AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 6, 2001
REGISTRATION STATEMENT NO. 333-58328
================================================================================
SECURITIES AND EXCHANGE COMMISION
WASHINGTON, D.C. 20549
--------------
POST-EFFECTIVE AMENDMENT NO. 1
ON
FORM S-3
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
L-3 COMMUNICATIONS HOLDINGS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 13-3937434
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation) Identification Number)
3812, 3663, 3679
(Primary Standard Industrial Classification Code Number)
--------------
600 THIRD AVENUE
NEW YORK, NY 10016
(212) 697-1111
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
SEE TABLE OF ADDITIONAL REGISTRANTS
--------------
CHRISTOPHER C. CAMBRIA, ESQ.
600 THIRD AVENUE
NEW YORK, NY 10016
(212) 697-1111
(Name, address, including zip code, and telephone number,
including area code, of agent for service
--------------
Copy to:
VINCENT PAGANO, ESQ.
SIMPSON THACHER & BARTLETT
425 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017-3954
(212) 455-2000
--------------
Approximate date of commencement of proposed sale to the public: From time
to time after the Registration Statement becomes effective as determined by
market conditions and other factors.
--------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] Registration Statement on Form S-1 No. 333-58328
filed April 5, 2001 and Amendment No. 1 thereto filed April 11, 2001, effective
April 12, 2001.
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
(Continued on following page)
================================================================================
(Continued from previous page)
CALCULATION OF REGISTRATION FEE
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====================================================================================================================================
PROPOSED MAXIMUM PROPOSED AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE AGGREGATE OFFERING MAXIMUM AGGREGATE REGISTRATION
SECURITIES TO BEREGISTERED REGISTERED PRICE PER SECURITY OFFERING PRICE FEE
------------------------------------------------------------------------------------------------------------------------------------
5.25% Convertible Senior Subordinated Notes due 2009 .... $300,000,000(1) 100%(2)(3) $300,000,000(2) (4)
------------------------------------------------------------------------------------------------------------------------------------
Common Stock, par value $.01 per share .................. 3,680,982 (5) (5) (5)
shares (4)
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Subsidiary Guarantees of 5.25% Convertible Senior N/A (6) (6) (6)
Subordinated Notes due 2009 ............................
====================================================================================================================================
(1) Includes $250,000,000 aggregate principal amount of notes offered in an
initial offering and $50,000,000 aggregate principal amount of notes
offered upon the exercise in full of the initial purchaser's
over-allotment option.
(2) Estimated solely for purposes of calculating the registration fee in
accordance with Rule 457(i) of the Securities Act of 1933.
(3) Exclusive of accrued interest and distributions, if any.
(4) The registration fee for the 5.25% Convertible Senior Subordinated Notes
due 2009 was paid upon our filing the S-1 Registration Statement on April
5, 2001.
(5) Represents the number of shares of our common stock that are initially
issuable upon conversion of the 5.25% Convertible Senior Subordinated
Notes due 2009 registered hereby. The estimated number of shares of
common stock to be issued upon conversion of the notes is based on a
conversion price of $81.50 per share of common stock and assumes
conversion of all of the notes into shares of our common stock. In
addition to the shares set forth in the table, pursuant to Rule 416 under
the Securities Act of 1933, as amended, the number of shares registered
includes an indeterminate number of shares of our common stock issuable
upon conversion of the notes, as this amount may be adjusted as a result
of stock splits, stock dividends and antidilution provisions.
(6) We will not receive additional consideration in connection with the
conversion into our common stock by the holders of the notes, and
therefore, no registration fee is required pursuant to Rule 457(i).
(7) No separate consideration will be received for the Subsidiary Guarantees.
Pursuant to Rule 457(n) of the Securities Act of 1933 there is no filing
fee with respect to the Subsidiary Guarantees.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE
ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
--------------
EXPLANATORY NOTE
This Post-Effective Amendment No. 1 on Form S-3 is being filed to convert
the Registration Statement on Form S-1 (the "S-1 Registration Statement") and
Amendment No. 1 thereto (File No. 333-58328) into a Registration Statement on
Form S-3. The S-1 Registration Statement related to $300,000,000 aggregate
principal amount of 5.25% Convertible Senior Subordinated Notes due 2009 and
3,680,982 shares of common stock of L-3 Communications Holdings, Inc. issuable
upon conversion of the notes at a fixed conversion rate of $81.50 per share to
be offered from time to time for the account of certain selling stockholders of
L-3 Communications Holdings, Inc.
The prospectus contained herein relates to the notes and the shares of
common stock that may be sold by the selling stockholders registered under the
S-1 Registration Statement filed April 5, 2001 and subsequent amendments and
supplements thereto. The S-1 Registration Statement was declared effective by
the Securities and Exchange Commission on April 12, 2001.
TABLE OF ADDITIONAL REGISTRANTS
STATE OR OTHER ADDRESS, INCLUDING ZIP CODE,
JURISDICTION OF IRS EMPLOYER AND TELEPHONE NUMBER, INCLUDING
EXACT NAME OF REGISTRANT INCORPORATION OR IDENTIFICATION AREA CODE, OF REGISTRANT'S
AS SPECIFIED IN ITS CHARTER ORGANIZATION NUMBER PRINCIPAL EXECUTIVE OFFICES
--------------------------- ------------ ------ ---------------------------
L-3 Communications Corporation Delaware 13-3937436 600 Third Avenue
New York, NY 10016
(212) 697-1111
Electrodynamics, Inc Arizona 36-3140903 600 Third Avenue
New York, NY 10016
(212) 697-1111
Henschel, Inc. Delaware 23-2554418 600 Third Avenue
New York, NY 10016
(212) 697-1111
Hygienetics Environmental Services, Inc. Delaware 13-3992505 600 Third Avenue
New York, NY 10016
(212) 697-1111
Interstate Electronics Corporation California 95-1912832 600 Third Avenue
New York, NY 10016
(212) 697-1111
L-3 Communications DBS Microwave, Inc. California 68-0281617 600 Third Avenue
New York, NY 10016
(212) 697-1111
L-3 Communications ESSCO, Inc. Delaware 04-2281486 600 Third Avenue
New York, NY 10016
(212) 697-1111
L-3 Communications ILEX Systems, Inc. Delaware 13-3992952 600 Third Avenue
New York, NY 10016
(212) 697-1111
L-3 Communications Aydin Corporation Delaware 23-1686808 600 Third Avenue
New York, NY 10016
(212) 697-1111
L-3 Communications SPD Technologies, Inc. Delaware 23-2869511 600 Third Avenue
New York, NY 10016
(212) 697-1111
L-3 Communications Storm Control Systems, Inc. California 77-0268547 600 Third Avenue
New York, NY 10016
(212) 697-1111
Microdyne Corporation Maryland 52-0856493 600 Third Avenue
New York, NY 10016
(212) 697-1111
MPRI, Inc. Delaware 54-1439937 600 Third Avenue
New York, NY 10016
(212) 697-1111
Pac Ord, Inc. Delaware 23-2523436 600 Third Avenue
New York, NY 10016
(212) 697-1111
Power Paragon, Inc. Delaware 33-0638510 600 Third Avenue
New York, NY 10016
(212) 697-1111
Southern California Microwave, Inc. California 13-0478540 600 Third Avenue
New York, NY 10016
(212) 697-1111
SPD Holdings, Inc. Delaware 23-2977238 600 Third Avenue
New York, NY 10016
(212) 697-1111
SPD Electrical Systems, Inc. Delaware 23-2457758 600 Third Avenue
New York, NY 10016
(212) 697-1111
SPD Switchgear, Inc. Delaware 23-2510039 600 Third Avenue
New York, NY 10016
(212) 697-1111
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN
OFFER TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
PROSPECTUS
Subject to Completion, Dated August 6, 2001
$300,000,000
[L-3 COMMUNICATIONS LOGO]
L-3 COMMUNICATIONS HOLDINGS, INC.
5.25% CONVERTIBLE SENIOR SUBORDINATED NOTES DUE 2009
AND 3,680,982 SHARES OF COMMON STOCK ISSUABLE
UPON CONVERSION OF THE NOTES
Guaranteed by
L-3 Communications Corporation L-3 Communications Storm Control Systems, Inc.
Electrodynamics, Inc. Microdyne Corporation
Henschel, Inc. MPRI, Inc.
Hygienetics Environmental Services, Inc. Pac Ord, Inc.
Interstate Electronics Corporation Power Paragon, Inc.
L-3 Communications DBS Microwave, Inc. Southern California Microwave, Inc.
L-3 Communications ESSCO, Inc. SPD Holdings, Inc.
L-3 Communications ILEX Systems, Inc. SPD Electrical Systems, Inc.
L-3 Communications Aydin Corporation SPD Switchgear, Inc.
L-3 Communications SPD Technologies, Inc.
--------------------------------------------------------------------------------
This prospectus relates to:
-- $300,000,000 principal amount of 5.25% convertible senior subordinated notes
due 2009;
-- The shares of our common stock issuable upon conversion of the notes; and
-- The subsidiary guarantees of the notes on behalf of each of our subsidiary
guarantors.
The notes, the shares of our common stock and the subsidiary guarantees are
offered for resale in this prospectus for the accounts of their holders at
market prices prevailing at the time of sale or at privately negotiated prices.
The holders may sell the notes or the shares of our common stock obtained
through conversion of the notes directly to purchasers or through underwriters,
broker-dealers or agents, who may receive compensation in the form of
discounts, concessions or commissions.
We will pay interest on the notes on June 1 and December 1 of each year,
commencing on June 1, 2001. The notes will mature on June 1, 2009. The notes
will be convertible at your option, unless previously redeemed or repurchased
by us, into shares of our common stock at a conversion price of $81.50 per
share, subject to the adjustments described in this prospectus. We may redeem
the notes, in whole or in part, at any time on or after December 1, 2003. If a
change in control occurs, each holder of the notes may require us to repurchase
all of their notes. If we cannot make the scheduled payments on the notes, our
subsidiary guarantors, listed above, will be required to make them for us in
accordance to the subsidiary guarantees. The notes are eligible for trading in
the PORTAL (Trade Mark) Market.
Our common stock is traded on the New York Stock Exchange under the symbol
"LLL." On August 6, 2001 the last reported sales price of our common stock was
$72.98 per share.
INVESTING IN THE NOTES INVOLVES RISKS. RISK FACTORS BEGIN ON PAGE 10.
The proceeds from the sale of the securities offered by this prospectus are
solely for the security holders who own and are selling the securities. We will
not receive any of the proceeds from the sale of these securities.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
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, 2001
TABLE OF CONTENTS
PAGE
---------
Forward-Looking Statements ............ 2
Incorporation by Reference ............ 3
Prospectus Summary .................... 4
Risk Factors .......................... 10
Use of Proceeds ....................... 20
Selling Security Holders .............. 20
PAGE
---------
Description of the Notes .............. 24
Description of Capital Stock .......... 42
Plan of Distribution .................. 45
Legal Matters ......................... 46
Experts ............................... 46
Available Information ................. 46
-----------------------------------
FORWARD-LOOKING STATEMENTS
Our disclosure and analysis in this prospectus contain some forward-looking
statements. Certain of the matters discussed concerning our operations, cash
flows, financial position, economic performance and financial condition,
including, in particular, the likelihood of our success in developing and
expanding our business and the realization of sales from backlog include
forward-looking statements within the meaning of section 27A of the Securities
Act of 1933, referred to herein as the Securities Act, and Section 21E of the
Securities Exchange Act of 1934, referred to herein as the Exchange Act.
Statements that are predictive in nature, that depend upon or refer to
future events or conditions or that include words such as "expects,"
"anticipates," "intends," "plans," "believes," "estimates" and similar
expressions are forward-looking statements. Although we believe that these
statements are based upon reasonable assumptions, including projections of
orders, sales, operating margins, earnings, cash flow, research and development
costs, working capital, capital expenditures and other projections, they are
subject to several risks and uncertainties, and therefore, we can give no
assurance that these statements will be achieved.
Our forward-looking statements will also be influenced by factors such as:
o our dependence on the defense industry and the business risks peculiar
to that industry, including changing priorities or reductions in the
U.S. Government defense budget;
o our reliance on contracts with a limited number of agencies of, or
contractors to, the U.S. Government and the possibility of termination
of government contracts by unilateral government action or for failure
to perform;
o our ability to obtain future government contracts on a timely basis;
o the availability of government funding and changes in customer
requirements for our products and services;
o our significant amount of debt and the restrictions contained in our
debt agreements;
o collective bargaining agreements and labor disputes;
o economic conditions, competitive environment, international business
and political conditions, timing of international awards and contracts;
o our extensive use of fixed price contracts as compared to cost plus
contracts;
o our ability to identify future acquisition candidates or to integrate
acquired operations;
o the rapid change of technology in the communications equipment
industry;
o the high level of competition in the communications equipment industry;
2
o our introduction of new products into commercial markets or our
investments in commercial products or companies; and
o pension, environmental or legal matters or proceedings and various
other market, competition and industry factors, many of which are
beyond our control.
Investors are cautioned that our forward-looking statements are not
guarantees of future performance and the actual results or developments may
differ materially from the expectations expressed in the forward-looking
statements.
As for the forward-looking statements that relate to future financial
results and other projections, actual results will be different due to the
inherent uncertainty of estimates, forecasts and projections and may be better
or worse than projected. Given these uncertainties, you should not place any
reliance on these forward-looking statements. These forward-looking statements
also represent our estimates and assumptions only as of the date that they were
made. We expressly disclaim a duty to provide updates to these forward-looking
statements, and the estimates and assumptions associated with them, after the
date of this filing to reflect events or changes in circumstances or changes in
expectations or the occurrence of anticipated events.
We undertake no obligation to publicly update any forward-looking
statement, whether as a result of new information, future events or otherwise.
You are advised, however, to consult any additional disclosures we make in our
Form 10-K, Form 10-Q and Form 8-K reports to the Securities and Exchange
Commission, referred to herein as the SEC. Also note that we provide a
cautionary discussion of risk and uncertainties under the caption "Risk Factors"
in this prospectus. These are factors that we think could cause our actual
results to differ materially from expected results. Other factors besides those
listed here could also adversely affect us. This discussion is provided as
permitted by the Private Securities Litigation Reform Act of 1995.
INCORPORATION BY REFERENCE
The SEC allows us to "incorporate by reference" the information contained
in documents that we file with them, which means that we can disclose important
information to you by referring you to those documents. The information
incorporated by reference is considered to be part of this prospectus.
Information in this prospectus supersedes information incorporated by reference
that we filed with the SEC prior to the date of this prospectus, while
information that we file later with the SEC will automatically update and
supersede this information. We incorporate by reference the documents listed
below and any future filings we will make with the SEC under Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934:
o Our Quarterly Report on Form 10-Q for the quarter ended March 31, 2001;
o Our Current Reports on Form 8-K/A dated March 21, 2001 and April 3,
2001; and
o Our Annual Report on Form 10-K for the fiscal year ended December 31,
2000, including all material incorporated by reference therein.
YOU SHOULD RELY ONLY ON THE INFORMATION INCORPORATED BY REFERENCE OR
PROVIDED IN THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT. WE HAVE NOT AUTHORIZED
ANYONE ELSE TO PROVIDE YOU WITH DIFFERENT INFORMATION. WE ARE NOT MAKING AN
OFFER OF THESE SECURITIES IN ANY STATE WHERE THE OFFER IS NOT PERMITTED. YOU
SHOULD NOT ASSUME THAT THE INFORMATION IN THIS PROSPECTUS OR ANY PROSPECTUS
SUPPLEMENT IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE FRONT OF THOSE
DOCUMENTS.
3
PROSPECTUS SUMMARY
This summary highlights selected information contained elsewhere in this
prospectus and does not contain all of the information you need to consider in
making your investment decision. You should read this entire prospectus
carefully. Except as otherwise noted, all information in this prospectus
assumes no exercise by the initial purchaser of the over-allotment option.
For convenience in this prospectus, "L-3 Holdings" refers to L-3
Communications Holdings, Inc. and "L-3 Communications" refers to L-3
Communications Corporation, a wholly-owned operating subsidiary of L-3 Holdings.
"L-3," "we," "us" and "our" refer to L-3 Holdings and its subsidiaries,
including L-3 Communications, except where the content otherwise requires.
"Predecessor company" refers to the ten initial business units we purchased from
Lockheed Martin Corporation in 1997.
L-3
We are a leading merchant supplier of sophisticated secure communication
systems and specialized communication products. We produce secure, high data
rate communication systems, training and simulation systems, avionics and ocean
products, telemetry, instrumentation and space products and microwave
components. These systems and products are critical elements of virtually all
major communication, command and control, intelligence gathering and space
systems. Our systems and specialized products are used to connect a variety of
airborne, space, ground and sea-based communication systems and are used in the
transmission, processing, recording, monitoring and dissemination functions of
these communication systems. Our customers include the U.S. Department of
Defense, which is commonly referred to as the DoD, certain U.S. Government
intelligence agencies, major aerospace and defense contractors, foreign
governments, commercial customers and certain other U.S. agencies. For the year
ended December 31, 2000, direct and indirect sales to the DoD provided 62.7% of
our sales, and sales to commercial customers, foreign governments and U.S.
Government agencies other than the DoD provided 37.3% of our sales. Our business
areas employ proprietary technologies and capabilities and have leading
positions in their respective primary markets. For the year ended December 31,
2000, we had sales of $1,910.1 million and operating income of $222.7 million.
We have two reportable segments: Secure Communication Systems and Specialized
Communication Products.
SECURE COMMUNICATION SYSTEMS
We are an established leader in the development and production of secure,
high data rate communications for military and other U.S. Government
reconnaissance and surveillance applications and we believe that we have
developed virtually every high bandwidth data link that is currently used by the
DoD for surveillance and reconnaissance. Our major secure communication programs
and systems include:
o secure data links for airborne, satellite, ground and sea-based remote
platforms for real-time information collection and dissemination to
users;
o strategic and tactical signal intelligence systems that detect,
collect, identify, analyze and disseminate information;
o secure telephone and network equipment and encryption management;
o communication software support services; and
o communication systems for surface and undersea vessels and manned space
flights.
Our Secure Communication Systems segment includes our training and
simulation business. We design, develop and manufacture advanced simulation
products, with high-fidelity representations of cockpits and operator stations
for aircraft and vehicle system simulation. We also provide a full range of
teaching, training and logistic services and training device support services
to domestic and international military customers and ballistic targets for the
DoD.
4
Our Secure Communication Systems segment provided $847.1 million or 44.3%
of our total sales for the year ended December 31, 2000.
SPECIALIZED COMMUNICATION PRODUCTS
We are a leading merchant supplier of products to military and commercial
customers. We focus on niche markets in which we believe we can achieve a
market leadership position. This reportable segment includes three product
categories:
o avionics and ocean products including our aviation recorders, airborne
collision avoidance products, displays, antennas, acoustic undersea
warfare products and naval power distribution, conditioning, switching
and protection equipment;
o telemetry, instrumentation and space products including our commercial
off-the-shelf, real-time data collection and transmission products and
components for missile, aircraft and space-based electronic systems;
and
o microwave components including our commercial off-the-shelf,
high-performance microwave components and frequency monitoring
equipment.
Our Specialized Communication Products segment provided $1,063.0 million
or 55.7% of our total sales for the year ended December 31, 2000.
DEVELOPING COMMERCIAL OPPORTUNITIES
An integral part of our growth strategy is to identify and exploit
commercial applications for select products and technologies that we currently
sell to defense customers. We have currently identified two vertical markets
within our Secure Communication Systems and Specialized Communication Products
segments where we believe there are significant opportunities to expand our
existing commercial sales: transportation products and broadband wireless
communications products. We believe that these vertical markets, together with
our existing commercial products, provide us with the opportunity for
substantial commercial growth in future years.
