e424b2
Filed
Pursuant to Rule 424(b)(2)
Registration Statement No. 333-165756
CALCULATION
OF REGISTRATION FEE
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Title of Each Class of Securities to be Registered
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Amount to be Registered
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Amount of Registration Fee
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3.95% Senior Notes due 2016
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$
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500,000,000
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$
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57,300
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Total
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$
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500,000,000
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$
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57,300
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(1)
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(1) |
The filing of $57,300 is calculated in accordance with
Rule 457(r) of the Securities Act of 1933, as amended (the
Securities Act). This Calculation of
Registration Fee table shall be deemed to update the
Calculation of Registration Fee table in L-3
Communications Corporations Registration Statement
No. 333-165756
on
Form S-3.
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PROSPECTUS SUPPLEMENT
(to Prospectus dated March 29, 2010)
$500,000,000
L-3 Communications
Corporation
3.95% Senior Notes due
2016
We are offering $500,000,000 in aggregate principal amount of
3.95% senior notes due 2016 (which we refer to as the
senior notes). Interest on the senior notes is
payable on May 15 and November 15 of each year,
beginning on May 15, 2012. The senior notes will mature on
November 15, 2016. We may redeem the senior notes in whole
or in part at any time at the redemption prices described herein.
The senior notes will be unsecured senior obligations of our
company and will rank equally with all of our existing and
future unsecured senior indebtedness. The senior notes will be
guaranteed on an unsecured senior basis by each of our material
domestic subsidiaries that guarantees any of our other
indebtedness. The senior notes will be issued only in registered
form in denominations of $2,000 and integral multiples of $1,000
in excess thereof.
Investing in the senior notes involves risks. For a
discussion of the factors you should carefully consider before
deciding to purchase any senior notes, see Forward-Looking
and Cautionary Statements beginning on page S-10,
Risk Factors contained in our
Form 10-K
for the year ended December 31, 2010 and in our
Form 10-Q
for the quarters ended April 1, 2011, July 1, 2011 and
September 30, 2011, Risk Factors Relating to the
Senior Notes beginning on page S-5 of this prospectus
supplement and other information included or incorporated by
reference in this prospectus supplement, the accompanying
prospectus and any related free writing prospectus issued by
us.
None of the Securities and Exchange Commission, any state
securities commission nor any other regulatory body has approved
or disapproved of these securities or passed upon the accuracy
or adequacy of this prospectus supplement or the accompanying
prospectus. Any representation to the contrary is a criminal
offense.
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Per Senior Note
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Total
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Public Offering
Price (1)
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99.273%
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$496,365,000
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Underwriting Discount
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0.60%
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$3,000,000
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Proceeds to L-3 Communications Corporation (before
expenses) (1)
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98.673%
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$493,365,000
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(1) Plus accrued interest, if any, from and including
November 22, 2011, if settlement occurs after that date.
The underwriters expect to deliver the senior notes to investors
on or about November 22, 2011, in book-entry form only
through the facilities of The Depository Trust Company for the
accounts of its participants, including Clearstream Banking,
société anonyme, Luxembourg and Euroclear Bank
N.V./S.A.
Joint
Book-Running Managers
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BofA Merrill Lynch
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Barclays Capital
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Deutsche Bank Securities
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Scotia Capital
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SunTrust Robinson Humphrey
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Wells Fargo Securities
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Joint
Lead Managers
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Mitsubishi
UFJ Securities |
Credit Agricole CIB |
Co-Managers
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ANZ
Securities |
BNY Capital Markets, LLC |
Comerica Securities |
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HSBC |
SMBC Nikko |
US Bancorp |
The date of this prospectus supplement is November 17, 2011
You should rely only on the information contained in or
incorporated by reference in this prospectus supplement, the
accompanying prospectus and any related free writing prospectus
issued by us. We have not, and the underwriters have not,
authorized anyone to provide you with different information. We
are not, and the underwriters are not, making an offer to sell
these securities in any jurisdiction where the offer is not
permitted. You should not assume that the information contained
in this prospectus supplement, the accompanying prospectus, the
documents incorporated by reference or any related free writing
prospectus issued by us is accurate as of any date other than
their respective dates. Our business, financial condition,
results of operations and prospects may have changed since those
dates.
TABLE OF
CONTENTS
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Page
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Prospectus Supplement
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iii
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iii
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iii
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S-1
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S-5
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S-10
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S-13
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S-13
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S-14
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S-16
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S-24
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S-27
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S-29
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S-33
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S-33
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Prospectus
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About This Prospectus
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ii
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Where You Can Find More Information
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ii
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Documents Incorporated by Reference
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ii
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Forward-Looking and Cautionary Statements
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iv
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The Company
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1
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Risk Factors
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1
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Use of Proceeds
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1
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Ratio of Earnings to Fixed Charges
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2
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Description of Senior Unsecured Notes
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3
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Plan of Distribution
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17
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Legal Matters
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17
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Experts
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17
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ii
ABOUT
THIS PROSPECTUS SUPPLEMENT
This document is in two parts. The first part is this prospectus
supplement, which describes the specific terms of this offering
and other matters relating to us and our financial condition.
The second part, the accompanying prospectus, gives more general
information about securities we may offer from time to time,
some of which may not apply to this offering.
If information varies between this prospectus supplement and the
accompanying prospectus or the documents incorporated by
reference, you should rely on the information in this prospectus
supplement.
As used in this prospectus supplement, (1) L-3
Holdings refers to L-3 Communications Holdings, Inc., the
direct parent company of
L-3
Communications Corporation, (2) L-3
Communications refers to L-3 Communications Corporation, a
wholly-owned operating subsidiary of L-3 Holdings and the issuer
of the senior notes, and (3) guarantors refers
to our subsidiaries that guarantee the obligations of L-3
Communications under the senior notes. The obligations of the
guarantors are referred to herein as the guarantees.
Except where the context provides otherwise, L-3,
the Company, we, us and
our refer to L-3 Communications and its subsidiaries.
WHERE YOU
CAN FIND MORE INFORMATION
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, or the Exchange Act, L-3 Holdings and L-3
Communications file annual, quarterly and current reports, proxy
statements and other information with the SEC. Our SEC filings
are available to the public over the Internet at the SECs
website at www.sec.gov or at our website at www.L-3com.com (as
noted below, the information contained in, or that can be
accessed through, our website is not a part of this prospectus
supplement or part of the accompanying prospectus). You may also
read and copy any document we file with the SEC at its public
reference room at 100 F Street, N.E.,
Washington, D.C. 20549. In addition, you can inspect
reports and other information L-3 Holdings files at the office
of The New York Stock Exchange, Inc., 20 Broad Street, New
York, New York 10005. Please call the SEC at
1-800-SEC-0330
for further information on the operation of the public reference
room.
DOCUMENTS
INCORPORATED BY REFERENCE
The SEC allows us to incorporate by reference into
this prospectus supplement information that we file with the
SEC. This means that we can disclose important information to
you by referring you to those documents. The information
incorporated by reference is an important part of this
prospectus supplement, and information that we file later with
the SEC will automatically update and supersede any inconsistent
information in this prospectus supplement and in our other
filings with the SEC.
We incorporate by reference the following documents that L-3
Holdings and L-3 Communications previously filed with the SEC
(other than information in such documents that is deemed not to
be filed), all of which are filed under SEC File Nos.
001-14141 or
333-46983:
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Our Annual Report on
Form 10-K
for the fiscal year ended December 31, 2010;
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Our Quarterly Reports on
Form 10-Q
for the quarterly periods ended April 1, 2011, July 1,
2011 and September 30, 2011; and
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Our Current Reports on
Form 8-K
filed with the SEC on February 8, 2011, March 2, 2011,
April 28, 2011, July 28, 2011 and September 12,
2011.
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iii
These documents contain important information about our business
and our financial performance.
We also incorporate by reference any future filings L-3 Holdings
and L-3 Communications make with the SEC pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, on
or after the date of the filing of this registration statement
and prior to the termination of the offering, all of which will
be filed under SEC File Nos.
001-14141 or
333-46983.
The future filings with the SEC made by L-3 Holdings and L-3
Communications will automatically update and supersede any
inconsistent information in this prospectus supplement. We do
not incorporate by reference any information furnished pursuant
to Item 2.02 or 7.01 of Form 8-K in any future filings unless
otherwise stated.
You may obtain a free copy of these filings from us by writing
or telephoning us at the following address and telephone number:
L-3
Communications Corporation
600 Third Avenue
New York, NY 10016
Attention: Corporate Secretary
Telephone:
(212) 697-1111
iv
PROSPECTUS
SUPPLEMENT SUMMARY
This summary highlights information contained elsewhere, or
incorporated by reference, in this prospectus supplement and the
accompanying prospectus. As a result, it does not contain all of
the information that you should consider before investing in the
senior notes. You should read this prospectus supplement, the
accompanying prospectus, any related free writing prospectus
issued by us and the documents incorporated by reference, which
are described under Where You Can Find More
Information and Documents Incorporated by
Reference elsewhere in this prospectus supplement and
included in the accompanying prospectus. This prospectus
supplement and the accompanying prospectus contain or
incorporate by reference forward-looking statements (as that
term is defined in the Private Securities Litigation Reform Act
of 1995). Forward-looking statements should be read with the
cautionary statements and important factors included under
Forward-Looking and Cautionary Statements in this
prospectus supplement.
The
Company
L-3 is a prime contractor in Command, Control, Communications,
Intelligence, Surveillance and Reconnaissance
(C3ISR)
systems, aircraft modernization and maintenance, and government
services. L-3 is also a leading provider of a broad range of
electronic systems used on military and commercial platforms.
Our customers include the United States (U.S.) Department of
Defense (DoD) and its prime contractors, U.S. Government
intelligence agencies, the U.S. Department of Homeland
Security (DHS), the U.S. Department of State (DoS), the
U.S. Department of Justice (DoJ), allied foreign
governments, domestic and foreign commercial customers and
select other U.S. federal, state and local government
agencies.
We are incorporated in Delaware, and the address of our
principal executive office is 600 Third Avenue, New York, New
York 10016. Our telephone number is
(212) 697-1111.
Our internet address is
www.L-3com.com.
However, our Web site and information posted on it or connected
to it do not constitute a part of this prospectus supplement or
the accompanying prospectus.
Previously
Announced Engility Spin-off
On July 28, 2011, we announced that our Board of Directors
approved a plan to spin-off a new, independent, publicly-traded
government services company. The transaction, which is intended
to be tax-free to L-3 and its shareholders, is expected to be
completed in the first half of 2012, and L-3 shareholders
will own 100% of the shares of both L-3 and the new government
services company at its completion. The spin-off will not be
subject to a shareholder vote.
Under the plan, the new, public company will be named Engility
and will include the systems engineering and technical
assistance (SETA), training and operational support services
businesses that are currently part of L-3s Government
Services segment. For the nine months ended September 30,
2011, the businesses that will comprise Engility had sales of
approximately $1.6 billion, or 56% of total Government
Services net sales, and operating income of approximately
$141 million, or 65% of total Government Services operating
income. The businesses that will comprise Engility currently
have approximately 10,000 employees. Upon completion of the
spin-off, the businesses that will comprise Engility will not be
guarantors
of L-3s
obligations, including the senior notes offered hereby.
L-3 will retain the cyber, intelligence and security solutions
businesses that are also part of L-3s Government Services
segment. The Government Services segment will be renamed
National Security Solutions upon completion of the transaction,
and will continue to leverage synergies across L-3 to develop
unique solutions to address growing challenges for our DoD,
intelligence and global security customers. For
S-1
the nine months ended September 30, 2011, L-3s cyber,
intelligence and security solutions businesses had sales of
approximately $1.2 million, or 44% of total Government
Services net sales, and operating income of approximately
$75 million, or 35% of total Government Services operating
income.
The completion of the spin-off transaction is subject to certain
customary conditions, including the filing of required documents
with the SEC, the receipt of a ruling from the Internal Revenue
Service and an opinion of counsel as to the tax-free nature of
the transaction. There can be no assurance that any separation
transaction will ultimately occur, or if one does occur, its
terms or timing.
S-2
The
Offering
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Issuer |
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L-3 Communications Corporation. |
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Securities Offered |
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$500,000,000 in aggregate principal amount of 3.95% senior
notes due 2016. |
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Maturity |
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The senior notes will mature on November 15, 2016. |
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Interest |
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The senior notes will bear interest at 3.95% per year. Interest
on the senior notes will be payable
semi-annually
in arrears on May 15 and November 15 of each year,
commencing May 15, 2012. Interest will accrue from and
including November 22, 2011. |
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Ranking |
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The senior notes will be unsecured senior obligations of L-3
Communications. The senior notes will be (i) effectively
subordinated to all of our future secured debt, if any, to the
extent of the value of the assets securing such debt, (ii)
ranked equal in right of payment with all of our other existing
and future senior indebtedness, including trade payables, and
(iii) ranked senior in right of payment to all of our existing
and future subordinated debt. |
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As of September 30, 2011, these senior notes and the
subsidiary guarantees would have ranked equal in right of
payment with $2.45 billion of our outstanding senior notes
and related guarantees and senior to: (1) $1.0 billion
of our existing senior subordinated notes and related guarantees
and (2) our senior subordinated guarantees of the
$689 million of 3% Convertible Contingent Debt
Securities due 2035 (the CODES) issued by
L-3
Holdings. In addition, as of September 30, 2011, we had the
ability to borrow up to an additional $990 million (after
reductions for outstanding letters of credit of
$10 million) under our revolving credit facility, which if
borrowed or drawn upon would also be senior debt guaranteed on a
senior basis by the guarantors and would rank equal in right of
payment with these senior notes. See Capitalization. |
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Subsidiary Guarantees |
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The senior notes will be jointly and severally guaranteed on an
unsecured senior basis by each of our material domestic
subsidiaries that guarantees any of our other indebtedness, as
described under Description of the Senior NotesThe
Subsidiary Guarantees. Upon the completion of the spin-off
transaction described under Previously
Announced Engility Spin-off, the businesses that will
comprise Engility will not be guarantors of any of our
indebtedness, including the senior notes. |
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The guarantees of the senior notes will be ranked equal in right
of payment with all of the existing and future senior
indebtedness of the guarantors. The guarantees will be ranked
senior in right of payment to all existing and future
subordinated indebtedness of the guarantors, including the
guarantees of (1) the
63/8% Senior
Subordinated Notes due 2015 issued by L-3 Communications and |
S-3
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guaranteed by the guarantors, and (2) the CODES issued by
L-3 Holdings, which are guaranteed by L-3 Communications and the
other guarantors. The guarantees will be effectively
subordinated to all future secured debt of the guarantors, if
any, to the extent of the value of the assets securing such
debt. Information regarding the guarantors and our
non-guarantor
subsidiaries is included in Note 25 to our audited
consolidated financial statements included in our Annual Report
for the year ended December 31, 2010, and in the respective
notes to our unaudited condensed consolidated financial
statements for the quarterly periods ended April 1, 2011,
July 1, 2011 and September 30, 2011, and all
incorporated herein by reference. |
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See Capitalization and Description of the
Senior NotesThe Subsidiary Guarantees. |
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Sinking Fund |
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None. |
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Change of Control Triggering Event |
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Upon the occurrence of a Change of Control Triggering
Event, as defined under Description of the Senior
NotesRepurchase at the Option of Holders Upon Change of
Control Triggering Event in this prospectus supplement,
L-3 will be required to make an offer to repurchase the senior
notes at a price equal to 101% of their principal amount, plus
accrued and unpaid interest to, but not including, the date of
repurchase. |
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Optional Redemption |
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L-3 may redeem some or all of the senior notes at any time or
from time to time, at its option, at the redemption prices
described in this prospectus supplement under the caption
Description of the Senior NotesOptional
Redemption. |
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Certain Covenants |
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The indenture relating to the senior notes, among other things,
limits
L-3s
ability and the ability of certain of L-3s subsidiaries to
create or assume certain liens or enter into sale and leaseback
transactions, and L-3s ability to engage in mergers or
consolidations or transfer or lease all or substantially all of
our assets. See Description of Senior Unsecured
NotesCertain Covenants in the accompanying
prospectus. |
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Use of Proceeds |
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We estimate that we will receive net proceeds from the offering
of approximately $491 million, after deduction of
underwriting expenses and commissions and estimated expenses
payable by us. |
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We intend to use the net proceeds of this offering, together
with cash on hand, to redeem $500 million in aggregate
principal amount of our outstanding
63/8%
Senior Subordinated Notes due 2015. |
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Listing |
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The senior notes will not be listed on any exchange or quoted on
any automated quotation system. |
S-4
RISK
FACTORS RELATING TO THE SENIOR NOTES
Our
significant level of debt and our ability to make payments on or
service our indebtedness may adversely affect our financial and
operating activities or ability to incur additional
debt.
At September 30, 2011, we had $4.14 billion in
aggregate principal amount of indebtedness outstanding, of which
$2.45 billion was senior debt represented by our
outstanding senior notes and $1.69 billion was senior
subordinated debt, including our senior subordinated guarantee
of the CODES. In addition, at September 30, 2011, we had
additional borrowing capacity of $990 million available to
us under our revolving credit facility that expires on
October 23, 2012, after reductions of $10 million for
outstanding letters of credit. In the future, we may increase
our borrowings, subject to limitations imposed on us by our debt
agreements.
Our ability to make scheduled payments of principal and interest
on our indebtedness and to refinance our existing debt depends
on our future financial performance as well as our ability to
access the capital markets, and the relative attractiveness of
available financing terms. We do not have complete control over
our future financial performance because it is subject to
economic, political, financial (including credit market
conditions), competitive, regulatory and other factors affecting
the aerospace and defense industry, as well as commercial
industries in which we operate. 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
reduce costs and expenses, sell assets, restructure debt or
obtain additional equity capital. We may not be able to do so in
a timely manner or upon acceptable terms in accordance with the
restrictions contained in our debt agreements.
Our level of indebtedness has important consequences to us.
These consequences may include:
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requiring a substantial portion of our net cash flow from
operations to be used to pay interest and principal on our debt
and therefore be unavailable for other purposes, including
acquisitions, capital expenditures, paying dividends to L-3
Holdings, research and development and other investments;
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limiting our ability to obtain additional financing for
acquisitions, working capital, investments or other
expenditures, which, in each case, may limit our ability to
carry out our acquisition strategy;
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increasing interest expenses due to higher interest rates on our
revolving credit facility as it has a variable interest rate;
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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
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impacting debt covenants that limit our ability to borrow
additional funds, dispose of assets or pay cash dividends to L-3
Holdings. Failure to comply with such covenants could result in
an event of default which, if not cured or waived, could result
in the acceleration of our outstanding indebtedness.
