Step by Step Stock Purchase by rui15627

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									    E M P L O Y E E STO C K PU R C H A S E P L A N




L    -   3   C   O   M   M   U   N   I   C   A   T   I   O   N   S
Investing and Sharing in Our Success

   The value of the L-3 Communications Holdings, Inc. common stock (L-3
   stock) is affected by our overall performance. Everything we do to work
   smarter and more efficiently has an impact on our bottom line, which, in
   turn, impacts our stock price.

   The L-3 Employee Stock Purchase Plan (ESPP) provides you with a unique
   opportunity to personally share in our overall success. L-3 is a firm believer
   in employee stock ownership. The ESPP puts this commitment into action.          table of contents
   If you are in the ESPP, you may directly benefit from our potential growth,
                                                                                    1    Highlights of your plan
   over and above our comprehensive compensation and benefits package.
                                                                                    2    How it works

                                                                                    3    How to enroll online

                                                                                    4    How to enroll by phone

                                                                                    5    Managing your ESPP account

                                                                                    6    Buying your shares

                                                                                    7    Selling your shares

                                                                                    9    Paying U.S. taxes

                                                                                    12   Terms to know



                                                                                    inside you will find:
                                                                                         A detailed explanation of how your ESPP works

                                                                                         Considerations for managing your ESPP

                                                                                         An introduction to the wide range of Fidelity
                                                                                         services, products, and research available to
                                                                                         you as part of your ESPP
..............................EMPLOYEE STOCK PURCHASE PLAN




                                         Highlights of Your Plan

                                             Eligibility You are eligible to enroll immediately upon hire if you are an employee of L-3
                                             Communications, who is paid on a U.S. payroll in U.S. dollars. If you do not meet these
                                             criteria, contact your local Benefits Representative to find out whether you are eligible for
                                             the ESPP. In order to participate, you will need to enroll in the Plan. See the How to Enroll
                                             section for more details on this process.

                                             Discounted Share Price The ESPP gives you the opportunity to buy L-3 stock at a 15%
                                             discount. Depending on how our stock performs, this discount could be worth even more
                                             than 15%.

                                             Convenient Payroll Deductions When you enroll in the ESPP, you authorize L-3 to deduct
                                             from 1% to 10% of your eligible compensation up to a $21,250 maximum annual contribution.
                                             These after-tax contributions are held by L-3 Communications until the end of each Offering
                                             Period and are used by the ESPP to purchase L-3 stock.

                                             An “Offering Period” is the six-month period during which the ESPP collects payroll deduction        1
              KEY TERM: Trading Day          contributions. At the end of each Offering Period, your accumulated contributions are used to
     A “Trading Day” means a day on          purchase L-3 stock. Our plan has two Offering Periods a year: the first one covers the first
   which the New York Stock Exchange         trading day in January through the last trading day in June and the second one is from the
                  is open for trading.       first trading day in July through the last trading day in December.

                                             Systematic Purchase Twice a year (at the end of each Offering Period, your accumulated
                                             contributions are used to buy L-3 stock), the ESPP will use the money you contributed to
                                             buy L-3 stock with no fees or commissions on the purchase transaction. These shares will
                                             then be placed in your Fidelity Account®
                                                                                    .

                                             Ownership Rights The shares purchased with your contributions are yours as soon as
                                             they are credited to your individual non-retirement brokerage account. Once you become
                                             a stockholder, you will have the same rights as any other stockholder, including the right
                                             to vote your shares and to receive dividends.

                                             Commissions All transactions conducted in your Fidelity Account will be subject to
                                             commissions and fees governing that account as outlined in the Brokerage Commission
                                             Schedule contained within the Customer Agreement located on www.Fidelity.com. Please
                                             refer to the Commissions & Fees section for further details.

                                             Possible Tax Advantages Your ESPP is a qualified plan under IRS Code Section 423. This
                                             means that for stock purchased under the plan, all income taxes are deferred until you sell
                                             your shares. A portion of your gains will be taxed at the more favorable capital gains tax
                                             rate provided you hold the stock for at least one year after the purchase date and for two
                                             years after the start of the Offering Period. You may sell your stock sooner, but an early sale
                                             will change the tax treatment (see the Withdrawing or Transferring Your Shares section
                                             for more information).