Within the transportation market, we have developed and are offering an
explosive detection system for checked baggage at airports, cruise ship voyage
recorders, power propulsion systems and power switches and displays for rail
transportation and internet service providers. We are developing additional
products, including an enhanced airborne collision avoidance product that
incorporates ground proximity warning.
Within the communications product market, we are offering local wireless
access equipment for voice DSL (Digital Subscriber Line) and internet access,
transceivers for LMDS (Local Multipoint Distribution Service) and a broad range
of commercial components and digital test equipment for broadband
communications providers.
We have developed the majority of our commercial products employing
technology funded by and used in our defense businesses, thereby minimizing any
required incremental development expenses. Sales generated from our developing
commercial opportunities have not yet been material to us.
5
BUSINESS STRATEGY
We intend to grow our sales, enhance our profitability and build on our
position as a leading merchant supplier of communication systems and products
to the major contractors in the aerospace and defense industry as well as the
U.S. Government. We intend to leverage our expertise and products into new
commercial business areas where we can adapt our existing products and
technologies. Our strategy to achieve our objectives includes:
o EXPAND MERCHANT SUPPLIER RELATIONSHIPS. As an independent merchant
supplier, we intend to identify opportunities where we will be able to use our
strong relationships to increase our business presence, allow customers to
reduce their costs and to be the desired merchant supplier to multiple bidders
on prime contract bids;
o SUPPORT CUSTOMER REQUIREMENTS. We intend to continue to align our
research and development, manufacturing and new business efforts to complement
our customers' requirements and provide state-of-the-art products;
o ENHANCE OPERATING MARGINS. We intend to continue to enhance our
operating performance by reducing overhead expenses, continuing consolidation
and increasing productivity;
o LEVERAGE TECHNICAL AND MARKET LEADERSHIP POSITIONS. We are applying
our market-leading technical expertise and capabilities to several closely
aligned commercial business areas and applications and will continue to explore
other similar commercial opportunities;
o MAINTAIN DIVERSIFIED BUSINESS MIX. We have a diverse business mix
which limits our exposure to the risks of particular programs, a balance of
cost plus and fixed price contracts, a significant sole-source follow-on
business and an attractive customer profile; and
o CAPITALIZE ON STRATEGIC ACQUISITION OPPORTUNITIES. We intend to
enhance our existing product base through internal research and development
efforts and selective acquisitions, and we seek to add new products to our
product base through acquisitions in areas synergistic with our present
technologies. As of December 31, 2000, we have acquired ten businesses for an
aggregate purchase price of $590.2 million, subject to adjustments.
We are incorporated in Delaware, and the address of our principal
executive offices is 600 Third Avenue, New York, New York 10016. Our telephone
number is (212) 697-1111. Our internet address is (http://www.L-3com.com).
L-3com.com is an interactive textual reference only, meaning that the
information contained on the website is not part of this prospectus and is not
incorporated in this prospectus by reference.
6
THE OFFERING
Securities Offered.......... $300,000,000 in aggregate principal amount of
5.25% Convertible Senior Subordinated Notes due
2009, of which $250,000,000 aggregate principal
amount were issued on November 21, 2000 and
$50,000,000 aggregate principal amount of notes
were issued on December 20, 2000.
Maturity.................... June 1, 2009 unless earlier redeemed,
repurchased or converted.
Interest Payment Dates...... June 1 and December 1, beginning June 1, 2001.
The initial interest payment will include accrued
interest from November 21, 2000.
Interest Rate............... 5.25% per year, subject to adjustment under
certain circumstances. See "Description of the
Notes -- Interest Rate Adjustments."
Guarantees.................. The notes are jointly and severally guaranteed
by certain direct and indirect domestic
subsidiaries of L-3 Holdings as described in the
"Description of the Notes", which in the
aggregate generated in excess of 97% of our
consolidated sales, income from continuing
operations before income taxes and cash from
operating activities for the year ended December
31, 2000, and represented in excess of 97% of our
consolidated assets and shareholders' equity at
December 31, 2000.
The Guarantees are subordinated in right of
payment to all existing and future senior debt
of the Guarantors. The Guarantees will be pari
passu with other senior subordinated
indebtedness of the Guarantors, including the
10 3/8% Senior Subordinated Notes due 2007, the
8 1/2% Senior Subordinated Notes due 2008 and the
8% Senior Subordinated Notes due 2008 issued by
L-3 Communications and guaranteed by the other
Guarantors.
As of December 31, 2000, we had $1,095.0 million
of indebtedness, including our obligations under
these notes and including $190.0 million of
senior debt, all of which were obligations of
the Guarantors.
See "Description of the Notes -- Subsidiary
Guarantees" and "-- Subordination of Subsidiary
Guarantees."
Ranking..................... The notes are unsecured senior subordinated
obligations of L-3 Holdings. The notes rank
junior in right of payment to all of the existing
and future senior debt of L-3 Holdings. As of
December 31, 2000, other than its obligations
under these notes, L-3 Holdings had no senior
debt outstanding and its only obligations were
its guarantees of L-3 Communications' senior
credit facilities. See "Description of the Notes
-- Subordination."
7
Optional Conversion
by Holders.................. Holders may convert the notes at any time through
maturity unless previously redeemed or
repurchased, into shares of our common stock
initially at a conversion price of $81.50 per
share (equal to a conversion rate of 12.2699
shares per $1,000 principal amount of notes),
subject to adjustment under certain
circumstances. See "Description of the Notes --
Conversion Rights."
Optional Redemption by
L-3 Holdings................ L-3 Holdings may not redeem the notes prior to
December 1, 2003. L-3 Holdings may redeem some or
all of the notes on or after December 1, 2003, at
the redemption prices, plus accrued and unpaid
interest to, but excluding, the redemption date,
set forth under "Description of the Notes --
Optional Redemption by L-3 Holdings." L-3
Holdings will therefore be required to make six
interest payments before being able to redeem any
notes.
Repurchase Right
of Holders.................. Each holder of the notes may require L-3 Holdings
to repurchase all of the holder's notes at 100%
of their principal amount plus accrued and unpaid
interest in certain circumstances involving a
change of control. The repurchase price is
payable in:
o cash; or
o at our option, subject to the satisfaction of
certain conditions, in common stock. The
number of shares of common stock will equal
the repurchase price divided by 95% of the
average closing sale price for the five
consecutive trading days ending on and
including the third trading day prior to the
repurchase date.
Form, Denomination and
Registration................ The notes are issued in fully registered form.
The notes are issued in denominations of $1,000.
Except as described in this prospectus, the
notes are issued in fully registered book-entry
form and are represented by one or more
permanent global notes without coupons deposited
with a custodian for and registered in the name
of a nominee of The Depository Trust Company
("DTC") in New York, New York. Beneficial
interests in any of the global notes are shown
on, and transfers thereof will be effected only
through, records maintained by DTC and its
direct and indirect participants, and any such
interest may not be exchanged for certificated
notes, except in limited circumstances described
in this prospectus. Settlement and all secondary
market trading activity for the notes will be in
same day funds. See "Description of the Notes --
Form, Denomination and Registration."
Use of Proceeds............. We will not receive any of the proceeds from
this offering. See "Use of Proceeds."
8
Registration Rights......... We have filed with the SEC a registration
statement for the resale of the notes, the
Guarantees and the common stock issuable upon
conversion. We have agreed to keep the
registration statement effective until the
earliest of two years after the latest date on
which we issue notes in this offering, expiration
of the resale restriction provisions of Rule 144
under the Securities Act or the date when all of
the notes, Guarantees and common stock into which
the notes are convertible are registered under
the registration statement and sold in accordance
with it. If we do not comply with these and other
registration obligations, we will be required to
pay liquidated damages to the holders of the
notes or the common stock issuable upon
conversion. See "Description of the Notes --
Registration Rights."
Trading..................... We can provide no assurance as to the liquidity
of the trading market for the notes. The notes
are currently traded on the Private Offerings,
Resales and Trading through Automated Linkages
market, known as PORTAL.
NYSE Symbol for our
Common Stock................ Our common stock is traded on the New York
Stock Exchange under the symbol "LLL."
9
RISK FACTORS
You should carefully consider the following factors and other information
in this prospectus before deciding to invest in the notes or the shares of our
common stock issuable upon conversion of the notes. Any of these risks could
materially adversely affect our business, financial condition and results of
operations, which could in turn materially adversely affect the price of the
notes and the common stock issuable upon conversion of the notes.
RISKS RELATED TO L-3
OUR SIGNIFICANT LEVEL OF DEBT MAY ADVERSELY AFFECT OUR FINANCIAL AND OPERATING
ACTIVITY.
We have incurred substantial indebtedness to finance our acquisitions. As
of December 31, 2000, we had $1,095.0 million of indebtedness outstanding
(excluding outstanding letters of credit). Our ratio of net debt to EBITDA at
December 31, 2000 was 3.6x. In the future we may borrow more money, subject to
limitations imposed on us by our debt agreements.
Based on our current level of operations and anticipated improvements to
our operations, we believe that our cash flow from operations and amounts we are
able to borrow under our senior credit facilities will be adequate to meet our
anticipated requirements for working capital, capital expenditures, research and
development expenditures, program and other discretionary investments, interest
payments and scheduled principal payments for the foreseeable future, at least
for the next three years. Our ability to make scheduled payments of principal
and interest on our indebtedness and to refinance our indebtedness depends on
our future performance. We do not have complete control over our future
performance because it is subject to economic, political, financial,
competitive, regulatory and other factors affecting the aerospace and defense
industry. It is possible that in the future our business may not generate
sufficient cash flow from operations to allow us to service our debt and make
necessary capital expenditures. If this situation occurs, we may have to sell
assets, restructure debt or obtain additional equity capital. We cannot be sure
that we would be able to do so or do so without additional expense.
Our level of indebtedness has important consequences to you and your
investment in these notes and our common stock into which these notes are
convertible. These consequences may include:
o requiring a substantial portion of our cash flow from operations to be
used to pay interest and principal on our debt and therefore be
unavailable for other purposes including capital expenditures, research
and development and other investments;
o limiting our ability to obtain additional financing for acquisitions or
working capital to make investments or other expenditures, which may
limit our ability to carry out our acquisition strategy;
o higher interest expenses due to increases in interest rates on our
borrowings that have variable interest rates;
o heightening our vulnerability to downturns in our business or in the
general economy and restricting us from making acquisitions,
introducing new technologies and products or exploiting business
opportunities; and
o covenants that limit our ability to borrow additional funds, dispose of
assets or pay cash dividends. Failure to comply with such covenants
could result in an event of default which, if not cured or waived,
could have a material adverse effect on our financial position and
results of operations due to financial and restrictive covenants.
10
OUR DEBT AGREEMENTS RESTRICT OUR ABILITY TO FINANCE OUR FUTURE OPERATIONS AND,
IF WE ARE UNABLE TO MEET OUR FINANCIAL RATIOS, COULD CAUSE OUR EXISTING DEBT TO
BE ACCELERATED.
Our debt agreements contain a number of significant provisions that, among
other things, restrict our ability to:
o sell assets;
o incur more indebtedness;
o repay certain indebtedness;
o pay dividends;
o make certain investments or acquisitions;
o repurchase or redeem capital stock;
o engage in mergers or consolidations; and
o engage in certain transactions with subsidiaries and affiliates.
These restrictions could hurt our ability to finance our future operations
or capital needs or engage in other business activities that may be in our
interest. In addition, some of our debt agreements also require us to maintain
compliance with certain financial ratios, including total consolidated earnings
before interest, taxes, depreciation and amortization to total consolidated
cash interest expense and net debt to total consolidated earnings before
interest, taxes, depreciation and amortization, and to limit our capital
expenditures. Our ability to comply with these ratios and limits may be
affected by events beyond our control. A breach of any of these agreements or
our inability to comply with the required financial ratios or limits could
result in a default under those debt agreements. In the event of any such
default, the lenders under those debt agreements could elect to:
o declare all outstanding debt, accrued interest and fees to be due and
immediately payable;
o require us to apply all of our available cash to repay our outstanding
senior debt; and
o prevent us from making debt service payments on our other debt.
If we were unable to repay any of these borrowings when due, the lenders
under our senior credit facilities could proceed against their collateral,
which consists of a first priority security interest in the capital stock of
our material subsidiaries, including L-3 Communications. If the indebtedness
under the existing debt agreements were to be accelerated, we cannot assure you
that our assets would be sufficient to repay such indebtedness in full.
L-3 HOLDINGS MAY NOT RECEIVE THE DIVIDENDS FROM ITS SUBSIDIARIES THAT IT WILL
RELY UPON TO MAKE INTEREST AND PRINCIPAL PAYMENTS ON THE NOTES.
L-3 Holdings is a holding company and derives all of its operating income
and cash flow from its subsidiaries, including L-3 Communications. The only
indebtedness of L-3 Holdings consists of these notes. L-3 Holdings also has
guaranteed L-3 Communications' indebtedness under the senior credit facilities.
L-3 Holdings relies on dividends and other payments from its subsidiaries or
must raise funds in public or private equity or debt offerings to generate the
funds necessary to pay principal of and interest on the notes. The subsidiaries
of L-3 Holdings are separate and distinct legal entities, and their ability to
pay any amounts due under L-3 Holdings' indebtedness or to make any funds
available to pay L-3 Holdings' debt obligations, including obligations under
the notes, whether by dividends, loans or other payments is restricted under
the terms of their present and future indebtedness. There can be no assurance
that L-3 Holdings will be able to obtain such funds on acceptable terms or at
all.
OUR ACQUISITION STRATEGY INVOLVES RISKS, AND WE MAY NOT SUCCESSFULLY IMPLEMENT
OUR STRATEGY.
We seek to acquire companies that complement our business. We cannot
assure you, however, that we will be able to identify acquisition candidates on
commercially reasonable terms or at all. If
11
we make additional acquisitions, we also cannot be sure that any benefits
anticipated from the acquisitions will actually be realized. Likewise, we
cannot be sure that we will be able to obtain additional financing for
acquisitions. Such additional financing could be restricted by the terms of our
debt agreements.
The process of integrating acquired operations, including our recent
acquisitions, into our existing operations may result in unforeseen operating
difficulties and may require significant financial and managerial resources
that would otherwise be available for the ongoing development or expansion of
our existing operations. Possible future acquisitions could result in the
incurrence of additional debt and related interest expense, contingent
liabilities and amortization expenses related to goodwill and other intangible
assets, all of which could have a materially adverse effect on our financial
condition, operating results and cash flow. We consider and execute strategic
acquisitions on an ongoing basis and may be evaluating acquisitions or engaged
in acquisition negotiations at any given time. We regularly evaluate potential
acquisitions and joint venture transactions, but we have not entered into any
agreements with respect to any material transactions at this time.
WE RELY ON SALES TO U.S. GOVERNMENT ENTITIES, AND THE LOSS OF SUCH CONTRACTS
WOULD HAVE A MATERIAL IMPACT ON OUR OPERATING RESULTS.
Our government sales are predominantly derived from contracts with
agencies of, and prime contractors to, the U.S. Government. Approximately
67.9%, or $1,296.1 million, of our sales for the year ended December 31, 2000,
were made directly or indirectly to agencies of the U.S. Government, including
the DoD. At December 31, 2000, the number of contracts with a value exceeding
$1.0 million was approximately 600. Our largest program is a long-term, cost
plus contract for the U.S. Air Force aerial reconnaissance program that
provided 3.8% of our sales for the same period. No other program provided more
than 2.3% of our sales for the year ended December 31, 2000. The loss of all or
a substantial portion of our sales to the U.S. Government would have a material
adverse effect on our financial condition, results of operations, or cash flow.
OUR GOVERNMENT CONTRACTS ENTAIL CERTAIN RISKS.
o Government contracts are dependent upon the U.S. defense budget.
The reduction in the U.S. defense budget in the early 1990s caused most
defense-related government contractors to experience decreased sales, increased
downward pressure on operating margins and, in certain cases, net losses. Our
predecessor company experienced a substantial decline in sales during that
period. A significant decline in U.S. military expenditures in the future could
materially adversely affect our sales, earnings and cash flow. The loss or
significant reduction in government funding of a large program in which we
participate could also materially adversely affect our future sales, earnings
and cash flows and thus our ability to meet our financial obligations. U.S.
Government contracts are also conditioned upon the continuing approval by
Congress of the amount of necessary spending. Congress usually appropriates
funds for a given program each fiscal year even though contract periods of
performance may exceed one year. Consequently, at the beginning of a major
program, the contract is usually partially funded, and additional monies are
normally committed to the contract only if appropriations are made by Congress
for future fiscal years.
o Government contracts contain unfavorable termination provisions and
are subject to audit and modification.
Companies engaged primarily in supplying defense-related equipment and
services to U.S. Government agencies are subject to certain business risks
peculiar to the defense industry. These risks include the ability of the U.S.
Government to unilaterally:
o suspend us from receiving new contracts pending resolution of alleged
violations of procurement laws or regulations;
o terminate existing contracts;
o reduce the value of existing contracts;
12
o audit our contract-related costs and fees, including allocated indirect
costs; and
o control and potentially prohibit the export of our products.
All of our U.S. Government contracts can be terminated by the U.S.
Government either for its convenience or if we default by failing to perform
under the contract. Termination for convenience provisions provide only for our
recovery of costs incurred or committed, settlement expenses and profit on the
work completed prior to termination. Termination for default provisions provide
for the contractor to be liable for excess costs incurred by the U.S.
Government in procuring undelivered items from another source. Our contracts
with foreign governments generally contain similar provisions relating to
termination at the convenience of the customer.
The U.S. Government may review our costs and performance on their
contracts, as well as our accounting and general business practices. Based on
the results of such audits, the U.S. Government may adjust our contract-related
costs and fees, including allocated indirect costs. In addition, under U.S.
Government purchasing regulations, some of our costs, including most financing
costs, amortization of goodwill, portions of research and development costs,
and certain marketing expenses may not be reimbursable under U.S. Government
contracts. Further, as a U.S. Government contractor, we are subject to
investigation, legal action and/or liability that would not apply to a
commercial company.
o Government contracts are subject to competitive bidding and we are
required to obtain licenses for non-U.S. sales.
We obtain many of our U.S. Government contracts through a competitive
bidding process. We cannot assure you that we will continue to win
competitively awarded contracts or that awarded contracts will generate sales
sufficient to result in our profitability. We are also subject to risks
associated with the following:
o the frequent need to bid on programs in advance of the completion of
their design (which may result in unforeseen technological difficulties
and/or cost overruns);
o the substantial time and effort including the relatively unproductive
design and development required to prepare bids and proposals for
competitively awarded contracts which may not be awarded to us;
o design complexity and rapid technological obsolescence; and
o the constant need for design improvement.
In addition to these U.S. Government contract risks, we are required to
obtain licenses from U.S. Government agencies to export many of our products
and systems. Additionally, we are not permitted to export some of our products.
We cannot be sure of our ability to gain any licenses required to export our
products, and failure to receive required licenses would eliminate our ability
to sell our products outside the United States.
OUR FIXED PRICE AND COST PLUS CONTRACTS MAY COMMIT US TO UNFAVORABLE TERMS.
We provide our products and services primarily through fixed price or cost
plus contracts. Fixed price contracts provided 71.4% of our sales for the year
ended December 31, 2000. In a fixed price contract, the price is not subject to
adjustment based on cost incurred to perform the required work under the
contract. Therefore, we fully absorb cost overruns on fixed price contracts and
this reduces our profit margin on the contract. Those cost overruns may result
in a loss. A further risk associated with fixed price contracts is the
difficulty of estimating sales and costs that are related to performance in
accordance with contract specifications and the possibility of obsolescence in
connection with long-term procurements. Failure to anticipate technical
problems, estimate costs accurately or control costs during performance of a
fixed price contract may reduce our profitability or cause a loss.