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Additionally, on December 31, 2010, we had
$9,578 million of contractual obligations (including
outstanding indebtedness). For a detailed listing of the
components of our contractual obligations, see
Managements Discussion and Analysis of Financial
Condition and Results of OperationsContractual
Obligations on page 57 of our Annual Report on
Form 10-K
for the year ended December 31, 2010, which is incorporated
herein by reference.
S-5
We may
incur additional indebtedness. This could further exacerbate the
risks described above.
Subject to the restrictions in the indenture governing our
senior subordinated notes and in our revolving credit facility,
we may incur additional indebtedness which could increase the
risks associated with our already substantial indebtedness.
Subject to certain limitations, we have the ability to borrow
additional funds under our revolving credit facility. If we
incur any additional indebtedness or obligations that rank equal
with the senior notes, including trade payables, the holders of
those obligations will be entitled to share ratably with you in
any proceeds distributed in connection with any insolvency,
liquidation, reorganization, dissolution or other winding up of
L-3. This may have the effect of reducing the amount of proceeds
paid to you.
The
senior notes will be effectively subordinated to our and the
subsidiary guarantors future secured indebtedness, if any,
to the extent of the value of the property securing such
indebtedness, which may inhibit our ability to repay
you.
The senior notes and the subsidiary guarantees will be
effectively subordinated to all of our and the subsidiary
guarantors future secured indebtedness, if any, to the
extent of the value of the property securing such indebtedness.
As a result, upon a default in payment on, or the acceleration
of, any of our or the subsidiary guarantors secured
indebtedness, or in the event of our or the subsidiary
guarantors bankruptcy, insolvency, liquidation,
dissolution, reorganization or similar proceeding, the proceeds
from the sale of the collateral that secures such indebtedness
will be available to pay obligations on the senior notes only
after our secured indebtedness, if any, has been paid in full.
In the event the Companys existing revolving credit
facility is required to be secured, each subsidiary guarantee
may be effectively subordinated to the guarantors
guarantee of the Companys existing revolving credit
facility to the extent of the value of the collateral owned by
that guarantor, until such time, if any, as the Companys
existing revolving credit facility is no longer required to be
secured.
The terms
of our indebtedness could restrict our flexibility and limit our
ability to satisfy obligations under the senior notes.
We are subject to operational and financial covenants and other
restrictions contained in our revolving credit facility and the
indentures evidencing our existing senior notes and senior
subordinated notes. 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 senior 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.
We may
not be able to repurchase the senior notes upon a Change of
Control Triggering Event.
If a Change of Control Triggering Event occurs, unless we have
exercised our right to redeem the senior notes, we will be
required to make an offer to purchase the senior notes in cash
at the redemption price described in this prospectus supplement.
However, we may not be able to repurchase the senior notes upon
a Change of Control Triggering Event because we may not have
sufficient funds to do so. In addition, agreements governing
indebtedness incurred in the future may restrict us from
purchasing the senior notes in the event of a Change of Control
Triggering Event. Any failure to purchase properly tendered
notes would constitute an event of default under the indenture
governing the senior notes, which would, in turn, constitute a
default under our existing revolving credit facility and may
constitute a default under agreements governing
S-6
indebtedness incurred in the future. See Description of
the Senior NotesRepurchase at the Option of Holders Upon
Change of Control Triggering Event.
Our
obligation to repurchase the senior notes upon a Change of
Control Triggering Event may not protect holders of the senior
notes in the case of certain corporate transactions involving
us.
The provisions of the senior notes relating to a Change of
Control Triggering Event may not protect you from certain
important corporate transactions, such as the
spin-off
transaction discussed above, a leveraged recapitalization (which
would increase the level of our indebtedness), reorganization,
restructuring, merger or other similar transactions not
involving a change in voting power or the beneficial ownership
of L-3 Communications. Even transactions involving a significant
change in voting power or beneficial ownership of L-3
Communications may not involve a change that constitutes a
Change of Control and, therefore, will not constitute a Change
of Control Triggering Event that would trigger our obligation to
offer to repurchase the senior notes. In addition, our
obligation to offer to purchase the senior notes is conditioned
upon two out of three ratings agencies ceasing to rate the
senior notes investment grade during the
60-day
period commencing on the earlier of (1) the occurrence of a
Change of Control or (2) public notice of the pending
occurrence of a Change of Control or our intention to effect a
Change of Control, and such rating agencies must publicly
announce (or inform the trustee in writing), that the ratings
downgrade occurred at least in part due to the applicable Change
of Control. If events, including certain Change of Control
transactions, occur that do not constitute a Change of Control
Triggering Event, we will not be required to make an offer to
purchase the senior notes, and you may have to continue to hold
your senior notes despite the occurrence of such events. See
Description of the Senior NotesRepurchase at the
Option of Holders Upon Change of Control Triggering Event.
The
limited covenants in the senior notes and the indenture may not
provide protection against some events or developments that may
affect our ability to repay the senior notes or the trading
prices for the senior notes.
The indenture governing the senior notes does not:
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require us to maintain any financial ratios or specific levels
of net worth, revenues, income, cash flow or liquidity and,
accordingly, does not protect holders of the senior notes in the
event that we experience significant adverse changes in our
financial condition or results of operations;
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limit our ability to incur indebtedness that is equal in right
of payment to the senior notes;
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limit our ability to incur substantial secured indebtedness that
would effectively rank senior to the senior notes to the extent
of the value of the assets securing the indebtedness;
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limit our subsidiaries ability to incur indebtedness,
which could effectively be senior to the senior notes;
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restrict our subsidiaries ability to issue securities or
otherwise incur indebtedness that would be senior to our equity
interests in our subsidiaries;
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restrict our ability to repurchase or prepay our
securities; or
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restrict our ability to make investments or pay dividends or
make other payments to L-3 Holdings or repay indebtedness or
other securities that rank junior to the senior notes.
|
For these reasons, you should not consider the covenants in the
indenture as a significant factor in evaluating whether to
invest in the senior notes. In addition, we are subject to
periodic review by independent
S-7
credit rating agencies. An increase in the level of our
outstanding indebtedness, or other events that could have an
adverse impact on our business, properties, financial condition,
results of operations or prospects, may cause the rating
agencies to downgrade our debt credit rating generally, and the
ratings on the senior notes, which could adversely impact the
trading prices for, or the liquidity of, the senior notes. Any
such downgrade could also adversely affect our cost of
borrowing, limit our access to the capital markets or result in
more restrictive covenants in future debt agreements.
The
guarantees may be unenforceable due to fraudulent conveyance
statutes, and 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:
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insolvent or rendered insolvent because of the guarantees;
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engaged in a business or transaction for which its remaining
assets constituted unreasonably small capital; or
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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 senior notes
would cease to have a claim against the subsidiary based on the
guaranty and would solely be creditors of L-3 Communications and
any guarantor whose guarantee was not similarly held
unenforceable.
Not all
of our subsidiaries are guarantors, and your claims will be
structurally subordinated to all of the creditors of the
non-guarantor subsidiaries.
Each of our material domestic subsidiaries that guarantees any
of our other indebtedness will guarantee the senior notes on an
unsecured senior basis. Upon the completion of the spin-off
transaction described under Prospectus Supplement
Summary Previously Announced Engility
Spin-off, the businesses that will comprise Engility will
not be guarantors of any of our indebtedness, including the
senior 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 us. As of September 30, 2011, the senior notes offered
hereby would have been effectively subordinated to
$688 million of indebtedness and other liabilities
(including trade payables) of these non-guarantor subsidiaries.
For the year-to-date period ended September 30, 2011, the
non-guarantor subsidiaries generated 16% of our sales. The
non-guarantor subsidiaries held approximately 17% of our
consolidated assets at September 30, 2011. In addition, for the
year-to-date period ended September 30, 2011, businesses
that we expect to comprise Engility had approximately
$1.6 billion in sales and had operating income of
approximately $141 million.
We cannot
assure you that an active trading market will develop for the
senior notes, which may reduce their market price.
The senior notes are a new issue of securities for which there
is currently no trading market and an active trading market for
the senior notes may not develop or be sustained. The
underwriters have advised us
S-8
that they presently intend to make a market in the senior notes
after this offering is completed. These underwriters are not
obligated, however, to make a market in the senior notes and any
such market-making may be discontinued at any time at the sole
discretion of such underwriters.
In addition, the liquidity of the trading market in the senior
notes and the market price quoted for the senior notes may be
adversely affected by changes in the overall market for debt
securities, changes in our prospects or financial performance or
in the prospects for companies in our industry generally. If an
active market for the senior notes fails to develop or be
sustained, the trading price could fall. If an active trading
market were to develop, they could trade at prices that may be
lower than the initial offering price. Whether or not they could
trade at lower prices depends on many factors, including:
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prevailing interest rates;
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the markets for similar securities;
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general economic conditions; and
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our financial condition, historical financial performance and
future prospects.
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S-9
FORWARD-LOOKING
AND CAUTIONARY STATEMENTS
Some of the information included or incorporated by reference in
this prospectus supplement and the accompanying prospectus
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, as amended,
and Section 21E of the Exchange Act of 1934, as amended.
Statements that are predictive in nature, that depend upon or
refer to 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 total sales growth, sales growth from business
acquisitions, organic sales growth, consolidated operating
margins, total segment operating margins, interest expense,
earnings, cash flow, research and development costs, working
capital, capital expenditures and other projections, they are
subject to several risks and uncertainties, and therefore, it is
possible that these statements may not be achieved. Such
statements will also be influenced by factors which include,
among other things:
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timing and completion of the planned spin-off of the Engility
business and our ability to achieve anticipated benefits;
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|
the effects of the planned spin-off on the Engility business;
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|
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;
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backlog processing and program slips resulting from delayed
funding of the DoD budget;
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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;
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the extensive legal and regulatory requirements surrounding our
contracts with the U.S. or foreign governments and the results
of any investigation of our contracts undertaken by the U.S. or
foreign governments, including potential suspensions or
debarments;
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our ability to retain our existing business and related
contracts (revenue arrangements);
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our ability to successfully compete for and win new business and
related contracts (revenue arrangements) and to win
re-competitions of our existing contracts;
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our ability to identify and acquire additional businesses in the
future with terms, including the purchase price, that are
attractive to
L-3 and to
integrate acquired business operations;
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our ability to maintain and improve our consolidated operating
margin and total segment operating margin in future periods;
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our ability to obtain future government contracts (revenue
arrangements) on a timely basis;
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the availability of government funding or cost-cutting
initiatives and changes in customer requirements for our
products and services;
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our significant amount of debt and the restrictions contained in
our debt agreements;
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S-10
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our ability to continue to retain and train our existing
employees and to recruit and hire new qualified and skilled
employees, as well as our ability to retain and hire employees
with U.S. Government security clearances that are a
prerequisite to compete for and to perform work on classified
contracts for the U.S. Government;
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actual future interest rates, volatility and other assumptions
used in the determination of pension, benefits and equity-based
compensation, as well as the market performance of benefit plan
assets;
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our collective bargaining agreements, our ability to
successfully negotiate contracts with labor unions and our
ability to favorably resolve labor disputes should they arise;
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the business, economic and political conditions in the markets
in which we operate, including those for the commercial
aviation, shipbuilding and communications markets;
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global economic uncertainty;
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the DoDs contractor support services in-sourcing and
efficiency initiatives;
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events beyond our control such as acts of terrorism;
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our ability to perform contracts (revenue arrangements) on
schedule;
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our international operations, including sales to foreign
customers;
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our extensive use of fixed-price type contracts as compared to
cost-plus type and
time-and-material
type contracts;
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the rapid change of technology and high level of competition in
the defense industry and the commercial industries in which our
businesses participate;
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our introduction of new products into commercial markets or our
investments in civil and commercial products or companies;
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the outcome of litigation matters, particularly in connection
with jury trials;
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results of audits by U.S. Government agencies, including
the Defense Contract Audit Agency, of our sell prices, costs and
performance on contracts (revenue arrangements), and our
accounting and general business practices;
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results of on-going governmental investigations, including
potential suspensions or debarments;
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the impact on our business of improper conduct by our employees,
agents or business partners;
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anticipated cost savings from business acquisitions not fully
realized or realized within the expected time frame;
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the outcome of matters relating to the Foreign Corrupt Practices
Act (FCPA) and similar non-U.S. regulations;
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ultimate resolution of contingent matters, claims and
investigations relating to acquired businesses, and the impact
on the final purchase price allocations;
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S-11
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significant increases in competitive pressure among companies in
our industry; and
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the fair values of our assets, including identifiable intangible
assets and the estimated fair value of the goodwill balances for
our reporting units, which can be impaired or reduced by other
factors, some of which are discussed above.
|
In addition, for a discussion of other risks and uncertainties
that could impair our results of operations or financial
condition, see Risk Factors in our Quarterly Report
on
Form 10-Q
for the quarters ended April 1, 2011, July 1, 2011 and
September 30, 2011 and Risk Factors and
Note 19 to our audited consolidated financial statements
included in our Annual Report on Form 10-K for the year
ended December 31, 2010 and incorporated herein by
reference, in each case.
Readers of this prospectus supplement 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 uncertainties of estimates,
forecasts and projections and may be better or worse than
projected and such differences could be material. 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 prospectus
supplement to reflect events or changes in circumstances or
changes in expectations or the occurrence of anticipated events.
S-12
USE OF
PROCEEDS
We estimate that we will receive net proceeds from the offering
of approximately $491 million, after deduction of
underwriting expenses and commissions and estimated expenses
payable by us. We intend to use the net proceeds of this
offering, together with cash on hand, to redeem
$500 million in aggregate principal amount of our
outstanding
63/8%
Senior Subordinated Notes due 2015.
CAPITALIZATION
The following table sets forth our cash and cash equivalents and
capitalization at September 30, 2011:
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on an actual basis; and
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as adjusted to give effect to the issuance and sale of the
senior notes in this offering and the application of the net
proceeds therefrom.
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At September 30, 2011
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As
|
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Actual
|
|
|
Adjusted
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(in millions)
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Cash and cash equivalents
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$
|
538
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|
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$
|
518
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|
|
|
|
|
|
|
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|
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Borrowing under revolving credit
facility(1)
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$
|
|
|
|
$
|
|
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3.95% Senior Notes due 2016
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|
|
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|
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500
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5.20% Senior Notes due 2019
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|
1,000
|
|
|
|
1,000
|
|
4.75% Senior Notes due 2020
|
|
|
800
|
|
|
|
800
|
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4.95% Senior Notes due 2021
|
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|
650
|
|
|
|
650
|
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63/8% Senior
Subordinated Notes due 2015
|
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1,000
|
|
|
|
500
|
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3% Convertible Contingent Debt Securities due 2035
|
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|
689
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|
|
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689
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|
|
|
|
|
|
|
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Principal amount of long-term debt
|
|
|
4,139
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|
|
|
4,139
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Unamortized discounts
|
|
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(13
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)
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|
|
(15
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)
|
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|
|
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Carrying amount of long-term debt
|
|
|
4,126
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|
|
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4,124
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|
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|
|
|
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Equity:
|
|
|
|
|
|
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|
|
Total shareholders equity
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|
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6,696
|
|
|
|
6,696
|
|
Noncontrolling interests
|
|
|
91
|
|
|
|
91
|
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
|
6,787
|
|
|
|
6,787
|
|
|
|
|
|
|
|
|
|
|
Total capitalization
|
|
$
|
10,913
|
|
|
$
|
10,911
|
|
|
|
|
|
|
|
|
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(1) |
|
At September 30, 2011, we had the ability to borrow
(subject to compliance with covenants) up to an additional
$990 million under our revolving credit facility after
reductions for outstanding letters of credit of $10 million. |
S-13
SELECTED
FINANCIAL DATA
We derived the selected financial data presented below at
December 31, 2010 and 2009 and for each of the years ended
December 31, 2010, 2009 and 2008 from our audited
consolidated financial statements included in our Annual Report
on Form 10-K
for the year ended December 31, 2010 incorporated into this
prospectus supplement and the accompanying prospectus by
reference. We derived the selected financial data presented
below at December 31, 2008, 2007 and 2006 and for the years
ended December 31, 2007 and 2006 from our audited
consolidated financial statements not incorporated into this
prospectus supplement and the accompanying prospectus by
reference. We derived the selected financial data presented
below at September 30, 2011 and September 24, 2010 and
for the year-to-date periods ended September 30, 2011 and
September 24, 2010 from our unaudited condensed
consolidated financial statements included in our Quarterly
Report on Form 10-Q for the quarter ended
September 30, 2011 incorporated into this prospectus
supplement and the accompanying prospectus by reference. Our
unaudited condensed consolidated financial statements for the
year-to-date periods ended September 30, 2011 and
September 24, 2010 include, in our opinion, all adjustments
consisting of normal and recurring adjustments considered
necessary for a fair presentation of the results for those
periods. Results for the year-to-date period ended
September 30, 2011 may not be indicative of the results for
the year ending December 31, 2011. The selected financial
data below does not give pro forma effect to the
spin-off
transaction discussed under Prospectus Supplement
Summary Previously Announced Engility Spin-off.
The selected financial data should be read in conjunction with
our Managements Discussion and Analysis of Financial
Condition and Results of Operations and our consolidated
financial statements and related notes included in our Annual
Report on Form
10-K for the
year ended December 31, 2010 and our Quarterly Report on
Form 10-Q
for the fiscal quarter ended September 30, 2011, each of
which is incorporated herein by reference. Our results of
operations, cash flows and financial position are affected
significantly, in some periods, by our business acquisitions,
the more significant of which are described in the documents
incorporated herein by reference.
