1.0.0.3falseDebtfalse1$falsefalseSharesStandardhttp://www.xbrl.org/2003/instancesharesxbrli0USDStandardhttp://www.xbrl.org/2003/iso4217USDiso42170USDEPSDividehttp://www.xbrl.org/2003/iso4217USDiso4217http://www.xbrl.org/2003/instancesharesxbrli020lll_DebtAbstractlllfalsenadurationstringDebt.falsefalsefalsefalsefalsetruefalsefalsefalse1falsefalse00falsefalseDebt.false31us-gaap_DebtDisclosureTextBlockus-gaaptruenadurationstringNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalse1falsefalse00<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 10 - us-gaap:DebtDisclosureTextBlock-->
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<td>
<b><font style="font-family: 'Times New Roman', Times">10.  </font></b>
</td>
<td>
<b><font style="font-family: 'Times New Roman', Times">Debt</font></b>
</td>
</tr>
</table>
<div style="margin-top: 9pt; font-size: 1pt"> 
</div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #ffffff">
The components of long-term debt and reconciliation to the
carrying amount of long-term debt are presented in the table
below.
</div>
<div style="margin-top: 6pt; font-size: 1pt"> 
</div>
<table border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #ffffff; text-align: left">
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<td width="1%" align="right"> </td><!-- colindex=02 type=lead -->
<td width="11%" align="right"> </td><!-- colindex=02 type=body -->
<td width="1%" align="left"> </td><!-- colindex=02 type=hang1 -->
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<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="6" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>December 31,</b>
</td>
<td>
 
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>2009</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>2008</b>
</td>
<td>
 
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="6" align="center" valign="bottom">
<b>(in millions)</b>
</td>
<td>
 