                                             Statements You’ll receive a statement on a monthly basis if there is activity in your account.
                                             If you do not have any activity during the month, you will then receive a statement on a quarterly
                                             basis. You will also receive a confirmation statement for each transaction processed through
                                             your account.
EMPLOYEE STOCK PURCHASE PLAN .................................



        Paperless Statements Through Fidelity’s e-Delivery program, you can elect to reduce the
        amount of paper mail you receive from Fidelity. You can receive account statements, trade
        confirmations, and Fidelity mutual fund prospectuses and financial reports online. To sign
        up for e-Delivery, visit www.Fidelity.com/edelivery.1

        You are now also able to have view-only access to your stock information through Fidelity
        Anywhere.SM Fidelity Anywhere is available through Web-enabled cell phones and wireless
        personal digital assistants (PDAs) over several major wireless systems, including Sprint,
        Nextel, and Verizon. Visit www.Fidelity.com for more information.2




        How it Works
                                                                                                                KEY TERM: Compensation
                                                                                                                For the purposes of the ESPP, the following
        The Risks and Rewards of Owning L-3 Stock                                                               types of compensation are eligible for ESPP
                                                                                                                contributions: annual base salary, overtime,
2       The ESPP provides you with a unique opportunity to become an owner of L-3. While stock
                                                                                                                shift differentials, lead differentials, site
        ownership potentially allows you to share in the profits when share values increase, you would
                                                                                                                differentials, lump-sum vacation pay (other
        likewise share in the losses should the value decrease. As optimistic as L-3 is about its future,
                                                                                                                than in connection with termination of
        as with any investment, it is important to understand the risk potential of stock ownership and
                                                                                                                employment) mandated by a collective
        that there is no guarantee as to how our stock will perform in the years to come.
                                                                                                                bargaining agreement, and elective deferrals
                                                                                                                under any L-3 benefit plan. It does not
        How the ESPP Works                                                                                      include bonuses, lump-sum vacation buyouts,
                                                                                                                lump-sum vacation pay on termination of
        On the last business day of each Offering Period, the ESPP uses your accumulated contributions to       employment, commissions, or other pay
        buy L-3 stock for you at a discount. (The number of shares you may purchase may be limited under        not specifically mentioned above.
        certain circumstances, please refer to the Limits on the Number of Shares You May Buy section.)         Generally, ESPP contributions must be
        Note: You pay no fees or commissions when shares are purchased and placed in your account. All          made via payroll deduction; you may not
        shares purchased on your behalf are deposited in an individual non-retirement brokerage account         use cash, checks, money orders, or other
        set up in your name, where they remain until you sell or withdraw them. Shares will be placed in        negotiable instruments to buy stock
        your account as soon as administratively possible after the Offering Period.                            through the ESPP. However, you may be
                                                                                                                able to make cash lump-sum contributions
                                                                                                                during an approved unpaid leave of
        How to Enroll
                                                                                                                absence. See your Benefit Representative
        To participate in the ESPP, you will need to contact Fidelity Investments. Please refer to the          for details.
        How to enroll online or How to enroll by phone sections for more details. Once you have                 You can enroll in the ESPP plan either
        completed the enrollment process your payroll contributions will begin as soon as administratively      through the Web or by calling a Fidelity
        possible, generally within one to two pay periods. It is important to remember that your contribution   Stock Plan Services Representative.
        percentage remains in effect until you change it.

        You may direct from 1% to 10% of your eligible compensation to the ESPP, with a $21,250 maximum
        annual contribution. Your contributions are deducted from your paychecks on an after-tax basis. You
        will not receive interest on these contributions during this accumulation period.
...............................EMPLOYEE STOCK PURCHASE PLAN




                                                            How to enroll online
                     STEP 1: Log in to http://www.netbenefits.fidelity.com and click Access My Benefits.

                     Enter your Social Security number and Personal Identification Number (PIN). If you do not have a PIN,
                     click on New User Registration to the right of the Login box. Please follow the instructions provided.


                     STEP 2: Begin Your Enrollment.

                                • On the NetBenefits  SM
                                                           homepage, click Enroll Today to the right of the L-3 Employee Stock
                                   Purchase Plan link.