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|
|
|
|
|
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|
Year-to-Date Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
September 24,
|
|
|
Year Ended December 31,
|
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|
|
2011
|
|
|
2010
|
|
|
2010
|
|
|
2009
|
|
|
2008 (1)
|
|
|
2007
|
|
|
2006
|
|
|
|
(in millions)
|
|
|
Statement of Operations Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
|
$11,154
|
|
|
|
$11,425
|
|
|
|
$15,680
|
|
|
|
$15,615
|
|
|
|
$14,901
|
|
|
|
$13,961
|
|
|
|
$12,477
|
|
Cost of sales
|
|
|
9,954
|
|
|
|
10,136
|
|
|
|
13,930
|
|
|
|
13,959
|
|
|
|
13,342
|
|
|
|
12,513
|
|
|
|
11,198
|
|
Litigation gain
(charge) (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
126
|
|
|
|
|
|
|
|
(129
|
)
|
Stock-based
charge (3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(39
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
1,200
|
|
|
|
1,289
|
|
|
|
1,750
|
|
|
|
1,656
|
|
|
|
1,685
|
|
|
|
1,448
|
|
|
|
1,111
|
|
Interest and other income, net
|
|
|
10
|
|
|
|
15
|
|
|
|
21
|
|
|
|
19
|
|
|
|
28
|
|
|
|
31
|
|
|
|
20
|
|
Interest
expense (2)
|
|
|
176
|
|
|
|
200
|
|
|
|
269
|
|
|
|
279
|
|
|
|
290
|
|
|
|
314
|
|
|
|
313
|
|
Debt retirement charge
|
|
|
18
|
|
|
|
18
|
|
|
|
18
|
|
|
|
10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before income taxes
|
|
|
1,016
|
|
|
|
1,086
|
|
|
|
1,484
|
|
|
|
1,386
|
|
|
|
1,423
|
|
|
|
1,165
|
|
|
|
818
|
|
Provision for income taxes
|
|
|
325
|
|
|
|
392
|
|
|
|
518
|
|
|
|
475
|
|
|
|
494
|
|
|
|
411
|
|
|
|
292
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
|
$691
|
|
|
|
$694
|
|
|
|
$966
|
|
|
|
$911
|
|
|
|
$929
|
|
|
|
$754
|
|
|
|
$526
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations attributable to L-3
|
|
|
$682
|
|
|
|
$687
|
|
|
|
$955
|
|
|
|
$901
|
|
|
|
$918
|
|
|
|
$745
|
|
|
|
$516
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to L-3
|
|
|
$682
|
|
|
|
$687
|
|
|
|
$955
|
|
|
|
$901
|
|
|
|
$938
|
|
|
|
$745
|
|
|
|
$516
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
S-14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year-to-Date Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
September 24,
|
|
|
Year Ended December 31,
|
|
|
|
2011
|
|
|
2010
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
|
|
|
|
|
|
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet Data (at period end):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Working capital
|
|
|
$2,405
|
|
|
|
$1,784
|
|
|
|
$2,345
|
|
|
|
$2,669
|
|
|
|
$2,254
|
|
|
|
$2,181
|
|
|
|
$1,553
|
|
Total assets
|
|
|
15,453
|
|
|
|
15,382
|
|
|
|
15,451
|
|
|
|
14,875
|
|
|
|
14,484
|
|
|
|
14,389
|
|
|
|
13,285
|
|
Short-term debt
|
|
|
|
|
|
|
693
|
|
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
|
4,126
|
|
|
|
3,439
|
|
|
|
4,126
|
|
|
|
4,112
|
|
|
|
4,493
|
|
|
|
4,472
|
|
|
|
4,452
|
|
Equity
|
|
|
6,787
|
|
|
|
7,000
|
|
|
|
6,855
|
|
|
|
6,660
|
|
|
|
5,941
|
|
|
|
6,114
|
|
|
|
5,439
|
|
Cash Flow Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash from operating activities
|
|
|
$984
|
|
|
|
$984
|
|
|
|
$1,461
|
|
|
|
$1,407
|
|
|
|
$1,387
|
|
|
|
$1,270
|
|
|
|
$1,074
|
|
Net cash used in investing activities
|
|
|
(137
|
)
|
|
|
(819
|
)
|
|
|
(945
|
)
|
|
|
(272
|
)
|
|
|
(432
|
)
|
|
|
(388
|
)
|
|
|
(1,091
|
)
|
Net cash used in financing activities
|
|
|
(916
|
)
|
|
|
(522
|
)
|
|
|
(918
|
)
|
|
|
(1,005
|
)
|
|
|
(840
|
)
|
|
|
(464
|
)
|
|
|
(29
|
)
|
|
|
|
(1) |
|
The year ended December 31, 2008 includes: (1) a gain of
$12 million ($7 million after income taxes) related to
the sale of a product line, (2) a non-cash impairment
charge of $28 million ($17 million after income taxes)
related to a write-down of capitalized software development
costs associated with a general aviation product, and
(3) an after-tax gain of $20 million related to the
sale of our 85% ownership interest in Medical Education
Technologies, Inc. on October 8, 2008. The gain is excluded
from income from continuing operations for the year ended
December 31, 2008. |
|
(2) |
|
The year ended December 31, 2008 includes a gain of
$133 million ($81 million after income taxes) related
to the reversal of a $126 million current liability for
pending and threatened litigation and $7 million of related
accrued interest as a result of a June 27, 2008 decision by
the U.S. Court of Appeals which vacated an adverse 2006 jury
verdict. The year ended December 31, 2006 included the
charge of $129 million ($78 million after income
taxes) related to this adverse jury verdict, which was rendered
on May 24, 2006. |
|
(3) |
|
The stock-based charge of $39 million ($25 million
after income taxes) was recorded in the second quarter of 2006
in connection with L-3s voluntary review of its past stock
option granting practices and the related accounting. |
S-15
DESCRIPTION
OF THE SENIOR NOTES
The following description of the particular terms of the senior
notes supplements the description of the general terms and
provisions of the senior notes set forth in the accompanying
prospectus. You should carefully read the entire prospectus and
prospectus supplement to understand fully the terms of the
senior notes. All of the information set forth below is
qualified in its entirety by the more detailed explanation set
forth in the accompanying prospectus.
The indenture relating to the senior notes is more fully
described in the accompanying prospectus. The following summary
of the material provisions of the indenture describes the
material terms of the indenture but does not purport to be
complete and is subject to, and qualified in its entirety by
reference to, the provisions of the indenture, including the
definitions of certain terms contained therein and those terms
made part of the indenture by reference to the
Trust Indenture Act. For definitions of certain capitalized
terms used in the following summary, see Description of
Senior Unsecured NotesCertain Defined Terms
contained in the accompanying prospectus.
For purposes of this summary, the term Company
refers only to L-3 Communications Corporation and not to any of
its Subsidiaries.
Brief
Description of the Senior Notes and the Subsidiary
Guarantees
The senior notes:
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|
will be unsecured senior obligations of the Company;
|
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|
will be pari passu in right of payment with all existing
and future senior Indebtedness of the Company, including our
$2.45 billion of outstanding senior notes and Indebtedness
outstanding under the Companys existing revolving credit
facility;
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|
will be senior in right of payment to any existing and future
subordinated Indebtedness of the Company, including the
Companys obligations under all of its outstanding
63/8% Senior
Subordinated Notes due 2015 and the obligations of the Company
under its senior subordinated guarantee of the CODES due 2035
issued by L-3 Holdings (collectively, the Existing
Senior Subordinated Notes);
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will be structurally subordinated to the current and future
Indebtedness and other liabilities (including trade payables) of
subsidiaries of the Company that do not guarantee the senior
notes; and
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|
will be unconditionally guaranteed by the Guarantors.
|
As of September 30, 2011, the Company had
$4.14 billion in aggregate principal amount of Indebtedness
outstanding, of which $2.45 billion was senior Indebtedness
represented by our outstanding senior notes and
$1.69 billion was our outstanding Existing Senior
Subordinated Notes. We expect to redeem $500 million in
aggregate principal amount of our
63/8%
Senior Subordinated Notes due 2015 with the net proceeds of this
offering and cash on hand. In addition, the Company had the
ability to borrow up to an additional $990 million (after
reductions for outstanding letters of credit of
$10 million) under the Companys revolving credit
facility, which if borrowed or drawn upon would be senior debt
and would be guaranteed on a senior basis.
S-16
Each Subsidiary Guarantee:
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will be an unsecured senior obligation of the guarantor;
|
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|
will be pari passu in right of payment with all existing
and future senior Indebtedness of that guarantor, including the
guarantors guarantee of our $2.45 billion of
outstanding senior notes and the Indebtedness outstanding under
the Companys existing revolving credit facility; and
|
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|
will be senior in right of payment to all existing and future
subordinated Indebtedness of that guarantor, including that
guarantors guarantee of the Existing Senior Subordinated
Notes.
|
In the event the Companys existing revolving credit
facility is required to be secured, each Subsidiary Guarantee
will be effectively subordinated to the guarantors
guarantee of the Companys existing revolving credit
facility to the extent of the value of the collateral owned by
that guarantor, until such time, if any, as the Companys
existing revolving credit facility is no longer required to be
secured.
The indenture does not limit the amount of other debt that we
may incur. We may from time to time, without the consent of the
holders of the senior notes, issue other debt securities under
the indenture in addition to the senior notes offered hereby.
The
Subsidiary Guarantees
The indenture will provide that the Companys payment
obligations under the senior notes will be jointly and severally
guaranteed (the Subsidiary Guarantees) on an
unsecured senior basis by all of the Companys current and
future Domestic Subsidiaries that guarantee other Indebtedness
of the Company. The obligations of each guarantor under its
Subsidiary Guarantee is limited as necessary to prevent that
Subsidiary Guarantee from constituting a fraudulent conveyance
under applicable law. See Risk Factors Relating to the
Senior NotesThe guarantees may be unenforceable due to
fraudulent conveyance statutes, and accordingly, you could have
no claim against the guarantors. The Subsidiary Guarantee
of each guarantor may be effectively subordinated to its
guarantee of amounts borrowed under the revolving credit
facility to the extent of the value of the collateral securing
those borrowings owned by such guarantor if the revolving credit
facility will require collateral.
Upon the release of all guarantees by a guarantor under all then
outstanding Indebtedness of the Company (other than the senior
notes), the Subsidiary Guarantee of that guarantor will
automatically and unconditionally be released and discharged,
without any further action required by such guarantor or the
trustee. If any former guarantor thereafter guarantees any
Indebtedness of the Company (other than the senior notes), then
that former guarantor (to the extent it is still a Domestic
Subsidiary) will again guarantee the senior notes on the terms
and conditions set forth in the indenture.
In addition, the Subsidiary Guarantee of any guarantor will be
automatically and unconditionally be released and discharged,
without any further action required by such guarantor or the
trustee, if at any time such guarantor is no longer a Domestic
Subsidiary.
Principal,
Maturity and Interest
The senior notes will initially be limited to $500,000,000 in
aggregate principal amount. The Company may from time to time,
without notice to or the consent of the holders, create and
issue additional notes having the same terms as, and ranking
equally and ratably with, the senior notes in all respects
(except for the issue date and, if applicable, the payment of
interest accruing prior to the issue date of such additional
notes and the date of the first payment of interest following
the issue date of such additional notes). Such additional notes
will be
S-17
consolidated and form a single series with, and will have the
same terms as to ranking, redemption, waivers, amendments or
otherwise, as the senior notes, and will vote together as one
class on all matters with respect to the senior notes.
The senior notes will mature on November 15, 2016. Interest
on the senior notes will accrue at the rate of 3.95% per annum
and will be payable semi-annually in arrears on May 15 and
November 15, commencing on May 15, 2012, to holders of
record on the immediately preceding May 1 and
November 1, respectively.
Interest on the senior notes will accrue from the most recent
date to which interest has been paid or, if no interest has been
paid, from the date of original issuance. Interest will be
computed on the basis of a
360-day year
comprised of twelve
30-day
months.
Optional
Redemption
The Company may, at its option, redeem the senior notes in whole
at any time or in part from time to time, on at least 30 but not
more than 60 days prior notice, at a redemption price
equal to the greater of:
|
|
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|
|
100% of the principal amount of the senior notes being
redeemed, and
|
|
|
|
the present value of the Remaining Scheduled Payments on the
senior notes being redeemed on the redemption date, discounted
to the date of redemption, on a semiannual basis, at the
Treasury Rate plus 50 basis points.
|
If the Company elects to redeem the senior notes, it will also
pay accrued and unpaid interest, if any, to the date of
redemption, subject to the rights of holders of senior notes on
the relevant record date to receive interest due on the relevant
interest payment date. In determining the redemption price and
accrued interest, interest will be calculated on the basis of a
360-day year
consisting of twelve
30-day
months.
For purposes of the foregoing discussion of the optional
redemption feature of the senior notes, the following
definitions are applicable:
Comparable Treasury Issue means, with respect
to the senior notes, the United States Treasury security
selected by the Reference Treasury Dealer as having a maturity
comparable to the remaining term of the senior notes to be
redeemed that would be utilized, at the time of selection and in
accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity to
the remaining term of such senior notes.
Comparable Treasury Price means, with respect
to any redemption date, (1) the average of the bid and
asked prices for the Comparable Treasury Issue (expressed in
each case as a percentage of its principal amount) on the third
business day preceding such redemption date, as set forth in the
daily statistical release (or any successor release) published
by the Federal Reserve Bank of New York and designated
Composite 3:30 p.m. Quotations for
U.S. Government Securities or (2) if such
release (or any successor release) is not published or does not
contain such price on such business day, (A) the average of
the Reference Treasury Dealer Quotations for such redemption
date, after excluding the highest and lowest such Reference
Treasury Dealer Quotations, or (B) if the trustee is given
fewer than four such Reference Treasury Dealer Quotations, the
average of all such quotations.
Reference Treasury Dealer means
(A) Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Deutsche Bank Securities Inc. and Barclays Capital
Inc. (or their respective affiliates which are Primary Treasury
Dealers) and each of their respective successors; provided,
however, that if any of the foregoing shall cease to be a
primary U.S. Government securities dealer in New York City
(a Primary Treasury Dealer), we
S-18
will substitute therefor another Primary Treasury Dealer; and
(B) any other Primary Treasury Dealer(s) selected by us.
Reference Treasury Dealer Quotations means,
with respect to each Reference Treasury Dealer and any
redemption date, the average, as determined by the trustee, of
the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount)
quoted in writing to the Trustee by such Reference Treasury
Dealer at 5:00 p.m. on the third business day preceding
such redemption date.
Remaining Scheduled Payments means, with
respect to any senior notes, the remaining scheduled payments of
the principal thereof to be redeemed and interest thereon that
would be due after the related redemption date but for such
redemption; provided, however, that, if such redemption
date is not an interest payment date with respect to such senior
note, the amount of the next succeeding scheduled interest
payment thereon will be reduced by the amount of interest
accrued thereon to such redemption date.
Treasury Rate means, with respect to any
redemption date, the rate per annum equal to the semiannual
equivalent yield to maturity of the Comparable Treasury Issue,
assuming a price for the Comparable Treasury Issue (expressed as
a percentage of its principal amount) equal to the Comparable
Treasury Price for such redemption date.
Certain
Covenants
The senior notes will also be entitled to the benefits of each
of the covenants set forth under the section entitled
Certain Covenants in the accompanying prospectus.
Mandatory
Redemption
Except as set forth below under Repurchase at the
Option of Holders Upon Change of Control Triggering Event,
the Company is not required to make any mandatory redemption or
sinking fund payments with respect to the senior notes.
Repurchase
at the Option of Holders Upon Change of Control Triggering
Event
Upon the occurrence of a Change of Control Triggering Event,
unless the Company has exercised its right to redeem the senior
notes as described above, each holder of senior notes will have
the right to require the Company to repurchase all or any part
(equal to $2,000 and integral multiples of $1,000 in excess
thereof) of such holders senior notes pursuant to the
offer described below (the Change of Control
Offer) at an offer price in cash equal to 101% of the
aggregate principal amount thereof plus accrued and unpaid
interest, if any, to the date of purchase (the Change
of Control Payment), subject to the rights of holders
of senior notes on the relevant record date to receive interest
due on the relevant interest payment date. Within 30 days
following the date upon which any Change of Control Triggering
Event occurs, or at the Companys option, prior to any
Change of Control Triggering Event but subject to the occurrence
of a Change of Control Triggering Event, the Company will mail a
notice to each holder describing the transaction or transactions
that constitute the Change of Control and offering to repurchase
senior notes on the date specified in such notice, which date
will be no earlier than 30 days and no later than
60 days from the date such notice is mailed (the
Change of Control Payment Date), pursuant to
the procedures required by the indenture and described in such
notice. The notice, if mailed prior to the occurrence of the
Change of Control Triggering Event, will state that the Change
of Control Offer is conditioned on the occurrence of a Change of
Control Triggering Event on or prior to the Change of Control
Payment Date. The Company will comply with the requirements of
Rule 14e-1
under the Exchange Act and any other securities laws and
regulations thereunder to the extent such laws and regulations
are applicable in connection with the repurchase of the senior
notes as a result of a Change of Control Triggering Event.
S-19
On the Change of Control Payment Date, the Company will, to the
extent lawful:
|
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|
(1)
|
accept for payment all senior notes or portions thereof properly
tendered pursuant to the Change of Control Offer and not
withdrawn;
|
|
|
(2)
|
deposit with the paying agent an amount equal to the Change of
Control Payment in respect of all senior notes or portions
thereof so tendered and not withdrawn; and
|
|
|
(3)
|
deliver or cause to be delivered to the trustee the senior notes
so accepted together with an Officers Certificate stating
the aggregate principal amount of notes or portions thereof
being purchased by the Company.
|
The paying agent will promptly mail to each holder of senior
notes so tendered the Change of Control Payment for such senior
notes, and the trustee will promptly authenticate and mail (or
cause to be transferred by book entry) to each holder a new note
equal in principal amount to any unpurchased portion of the
senior notes surrendered, if any; provided that each such
new senior note will be in a principal amount of $2,000 and
integral multiples of $1,000 in excess thereof.
The Company will not be required to make a Change of Control
Offer upon a Change of Control Triggering Event if a third party
makes the Change of Control Offer in the manner, at the times
and otherwise in compliance with the requirements set forth in
the indenture applicable to a Change of Control Offer made by
the Company and purchases all senior notes validly tendered and
not withdrawn under such Change of Control Offer.
