduction); or

 

         (ii) Any material diminution or material adverse change in Executive's

     titles, duties or responsibilities, unless due to a promotion or increased

     responsibility of Executive.

 

         (c) Termination by Executive for Good Reason shall be made by delivery

to the Company by Executive of written notice, given at least 45 days prior to

such termination, which sets forth the conduct believed to constitute Good

Reason; provided, however, that the Company shall have the opportunity to cure

the Good Reason during the first 30 days of such notice period and if the Good

Reason is cured within such 30-day period, Executive's notice of termination

shall be deemed withdrawn. If no notice is given within 90 days of the event

giving rise to Good Reason, the Good Reason shall be deemed waived.

 

         6.2 Voluntary Termination by Executive; Discharge for Cause. (a) In

the event that Executive's employment is terminated (i) by the Company for

Cause, as hereinafter defined or (ii) by Executive other than for Good Reason,

Disability or death, Executive shall only be entitled to receive (A) any Base

Salary accrued but unpaid prior to such termination and (B) any

 

                                       5

 

<PAGE>

 

benefits provided under the employee benefit programs, plans and practices

referred to in Section 4.2 hereof, in accordance with their terms. After the

termination of Executive's employment under this Section 6.2, the obligations

of the Company under this Agreement to make any further payments, or provide

any benefits specified herein, to Executive shall thereupon cease and

terminate.

 

         (b) As used herein, the term "Cause" shall be limited to (i) gross

neglect of or willful and continuing refusal by Executive to substantially

perform Executive's duties hereunder (other than due to death or Disability, as

such term is defined in Section 6.3 hereof), (ii) any breach of the provisions

of Section 11 of this Agreement by Executive, (iii) willfully engaging in

conduct that is demonstrably injurious to the Company or the Company's

subsidiaries or affiliates by Executive or (iv) conviction of, or plea of nolo

contendere, by Executive to (a) any felony or (b) a misdemeanor involving moral

turpitude. Termination of Executive pursuant to this Section 6.2 shall be made

by delivery to Executive of written notice, given at least 30 days prior to

such Termination, from the Board specifying the particulars of the conduct by

Executive set forth in any of clauses (i) through (iv) above. Termination shall

be effected by a majority vote of the Board at a meeting at which Executive

shall have had the opportunity (along with counsel) to be heard unless within

30 days after receiving such notice, Executive shall have cured Cause to the

reasonable satisfaction of the Board; provided, however, that no cure shall be

possible if termination for Cause is made pursuant to this Section 6.2(b)(ii)

or (iv). As long as Executive is on the Board, he shall reasonably cooperate to

cause a valid Board meeting to occur.

 

         6.3 Disability. In the event of the Disability (as defined below) of

Executive during the Term of Employment, the Company may terminate Executive's

Term of Employment upon written notice to Executive (or

 

                                       6

 

<PAGE>

 

Executive's personal representative, if applicable) effective upon the date of

receipt thereof (the "Disability Commencement Date"). The obligation of the

Company to make any further payments under this Agreement shall, except for

earned but unpaid Base Salary, cease as of the Disability Commencement Date;

provided, however, that Executive shall continue to receive payments equal to

Executive's Base Salary otherwise payable under this Agreement for a period

equal to the lesser of (i) six months after the date of the occurrence of the

incapacity causing Executive's Disability and (ii) the number of months

otherwise remaining in the Term of Employment, in either case, reduced by the

amount of any disability payments otherwise payable to Executive under any

insurance program of the Company. The term "Disability," for purposes of this

Agreement, shall mean Executive's absence from the full-time performance of

Executive's duties pursuant to a reasonable determination made in accordance

with the Company's disability plan that Executive is disabled as a result of

incapacity due to physical or mental illness that lasts, or is reasonably

expected to last, for at least six months.

 

         6.4 Death. In the event of Executive's death during his Term of

Employment hereunder or at any time thereafter while payments are still owing

to Executive under the terms of this Agreement, all obligations of the Company

to make any further payments, other than the obligation to pay any accrued but

unpaid Base Salary or remaining payments that were payable to Executive by

reason of his termination of employment under Section 6.1 to which Executive

was entitled at the time of his death, shall terminate upon Executive's death,

and benefits shall become payable under the Company's life and accidental death

insurance program in accordance with its terms. Benefits under all other

employee benefit programs, plans and practices shall be paid in accordance with

their terms.