Cost plus contracts provided 28.6% of our sales for the year ended
December 31, 2000. In a cost plus contract, we are reimbursed for allowable
incurred costs plus a fee, which may be fixed or
13
variable depending on the contract arrangement. The price on a cost plus
contract is based on allowable cost incurred, but generally is subject to
contract funding limitations. U.S. Government regulations require that we
notify our customer of any cost overruns or underruns on a cost plus contract.
If we incur costs in excess of the funding limitation specified in the
contract, we may not be able to recover those cost overruns.
We record sales and profits on substantially all of our contracts using
percentage-of-completion methods of accounting. As a result, revisions made to
our estimates of sales and profits are recorded in the period in which the
conditions that require such revisions become known and can be estimated.
Although we believe that adequate provisions for losses for our fixed price
contracts are recorded in our financial statements, as required under U.S.
generally accepted accounting principles, we cannot assure you that our
contract loss provisions, which are based on estimates, will be adequate to
cover all actual future losses.
OUR OPERATIONS INVOLVE RAPIDLY EVOLVING PRODUCTS AND TECHNOLOGICAL CHANGE.
The rapid change of technology is a key feature of the communication
equipment industry as a whole, and for defense applications in particular. To
succeed in the future, we will need to continue to design, develop,
manufacture, assemble, test, market and support new products and enhancements
on a timely and cost-effective basis. Historically, our technology has been
developed through customer-funded research and development as well as from
internally funded research and development. We cannot guarantee that we will
continue to maintain comparable levels of research and development. In the past
we have allocated substantial funds to capital expenditures, programs and other
investments. This practice will continue to be required in the future. Even so,
we cannot assure you that we will successfully identify new opportunities and
continue to have the needed financial resources to develop new products in a
timely or cost-effective manner. At the same time, products and technologies
developed by others may render our products and systems obsolete or
non-competitive.
WE MAY NOT SUCCESSFULLY IMPLEMENT OUR PLAN TO EXPAND INTO COMMERCIAL MARKETS.
Our revenues have primarily come from business with the DoD and other U.S.
Government agencies. In addition to continuing to pursue these market areas, we
will continue applying our technical capabilities and expertise to related
commercial markets. Some of our commercial products, such as local wireless
loop telecommunications equipment, airport security equipment and voyage
recorders, have only recently been introduced. As such, these new products are
subject to certain risks and may require us to:
o develop and maintain marketing, sales and customer support
capabilities;
o secure sales and customer support capabilities;
o obtain customer and/or regulatory certification;
o respond to rapid technological advances; and
o obtain customer acceptance of these products and product performance.
Our efforts to expand our presence in commercial markets may require
significant resources, including additional working capital and capital
expenditures, as well as the use of our management's time. Our efforts to sell
certain commercial products, particularly our broadband wireless communications
products, also may depend to a significant degree on the efforts of independent
distributors or communication service providers. In addition, we have made
equity investments in entities that plan to commence operations as
communications service providers using some of our commercial products. We can
give no assurance that these distributors or service providers will be able to
market our products or their services successfully or that we will be able to
realize a return on our investments in them. We cannot assure you that we will
be successful in addressing these risks or in developing these commercial
business opportunities.
14
CONSOLIDATION AND INTENSE COMPETITION IN OUR INDUSTRY COULD LIMIT OUR ABILITY
TO ATTRACT AND RETAIN CUSTOMERS.
The communications equipment industry as a whole, and the market for
defense applications in particular, is highly competitive. The defense industry
has experienced substantial consolidation due to declining defense budgets and
increasing pressures for cost reductions. We expect that the DoD's increased
use of commercial off-the-shelf products and components in military equipment
will continue to encourage new competitors to enter the market. We also expect
that competition for original equipment manufacturing business will increase
due to the continued emergence of merchant suppliers. Our ability to compete
for defense contracts largely depends on the following factors:
o the effectiveness and innovations of our research and development
programs;
o our ability to offer better performance than our competitors at a lower
cost to the U.S. Government; and
o the readiness of our facilities, equipment and personnel to undertake
the programs for which we compete.
In some instances, the U.S. Government directs all work for a particular
project to a single supplier, commonly known as a sole-source project. In such
cases, other suppliers who may otherwise be able to compete for the programs
involved can only do so if the U.S. Government chooses to reopen the particular
program to competition. Additionally, many of our competitors are larger than
us and have substantially greater financial and other resources than we have.
IF WE ARE UNABLE TO ATTRACT AND RETAIN KEY MANAGEMENT AND PERSONNEL, WE MAY
BECOME UNABLE TO OPERATE OUR BUSINESS EFFECTIVELY.
Our future success depends to a significant degree upon the continued
contributions of our management, including Messrs. Lanza and LaPenta, and our
ability to attract and retain other highly qualified management and technical
personnel. We do not maintain any key person life insurance policies for
members of our management. As of March 12, 2001, Messrs. Lanza and LaPenta
owned, in the aggregate, 14.3% of our common stock. We have entered into
employment agreements with Messrs. Lanza and LaPenta. We face competition for
management and technical personnel from other companies and organizations.
Failure to attract and retain such personnel would damage our prospects.
ENVIRONMENTAL LAWS AND REGULATION MAY SUBJECT US TO SIGNIFICANT LIABILITY.
Our operations are subject to various U.S. federal, state and local as
well as certain foreign environmental laws and regulations within the countries
in which we operate relating to the discharge, storage, treatment, handling,
disposal and remediation of certain materials, substances and wastes used in
our operations.
New laws and regulations, stricter enforcement of existing laws and
regulations, the discovery of previously unknown contamination or the
imposition of new clean-up requirements may require us to incur costs in the
future that could have a negative effect on our financial condition, results of
operations or cash flow.
TERMINATION OF OUR BACKLOG OF ORDERS COULD NEGATIVELY IMPACT OUR SALES.
We currently have a backlog of orders, primarily under contracts with the
U.S. Government. The U.S. Government may unilaterally modify or terminate these
contracts. Accordingly, most of our backlog could be modified or terminated by
the U.S. Government. We cannot assure you that our existing backlog will result
in sales. Further, we cannot be sure that the margin we record on sales from
any contract included in backlog will be profitable.
OUR PENSION PLAN LIABILITIES MAY RESULT IN SIGNIFICANT EXPENSES.
We have assumed certain liabilities relating to defined benefit pension
plans for present and former employees and retirees of certain businesses which
we acquired. Prior to our formation,
15
Lockheed Martin received a letter from the Pension Benefit Guaranty Corporation
(the "PBGC"), which requested information regarding the transfer of these
pension plans and indicated that the PBGC believed certain of these pension
plans were underfunded using its actuarial assumptions. These assumptions
resulted in a larger liability for accrued benefits than the assumptions used
for financial reporting under Statement of Financial Accounting Standards No.
87.
With respect to these plans, Lockheed Martin entered into an agreement
with us and the PBGC dated as of April 30, 1997. Under that agreement, Lockheed
Martin agreed, upon the occurrence of certain circumstances, either to:
o assume sponsorship of the subject plans; or
o provide another form of financial support.
If Lockheed Martin did assume sponsorship of these plans, it would be
primarily liable for the costs associated with funding these plans or any costs
associated with the termination of them, but we would be required to reimburse
Lockheed Martin for its obligations. To date, the impact on our pension expense
and funding requirements resulting from this arrangement has not been material
to our results of operations, financial position or cash flow. However, should
Lockheed Martin assume sponsorship of the subject plans, or if these plans were
terminated, the impact of any increased pension expenses or funding
requirements could be material to us.
RISKS RELATED TO THE NOTES AND THE COMMON STOCK INTO WHICH THE NOTES ARE
CONVERTIBLE
WE CANNOT ASSURE YOU THAT AN ACTIVE TRADING MARKET WILL BE SUSTAINED FOR THESE
NOTES, WHICH MAY REDUCE THEIR MARKET PRICE.
The notes were initially issued on November 21, 2000 and on December 20,
2000. Although the notes are eligible for trading in the PORTAL market, we
cannot assure you that an active trading market for the notes will be
sustained. Because the initial purchaser of the notes, Lehman Brothers Inc., is
an affiliate of L-3 Holdings, it is not permitted under the rules of the New
York Stock Exchange to solicit, or make recommendations regarding, the purchase
or sale of the notes or the common stock of L-3 Holdings. This could affect the
liquidity of, the trading markets for, or investor interest in the notes and
the common stock of L-3 Holdings, which could adversely affect the price at
which the notes trade.
In addition, the liquidity of the trading market in the notes and the
market price quoted for the notes may be adversely affected by changes in the
overall market for convertible securities, changes in our prospects or
financial performance or in the prospects for companies in our industry
generally. If an active market for the notes or the common stock of L-3
Holdings fails to be sustained, the trading price could fall. The notes could
also trade at lower prices depending on other factors, including:
o prevailing interest rates;
o the markets for similar securities;
o general economic conditions; and
o our financial condition, historical financial performance and future
prospects.
THE NOTES ARE SUBORDINATED TO ALL OUR EXISTING AND FUTURE SENIOR INDEBTEDNESS,
WHICH MAY INHIBIT OUR ABILITY TO REPAY YOU.
The notes are contractually subordinated in right of payment to our
existing and future senior indebtedness, other than indebtedness that is
expressly junior in right of payment to the notes. As of December 31, 2000, we
had $190.0 million of senior debt, which consisted of L-3 Communications'
senior credit facilities. The indenture does not limit the creation of
additional senior indebtedness or any other indebtedness by us.
16
Any incurrence of additional indebtedness may materially adversely impact
our ability to service our debt, including the notes. Due to the subordination
provisions of our senior indebtedness, in the event of our insolvency, funds
that would otherwise be used to pay the holders of the notes will be used to
pay the holders of senior indebtedness to the extent necessary to pay the
senior indebtedness in full. As a result of these payments, general creditors
may recover less, ratably, than the holders of senior indebtedness and the
general creditors may recover more, ratably, than the holders of the notes or
other subordinated indebtedness. In addition, the holders of senior
indebtedness may, under certain circumstances, restrict or prohibit us from
making payments on the notes.
OUR HOLDING COMPANY STRUCTURE MAY LIMIT YOUR RECOURSE TO OUR ASSETS.
L-3 Holdings' right to receive the assets of any subsidiary upon the
liquidation or reorganization of that subsidiary (and the consequent rights of
the holders of the notes to participate in those assets) will be subordinated
structurally to the claims of the subsidiary's creditors. However, if L-3
Holdings is recognized as a creditor, its claims would be subordinate to any
secured indebtedness of its subsidiary and any indebtedness of a subsidiary
that is senior to L-3 Holdings' claims. L-3 Holdings has no assets other than
the stock of its subsidiary, L-3 Communications. The capital stock of L-3
Communications and its material subsidiaries is pledged to secure our
obligations under L-3 Communications' bank credit facilities.
THE TERMS OF OUR INDEBTEDNESS COULD RESTRICT OUR FLEXIBILITY AND LIMIT OUR
ABILITY TO SATISFY OBLIGATIONS UNDER THE NOTES.
We are subject to operational and financial covenants and other
restrictions contained in the bank loan documents evidencing our senior
indebtedness and the indentures evidencing the senior subordinated notes of L-3
Communications. These covenants could limit our operational flexibility and
restrict our ability to borrow additional funds, if necessary, to finance
operations and to make principal and interest payments on the notes.
Additionally, failure to comply with these operational and financial covenants
could result in an event of default under the terms of this indebtedness which,
if not cured or waived, could result in this indebtedness becoming due and
payable. The effect of these covenants, or our failure to comply with them,
could have a material adverse effect on our business, financial condition and
results of operations.
OUR ABILITY TO REPURCHASE NOTES WITH CASH UPON A CHANGE OF CONTROL MAY BE
LIMITED.
In certain circumstances involving a change of control of L-3 Holdings,
you may require us to repurchase some or all of your notes. We cannot assure
you that we will have sufficient financial resources at such time or would be
able to arrange financing to pay the repurchase price of the notes in cash. Our
ability to repurchase the notes in such event may be limited by law, by our
indentures, by the terms of other agreements relating to our senior
indebtedness and by such indebtedness and agreements as may be entered into,
replaced, supplemented or amended from time to time. We may be required to
refinance our senior indebtedness in order to make such payments. We may not
have the financial ability to repurchase the notes in cash if payment for our
senior indebtedness is accelerated.
THE GUARANTEES MAY BE UNENFORCEABLE DUE TO FRAUDULENT CONVEYANCE STATUTES,
ACCORDINGLY, YOU COULD HAVE NO CLAIM AGAINST THE GUARANTORS.
Although laws differ among various jurisdictions, a court could, under
fraudulent conveyance laws, further subordinate or avoid the Guarantees if it
found that the Guarantees were incurred with actual intent to hinder, delay or
defraud creditors, or the Guarantor did not receive fair consideration or
reasonably equivalent value for the Guarantees and that the Guarantor was any
of the following:
o insolvent or rendered insolvent because of the Guarantees;
o engaged in a business or transaction for which its remaining assets
constituted unreasonably small capital; or
17
o intended to incur, or believed that it would incur, debts beyond its
ability to pay at maturity.
If a court voided a guaranty by one or more of our subsidiaries as the
result of a fraudulent conveyance, or held it unenforceable for any other
reason, holders of the notes would cease to have a claim against the subsidiary
based on the guaranty and would solely be creditors of L-3 Holdings and any
Guarantor whose Guarantee was not similarly held unenforceable.
NOT ALL OF THE SUBSIDIARIES OF L-3 HOLDINGS ARE GUARANTORS, AND YOUR CLAIMS
WILL BE SUBORDINATED TO ALL OF THE CREDITORS OF THE NON-GUARANTOR SUBSIDIARIES.
Many, but not all, of the direct and indirect subsidiaries of L-3 Holdings
guarantee the notes. In the event of a bankruptcy, liquidation or reorganization
of any of the non-guarantor subsidiaries, holders of their indebtedness and
their trade creditors will generally be entitled to payment of their claims from
the assets of those non-guarantor subsidiaries before any assets of the
non-guarantor subsidiaries are made available for distribution to L-3 Holdings.
As of December 31, 2000, these notes were effectively junior to $22.6 million of
indebtedness and other liabilities (including trade payables) of these
non-guarantor subsidiaries. The non-guarantor subsidiaries generated 2.6% of our
consolidated revenues, generated a loss from continuing operations before income
taxes of $0.2 million and used $2.2 million of cash from operating activities
for the year ended December 31, 2000. The non-guarantor subsidiaries held 1.6%
of our consolidated assets as of December 31, 2000.
THE GUARANTEES WILL BE SUBORDINATED TO THE SENIOR DEBT OF THE GUARANTORS.
The Guarantees are subordinated to all existing and future senior debt of
the Guarantors, which shall consist of all of the indebtedness and other
liabilities of the Guarantors designated as senior, including borrowings under
the L-3 Communications' senior credit facilities. The Guarantee rendered by L-3
Communications in connection with this offering will be pari passu with the
Senior Subordinated Notes sold by L-3 Communications in April 1997, May 1998
and December 1998, and the Guarantees made by subsidiaries of L-3
Communications in connection with this offering will be pari passu with the
Guarantees made by those subsidiaries relating to those Senior Subordinated
Notes. As of December 31, 2000, our subsidiaries had $190.0 million of senior
debt. Any right of L-3 Holdings to receive the assets of any of its
subsidiaries upon their liquidation or reorganization (and the consequent right
of the holders of the notes to participate in those assets) will be subject to
the claims of that subsidiary's creditors, including trade creditors. To the
extent that L-3 Holdings is recognized as a creditor of that subsidiary, L-3
Holdings may have such claim, but it would still be subordinate to any security
interests in the assets of that subsidiary and any indebtedness and other
liabilities of that subsidiary senior to that held by L-3 Holdings.
FUTURE SALES OF THE COMMON STOCK OF L-3 HOLDINGS IN THE PUBLIC MARKET COULD
LOWER THE STOCK PRICE.
We may, in the future, sell additional shares of our common stock in
subsequent public offerings. We may also issue additional shares of our common
stock to finance future acquisitions, including acquisitions larger than those
we have done in the past through the use of equity. Additionally, a substantial
number of shares of our common stock is available for future sale pursuant to
stock options, registration rights agreements and upon conversion of these
notes. We cannot predict the size of future issuances of our common stock or
the effect, if any, that future sales and issuances of shares of our common
stock will have on the market price of our common stock. Sales of substantial
amounts of our common stock (including shares issued upon the exercise of stock
options, acquisition financing or the conversion of these notes), or the
perception that such sales could occur, may adversely affect prevailing market
prices for our common stock.
DELAWARE LAW AND THE CHARTER DOCUMENTS OF L-3 HOLDINGS MAY IMPEDE OR DISCOURAGE
A TAKEOVER, WHICH COULD CAUSE THE MARKET PRICE OF ITS SHARES TO DECLINE.
We are a Delaware corporation and the anti-takeover provisions of Delaware
law impose various impediments to the ability of a third party to acquire
control of us, even if a change in control would be beneficial to our existing
stockholders. In addition, our board of directors has the power, without
18
stockholders' approval, to designate the terms of one or more series of
preferred stock and issue shares of preferred stock, which could be used
defensively if a takeover is threatened. Our certificate of incorporation and
by-laws provide for a classified board of directors serving staggered
three-year terms, restrictions on who may call a special meeting of
stockholders and a prohibition on stockholder action by written consent. All
options issued under our stock option plans automatically vest upon a change in
control of L-3 Holdings. Our incorporation under Delaware law, the ability of
our board of directors to create and issue a new series of preferred stock, the
acceleration of the vesting of the outstanding stock options that we have
granted upon a change in control of L-3 Holdings, and certain provisions of L-3
Holdings' certificate of incorporation and by-laws could impede a merger,
takeover or other business combination involving L-3 Holdings or discourage a
potential acquiror from making a tender offer for the common stock of L-3
Holdings, which, under certain circumstances, could reduce the market value of
our common stock.
THIS PROSPECTUS CONTAINS FORWARD LOOKING STATEMENTS, WHICH MAY NOT BE CORRECT.
Certain of the matters discussed concerning our operations, economic
performance and financial condition, including in particular, the likelihood of
our success in developing and expanding our business and the realization of
sales from backlog, include forward-looking statements within the meaning of
Section 27A of the Securities Act and Section 21E of the Securities Exchange
Act of 1934 ("Exchange Act"). Statements that are predictive in nature, that
depend upon or refer to future events or conditions or that include words such
as "expects," "anticipates," "intends," "plans," "believes," "estimates" and
similar expressions are forward-looking statements. Although we believe that
these statements are based upon reasonable assumptions, we can give no
assurance that their goals will be achieved.
19
USE OF PROCEEDS
We will not receive any proceeds from the resale of the notes or the
shares of common stock which are issuable upon conversion of the notes.
SELLING SECURITY HOLDERS
The following table sets forth information, as of August 3, 2001 (unless
otherwise noted), with respect to the selling holders and the principal amounts
of notes beneficially owned by each selling holder that may be offered under
this prospectus. The information is based on information provided by or on
behalf of the selling holders. The selling holders may offer all, some or none
of the notes or common stock into which the notes are convertible. Because the
selling holders may offer all or some portion of the notes or the common stock,
no estimate can be given as to the amount of the notes or the common stock that
will be held by the selling holders upon termination of any sales. In addition,
the selling holders identified below may have sold, transferred or otherwise
disposed of all or a portion of their notes in transactions exempt from the
registration requirements of the Securities Act or pursuant to our Registration
Statement on Form S-1 and amendments or supplements thereto. Selling holders,
including their transferees, pledgees or donees or their successors, may from
time to time offer and sell pursuant to this prospectus any or all of the notes
and common stock into which the notes are convertible.