The provisions described above providing for the repurchase of
senior notes at the option of the holders may in certain
circumstances make more difficult or discourage a sale or
takeover of the Company and, thus, the removal of incumbent
management. Subject to the limitations discussed below, the
Company could, in the future, enter into certain transactions,
including acquisitions, refinancings or other recapitalizations,
that would not constitute a Change of Control under
the indenture, but that could increase the amount of
Indebtedness outstanding at such time or otherwise affect the
capital structure of the Company or credit ratings of the senior
notes. Restrictions on the ability of the Company to incur
liens, enter into sale and leaseback transactions and
consolidate, merge or sell assets are contained in the covenants
as described in the Description of Senior Unsecured
Notes section of the accompanying prospectus under the
captions Certain CovenantsLimitation on
Liens, Certain CovenantsLimitation on
Sale and Leaseback Transactions andMerger,
Consolidation or Sale of Assets. Except for the
limitations contained in such covenants and the covenant
relating to repurchases upon the occurrence of a Change of
Control Triggering Event, the indenture does not contain any
covenants or provisions that may afford holders protection in
the event of a decline in the credit quality of the Company or a
highly leveraged or similar transaction involving the Company,
including as a result of the
spin-off
transaction discussed above.
The existing revolving credit facility may prohibit the Company,
in certain circumstances, from purchasing any senior notes, and
also provides that certain change of control events with respect
to the Company constitute a default thereunder. Any future
credit agreements or other agreements relating to Indebtedness
to which the Company becomes a party may contain similar
restrictions and provisions. In the event a Change of Control
occurs at a time when the Company is prohibited from purchasing
senior notes, the Company could seek the consent of its lenders
to the purchase of senior notes or could attempt to refinance
the borrowings that contain such prohibition. If the Company
does not obtain such a consent or repay such borrowings, the
Company will remain prohibited from purchasing senior notes. In
such case, the Companys failure to purchase tendered
senior notes would constitute an Event of Default under the
indenture and under the documentation governing certain of our
other Indebtedness, which would, in turn, constitute a default
under the existing revolving credit facility. See Risk
Factors Relating to the Senior NotesWe may not be able to
repurchase the senior notes upon a Change of Control Triggering
Event.
S-20
The Companys ability to pay cash to the holders of senior
notes upon a purchase may be limited by the Companys
then-existing financial resources. There can be no assurance
that sufficient funds will be available when necessary to make
any required purchases.
The definition of Change of Control contains, with respect to
the disposition of assets, the phrase all or substantially
all, which varies according to the facts and circumstances
of the subject transaction and is subject to judicial
interpretation. Accordingly, in certain circumstances there may
be a degree of uncertainty in ascertaining whether a particular
transaction would involve a disposition of all or
substantially all of the assets of the Company and its
Subsidiaries, and therefore it may be unclear as to whether a
Change of Control has occurred and whether the holders have the
right to require the Company to purchase the senior notes. In
the event that the Company were to determine that a Change of
Control did not occur because not all or substantially
all of the assets of the Company and its Subsidiaries had
been sold and the holders of the senior notes disagreed with
such determination, the holders
and/or the
trustee would need to seek a judicial determination of the issue.
For purposes of the foregoing discussion of a repurchase at the
option of holders, the following definitions are applicable:
Change of Control means the occurrence of any
one of the following:
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|
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|
(1)
|
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 the Company and its Subsidiaries taken as a whole
to any person (as that term is used in Section 13(d)(3) of
the Exchange Act) other than to the Company or one of its
Subsidiaries;
|
|
|
(2)
|
the consummation of any transaction (including without
limitation, any merger or consolidation) the result of which is
that any person (as defined above) becomes the beneficial
owner (as defined in
Rules 13d-3
and 13d-5
under the Exchange Act), directly or indirectly, of more than
50% of the outstanding Voting Stock of the Company, measured by
voting power rather than number of shares, other than by a
person whose outstanding Voting Stock, measured by voting power
rather than number of shares, is owned 100%, directly or
indirectly, by Holdings;
|
|
|
(3)
|
the first day on which the majority of the members of the board
of directors of the Company cease to be Continuing
Directors; or
|
|
|
(4)
|
the adoption of a plan relating to the liquidation or
dissolution of the Company.
|
Change of Control Triggering Event means the
senior notes cease to be rated Investment Grade by at least two
of the three Rating Agencies on any date during the
60-day
period (the Trigger Period) commencing on the
earlier of (1) the occurrence of a Change of Control and
(2) public notice of the pending occurrence of a Change of
Control or our intention to effect a Change of Control (which
Trigger Period will be extended for so long as any of the Rating
Agencies has publicly announced that it is considering a
possible ratings change).
Notwithstanding the foregoing, no Change of Control Triggering
Event will be deemed to have occurred in connection with any
particular Change of Control (1) if the Rating Agencies
making the reduction in rating that causes the senior notes to
cease to be rated Investment Grade do not announce or publicly
confirm or inform the trustee in writing at its request that the
reduction was the result, in whole or in part, of any event or
circumstance comprised of or arising as a result of, or in
respect of, the applicable Change of Control (whether or not the
applicable Change of Control has occurred at the time of the
ratings reduction) and (2) unless and until such Change of
Control has actually been consummated.
S-21
Continuing Directors means, as of any date of
determination, any member of the board of directors of the
Company who (1) was a member of such board of directors on
the Issue Date; or (2) was nominated for election or
elected to such board of directors with the approval of a
majority of the Continuing Directors who were members of such
board of directors at the time of such nomination or election.
Fitch means Fitch Inc., a subsidiary of
Fimalac, S.A., and its successors.
Investment Grade means a rating of BBB−
or better by Fitch (or its equivalent under any successor rating
categories of Fitch); a rating of Baa3 or better by Moodys
(or its equivalent under any successor rating categories of
Moodys); and a rating of BBB− or better by S&P
(or its equivalent under any successor rating categories of
S&P).
Moodys means Moodys Investors
Service Inc., a subsidiary of Moodys Corporation, and its
successors.
S&P means Standard &
Poors Ratings Services, a division of The McGraw-Hill
Companies, Inc., and its successors.
Rating Agency means each of Moodys,
S&P and Fitch; provided, that if any of
Moodys, S&P and Fitch ceases to provide rating
services to issuers or investors, the Company may appoint a
replacement for such Rating Agency that is reasonably acceptable
to the trustee under the indenture.
Voting Stock of any specified Person as of
any date means the capital stock of such Person that is at the
time entitled to vote generally in the election of the board of
directors of such Person.
Selection
and Notice
If less than all of the senior notes are to be redeemed at any
time, the trustee will select senior notes for redemption on a
pro rata basis (or, in the case of senior notes issued in
global form as discussed under Book-Entry, Delivery
and Form, based on a method that most nearly approximates
a pro rata selection as the trustee deems fair and
appropriate) unless otherwise required by law or applicable
stock exchange or depositary requirements.
No senior notes of $2,000 or less will be redeemed in part.
Notices of redemption will be mailed by first class mail at
least 30 but not more than 60 days before the redemption
date to each holder of senior notes to be redeemed at its
registered address, except that redemption notices may be mailed
more than 60 days prior to a redemption date if the notice
is issued in connection with a defeasance of the senior notes or
a satisfaction and discharge of the indenture. Notices of
redemption may not be conditional.
If any senior note is to be redeemed in part only, the notice of
redemption that relates to that senior note will state the
portion of the principal amount of that senior note that is to
be redeemed. A new note in principal amount equal to the
unredeemed portion of the original senior note will be issued in
the name of the holder of senior notes upon cancellation of the
original senior note. Senior notes called for redemption become
due on the date fixed for redemption. On and after the
redemption date, interest ceases to accrue on senior notes or
portions of senior notes called for redemption.
Book-Entry
Delivery and Form
The senior notes will be issued as global debt securities in
book-entry form in denominations of $2,000 and
integral multiples of $1,000 in excess thereof. See
Description of Senior Unsecured NotesTransfer and
ExchangeGlobal Senior Unsecured Notes and Book-Entry
System in the accompanying
S-22
prospectus. The Depository Trust Company (DTC) will
be the depositary with respect to the senior notes. The senior
notes will be issued as fully registered securities in the name
of Cede & Co., DTCs nominee, and will be
deposited with DTC.
DTC has advised us that it is a member of the U.S. Federal
Reserve System, a limited-purpose trust company under the New
York banking law, and a registered clearing agency with the SEC.
DTC holds securities that its participants deposit with DTC and
facilitates the settlement among participants of securities
transactions in deposited securities through electronic
computerized book-entry changes in participants accounts,
thereby eliminating the need for physical movement of securities
certificates. Participants include securities brokers and
dealers (including the underwriters), banks, trust companies,
clearing corporations and certain other organizations. DTC is
owned by a number of its participants and by The New York Stock
Exchange, Inc., the American Stock Exchange LLC and the
Financial Industry Regulatory Authority, Inc. Access to
DTCs book-entry system is also available to others, such
as securities brokers and dealers, banks and trust companies
that clear through or maintain a custodial relationship with a
participant, either directly or indirectly. The rules applicable
to DTC and its participants are on file with the SEC.
Same-Day
Settlement and Payment
Settlement for the senior notes will be made by the underwriters
in immediately available funds. All payments of principal and
interest on the senior notes will be made by us in immediately
available funds. The senior notes will trade in DTCs
settlement system until maturity, and secondary market trading
activity in the senior notes therefore will be required by DTC
to settle in immediately available funds.
S-23
MATERIAL
U.S. FEDERAL INCOME AND ESTATE TAX CONSEQUENCES
The following is a summary of the material U.S. federal income
and estate tax consequences of the purchase, ownership and
disposition of the senior notes as of the date hereof. Except
where noted, this summary deals only with the senior notes that
are held as capital assets by a
non-U.S. holder,
defined below, who acquires the senior notes upon original
issuance at their initial offering price.
A
non-U.S. holder
means a holder of the senior notes (other than a partnership)
that is not for U.S. federal income tax purposes any of the
following:
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an individual citizen or resident of the United States;
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a corporation (or any other entity treated as a corporation for
U.S. federal income tax purposes) created or organized in or
under the laws of the United States, any state thereof or the
District of Columbia;
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an estate the income of which is subject to U.S. federal income
taxation regardless of its source; or
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a trust if it (1) is subject to the primary supervision of
a court within the United States and one or more U.S. persons
have the authority to control all substantial decisions of the
trust or (2) has a valid election in effect under
applicable U.S. Treasury regulations to be treated as a U.S.
person.
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This summary is based upon provisions of the Internal Revenue
Code of 1986, as amended (the Code), and
regulations, rulings and judicial decisions as of the date
hereof. Those authorities may be changed, perhaps retroactively,
so as to result in U.S. federal income and estate tax
consequences different from those summarized below. This summary
does not address all aspects of U.S. federal income and estate
taxes and does not deal with foreign, state, local or other tax
considerations that may be relevant to
non-U.S. holders
in light of their personal circumstances. In addition, it does
not represent a detailed description of the U.S. federal income
and estate tax consequences applicable to you if you are subject
to special treatment under the U.S. federal income tax laws
(including if you are a U.S. expatriate, controlled
foreign corporation, passive foreign investment
company or a partnership or other pass-through entity for
U.S. federal income tax purposes). We cannot assure you that a
change in law will not alter significantly the tax
considerations that we describe in this summary.
If a partnership holds the senior notes, the tax treatment of a
partner will generally depend upon the status of the partner and
the activities of the partnership. If you are a partner of a
partnership holding the senior notes, you should consult your
tax advisors.
If you are considering the purchase of the senior notes, you
should consult your own tax advisors concerning the particular
U.S. federal income and estate tax consequences to you of the
ownership of the senior notes, as well as the consequences to
you arising under the laws of any other taxing jurisdiction.
U.S.
Federal Withholding Tax
The 30% U.S. federal withholding tax will not apply to any
payment of interest on the senior notes under the
portfolio interest rule, provided that:
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interest paid on the senior notes is not effectively connected
with your conduct of a trade or business in the United States;
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S-24
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you do not actually (or constructively) own 10% or more of the
total combined voting power of all classes of our voting stock
within the meaning of the Code and applicable U.S. Treasury
regulations;
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you are not a controlled foreign corporation that is related to
us through stock ownership;
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you are not a bank whose receipt of interest on the senior notes
is described in Section 881(c)(3)(A) of the Code; and
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either (a) you provide your name and address on an Internal
Revenue Service (IRS)
Form W-8BEN
(or other applicable form) and certify, under penalties of
perjury, that you are not a United States person as defined
under the Code or (b) you hold your senior notes through
certain intermediaries and satisfy the certification
requirements of applicable U.S. Treasury regulations. Special
certification rules apply to
non-U.S. holders
that are pass-through entities rather than corporations or
individuals.
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If you cannot satisfy the requirements described above, payments
of interest made to you will be subject to the 30% U.S. federal
withholding tax, unless you provide us with a properly executed:
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IRS
Form W-8BEN
(or other applicable form) claiming an exemption from or
reduction in withholding under the benefit of an applicable
income tax treaty; or
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IRS
Form W-8ECI
(or other applicable form) stating that interest paid on the
senior notes is not subject to withholding tax because it is
effectively connected with your conduct of a trade or business
in the United States (as discussed below under U.S.
Federal Income Tax).
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The 30% U.S. federal withholding tax generally will not apply to
any payment of principal or gain that you realize on the sale,
exchange, retirement or other disposition of a senior note.
U.S.
Federal Income Tax
If you are engaged in a trade or business in the United States
and interest on the senior notes is effectively connected with
the conduct of that trade or business (and, if required by an
applicable income tax treaty, is attributable to a U.S.
permanent establishment), then you will be subject to U.S.
federal income tax on that interest on a net income basis
(although you will be exempt from the 30% U.S. federal
withholding tax, provided the certification requirements
discussed above in U.S. Federal Withholding Tax are
satisfied) in the same manner as if you were a United States
person as defined under the Code. In addition, if you are a
foreign corporation, you may be subject to a branch profits tax
equal to 30% (or lower applicable income tax treaty rate) of
such interest, subject to adjustments.
Any gain realized on the disposition of a senior note generally
will not be subject to U.S. federal income tax unless:
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the gain is effectively connected with your conduct of a trade
or business in the United States (and, if required by an
applicable income tax treaty, is attributable to a U.S.
permanent establishment); or
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you are an individual who is present in the United States for
183 days or more in the taxable year of that disposition,
and certain other conditions are met.
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S-25
U.S.
Federal Estate Tax
Your estate will not be subject to U.S. federal estate tax on
the senior notes beneficially owned by you at the time of your
death, provided that any payment to you on the senior notes
would be eligible for exemption from the 30% U.S. federal
withholding tax under the portfolio interest rule
described above under U.S. Federal Withholding Tax
without regard to the statement requirement described in the
fifth bullet point of that section.
Information
Reporting and Backup Withholding
Generally, we must report to the IRS and to you the amount of
interest paid to you and the amount of tax, if any, withheld
with respect to those payments. Copies of the information
returns reporting such interest payments and any withholding may
also be made available to the tax authorities in the country in
which you reside under the provisions of an applicable income
tax treaty.
In general, you will not be subject to backup withholding with
respect to payments on the senior notes that we make to you
provided that we do not have actual knowledge or reason to know
that you are a United States person as defined under the Code,
and we have received from you the statement described above in
the fifth bullet point under U.S. Federal Withholding
Tax.
Information reporting and, depending on the circumstances,
backup withholding will apply to the proceeds of a sale of the
senior notes within the United States or conducted through
certain
U.S.-related
financial intermediaries, unless you certify under penalties of
perjury that you are not a United States person as defined under
the Code (and the payor does not have actual knowledge or reason
to know that you are a United States person as defined under the
Code) or you otherwise establish an exemption.
Any amounts withheld under the backup withholding rules will be
allowed as a refund or a credit against your U.S. federal
income tax liability provided the required information is
furnished to the IRS.
S-26
CERTAIN
ERISA CONSIDERATIONS
The following is a summary of certain considerations associated
with the purchase of the senior notes by employee benefit plans
that are subject to Title I of the U.S. Employee
Retirement Income Security Act of 1974, as amended
(ERISA), plans, individual retirement accounts and
other arrangements that are subject to Section 4975 of the
Code or provisions under any federal, state, local,
non-U.S. or
other laws or regulations that are similar to such provisions of
the Code or ERISA (collectively, Similar Laws), and
entities whose underlying assets are considered to include
plan assets of such plans, accounts and arrangements
(each, a Plan).
General
Fiduciary Matters
ERISA and the Code impose certain duties on persons who are
fiduciaries of a Plan subject to Title I of ERISA or
Section 4975 of the Code (an ERISA Plan) and
prohibit certain transactions involving the assets of an ERISA
Plan and its fiduciaries or other interested parties. Under
ERISA and the Code, any person who exercises any discretionary
authority or control over the administration of such an ERISA
Plan or the management or disposition of the assets of such an
ERISA Plan, or who renders investment advice for a fee or other
compensation to such an ERISA Plan, is generally considered to
be a fiduciary of the ERISA Plan.
In considering an investment in the senior notes of a portion of
the assets of any Plan, a fiduciary should determine whether the
investment is in accordance with the documents and instruments
governing the Plan and the applicable provisions of ERISA, the
Code or any Similar Law relating to a fiduciarys duties to
the Plan including, without limitation, the prudence,
diversification, delegation of control and prohibited
transaction provisions of ERISA, the Code and any other
applicable Similar Laws.
Prohibited
Transaction Issues
Section 406 of ERISA and Section 4975 of the Code
prohibit ERISA Plans from engaging in specified transactions
involving plan assets with persons or entities who are
parties in interest, within the meaning of ERISA, or
disqualified persons, within the meaning of
Section 4975 of the Code, unless an exemption is available.
A party in interest or disqualified person who engaged in a
non-exempt prohibited transaction may be subject to excise taxes
and other penalties and liabilities under ERISA and the Code. In
addition, the fiduciary of the ERISA Plan that engaged in such a
non-exempt prohibited transaction may be subject to penalties
and liabilities under ERISA and the Code. The acquisition
and/or
holding of senior notes by an ERISA Plan with respect to which
the issuer or its affiliates is considered a party in interest
or a disqualified person may constitute or result in a direct or
indirect prohibited transaction under Section 406 of ERISA
and/or
Section 4975 of the Code, unless the investment is acquired
and is held in accordance with an applicable statutory or
administrative exemption. In this regard, the
U.S. Department of Labor has issued prohibited transaction
class exemptions, or PTCEs, that may apply to the
acquisition and holding of the senior notes. These class
exemptions include, without limitation,
PTCE 84-14
respecting transactions determined by independent qualified
professional asset managers,
PTCE 90-1
respecting insurance company pooled separate accounts,
PTCE 91-38
respecting bank collective investment funds,
PTCE 95-60
respecting life insurance company general accounts and
PTCE 96-23
respecting transactions determined by in-house asset managers.