</td>
</tr>
<tr style="line-height: 3pt; font-size: 1pt">
<td> 
</td>
</tr>
<!-- TableOutputBody -->
<tr valign="bottom" style="background: #cceeff">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
<b>L-3 Communications:</b>
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt">
Borrowings under Revolving Credit
Facility<sup style="font-size: 85%; vertical-align: top">(1)</sup>
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt">
Borrowings under Term Loan Facility maturing
2010<sup style="font-size: 85%; vertical-align: top">(2)</sup>
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
650
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 30pt">
5<sup style="font-size: 85%; vertical-align: top">1</sup>/<sub style="font-size: 85%; vertical-align: text-bottom">5</sub>% Senior
Notes due 2019
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
1,000
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 30pt">
7<sup style="font-size: 85%; vertical-align: top">5</sup>/<sub style="font-size: 85%; vertical-align: text-bottom">8</sub>% Senior
Subordinated Notes due 2012
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
750
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 30pt">
6<sup style="font-size: 85%; vertical-align: top">1</sup>/<sub style="font-size: 85%; vertical-align: text-bottom">8</sub>% Senior
Subordinated Notes due 2013
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
400
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
400
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 30pt">
6<sup style="font-size: 85%; vertical-align: top">1</sup>/<sub style="font-size: 85%; vertical-align: text-bottom">8</sub>% Senior
Subordinated Notes due 2014
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
400
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
400
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 30pt">
5<sup style="font-size: 85%; vertical-align: top">7</sup>/<sub style="font-size: 85%; vertical-align: text-bottom">8</sub>% Senior
Subordinated Notes due 2015
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
650
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
650
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 30pt">
6<sup style="font-size: 85%; vertical-align: top">3</sup>/<sub style="font-size: 85%; vertical-align: text-bottom">8</sub>% Senior
Subordinated Notes due 2015
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
1,000
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
1,000
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="font-size: 1pt">
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 40pt">
Subtotal
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
3,450
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
3,850
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="font-size: 1pt">
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
<b>L-3 Holdings:</b>
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt">
3% Convertible Contingent Debt Securities due 2035
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
700
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
700
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="font-size: 1pt">
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Principal amount of long-term debt
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
4,150
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
4,550
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt">
Unamortized discounts
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
(38
</td>
<td nowrap="nowrap" align="left" valign="bottom">
)
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
(57
</td>
<td nowrap="nowrap" align="left" valign="bottom">
)
</td>
</tr>
<tr valign="bottom" style="font-size: 1pt">
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Carrying amount of long-term debt
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
4,112
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
4,493
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="font-size: 1pt">
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
</tr>
</table>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #ffffff">
</div>
<div style="margin-top: 6pt; font-size: 1pt"> 
</div>
<div style="font-size: 1pt; margin-left: 0%; width: 13%; align: left; border-bottom: 1pt solid #000000">
</div>
<div style="margin-top: 3pt; font-size: 1pt"> 
</div>
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #ffffff; text-align: left">
<tr>
<td width="1%"></td>
<td width="1%"></td>
<td width="98%"></td>
</tr>
<tr>
<td valign="top">
<font style="font-size: 8pt"><sup style="font-size: 85%; vertical-align: top">(1)</sup></font></td>
<td></td>
<td valign="bottom">
<font style="font-size: 8pt">At December 31, 2009,
available borrowings under the Revolving Credit Facility were
$968 million after reductions for outstanding letters of
credit of $32 million.
</font></td>
</tr>
<tr style="line-height: 3pt; font-size: 1pt">
<td> </td>
</tr>
<tr>
<td valign="top">
<font style="font-size: 8pt"><sup style="font-size: 85%; vertical-align: top">(2)</sup></font></td>
<td></td>
<td valign="bottom">
<font style="font-size: 8pt">The interest rate at
December 31, 2008 was 2.70% and was based on the LIBOR rate
(as defined in the credit agreement) plus a spread.
</font></td>
</tr>
</table>
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<b>
<font style="font-family: 'Times New Roman', Times">
</font>
</b>
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<div style="margin-top: 0pt; font-size: 1pt">
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<div align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #ffffff">
<b><i><font style="font-family: 'Times New Roman', Times">L-3
Communications</font></i></b>
</div>
<div style="margin-top: 9pt; font-size: 1pt"> 
</div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #ffffff">
On October 23, 2009, L-3 Communications replaced its
$1 billion Senior Credit Facility with a new
$1 billion three-year Revolving Credit Facility maturing on
October 23, 2012. Borrowings under the new Revolving Credit
Facility bear interest, at L-3 Communications’ option, at
either (i) a “base rate” equal to the higher of
(a) 0.50% per annum above the latest federal funds rate,
(b) the Bank of America “prime rate” (as defined