                     Note: If you have an existing individual Fidelity Account,that account will be used to purchase L-3 shares
                     through the ESPP. To complete your enrollment, please go to Step 5.


                     STEP 3: Click Apply Online.

                                • Enter Account Owner information.
                                • Enter Employment information.
                                • Enter Financial information. We are required by industry regulations to obtain Financial information.   3

                                • If necessary, click Change Information in any section where you need to make changes to the
                                   information previously entered.


                     STEP 4: Review the Customer Agreement.

                                • Click I Agree at the bottom of the page to agree to the terms of the Customer Agreement.
                                • Your account is now established and your Account Number will be displayed.
                                • Make a note of this account number for your future use.

                     STEP 5: Click Elect your Payroll Deduction.

                                • Select Enroll Now to the right of the L-3 Stock Purchase Plan link.
                                • Enter the percent (minimum 1%, maximum 10%, in whole percentages only) of eligible pay that you
                                   would like deducted each pay period. Click Cancel if you want to change the percent you entered.


                     STEP 6: Click Preview Payroll Deduction to confirm the deduction percentage you entered.

                                • The Enrollment Verification window will open and display the percentage you entered.

                     STEP 7: Click Submit to complete your enrollment.

                                • You will receive an enrollment confirmation number.
                                • Make a note of the confirmation number and maintain it for your records.

                     Going forward, you can access your account at http://www.netbenefits.fidelity.com or by contacting
                     a Fidelity Stock Plan Services Representative to obtain your account balance, change your payroll
                     deduction election, request the sale of shares, suspend contributions, or withdraw from the Plan,
                     per your plan rules.End Call.
EMPLOYEE STOCK PURCHASE PLAN .................................




                                          How to enroll by phone
         STEP 1: Call Fidelity at 1-800-354-7125.

                    Monday through Friday, from 8:00 a.m. – midnight ET.

                    • Press 2 for Stock Plan Services.
                    • Enter your Social Security number.
                    • When prompted for your PIN, simply stay on the line to speak with a Fidelity Stock Plan
                      Services Representative.


         STEP 2: Request a Fidelity Account application.

                    • Provide the Fidelity Stock Plan Services Representative with your payroll deduction percentage.
                      An account will be opened for you, and the account application will be mailed to you along with
                      a copy of the Customer Agreement.

                    • The Fidelity Stock Plan Services Representative will give you a confirmation number for your
                      enrollment election, which you should maintain for your records.
4
         STEP 3: When you receive the application, complete and return it immediately.

                    Failure to return a completed and signed Fidelity Account application may result in mandatory
                    backup tax withholding upon certain transactions in your account and restricted online access.
                    (It is not necessary to return an application if you open your Fidelity Account online).

         You may call a Fidelity Stock Plan Services Representative to confirm your enrollment election one business
         day after requesting an application.



         Once You Have Enrolled and Become a Participant in the Plan

         You can go online at http://www.netbenefits.fidelity.com or contact a Fidelity Stock Plan Services
         Representative to:

         • Obtain your account balance
         • Change your payroll deduction election
         • Request the sale of shares
         • Suspend contributions
         • Withdraw from the Plan, per your plan rules
...............................EMPLOYEE STOCK PURCHASE PLAN




                 Managing Your ESPP Account
                     Fidelity Investments will establish for you an individual non-retirement brokerage account known as the Fidelity
                     Account. If you are already the single owner of a Fidelity Account, Fidelity will not open another account on your
                     behalf. (If you have a joint account, Fidelity is required to open a single owner account on your behalf.)

                     If you are logging in to http://www.netbenefits.fidelity.com for the first time, you will need to create
                     a PIN. Please click “New User Registration” on the login page and follow the prompts. After creating a
                     PIN, the next step is to activate your account online. This activation is required in order for you to initiate
                     any account activity. In addition, activation allows you to avoid any potential additional backup tax
                     withholding on the gross proceeds from any shares of stock you may sell, along with any dividend or
                     interest you may receive.