PRINCIPAL
AMOUNT OF COMMON
NOTES PERCENT OF STOCK ISSUABLE
BENEFICIALLY THE NOTES UPON CONVERSION
NAME OWNED OWNED OF THE NOTES
---- -------------- ------------ ----------------
1976 Distribution Trust FBO
A. R. Lauder Zinterhofer ................................... $ 8,000 -- 98
1976 Distribution Trust FBO Jane A. Lauder ................... $ 16,000 0.01% 196
2000 Revocable Trust FBO
A. R. Lauder Zinterhofer ................................... $ 8,000 -- 98
ABN Amro Securities LLC ...................................... $ 4,250,000 1.42% 52,147
ACM Offshore Fund ............................................ $ 850,000 0.28% 10,429
AIG/National Union Fire Insurance ............................ $ 785,000 0.26% 9,631
Alexandra Global Investment Fund 1 Ltd ....................... $ 6,500,000 2.16% 79,754
Aloha Airlines Non-Pilots Pension Trust ...................... $ 175,000 0.06% 2,147
Aloha Pilots Retirement Trust ................................ $ 100,000 0.03% 1,226
Alpha U.S. Sub Fund VIII, LLC ................................ $ 750,000 0.25% 9,202
Alpine Associates ............................................ $ 4,000,000 1.33% 49,079
Alpine Partners, L.P. ........................................ $ 650,000 0.22% 7,975
Allstate Insurance Company ................................... $ 1,000,000 0.33% 12,269
Allstate Life Insurance Company .............................. $ 400,000 0.13% 4,907
Amaranth Securities L.L.C. ................................... $ 5,000,000 1.67% 61,349
American Motorist Insurance Corporation ...................... $ 585,000 0.20% 7,177
Arapahoe County, Colorado .................................... $ 57,000 0.02% 699
Arbitex Master Fund, L.P. .................................... $ 6,400,000 2.13% 78,527
Arkansas PERS ................................................ $ 950,000 0.32% 11,656
Arkansas Teachers Retirement ................................. $ 3,885,000 1.30% 47,668
Associated Electric & Gas Insurance Services Limited ......... $ 500,000 0.17% 6,134
BP Amoco Corporation Master Trust for Employee
Pension Plans ................................................ $ 7,700,000 2.56% 94,478
BP Amoco PLC, Master Trust ................................... $ 410,000 0.14% 5,030
BT Equity Opportunities ...................................... $ 2,000,000 0.67% 24,539
BT Strategy .................................................. $ 1,000,000 0.33% 12,269
Bancroft Convertible Fund, Inc. .............................. $ 1,000,000 0.33% 12,269
20
PRINCIPAL
AMOUNT OF COMMON
NOTES PERCENT OF STOCK ISSUABLE
BENEFICIALLY THE NOTES UPON CONVERSION
NAME OWNED OWNED OF THE NOTES
---- -------------------------- ----------------
Baptist Health of South Florida .................................................. $ 386,000 0.13% 4,736
Black Diamond Offshore, Ltd. ..................................................... $ 753,000 0.25% 9,239
Boilermakers Blacksmith Pension Trust ............................................ $ 1,300,000 0.43% 15,950
Boston Museum of Fine Art ........................................................ $ 115,000 0.04% 1,411
Brazos Small Cap Portfolio ....................................................... $ 127,000 0.04% 1,558
British Virgin Islands Social Security Board ..................................... $ 42,000 0.01% 515
C&H Sugar Company Inc. ........................................................... $ 265,000 0.09% 3,251
CALAMOS (Registered Trademark) Convertible Fund -- CALAMOS
(Registered Trademark) Investment Trust ........................................ $ 2,920,000 0.97% 35,828
CALAMOS (Registered Trademark) Convertible Growth and Income
Fund -- CALAMOS (Registered Trademark) Investment Trust ....................... $ 1,500,000 0.50% 18,404
CALAMOS (Registered Trademark) Convertible Portfolio -- CALAMOS
(Registered Trademark) Advisors Trust .......................................... $ 200,000 0.06% 2,453
CALAMOS (Registered Trademark) Convertible Technology Fund --
CALAMOS (Registered Trademark) Investment Trust ................................. $ 60,000 0.02% 736
CALAMOS (Registered Trademark) Global Convertible Fund -- CALAMOS
(Registered Trademark) Investment Trust ........................................ $ 320,000 0.11% 3,296
Chrysler Corporation Master Retirement Trust ..................................... $ 4,960,000 1.65% 60,858
City of New Orleans .............................................................. $ 239,000 0.08% 2,932
City University of New York ...................................................... $ 142,000 0.05% 1,742
The Class IC Company Ltd. ........................................................ $ 2,750,000 0.92% 33,742
Continental Assurance Company .................................................... $ 2,400,000 0.80% 29,447
Credit Lyonnais Securities (USA) Inc. ............................................ $ 2,000,000 0.67% 24,539
Deephaven Domestic Convertible Trading Ltd. ...................................... $ 8,100,000 2.70% 99,386
Deeprock & Co. ................................................................... $ 1,000,000 0.33% 12,269
Delaware PERS .................................................................... $ 1,400,000 0.47% 17,177
Delta Air Lines Master Trust (c/o Oaktree Capital
Management LLC) .................................................................. $ 1,705,000 0.57% 20,920
Delta Pilots D&S Trust ........................................................... $ 605,000 0.20% 7,423
Double Black Diamond Offshore, LDC ............................................... $ 3,113,000 1.04% 38,196
Drury University ................................................................. $ 80,000 0.03% 981
Dylan (IMA) Limited .............................................................. $ 2,000,000 0.67% 24,539
Ellsworth Convertible Growth and Income Fund, Inc. ............................... $ 1,000,000 0.33% 12,269
Employee Benefit Convertible Securities Fund ..................................... $ 240,000 0.08% 2,944
Engineers Joint Pension Fund ..................................................... $ 469,000 0.16% 5,754
Enterprise Convertible Securities Fund ........................................... $ 95,000 0.03% 1,165
F. R. Convt. Sec. Fn. ............................................................ $ 95,000 0.03% 1,165
First Union Securities Inc. ...................................................... $ 450,000 0.15% 5,521
Froley Investment Company, Inc. .................................................. $ 235,000 0.08% 2,883
The Grable Foundation ............................................................ $ 111,000 0.04% 1,361
Grady Hospital Foundation ........................................................ $ 122,000 0.04% 1,496
Hawaiian Airlines Employees Pension Plan--IAM .................................... $ 80,000 0.03% 981
Hawaiian Airlines Pension Plan for Salaried Employees ............................ $ 20,000 0.01% 245
Hawaiian Airlines Pilots Retirement Plan ......................................... $ 160,000 0.05% 1,963
HFR Convertible Arbitrage Fund ................................................... $ 200,000 0.07% 2,453
Highbridge International LLC ..................................................... $15,000,000 5.00% 184,049
ICI American Holdings Trust ...................................................... $ 750,000 0.25% 9,202
Independence Blue Cross .......................................................... $ 116,000 0.04% 1,423
21
PRINCIPAL
AMOUNT OF COMMON
NOTES PERCENT OF STOCK ISSUABLE
BENEFICIALLY THE NOTES UPON CONVERSION
NAME OWNED OWNED OF THE NOTES
---- -------------- ------------ ----------------
Innovest Finanzoienstleistungs ................................. $ 394,000 0.13% 4,834
Island Holdings ................................................ $ 45,000 0.02% 552
JMG Capital Partners, LP ....................................... $ 4,000,000 1.33% 49,079
JMG Triton Offshore Fund, Ltd. ................................. $ 4,000,000 1.33% 49,079
KBC Financial Products USA ..................................... $ 1,000,000 0.33% 12,269
Lehman Brothers Inc. ........................................... $ 9,000,000 3.00% 110,429
Lipper Convertibles, L.P. ...................................... $ 9,000,000 3.00% 110,429
Lipper Offshore Convertibles, L.P. ............................. $ 2,000,000 0.67% 24,539
Local Initiatives Support Corporation .......................... $ 64,000 0.02% 785
Lumbermens Mutual Casualty ..................................... $ 486,000 0.16% 5,963
K.D. Offshore Fund C.V. ........................................ $ 750,000 0.25% 9,202
Kellner, DiLeo & Co. ........................................... $ 750,000 0.25% 9,202
Kentfield Trading Ltd. ......................................... $ 9,975,000 3.33% 122,392
Lydian Overseas Master Fund .................................... $10,000,000 3.33% 122,699
Maryland Retirement Agency ..................................... $ 2,980,000 0.99% 36,564
McMahan Securities Co. L.P. .................................... $ 1,600,000 0.53% 19,631
McMahan Securities Co. L.P. .................................... $ 1,000,000 0.33% 12,269
Merrill Lynch Insurance Group .................................. $ 284,000 0.09% 3,484
Motion Picture Industry Health Plan -- Active Member
Fund ......................................................... $ 580,000 0.19% 7,116
Motion Picture Industry Health Plan -- Retiree Member
Fund ......................................................... $ 290,000 0.10% 3,558
Municipal Employees ............................................ $ 125,000 0.04% 1,533
Nabisco ........................................................ $ 34,000 0.01% 417
Nations Convertible Securities Fund ............................ $ 6,160,000 2.05% 75,582
New Orleans Firefighters Pension/Relief Fund ................... $ 125,000 0.04% 1,533
New York Life Insurance and Annuity Corporation ................ $ 900,000 0.30% 11,042
New York Life Insurance Company ................................ $ 9,500,000 3.17% 116,564
Nicholas Applegate Convertible Fund ............................ $ 1,609,000 0.54% 19,742
Nicholas Applegate Global Holdings ............................. $ 30,000 0.01% 368
OCM Convertible Trust .......................................... $ 2,875,000 0.96% 35,276
Occidental Petroleum Corporation ............................... $ 232,000 0.08% 2,846
Ohio Bureau of Workers Compensation ............................ $ 150,000 0.05% 1,840
Onex Industrial Partners Limited ............................... $ 7,220,000 2.40% 88,588
Oxford, Lord Abbott & Co. ...................................... $ 1,750,000 0.58% 21,472
Ondeo Nalco .................................................... $ 255,000 0.09% 3,128
Partner Reinsurance Company, Ltd. .............................. $ 995,000 0.33% 12,208
People's Benefit Life Insurance Company (Teamsters
Separate Account) ............................................ $ 4,000,000 1.33% 49,079
Pebble Capital Inc. ............................................ $ 2,899,000 0.96% 35,570
Physicians Life ................................................ $ 370,000 0.12% 4,539
Policemen and Retirement System of the City of Detroit ......... $ 635,000 0.21% 7,791
Pro Mutual ..................................................... $ 664,000 0.22% 8,147
Queen's Health Plan ............................................ $ 60,000 0.02% 736
RJR Reynolds ................................................... $ 107,000 0.04% 1,312
22
PRINCIPAL
AMOUNT OF COMMON
NOTES PERCENT OF STOCK ISSUABLE
BENEFICIALLY THE NOTES UPON CONVERSION
NAME OWNED OWNED OF THE NOTES
---- -------------- ------------ ----------------
RCG Latitude Master Fund* .............................. $ 1,150,000 0.38% 14,110
Raytheon Master Pension Trust .......................... $ 640,000 0.21% 7,852
Rockhaven Fund ......................................... $ 90,000 0.03% 1,104
SG Cowen Securities Inc. ............................... $ 5,250,000 1.75% 64,417
Sage Capital ........................................... $ 75,000 0.02% 920
Salomon Brothers Asset Management Inc. ................. $ 4,500,000 1.50% 55,214
San Diego City Retirement .............................. $ 899,000 0.30% 11,030
San Diego County Convertible ........................... $ 1,968,000 0.66% 24,147
Sanpaolo Asset Management .............................. $ 150,000 0.05% 1,840
Screen Actors Guild Pension Convertible ................ $ 502,000 0.17% 6,159
Shell Pension Trust .................................... $ 498,000 0.17% 6,110
Silvercreek II Limited ................................. $12,788,000 4.26% 156,907
Silvercreek Limited Partnership ........................ $ 5,533,000 1.84% 67,889
Southern Farm Bureau Life Insurance .................... $ 675,000 0.23% 8,282
St. Albans Partners Ltd. ............................... $ 4,000,000 1.33% 49,079
Starvest Combined Portfolio ............................ $ 850,000 0.28% 10,429
State Employees' Retirement Fund of the State of
Delaware ............................................... $ 2,505,000 0.84% 30,736
State of Connecticut Combined Investment Funds ......... $ 5,470,000 1.82% 67,116
State of Oregon/SAIF Corporation ....................... $ 6,850,000 2.28% 84,049
State of Oregon--Equity ................................ $ 4,550,000 1.52% 58,828
Syngenta AG ............................................ $ 235,000 0.08% 2,760
Total Fina Elf Finance U.S.A. Inc. ..................... $ 250,000 0.08% 3,067
UBS AG London Branch ................................... $19,725,000 6.58% 242,024
Value Line Convertible Fund, Inc. ...................... $ 1,000,000 0.33% 12,269
Van Kampen Harbor Fund ................................. $ 5,000,000 1.67% 61,349
Vanguard Convertible Securities Fund, Inc. ............. $ 5,915,000 1.97% 72,576
Wake Forest University ................................. $ 861,000 0.29% 10,564
Worldwide Transactions, Ltd. ........................... $ 134,000 0.04% 1,644
Writers Guild Convertible .............................. $ 294,000 0.10% 3,607
Wyoming State Treasurer ................................ $ 1,002,000 0.33% 12,294
Zeneca AG Products Inc. ................................ $ 135,000 0.05% 1,656
Zeneca Holdings Trust .................................. $ 350,000 0.12% 4,294
None of the selling holders nor any of their affiliates, officers,
directors or principal equity holders has held any position or office or has
had any material relationship with us within the past three years.
Information concerning the selling holders may change from time to time
and any changed information will be set forth in supplements to this prospectus
if and when necessary. In addition, the conversion rate and therefore, the
number of shares of common stock issuable upon conversion of the notes, is
subject to adjustment under certain circumstances. Accordingly, the aggregate
principal amount of notes and the number of shares of common stock into which
the notes are convertible may increase or decrease.
----------
* Holdings for this selling holder are as of June 15, 2001.
23
DESCRIPTION OF THE NOTES
The notes were issued under an indenture dated November 21, 2000, among
us, the Guarantors and The Bank of New York, as trustee. The terms of the notes
include those provided in the indenture and those provided in the registration
rights agreement, which we entered into with the initial purchaser on November
21, 2000.
The following description is only a summary of the material provisions of
the notes, the indenture and the registration rights agreement. We urge you to
read these documents in their entirety because they, and not this description,
define your rights as holders of these notes. You may request copies of these
documents at our address set forth under the caption "Summary."
When we refer to L-3 Holdings in this section, we refer only to L-3
Communications Holdings, Inc., a Delaware corporation, and not its
subsidiaries.
BRIEF DESCRIPTION OF THE NOTES
The notes are:
o limited to $300,000,000 aggregate principal amount, which includes
$250,000,000 aggregate principal amount issued to the Initial Purchaser
in the Initial Offering and $50,000,000 aggregate principal amount
issued to the Initial Purchaser upon exercise in full of its
over-allotment option.
o general unsecured obligations, junior in right of payment to all of our
existing and future Senior Debt;
o convertible into our common stock at a conversion price of $81.50 per
share, subject to adjustment as described below under "-- Conversion
Rights";
o redeemable at our option in whole or in part beginning on December 1,
2003 upon the terms and the redemption prices set forth below under "--
Optional Redemption by L-3 Holdings";
o unconditionally guaranteed by the Guarantors;
o subject to repurchase by us at your option if a Change of Control
occurs; and
o due on June 1, 2009, unless earlier converted, redeemed by us at our
option or repurchased by us at your option.
The indenture does not contain any financial covenants and does not
restrict L-3 Holdings or the Guarantors from paying dividends, incurring Senior
Debt or any other indebtedness or issuing or repurchasing their other
securities. The indenture also does not protect you in the event of a highly
leveraged transaction or a change in control of L-3 Holdings except to the
extent described under "-- Repurchase at Option of Holders upon a Change of
Control" below.
You may present definitive notes for conversion, registration of transfer
or exchange, without service charge, at our office or agency in New York City,
which shall initially be the office or agency of the trustee in New York City.
For information regarding conversion, registration of transfer and exchange of
global notes, see "-- Form, Denomination and Registration."
BRIEF DESCRIPTION OF THE GUARANTEES
These notes are jointly and severally guaranteed by certain of L-3
Holdings' existing and future domestic subsidiaries as described below under
"-- Subsidiary Guarantees."
The Guarantees of these notes:
o are general obligations of each Guarantor;
o are subordinated in right of payment to all existing and future Senior
Debt of each Guarantor; and
24
o rank pari passu with the obligations of L-3 Communications and the
other Guarantors under L-3 Communications' outstanding:
o 10 3/8% Senior Subordinated Notes due 2007;
o 8 1/2% Senior Subordinated Notes due 2008; and
o 8% Senior Subordinated Notes due 2008 (collectively, the "Outstanding
Senior Subordinated Notes").
INTEREST
The notes bear interest from November 21, 2000 at the rate of 5.25% per
year, subject to adjustment upon the occurrence of a Reset Transaction. See "--
Interest Rate Adjustments" below. We will pay interest semiannually on June 1
and December 1 of each year to the holders of record at the close of business
on the preceding May 15 and November 15, respectively, beginning May 15, 2001.
There are two exceptions to the preceding sentence:
o In general, we will not pay interest accrued and unpaid on any note
that is converted into our common stock. See "-- Conversion Rights." If
a holder of notes converts after a record date for an interest payment
but prior to the corresponding interest payment date, it will receive
on the interest payment date interest accrued and paid on such notes,
notwithstanding the conversion of such notes prior to such interest
payment date, because that holder will have been the holder of record
on the corresponding record date. However, at the time the holder
surrenders those notes for conversion, it must pay us an amount equal
to the interest that will be paid on the interest payment date. The
preceding sentence does not apply, however, to a holder that converts
notes that are called by us for redemption. Accordingly, if we redeem
notes on a date after a record date for an interest payment but prior
to the corresponding interest payment date, and prior to the redemption
date the holder of those notes chooses to convert the notes, the holder
will not be required to pay us, at the time it surrenders the notes for
conversion, the amount of interest on the notes it will receive on the
interest payment date.
o We will pay interest to a person other than the holder of record on the
record date if we redeem the notes on a date that is after the record
date and prior to the corresponding interest payment date. In this
instance, we will pay interest accrued and unpaid on the notes being
redeemed to but not including the redemption date to the same person to
whom we will pay the principal of such notes.
Except as provided below, we will pay interest on:
o the global notes to DTC in immediately available funds;
o any definitive notes having an aggregate principal amount of $5,000,000
or less by check mailed to the holders of these notes; and
o any definitive notes having an aggregate principal amount of more than
$5,000,000 by wire transfer in immediately available funds at the
election of the holders of these notes.
At maturity, we will pay interest on the definitive notes at our office or
agency in New York City, which initially will be the office or agency of the
trustee in New York City.
We will pay principal and premium, if any, on:
o the global notes to DTC in immediately available funds; and
o the definitive notes by wire transfer in immediately available funds
or, at our option, at our office or agency in New York City, which
initially will be the office or agency of the trustee in New York City.
Interest generally is computed on the basis of a 360-day year comprised of
twelve 30-day months.
25
INTEREST RATE ADJUSTMENTS
If a Reset Transaction occurs, the interest rate will be adjusted to equal
the Adjusted Interest Rate from the effective date of such Reset Transaction
to, but not including, the effective date of any succeeding Reset Transaction.