 

         6.5 No Further Notice or Compensation. Executive understands and

agrees that he shall not be entitled to any further notice or compensation

 

                                       7

 

<PAGE>

 

upon Termination of Employment under this Agreement, other than amounts

specified in this Section 6 and the Ancillary Documents. Executive shall not

have any obligation to seek comparable employment following such termination or

resignation, nor shall any compensation received from any subsequent employment

reduce the Company's obligations hereunder.

 

         6.6 Executive's Duty to Provide Materials. Upon the termination of the

Term of Employment for any reason, Executive or his estate shall surrender to

the Company all correspondence, letters, files, contracts, mailing lists,

customer lists, advertising materials, ledgers, supplies, equipment, checks,

and all other materials and records of any kind that are the property of the

Company or any of its subsidiaries or affiliates, that may be in Executive's

possession or under his control, including all copies of any of the foregoing;

provided, however, Executive shall not be required to surrender his personal

rolodex, telephone book, appointment book and personal materials acquired by

Executive prior to the date hereof.

 

         7. Notices. All notices or communications hereunder shall be in

writing, addressed as follows:

 

         To the Company:

 

 

         with a copy to:

 

               Alvin H. Brown, Esq.

               Simpson Thacher & Bartlett

               425 Lexington Avenue

               New York, New York  10017

 

         To Executive:

 

               Frank C. Lanza

               37 Murray Hill Road

               Scarsdale, NY  10583

 

         with a copy to:

 

               Robert C. Schwenkel

               Fried, Frank, Harris, Shriver & Jacobson

               1 New York Plaza

               New York, New York  10004

 

                                       8

 

<PAGE>

 

Any such notice or communication shall be delivered by hand or by courier or

sent certified or registered mail, return receipt requested, postage prepaid,

addressed as above (or to such other address as such party may designate in a

notice duly delivered as described above), and the third business day after the

actual date of sending shall constitute the time at which notice was given.

 

         8. Separability. If any provision of this Agreement shall be declared

to be invalid or unenforceable, in whole or in part, such invalidity or

unenforceability shall not affect the remaining provisions hereof which shall

remain in full force and effect.

 

         9. Assignment. This contract shall be binding upon and inure to the

benefit of the heirs and representatives of Executive and the assigns and

successors of the Company, but neither this Agreement nor any rights or

obligations hereunder shall be assignable or otherwise subject to hypothecation

by Executive (except by will or, in the case of the Options, by trust for the

benefit of Executive's spouse and/or children or by operation of the laws of

intestate succession) or by the Company, except that the Company may assign

this Agreement to any successor (whether by merger, purchase or otherwise) to

all or substantially all of the stock, assets or businesses of the Company, if

such successor expressly agrees to assume the obligations of the Company

hereunder.

 

         10. Amendment. This Agreement may only be amended by written agreement

of the parties hereto.

 

         11. Nondisclosure of Confidential Information: Non-Competition. (a)

While employed by the Company, and at any time thereafter, the Executive shall

not, without the prior written consent of the Company, use, divulge, disclose

or make accessible to any other person, firm, partnership, corporation or other

entity any Confidential Information pertaining to the business of the Company

or any of its affiliates, except (i) while employed

 

                                       9

 

<PAGE>

 

by the Company, in the business of and for the benefit of the Company or (ii)

when required to do so by applicable law, by a court, by any governmental

agency, or by any administrative body or legislative body (including a

committee thereof); provided, however, that Executive shall give reasonable

notice under the circumstances to the Company that he has been notified that he

will be required to so disclose as soon as possible after receipt of such

notice in order to permit the Company to take whatever action it reasonably

deems necessary to prevent such disclosure and Executive shall cooperate with

the Company to the extent that it reasonably requests him to do so. For

purposes of this Section 11(a), "Confidential Information" shall mean

non-public information concerning the financial data, strategic business plans,

product development (or other proprietary product data), customer lists,

marketing plans and other non-public, proprietary and confidential information

of the Company, its subsidiaries, its affiliates or customers, that, in any

case, is not otherwise available to the public (other than by Executive's

breach of the terms hereof).

 

         (b) In consideration of the Company's obligations under this

Agreement, Executive agrees that during the period of his employment hereunder

and for a period of twelve (12) months thereafter, without the prior written

consent of the Board, (A) he will not, directly or indirectly, either as

principal, manager, agent, consultant, officer, stockholder, partner, investor,

lender or employee or in any other capacity, carry on, be engaged in or have

any financial interest in, any entity which is in competition with the business

of the Company or its subsidiaries and (B) he shall not, on his own behalf or

on behalf of any person, firm or company, directly or indirectly, solicit or

offer employment to any person who is or has been employed by the Company or

its subsidiaries at any time during the twelve (12) months immediately

preceding such solicitation; provided, however, that if the Executive's

employment terminates following the

 

                                       10

 

<PAGE>

 

expiration of the Initial Term, this subsection 11(b) shall only be effective

during the period, if any, that the Company pays the Executive the Severance

Payments.