                     Changing Your Contributions
                     You may increase and/or decrease your contribution percentage one time per Offering Period. In addition,
                     you may also cease contributions at any time. Please refer to Stopping Your Contributions.
                                                                                                                                           5
                     Stopping Your Contributions & Discontinuing Your Participation
                     To discontinue your contributions to the ESPP, you must log in to http://www.netbenefits.fidelity.com
                     or call Fidelity Investments at 1-800-354-7125, option 2. The change will be effective as soon as
                     administratively possible, generally within one to two pay periods. You have two options:

                     • If you wish to discontinue participation in the ESPP, log in to http://www.netbenefits.fidelity.com
                       and select 0% as your contribution percentage. You would still be eligible to have your contributions,
                       if any, be included with the upcoming purchase and you will receive shares of L-3 stock at the end of
                       the Offering Period.
                     • If you would also like to have your contributions refunded, in addition to discontinuing your payroll deductions,
                       you must elect to withdraw from the Plan. If you choose to withdraw these contributions, you must withdraw
                       all of the contributions made during that Offering Period. This withdrawal can be processed by contacting
                       a Fidelity Stock Plan Services Representative. Once the request has been made, these contributions will
                       be refunded in one to two pay periods through your business unit’s Payroll Department.

                     IMPORTANT: If you elect to stop contributions, you cannot resume contributions again during the same
                     Offering Period. You must wait until a subsequent Offering Period to re-enroll in the ESPP.


                     Limits on the Number of Shares You May Buy
                     An individual participant can buy no more than a total value of $25,000 of stock through the ESPP during
                     any calendar year (determined at fair market value as of the beginning of the Offering Period). Also note
                     that you would not be allowed to buy stock through the ESPP if it would make you an owner of five percent
                     (5%) or more of L-3’s stock.


                     How to Designate a Beneficiary
                     After accessing your brokerage account, you can designate a beneficiary online by clicking on Your
                     Profile and then Beneficiaries and then follow the prompts thereafter. If you do not wish to designate a
                     beneficiary electronically, you can also download a Transfer on Death form, which must be returned directly
                     to Fidelity. You can locate the form by typing Transfer on Death within the search area of Fidelity’s website.
                     All ESPP beneficiary designations are maintained at Fidelity.
EMPLOYEE STOCK PURCHASE PLAN .................................



                              When Your Employment Ends
                              Your ESPP participation ends when your employment ends — whether because of retirement,
                              disability, death, or other termination of employment.Contributions deducted from your paychecks
                              that have not yet been used to buy shares will be refunded to you (or, in the event of your death,
                              to your designated beneficiary or your estate). Shares of L-3’s stock credited to your account
                              will remain in your account until you sell or withdraw the shares.




                              Buying Your Shares

                              Buying Shares
                                                                                                                                         KEY TERM: Purchase Date
                              With the contributions you make during the Offering Period, the Plan buys shares for you on                “Purchase Date” is the last business day
                              each Purchase Date at the applicable purchase price (see illustration below). For example,                 of each Offering Period. It is the date on
                              if the purchase price is $46.75 and you have contributed $2,500 during that Offering Period,               which the ESPP uses your contributions to
     6
                              the ESPP would buy 53.475 shares for you ($2,500 divided by $46.75). The number of shares                  purchase shares for you. These shares are
                              you can buy may be limited.                                                                                then credited to your Fidelity Account as
                                                                                                                                         soon as administratively possible.
                              How the Purchase Price Is Determined
                              The price you pay for each share of L-3 stock on each Purchase Date will be 85% of the stock’s
                              fair market value on the first or last business day of the Offering Period, whichever is lower.
                              For example, if the fair market value of a share of L-3 stock was $55 on the first trading day
                              of the Offering Period and $60 on the last trading day, the price you would pay on the Purchase
                              Date would be $46.75, which is the lesser of $46.75 (85% of $55) and $51 (85% of $60).
                              There are no fees or transaction charges to pay when the shares are purchased.



           Examples:
           Here are another two examples of what $2,500 in contributions during a given Offering Period would yield.