A "Reset Transaction" means:
o a merger, consolidation or statutory share exchange to which the entity
that is the issuer of the common stock into which the notes are then
convertible is a party;
o a sale of all or substantially all the assets of that entity;
o a recapitalization of that common stock; or
o a distribution described in the fourth bullet point of the sixth
paragraph under "-- Conversion Rights" below,
after the effective date of which transaction or distribution the notes would
be convertible into:
o shares of an entity the common stock of which had a dividend yield for
the four fiscal quarters of such entity immediately preceding the
public announcement of the transaction or distribution that was more
than 2.5% higher than the dividend yield on our common stock (or other
common stock then issuable upon conversion of the notes) for the four
fiscal quarters preceding the public announcement of the transaction or
distribution; or
o shares of an entity that announces a dividend policy prior to the
effective date of the transaction or distribution which policy, if
implemented, would result in a dividend yield on that entity's common
stock for the next four fiscal quarters that would result in such a
2.5% increase.
The "Adjusted Interest Rate" with respect to any Reset Transaction will be
the rate per year that is the arithmetic average of the rates quoted by two
dealers engaged in the trading of convertible securities selected by us or our
successor as the rate at which interest should accrue so that the fair market
value, expressed in dollars, of a note immediately after the later of:
o the public announcement of the Reset Transaction; or
o the public announcement of a change in dividend policy in connection
with the Reset Transaction,
will equal the average Trading Price of a note for the 20 trading days
preceding the date of public announcement of the Reset Transaction. However,
the Adjusted Interest Rate will not be less than 5.25% per year.
For purposes of the definition of "Reset Transaction," the dividend yield
on any security for any period means the dividends paid or proposed to be paid
pursuant to an announced dividend policy on the security for that period
divided by, if with respect to dividends paid on that security, the average
Closing Price (as defined in the indenture) of the security during that period
and, if with respect to dividends proposed to be paid on the security, the
Closing Price of such security on the effective date of the related Reset
Transaction.
The "Trading Price" of a security on any date of determination means:
o the closing sale price (or, if no closing sale price is reported, the
last reported sale price) of a security (regular way) on the New York
Stock Exchange on that date;
o if that security is not listed on the NYSE on that date, the closing
sale price as reported in the composite transactions for the principal
U.S. securities exchange on which that security is listed;
o if that security is not so listed on a U.S. national or regional
securities exchange, the closing sale price as reported by the Nasdaq
National Market;
26
o if that security is not so reported, the last price quoted by
Interactive Data Corporation for that security or, if Interactive Data
Corporation is not quoting such price, a similar quotation service
selected by us;
o if that security is not so quoted, the average of the mid-point of the
last bid and ask prices for that security from at least two dealers
recognized as market-makers for that security; or
o if that security is not so quoted, the average of that last bid and ask
prices for that security from a dealer engaged in the trading of
convertible securities.
CONVERSION RIGHTS
You may convert any outstanding notes (or portions of outstanding notes)
into our common stock, initially at the conversion price of $81.50 per share
(equal to a conversion rate of 12.2699 shares per $1,000 principal amount of
notes). The conversion price is, however, subject to adjustment as described
below. We will not issue fractional shares of common stock upon conversion of
notes. Instead, we will pay a cash adjustment based upon the closing sale price
of our common stock on the business day immediately preceding the conversion
date. You may convert notes only in denominations of $1,000 and whole multiples
of $1,000.
You may exercise conversion rights at any time prior to the close of
business on the final maturity date of the notes. However, if you are a holder
of notes that have been called for redemption, you must exercise your
conversion rights prior to the close of business on the business day preceding
the redemption date, unless we default in payment of the redemption price. In
addition, if you have exercised your right to require us to repurchase your
notes because a Change of Control has occurred, you may convert your notes into
our common stock only if you withdraw your notice and convert your notes prior
to the close of business on the business day immediately preceding the Change
of Control repurchase date.
Except as provided below, if you convert your notes into our common stock
on any day other than an interest payment date, you will not receive any
interest that has accrued on these notes. By delivering to the holder the
number of shares issuable upon conversion, determined by dividing the principal
amount of the notes being converted by the conversion price, together with a
cash payment, if any, in lieu of fractional shares, we will satisfy our
obligation with respect to the notes. That is, accrued but unpaid interest will
be deemed to be paid in full rather than canceled, extinguished or forfeited.
If you convert after a record date for an interest payment but prior to the
corresponding interest payment date, you will receive on the interest payment
date interest accrued and paid on the converted notes, notwithstanding the
conversion of those notes prior to the interest payment date, because you will
have been the holder of record on the corresponding record date. However, at
the time you surrender those notes for conversion, you must pay us an amount
equal to the interest that will be paid on the notes being converted on the
interest payment date. However, the preceding sentence does not apply to notes
that are converted after being called by us for redemption. Accordingly, if we
call your notes for redemption on a date that is after a record date for an
interest payment but prior to the corresponding interest payment date, and
prior to the redemption date you choose to convert your notes, you will not be
required to pay us at the time you surrender such notes for conversion the
amount of interest on such notes you will receive on the date that has been
fixed for redemption.
You will not be required to pay any taxes or duties relating to the
issuance or delivery of our common stock if you exercise your conversion
rights, but you will be required to pay any tax or duty which may be payable
relating to any transfer involved in the issuance or delivery of the common
stock in a name other than yours. (If you convert any note within two years
after its original issuance, the common stock issuable upon conversion will not
be issued or delivered in a name other than yours unless the applicable
restrictions on transfer have been satisfied. See "Notice to Investors.")
Certificates representing shares of common stock will be issued or delivered
only after all applicable taxes and duties, if any, payable by you have been
paid.
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To convert interests in the global note, you must deliver to DTC,
Euroclear or Clearstream Banking S.A. (formerly known as Cedelbank) as
applicable, the appropriate instruction form for conversion pursuant to DTC's
conversion program or in accordance with the normal operating procedures of
Euroclear or Clearstream, as applicable, after application has been made to
make the underlying common stock eligible for trading on Euroclear or
Cedelbank. To convert a definitive note, you must:
o complete the conversion notice on the back of the note (or a facsimile
thereof);
o deliver the completed conversion notice and the notes to be converted
to the specified office of the conversion agent;
o pay all funds required, if any, relating to interest on the notes to be
converted to which you are not entitled, as described in the second
preceding paragraph; and
o pay all taxes or duties, if any, as described in the preceding
paragraph.
The conversion date will be the date on which all of the foregoing
requirements have been satisfied. The notes will be deemed to have been
converted immediately prior to the close of business on the conversion date. A
certificate for the number of shares of common stock into which the notes are
converted (and cash in lieu of any fractional shares) will be delivered as soon
as practicable on or after the conversion date.
We will adjust the initial conversion price for certain events, including:
o issuances of our common stock as a dividend or distribution on our
common stock;
o certain subdivisions and combinations of our common stock;
o issuances to all holders of our common stock of certain rights or
warrants to purchase our common stock (or securities convertible into
our common stock) at less than (or having a conversion price per share
less than) the Current Market Price of our common stock (Current Market
Price is based upon the market price during the prior 10-day period);
o distributions to all holders of our common stock of shares of our
capital stock (other than our common stock), evidences of our
indebtedness or assets (including securities, but excluding:
o the rights and warrants referred to in the third bullet point above;
o any dividends and distributions in connection with a
reclassification, change, consolidation, merger, combination, sale
or conveyance resulting in a change in the conversion consideration
pursuant to the second succeeding paragraph; or
o any dividends or distributions paid exclusively in cash);
o distributions consisting exclusively of cash to all holders of our
common stock to the extent that such distributions, combined together
with:
o all other such all-cash distributions made within the preceding 12
months for which no adjustment has been made; plus
o any cash and the fair market value of other consideration paid for
any tender offers by us or any of our subsidiaries for our common
stock expiring within the preceding 12 months for which no
adjustment has been made,
exceeds 10% of our Market Capitalization on the record date for such
distribution (Market Capitalization is the product of the then Current
Market Price of our common stock times the number of shares of our
common stock then outstanding); and
o purchases of our common stock pursuant to a tender offer made by us or
any of our subsidiaries to the extent that the same involves an
aggregate consideration that, together with:
28
o any cash and the fair market value of any other consideration paid
in any other tender offer by us or any of our subsidiaries for our
common stock expiring within the 12 months preceding such tender
offer for which no adjustment has been made, plus
o the aggregate amount of any all-cash distributions referred to in
the preceding bullet point to all holders of our common stock within
12 months preceding the expiration of tender offer for which no
adjustments have been made,
exceeds 10% of our Market Capitalization on the expiration of such tender
offer.
We will not make an adjustment in the conversion price unless the
adjustment would require a change of at least 1% in the conversion price then
in effect. We will carry forward and take into account in any subsequent
adjustment any adjustment that would otherwise be required to be made. Except
as stated above, we will not adjust the conversion price for the issuance of
our common stock or any securities convertible into or exchangeable for our
common stock or carrying the right to purchase any of the foregoing.
If we:
o reclassify or change our common stock (other than changes resulting
from a subdivision or combination); or
o consolidate or combine with or merge with or into any person or sell or
convey to another person all or substantially all of our property and
assets,
and the holders of our common stock receive stock, other securities or other
property or assets (including cash or any combination thereof) with respect to
or in exchange for their common stock, the holders of the notes may thereafter
convert the notes into the consideration they would have received if they had
converted their notes immediately prior to such reclassification, change,
consolidation, combination, merger, sale or conveyance. We may not become a
party to any such transaction unless its terms are consistent with the
foregoing.
If a taxable distribution to holders of our common stock or other
transaction occurs that results in any adjustment of the conversion price, you
may, in certain circumstances, be deemed to have received a distribution
subject to U.S. income tax as a dividend. In certain other circumstances, the
absence of an adjustment may result in a taxable dividend to the holders of our
common stock. See "Certain United States Federal Income Tax Consequences."
We may from time to time, to the extent permitted by law, reduce the
conversion price of the notes by any amount for any period of at least 20 days.
In that case, we will give at least 15 days' notice of such decrease. We may
make such reductions in the conversion price, in addition to those set forth
above, as our board of directors deems advisable to avoid or diminish any
income tax to holders of our common stock resulting from any dividend or
distribution of stock (or rights to acquire stock) or from any event treated as
such for income tax purposes.
OPTIONAL REDEMPTION BY L-3 HOLDINGS
Optional Redemption
We may not redeem the notes in whole or in part at any time prior to
December 1, 2003. At any time on or after December 1, 2003, we may redeem some
or all of the notes on at least 20 but not more than 60 days' notice, at the
following redemption prices (expressed in percentages of the principal amount):
REDEMPTION
DURING THE TWELVE MONTHS COMMENCING PRICE
----------------------------------- -----
December 1, 2003 .................. 102.625%
December 1, 2004 .................. 101.313%
December 1, 2005 .................. 100.000%
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In addition, we will pay all accrued and unpaid interest on the notes being
redeemed. This interest will include interest accrued and unpaid to, but
excluding, the redemption date. If the redemption date is an interest payment
date, we will pay the interest to the holder of record on the corresponding
record date, which may or may not be the same person to whom we will pay the
redemption price. No interest will be paid on notes that are converted into our
common stock, except notes that are called for redemption on a date that is
after a record date but prior to the corresponding interest payment date if
those notes are converted into common stock after the record date.
Partial Redemption
If we do not redeem all of the notes, the trustee will select the notes to
be redeemed in principal amounts of $1,000 or whole multiples of $1,000 by lot
or on a pro rata basis. If any notes are to be redeemed in part only, we will
issue a new note or notes in principal amount equal to the unredeemed principal
portion thereof. If a portion of your notes is selected for partial redemption
and you convert a portion of your notes, the converted portion will be deemed to
be taken from the portion selected for redemption.
REPURCHASE AT OPTION OF HOLDERS UPON A CHANGE OF CONTROL
If a Change of Control occurs, you will have the right to require us to
repurchase all of your notes not previously called for redemption, or any
portion of those notes that is equal to $1,000 or a whole multiple of $1,000.
The repurchase price is equal to 100% of the principal amount of the notes to be
repurchased. We will also pay interest accrued and unpaid to, but excluding, the
repurchase date.
Instead of paying the repurchase price in cash, we may pay the repurchase
price in common stock. In such event, the number of shares of common stock a
holder will receive will equal the repurchase price divided by 95% of the
average of the closing sale prices of our common stock for the five trading days
immediately preceding and including the third trading day prior to the
repurchase date. However, we may not pay in common stock unless we satisfy
certain conditions prior to the repurchase date as provided in the indenture.
Within 30 days after the occurrence of a Change of Control, we are required
to give you notice of the occurrence of the Change of Control and of your
resulting repurchase right. The repurchase date is no earlier than 30 days and
no later than 60 days after the date we give notice of a Change of Control. To
exercise the repurchase right, you must deliver prior to the close of business
on the business day immediately preceding the repurchase date, written notice to
the trustee of your exercise of your repurchase right, together with the notes
with respect to which your right is being exercised. You may withdraw this
notice by delivering to the paying agent a notice of withdrawal prior to the
close of business on the business day immediately preceding the repurchase date.
The indenture will provide that, prior to mailing a Change of Control
notice, but in any event within 90 days following a Change of Control, L-3
Holdings will either repay all outstanding Senior Debt or offer to repay all
Senior Debt and terminate all commitments thereunder of each lender who has
accepted such offer or obtain the requisite consents, if any, under all
agreements governing outstanding Senior Debt to permit the repurchase of notes
required by this covenant. L-3 Holdings will publicly announce the results of
the Change of Control offer on or as soon as practicable after it closes.
A "Change of Control" will be deemed to have occurred at such time after
the original issuance of the notes when any of the following has occurred:
o the sale, lease, transfer, conveyance or other disposition (other than
by way of merger or consolidation), in one or a series of related
transactions, of all or substantially all of the assets of L-3 Holdings
and its subsidiaries (other than the Excluded Subsidiaries (as defined
below)) taken as a whole to any "person" (as such term is used in
Section 13(d)(3) of the Exchange Act) other than the Principals or
their Related Parties;
30
o the consummation of any transaction (including, without limitation, any
merger or consolidation) the result of which is that any "person" (as
defined above), other than the Principals and their Related Parties,
becomes the "beneficial owner," directly or indirectly, of more than
50% of the Voting Stock of L-3 Holdings (measured by voting power
rather than number of shares);
o the first day on which a majority of the members of the board of
directors of L-3 Holdings are not Continuing Directors; or
o the consolidation or merger of L-3 Holdings with or into any other
person, any merger of another person into L-3 Holdings, or any
conveyance, transfer, sale, lease or other disposition of all or
substantially all of our properties and assets to another person, other
than:
(1) any transaction:
o that does not result in any reclassification, conversion,
exchange or cancellation of outstanding shares of our capital
stock; and
o pursuant to which holders of our capital stock immediately
prior to such transaction have the entitlement to exercise,
directly or indirectly, 50% or more of the total voting power
of all shares of our capital stock entitled to vote generally
in elections of directors of the continuing or surviving person
immediately after giving effect to such issuance; and
(2) any merger solely for the purpose of changing our jurisdiction of
incorporation and resulting in a reclassification, conversion or
exchange of outstanding shares of common stock solely into shares
of common stock of the surviving entity.
However, a Change of Control will be deemed not to have occurred if:
o the closing sale price per share of our common stock for any five
trading days within:
o the period of 10 consecutive trading days ending immediately after the
later of the Change of Control or the public announcement of the Change
of Control, in the case of a Change of Control under the first bullet
point above; or
o the period of 10 consecutive trading days ending immediately before the
Change of Control, in the case of a Change of Control under the second
bullet point above,
equals or exceeds 110% of the conversion price of the notes in effect
on each such trading day; or
o at least 90% of the consideration in the transaction or transactions
constituting a Change of Control consists of shares of common stock
traded or to be traded immediately following such Change of Control on
a national securities exchange or the Nasdaq National Market and, as a
result of the transaction or transactions, the notes become convertible
solely into such common stock (and any rights attached thereto).
Beneficial ownership shall be determined in accordance with Rule 13d-3
promulgated by the SEC under the Exchange Act. The term "person" includes any
syndicate or group which would be deemed to be a "person" under Section
13(d)(3) of the Exchange Act.
"Continuing Directors" means, as of any date of determination, any member
of the board of directors of L-3 Holdings who:
o was a member of the board of directors on May 22, 1998; or
o was nominated for election or elected to the board of directors with
the approval of a majority of the Continuing Directors who were members
of the board at the time of new director's nomination or election.
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"Excluded Subsidiaries" means:
o any domestic subsidiary of L-3 Holdings that is not a Guarantor; and
o foreign subsidiaries of L-3 Holdings and L-3 Communications that have
been designated as, or, if the indentures governing the Outstanding
Senior Subordinated Notes are no longer in effect, could have been
designated as "Unrestricted Subsidiaries" pursuant to the terms of the
indentures governing any of the Outstanding Senior Subordinated Notes
of L-3 Communications as the same are in effect on the date of the
closing of this offering (whether or not those indentures are
subsequently amended, waived, modified or terminated or expire and
whether or not any of those notes continue to be outstanding).
"Principals" means Lehman Brothers Holding Inc. and any of its affiliates,
Lockheed Martin, Frank C. Lanza and Robert V. LaPenta.
"Related Party" with respect to any Principal means:
o any controlling stockholder, 50% (or more) owned subsidiary, or spouse
or immediate family member (in the case of an individual) of such
Principal; or
o any trust, corporation, partnership or other entity, the beneficiaries,
stockholders, partners, owners or Persons beneficially holding a more
than 50% controlling interest of which consist of such Principal and/or
such other Persons referred to above.
"Voting Stock" means the capital stock that is entitled to vote in the
election of the board of directors at that time.
Rule 13e-4 under the Exchange Act, requires the dissemination of certain
information to security holders if an L-3 Holdings tender offer occurs and may
apply if the repurchase option becomes available to holders of the notes. We
will comply with this rule to the extent applicable at that time.
We may, to the extent permitted by applicable law and our Senior Debt, at
any time purchase the notes in the open market or by tender at any price or by
private agreement. Any note so purchased by us may, to the extent permitted by
applicable law, be reissued or resold or may be surrendered to the trustee for
cancellation. Any notes surrendered to the trustee may not be reissued or
resold and will be canceled promptly.
The foregoing provisions would not necessarily protect holders of the
notes if highly leveraged or other transactions involving us occur that may
adversely affect holders.
Our ability to repurchase notes upon the occurrence of a change in control
is subject to important limitations. The occurrence of a Change of Control
could cause an event of default under, or be prohibited or limited by, the
terms of our existing or future Senior Debt. As a result, any repurchase of the
notes could, absent a waiver, be prohibited under the subordination provisions
of the indenture until the Senior Debt is paid in full. Further, we cannot
assure you that we would have the financial resources, or would be able to
arrange financing, to pay the repurchase price for all the notes that might be
delivered by holders of notes seeking to exercise the repurchase right. Any
failure by us to repurchase the notes when required following a Change of
Control would result in an event of default under the indenture, whether or not
such repurchase is permitted by the subordination provisions of the indenture.
Any such default may, in turn, cause a default under our existing or future
Senior Debt. See "-- Subordination" below.
SUBSIDIARY GUARANTEES
The Guarantors jointly and severally guarantee L-3 Holdings' obligations
under the notes. Each guarantee is subordinated to the prior payment in full of
all Senior Debt of that Guarantor. The obligations of each Guarantor under its
guarantee are limited as necessary to prevent that guarantee from constituting
a fraudulent conveyance under applicable law. See "Risk Factors -- The
Guarantees may be unenforceable due to fraudulent conveyance statutes,
accordingly, you could have no claim against the Guarantors."
