DESCRIPTION OF DEBT SECURITIES
The following is a general description of the Debt Securities that may be issued from time to time by us under this prospectus. The particular terms relating to each Debt Security will be set forth in a prospectus supplement. In the description of the Debt Securities that follows, “we,” “us,” and “our” refer only to Lockheed Martin Corporation and not to any of its subsidiaries.
General
We may issue from time to time one or more series of Debt Securities under an indenture between us and U.S. Bank National Association, as trustee. The indenture does not limit the amount of Debt Securities that we may issue.
The Debt Securities will be our direct, unsecured and unsubordinated obligations, and may be issued either separately or together with, or upon the conversion of, or in exchange for, other securities.
The following description does not purport to be complete, is only a summary of the material provisions of the indenture for the Debt Securities and is qualified in its entirety by reference to the indenture, a copy of which is filed as an exhibit to the registration statement of which this prospectus is a part. We urge you to read the indenture because it, and not this description, defines your rights as a holder of the Debt Securities. The summary below of the general terms of the Debt Securities will be supplemented by the more specific terms in the prospectus supplement for a particular series of Debt Securities.
Terms
The indenture provides for the issuance of Debt Securities in one or more series. A prospectus supplement relating to a series of Debt Securities will include specific terms relating to that offering. These terms will include some or all of the following:
◦the title of the Debt Securities;
◦any limit on the total principal amount of the Debt Securities;
◦the price or prices at which we will sell the Debt Securities;
◦the maturity date or dates of the Debt Securities;
◦the rate or rates, which may be fixed or variable, at which the Debt Securities will bear interest and the date from which such interest will accrue;
◦the dates on which interest will be payable and the related record dates;
◦whether any index, formula or other method will be used to determine payments of principal or interest and the manner of determining the amount of such payments;
◦the place or places where principal and interest payments on the Debt Securities will be payable;
◦whether the Debt Securities are redeemable;
◦any redemption dates, prices, obligations and restrictions on the Debt Securities;
◦any mandatory or optional sinking fund or purchase fund or analogous provisions;
◦the denominations in which the Debt Securities will be issued, if other than $1,000 or multiples of $1,000;
◦the currency in which principal and interest will be paid, if other than U.S. dollars;
◦any provisions granting special rights upon the occurrence of specified events;
◦any deletions from, changes in or additions to the events of default or the covenants specified in the indenture;
◦any trustees, authenticating or paying agents, transfer agents, registrars or other agents for the Debt Securities if other than U.S. Bank National Association;
◦any conversion or exchange features of the Debt Securities;
◦whether we will issue the Debt Securities as original issue discount securities for federal income tax purposes;
◦any special tax implications of the Debt Securities;
◦the terms of payment upon acceleration; and
◦any other material terms of the Debt Securities.
We may issue Debt Securities that are convertible into or exchangeable for our common stock or other securities of Lockheed Martin or another company. We may also continuously offer Debt Securities in a medium term note program. If we issue these types of Debt Securities, we will provide additional information in a prospectus supplement.
We may sell Debt Securities at a discount below their stated principal amount, bearing no interest or interest at a rate that, at the time of issuance, is different than market rates. When we refer to the principal and interest on Debt Securities, we also mean the payment of any additional amounts that we are required to pay under the indenture or the Debt Securities, including amounts for certain taxes, assessments or other governmental charges imposed on holders of Debt Securities.
Denomination, Form, Payment and Transfer
In general, we will denominate and make payments on Debt Securities in U.S. dollars. If we issue Debt Securities denominated, or with payments, in a foreign or composite currency, a prospectus supplement will specify the currency or composite currency.
We may from time to time issue Debt Securities as registered securities. This means that holders will be entitled to receive certificates representing the Debt Securities registered in their name. You can transfer or exchange Debt Securities in registered form upon reimbursement of any taxes or government charges. This transfer or exchange can be made at the trustee’s corporate trust office or at any other office maintained by us for such purposes. We may charge a reasonable fee in connection with certain transfers and exchanges. If the Debt Securities are in registered form, we can pay interest by check mailed to the person in whose name the Debt Securities are registered on the days specified in the indenture.
As a general rule, however, we will issue Debt Securities in the form of one or more global certificates that will be deposited with The Depository Trust Company, New York, New York (“DTC”) and registered in the name of Cede & Co., as nominee of DTC, or such other name as may be requested by an authorized representative of DTC. DTC will act as depository for the global certificates.
Beneficial interests in global certificates will be shown on, and transfer of beneficial interests will be effected only through, records maintained by DTC and its participants. Therefore, if you wish to own Debt Securities that are represented by one or more global certificates, you can do so only indirectly or “beneficially” through an account with a broker, bank or other financial institution that has an account with DTC (that is, a DTC participant) or through an account directly with DTC if you are a DTC participant.