             Fair Market Value On…
                                                Purchase Price
         First Day of                        (85% of lesser of first                                               Account Value
         the Offering   Last Day of the         day/last day fair            Number of              Your              Following
            Period      Offering Period          market value)                Shares                Cost           Offering Period

1.          $53             $61.50                   $45.05                    55.493             $2,500             $3,412.82


2.          $62             $56.00                   $47.60                    52.521             $2,500             $2,941.18



           The first example above shows how the 15% discount can be worth more than 15% if the stock price at the end of the
           Offering Period is higher than it was at the beginning. In this example, you’re buying over $3,400 of L-3 stock for $2,500,
           which translates into approximately a 27% discount!
...............................EMPLOYEE STOCK PURCHASE PLAN




                                                Selling Your Shares
                                                    You will be taxed when you sell your shares. Please refer to the Paying U.S. Taxes section for more
                                                    information.

                                                    To sell your ESPP shares, you may make your transactions via Web, wireless device, telephone, or
                                                    with assistance from a Fidelity Stock Plan Services Representative.


                                                    Types of Orders
                                                    The following three types of orders are available when placing a sell order:

                                                    1. Market Order — This order is processed at the best available sale price as market conditions allow.
                                                    2. Day Limit Order — This order allows you to specify a price at which you want your shares to be
                                                      sold. If, during the trading day, the stock price equals or exceeds the minimum price specified by
                                                      you, your order will be executed at your limit price or better, as market conditions allow. If it does
                                                      not reach or exceed the price you indicate, your order will be canceled.
                                                                                                                                                                               7
                                                    3. Good-Til-Canceled Order — This order also allows you to indicate a price at which your shares
                                                      are to be sold. Your order instructions will be effective for a maximum of 120 days and will be
                                                      executed when the stock price equals or exceeds the minimum price specified by you as market
                                                      conditions allow. If the stock price does not meet or exceed the specified price within the 120-day
                                                      period, your order will be canceled. Certain sell orders are subject to a per-order fee as noted in
                                                      the Fees and Commissions section of the online Customer Agreement.
            KEY TERM: Fair Market Value
    “Fair Market Value” means the average
      of the highest and lowest sales prices           Via Web/Wireless:
            of a share of stock reported on a
                                                       •   Log in to your account at http://www.netbenefits.fidelity.com,
     consolidated basis for securities listed
         on the New York Stock Exchange for            •   Indicate the number of shares to sell,
        trades on the date as of which such            •   Review and confirm your order(s) online.
   value is being determined or, if that day
            is not a trading day, then on the
         immediately preceding trading day.
                                                       Via telephone:
                                                       When contacting Fidelity via the telephone at 1-800-354-7125, you have the following two options as summarized below:

                                                           Your first option is to use Fidelity’s Fidelity Automated Service Telephone (FAST      ®
                                                                                                                                                   ):

                                                           •   At the prompts, enter your Social Security number or Customer ID, and then enter your PIN followed by the
                                                               # key. If you’re using FAST® for the first time, please have your account number available. It is necessary
                                                               to establish your PIN.

                                                           •   Select one of the following from the main menu:
                                                               – Transactions
                                                               – Quotes
                                                               – Accounts/Holdings
                                                               – Order Review and Account History
                                                               – FAST Services


                                                           Your second option is to speak with a Fidelity Stock Plan Services Representative. They are available
                                                           from 8:00 a.m. – midnight ET, Monday through Friday.
EMPLOYEE STOCK PURCHASE PLAN .................................




                          Selling Your Shares                                                   (CONTINUED)


                          Stock Transfer
                          If you would like to transfer ownership of one or more certificates, Fidelity can deliver stock
                          certificates to either your address on record or an address that you request. Please contact
                          a Fidelity Stock Plan Services Representative for complete instructions as delivery methods,
                          fees, and restrictions may apply.


                          Commissions & Fees
                          All trades, including but not limited to stock purchase trades, are subject to standard brokerage
                          fees based upon a participant’s asset and trading levels according to the following schedule:

8
                                 BRONZE                                   SILVER                                  GOLD

     Eligibility                 Available to all customers               Households** meeting any of             Households** meeting either of
                                                                          the following criteria:                 the following criteria:
                                                                          • $100,000+ in assets                   • $1,000,000+ in assets
                                                                          • $30,000+ in assets and                • $30,000 in assets and 120+
                                                                            36+ trades in a rolling                 trades in a rolling 12-month
                                                                            12-month period.                        period
                                                                          • No asset minimum and
                                                                            72+ trades in a rolling
                                                                            12-month period