 

         (c) For purposes of this Section 11, an entity shall be deemed to be

in competition with the Company if it is principally involved in the purchase,

sale or other dealing in any property or the rendering of any service

purchased, sold, dealt in or rendered by the Company as a part of the business

of the Company within the same geographic area in which the Company effects

such sales or dealings or renders such services. Notwithstanding this

subsection 11(c) or subsection 11(b), nothing herein shall (i) prohibit

Executive from serving as an officer, employee or independent consultant of any

business unit or subsidiary which would not otherwise be in competition with

the Company or its subsidiaries, but which business unit is a part of, or which

subsidiary is controlled by, or under common control with, an entity that would

be in competition with the Company or its subsidiaries, so long as Executive

does not engage in any activity which is in competition with any business of

the Company or its subsidiaries or (ii) be construed so as to preclude

Executive from investing in any publicly or privately held company, provided

Executive's beneficial ownership of any class of such company's securities does

not exceed 5% of the outstanding securities of such class.

 

         (d) Executive agrees that this covenant not to compete is reasonable

under the circumstances and will not interfere with his ability to earn a

living or to otherwise meet his financial obligations. Executive and the

Company agree that if in the opinion of any court of competent jurisdiction

such restraint is not reasonable in any respect, such court shall have the

right, power and authority to excise or modify such provision or provisions of

this covenant as to the court shall appear not reasonable and to enforce the

remainder of the covenant as so amended. Executive agrees that any breach of

the covenants contained in this Section 11 would

 

                                       11

 

<PAGE>

 

irreparably injure the Company. Accordingly, Executive agrees that, in the

event the Company determines that Executive has breached the covenants

contained in this Section 11, the Company may, in addition to pursuing any

other remedies it may have in law or in equity, cease making any payments

otherwise required by this Agreement and obtain an injunction against Executive

from any court having jurisdiction over the matter restraining any further

violation of this Agreement by Executive.

 

         12. Beneficiaries; References. Executive shall be entitled to select

(and change, to the extent permitted under any applicable law) a beneficiary or

beneficiaries to receive any compensation or benefit payable hereunder

following Executive's death, and may change such election, in either case by

giving the Company written notice thereof. In the event of Executive's death or

a judicial determination of his incompetence, reference in this Agreement to

Executive shall be deemed, where appropriate, to refer to his beneficiary,

estate or other legal representative. Any reference to the masculine gender in

this Agreement shall include, where appropriate, the feminine.

 

         13. Survivorship. The respective rights and obligations of the parties

hereunder shall survive any termination of this Agreement to the extent

necessary to the intended preservation of such rights and obligations. The

provisions of this Section 13 are in addition to the survivorship provisions of

any other section of this Agreement.

 

         14. Dispute Resolution; Legal Fees. Any dispute or controversy arising

under or in connection with this Agreement shall be resolved by the court with

the appropriate jurisdiction in the State of New York. The prevailing party

shall be entitled to be reimbursed for any reasonable legal fees and other fees

and expenses which may be incurred in respect of enforcing its respective

rights under this Agreement.

 

                                       12

 

<PAGE>

 

         15. Governing Law. This Agreement shall be construed, interpreted and

governed in accordance with the laws of the State of New York, without

reference to rules relating to conflicts of law.

 

         16. Effect on Prior Agreements. This Agreement and the Ancillary

Documents contain the entire understanding between the parties hereto and

supersedes in all respects any prior or other agreement or understanding, both

written and oral, between the Company, any affiliate of the Company or any

predecessor of the Company or affiliate of the Company and Executive.

 

         17. Withholding. The Company shall be entitled to withhold from

payment any amount of withholding required by law.

 

         18. Survival. Notwithstanding the expiration of the term of this

Agreement, the provisions of Section 11 hereunder shall remain in effect as

long as is reasonably necessary to give effect thereto in accordance with the

terms hereof.

 

         19. Counterparts. This Agreement may be executed in two or more

counterparts, each of which will be deemed an original.

 

                            L-3 Communications Holdings, Inc.

 

                            By /s/ Michael T. Strianese

                               Name:  Michael T. Strianese

                               Title:  Vice President, Finance and Controller

 

 

                              /s/ Frank C. Lanza