32
Guarantors may, without the consent of the holders of notes, consolidate
with, merge with or into or transfer all or substantially all of their assets
to any other corporation organized under the laws of the United States or any
of its political subdivisions provided that:
o the surviving corporation assumes all of the Guarantor's obligations
under the indenture;
o at the time of such transaction, no event of default, and no event
which, after notice or lapse of time, would become an event of default,
shall have happened and be continuing; and
o certain other conditions are met.
The Guarantee of a Guarantor will be released:
o in connection with any sale or other disposition of all or
substantially all of the assets of that Guarantor (including by way of
merger or consolidation); or
o in connection with any sale of all of the capital stock of a Guarantor.
The indenture provides that if L-3 Holdings or any of its subsidiaries
acquires or creates a subsidiary (other than a foreign subsidiary) after the
date of this offering, then such subsidiary will execute a guarantee in
accordance with the terms of the indenture; provided, however, that no domestic
subsidiary shall be required to guarantee these notes if that subsidiary would
not have had to become a guarantor of any of the Outstanding Senior
Subordinated Notes of L-3 Communications pursuant to the terms of the
indentures governing those notes as the same are in effect on the date of the
closing of this offering (whether or not those indentures are subsequently
amended, waived, modified or terminated or expire and whether or not any of
those notes continue to be outstanding).
SUBORDINATION
The payment of principal of, premium and liquidated damages, if any, and
interest on the notes is subordinated in right of payment, as set forth in the
indenture, to the prior payment in full of all Senior Debt, whether outstanding
on the issue date or thereafter incurred.
Upon any distribution to creditors of L-3 Holdings in a liquidation or
dissolution of L-3 Holdings or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to L-3 Holdings or its property, an
assignment for the benefit of creditors or any marshalling of L-3 Holdings'
assets and liabilities, the holders of Senior Debt will be entitled to receive
payment in full in cash of all obligations due in respect of such Senior Debt
(including interest after the commencement of any such proceeding at the rate
specified in the applicable Senior Debt, whether or not an allowable claim in
any such proceeding) before the holders of notes will be entitled to receive
any payment with respect to the notes, and until all obligations with respect
to Senior Debt are paid in full, any distribution to which the holders of notes
would be entitled shall be made to the holders of Senior Debt.
L-3 Holdings also may not make any payment upon or in respect of the notes
if:
o a default in the payment of the principal of, premium, if any, or
interest on Designated Senior Debt occurs and is continuing; or
o any other default occurs and is continuing with respect to Designated
Senior Debt that permits holders of the Designated Senior Debt as to
which such default relates to accelerate its maturity (or that would
permit such holders to accelerate with the giving of notice or the
passage of time or both) and the trustee receives a notice of such
default (a "Payment Blockage Notice") from L-3 Holdings or the holders
of any Designated Senior Debt.
Payments on the notes may and shall be resumed:
o in the case of a payment default, upon the date on which such default
is cured or waived; and
o in case of a nonpayment default, the earlier of the date on which such
nonpayment default is cured or waived or 179 days after the date on
which the applicable Payment Blockage Notice is received, unless the
maturity of any Designated Senior Debt has been accelerated.
33
No new period of payment blockage may be commenced unless and until:
o 360 days have elapsed since the effectiveness of the immediately prior
Payment Blockage Notice; and
o all scheduled payments of principal, premium and liquidated damages, if
any, and interest on the notes that have come due have been paid in
full in cash.
No nonpayment default that existed or was continuing on the date of
delivery of any Payment Blockage Notice to the trustee shall be, or be made,
the basis for a subsequent Payment Blockage Notice unless such default shall
have been waived for a period of not less than 90 days.
The indenture further requires that L-3 Holdings promptly notify holders
of Senior Debt if payment of the notes is accelerated because of an Event of
Default.
As a result of the subordination provisions described above, in the event
of a liquidation or insolvency, holders of notes may recover less ratably than
creditors of L-3 Holdings who are holders of Senior Debt. On December 31, 2000
there was $190.0 million of Senior Debt outstanding.
"Senior Debt" means:
o all Indebtedness of L-3 Holdings outstanding under credit facilities
and all hedging obligations with respect thereto;
o any other Indebtedness permitted to be incurred by L-3 Holdings under
the terms of the indenture, unless the instrument under which such
Indebtedness is incurred expressly provides that it is on a parity with
or subordinated in right of payment to the notes; and
o all principal, premium (if any), interest (including interest accruing
on or after the filing of any petition in bankruptcy or for
reorganization, whether or not a claim for post-filing interest is
allowed in such proceeding), penalties, fees, charges, expenses,
indemnification, reimbursement obligations, damages, guarantees and
other liabilities or amounts payable under the documentation governing
any indebtedness referred to above.
Notwithstanding anything to the contrary in the foregoing, Senior Debt
will not include:
o any liability for federal, state, local or other taxes owed or owing by
L-3 Holdings;
o any Indebtedness of L-3 Holdings to any of its subsidiaries or other
affiliates;
o any trade payables; or
o any indebtedness that is incurred in violation of the Indenture.
"Indebtedness" means, with respect to any person, any indebtedness of such
person, whether or not contingent, in respect of borrowed money or evidenced by
bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or banker's acceptances or
representing capital lease obligations or the balance deferred and unpaid of
the purchase price of any property or representing any hedging obligations,
except any such balance that constitutes an accrued expense or trade payable,
if and to the extent any of the foregoing indebtedness (other than letters of
credit and hedging obligations) would appear as a liability upon a balance
sheet of such person prepared in accordance with GAAP, as well as all
indebtedness of others secured by a lien on any assets of such person (whether
or not such indebtedness is assumed by such person) and, to the extent not
otherwise included, the guarantee by such person of any indebtedness of any
other person. The amount of any Indebtedness outstanding as of any date shall
be:
o the accreted value thereof, in the case of any Indebtedness that does
not require current payments of interest; and
o the principal amount thereof, together with any interest thereon that
is more than 30 days past due, in the case of any other Indebtedness.
"Designated Senior Debt" means (1) any Senior Debt outstanding under any
credit facility and (2) any other Senior Debt permitted under the indenture,
the principal amount of which is
34
$25.0 million or more and that has been designated by L-3 Holdings as
"Designated Senior Debt." The indenture does not restrict the creation of
Senior Debt or any other indebtedness in the future.
We are obligated to pay reasonable compensation to the trustee and to indemnify
the trustee against any losses, liabilities or expenses incurred by it in
connection with its duties relating to the notes. The trustee's claims for such
payments are senior to those of holders of the notes in respect of all funds
collected or held by the trustee.
SUBORDINATION OF SUBSIDIARY GUARANTEES
The guarantees of the Guarantors are subordinated in right of payment to
all Senior Debt of the Guarantors to the same extent that the notes are
subordinated to the Senior Debt of L-3 Holdings. "Senior Debt of a Guarantor"
means:
(1) all Indebtedness of the Guarantors outstanding under credit facilities
and all hedging obligations with respect thereto;
(2) any other indebtedness permitted to be incurred by the Guarantors under
the terms of the indenture, unless the instrument under which such
Indebtedness is incurred expressly provides that it is on a parity with
or subordinated in right of payment to the notes; and
(3) all principal, premium (if any), interest (including interest accruing
on or after the filing of any petition in bankruptcy or for
reorganization, whether or not a claim for post-filing interest is
allowed in such proceeding), penalties, fees, charges, expenses,
indemnification, reimbursement obligations, damages, guarantees and
other liabilities or amounts payable under the documentation governing
any Indebtedness referred to above. Notwithstanding anything to the
contrary in the foregoing, the term "Senior Debt of a Guarantor" will
not include:
o any liability for federal, state, local or other taxes owed or owing
by that Guarantor;
o any Indebtedness of that Guarantor to any of its subsidiaries or
other affiliates;
o any trade payables; or
o any obligations with respect to the Outstanding Senior Subordinated
Notes of L-3 Communications (and the related guarantees).
ANTILAYERING PROVISION
The indenture provides that (i) L-3 Holdings will not incur, create,
issue, assume, guarantee or otherwise become liable for any Indebtedness that
is subordinate or junior in right of payment to any Senior Debt and senior in
any respect in right of payment to the notes, and (ii) no Guarantor will incur,
create, issue, assume, guarantee or otherwise become liable for any
Indebtedness that is subordinate or junior in right of payment to any Senior
Debt of a Guarantor and senior in any respect in right of payment to any of the
Subsidiary Guarantees.
EVENTS OF DEFAULT
Each of the following constitutes an event of default under the indenture:
(1) default for 30 days in the payment when due of interest or liquidated
damages on the notes, whether or not prohibited by the subordination
provisions of the indenture;
(2) default in payment when due of the principal of or premium, if any, on
the notes, whether or not prohibited by the subordination provisions of
the indenture;
(3) failure by L-3 Holdings for 60 days after notice to comply with any of
its other agreements in the indenture or the notes;
(4) a default under any mortgage, indenture or instrument under which there
may be issued or by which there may be secured or evidenced any
Indebtedness of L-3 Holdings or any
35
of its subsidiaries (other than the Excluded Subsidiaries) for money
borrowed (or the payment of which is guaranteed by L-3 Holdings or any
of those subsidiaries) whether such Indebtedness or guarantee now
exists, or is created after the date of the indenture, which default
results in the acceleration of such Indebtedness prior to its express
maturity and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such
Indebtedness the maturity of which has been so accelerated, aggregates
$10.0 million or more;
(5) failure by the Company or any of its subsidiaries (other than the
Excluded Subsidiaries) to pay final judgments aggregating in excess of
$10.0 million, which judgments are not paid, discharged or stayed for a
period of 60 days;
(6) certain events of bankruptcy, insolvency or reorganization with respect
to L-3 Holdings or any subsidiary of L-3 Holdings (other than the
Excluded Subsidiaries); and
(7) except as permitted by the indenture, any Guarantee shall be held in
any judicial proceeding to be unenforceable or invalid.
The indenture provides that the trustee shall, within 90 days of the
occurrence of a default, give to the registered holders of the notes notice of
all uncured defaults known to it, but the trustee shall be protected in
withholding such notice if it, in good faith, determines that the withholding
of such notice is in the best interest of such registered holders, except in
the case of a default in the payment of the principal of, or premium, if any,
or interest on, any of the notes when due or in the payment of any redemption
or repurchase obligation.
If an event of default specified in clause (5) above occurs and is
continuing with respect to L-3 Holdings, then automatically the principal of
all the notes and the interest thereon shall become immediately due and
payable. If any other event of default shall occur and be continuing (the
default not having been cured or waived as provided under "-- Modifications,
Amendments and Meetings" below), the trustee or the holders of at least 25% in
aggregate principal amount of the notes then outstanding may declare the notes
due and payable at their principal amount together with accrued interest, and
thereupon the trustee may, at its discretion, proceed to protect and enforce
the rights of the holders of notes by appropriate judicial proceedings. Such
declaration may be rescinded or annulled either with the written consent of the
holders of a majority in aggregate principal amount of the notes then
outstanding or a majority in aggregate principal amount of the notes
represented at a meeting at which a quorum (as specified under "--
Modifications, Amendments and Meetings" below) is present, in each case upon
the conditions provided in the indenture.
The indenture contains a provision entitling the trustee, subject to the
duty of the trustee during default to act with the required standard of care,
to be indemnified by the holders of notes before proceeding to exercise any
right or power under the indenture at the request of such holders. The
indenture provides that the holders of a majority in aggregate principal amount
of the notes then outstanding through their written consent, or the holders of
a majority in aggregate principal amount of the notes then outstanding
represented at a meeting at which a quorum is present by a written resolution,
may direct the time, method and place of conducting any proceeding for any
remedy available to the trustee or exercising any trust or power conferred upon
the trustee.
We are required to furnish annually to the trustee a statement as to the
fulfillment of our obligations under the indenture.
CONSOLIDATION, MERGER OR ASSUMPTION
We may, without the consent of the holders of notes, consolidate with,
merge with or into or transfer all or substantially all of our assets to any
other corporation organized under the laws of the United States or any of its
political subdivisions provided that:
o the surviving corporation assumes all our obligations under the
indenture;
36
o at the time of such transaction, no event of default, and no event
which, after notice or lapse of time, would become an event of default,
shall have happened and be continuing; and
o certain other conditions are met.
MODIFICATIONS, AMENDMENTS AND MEETINGS
Changes Requiring Approval of Each Affected Holder
The indenture (including the terms and conditions of the notes) cannot be
modified or amended without the written consent or the affirmative vote of the
holder of each note affected by such change to:
o change the maturity of the principal of or any installment of interest
on any note (including any payment of liquidated damages);
o reduce the principal amount of, or any premium or interest on
(including any payment of liquidated damages), any note;
o change the currency of payment of such note or interest thereon;
o impair the right to institute suit for the enforcement of any payment
on or with respect to any note;
o modify our obligations to maintain an office or agency in New York
City;
o except as otherwise permitted or contemplated by provisions concerning
corporate reorganizations, adversely affect the repurchase option of
holders upon a Change of Control or the conversion rights of holders of
the notes;
o modify the subordination provisions of the indenture in a manner
adverse to the holders of notes;
o modify the redemption provisions of the indenture (other than the
provisions of the indenture governing the repurchase of notes upon the
occurrence of a Change in Control) in a manner adverse to the holders
of notes;
o reduce the percentage in aggregate principal amount of notes
outstanding necessary to modify or amend the indenture or to waive any
past default; or
o reduce the percentage in aggregate principal amount of notes
outstanding required for the adoption of a resolution or the quorum
required at any meeting of holders of notes at which a resolution is
adopted.
Changes Requiring Majority Approval
The indenture (including the terms and conditions of the notes) may be
modified or amended either:
o with the written consent of the holders of at least a majority in
aggregate principal amount of the notes at the time outstanding; or
o by the adoption of a resolution at a meeting of holders by at least a
majority in aggregate principal amount of the notes represented at such
meeting.
Changes Requiring No Approval
The indenture (including the terms and conditions of the notes) may be
modified or amended by us and the trustee, without the consent of the holder of
any note, for the purposes of, among other things:
o adding to our covenants for the benefit of the holders of notes;
o surrendering any right or power conferred upon us;
37
o providing for conversion rights of holders of notes if any
reclassification or change of our common stock or any consolidation,
merger or sale of all or substantially all of our assets occurs;
o providing for the assumption of our obligations to the holders of notes
in the case of a merger, consolidation, conveyance, transfer or lease;
o reducing the conversion price, provided that the reduction will not
adversely affect the interests of the holders of notes;
o complying with the requirements of the SEC in order to effect or
maintain the qualification of the indenture under the Trust Indenture
Act of 1939, as amended;
o making any changes or modifications necessary in connection with the
registration of the notes under the Securities Act as contemplated in
the registration rights agreement; provided that such change or
modification does not, in the good faith opinion of our board of
directors and the trustee, adversely affect the interests of the
holders of notes in any material respect;
o curing any ambiguity or correcting or supplementing any defective
provision contained in the indenture; provided that such modification
or amendment does not, in the good faith opinion of our board of
directors and the trustee, adversely affect the interests of the
holders of notes in any material respect; or
o adding or modifying any other provisions with respect to matters or
questions arising under the indenture which we and the trustee may deem
necessary or desirable and which will not adversely affect the
interests of the holders of notes.
MEETINGS
The indenture contains provisions for convening meetings of the holders of
notes to consider matters affecting their interests.
Quorum
The quorum at any meeting called to adopt a resolution will be persons
holding or representing a majority in aggregate principal amount of the notes
at the time outstanding and, at any reconvened meeting adjourned for lack of a
quorum, 25% of the aggregate principal amount.
SATISFACTION AND DISCHARGE
We may satisfy and discharge our obligations under the indenture while
notes remain outstanding, subject to certain conditions, if:
o all outstanding notes will become due and payable at their scheduled
maturity within one year; or
o all outstanding notes are scheduled for redemption within one year,
and, in either case, we have deposited with the trustee an amount sufficient to
pay and discharge all outstanding notes on the date of their scheduled maturity
or the scheduled date of redemption.
GOVERNING LAW
The indenture and the notes are governed by, and construed in accordance
with, the law of the State of New York.
INFORMATION CONCERNING THE TRUSTEE
The Bank of New York, as trustee under the indenture, has been appointed
by us as paying agent, conversion agent, registrar and custodian with regard to
the notes. First Chicago Trust Company of New York is the transfer agent and
registrar for our common stock. The trustee or its affiliates may from time to
time in the future provide banking and other services to us in the ordinary
course of their business.
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REGISTRATION RIGHTS
Under the terms of the registration rights agreement, we have filed with
the SEC this resale registration statement covering resales by holders of all
notes, the Guarantees and the common stock issuable upon conversion of the
notes. Under the terms of the agreement, we also agreed to use all commercially
reasonable efforts to:
o cause the registration statement to become effective as promptly as is
practicable, but in no event later than 195 days after the earliest
date of original issuance of any of the notes; and
o keep the registration statement effective until the earliest of:
o two years after the last date of original issuance of the notes;
o the date when the holders of the notes and the common stock issuable
upon conversion of the notes are able to sell all such securities
immediately without restriction pursuant to the volume limitation
provisions of Rule 144 under the Securities Act; and
o the date when all of the notes and the common stock into which the
notes are convertible that are owned by the holders who complete and
deliver in a timely manner the selling securityholder election and
questionnaire appended to the offering memorandum dated November 16,
2000 are registered under the registration statement and disposed of
in accordance with the registration statement.
We will, when the registration statement is filed:
o provide to each holder for whom the registration statement was filed
copies of the prospectus that is a part of the registration statement;
o notify each such holder when the registration statement has become
effective; and
o take certain other actions as are required to permit unrestricted
resales of the notes and the common stock issuable upon conversion of
the notes.
Each holder who sells securities pursuant to the registration statement
generally will be:
o required to be named as a selling stockholder in the related
prospectus;
o required to deliver a prospectus to purchasers;
o subject to certain of the civil liability provisions under the
Securities Act in connection with the holder's sales; and
o bound by the provisions of the registration rights agreement which are
applicable to the holder (including certain indemnification rights and
obligations).
Each holder must notify us not later than three business days prior to any
proposed sale by that holder pursuant to the registration statement. This
notice will be effective for five business days. We may suspend the holder's
use of the prospectus for a reasonable period not to exceed 45 days in any
90-day period, and not to exceed an aggregate of 90 days in any 360-day period,
if:
o the prospectus would, in our judgment, contain a material misstatement
or omission as a result of an event that has occurred and is
continuing; and
o we reasonably determine that the disclosure of this material non-public
information would have a material adverse effect on us and our
subsidiaries taken as a whole.
However, if the disclosure relates to a previously undisclosed proposed or
pending material business transaction, the disclosure of which would impede our
ability to consummate such transaction, we may extend the suspension period
from 45 days to 60 days. Each holder, by its acceptance of a note, agrees to
hold any communication by us in response to a notice of a proposed sale in
confidence.
39
If,
o we have not filed the registration statement with the SEC prior to or
on the 135th day following the earliest date of original issuance of
any of the notes;
o the registration statement has not been declared effective prior to or
on the 195th day following the earliest date of original issuance of
any of the notes; or
o the registration statement ceases to be effective or fails to be usable
and (1) we do not cure the registration statement within five business
days by a post-effective amendment or a report filed pursuant to the
Exchange Act or (2) if applicable, we do not terminate the suspension
period, described in the preceding paragraph, by the 45th or 60th day,
as the case may be (each, a "registration default"),
additional interest as liquidated damages will accrue on the notes, from and
including the day following the registration default to but excluding the day
on which the registration default has been cured. Liquidated damages will be
paid semiannually in arrears, with the first semiannual payment due on the
first interest payment date, as applicable, following the date on which such
liquidated damages begin to accrue, and will accrue at a rate per year equal
to:
o an additional 0.25% of the principal amount to and including the 90th
day following such registration default; and
o an additional 0.50% of the principal amount from and after the 91st day
following such registration default.