     STOCKS*

     Online                      $19.95 for up to the first 1,000         $14.95 for up to the first 1,000        $8 for all online stock trades
                                 shares plus $.015 for each               shares plus $.015 for each              except stocks trading under $1,
                                 additional share                         additional share                        Directed Trading orders, and
                                                                                                                  Extended Hour Session orders,
                                                                                                                  which are subject to the $8 base
                                                                                                                  commission up to 1,000 shares,
                                                                                                                  and $0.005 per share thereafter

     Fidelity Automated          $45 for up to the first 500              $25 for up to the first 1,000           $20 for up to the first 1,000
     Service Telephone           shares plus $.045 for each               shares plus $.025 for each              shares plus $.02 for each
     (FAST®)                     additional share                         additional share                        additional share

     Representative              $55 for up to the first 100             $45 for up to the first 500              $35.00 for the first 1,000 shares
     Assisted                    shares plus $.14 for each               shares plus $.045 for each               plus $.035 for each additional
                                 additional share                        additional share                         share over 1,000 shares

     Maximum Charge              5% of principal, subject to              5% of principal, subject to             5% of principal, subject to the
                                 the minimum commission                   the minimum commission                            minimum commission


    * For a complete Commission schedule, please refer to the Brokerage Commission Schedule contained within the online Customer Agreement located
       on http://www.netbenefits.fidelity.com. Fidelity reserves the right to change these fees without notice.
    ** Commission and fee waiver eligibility will be determined automatically by aggregating assets and trading activity of eligible retail and certain
       non-retail accounts included in the periodic statement that you receive from Fidelity. The accounts included in your statement will be considered
       your household. You may authorize Fidelity to consolidate accounts held by you or your immediate family members (and/or accounts reported to
       you or your immediate family members on Fidelity account statements) into an aggregated relationship household, which may entitle you or your
       immediate family members who reside at the same address to a more favorable commission level. For further information on households and
       commissions, please go to Fidelity.com/goto/commissions or call a Fidelity Representative at 800-544-6666.
...............................EMPLOYEE STOCK PURCHASE PLAN



                  Core Account
                  You will not be sent a check for proceeds. Proceeds from the selling of any shares are held in a “core” account
                  as part of your Fidelity Account. Those proceeds can then be used for a variety of cash transactions3.

                  ADDITIONAL FEATURES OF FIDELITY ACCOUNTS:
                  •   Checkwriting Your account can act as a no-fee checking account.
                  •   Bill Pay You can pay bills directly from the cash in your core account.
                  •   Direct Deposit You can have your paycheck directly deposited into your core account.
                  •   Electronic Funds Transfer One to three business days to transfer money between your bank accounts and Fidelity.
                  •   Wire Money Same-day transfers between Fidelity and your banking institution.


                  Withdrawing or Transferring Your Shares
                  You can withdraw shares and receive paper certificates from your account only after two years have elapsed.4
                  The two years are measured from the first day of the Offering Period during which the shares were purchased.
                  You can also transfer your shares, to a separate brokerage account, after two years. Withdrawals and transfers              9
                  are in whole shares only. If you have partial shares their value will be paid to you in cash.

                  Example: If you received 52.525 shares during the January 1, 2004 through June 30, 2004 Offering Period,
                  your earliest opportunity to receive a stock certificate is January 1, 2006 (two years from the beginning of the
                  Offering Period in which those shares were purchased). You will receive a stock certificate for 52 shares and
                  the remaining .525 shares will be converted to cash, at the fair market value.




                 Paying U.S. Taxes
                  This is a brief summary of the principal United States federal income tax consequences under current federal income tax
                  laws relating to the ESPP and is for general information only.5 For example, it does not describe state, local, or foreign
                  income and other tax consequences. You are encouraged to consult your own tax advisor about the federal, state, local,
                  and foreign income and other tax consequences relating to your ESPP participation.
                  For stock purchased under the ESPP, all income taxes are deferred until you sell your shares. You pay no taxes when the
                  shares are purchased on your behalf and placed into your Fidelity Account.
                  When your shares are sold, the tax treatment will depend on whether it is considered a qualifying or disqualifying
                  disposition of shares.


                  Qualifying Dispositions
                  In general, to satisfy IRS holding requirements and qualify for beneficial tax treatment, you must hold on to the stock
                  for at least one year after its transfer to you upon purchase and for two years after the purchase right was granted.