In addition, Section 408(b)(17) of ERISA and
Section 4975(d)(20) of the Code provide relief from the
prohibited transaction provisions of ERISA and Section 4975
of the Code for certain transactions, provided that neither the
issuer of the securities nor any of its affiliates (directly or
indirectly) have or exercise any discretionary authority or
control or render any investment advice with respect to the
assets of any ERISA Plan involved in the transaction and
provided further that the ERISA Plan pays no more than adequate
consideration in connection with the transaction. There can be
no assurance that all of the conditions of any such exemptions
will be satisfied.
S-27
Because of the foregoing, the senior notes should not be
purchased or held by any person investing plan
assets of any Plan, unless such purchase and holding will
not constitute a non-exempt prohibited transaction under ERISA
and the Code or similar violation of any applicable Similar Laws.
Representation
By acceptance of a senior note, each purchaser and subsequent
transferee of a senior note will be deemed to have represented
and warranted that either (i) no portion of the assets used
by such purchaser or transferee to acquire and hold the senior
notes constitutes assets of any Plan or (ii) the purchase
and holding of the senior notes by such purchaser or transferee
will not constitute a non-exempt prohibited transaction under
Section 406 of ERISA or Section 4975 of the Code or
similar violation under any applicable Similar Laws.
The foregoing discussion is general in nature and is not
intended to be all inclusive. Due to the complexity of these
rules and the penalties that may be imposed upon persons
involved in non-exempt prohibited transactions, it is
particularly important that fiduciaries, or other persons
considering purchasing the senior notes on behalf of, or with
the assets of, any Plan, consult with their counsel regarding
the potential applicability of ERISA, Section 4975 of the
Code and any Similar Laws to such investment and whether an
exemption would be applicable to the purchase and holding of the
senior notes. Purchasers of the senior notes have exclusive
responsibility for ensuring that their purchase and holding of
the senior notes do not violate the fiduciary or prohibited
transaction rules of ERISA, the Code or any Similar Laws. The
sale of any senior notes to a Plan is in no respect a
representation by the issuer or any of its affiliates or
representatives that such an investment meets all relevant legal
requirements with respect to investments by any such Plan
generally or any particular Plan, or that such investment is
appropriate for such Plans generally or any particular Plan.
S-28
UNDERWRITING
Merrill Lynch, Pierce, Fenner & Smith Incorporated,
Barclays Capital, Inc. and Deutsche Bank Securities Inc. are
acting as representatives of the underwriters named below.
Subject to the terms and conditions set forth in an underwriting
agreement among us and the underwriters, we have agreed to sell
to the underwriters, and each of the underwriters has agreed,
severally and not jointly, to purchase from us, the principal
amount of senior notes set forth opposite its name below.
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Principal
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Underwriter
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Amount of Senior Notes
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Merrill Lynch, Pierce, Fenner & Smith
Incorporated
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$
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90,000,000
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Barclays Capital Inc.
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90,000,000
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Deutsche Bank Securities Inc.
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90,000,000
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Scotia Capital (USA) Inc.
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40,000,000
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SunTrust Robinson Humphrey, Inc.
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40,000,000
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Wells Fargo Securities, LLC
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40,000,000
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Mitsubishi UFJ Securities (USA), Inc.
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20,000,000
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Credit Agricole Securities (USA) Inc.
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20,000,000
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ANZ Securities, Inc.
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15,000,000
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BNY Mellon Capital Markets, LLC
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15,000,000
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Comerica Securities Inc.
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10,000,000
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HSBC Securities (USA) Inc.
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10,000,000
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SMBC Nikko Capital Markets Limited
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10,000,000
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U.S. Bancorp Investments, Inc.
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10,000,000
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Total
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$
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500,000,000
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Subject to the terms and conditions set forth in the
underwriting agreement, the underwriters have agreed, severally
and not jointly, to purchase all of the senior notes sold under
the underwriting agreement if any of these senior notes are
purchased. If an underwriter defaults, the underwriting
agreement provides that the purchase commitments of the
nondefaulting underwriters may be increased or the underwriting
agreement may be terminated.
We and certain of our subsidiaries have jointly and severally
agreed to indemnify the underwriters and their controlling
persons against certain liabilities in connection with this
offering, including liabilities under the Securities Act of
1933, as amended, or to contribute to payments the underwriters
may be required to make in respect of those liabilities.
The underwriters are offering the senior notes, subject to prior
sale, when, as and if issued to and accepted by them, subject to
approval of legal matters by their counsel, including the
validity of the senior notes, and other conditions contained in
the underwriting agreement, such as the receipt by the
underwriters of officers certificates and legal opinions.
The underwriters reserve the right to withdraw, cancel or modify
offers to the public and to reject orders in whole or in part.
Commissions
and Discounts
The representatives have advised us that the underwriters
propose initially to offer the senior notes to the public at the
public offering price set forth on the cover page of this
prospectus supplement and may offer to certain dealers at such
price less a concession not in excess of 0.35% of the principal
amount of the senior
S-29
notes. The underwriters may allow, and such dealers may reallow,
a concession not in excess of 0.25% of the principal amount of
the senior notes. After the initial offering, the public
offering price, concession, reallowance or any other term of the
offering may be changed.
The expenses of the offering, not including the underwriting
discount, are estimated at $2 million and are payable by us.
New Issue
of Senior Notes
The senior notes are a new issue of securities with no
established trading market. We do not intend to apply for
listing of the notes on any national securities exchange or for
inclusion of the notes on any automated dealer quotation system.
We have been advised by the underwriters that they presently
intend to make a market in the notes after completion of the
offering. However, they are under no obligation to do so and may
discontinue any market-making activities at any time without any
notice. We cannot assure the liquidity of the trading market for
the senior notes or that an active public market for the senior
notes will develop. If an active public trading market for the
senior notes does not develop, the market price and liquidity of
the senior notes may be adversely affected. If the senior notes
are traded, they may trade at a discount from their initial
offering price, depending on prevailing interest rates, the
market for similar securities, our operating performance and
financial condition, general economic conditions and other
factors.
Short
Positions
In connection with the offering, the underwriters may purchase
and sell the senior notes in the open market. These transactions
may include short sales and purchases on the open market to
cover positions created by short sales. Short sales involve the
sale by the underwriters of a greater principal amount of senior
notes than they are required to purchase in the offering. The
underwriters must close out any short position by purchasing
senior notes in the open market. A short position is more likely
to be created if the underwriters are concerned that there may
be downward pressure on the price of the senior notes in the
open market after pricing that could adversely affect investors
who purchase in the offering.
Similar to other purchase transactions, the underwriters
purchases to cover the syndicate short sales may have the effect
of raising or maintaining the market price of the senior notes
or preventing or retarding a decline in the market price of the
senior notes. As a result, the price of the notes may be higher
than the price that might otherwise exist in the open market.
Neither we nor any of the underwriters make any representation
or prediction as to the direction or magnitude of any effect
that the transactions described above may have on the price of
the senior notes. In addition, neither we nor any of the
underwriters make any representation that the representatives
will engage in these transactions or that these transactions,
once commenced, will not be discontinued without notice.
Other
Relationships
Some of the underwriters and their affiliates have engaged in,
and may in the future engage in, investment banking and other
commercial dealings in the ordinary course of business with us
or our affiliates, for which they receive customary fees and
expense reimbursement. Bank of America, N.A., an affiliate of
Merrill Lynch, Pierce, Fenner & Smith Incorporated, is
administrative agent and a lender, and certain of the
underwriters or their respective affiliates are lenders, under
our existing revolving credit facility. Certain of the
underwriters or their respective affiliates hold a portion of
the senior subordinated notes being redeemed with the net
proceeds from this offering and, as a result, they will receive
a portion of the net proceeds from this offering.
S-30
In addition, in the ordinary course of their business
activities, the underwriters and their affiliates may make or
hold a broad array of investments and actively trade debt and
equity securities (or related derivative securities) and
financial instruments (including bank loans) for their own
account and for the accounts of their customers. Such
investments and securities activities may involve securities
and/or
instruments of ours or our affiliates. Certain of the
underwriters or their affiliates that have a lending
relationship with us routinely hedge their credit exposure to us
consistent with their customary risk management policies.
Typically, such underwriters and their affiliates would hedge
such exposure by entering into transactions which consist of
either the purchase of credit default swaps or the creation of
short positions in our securities, including potentially the
notes offered hereby. Any such short positions could adversely
affect future trading prices of the notes offered hereby. The
underwriters and their affiliates may also make investment
recommendations
and/or
publish or express independent research views in respect of such
securities or financial instruments and may hold, or recommend
to clients that they acquire, long
and/or short
positions in such securities and instruments.
Notice to
Prospective Investors in the EEA
In relation to each Member State of the European Economic Area
which has implemented the Prospectus Directive (each, a
Relevant Member State), each Purchaser has
represented and agreed that with effect from and including the
date on which the Prospectus Directive is implemented in that
Relevant Member State (the Relevant Implementation
Date) it has not made and will not make an offer of Notes
which are the subject of the offering contemplated by the
Preliminary Offering Circular to the public in that Relevant
Member State other than:
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(a)
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to any legal entity which is a qualified investor as defined in
the Prospectus Directive;
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(b)
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to fewer than 100 or, if the Relevant Member State has
implemented the relevant provision of the 2010 PD Amending
Directive, 150, natural or legal persons (other than qualified
investors as defined in the Prospectus Directive), as permitted
under the Prospectus Directive; or
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(c)
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in any other circumstances falling within Article 3(2) of
the Prospectus Directive,
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provided that no such offer of Notes shall require the Company
or any Purchaser to publish a prospectus pursuant to
Article 3 of the Prospectus Directive.
For the purposes of this provision, the expression an
offer of Notes to the public in relation to any Notes in
any Relevant Member State means the communication in any form
and by any means of sufficient information on the terms of the
offer and the Notes to be offered so as to enable an investor to
decide to purchase or subscribe for the Notes, as the same may
be varied in that Member State by any measure implementing the
Prospectus Directive in that Member State, the expression
Prospectus Directive means Directive 2003/71/EC (and
amendments thereto, including the 2010 PD Amending Directive, to
the extent implemented in the Relevant Member State), and
includes any relevant implementing measure in the Relevant
Member State and the expression 2010 PD Amending
Directive means Directive 2010/73/EU.
Each person in a Relevant Member State who receives any
communication in respect of, or who acquires any notes under,
the offer of notes contemplated by this prospectus supplement
will be deemed to have represented, warranted and agreed to and
with us and each underwriter that:
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(A)
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it is a qualified investor within the meaning of the
law in that Relevant Member State implementing
Article 2(1)(e) of the Prospectus Directive; and
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(B)
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in the case of any notes acquired by it as a financial
intermediary, as that term is used in Article 3(2) of the
Prospectus Directive, (i) the notes acquired by it in the
offering have not been acquired on behalf of, nor have they been
acquired with a view to their offer or resale to, persons
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S-31
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in any Relevant Member State other than qualified
investors (as defined in the Prospectus Directive), or in
circumstances in which the prior consent of the representatives
has been given to the offer or resale; or (ii) where notes
have been acquired by it on behalf of persons in any Relevant
Member State other than qualified investors, the offer of those
notes to it is not treated under the Prospectus Directive as
having been made to such persons.
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In addition, in the United Kingdom, this document is being
distributed only to, and is directed only at, and any offer
subsequently made may only be directed at persons who are
qualified investors (as defined in the Prospectus
Directive) (i) who have professional experience in matters
relating to investments falling within Article 19
(5) of the Financial Services and Markets Act 2000
(Financial Promotion) Order 2005, as amended (the
Order)
and/or
(ii) who are high net worth companies (or persons to whom
it may otherwise be lawfully communicated) falling within
Article 49(2)(a) to (d) of the Order (all such persons
together being referred to as relevant persons).
This document must not be acted on or relied on in the United
Kingdom by persons who are not relevant persons. In the United
Kingdom, any investment or investment activity to which this
document relates is only available to, and will be engaged in
with, relevant persons.
S-32
LEGAL
MATTERS
The validity of the issuance of the senior notes offered by this
prospectus supplement will be passed upon for us by Simpson
Thacher & Bartlett LLP, New York, New York. Certain
legal matters will be passed upon for the underwriters by
Latham & Watkins LLP, New York, New York.
EXPERTS
The consolidated financial statements of
L-3 Holdings
and L-3
Communications and managements assessment of the
effectiveness of internal control over financial reporting
(which is included in Managements Report on Internal
Control over Financial Reporting) incorporated in this
prospectus supplement and the accompanying prospectus by
reference to the Annual Report on
Form 10-K
for the year ended December 31, 2010 have been so
incorporated in reliance on the report of PricewaterhouseCoopers
LLP, an independent registered public accounting firm, given on
the authority of said firm as experts in auditing and accounting.
S-33
PROSPECTUS
L-3 Communications
Corporation
Senior Unsecured Notes
Subsidiary Guarantors
Guarantees of Senior Unsecured Notes
From time to time, we may offer the senior unsecured notes and
the related guarantees described in this prospectus.
This prospectus provides a general description of the senior
unsecured notes and the related guarantees of the senior
unsecured notes. We will provide the specific terms of the
securities in one or more supplements to this prospectus. This
prospectus may not be used to offer and sell the securities
unless accompanied by a prospectus supplement. A prospectus
supplement may add, update or change information contained in
this prospectus. You should read this prospectus and the
applicable prospectus supplement, as well as the documents
incorporated by reference in this prospectus and in any
accompanying prospectus supplement, carefully before you invest.
Investing in these securities involves risks. See the
information included and incorporated by reference in this
prospectus and the accompanying prospectus supplement for a
discussion of the factors you should carefully consider before
deciding to purchase these securities, including the information
under Risk Factors in the applicable prospectus
supplement and in our most recent annual report on
Form 10-K
(as it may be updated in our most recent quarterly report on
Form 10-Q)
filed with the Securities and Exchange Commission.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or passed upon the accuracy or adequacy of this
prospectus or the accompanying prospectus supplement. Any
representation to the contrary is a criminal offense.
The date of this prospectus is March 29, 2010
TABLE OF
CONTENTS
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ii
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ii
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ii
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iv
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1
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1
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1
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2
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3
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17
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17
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17
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You should rely only on the information contained or
incorporated by reference in this prospectus and in any
accompanying prospectus supplement or in any related free
writing prospectus. We have not authorized anyone to provide you
with different information. This document may only be used where
it is legal to sell these securities. You should only assume
that the information contained or incorporated by reference in
this prospectus or in any accompanying prospectus supplement or
any related free writing prospectus is accurate as of the
respective date on the front of those documents. Our business,
financial condition, results of operations and prospects may
have changed since that date. We are not making an offer of
these securities in any jurisdiction where the offer is not
permitted.
ABOUT
THIS PROSPECTUS
This prospectus is part of an automatic shelf registration
statement that we filed with the Securities and Exchange
Commission, or the SEC, as a well-known seasoned
issuer as defined in Rule 405 under the Securities
Act of 1933, as amended, or the Securities Act. By using an
automatic shelf registration statement, we may, at any time and
from time to time, sell senior unsecured notes, including the
related guarantees, under this prospectus in one or more
offerings in an unlimited amount. As allowed by the SEC rules,
this prospectus does not contain all of the information included
in the registration statement. For further information, we refer
to the registration statement, including its exhibits.
Statements contained in this prospectus about the provisions or
contents of any agreement or other document are not necessarily
complete and the applicable prospectus supplement may add,
update or change the information contained in this prospectus.
If the SECs rules and regulations require that an
agreement or document be filed as an exhibit to the registration
statement, please see that agreement or document for a complete
description of these matters.
This prospectus provides you with a general description of the
securities we may offer. Each time we use this prospectus to
offer securities, we will provide you with a prospectus
supplement that will describe the specific amounts, prices and
terms of the securities being offered. The prospectus supplement
may also add, update or change information contained in this
prospectus. Therefore, if there is any inconsistency between the
information in this prospectus and the prospectus supplement,
you should rely on the information in the prospectus supplement.
To understand the terms of our securities, you should carefully
read this document and the applicable prospectus supplement.
Together, they provide the specific terms of the securities we
are offering. You should also read the documents we have
referred you to under Where You Can Find More
Information below for information on our company, the
risks we face and our financial statements. The registration
statement and exhibits can be read at the SECs website or
at the SEC as described under Where You Can Find More
Information.
As used in this prospectus, (1) L-3 Holdings
refers to L-3 Communications Holdings, Inc., the direct parent
company of L-3 Communications Corporation, (2) L-3
Communications refers to L-3 Communications Corporation, a
wholly-owned operating subsidiary of L-3 Holdings and the issuer
of the senior unsecured notes, and
(3) Guarantors refers to our subsidiaries that
guarantee the obligations of L-3 Communications under the senior
unsecured notes. The obligations of the Guarantors are referred
to herein as the guarantees. Except where the
context provides otherwise, L-3, the
Company, we, us and
our refer to L-3 Communications and its subsidiaries.
WHERE YOU
CAN FIND MORE INFORMATION
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, or the Exchange Act, L-3 Holdings and L-3
Communications file annual, quarterly and current reports, proxy
statements and other information with the SEC. Our SEC filings
are available to the public over the Internet at the SECs
website at www.sec.gov or at our website at www.L-3com.com (as
noted below, the information contained in, or that can be
accessed through, our website is not a part of this prospectus
or part of any prospectus supplement). You may also read and
copy any document we file with the SEC at its public reference
room at 100 F Street, N.E., Washington, D.C.
20549. In addition, you can inspect reports and other
information L-3 Holdings files at the office of the New York
Stock Exchange, Inc., 20 Broad Street, New York, New York
10005.
You may also obtain copies of this information at prescribed
rates by writing to the Public Reference Section of the SEC at
100 F Street, N.E., Washington, D.C. 20549.
Please call the SEC at
1-800-SEC-0330
for further information on the operation of the public reference
room.
Our SEC filings are also available at the office of the New York
Stock Exchange. For further information on obtaining copies of
our public filings at the New York Stock Exchange, you should
call
(212) 656-5060.
DOCUMENTS
INCORPORATED BY REFERENCE
The SEC allows us to incorporate by reference into
this prospectus information that we file with the SEC. This
means that we can disclose important information to you by
referring you to those documents. The information incorporated
by reference is an important part of this prospectus, and
information that we file later with the SEC will automatically
update and supersede any inconsistent information in this
prospectus and in our other filings with the SEC.
ii
We incorporate by reference the following documents that L-3
Holdings and L-3 Communications previously filed with the SEC
(other than information in such documents that is deemed not to
be filed), all of which are filed under SEC File Nos.