In no event will liquidated damages accrue at a rate per year exceeding 0.50%.
If a holder has converted some or all of its notes into common stock, the
holder will be entitled to receive equivalent amounts based on the principal
amount of the notes converted. We agreed to distribute a questionnaire to each
holder to obtain certain information regarding the holder for inclusion in the
prospectus. Holders were required to complete and deliver the questionnaire
within 20 business days after receipt of the questionnaire to be named as
selling stockholders in the related prospectus at the time of effectiveness. A
holder will not be entitled to liquidated damages unless it has provided all
information requested by the questionnaire prior to the deadline.
The specific provisions relating to the registration described above are
contained in the registration rights agreement which was entered into on the
closing of the initial offering of the notes.
FORM, DENOMINATION AND REGISTRATION
The notes were issued in fully registered form, without coupons, in
denominations of $1,000 principal amount and whole multiples of $1,000.
The notes are evidenced by a global note deposited with the trustee as
custodian for The Depository Trust Company, New York, New York, or DTC, and
registered in the name of Cede & Co. as DTC's nominee. Record ownership of the
global note may be transferred, in whole or in part, only to another nominee of
DTC or to a successor of DTC or its nominee, except as set forth below.
A holder may hold its interests in the global note directly through DTC if
such holder is a participant in DTC, or indirectly through organizations which
are direct DTC participants. Transfers between direct DTC participants will be
effected in the ordinary way in accordance with DTC's rules and will be settled
in same-day funds. Holders may also beneficially own interests in the global
note held by DTC through certain banks, brokers, dealers, trust companies and
other parties that clear through or maintain a custodian relationship with a
direct DTC participant, either directly or indirectly.
So long as Cede & Co., as nominee of DTC, is the registered owner of the
global note, Cede & Co. for all purposes will be considered the sole holder of
the global note. Except as provided below, owners of beneficial interests in
the global note will not be entitled to have certificates registered in their
names, will not receive or be entitled to receive physical delivery of
certificates in definitive
40
form, and will not be considered holders thereof. The laws of some states
require that certain persons take physical delivery of securities in definitive
form. Consequently, the ability to transfer a beneficial interest in the global
note to such persons may be limited.
We will wire, through the facilities of the trustee, principal, premium,
if any, and interest payments on the global note to Cede & Co., the nominee for
DTC, as the registered owner of the global note. L-3, the trustee and any
paying agent will have no responsibility or liability for paying amounts due on
the global note to owners of beneficial interests in the global note.
It is DTC's current practice, upon receipt of any payment of principal of
and premium, if any, and interest on the global note, to credit participants'
accounts on the payment date in amounts proportionate to their respective
beneficial interests in the notes represented by the global note, as shown on
the records of DTC, unless DTC believes that it will not receive payment on the
payment date. Payments by DTC participants to owners of beneficial interests in
notes represented by the global note held through DTC participants will be the
responsibility of DTC participants, as is now the case with securities held for
the accounts of customers registered in "street name."
If you would like to convert your notes into common stock pursuant to the
terms of the notes, you should contact your broker or other direct or indirect
DTC participant to obtain information on procedures, including proper forms and
cut-off times, for submitting those requests.
Because DTC can only act on behalf of DTC participants, who in turn act on
behalf of indirect DTC participants and other banks, your ability to pledge
your interest in the notes represented by global note to persons or entities
that do not participate in the DTC system, or otherwise take actions in respect
of such interest, may be affected by the lack of a physical certificate.
Neither L-3 nor the trustee (nor any registrar, paying agent or conversion
agent under the indenture) will have any responsibility for the performance of
DTC or indirect DTC participants of their obligations under the rules and
procedures governing their operations. DTC has advised us that it will take any
action permitted to be taken by a holder of notes, including, without
limitation, the presentation of notes for conversion as described below, only
at the direction of one or more direct DTC participants to whose account with
DTC interests in the global note are credited and only for the principal amount
of the notes for which directions have been given.
DTC has advised us as follows: DTC is a limited purpose trust company
organized under the laws of the State of New York, a member of the Federal
Reserve System, a "clearing corporation" within the meaning of the Uniform
Commercial Code and a "clearing agency" registered pursuant to the provisions
of Section 17A of the Securities Exchange Act of 1934, as amended. DTC was
created to hold securities for DTC participants and to facilitate the clearance
and settlement of securities transactions between DTC participants through
electronic book-entry changes to the accounts of its participants, thereby
eliminating the need for physical movement of certificates. Participants
include securities brokers and dealers, banks, trust companies and clearing
corporations and may include certain other organizations such as the initial
purchasers of the notes. Certain DTC participants or their representatives,
together with other entities, own DTC. Indirect access to the DTC system is
available to others such as banks, brokers, dealers and trust companies that
clear through, or maintain a custodial relationship with, a participant, either
directly or indirectly.
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the global note among DTC participants, it is under
no obligation to perform or continue to perform such procedures, and such
procedures may be discontinued at any time. If DTC is at any time unwilling or
unable to continue as depositary and a successor depositary is not appointed by
us within 90 days, we will cause notes to be issued in definitive form in
exchange for the global note. None of L-3, the trustee or any of their
respective agents will have any responsibility for the performance by DTC,
direct or indirect DTC participants of their obligations under the rules and
procedures governing their operations, including maintaining, supervising or
reviewing the records relating to, or payments made on account of, beneficial
ownership interests in global notes.
41
DESCRIPTION OF CAPITAL STOCK
GENERAL
The current certificate of incorporation of L-3 Holdings authorizes
100,000,000 shares of common stock with a par value of $.01 per share and
25,000,000 shares of preferred stock. As of March 12, 2001, the outstanding
capital stock of L-3 Holdings consisted of 33,953,182 shares of common stock
held by 152 stockholders of record, not including the stockholders for whom
shares are held in a "nominee" or "street" name. The following summaries of
certain provisions of the common stock do not purport to be complete and are
subject to, and qualified in their entirety by, the provisions of the
certificate of incorporation and bylaws of L-3 Holdings and by applicable law.
COMMON STOCK
Holders of our common stock are entitled to one vote per share on all
matters to be voted upon by stockholders of L-3 Holdings, and do not have
cumulative voting rights. The holders of our common stock are entitled to
ratably receive such dividends, if any, as may be declared from time to time by
our board of directors out of funds legally available for that purpose, subject
to preferences that may be applicable to any outstanding preferred stock and
any other provisions of the L-3 Holdings certificate of incorporation. See
"Dividend Policy". L-3 Holdings does not, however, anticipate paying any cash
dividends in the foreseeable future. Holders of common stock have no preemptive
or other rights to subscribe for additional shares. No shares of common stock
are subject to redemption or a sinking fund. In the event of any liquidation,
dissolution or winding up of L-3 Holdings, after payment of the debts and other
liabilities of L-3 Holdings, and subject to the rights of holders of shares of
preferred stock, holders of common stock are entitled to share in any
distribution to the stockholders on a pro-rata basis. All of the outstanding
shares of common stock of L-3 Holdings are, and the shares of common stock
offered hereby will be, fully paid and non-assessable.
PREFERRED STOCK
Our board of directors is authorized, without further vote or action by
holders of common stock, to issue 25,000,000 shares of preferred stock in one
or more series and to designate the rights, preferences, limitations and
restrictions of and upon shares of each series, including voting, redemption
and conversion rights. The board of directors may also designate dividend
rights and preferences in liquidation. It is not possible to state the effect
of the authorization and issuance of any series of preferred stock upon the
rights of such shares without further action by holders of common stock. In
addition, under certain circumstances, the issuance of preferred stock may
render more difficult or tend to discourage a merger, tender offer or proxy
contest, the assumption of control by a holder of a large block of L-3
Holdings' common stock or the removal of incumbent management, which could
thereby depress the market price of our common stock. We do not currently have
any preferred stock outstanding.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for our common stock is First Chicago
Trust Company of New York.
ANTI-TAKEOVER EFFECTS OF PROVISIONS OF OUR CHARTER AND BYLAWS
The certificate of incorporation of L-3 Holdings provides for our board of
directors to be divided into three classes, with staggered three-year terms. As
a result, only one class of directors will be elected at each annual meeting of
stockholders, with the other classes continuing for the remainder of their
respective three-year terms. Stockholders have no cumulative voting rights, and
the stockholders representing a majority of the shares of common stock
outstanding are able to elect all of the directors.
42
The certificate of incorporation of L-3 Holdings also requires that any
action required or permitted to be taken by our stockholders must be effected
at a duly called annual or special meeting of the stockholders and may not be
effected by a consent in writing. Our stockholders may amend our bylaws or
adopt new bylaws, by the affirmative vote of 662/3% of the outstanding voting
securities. A special meeting of the stockholders may be called by our
Chairman, Chief Executive Officer or any stockholders owning 10% or more of the
outstanding shares of common stock. These provisions may have the effect of
delaying, deferring or preventing a change in control.
The classification of the board of directors and lack of cumulative voting
will make it more difficult not only for another party to obtain control of us
by replacing our board of directors, but also for our existing stockholders to
replace our board of directors. Since the board of directors has the power to
retain and discharge our officers, these provisions could also make it more
difficult for existing stockholders or another party to effect a change in
management.
Our anti-takeover and other provisions may have the effect of deterring
hostile takeovers or delaying changes in control or management. They are
intended to enhance the likelihood of continued stability in the composition of
our board of directors and in the policies of our board of directors and to
discourage certain types of transactions that may involve an actual or
threatened change in control. Additionally, these provisions are designed to
reduce our vulnerability to an unsolicited acquisition proposal. The provisions
also are intended to discourage certain tactics that may be used in proxy
fights. However, such provisions could have the effect of discouraging others
from making tender offers for our shares and, as a consequence, they also may
inhibit fluctuations in the market price of our shares that could result from
actual or rumored takeover attempts. Such provisions also may have the effect
of preventing changes in our management.
SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW
We, as a Delaware corporation, are subject to Section 203 of the Delaware
General Corporation Law, which, subject to certain exceptions, prohibits us
from engaging in any business combination with any interested stockholder for a
period of three years following the time that such stockholder became an
interested stockholder, unless:
o prior to such time, our board of directors approved either the business
combination or the transaction that resulted in the stockholder
becoming an interested holder;
o upon consummation of the transaction that resulted in the stockholder
becoming an interested stockholder, the interested stockholder owned at
least 85.0% of our outstanding voting stock at the time the transaction
commenced, excluding for purposes of determining the number of shares
outstanding those shares owned (a) by persons who are directors and
also officers and (b) by employee stock plans in which employee
participants do not have the right to determine confidentially whether
shares held subject to the plan will be tendered in a tender or
exchange offer; or
o at or subsequent to such time, the business combination is approved by
our board of directors and authorized at an annual or special meeting
of stockholders, and not by written consent, by the affirmative vote of
at least 662/3% of our outstanding voting stock that is not owned by
the interested stockholder.
In general, Section 203 defines "business combination" to include the
following:
o any merger or consolidation involving the interested stockholder and
us;
o any sale, transfer, pledge or other disposition of 10% or more of
assets involving the interested stockholder;
o subject to certain exceptions, any transaction that results in our
issuance or transfer of any of our stock to the interested stockholder;
o any transaction involving us that has the effect of increasing the
proportionate share of the stock or any class or series of our stock
beneficially owned by the interested stockholder; or
43
o the receipt by the interested stockholder of the benefit of any loans,
advances, guarantees, pledges or other financial benefits by or through
us.
In general, Section 203 defines "interested stockholder" as an entity or
person beneficially owning 15% or more of our outstanding voting stock and any
entity or person affiliated with or controlling or controlled by such entity or
person.
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PLAN OF DISTRIBUTION
The selling holders and their successors, including their transferees,
pledgees or donees or their successors, may sell the notes and the common stock
into which the notes are convertible directly to purchasers or through
underwriters, broker-dealers or agents, who may receive compensation in the
form of discounts, concessions or commissions from the selling holders or the
purchasers. These discounts, concessions or commissions as to any particular
underwriter, broker-dealer or agent may be in excess of those customary in the
types of transactions involved.
The notes and the common stock into which the notes are convertible may be
sold in one or more transactions at fixed prices, at prevailing market prices
at the time of sale, at prices related to the prevailing market prices, at
varying prices determined at the time of sale, or at negotiated prices. These
sales may be effected in transactions, which may involve crosses or block
transactions:
o on any national securities exchange or U.S. inter-dealer system of a
registered national securities association on which the notes or the
common stock may be listed or quoted at the time of sale;
o in the over-the-counter market;
o in transactions otherwise than on these exchanges or systems or in the
over-the-counter market;
o through the writing of options, whether the options are listed on an
options exchange or otherwise; or
o through the settlement of short sales.
In connection with the sale of the notes and the common stock into which
the notes are convertible or otherwise, the selling holders may enter into
hedging transactions with the broker-dealers or other financial institutions,
which may in turn engage in short sales of the notes or the common stock into
which the notes are convertible in the course of hedging the positions they
assume. The selling holders may also sell the notes or the common stock into
which the notes are convertible short and deliver these securities to close out
their short positions, or loans or pledge the notes or the common stock into
which the notes are convertible to broker-dealers that in turn may sell these
securities.
The aggregate proceeds to the selling holders from the sale of the notes
or common stock into which the notes are convertible offered by them will be
the purchase price of the notes or common stock less discounts and commissions,
if any. Each of the selling holders reserves the right to accept and, together
with their agents from time to time, to reject, in whole or in part, any
proposed purchase of notes or common stock to be made directly or through
agents. We will not receive any of the proceeds from this offering.
Our outstanding common stock is listed for trading on the New York Stock
Exchange. We do not intend to list the notes for trading on any national
securities exchange or on the New York Stock Exchange and can give no assurance
about the development of any trading market for the notes.
In order to comply with the securities laws of some states, if applicable,
the notes and common stock into which the notes are convertible may be sold in
these jurisdictions only through registered or licensed brokers or dealers. In
addition, in some states the notes and common stock into which the notes are
convertible may not be sold unless they have been registered or qualified for
sale or an exemption from registration or qualification requirements is
available and is complied with.
The selling holders and any underwriters, broker-dealers or agents that
participate in the sale of the notes and common stock into which the notes are
convertible may be "underwriters" within the meaning of Section 2(11) of the
Securities Act. Any discounts, commissions, concessions or profit they earn on
any resale of the shares may be underwriting discounts and commissions under
the Securities Act. Selling holders who are "underwriters" within the meaning
of Section 2(11) of the Securities Act
45
will be subject to the prospectus delivery requirements of the Securities Act.
The selling holders have acknowledged that they understand their obligations to
comply with the provisions of the Exchange Act and the rules thereunder
relating to stock manipulation, particularly Regulation M.
In addition, any securities covered by this prospectus that qualify for
sale pursuant to Rule 144 or Rule 144A of the Securities Act may be sold under
Rule 144 or Rule 144A rather than pursuant to this prospectus. A selling holder
may not sell any notes or common stock described in this prospectus and may not
transfer, devise or gift these securities by other means not described in this
prospectus.
To the extent required, the specific notes or common stock to be sold, the
names of the selling holders, the respective purchase prices and public
offering prices, the names of any agent, dealer or underwriter, and any
applicable commission or discounts with respect to a particular offer will be
set forth in an accompanying prospectus supplement or, if appropriate, a
post-effective amendment to the registration statement of which this prospectus
is a part.
We entered into a registration rights agreement for the benefit of holders
of the notes to register their notes and common stock under applicable federal
and state securities laws under specific circumstances and at specific times.
The registration rights agreement provided for cross-indemnification of the
selling holders and us and their and our respective directors, officers and
controlling persons against specific liabilities in connection with the offer
and sale of the notes and the common stock, including liabilities under the
Securities Act. We will pay substantially all of the expenses incurred by the
selling holders incident to the offering and sale of the notes and the common
stock.
LEGAL MATTERS
The validity of the notes offered by this prospectus and of the shares of
common stock issuable upon conversion thereof will be passed upon for us by
Simpson Thacher & Bartlett, New York, New York.
EXPERTS
Our financial statements have been included herein in reliance on the
report of PricewaterhouseCoopers LLP, independent auditors given upon their
authority as experts in accounting and auditing.
AVAILABLE INFORMATION
We are subject to the informational requirements of the Securities
Exchange Act of 1934, referred to herein as the Exchange Act, and, in
accordance therewith, file reports and other information with the Securities
and Exchange Commission, referred to herein as the SEC. Such reports and other
information can be inspected and copied at the Public Reference Section of the
SEC located at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington
D.C. 20549 and at regional public reference facilities maintained by the SEC
located at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661 and Seven World Trade Center, Suite 1300, New York, New York
10048. Copies of such material can be obtained from the Public Reference
Section of the SEC at prescribed rates. Such material may also be accessed
electronically by means of the SEC's home page on the Internet
(http://www.sec.gov).
Our common stock is quoted on the New York Stock Exchange under the symbol
"LLL." You may inspect reports and other information concerning us at the
offices of the New York Stock Exchange at 11 Wall Street, New York, New York
10005.
46
YOU SHOULD ONLY RELY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE
HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH DIFFERENT OR ADDITIONAL
INFORMATION. THIS PROSPECTUS IS NOT AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY COMMON STOCK IN ANY JURISDICTION WHERE IT IS UNLAWFUL. THE
INFORMATION CONTAINED IN THIS PROSPECTUS IS ACCURATE ONLY AS OF THE DATE OF
THIS PROSPECTUS, REGARDLESS OF THE TIME OF DELIVERY OF THIS PROSPECTUS OR OF
ANY SALE OF COMMON STOCK.
47
[L-3 COMMUNICATIONS LOGO]
5.25% CONVERTIBLE SENIOR SUBORDINATED NOTES DUE 2009
AND 3,680,982 SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THE NOTES
---------------------
PROSPECTUS
AUGUST 6, 2001
---------------------
PART II INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is an itemization of all fees and expenses incurred or
expected to be incurred by the registrant in connection with the issuance and
distribution of the securities being registered hereby. All but the Securities
and Exchange Commission registration fee and the New York Stock Exchange listing
fee are estimates and remain subject to future contingencies.
Securities and Exchange Commission registration fee ......... $ 75,000
New York Stock Exchange listing fee ......................... $ 1,500
Legal fees and expenses ..................................... $ 50,000
Accounting fees and expenses ................................ $ 50,000
Trustees' fees and expenses ................................. $ 2,500
Printing and engraving fees ................................. $ 50,000
Miscellaneous expenses ...................................... $ 6,000
--------
Total .................................................... $235,000
========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law (the "DGCL") provides
for, among other things:
(i) permissive indemnification for expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and
reasonably incurred by designated persons, including directors and
officers of a corporation, in the event such persons are parties to
litigation other than stockholder derivative actions if certain
conditions are met;
(ii) permissive indemnification for expenses (including attorneys' fees)
actually and reasonably incurred by designated persons, including
directors and officers of a corporation, in the event such persons
are parties to stockholder derivative actions if certain conditions
are met;
(iii) mandatory indemnification for expenses (including attorneys' fees)
actually and reasonably incurred by designated persons, including
directors and officers of a corporation, in the event such persons
are successful on the merits or otherwise in defense of litigation
covered by (i) and (ii) above; and
(iv) that the indemnification provided for by Section 145 is not deemed
exclusive of any other rights which may be provided under any
by-law, agreement, stockholder or disinterested director vote, or
otherwise
In addition to the indemnification provisions of the DGCL described above,
our Certificate of Incorporation (the "Certificate of Incorporation") provides
that we shall, to the fullest extent permitted by the DGCL, (i) indemnify our
officers and directors and (ii)advance expenses incurred by such officers or
directors in relation to any action, suit or proceeding.