in the Revolving Credit Facility), and (c) 1.00% per annum
above a “LIBOR rate” (as defined in the Revolving
Credit Facility), plus a spread ranging from 1.25% to 3.00% per
annum, or (ii) a “LIBOR rate” (as defined in the
Revolving Credit Facility) plus a spread ranging from 2.25% to
4.00% per annum. The spread, in both cases, depends on L-3
Communications’ debt rating at the time of determination.
L-3 Communications pays: (1) commitment fees calculated on
the daily amounts of the available unused commitments at a rate
ranging from 0.375% to 0.75% per annum, (2) letter of
credit fees ranging from 1.50% to 2.67% per annum for
performance and commercial letters of credit and (3) letter
of credit fees ranging from 2.25% to 4.00% for financial letters
of credit. The fee rate, in all cases, depends on L-3
Communications’ debt rating at the time of determination.
The debt rating is based on the credit ratings as determined by
Standard & Poor’s Rating Services, Moody’s
Investors Service, Inc. and Fitch Ratings of L-3
Communications’ non-credit enhanced senior, unsecured
long-term debt.
</div>
<div style="margin-top: 9pt; font-size: 1pt"> 
</div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #ffffff">
On October 2, 2009, L-3 Communications issued
$1 billion in aggregate principal amount of
5.20% Senior Notes due October 15, 2019 (Senior Notes)
at a discount of $4 million. The discount was recorded as a
reduction to the principal amount of the notes and will be
amortized as an interest expense over the term of the notes. The
effective interest rate of the Senior Notes is 5.25%. Interest
on the Senior Notes is payable semi-annually on April 15 and
October 15 of each year, commencing on April 15, 2010. The
net cash proceeds from this offering amounted to approximately
$987 million after deducting the discounts, commissions and
estimated expenses, and were used, together with cash on hand,
to redeem L-3 Communications’ $750 million
7<sup style="font-size: 85%; vertical-align: top">5</sup>/<sub style="font-size: 85%; vertical-align: text-bottom">8</sub>% Senior
Subordinated Notes due in 2012 (2002 Notes) on November 2,
2009 and to repay L-3 Communications’ outstanding
$650 million Term Loan on October 7, 2009. In
connection with the redemption of the 2002 Notes, the Company
recorded a debt retirement charge of approximately
$10 million ($6 million after income tax). The Senior
Notes are unsecured senior obligations of L-3 Communications.
The Senior Notes may be redeemed at any time prior to their
maturity at the option of L-3 Communications, in whole or in
part, at a redemption price equal to the greater of:
(1) 100% of the principal amount, or (2) the present
value of the remaining principal and interest payments
discounted to the date of redemption, on a semi-annual basis, at
the Treasury Rate (as defined in the Indenture dated as of
October 2, 2009 (the Senior Indenture)), plus 0.30%. Upon
the occurrence of a change in control (as defined in the Senior
Indenture), each holder of the notes will have the right to
require L-3 Communications to repurchase all or any part of such
holder’s notes at an offer price in cash equal to 101% of
the aggregate principle amount plus accrued and unpaid interest
and special interest (as defined in the Senior Indenture), if
any, to the date of the purchase.
</div>
<!-- XBRL Pagebreak Begin -->
</div>
<!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<div style="margin-left: 0%">
<!-- BEGIN PAGE WIDTH -->
<div style="margin-top: 0pt; font-size: 1pt">
</div>
<div align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #ffffff">
<b>
<font style="font-family: 'Times New Roman', Times">
</font>
</b>
</div>
<!-- XBRL Pagebreak End -->
<div style="margin-top: 6pt; font-size: 1pt"> 
</div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #ffffff">
L-3 Communications sold Senior Subordinated Notes from
June 28, 2002 to July 29, 2005, which are included as
components of long-term debt in the table above. The notes are
general unsecured obligations of L-3 Communications and are
subordinated in right of payment to all existing and future
senior debt of L-3 Communications. The terms of each outstanding
Senior Subordinated Note are presented in the table below.
</div>
<div style="margin-top: 6pt; font-size: 1pt"> 
</div>
<table border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 8pt; font-family: 'Times New Roman', Times; color: #000000; background: #ffffff; text-align: left">
<!-- Table Width Row BEGIN -->
<tr style="font-size: 1pt" valign="bottom">
<td width="26%"> </td><!-- colindex=01 type=maindata -->
<td width="1%"> </td><!-- colindex=02 type=gutter -->
<td width="18%"> </td><!-- colindex=02 type=maindata -->
<td width="1%"> </td><!-- colindex=03 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=03 type=lead -->
<td width="3%" align="right"> </td><!-- colindex=03 type=body -->
<td width="1%" align="left"> </td><!-- colindex=03 type=hang1 -->
<td width="1%"> </td><!-- colindex=04 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=04 type=lead -->
<td width="5%" align="right"> </td><!-- colindex=04 type=body -->
<td width="1%" align="left"> </td><!-- colindex=04 type=hang1 -->
<td width="1%"> </td><!-- colindex=05 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=05 type=lead -->
<td width="3%" align="right"> </td><!-- colindex=05 type=body -->
<td width="1%" align="left"> </td><!-- colindex=05 type=hang1 -->
<td width="1%"> </td><!-- colindex=06 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=06 type=lead -->
<td width="3%" align="right"> </td><!-- colindex=06 type=body -->
<td width="1%" align="left"> </td><!-- colindex=06 type=hang1 -->
<td width="2%"> </td><!-- colindex=07 type=gutter -->
<td width="18%"> </td><!-- colindex=07 type=maindata -->
<td width="2%"> </td><!-- colindex=08 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=08 type=lead -->
<td width="5%" align="right"> </td><!-- colindex=08 type=body -->
<td width="1%" align="left"> </td><!-- colindex=08 type=hang1 -->
</tr>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<tr style="font-size: 7pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Net<br />
</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Effective<br />
</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Redemption<br />
</b>
</td>
<td>
 