                  This is considered a qualifying disposition. If the holding periods are met, the portion recognized as ordinary income is
                  the lesser of:
                  • The amount by which the fair market value of stock at the beginning of the offering period exceeds your purchase price, or
                  • The amount by which the fair market value of the stock at the time you sell it exceeds your purchase price.

                  The remainder is recognized as a long-term capital gain and is taxed at the more favorable capital gains tax rate.
                  Participation in the Employee Stock Purchase Plan involves tax consequences and investment risks. You may want to
                  consult your tax and investment advisors if you are going to take advantage of the ESPP.
EMPLOYEE STOCK PURCHASE PLAN .................................




 Paying U.S. Taxes                                    ( CONTINUED )


     Example: QUALIFYING DISPOSITION
     This chart shows an example of a Qualifying Disposition of shares.

                                   Fair Market Value
      Date                            of L-3 Stock         What Happens

      July 2, 2001                         $42             Payroll deduction contributions begin; you contribute $2,500
                                                           over the course of the Offering Period
      December 31, 2001                    $48             At $35.70 a share (85% of $42 = $35.70), your (the Purchase Date)
      (the Purchase Date)                                  $2,500 of contributions buys 70.028 shares ($2,500 ÷ $35.70 = 70.028)
      September 25, 2003                   $57             You sell 10 shares

     All prices and dates are for example purposes only.



10
          Ordinary Income
          Because 15% of the fair market value of the shares at the beginning of the Offering Period
          (15% of $42 = $6.30 a share) is less than the excess of the fair market value of the shares
          when they are sold over their purchase price ($57 – $35.70 = $21.30 a share), you will realize
          $6.30 a share of ordinary income, for a total of $63 ($6.30 a share x 10 shares sold = $63).


          Long-Term Capital Gain
          To determine the capital gain (or loss) for the sale:

          First, determine your tax basis in the shares sold, which you do by adding the ordinary income
          realized to the amount you paid for the shares ($6.30 + $35.70 = $42).

          Next, compare your tax basis to the sale price. If the sale price is higher than your tax basis, the
          difference is a long-term capital gain; if your tax basis is higher, the difference is a long-term
          capital loss.

          In this example, you have a capital gain of $15 a share ($57 sale price – $42 tax basis = $15
          gain), for a total capital gain of $150 ($15 a share x 10 shares sold = $150).

          If you decide to sell stock purchased through your ESPP before meeting the holding period
          required by the U.S. tax code, it is considered a disqualifying disposition.


          Disqualifying Disposition
          If you sell shares that you have held for less than two years from the beginning of the Offering
          Period, it is considered a “Disqualifying Disposition,” for which you will be taxed as follows:

          • You generally will realize ordinary income on the discount (that is, at the time of sale you’ll be
            taxed on the excess of the fair market value on the date the shares were purchased over the
            price you paid).

          • You also will realize a capital gain or loss in an amount equal to the difference between the
            fair market value of the shares when they’re sold and the fair market value of the shares when
            they were purchased.
...............................EMPLOYEE STOCK PURCHASE PLAN




                  Example: DISQUALIFYING DISPOSITION
                  This chart shows an example of a Disqualifying Disposition of shares.

                                                Fair Market Value
                   Date                            of L-3 Stock         What Happens

                   July 2, 2001                         $42             Payroll deduction contributions begin; you contribute $2,500
                                                                        over the course of the Offering Period
                   December 31, 2001                    $48             At $35.70 a share (85% of $42 = $35.70), your $2,500 of
                   (the Purchase Date)                                  contributions buys 70.028 shares ($2,500 ÷ $35.70 = 70.028)
                   April 25, 2002                       $57             You sell 10 shares

                  All prices and dates are for example purposes only.



                                                                                                                                         11
                                  Ordinary Income
                                  The excess of the fair market value on the date the shares were purchased over the price you
                                  paid is $12.30 a share ($48 – $35.70 = $12.30 a share), so you will realize a total of $123.00
                                  of ordinary income ($12.30 a share x 10 shares sold = $123). The ordinary income amount is
                                  included on your W-2 Form.