Our Bylaws (the "Bylaws") require the advancement of expenses to an
officer or director (without a determination as to his conduct) in advance of
the final disposition of a proceeding if such person furnishes a written
affirmation of his good faith belief that he has met the applicable standard of
conduct and furnishes a written undertaking to repay any advances if it is
ultimately determined that he is not entitled to indemnification. In connection
with proceedings by or in the right of the Registrant, the Bylaws provide that
indemnification shall include not only reasonable expenses, but also judgments,
fines, penalties and amounts paid in settlement. The Bylaws provide that the
Registrant may, subject to authorization on a case by case basis, indemnify and
advance expenses to employees or agents to the same extent as a director or to
a lesser extent (or greater, as permitted by law) as determined by the board of
directors.
The Bylaws purport to confer upon officers and directors contractual
rights to indemnification and advancement of expenses as provided therein.
II-1
Our Certificate of Incorporation limits the personal liability of our
directors to us or our stockholders for monetary damages for breach of the
fiduciary duty as a director, other than liability as a director (i) for breach
of duty of loyalty to us or our stockholders, (ii) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the DGCL (certain illegal distributions) or
(iv) for any transaction for which the director derived an improper personal
benefit.
We maintain officers' and directors' insurance covering certain
liabilities that may be incurred by officers and directors in the performance
of their duties.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or persons controlling the
registrant pursuant to the foregoing provisions, the registrant has been
informed that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is
therefore unenforceable.
ITEM 16. EXHIBITS
The following exhibits are filed as part of this registration statement:
EXHIBIT
NO. DESCRIPTION
--- -----------
**5.1 Opinion of Simpson Thacher & Bartlett.
10.1 Indenture dated as of April 30, 1997 between L-3
Communications Corporation and The Bank of New York, as
Trustee (incorporated by reference to Exhibit 4.1 to L-3
Communications Corporation's Registration Statement on Form
S-4 No. 333-31649).
10.2 Employment Agreement dated April 30, 1997 between Frank C.
Lanza and L-3 Communications Holdings, Inc. (incorporated by
reference to Exhibit 10.5 to the Registrant's Registration
Statement on Form S-1 No. 333-46975).
10.3 Employment Agreement dated April 30, 1997 between Robert V.
LaPenta and L-3 Communications Holdings, Inc. (incorporated
by reference to Exhibit 10.51 to the Registrant Statement on
Form S-1 No. 333-46975).
10.4 Form of Stock Option Agreement for Employee Options
(incorporated by reference to Exhibit 10.9 to the
Registrant's Registration Statement on Form S-1 No.
333-46975).
10.5 Form of 1997 Stock Option Plan for Key Employees
(incorporated by reference to Exhibit 10.91 to Registrant's
Registration Statement on Form S-1, No. 333-46975).
10.6 Non-Qualified Stock Option Agreement dated as of April 30,
1997 by and between L-3 Communications Holdings, Inc. and
Frank C. Lanza (incorporated by reference to Exhibit 10.12
to Registrant" Registration Statement on Form S-1, No.
333-70125).
10.7 Non-Qualified Stock Option Agreement dated as of April 30,
1997 by and between L-3 Communications Holdings, Inc. and
Robert V. LaPenta (incorporated by reference to Exhibit
10.13 to Registrant's Registration Statement on Form S-1,
No. 333-70125).
10.8 Option Plan for Non-Employee Directors of L-3
Communication's Holdings, Inc. (incorporated by reference to
Exhibit 10.15 to Registrant's annual report on Form 10-K
filed on March 31, 1999).
10.9 1999 Long Term Performance Plan dated as of April 27, 1999
(incorporated by reference to Exhibit 10.16 to the
Registrant's annual report on Form 10-K filed on March 30,
2000).
10.10 L-3 Communications Corporation Pension Plan (incorporated by
reference to Exhibit 10.10 to the Registrant's Registration
Statement on Form S-1 No. 333-46975).
10.11 Indenture dated as of May 22, 1998 between L-3
Communications Corporation and The Bank of New York, as
Trustee (incorporated by reference to Exhibit 10.6 to L-3
Communications Corporation's Registration Statement on Form
S-4 No. 333-70199).
II-2
EXHIBIT
NO. DESCRIPTION
--- -----------
10.12 Indenture dated as of December 11, 1998 among L-3 Communications
Corporation, the Guarantors named therein and The Bank of New
York, as Trustee (incorporated by reference to Exhibit 10.32 to
Registrant's Registration Statement on Form S-1, No. 333-70125).
10.13 Indenture dated as of November 21, 2000 among L-3 Communications
Holdings, Inc., the Guarantors named therein and the Bank of New
York, as Trustee (incorporated by reference to Exhibit 10.33 to
the Registrant's annual report on Form 10-K filed on March 15,
2001).
10.14 Purchase Agreement dated as of November 21, 2000 among L-3
Communications Holdings, Inc., the Guarantors included therein and
Lehman Brothers Inc. (incorporated by reference to Exhibit 10.34
to the Registrant's annual report on Form 10-K filed on March 15,
2001).
10.15 Registration Rights Agreement dated as of November 21, 2000 among
L-3 Communications Holdings, Inc., the Guarantors included therein
and Lehman Brothers Inc. (incorporated by reference to Exhibit
10.35 to the Registrant's annual report on Form 10-K filed on
March 15, 2001).
10.16 Consent, Waiver and First Amendment to Amended and Restated 364
Day Credit Agreement dated as of April 28, 2000 among L-3
Communications Corporation and lenders named therein (incorporated
by reference to Exhibit 10.40 to the Registrant's annual report on
Form 10-K filed on March 15, 2001).
10.17 Consent, Waiver and First Amendment to Second Amended and Restated
Credit Agreement dated as of April 28, 2000 among L-3
Communications Corporation and lenders named therein (incorporated
by reference to Exhibit 10.41 to the Registrant's annual report on
Form 10-K filed on March 15, 2001).
10.18 Consent, Waiver and First Amendment to New 364 Day Credit
Agreement dated as of April 28, 2000 among L-3 Communications
Corporation and lenders named therein (incorporated by reference
to Exhibit 10.42 to the Registrant's annual report on Form 10-K
filed on March 15, 2001).
10.19 New 364 Day Credit Agreement dated as of April 24, 2000 among L-3
Communications Corporation and lenders named therein (incorporated
by reference to Exhibit 10.43 to the Registrant's annual report on
Form 10-K filed on March 15, 2001).
10.20 Amended and Restated 364 Day Credit Agreement dated as of April
24, 2000 among L-3 Communications Corporation and lenders named
therein (incorporated by reference to Exhibit 10.44 to the
Registrant's annual report on Form 10-K filed on March 15, 2001).
10.21 Second Amended and Restated Credit Agreement dated as of April 24,
2000 among L-3 Communications Corporation and lenders named
therein (incorporated by reference to Exhibit 10.45 to the
Registrant's annual report on Form 10-K filed on March 15, 2001).
10.22 Consent and Third Amendment to Amended and Restated 364 Day Credit
Agreement dated as of November 16, 2000 among L-3 Communications
Corporation and lenders named therein (incorporated by reference
to Exhibit 10.46 to the Registrant's annual report on Form 10-K
filed on March 15, 2001).
10.23 Consent and Second Amendment to New 364 Day Credit Agreement dated
as of November 16, 2000 among L-3 Communications Corporation and
lenders named therein (incorporated by reference to Exhibit 10.47
to the Registrant's annual report on Form 10-K filed on March 15,
2001).
10.24 Consent and Second Amendment to Second Amended and Restated Credit
Agreement dated as of November 16, 2000 among L-3 Communication
Corporation and lenders named therein (incorporated by reference
to Exhibit 10.48 to the Registrant's annual report on Form 10-K
filed on March 15, 2001).
II-3
EXHIBIT
NO. DESCRIPTION
--- -----------
10.25 Asset Purchase Agreement relating to the Honeywell TCAS Business
by and among Honeywell Inc., L-3 Communications Corporation and,
solely in respect of the Guaranty in Article XIV, Honeywell
International Inc. dated as of February 10, 2000 (incorporated by
reference to Exhibit 10.91 to the Registrant's annual report on
Form 10-K filed on March 15, 2001).
10.26 Asset Purchase and Sale Agreement, dated January 7, 2000 by and
between L-3 Communications Corporation and Raytheon Company
(incorporated by reference to Exhibit 10.92 to the Registrant's
annual report on Form 10-K filed on March 15, 2001).
*12.1 Ratio of Earnings to Fixed Charges.
21.1 Subsidiaries of the Registrant (incorporated by reference to
Exhibit 21 to the Registrant's annual report on Form 10-K filed
on March 15, 2001).
*23.1 Consent of PricewaterhouseCoopers LLP.
**23.2 Consent of Simpson Thacher & Bartlett.
*24.1 Powers of Attorney (included on signature page).
25.1 Statement of Eligibility of Trustee on Form T-1 (incorporated by
reference to Exhibit 25.1 to the Registrant's Registration
Statement on Form S-1 filed on April 5, 2001).
----------
* Filed herewith
** Previously filed.
ITEM 17. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement.
Notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more that a 20
percent change in the maximum aggregate offering price set forth
in the "Calculation of Registration Fee" table in the effective
Registration Statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
(b) Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions,
II-4
or otherwise, the registrant has been advised that in the opinion of the
Commission such indemnification is against public policy as expressed in
the Securities Act, and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment
by a registrant of expenses incurred or paid by a director, officer or
controlling person of such registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue
(c) The undersigned registrant hereby undertakes to file an application for the
purpose of determining the eligibility of the trustee to act under
Subsection (a) of Section 310 of the Trust Indenture Act in accordance with
the rules and regulations prescribed by the Commission under Section
305(b)(2) of the Trust Indenture Act.
II-5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that is has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and duly caused this registration statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
city of New York, state of New York, on August 6, 2001.
L-3 COMMUNICATIONS HOLDINGS, INC.
By: /s/ Christopher C. Cambria
------------------------------------
Christopher C. Cambria, Senior Vice
President -- General Counsel and
Secretary
SIGNATURES AND POWERS OF ATTORNEY
Each person whose signature appears below authorizes Christopher C.
Cambria, Michael T. Strianese, Frank C. Lanza, Robert V. LaPenta, or any of
them, as his attorney in fact and agent, with full power of substitution and
resubstitution, to execute, in his name and on his behalf, in any and all
capacities, this Registration Statement on Form S-3 relating to the notes,
common stock into which the notes are convertible and the subsidiary guarantees
and any amendments thereto (and any additional registration statement related
thereto permitted by Rule 462 (b) promulgated under the Securities Act of 1933
(and all further amendments including post-effective amendments thereto)
necessary or advisable to enable the registrant to comply with the Securities
Act of 1933, and any rules, regulations and requirements of the Securities and
Exchange Commission, in respect thereof, in connection with the registration of
the securities which are the subject of such registration statement, which
amendments may make such changes in such registration statement as such attorney
may deem appropriate, and with full power and authority to perform and do any
and all acts and things whatsoever which any such attorney or substitute may
deem necessary or advisable to be performed or done in connection with any or
all of the above-described matters, as fully as each of the undersigned could do
if personally present and acting, hereby ratifying and approving all acts of any
such attorney or substitute.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Frank C. Lanza Chairman, Chief Executive August 6, 2001
---------------------------- Officer and Director
Frank C. Lanza
/s/ Robert V. LaPenta President, Chief Financial August 6, 2001
---------------------------- Officer and Director
Robert V. LaPenta
/s/ Christopher C. Cambria Senior Vice President -- August 6, 2001
---------------------------- General Counsel and Secretary
Christopher C. Cambria
/s/ Michael T. Strianese Senior Vice President -- August 6, 2001
---------------------------- Finance
Michael T. Strianese
/s/ Thomas A. Corcoran Director August 6, 2001
----------------------------
Thomas A. Corcoran
II-6
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Robert B. Millard Director August 6, 2001
----------------------------
Robert B. Millard
/s/ John E. Montague Director August 6, 2001
----------------------------
John E. Montague
/s/ John M. Shalikashvili Director August 6, 2001
----------------------------
John M. Shalikashvili
/s/ Arthur L. Simon Director August 6, 2001
----------------------------
Arthur L. Simon
/s/ Alan H. Washkowitz Director August 6, 2001
----------------------------
Alan H. Washkowitz
II-7
INDEX TO EXHIBITS
EXHIBIT
NO. DESCRIPTION
--- -----------
**5.1 Opinion of Simpson Thacher & Bartlett.
10.1 Indenture dated as of April 30, 1997 between L-3 Communications
Corporation and The Bank of New York, as Trustee (incorporated by
reference to Exhibit 4.1 to L-3 Communications Corporation's
Registration Statement on Form S-4 No. 333-31649).
10.2 Employment Agreement dated April 30, 1997 between Frank C. Lanza
and L-3 Communications Holdings, Inc. (incorporated by reference
to Exhibit 10.5 to the Registrant's Registration Statement on
Form S-1 No. 333-46975).
10.3 Employment Agreement dated April 30, 1997 between Robert V.
LaPenta and L-3 Communications Holdings, Inc. (incorporated by
reference to Exhibit 10.51 to the Registrant Statement on Form
S-1 No. 333-46975).
10.4 Form of Stock Option Agreement for Employee Options (incorporated
by reference to Exhibit 10.9 to the Registrant's Registration
Statement on Form S-1 No. 333-46975).
10.5 Form of 1997 Stock Option Plan for Key Employees (incorporated by
reference to Exhibit 10.91 to Registrant's Registration Statement
on Form S-1, No. 333-46975).
10.6 Non-Qualified Stock Option Agreement dated as of April 30, 1997
by and between L-3 Communications Holdings, Inc. and Frank C.
Lanza (incorporated by reference to Exhibit 10.12 to Registrant"
Registration Statement on Form S-1, No. 333-70125).
10.7 Non-Qualified Stock Option Agreement dated as of April 30, 1997
by and between L-3 Communications Holdings, Inc. and Robert V.
LaPenta (incorporated by reference to Exhibit 10.13 to
Registrant's Registration Statement on Form S-1, No. 333-70125).
10.8 Option Plan for Non-Employee Directors of L-3 Communication's
Holdings, Inc. (incorporated by reference to Exhibit 10.15 to
Registrant's annual report on Form 10-K filed on March 31, 1999).
10.9 1999 Long Term Performance Plan dated as of April 27, 1999
(incorporated by reference to Exhibit 10.16 to the Registrant's
annual report on Form 10-K filed on March 30, 2000).
10.10 L-3 Communications Corporation Pension Plan (incorporated by
reference to Exhibit 10.10 to the Registrant's Registration
Statement on Form S-1 No. 333-46975).
10.11 Indenture dated as of May 22, 1998 between L-3 Communications
Corporation and The Bank of New York, as Trustee (incorporated by
reference to Exhibit 10.6 to L-3 Communications Corporation's
Registration Statement on Form S-4 No. 333-70199).
10.12 Indenture dated as of December 11, 1998 among L-3 Communications
Corporation, the Guarantors named therein and The Bank of New
York, as Trustee (incorporated by reference to Exhibit 10.32 to
Registrant's Registration Statement on Form S-1, No. 333-70125).
10.13 Indenture dated as of November 21, 2000 among L-3 Communications
Holdings, Inc., the Guarantors named therein and the Bank of New
York, as Trustee (incorporated by reference to Exhibit 10.33 to
the Registrant's annual report on Form 10-K filed on March 15,
2001).
10.14 Purchase Agreement dated as of November 21, 2000 among L-3
Communications Holdings, Inc., the Guarantors included therein
and Lehman Brothers Inc. (incorporated by reference to Exhibit
10.34 to the Registrant's annual report on Form 10-K filed on
March 15, 2001).
10.15 Registration Rights Agreement dated as of November 21, 2000 among
L-3 Communications Holdings, Inc., the Guarantors included
therein and Lehman Brothers Inc. (incorporated by reference to
Exhibit 10.35 to the Registrant's annual report on Form 10-K
filed on March 15, 2001).
10.16 Consent, Waiver and First Amendment to Amended and Restated 364
Day Credit Agreement dated as of April 28, 2000 among L-3
Communications Corporation and lenders named therein
(incorporated by reference to Exhibit 10.40 to the Registrant's
annual report on Form 10-K filed on March 15, 2001).
EXHIBIT
NO. DESCRIPTION
--- -----------
10.17 Consent, Waiver and First Amendment to Second Amended and
Restated Credit Agreement dated as of April 28, 2000 among L-3
Communications Corporation and lenders named therein
(incorporated by reference to Exhibit 10.41 to the Registrant's
annual report on Form 10-K filed on March 15, 2001).
10.18 Consent, Waiver and First Amendment to New 364 Day Credit
Agreement dated as of April 28, 2000 among L-3 Communications
Corporation and lenders named therein (incorporated by reference
to Exhibit 10.42 to the Registrant's annual report on Form 10-K
filed on March 15, 2001).
10.19 New 364 Day Credit Agreement dated as of April 24, 2000 among L-3
Communications Corporation and lenders named therein
(incorporated by reference to Exhibit 10.43 to the Registrant's
annual report on Form 10-K filed on March 15, 2001).
10.20 Amended and Restated 364 Day Credit Agreement dated as of April
24, 2000 among L-3 Communications Corporation and lenders named
therein (incorporated by reference to Exhibit 10.44 to the
Registrant's annual report on Form 10-K filed on March 15, 2001).
10.21 Second Amended and Restated Credit Agreement dated as of April
24, 2000 among L-3 Communications Corporation and lenders named
therein (incorporated by reference to Exhibit 10.45 to the
Registrant's annual report on Form 10-K filed on March 15, 2001).
10.22 Consent and Third Amendment to Amended and Restated 364 Day
Credit Agreement dated as of November 16, 2000 among L-3
Communications Corporation and lenders named therein
(incorporated by reference to Exhibit 10.46 to the Registrant's
annual report on Form 10-K filed on March 15, 2001).
10.23 Consent and Second Amendment to New 364 Day Credit Agreement
dated as of November 16, 2000 among L-3 Communications
Corporation and lenders named therein (incorporated by reference
to Exhibit 10.47 to the Registrant's annual report on Form 10-K
filed on March 15, 2001).
10.24 Consent and Second Amendment to Second Amended and Restated
Credit Agreement dated as of November 16, 2000 among L-3
Communication Corporation and lenders named therein (incorporated
by reference to Exhibit 10.48 to the Registrant's annual report
on Form 10-K filed on March 15, 2001).
10.25 Asset Purchase Agreement relating to the Honeywell TCAS Business
by and among Honeywell Inc., L-3 Communications Corporation and,
solely in respect of the Guaranty in Article XIV, Honeywell
International Inc. dated as of February 10, 2000 (incorporated by
reference to Exhibit 10.91 to the Registrant's annual report on
Form 10-K filed on March 15, 2001).
10.26 Asset Purchase and Sale Agreement, dated January 7, 2000 by and
between L-3 Communications Corporation and Raytheon Company
(incorporated by reference to Exhibit 10.92 to the Registrant's
annual report on Form 10-K filed on March 15, 2001).
*12.1 Ratio of Earnings to Fixed Charges.
21.1 Subsidiaries of the Registrant (incorporated by reference to
Exhibit 21 to the Registrant's annual report on Form 10-K filed
on March 15, 2001).
*23.1 Consent of PricewaterhouseCoopers LLP.
**23.2 Consent of Simpson Thacher & Bartlett (included in Exhibit 5.1).
*24.1 Powers of Attorney (included on signature page).
25.1 Statement of Eligibility of Trustee on Form T-1 (incorporated by
reference to Exhibit 25.1 to the Registrant's Registration
Statement on Form S-1 filed on April 5, 2001).
----------
* Filed herewith
** Previously filed