</td>
</tr>
<tr style="font-size: 7pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Amount<br />
</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Cash<br />
</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Interest<br />
</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Price % of<br />
</b>
</td>
<td>
 
</td>
</tr>
<tr style="font-size: 7pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Note</b>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Date of Issuance</b>
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Issued</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Discount<sup style="font-size: 85%; vertical-align: top">(1)</sup></b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Proceeds</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Rate</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Call
Date<sup style="font-size: 85%; vertical-align: top">(2)</sup></b>
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Principal<sup style="font-size: 85%; vertical-align: top">(3)</sup></b>
</td>
<td>
 
</td>
</tr>
<tr style="font-size: 7pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="10" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>(in millions)</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
</tr>
<tr style="line-height: 3pt; font-size: 1pt">
<td> 
</td>
</tr>
<!-- TableOutputBody -->
<tr valign="bottom" style="background: #cceeff">
<td align="left" valign="top">
<div style="text-indent: -8pt; margin-left: 8pt">
6<sup style="font-size: 85%; vertical-align: top">1</sup>/<sub style="font-size: 85%; vertical-align: text-bottom">8</sub>% Senior
Subordinated Notes due July 15, 2013
</div>
</td>
<td>
 
</td>
<td align="left" valign="bottom">
May 21, 2003
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
400
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
2
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
391
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
6.170
</td>
<td nowrap="nowrap" align="left" valign="bottom">
%
</td>
<td>
 
</td>
<td align="center" valign="bottom">
July 15, 2008
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
102.042
</td>
<td nowrap="nowrap" align="left" valign="bottom">
%
</td>
</tr>
<tr valign="bottom">
<td align="left" valign="top">
<div style="text-indent: -8pt; margin-left: 8pt">
6<sup style="font-size: 85%; vertical-align: top">1</sup>/<sub style="font-size: 85%; vertical-align: text-bottom">8</sub>% Senior
Subordinated Notes due January 15, 2014
</div>
</td>
<td>
 