001-14141 or
333-46983:
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Our Annual Report on
Form 10-K
for the fiscal year ended December 31, 2009; and
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Our Current Report on
Form 8-K
filed with the SEC on February 25, 2010.
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These documents contain important information about our business
and our financial performance.
We also incorporate by reference any future filings L-3 Holdings
and L-3 Communications make with the SEC pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, on
or after the date of the filing of this registration statement
and prior to the termination of the offering, all of which will
be filed under SEC File Nos.
001-14141 or
333-46983.
The future filings with the SEC made by L-3 Holdings and L-3
Communications will automatically update and supersede any
inconsistent information in this prospectus.
You may obtain a free copy of these filings from us by
telephoning or writing to us at the following address and
telephone number:
L-3
Communications Corporation
600 Third Avenue
New York, NY 10016
Attention: Secretary
Telephone:
(212) 697-1111
iii
FORWARD-LOOKING
AND CAUTIONARY STATEMENTS
Some of the information included or incorporated by reference in
this prospectus and the applicable prospectus supplement
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 and Section 21E
of the Exchange Act.
Statements that are predictive in nature, that depend upon or
refer to 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 total sales growth, sales growth from business
acquisitions, organic sales growth, consolidated operating
margins, total segment operating margins, interest expense,
earnings, cash flow, research and development costs, working
capital, capital expenditures and other projections, they are
subject to several risks and uncertainties, and therefore, it is
possible that these statements may not be achieved. Such
statements will also be influenced by factors which include,
among other things:
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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;
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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;
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the extensive legal and regulatory requirements surrounding our
contracts with the U.S. or foreign governments and the
results of any investigation of our contracts undertaken by the
U.S. or foreign governments;
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our ability to retain our existing business and related
contracts (revenue arrangements);
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our ability to successfully compete for and win new business and
related contracts (revenue arrangements) and to win
re-competitions of our existing contracts;
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our ability to identify and acquire additional businesses in the
future with terms, including the purchase price, that are
attractive to L-3 and to integrate acquired business operations;
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our ability to maintain and improve our consolidated operating
margin and total segment operating margin in future periods;
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our ability to obtain future government contracts (revenue
arrangements) on a timely basis;
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the availability of government funding or cost-cutting
initiatives and changes in customer requirements for our
products and services;
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our significant amount of debt and the restrictions contained in
our debt agreements;
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our ability to continue to retain and train our existing
employees and to recruit and hire new qualified and skilled
employees, as well as our ability to retain and hire employees
with U.S. Government security clearances that are a prerequisite
to compete for and to perform work on classified contracts for
the U.S. Government;
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actual future interest rates, volatility and other assumptions
used in the determination of pension, benefits and equity-based
compensation, as well as the market performance of benefit plan
assets;
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our collective bargaining agreements, our ability to
successfully negotiate contracts with labor unions and our
ability to favorably resolve labor disputes should they arise;
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the business, economic and political conditions in the markets
in which we operate, including those for the commercial
aviation, shipbuilding and communications markets;
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global economic uncertainty;
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the DoDs contractor support services in-sourcing
initiative;
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events beyond our control such as acts of terrorism;
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our ability to perform contracts (revenue arrangements) on
schedule;
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our international operations, including sales to foreign
customers;
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our extensive use of fixed-price type contracts as compared to
cost-plus type and
time-and-material
type contracts;
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the rapid change of technology and high level of competition in
the defense industry and the commercial industries in which our
businesses participate;
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our introduction of new products into commercial markets or our
investments in civil and commercial products or companies;
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the outcome of current or future litigation matters, including
those that are expected to be resolved by jury trials, which are
inherently risky and for which outcomes are difficult to predict;
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results of audits by U.S. Government agencies, including
the Defense Contract Audit Agency, of our sell prices, costs and
performance on contracts (revenue arrangements), and our
accounting and general business practices;
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anticipated cost savings from business acquisitions not fully
realized or realized within the expected time frame;
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outcome of matters relating to the Foreign Corrupt Practices Act
(FCPA);
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ultimate resolution of contingent matters, claims and
investigations relating to acquired businesses, and the impact
on the final purchase price allocations;
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significant increase in competitive pressure among companies in
our industry; and
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the fair values of our assets, including identifiable intangible
assets and the estimated fair value of the goodwill balances for
our reporting units, which can be impaired or reduced by other
factors, some of which are discussed above.
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In addition, for a discussion of other risks and uncertainties
that could impair our results of operations or financial
condition, see Part I
Item 1A Risk Factors (as it may be
updated in our most recent quarterly report on
Form 10-Q)
and Note 19 to our audited consolidated financial
statements, in each case included in our Annual Report on
Form 10-K
for the year ended December 31, 2009, and the risk factor
section contained in the applicable prospectus supplement.
Readers of this document 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 uncertainties of estimates,
forecasts and projections and may be better or worse than
projected and such differences could be material. 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.
v
THE
COMPANY
L-3 is a prime system contractor in Command, Control,
Communications, Intelligence, Surveillance and Reconnaissance
(C3ISR)
systems, government services, and aircraft modernization and
maintenance. L-3 is also a leading provider of high technology
products, subsystems and systems. Our customers include the
United States (U.S.) Department of Defense (DoD) and its prime
contractors, U.S. Government intelligence agencies, the
U.S. Department of Homeland Security (DHS),
U.S. Department of State (DoS), U.S. Department of
Justice (DoJ), allied foreign governments, domestic and
international commercial customers and select other
U.S. federal, state and local government agencies.
We are incorporated in Delaware, and the address of our
principal executive office is 600 Third Avenue, New York, New
York 10016. Our telephone number is
(212) 697-1111.
Our internet address is www.L-3com.com. However, our Web site
and information posted on it or connected to it do not
constitute a part of this prospectus or any prospectus
supplement.
RISK
FACTORS
Our business is subject to uncertainties and risks and an
investment in our securities involves a high degree of risk. You
should carefully consider and evaluate all of the information
included and incorporated by reference in this prospectus and
any accompanying prospectus supplement, including the risk
factors included in the accompanying prospectus supplement and
incorporated by reference, as well as any risk factors we may
describe in any subsequent periodic reports or information we
file with the SEC. It is possible that our business, financial
condition, liquidity or results of operations could be
materially and adversely affected by any of these risks. In that
case, the trading price of our securities could decline and you
might lose all or part of the value of your investment.
USE OF
PROCEEDS
Unless we otherwise state in the applicable prospectus
supplement, we intend to use the net proceeds from the sale of
the securities for general corporate purposes. General corporate
purposes may include repayment, redemption or retirement of
debt, payment of dividends, additions to working capital,
capital expenditures, investments in our subsidiaries and
possible acquisitions. The net proceeds may be temporarily
invested or applied to repay short-term or revolving debt prior
to use.
1
Ratio of
Earnings to Fixed Charges
The ratio of earnings to fixed charges presented below should be
read together with our consolidated financial statements and
related notes and Managements Discussion and
Analysis of Financial Condition and Results of Operations
contained in our Annual Report on
Form 10-K
for the fiscal year ended December 31, 2009 which is
incorporated herein by reference. In calculating the ratio of
earnings to fixed charges, earnings consist of income from
continuing operations before income taxes less net income
attributable to non-controlling interests plus fixed charges.
Fixed charges consist of interest on indebtedness plus the
amortization of bond discounts and deferred debt issuance costs
and that portion of lease rental expense representative of the
interest element.
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Year Ended December 31,
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2009
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2008
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2007
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2006
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2005
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(In millions, except ratio of earnings to fixed charges)
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Earnings:
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Income from continuing operations before income taxes
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$
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1,386
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$
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1,423
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$
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1,165
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$
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818
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$
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791
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Less: Net income attributable to noncontrolling interests
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10
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11
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9
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10
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10
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Income before income taxes after noncontrolling interests
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$
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1,376
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$
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1,412
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$
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1,156
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$
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808
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$
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781
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Add:
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Interest expense
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268
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279
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304
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303
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206
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Amortization of debt expense
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11
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11
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10
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10
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5
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Interest component of rent expense
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59
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58
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56
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53
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41
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Earnings
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$
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1,714
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$
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1,760
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$
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1,526
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$
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1,174
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$
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1,033
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Fixed charges:
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Interest expense
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$
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268
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$
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279
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$
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304
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$
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303
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$
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206
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Amortization of debt expense
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11
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11
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10
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10
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5
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Interest component of rent expense
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59
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58
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56
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53
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41
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Fixed charges
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$
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338
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$
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348
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$
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370
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$
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366
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$
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252
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Ratio of earnings to fixed charges
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5.1
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x
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5.1
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x
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4.1
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x
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3.2
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x
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4.1x
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2
DESCRIPTION
OF SENIOR UNSECURED NOTES
The following is a summary of the general terms of the senior
unsecured notes and the related subsidiary guarantees. We will
file a prospectus supplement that may contain additional terms
when we issue senior unsecured notes. The terms presented here,
together with the terms in a related prospectus supplement, will
be a description of the material terms of the senior unsecured
notes. You should also read the indenture under which the senior
unsecured notes are to be issued. We have filed a form of
indenture governing the senior unsecured notes with the SEC as
an exhibit to the registration statement of which this
prospectus is a part. All capitalized terms have the meanings
specified in the indenture.
We may issue, from time to time, debt securities, in one or more
series, that will consist of our senior unsecured notes. The
senior unsecured notes will be non-convertible and
investment grade securities, within the meaning of
General Instruction I.B. of
Form S-3.
A non-convertible security is an investment grade
security for such purposes if, at the time of sale, at
least one nationally recognized statistical rating organization
(as that term is used in
Rule 15c3-
1(c)(2)(vi)(F) under the Exchange Act) has rated the securities
in one of its generic rating categories which signifies
investment grade; typically, the four highest rating categories
(within which there may be
sub-categories
or gradations indicating relative standing) signify investment
grade. Agency ratings are not a recommendation to buy, sell or
hold any security, and recommendations may be revised or
withdrawn at any time by the rating agency.
The senior unsecured notes we offer will be issued under an
indenture among L-3 Communications, the subsidiary guarantors
from time to time party thereto and The Bank of New York Mellon
Trust Company, N.A., as trustee. The following is a summary of
the material provisions of the indenture filed as an exhibit to
the registration statement of which this prospectus is a part.
For each series of senior unsecured notes, the applicable
prospectus supplement for the series may change and supplement
the summary below.
General
Terms of the Indenture
The indenture does not limit the amount of senior unsecured
notes that we may issue and permits us to issue senior unsecured
notes in one or more series. All senior unsecured notes of one
series need not be issued at the same time, and, unless
otherwise provided, any series may be reopened, without the
consent of the holders of the senior unsecured notes of that
series, for issuances of additional senior unsecured notes of
that series. It provides that we may issue senior unsecured
notes up to the principal amount that we may authorize and that
such senior unsecured notes may be in any currency or currency
unit that we may designate. Except for the limitations on liens,
sales and leaseback transactions, consolidation, merger and sale
of all or substantially all of our assets contained in the
indenture and a covenant relating to future guarantors, the
terms of the indenture do not contain any covenants or other
provisions designed to give holders of any senior unsecured
notes protection against changes in our operations, financial
condition or transactions involving us.
We may issue the senior unsecured notes issued under the
indenture as discount securities, which means they
may be sold at a discount below their stated principal amount.
These senior unsecured notes, as well as other senior unsecured
notes that are not issued at a discount, may be issued with
original issue discount, or OID, for
U.S. federal income tax purposes because of interest
payment and other characteristics or terms of the senior
unsecured notes. Certain U.S. federal income tax
considerations applicable to senior unsecured notes issued with
OID will be described in more detail in the applicable
prospectus supplement.
The applicable prospectus supplement for a series of senior
unsecured notes that we issue will describe, among other things,
the following terms of the offered senior unsecured notes:
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The title of the series of senior unsecured notes;
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The price or prices (expressed as a percentage of the principal
amount) at which we will sell the senior unsecured notes;
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Any limit on the aggregate principal amount of the series of
senior unsecured notes;
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The maturity date(s);
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The rate or rates (which may be fixed or variable) per annum or
the method used to determine the rate or rates (including any
currency exchange rate, commodity, commodity index, stock
exchange index or financial index) at which the senior unsecured
notes will bear interest, the date or dates from which interest
will accrue or the method for determining dates from which
interest will accrue, the date or dates on which interest will
commence and be payable and any regular record date for the
interest payable on any interest payment date;
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The manner in which the amounts of payment of principal of,
premium, if any, or interest, if any, on the series of senior
unsecured notes will be determined (if such amounts may be
determined by reference to an index based on a currency or
currencies or by reference to a currency exchange rate,
commodity, commodity index, stock exchange index or financial
index);
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The place or places where principal of, premium, if any, and
interest, if any, on the senior unsecured notes will be payable
and the method of such payment, if by wire transfer, mail or
other means;
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Provisions related to redemption or early repayment of the
senior unsecured notes at our option;
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Our obligation, if any, to redeem or purchase any series of
senior unsecured notes pursuant to any sinking fund or analogous
provisions or at the option of a holder thereof and the period
or periods within which, the price or prices at which and the
terms and conditions upon which such senior unsecured notes
shall be redeemed or purchased, in whole or in part, pursuant to
such obligation;
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The authorized denominations;
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The form of the senior unsecured notes and whether the senior
unsecured notes will be issued in bearer or fully registered
form (and if in fully registered form, whether the senior
unsecured notes will be issuable, in whole or in part, as global
senior unsecured notes);
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Any depositaries, interest rate calculation agents, exchange
rate calculation agents or other agents with respect to the
senior unsecured notes;
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Any changes in the trustee for such senior unsecured notes;
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The portion of principal amount of the senior unsecured notes
payable upon declaration of acceleration of the maturity date,
if other than the principal amount;
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Any changes in or additions or deletions to the covenants
applicable to the particular senior unsecured notes being issued;
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Additions or deletions to or changes in the Events of Default
with respect to the securities and any change in the right of
the trustee or the holders to declare the principal, premium, if
any, and interest, if any, with respect to such securities to be
due and payable;
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The currency of denomination of the senior unsecured notes;
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The designation of the currency, currencies or currency units in
which the purchase price for, the principal of and any premium
and any interest on, such securities will be payable;
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If payments of principal of, premium, if any, or interest, if
any, on the senior unsecured notes will be made in one or more
currencies or currency units other than that or those in which
the senior unsecured notes are denominated, the manner in which
the exchange rate with respect to these payments will be
determined;
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The securities exchange(s) on which the senior unsecured notes
will be listed, if any;
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Whether any underwriter(s) will act as market maker(s) for the
senior unsecured notes;
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The extent to which a secondary market for the senior unsecured
notes is expected to develop;
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Additions or deletions to or changes in the provisions relating
to covenant defeasance and legal defeasance;
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Additions or deletions to or changes in the provisions relating
to satisfaction and discharge of the indenture;
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Additions or deletions to or changes in the provisions relating
to the modification of the indenture both with and without the
consent of holders of senior unsecured notes issued under the
indenture; and
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Any other terms of the senior unsecured notes, which may modify,
supplement or delete any provision of the indenture as it
applies to that series.
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The applicable prospectus supplement may discuss certain
U.S. federal income tax considerations for holders of any
senior unsecured notes, if any, and the securities exchange or
quotation system on which any senior unsecured notes are to be
listed or quoted, if any.
We expect most senior unsecured notes to be issued in fully
registered form without coupons and in denominations of $2,000
and any integral multiples of $1,000 in excess thereof.
Guarantees
Unless otherwise specified in the applicable prospectus
supplement, the Companys payment obligations under the
senior unsecured notes will be jointly and severally guaranteed
(the Subsidiary Guarantees) by all of the
Companys current and future Domestic Subsidiaries that
guarantee other Indebtedness of the Company. The obligations of
each Guarantor under its Subsidiary Guarantee will be limited as
necessary to prevent that Subsidiary Guarantee from constituting
a fraudulent conveyance under applicable law. The Subsidiary
Guarantee of each Guarantor will be effectively subordinated to
the extent of the value of the collateral securing the
guarantees or Indebtedness of such Guarantor, if such guarantees
or Indebtedness are secured. Upon the release of all guarantees
by a Guarantor under all then outstanding Indebtedness of the
Company (other than the senior unsecured notes), the Subsidiary
Guarantee of that Guarantor will automatically and
unconditionally be released and discharged, without any further
action required by such Guarantor or the trustee. If any former
Guarantor thereafter guarantees any Indebtedness of the Company
(other than the senior unsecured notes), then that former
Guarantor (to the extent it is still a Domestic Subsidiary) will
again guarantee the senior unsecured notes on the terms and
conditions set forth in the indenture. In addition, the
Subsidiary Guarantee of any Guarantor will be automatically and
unconditionally released and discharged, without any further
action required by such Guarantor or the trustee, if the senior
unsecured notes are defeased or at any time such Guarantor is no
longer a Domestic Subsidiary.
Merger,
Consolidation or Sale of Assets
The indenture will provide that the Company may not, directly or
indirectly, consolidate or merge with or into (whether or not
the Company is the surviving entity), or sell, assign, transfer,
lease, convey or otherwise dispose of all or substantially all
of its properties or assets in one or more related transactions,
to another Person unless:
(1) the Company is the surviving or continuing corporation
or the Person formed by or surviving any such consolidation or
merger (if other than the Company) or to which such sale,
assignment, transfer, lease, conveyance or other disposition has
been made is a corporation, partnership, limited liability
company, trust or other entity organized or existing under the
laws of the United States, any state thereof or the District of
Columbia;
(2) the Person formed by or surviving any such
consolidation or merger (if other than the Company) or the
Person to which such sale, assignment, transfer, lease,
conveyance or other disposition has been made (if other than the
Company) assumes all the obligations of the Company under the
senior unsecured notes and the indenture pursuant to agreements
reasonably satisfactory to the trustee; and
(3) immediately after such transaction no Default or Event
of Default exists.
In the case of any such consolidation, merger, sale, transfer or
other conveyance in a transaction in which there is a successor
Person, the successor Person will succeed to, and be substituted
for, the Company under the indenture and, subject to the terms
of the indenture, the Company will be released from the
obligation to pay principal and interest on the senior unsecured
notes and all obligations under the indenture.
The limitations described above will not apply to:
(a) a merger of the Company with an affiliate solely for
the purpose of reincorporating the Company in another
jurisdiction; or
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(b) any consolidation or merger, or any sale, assignment,
transfer, conveyance, lease or other disposition of assets
between or among the Company and its subsidiaries.