                                  Short-Term Capital Gain
                                  To determine the capital gain (or loss) for the sale: First, determine your tax basis in the shares
                                  sold, which you do by adding the ordinary income realized to the amount you paid for the shares
                                  ($12.30 + $35.70 = $48). Next, compare your tax basis to the sale price. If the sale price is higher
                                  than your tax basis, the difference is a short-term capital gain; if your tax basis is higher, the
                                  difference is a short-term capital loss.

                                  In this example, you have a capital gain of $9 a share ($57 sale price – $48 tax basis = $9
                                  gain), for a total capital gain of $90 ($9 a share x 10 shares sold = $90). Since you did not
                                  hold the stock for longer than one year, the gain will be considered a short-term capital gain.


                                  Maximum Income Tax Rates on Capital Gain and Ordinary Income
                                  Under current tax laws, long-term capital gains will be taxable up to a maximum rate of 15%;
                                  short-term capital gains and ordinary income will be taxable up to a maximum rate of 35%.
                                  Phase-outs of personal exemptions and reductions of allowable itemized deductions at higher
                                  levels of income may result in slightly higher marginal tax rates.
EMPLOYEE STOCK PURCHASE PLAN .................................




        Terms to Know



        Stock Splits, Dividends, and Other Changes
        If there is a stock split, dividend, or other change affecting L-3 common stock, L-3’s Benefit Plan
        Committee will make the appropriate adjustments, if any, to the ESPP. You will be notified of
        any changes and/or adjustments.


        Change in Control
        If there is a merger, sale, or other change in control of the Company, there will be one final Exercise
        Date before the change in control occurs. You’ll be notified in writing at least 10 days in advance.


12      “Insider” Trading
        Certain restrictions may apply if you fall into either of the following categories:

        • You are an employee of the Company to whom the reporting requirements of Section 16(b)
          of the U.S. Securities Exchange Act of 1934, as amended, apply (generally, an executive
          officer or director of the Company), or

        • You are a corporate director, senior officer, or holder of 10% or more of the stock of a corporation
          and are subject to Rule 405 of the General Rules and Regulations promulgated under the U.S.
          Securities Act of 1933.

        If any of these situations applies to you, please refer to the Company’s Insider Trading policy
        for guidelines on how to comply.


        Future of the ESPP
        The Company intends to continue to offer the ESPP, but reserves the right to change, terminate,
        suspend, withdraw, reduce, amend, or modify the ESPP at anytime, in any manner, at the Company’s
        sole discretion, by action of the Board of Directors. Any change or terminations of benefits will be
        based solely on the decisions of the Company. You will be notified of any change.
...............................EMPLOYEE STOCK PURCHASE PLAN




                                                                                                             15




                   This is not the Plan document or prospectus; it is meant as a brief summary of the
                   key features of the L-3 Corporation Employee Stock Purchase Plan. Please note
                   that the Plan is governed by the official Plan document. If there is a conflict
                   between the informal language of this brochure and the official Plan document,
                   the Plan document will prevail. Any legal interpretations made will be based on
                   applicable federal and state laws. In addition, this description is neither an offer to
                   sell, nor a solicitation of an offer to buy shares of L-3 Communications Holdings,
                   Inc. common stock under the Plan. That offer can be made only by means of the
                   Prospectus. A copy of the Prospectus is available online at netbenefits.fidelity.com
                   or by contacting your Human Resources Representative.
                 1
                   These documents are available on Fidelity.com for customers. If you consent to
                   suspend mailing, Fidelity will notify you by email when your account statement or
                   trade confirmation is available online.
                 2
                   System availability and response time may be subject to market conditions. Wireless
                   coverage determined by service provider and geographic location. Sprint, Nextel
                   and Verizon are independent companies and are not affiliated with Fidelity.
                 3
                   Minimum account balances and fees may apply for certain cash management features.
                   See Fidelity.com for details.
                 4
                   A fee may apply. Contact a Fidelity Representative for more information.
                 5
                   Please consult your tax advisor regarding your specific tax situation.
                   L-3 Communications Corporation and Fidelity Investments are not affiliated.
                   Brokerage services provided by Fidelity Brokerage Services LLC, Member NYSE, SIPC
388678            1.800457.102
         L3-DOM-ESPP-BRO-1104

								
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