</td>
<td align="left" valign="bottom">
December 22, 2003
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
400
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
7
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
390
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
6.310
</td>
<td nowrap="nowrap" align="left" valign="bottom">
%
</td>
<td>
 
</td>
<td align="center" valign="bottom">
January 15, 2009
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
102.042
</td>
<td nowrap="nowrap" align="left" valign="bottom">
%
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td align="left" valign="top">
<div style="text-indent: -8pt; margin-left: 8pt">
5<sup style="font-size: 85%; vertical-align: top">7</sup>/<sub style="font-size: 85%; vertical-align: text-bottom">8</sub>% Senior
Subordinated Notes due January 15, 2015
</div>
</td>
<td>
 
</td>
<td align="left" valign="bottom">
November 12, 2004
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
650
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
639
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
5.875
</td>
<td nowrap="nowrap" align="left" valign="bottom">
%
</td>
<td>
 
</td>
<td align="center" valign="bottom">
January 15, 2010
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
102.938
</td>
<td nowrap="nowrap" align="left" valign="bottom">
%
</td>
</tr>
<tr valign="bottom">
<td align="left" valign="top">
<div style="text-indent: -8pt; margin-left: 8pt">
6<sup style="font-size: 85%; vertical-align: top">3</sup>/<sub style="font-size: 85%; vertical-align: text-bottom">8</sub>% Senior
Subordinated Notes due October 15, 2015
</div>
</td>
<td>
 
</td>
<td align="left" valign="bottom">
July 29, 2005
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
1,000
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
9
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
972
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
6.470
</td>
<td nowrap="nowrap" align="left" valign="bottom">
%
</td>
<td>
 
</td>
<td align="center" valign="bottom">
October 15, 2010
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
103.188
</td>
<td nowrap="nowrap" align="left" valign="bottom">
%
</td>
</tr>
</table>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #ffffff">
</div>
<div style="margin-top: 6pt; font-size: 1pt"> 
</div>
<div style="font-size: 1pt; margin-left: 0%; width: 13%; align: left; border-bottom: 1pt solid #000000">
</div>
<div style="margin-top: 3pt; font-size: 1pt"> 
</div>
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #ffffff; text-align: left">
<tr>
<td width="1%"></td>
<td width="1%"></td>
<td width="98%"></td>
</tr>
<tr>
<td valign="top">
<font style="font-size: 8pt"><sup style="font-size: 85%; vertical-align: top">(1)</sup></font></td>
<td></td>
<td valign="bottom">
<font style="font-size: 8pt">Discounts are recorded as a
reduction to the principal amount of the notes and are amortized
as interest expense over the term of the notes.
</font></td>
</tr>
<tr style="line-height: 3pt; font-size: 1pt">
<td> </td>
</tr>
<tr>
<td valign="top">
<font style="font-size: 8pt"><sup style="font-size: 85%; vertical-align: top">(2)</sup></font></td>
<td></td>
<td valign="bottom">
<font style="font-size: 8pt">Notes are subject to redemption at
any time, at the option of L-3 Communications, in whole or in
part, on or after the call date.
</font></td>
</tr>
<tr style="line-height: 3pt; font-size: 1pt">
<td> </td>
</tr>
<tr>
<td valign="top">
<font style="font-size: 8pt"><sup style="font-size: 85%; vertical-align: top">(3)</sup></font></td>
<td></td>
<td valign="bottom">
<font style="font-size: 8pt">Redemption prices (plus accrued and
unpaid interest) include a premium on the principal amount (plus
accrued and unpaid interest). The prices above represent the
current redemption prices or the price during the
<font style="white-space: nowrap">12-month</font>
period starting on the first allowable date of redemption, which
decline annually to 100% of principal (plus accrued and unpaid
interest) starting three years from the first allowable date of
redemption, and thereafter.
</font></td>
</tr>
</table>
<div style="margin-top: 9pt; font-size: 1pt"> 
</div>
<div align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #ffffff">
<b><i><font style="font-family: 'Times New Roman', Times">L-3
Holdings</font></i></b>
</div>
<div style="margin-top: 9pt; font-size: 1pt"> 
</div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #ffffff">
On July 29, 2005, L-3 Holdings sold $600 million of
3% Convertible Contingent Debt Securities (CODES) due
August 1, 2035. Interest is payable semi-annually on
February 1 and August 1 of each year. On August 4, 2005,
L-3 Holdings sold an additional $100 million of CODES,
pursuant to an over-allotment option exercised by the initial
purchasers of the CODES. Effective January 1, 2009, the
Company is separately accounting for the liability and equity
(conversion option) components of the CODES in a manner that
reflects the Company’s non-convertible debt borrowing rate
when interest expense is realized in accordance with the
provisions of the accounting standard for convertible debt. The
effective interest rate of the CODES is 6.33%. Interest expense
relates to both the contractual coupon interest and amortization
of the discount on the liability components. Interest expense
recognized was $42 million and $41 million for the
years ended December 31, 2009 and December 31, 2008,
respectively. The following table provides the carrying amount
of the liability and equity (conversion option) of the
Company’s CODES:
</div>
<div style="margin-top: 6pt; font-size: 1pt"> 
</div>
<table border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #ffffff; text-align: left">
<!-- Table Width Row BEGIN -->
<tr style="font-size: 1pt" valign="bottom">
<td width="73%"> </td><!-- colindex=01 type=maindata -->
<td width="2%"> </td><!-- colindex=02 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=02 type=lead -->
<td width="9%" align="right"> </td><!-- colindex=02 type=body -->
<td width="1%" align="left"> </td><!-- colindex=02 type=hang1 -->
<td width="3%"> </td><!-- colindex=03 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=03 type=lead -->
<td width="9%" align="right"> </td><!-- colindex=03 type=body -->
<td width="1%" align="left"> </td><!-- colindex=03 type=hang1 -->
</tr>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>December 31,<br />
</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>December 31,<br />
</b>
</td>
<td>
 