Events of
Default and Remedies
Unless otherwise specified in the applicable prospectus
supplement, the term Event of Default, when used in
the indenture with respect to any series of senior unsecured
notes means any of the following:
(1) default for 30 days in the payment when due of
interest on the senior unsecured notes of that series;
(2) default in payment when due of the principal of or
premium, if any, on the senior unsecured notes of that series;
(3) failure to make sinking fund payments, if any, when due
in respect of that series;
(4) failure by the Company to comply with the provisions
described under the caption Merger,
Consolidation or Sale of Assets;
(5) failure by the Company to comply with any of its other
agreements in the indenture (other than an agreement that has
been included in the indenture solely for the benefit of a
series of senior unsecured notes other than that series) for
90 days after written notice is received by the Company
from the trustee or by the Company and the trustee from the
holders of at least 25% of the aggregate principal amount of
senior unsecured notes of that series then outstanding;
(6) 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 the Company or any of its
Subsidiaries (or the payment of which is guaranteed by the
Company or any of its Subsidiaries) whether such Indebtedness or
guarantee now exists, or is created after the Issue Date, which
default relates to a payment at final maturity or results in the
acceleration of such Indebtedness prior to its express maturity
and, in each case, the principal amount of such Indebtedness,
together with the principal amount of all other Indebtedness
that is not paid at final maturity or the maturity of which has
been so accelerated, aggregates $100.0 million or more;
(7) failure by the Company or any of its Subsidiaries to
pay final judgments aggregating in excess of
$100.0 million, which judgments are not paid, discharged or
stayed for a period of 60 days;
(8) certain events of bankruptcy or insolvency with respect
to the Company or any of its Significant Subsidiaries;
(9) except as permitted by the indenture, any Subsidiary
Guarantee of a Significant Subsidiary is held in any judicial
proceeding to be unenforceable or invalid; and
(10) any other Event of Default provided in the applicable
officers certificate, resolution of our board of directors
or the supplemental indenture under which we issue a series of
senior unsecured notes.
An Event of Default for a particular series of senior unsecured
notes does not necessarily constitute an Event of Default for
any other series of senior unsecured notes issued under the
indenture.
If an Event of Default with respect to any series of senior
unsecured notes occurs and is continuing, then either the
trustee for such series or the holders of 25% in aggregate
principal amount of the outstanding senior unsecured notes of
such series, by notice in writing, may declare the principal
amount (or, if the senior unsecured notes are discount
securities, that portion of the principal amount as may be
specified in the terms of that series) of and interest on all of
the senior unsecured notes of such series to be due and payable
immediately. We refer you to the prospectus supplement relating
to any series of senior unsecured notes that are discount
securities for the particular provisions relating to
acceleration of a portion of the principal amount of such
discount securities upon the occurrence of an Event of Default.
The holders of not less than a majority in aggregate principal
amount of the senior unsecured notes of each affected series
may, after satisfying certain conditions, rescind and annul any
of the above-described declarations and consequences involving
such series.
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If an Event of Default relating to certain events of bankruptcy
or insolvency with respect to the Company occurs and is
continuing, then the principal amount (or, if the senior
unsecured notes are discount securities, that portion of the
principal amount as may be specified in the terms of that
series) of all of the senior unsecured notes outstanding, and
any accrued interest, will automatically become due and payable
immediately, without any declaration or other act by the trustee
or any holder.
The indenture imposes limitations on suits brought by holders of
senior unsecured notes against us. Except for actions for
payment of overdue principal or interest, no holder of senior
unsecured notes of any series may institute any action against
us under the indenture unless:
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The holder has previously given to the trustee written notice of
default and continuance of such default;
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The holders of not less than a majority in principal amount of
the outstanding senior unsecured notes of that series have
requested that the trustee institute the action;
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The requesting holders have offered the trustee indemnity
satisfactory to it for expenses and liabilities that may be
incurred by bringing the action;
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The trustee has not instituted the action within 60 days of
the request; and
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The trustee has not received inconsistent direction by the
holders of a majority in principal amount of that series of
senior unsecured notes.
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The Company is required to deliver to the trustee annually a
statement regarding compliance with the indenture, and the
Company is required upon becoming aware of any Default or Event
of Default, to deliver to the trustee a statement specifying
such Default or Event of Default.
Certain
Covenants
Limitation
on Liens
Except as otherwise specified in the applicable prospectus
supplement, the indenture will provide that the Company will
not, and will not permit any of its Wholly Owned Domestic
Subsidiaries to, create, incur, assume or permit to exist any
Lien (except Permitted Liens) on (1) any Principal Property
or (2) the capital stock of any Subsidiary, in each case to
secure Indebtedness of the Company, any Subsidiary of the
Company or any other Person, unless the senior unsecured notes
are secured, equally and ratably with such other Indebtedness
(or on a senior basis if the obligations so secured are
subordinated Indebtedness), for so long as such other
Indebtedness is so secured. Any Lien that is granted to secure
the senior unsecured notes under this covenant shall be
automatically released and discharged at the same time as the
release of the Lien that gave rise to the obligation to secure
the senior unsecured notes under this covenant.
Permitted Liens means, with respect to each
series of senior unsecured notes:
(1) Liens securing Indebtedness of the Company or any of
its Subsidiaries, which Indebtedness exists on the Issue Date;
(2) Liens securing Indebtedness of any Person that
(a) is acquired by the Company or any of its Subsidiaries
after the Issue Date, (b) is merged or amalgamated with or
into the Company or any of its Subsidiaries after the Issue Date
or (c) becomes consolidated in the financial statements of
the Company or any of its Subsidiaries after the Issue Date in
accordance with GAAP; provided, however, that in
each case contemplated by this clause (2), such Indebtedness was
not incurred in contemplation of such acquisition, merger,
amalgamation or consolidation and is only secured by Liens on
the capital stock and assets of, the Person (and Subsidiaries of
the Person) acquired by, or merged or amalgamated with or into,
or consolidated in the financial statements of, the Company or
any of its Subsidiaries;
(3) Liens securing Indebtedness (including assumed
Indebtedness) of the Company or any of its Subsidiaries incurred
to finance (whether prior to or within 365 days after) the
acquisition, construction or improvement of assets (whether
through the direct purchase of assets or through the purchase of
the capital stock of any Person owning such assets or through an
acquisition of any such Person by merger); provided,
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however, that such Indebtedness is only secured by Liens on the
capital stock and assets acquired, constructed or improved in
connection with such financing (including the capital stock and
assets of any Subsidiary of any such acquired Person);
(4) Liens to secure any extension, renewal, refinancing or
refunding (or successive extensions, renewals, refinancings or
refundings), in whole or in part, of any Indebtedness secured by
Liens referred to in clauses
(1)-(3)
above or clause (10) below or Liens created in connection
with any amendment, consent or waiver relating to such
Indebtedness, so long as such Lien is limited to all or part of
substantially the same property which secured the Lien extended,
renewed or replaced, the amount of Indebtedness secured is not
increased (other than by the amount equal to any costs and
expenses (including any premiums, fees or penalties) incurred in
connection with any extension, renewal, refinancing or
refunding) and the Indebtedness so secured does not exceed the
fair market value (as determined by the Companys board of
directors) of the assets subject to such Liens at the time of
such extension, renewal, refinancing or refunding, or such
amendment, consent or waiver, as the case may be;
(5) Liens to secure intercompany Indebtedness of the
Company or any of its Subsidiaries to the Company or any of its
Subsidiaries;
(6) Liens to secure the performance of statutory
obligations, insurance, surety or appeal bonds, workers
compensation obligations, performance bonds or other obligations
of a like nature incurred in the ordinary course of business
(including Liens to secure letters of credit and reimbursement
obligations with respect thereto issued to assure payment of
such obligations);
(7) Liens created for the benefit of (or to secure) such
series of senior unsecured notes (or the related Subsidiary
Guarantees);
(8) Liens in favor of the trustee granted in accordance
with the indenture;
(9) Liens for taxes, assessments or governmental charges or
claims that are not yet delinquent or that are being contested
in good faith by appropriate proceedings promptly instituted and
diligently concluded, provided that any reserve or other
appropriate provision as is required in conformity with GAAP has
been made therefor; and
(10) other Liens, in addition to those permitted in
clauses (1) through (9) above, securing Indebtedness
having an aggregate principal amount (including all Indebtedness
incurred pursuant to clause (4) above to renew, refund,
refinance, replace, defease or discharge any Indebtedness
incurred pursuant to this clause (10)), measured as of the date
of the incurrence of any such Indebtedness (giving pro forma
effect to the application of the proceeds therefrom and any
transaction in connection with which such Indebtedness is being
incurred), taken together with the amount of all Attributable
Debt of the Company and its Subsidiaries at that time
outstanding relating to Sale and Leaseback Transactions
permitted under the covenant described below under the caption
Limitation on Sale and Leaseback
Transactions, not to exceed the greater of (a) 15% of
the Companys Consolidated Net Tangible Assets measured as
of the date of the incurrence of any such Indebtedness (giving
pro forma effect to the application of the proceeds
therefrom and any transaction in connection with which such
Indebtedness is being incurred) or (b) $1.5 billion.
For purposes of clause (10) of this definition of Permitted
Liens, (a) with respect to any revolving credit facility
secured by a Lien, the full amount of Indebtedness that may be
borrowed thereunder will be deemed to be incurred at the time
any revolving credit commitment thereunder is first extended or
increased and will not be deemed to be incurred when such
revolving credit facility is drawn upon and (b) if a Lien
of the Company or any of its Wholly Owned Domestic Subsidiaries
is granted to secure Indebtedness that was previously unsecured,
such Indebtedness will be deemed to be incurred as of the date
such Indebtedness is secured.
Limitation
on Sale and Leaseback Transactions
Except as otherwise specified in the applicable prospectus
supplement, the Company will not, and will not permit any of its
Subsidiaries to, enter into any arrangement with any other
Person pursuant to which the Company or any of its Subsidiaries
leases any property that has been or is to be sold or
transferred by the Company or the
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Subsidiary to such other Person (a Sale and Leaseback
Transaction), except that a Sale and Leaseback
Transaction is permitted if the Company or such Subsidiary would
be entitled to incur Indebtedness secured by a Lien on the
property to be leased (without equally and ratably securing the
senior unsecured notes) in an aggregate principal amount equal
to the Attributable Debt with respect to such Sale and Leaseback
Transaction.
In addition, the following Sale and Leaseback Transactions are
not subject to the limitation above and the provisions described
in Limitation on Liens above:
(1) temporary leases for a term, including renewals at the
option of the lessee, of not more than three years;
(2) leases between only the Company and a Subsidiary of the
Company or only between Subsidiaries of the Company;
(3) leases where the proceeds from the sale of the subject
property are at least equal to the fair market value (as
determined in good faith by the Company) of the subject property
and the Company applies an amount equal to the net proceeds of
the sale to the retirement of long-term Indebtedness or to the
purchase of other property or equipment used or useful in its
business, within 270 days of the effective date of such
sale; provided that in lieu of applying such amount to the
retirement of long-term Indebtedness, the Company may deliver
senior unsecured notes or other debt securities to the
applicable trustee for cancellation, such senior unsecured notes
or other debt securities to be credited at the cost thereof to
the Company; and
(4) leases of property executed by the time of, or within
270 days after the latest of, the acquisition, the
completion of construction or improvement, or the commencement
of commercial operation, of the subject property.
Future
Subsidiary Guarantees
Unless otherwise specified in the applicable prospectus
supplement, the Companys payment obligations under the
senior unsecured notes will be jointly and severally guaranteed
by all of the Companys existing and future Domestic
Subsidiaries that guarantee any other Indebtedness of the
Company. The indenture will provide that if the Company or any
of its Subsidiaries acquires or creates a Domestic Subsidiary
after the Issue Date, and such Domestic Subsidiary guarantees
any other Indebtedness of the Company, then such Domestic
Subsidiary will become a Guarantor and will execute a
supplemental indenture and deliver an opinion of counsel
satisfactory to the trustee within thirty (30) business
days of the date on which it was acquired or created. The
Subsidiary Guarantee of each Guarantor will rank pari passu
in right of payment with all senior Indebtedness of such
Guarantor, which would include the guarantees of amounts
borrowed under the Companys existing senior credit
facility. The obligations of each Guarantor under its Subsidiary
Guarantee will be limited so as not to constitute a fraudulent
conveyance under applicable law.
Unless otherwise specified in the applicable prospectus
supplement, the indenture will provide that no Guarantor may
consolidate with or merge with or into (whether or not such
Guarantor is the surviving Person) another Person (except the
Company or another Guarantor) unless:
(1) subject to the provisions of the following paragraph,
the Person formed by or surviving any such consolidation or
merger (if other than such Guarantor) assumes all the
obligations of such Guarantor pursuant to a supplemental
indenture in form and substance reasonably satisfactory to the
trustee, under the senior unsecured notes and the
indenture; and
(2) immediately after giving effect to such transaction, no
Default or Event of Default exists.
The indenture will provide that in the event of a sale or other
disposition of all of the assets of any Guarantor, by way of
merger, consolidation or otherwise, or a sale or other
disposition of stock of any Guarantor such that the Guarantor is
no longer a Subsidiary of the Company, then such Guarantor (in
the event of a sale or other disposition, by way of such a
merger, consolidation or otherwise) or the corporation acquiring
the property (in the event of a sale or other disposition of all
of the assets of such Guarantor) will be automatically and
unconditionally released and relieved of any obligations under
its Subsidiary Guarantee, without any actions required on the
part of the Guarantor or trustee.
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The foregoing notwithstanding, a Guarantor will be automatically
and unconditionally released and discharged from all of its
obligations under the indenture and its Subsidiary Guarantee
upon defeasance or if such Guarantor is released from its
guarantees of all other Indebtedness of the Company, without any
actions required on the part of the Guarantor or trustee.
Transfer
and Exchange
Unless otherwise stated in the applicable prospectus supplement,
each senior unsecured note will be represented by either one or
more global securities registered in the name of The Depository
Trust Company, as depositary, or a nominee (we will refer
to any senior unsecured note represented by a global senior
unsecured note as a book-entry debt security), or a
certificate issued in definitive registered form (we will refer
to any senior unsecured note represented by a certificated
security as a certificated debt security) as set
forth in the applicable prospectus supplement. Except as set
forth under the subheading Global Senior
Unsecured Notes and Book-Entry System below, book-entry
senior unsecured notes will not be issuable in certificated form.
Certificated Senior Unsecured Notes. You may
transfer or exchange certificated senior unsecured notes at any
office we maintain for this purpose in accordance with the terms
of the indenture. No service charge will be made for any
transfer or exchange of certificated senior unsecured notes, but
we may require payment of a sum sufficient to cover any tax or
other governmental charge payable in connection with a transfer
or exchange.
You may effect the transfer of certificated senior unsecured
notes and the right to receive the principal of, premium, if
any, and interest, if any, on certificated senior unsecured
notes only by surrendering the certificate representing those
certificated senior unsecured notes and either reissuance by us
or the trustee of the certificate to the new holder or the
issuance by us or the trustee of a new certificate to the new
holder.
Global Senior Unsecured Notes and Book-Entry
System. Each global debt security representing
book-entry senior unsecured notes will be deposited with, or on
behalf of, the depositary, and registered in the name of the
depositary or a nominee of the depositary.
We anticipate that the depositary will follow the following
procedures with respect to book-entry senior unsecured notes.
Ownership of beneficial interests in book-entry senior unsecured
notes will be limited to persons that have accounts with the
depositary for the related global debt security, which we refer
to as participants, or persons that may hold interests through
participants. Upon the issuance of a global debt security, the
depositary will credit, on its book-entry registration and
transfer system, the participants accounts with the
respective principal amounts of the book-entry senior unsecured
notes represented by such global debt security beneficially
owned by such participants. The accounts to be credited will be
designated by any dealers, underwriters or agents participating
in the distribution of the book-entry senior unsecured notes.
Ownership of book-entry senior unsecured notes will be shown on,
and the transfer of such ownership interests will be effected
only through, records maintained by the depositary for the
related global debt security (with respect to interests of
participants) and on the records of participants (with respect
to interests of persons holding through participants). The laws
of some states may require that certain purchasers of securities
take physical delivery of such securities in definitive form.
These laws may impair the ability to own, transfer or pledge
beneficial interests in book-entry senior unsecured notes.
So long as the depositary for a global debt security, or its
nominee, is the registered owner of that global debt security,
the depositary or its nominee, as the case may be, will be
considered the sole owner or holder of the book-entry senior
unsecured notes represented by such global debt security for all
purposes under the indenture. Except as described below,
beneficial owners of book-entry senior unsecured notes will not
be entitled to have securities registered in their names, will
not receive or be entitled to receive physical delivery of a
certificate in definitive form representing securities and will
not be considered the owners or holders of those securities
under the indenture. Accordingly, each person beneficially
owning book-entry senior unsecured notes must rely on the
procedures of the depositary for the related global debt
security and, if such person is not a participant, on the
procedures of the participant through which such person owns its
interest, to exercise any rights of a holder under the indenture.
We understand, however, that under existing industry practice,
the depositary will authorize the persons on whose behalf it
holds a global debt security to exercise certain rights of
holders of senior unsecured notes, and the
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indenture provides that we, the trustee and our respective
agents will treat as the holder of a debt security the persons
specified in a written statement of the depositary with respect
to that global debt security for purposes of obtaining any
consents or directions required to be given by holders of the
senior unsecured notes pursuant to the indenture.
We will make payments of principal of, premium, if any, and
interest, if any, on book-entry senior unsecured notes to the
depositary or its nominee, as the case may be, as the registered
holder of the related global debt security. We, the trustee and
any other agent of ours or agent of the trustee will not have
any responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial ownership
interests in a global debt security or for maintaining,
supervising or reviewing any records relating to beneficial
ownership interests.
We expect that the depositary, upon receipt of any payment of
principal of, premium, if any, or interest, if any, on a global
debt security, will immediately credit participants
accounts with payments in amounts proportionate to the
respective amounts of book-entry senior unsecured notes held by
each participant as shown on the records of such depositary. We
also expect that payments by participants to owners of
beneficial interests in book-entry senior unsecured notes held
through those participants will be governed by standing customer
instructions and customary practices, as is now the case with
the securities held for the accounts of customers in bearer form
or registered in street name, and will be the
responsibility of those participants.
We will issue certificated senior unsecured notes in exchange
for each global debt security if the depositary is at any time
unwilling or unable to continue as depositary or ceases to be a
clearing agency registered under the Exchange Act, and a
successor depositary registered as a clearing agency under the
Exchange Act is not appointed by us within 90 days. In
addition, we may at any time and in our sole discretion
determine not to have the book-entry senior unsecured notes of
any series represented by one or more global senior unsecured
notes and, in that event, will issue certificated senior
unsecured notes in exchange for the global senior unsecured
notes of that series. Global senior unsecured notes will also be
exchangeable by the holders for certificated senior unsecured
notes if an Event of Default with respect to the book-entry
senior unsecured notes represented by those global senior
unsecured notes has occurred and is continuing. Any certificated
senior unsecured notes issued in exchange for a global debt
security will be registered in such name or names as the
depositary shall instruct the trustee. We expect that such
instructions will be based upon directions received by the
depositary from participants with respect to ownership of
book-entry senior unsecured notes relating to such global debt
security.
We have obtained the foregoing information concerning the
depositary and the depositarys book-entry system from
sources we believe to be reliable, but we take no responsibility
for the accuracy of this information.
Discharge,
Defeasance and Covenant Defeasance
Legal Defeasance. The indenture provides that,
unless otherwise provided by the terms of the applicable series
of senior unsecured notes, we may be discharged from any and all
obligations in respect of the senior unsecured notes of any
series (except for certain obligations to register the transfer
or exchange of senior unsecured notes of such series, to replace
stolen, lost or mutilated senior unsecured notes of such series,
and to maintain paying agencies and certain provisions relating
to the treatment of funds held by paying agents). We will be so
discharged upon the deposit with the trustee, in trust, of money
and/or
U.S. government obligations or, in the case of senior
unsecured notes denominated in a single currency other than
U.S. dollars, foreign government obligations, that, through
the payment of interest and principal in accordance with their
terms, will provide money in an amount sufficient in the opinion
of a nationally recognized investment bank, appraisal firm or
firm of independent public accountants to pay and discharge each
installment of principal, premium, if any, and interest, if any,
on and any mandatory sinking fund payments in respect of the
senior unsecured notes of that series on the stated maturity of
those payments in accordance with the terms of the indenture and
those senior unsecured notes.
This discharge may occur only if, among other things, we have
delivered to the trustee an opinion of counsel stating that we
have received from, or there has been published by, the United
States Internal Revenue Service a ruling or, since the date of
execution of the indenture, there has been a change in the
applicable United States federal income tax law, in either case
to the effect that, and based thereon such opinion shall confirm
that, the holders of the senior unsecured notes of that series
will not recognize income, gain or loss for United States
federal income tax purposes as a result of the deposit,
defeasance and discharge and will be subject to United States
federal income tax
11
on the same amounts and in the same manner and at the same times
as would have been the case if the deposit, defeasance and
discharge had not occurred.
Defeasance of Certain Covenants. The indenture
provides that, unless otherwise provided by the terms of the
applicable series of senior unsecured notes, upon compliance
with certain conditions:
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We may omit to comply with the covenants described under the
headings Guarantees,
Merger, Consolidation or Sale of Assets,
Limitation on Liens,
Limitation on Sale and Leaseback
Transactions, Future Subsidiary
Guarantees and certain other covenants set forth in the
indenture, as well as any additional covenants which may be set
forth in the applicable prospectus supplement; and
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Any omission to comply with those covenants will not constitute
a default or an Event of Default with respect to the senior
unsecured notes of that series.
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The conditions include:
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Depositing with the trustee money
and/or
U.S. government obligations or, in the case of senior
unsecured notes denominated in a single currency other than
U.S. dollars, foreign government obligations, that, through
the payment of interest and principal in accordance with their
terms, will provide money in an amount sufficient in the opinion
of a nationally recognized investment bank, appraisal firm or
firm of independent public accountants to pay and discharge each
installment of principal of, premium, if any, and interest, if
any, on and any mandatory sinking fund payments in respect of
the senior unsecured notes of that series on the stated maturity
or applicable redemption date of those payments in accordance
with the terms of the indenture and those senior unsecured
notes; and
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Delivering to the trustee an opinion of counsel to the effect
that the holders of the senior unsecured notes of that series
will not recognize income, gain or loss for United States
federal income tax purposes as a result of the deposit and
related covenant defeasance and will be subject to United States
federal income tax on the same amounts and in the same manner
and at the same times as would have been the case if the deposit
and related covenant defeasance had not occurred.
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Covenant Defeasance and Events of Default. In
the event we exercise our option to effect covenant defeasance
with respect to any series of senior unsecured notes and the
senior unsecured notes of that series are declared due and
payable because of the occurrence of any Event of Default, the
amount of money
and/or
U.S. government obligations or foreign government
obligations on deposit with the trustee will be sufficient to
pay amounts due on the senior unsecured notes of that series at
the time of their stated maturity but may not be sufficient to
pay amounts due on the senior unsecured notes of that series at
the time of the acceleration resulting from the Event of
Default. However, we shall remain liable for those payments.
Modification
of the Indenture
The indenture provides that we and the trustee may enter into
supplemental indentures without the consent of the holders of
any series of senior unsecured notes to:
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Secure any series of senior unsecured notes and provide the
terms and conditions for the release or substitution of the
security;
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Add additional guarantors;
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Evidence the assumption by a successor person of our obligations;
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Add covenants for the protection of the holders of any series of
senior unsecured notes;
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Add any additional Events of Default with respect to any series
of senior unsecured notes;
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Make any change that would provide any additional rights or
benefits to the holders of any series of senior unsecured notes
or that does not adversely affect the legal rights under the
indenture of any such holder of any series of senior unsecured
notes in any material respect;
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Cure any ambiguity or correct any inconsistency or defect in the
indenture;
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Provide for uncertificated notes in addition to or in place of
certificated notes;
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Add to, change or eliminate any of the provisions of the
indenture with respect to any series in a manner that will
become effective only when there is no outstanding senior
unsecured note of such series which is entitled to the benefit
of the provision as to which the modification would apply;
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Establish the forms or terms of senior unsecured notes of any
series;
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Eliminate any conflict between the terms of the indenture and
the Trust Indenture Act of 1939;
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Evidence and provide for the acceptance of appointment by a
successor trustee and add to or change any of the provisions of
the indenture as is necessary for the administration of the
trusts by more than one trustee;
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Conform any provision of the indenture, the securities of any
series or any related guarantees or security documents to the
description of such securities contained in the applicable
prospectus, prospectus supplement or similar document with
respect to the offering of the securities of such series to the
extent that such description was intended to be a verbatim
recitation of a provision in the indenture, such securities or
any related guarantees or security documents; and
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Make any other provisions with respect to matters or questions
arising under the indenture that will not be inconsistent with
any provision of the indenture as long as the new provisions do
not materially adversely affect the interests of the holders of
any outstanding senior unsecured notes of any series created
prior to the modification.
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The indenture also provides that we and the trustee may, with
the consent of the holders of not less than a majority in
aggregate principal amount of senior unsecured notes of a series
then outstanding and affected, add any provisions to, or change
in any manner, eliminate or modify in any way the provisions of
the indenture with respect to such series or modify in any
manner the rights of the holders of the senior unsecured notes
of such series. We and the trustee may not, however, without the
consent of the holder of each outstanding senior unsecured note
affected thereby (with respect to any senior unsecured notes
held by such non-consenting holder):
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Change the amount of senior unsecured notes of such series whose
holders must consent to an amendment, supplement or waiver;
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Reduce the rate of or extend the time for payment of interest
(including default interest) on any senior unsecured note of
such series;
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Reduce the principal of or premium, if any, on or change the
fixed maturity of any senior unsecured note or reduce the amount
of, or postpone the date fixed for, the payment of any sinking
fund or analogous obligation with respect to any series of
senior unsecured notes;
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Reduce the principal amount of discount securities payable upon
acceleration of maturity of such series;
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Waive a default in the payment of the principal of, premium, if
any, or interest, if any, on any senior unsecured note of such
series (except a rescission of acceleration of the senior
unsecured notes of any series by the holders of at least a
majority in aggregate principal amount of the then outstanding
senior unsecured notes of that series and a waiver of the
payment default that resulted from such acceleration);
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Make the principal of or premium, if any, or interest, if any,
on any senior unsecured note of such series payable in a
currency other than that stated in the senior unsecured note;
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Make any change to certain provisions of the indenture relating
to, among other things, the right of holders of senior unsecured
notes of such series to receive payment of the principal of,
premium, if any, and interest, if any, on those senior unsecured
notes of such series and to institute suit for the enforcement
of any such payment and to waivers or amendments;
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Waive a redemption payment with respect to any senior unsecured
note of such series or change any of the provisions with respect
to the redemption of any senior unsecured notes of such series
(other than with respect to any provision relating to covenants
that require the Company to repurchase, at the option of the
holders, a series of senior unsecured notes in connection with a
change of control triggering event); or
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Make any change in the foregoing amendment and waiver provisions
with respect to such series.
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Except for certain specified provisions, the holders of at least
a majority in principal amount of the outstanding senior
unsecured notes of any series may on behalf of the holders of
all senior unsecured notes of that series waive our compliance
with provisions of the indenture. The holders of a majority in
principal amount of the outstanding senior unsecured notes of
any series may on behalf of the holders of all the senior
unsecured notes of such series waive any past default under the
indenture with respect to that series and its consequences,
except a default in the payment of the principal of, premium, if
any, or any interest, if any, on any senior unsecured note of
that series or in respect of a covenant or provision which
cannot be modified or amended without the consent of the holder
of each outstanding senior unsecured note of the series
affected; provided, however, that the holders of a majority in
principal amount of the outstanding senior unsecured notes of
any series may rescind an acceleration and its consequences,
including any related payment default that resulted from the
acceleration.
No
Personal Liability of Directors, Officers, Employees and
Stockholders
No director, officer, employee, incorporator or stockholder of
the Company or any Subsidiary of the Company, as such, will have
any liability for any obligations of the Company or any
Subsidiary of the Company under the senior unsecured notes, the
Subsidiary Guarantees or the indenture or for any claim based
on, in respect of, or by reason of, such obligations or their
creation. Each holder of senior unsecured notes by accepting a
note waives and releases all such liability. The waiver and
release are part of the consideration for issuance of the senior
unsecured notes. Such waiver may not be effective to waive
liabilities under the federal securities laws and it is the view
of the SEC that such a waiver is against public policy.
Governing
Law
The indenture and the senior unsecured notes will be governed
by, and construed in accordance with, the laws of the State of
New York.
Concerning
the Trustee
The indenture contains certain limitations on the rights of the
trustee, should it become a creditor of the Company, to obtain
payment of claims in certain cases, or to realize on certain
property received in respect of any such claim as security or
otherwise. The trustee will be permitted to engage in other
transactions; however, if it acquires any conflicting interest
it must eliminate such conflict within 90 days, apply to
the SEC for permission to continue or resign, in each case to
the extent required by law.
The holders of a majority in principal amount of the then
outstanding notes will have the right to direct the time, method
and place of conducting any proceeding for exercising any remedy
available to the trustee, subject to certain exceptions. The
indenture provides that if an Event of Default occurs (which has
not been cured), the trustee will be required, in the exercise
of its power, to use the degree of care of a prudent person in
the conduct of such persons affairs. Subject to such
provisions, the trustee will be under no obligation to exercise
any of its rights or powers under the indenture at the request
of any holder of senior unsecured notes, unless such holder
offers the trustee security and indemnity satisfactory to it
against any loss, liability or expense. We and our subsidiaries
from time to time maintain ordinary banking relationships and
credit facilities with The Bank of New York Mellon Corporation
and its affiliates.
Certain
Defined Times
Unless otherwise specified in the applicable prospectus
supplement, set forth below are certain defined terms used in
the indenture. Reference is made to the indenture and the
applicable prospectus supplement for a full disclosure of all
such terms, as well as any other capitalized terms used herein
for which no definition is provided.
Attributable Debt in respect of a Sale and
Leaseback Transaction means, at any time of determination, the
present value at that time of the obligation of the lessee for
net rental payments during the remaining term of the lease
included in such Sale and Leaseback Transaction including any
period for which such lease has been extended or may, at the
option of the lessor, be extended. Such present value will be
calculated using a discount rate equal to the rate of interest
implicit in such transaction, determined in accordance with GAAP.
14
Consolidated Net Tangible Assets of any
Person as of any date means the total assets of such Person and
its Subsidiaries as of the most recent fiscal quarter end for
which a consolidated balance sheet of such Person and its
Subsidiaries is available as of that date, minus all current
liabilities of such Person and its Subsidiaries reflected on
such balance sheet and minus total goodwill and other intangible
assets of such Person and its Subsidiaries reflected on such
balance sheet, all calculated on a consolidated basis in
accordance with GAAP.
Default means any event that is, or with the
passage of time or the giving of notice or both would be, an
Event of Default.
Domestic Subsidiary means a Subsidiary of the
Company (other than an Immaterial Subsidiary) that is organized
or existing under the laws of the United States, any state
thereof, the District of Columbia or any territory thereof.
Exchange Act means the Securities Exchange
Act of 1934, as amended.
GAAP means generally accepted accounting
principles set forth in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements
of the Financial Accounting Standards Board or in such other
statements by such other entity as have been approved by a
significant segment of the accounting profession, which are in
effect from time to time.
Guarantors means each Domestic Subsidiary of
the Company that executes a Subsidiary Guarantee in accordance
with the provisions of the indenture, and their respective
successors and assigns, provided, that upon the release and
discharge of such Person from its guarantee in accordance with
the Indenture, such Person shall cease to be a Guarantor.
Immaterial Subsidiary means, as of any date,
any Subsidiary whose total assets, as of that date, are less
than $20.0 million and whose total revenues for the most
recent
12-month
period do not exceed $20.0 million.
Indebtedness means, with respect to any
Person, obligations of such Person for borrowed money
(including, without limitation, indebtedness for borrowed money
evidenced by notes, bonds, debentures or similar instruments).
For the avoidance of doubt, bankers acceptances and
obligations of a Person under currency exchange or interest rate
swap agreements (or other agreements or arrangements designed to
protect such Person against fluctuations in currency exchange
rates or interest rates) are not Indebtedness.
Issue Date means, with respect to each series
of senior unsecured notes, the date such series of senior
unsecured notes are issued.
Lien means any mortgage, lien, pledge,
charge, security interest or other encumbrance of any kind,
whether or not filed, recorded or otherwise perfected under
applicable law, including any conditional sale or other title
retention agreement, any lease in the nature thereof, any option
or other agreement to sell or give a security interest in and
any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statute) of any
jurisdiction.
Person means any individual, corporation,
partnership, joint venture, association, limited liability
company, joint-stock company, trust, unincorporated organization
or other entity, government or any agency or political
subdivision thereof.
Principal Property means any building,
structure or other facility located within the United States
(other than its territories and possessions) and owned by the
Company or any Wholly Owned Domestic Subsidiary, the book value
of which is not less than 0.5% of the Companys
Consolidated Net Tangible Assets. For purposes of this
definition, book value will be measured at the time the relevant
Lien is being created or, in the case of any Lien incurred
pursuant to clause (10) of the definition of
Permitted Liens, at the time the relevant secured
Indebtedness is deemed to be incurred.
The term Principal Property, as defined
above, will not include any of the assets of our Subsidiaries
that are not Wholly Owned Domestic Subsidiaries, and will also
not include many of our domestic buildings, structures and other
facilities, since many of those buildings, structures and
facilities do not meet the minimum book value threshold
specified in the definition.
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SEC means the Securities and Exchange
Commission or any successor agency.
Significant Subsidiary means any Subsidiary
which is a significant subsidiary within the meaning
of Rule 405 under the Securities Act.
Stated Maturity means, with respect to any
installment of interest or principal on any series of
Indebtedness, the date on which the payment of interest or
principal was scheduled to be paid in the documentation
governing such Indebtedness, and will not include any contingent
obligations to repay, redeem or repurchase any such interest or
principal prior to the date originally scheduled for the payment
thereof.
Subsidiary means, with respect to any Person:
(1) any corporation, association or other business entity
of which more than 50% of the total voting power of shares of
capital stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or
trustees thereof is at the time owned or controlled, directly or
indirectly, by such Person or one or more of the other
Subsidiaries of that Person (or a combination thereof); and
(2) any partnership (A) the sole general partner or
the managing general partner of which is such Person or a
Subsidiary of such Person or (B) the only general partners
of which are such Person or of one or more Subsidiaries of such
Person (or any combination thereof).
Wholly Owned Domestic Subsidiary means, with
respect to any Person, any Domestic Subsidiary of such Person,
the capital stock of which is 100% owned and controlled,
directly or indirectly through one or more other Wholly Owned
Domestic Subsidiaries, by such Person.
16
PLAN OF
DISTRIBUTION
We may sell the securities offered pursuant to this prospectus
in any of the following ways:
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directly to one or more purchasers;
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through agents;
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through underwriters, brokers or dealers; or
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through a combination of any of these methods of sale.
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We will identify the specific plan of distribution, including
any underwriters, brokers, dealers, agents or direct purchasers
and their compensation in a prospectus supplement.
LEGAL
MATTERS
The validity of the senior unsecured notes offered by this
prospectus and any prospectus supplement will be passed upon for
us by Simpson Thacher & Bartlett LLP, New York, New
York. Counsel for any underwriters, agents or dealers will be
named in the accompanying prospectus supplement.
EXPERTS
The financial statements and managements assessment of the
effectiveness of internal control over financial reporting
(which is included in Managements Report on Internal
Control over Financial Reporting) incorporated in this
Prospectus by reference to the Annual Report on
Form 10-K
for the year ended December 31, 2009 have been so
incorporated in reliance on the report of PricewaterhouseCoopers
LLP, an independent registered public accounting firm, given on
the authority of said firm as experts in auditing and accounting.
17
$500,000,000
L-3 Communications
Corporation
3.95% Senior Notes due
2016
PROSPECTUS SUPPLEMENT
Joint
Book-Running Managers
BofA Merrill Lynch
Barclays Capital
Deutsche Bank Securities
Scotia Capital
SunTrust Robinson Humphrey
Wells Fargo Securities
Joint Lead Managers
Mitsubishi UFJ Securities
Credit Agricole CIB
Co-Managers
ANZ Securities
BNY Capital Markets, LLC
Comerica Securities
HSBC
SMBC Nikko
US Bancorp
November 17, 2011