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>2009</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>2008</b>
</td>
<td>
 
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="6" align="center" valign="bottom">
<b>(in millions)</b>
</td>
<td>
 
</td>
</tr>
<tr style="line-height: 3pt; font-size: 1pt">
<td> 
</td>
</tr>
<!-- TableOutputBody -->
<tr valign="bottom" style="background: #cceeff">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Carrying amount of the equity component (conversion feature)
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
64
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
64
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Unamortized discount of liability component being amortized
through February 1, 2011
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
24
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
45
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Net carrying amount of liability component
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
  676
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
  655
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
</table>
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<b>
<font style="font-family: 'Times New Roman', Times">
</font>
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<div style="margin-top: 6pt; font-size: 1pt"> 
</div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #ffffff">
The CODES are convertible into cash and shares of L-3
Holdings’ common stock based on a conversion rate of
9.9862 shares of L-3 Holdings common stock per one thousand
dollars in principal amount of the CODES (equivalent to a
conversion price of $100.14 per share) only under the following
circumstances: (1) prior to August 1, 2033, on any
date during any fiscal quarter (and only during such fiscal
quarter) beginning after September 30, 2005, if the closing
sales price of the common stock of L-3 Holdings is more than
120% of the then current conversion price (currently $120.17)
for at least 20 trading days in the 30 consecutive
<font style="white-space: nowrap">trading-day</font>
period ending on the last trading day of the previous fiscal
quarter; (2) on or after August, 1, 2033, at all times on
or after any date on which the closing sale price of the common
stock of L-3 Holdings is more than 120% of the then current
conversion price (currently $120.17); (3) if we distribute
to all holders of our common stock, rights or warrants (other
than pursuant to a rights plan) entitling them to purchase, for
a period of 45 calendar days or less, shares of
<font style="white-space: nowrap">L-3</font>
Holdings’ common stock at a price less than the average
closing sales price for the ten trading days preceding the
declaration date for such distribution; (4) if we
distribute to all holders of our common stock, cash and other
assets, debt securities or rights to purchase L-3 Holdings’
securities (other than pursuant to a rights plan), which
distribution has a per share value exceeding 10% of the closing
sale price of L-3 Holdings common stock on the trading day
preceding the declaration date for such distribution;
(5) during the five consecutive
<font style="white-space: nowrap">business-day</font>
period following any five consecutive
<font style="white-space: nowrap">trading-day</font>
period in which the average trading price of the CODES was less
than 98% of the average of the closing sale price of L-3
Holdings common stock during such five trading day period
multiplied by the then current conversion rate; (6) during
a specified period if the CODES have been called for redemption;
or (7) during a specified period if a “fundamental
change” (as such term is defined in the indenture governing
the CODES) occurs. The conversion rate is subject to adjustments
in certain circumstances set forth in the indenture governing
the CODES. For the year ended December 31, 2009, the
conversion feature of the CODES had no impact on diluted
earnings per share (EPS) (see Note 16).
</div>
<div style="margin-top: 6pt; font-size: 1pt"> 
</div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #ffffff">
Upon conversion of the CODES, the settlement amount will be
computed as follows: (1) if L-3 Holdings elects to satisfy
the entire conversion obligation in cash, L-3 Holdings will
deliver to the holder for each one thousand dollars in principal
amount of the CODES converted cash in an amount equal to the
conversion value; or (2) if L-3 Holdings elects to satisfy
the conversion obligation in a combination of cash and common
stock, L-3 Holdings will deliver to the holder for each one
thousand dollars in principal amount of the CODES converted
(x) cash in an amount equal to (i) the fixed dollar
amount per one thousand dollars in principal amount of the CODES
of the conversion obligation to be satisfied in cash specified
in the notice regarding L-3 Holdings’ chosen method of
settlement or, if lower, the conversion value, or (ii) the
percentage of the conversion obligation to be satisfied in cash
specified in the notice regarding L-3 Holdings chosen method of
settlement multiplied by the conversion value, as the case may
be (the “cash amount”); provided that in either case
the cash amount shall in no event be less than the lesser of
(a) the principal amount of the CODES converted and
(b) the conversion value; and (y) a number of shares
of common stock of L-3 Holdings for each of the 20 trading days
in the conversion period equal to 1/20th of (i) the
conversion rate then in effect minus (ii) the quotient of
the cash amount divided by the closing price of common stock of
L-3 Holdings for that day (plus cash in lieu of fractional
shares, if applicable).
</div>
<div style="margin-top: 6pt; font-size: 1pt"> 
</div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #ffffff">
The CODES are senior unsecured obligations of L-3 Holdings and
rank equal in right of payment with all existing and future
senior indebtedness and senior to all future senior subordinated
indebtedness of L-3 Holdings. The CODES are jointly and
severally guaranteed on a senior subordinated basis by the
existing and future domestic subsidiaries of L-3 Holdings that
guarantee any other indebtedness of L-3 Holdings or any of its
domestic subsidiaries.
</div>
<div style="margin-top: 6pt; font-size: 1pt"> 
</div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #ffffff">
At any time on or after February 1, 2011, the CODES are
subject to redemption at the option of L-3 Holdings, in whole or
in part, at a cash redemption price (plus accrued and unpaid
interest, including contingent interest and additional interest,
if any) equal to 100% of the principal amount of the CODES.
</div>
<div style="margin-top: 6pt; font-size: 1pt"> 
</div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #ffffff">
Holders of the CODES may require L-3 Holdings to repurchase the
CODES, in whole or in part, on February 1, 2011,
February 1, 2016, February 1, 2021, February 1,
2026 and February 1, 2031 at a cash repurchase price equal
to 100% of the principal amount of the CODES (plus accrued and
unpaid interest, including contingent interest and
additional interest, if any). In addition, holders of the CODES
may require L-3 Holdings to repurchase the CODES at a repurchase
price equal to 100% of the principal amount of the CODES (plus
accrued and unpaid interest, including contingent interest and
additional interest, if any) if a “fundamental change”
occurs prior to maturity of the CODES.
</div>
<div style="margin-top: 9pt; font-size: 1pt"> 
</div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #ffffff">
Holders of the CODES have a right to receive contingent interest
payments, which will be paid on the CODES during any six-month
period commencing February 1, 2011 in which the trading
price of the CODES for each of the five trading days ending on
the second trading day preceding the first day of the applicable
six-month interest period equals or exceeds 120% of the
principal amount of the CODES. The contingent interest payable
per one thousand dollars in principal amount of CODES will equal
0.25% of the average trading price of one thousand dollars in
principal amount of CODES during the five trading days ending on
the second trading day preceding the first day of the applicable
six-month interest period. The contingent interest payment
provision has been accounted for as an embedded derivative. The
embedded derivative had an initial fair value of zero. The
amount assigned to the embedded derivative will be adjusted
periodically through other income (expense) for changes in its
fair value, if any.
</div>
<div style="margin-top: 9pt; font-size: 1pt"> 
</div>
<div align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #ffffff">
<b><i><font style="font-family: 'Times New Roman', Times">Guarantees</font></i></b>
</div>
<div style="margin-top: 9pt; font-size: 1pt"> 
</div>
<div align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #ffffff">
<i><font style="font-family: 'Times New Roman', Times">L-3
Communications</font></i>
</div>
<div style="margin-top: 9pt; font-size: 1pt"> 
</div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #ffffff">
The borrowings under the Revolving Credit Facility are fully and
unconditionally guaranteed by L-3 Holdings and by substantially
all of the material wholly-owned domestic subsidiaries of L-3
Communications on an unsecured senior basis. The payment of
principal and premium, if any, and interest on the Senior Notes
are fully and unconditionally guaranteed, on an unsecured senior
basis, jointly and severally, by L-3 Communications’
material wholly-owned domestic subsidiaries that guarantee any
of its other indebtedness. The payment of principal and premium,
if any, and interest on the Senior Subordinated Notes are fully
and unconditionally guaranteed, on an unsecured senior
subordinated basis, jointly and severally, by L-3
Communications’ material wholly-owned domestic subsidiaries
that guarantee any of its other indebtedness.
</div>
<div style="margin-top: 9pt; font-size: 1pt"> 
</div>
<div align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #ffffff">
<i><font style="font-family: 'Times New Roman', Times">L-3
Holdings</font></i>
</div>
<div style="margin-top: 9pt; font-size: 1pt"> 
</div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #ffffff">
The payment of principal and premium, if any, and interest on
the CODES are fully and unconditionally guaranteed, on an
unsecured senior subordinated basis, jointly and severally, by
certain of L-3 Holdings’ wholly-owned domestic subsidiaries.
</div>
<div style="margin-top: 9pt; font-size: 1pt"> 
</div>
<div align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #ffffff">
<b><i><font style="font-family: 'Times New Roman', Times">Subordination</font></i></b>
</div>
<div style="margin-top: 9pt; font-size: 1pt"> 
</div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #ffffff">
The guarantees of the Revolving Credit Facility and the Senior
Notes rank senior to the guarantees of the Senior Subordinated
Notes and the CODES and pari passu with each other. The
guarantees of the Senior Subordinated Notes and CODES rank pari
passu with each other and are junior to the guarantees of the
Revolving Credit Facility and Senior Notes.
</div>
<div style="margin-top: 9pt; font-size: 1pt"> 
</div>
<div align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #ffffff">
<b><i><font style="font-family: 'Times New Roman', Times">Covenants</font></i></b>
</div>
<div style="margin-top: 9pt; font-size: 1pt"> 
</div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #ffffff">
<i>Financial and other restrictive covenants.</i> The Revolving
Credit Facility and Senior Subordinated Notes indentures contain
financial and other restrictive covenants that limit, among
other things, the ability of the subsidiaries of L-3
Communications to borrow additional funds, and the ability of
L-3 Communications and its subsidiaries to incur liens, make
investments, merge or consolidate, dispose of assets, pay
dividends or repurchase its common stock. The Company’s
Revolving Credit Facility contains covenants that require that
(1) the Company’s consolidated leverage ratio be less
than or equal to 4.0 to 1.0; (2) the Company’s
consolidated interest coverage ratio
be greater than or equal to 3.0 to 1.0; and (3) the
Company’s consolidated senior leverage ratio be less than
or equal to 3.5 to 1.0, in each case, as of the end of any
fiscal quarter. Calculations of the financial covenants are to
exclude, among other things, certain items such as impairment
losses on goodwill or other intangible assets, non-cash gains or
losses from discontinued operations, gains or losses in
connection with asset dispositions, and gains or losses with
respect to judgments or settlements in connection with
litigation matters. As of December 31, 2009, the Company
was in compliance with its financial and other restrictive
covenants.
</div>
<div style="margin-top: 9pt; font-size: 1pt"> 
</div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #ffffff">
The Senior Indenture contains covenants customary for investment
grade notes, including covenants that restrict the ability of
L-3 Communications and its wholly-owned domestic subsidiaries to
create, incur, assume or permit to exist any lien, except
permitted liens (as defined in the Senior Indenture) and
restrict the ability of L-3 Communications and its subsidiaries
to enter into certain sale and leaseback transactions (as
defined in the Senior Indenture).
</div>
<div style="margin-top: 9pt; font-size: 1pt"> 
</div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #ffffff">
The Senior Subordinated Notes indentures contain covenants that
restrict the ability of L-3 Communications to incur indebtedness
and issue capital stock that matures or is redeemable
91 days or less after the maturity date of such series of
notes, and the ability of its restricted subsidiaries to incur
indebtedness or issue preferred stock, unless the Company’s
fixed charge coverage ratio would have been at least 2.0 to 1.0
on a pro forma basis. The covenants are subject to several
material exceptions, including an exception for indebtedness
under the Company’s credit facilities up to a specified
amount.
</div>
<div style="margin-top: 9pt; font-size: 1pt"> 
</div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #ffffff">
<i>Restricted Payments.</i> L-3 Holdings relies on dividends
paid by L-3 Communications to generate the funds necessary to
pay dividends on and repurchase its common stock. The Revolving
Credit Facility contains provisions that limit the ability of
L-3 Communications to pay dividends, repurchase L-3
Holdings’ common stock or other distributions with respect
to any capital stock and make investments in L-3 Holdings.
However, the Revolving Credit Facility permits L-3
Communications to:
</div>
<div style="margin-top: 6pt; font-size: 1pt"> 
</div>
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="text-align: left">
<tr>
<td width="4%"></td>
<td width="3%"></td>
<td width="93%"></td>
</tr>
<tr valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #ffffff">
<td> </td>
<td> •  
</td>
<td align="left">
fund payments of interest on indebtedness of L-3 Holdings and to
fund payments of dividends on disqualified preferred stock
issued by L-3 Holdings, so long as (1) any such
indebtedness or disqualified preferred stock is guaranteed by
L-3 Communications and (2) the proceeds received by L-3
Holdings from the issuance of such indebtedness or disqualified
preferred stock have been invested by L-3 Holdings in L-3
Communications;
</td>
</tr>
<tr style="line-height: 3pt; font-size: 1pt">
<td> </td>
</tr>
<tr valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #ffffff">
<td> </td>
<td> •  
</td>
<td align="left">
fund payments and prepayments of principal of indebtedness of
L-3 Holdings and to fund optional and mandatory redemptions of
disqualified preferred stock issued by L-3 Holdings, so long as
(1) any such indebtedness or disqualified preferred stock
is guaranteed by L-3 Communications and (2) the amount of
such fundings does not exceed the sum of (a) the aggregate
amount of investments made by L-3 Holdings in L-3 Communications
with the proceeds from any issuance of indebtedness or
disqualified preferred stock by
<font style="white-space: nowrap">L-3</font> Holdings
that is guaranteed by L-3 Communications and (b) the amount of
any premium, penalty, or accreted value payable in connection
with such payment, prepayment or redemption;
</td>
</tr>
<tr style="line-height: 6pt; font-size: 1pt">
<td> </td>
</tr>
<tr valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #ffffff">
<td> </td>
<td> •  
</td>
<td align="left">
pay other dividends on and make other redemptions of its equity
interests (including for the benefit of L-3 Holdings) and make
other investments in L-3 Holdings, so long as no default or
event of default has occurred and is continuing, up to an
aggregate amount of $2.0 billion, increased (or decreased)
on a cumulative basis at the end of each quarter, commencing
with the quarter ended December 31, 2009 by an amount equal
to 50% of the consolidated net income (or deficit) of L-3
Communications for the quarter, plus (1) 100% of the
proceeds from any issuance of capital stock (other than
disqualified preferred stock) by L-3 Holdings after
October 23, 2009, provided those proceeds were invested in
L-3 Communications, plus (2) 100% of the proceeds from any
issuance of indebtedness or disqualified preferred stock by L-3
Holdings after October 23, 2009 provided those proceeds
were invested in L-3 Communications and the indebtedness or
disqualified preferred stock is not
guaranteed by L-3 Communications, plus (3) 100% of the
proceeds from any issuance of capital stock (other than
disqualified preferred stock) by L-3 Communications after
October 23, 2009.
</td>
</tr>
</table>
<div style="margin-top: 9pt; font-size: 1pt"> 
</div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #ffffff">
Disqualified preferred stock discussed above is stock, other
than common stock, that is not classified as a component of
shareholders’ equity on the balance sheet. At
December 31, 2009, L-3 Holdings and L-3 Communications did
not have any disqualified preferred stock.
</div>
<div style="margin-top: 9pt; font-size: 1pt"> 
</div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #ffffff">
The Senior Subordinated Notes indentures contain provisions that
limit the ability of L-3 Communications to pay dividends to L-3
Holdings and make investments in L-3 Holdings, subject to
exceptions. Subject to certain limitations, the indentures
permit L-3 Communications to make such restricted payments so
long as it would be able to incur at least one dollar of
additional indebtedness under the fixed charge coverage ratio
test described above and meet other conditions.
</div>
<div style="margin-top: 9pt; font-size: 1pt"> 
</div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #ffffff">
<i>Cross default provisions.</i>  The Revolving Credit
Facility contains cross default provisions that are triggered
when a payment default occurs or certain other defaults occur
that would allow the acceleration of indebtedness, swap
contracts or guarantees of L-3 Holdings, L-3 Communications or
its subsidiaries, so long as the aggregate amount of such
indebtedness, swap contracts or guarantees is at least
$50 million and such defaults (other than payment defaults
and defaults that have resulted in acceleration) have not been
cured within 10 days. The Senior Subordinated Notes
indentures contain cross acceleration provisions that are
triggered when holders of the indebtedness of L-3 Holdings, L-3
Communications or their restricted subsidiaries (or the payment
of which is guaranteed by such entities) accelerate at least
$10 million in aggregate principal amount of those
obligations. The Senior Notes indenture contains a cross
acceleration provision that is triggered when a default or
acceleration occurs under any indenture or instrument of L-3
Communications or its subsidiaries or the payment of which is
guaranteed by L-3 Communications or its subsidiaries in an
aggregate amount of at least $100 million.
</div>
</div>
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