During the period of time the Debt Securities are represented by one or more global certificates:
◦you will not be able to have the Debt Securities registered in your name;
◦you will not be able to receive a physical certificate for the Debt Securities;
◦DTC will credit interest and principal payments from us to the accounts of your broker, bank or other financial institution according to their beneficial ownership as reflected in DTC’s records;
◦our obligations, as well as the obligations of the trustee and any of our agents, under the Debt Securities will run only to DTC as the registered owner of the Debt Securities. For example, once we make payment to DTC, we will have no further responsibility for the payment even if DTC or your broker, bank or other financial institution fails to pass it on so that you receive it;
◦your rights under the Debt Securities relating to payments, transfer, exchanges and other matters will be governed by applicable law and by the contractual arrangements between you and your broker, bank or other financial institution, and the contractual arrangements you have or your broker, bank or financial institution has with DTC. Neither we nor the trustee will have any responsibility for the actions of DTC or your broker, bank or financial institution;
◦you may not be able to sell your interests in the Debt Securities to some insurance companies and others who are required by law to own their Debt Securities in the form of physical certificates; and
◦because the Debt Securities will trade in DTC’s Same-Day Funds Settlement System, when you buy or sell interests in the Debt Securities, payment for them will have to be made in immediately available funds. This could affect the attractiveness of the Debt Securities to others.
We, the trustee, and the paying agent have no responsibility or liability for the records relating to beneficial ownership interests in the global certificates or for the payments of principal and interest for the accounts of beneficial holders of interests in the global certificates. A global certificate generally can be transferred only as a whole, unless it is being transferred to certain
nominees of DTC or it is exchanged in whole or in part for Debt Securities in physical form in accordance with the indenture. A series of Debt Securities represented by global certificates will be exchangeable for Debt Securities in registered form with the same terms in authorized denominations if:
◦DTC notifies us that it is unwilling or unable to continue as depositary or if DTC ceases to be a clearing agency registered under applicable law and we do not appoint a successor depositary within 90 days; or
◦we decide not to require all of the Debt Securities of a series to be represented by global certificates and notify the trustee of that decision.
Events of Default
Unless we indicate otherwise in a prospectus supplement, the following are events of default under the indenture with respect to each series of Debt Securities:
◦failure to pay the principal or any premium on any Debt Security of that series when due at maturity, upon redemption, or otherwise;
◦failure for 30 days to pay interest on any Debt Security of that series when due;
◦failure to comply with any other agreement relating to the Debt Securities of that series or in the indenture that continues for 90 days after we have received written notice of such failure from the trustee or the holders of at least 25% in aggregate principal amount of the Debt Securities of the affected series; or
◦certain events of bankruptcy, insolvency or reorganization.
An event of default for one series of Debt Securities does not necessarily constitute an event of default for any other series. The trustee may withhold notice to the Debt Securities holders of any default, except a payment default, if it determines in good faith that such action is in the holders’ interests.
If an event of default occurs and continues, the trustee, or the holders of at least 25% in aggregate principal amount of the Debt Securities of the affected series, may declare the entire principal of, and any premium or accrued interest on, all the Debt Securities of that series to be due and payable immediately. Upon such declaration, subject to certain conditions, the holders of a majority of the aggregate principal amount of the Debt Securities of that series, by notice to the trustee, may rescind an acceleration of payment and its consequences.
The holders of a majority in principal amount of any series of Debt Securities have the right to direct any proceeding, remedy or power available to the trustee with respect to that series, subject to certain limitations. The trustee may refuse to follow any direction that conflicts with law or the indenture, is unduly prejudicial to the rights of other holders of Debt Securities of the same series, or would involve the trustee in personal liability. The trustee also has no obligation to exercise any of its rights at the request or direction of any of the holders, unless the holders have offered the trustee a satisfactory indemnity against the costs, expenses and liabilities that the trustee may incur in compliance with such request or direction.
Conversion Rights
We will describe the terms upon which Debt Securities may be convertible into our common stock or other securities of Lockheed Martin or another company in a prospectus supplement. These terms will include provisions as to whether conversion is mandatory or optional. They also may include provisions adjusting the number of shares of our common stock or such other securities of Lockheed Martin or another company that are issuable upon any such conversion.
Certain Covenants
Unless the applicable prospectus supplement specifies otherwise, the Debt Securities will be subject to the restrictive covenants described below. Any additional restrictive covenants applicable to a particular series of Debt Securities that we offer will be described in the applicable prospectus supplement. Under the indenture, among other things, we agree to:
◦promptly pay the principal, interest and any premium on the Debt Securities on the dates and in the manner provided in the Debt Securities;
◦maintain a place of payment; and
◦deliver to the trustee copies of our SEC reports within 15 days after we file with the SEC and a compliance certificate within 120 days after the end of each fiscal year that certifies our compliance with, or any defaults under, our covenants under the indenture.
The indenture restricts our ability and the ability of our restricted subsidiaries, as defined below, to encumber assets that are defined in the indenture as restricted property. If we, or any restricted subsidiary, pledge, mortgage, or grant a security interest or incur a lien on, any of our restricted property to secure any debt, then we will, unless an exception applies, pledge, mortgage, or grant a security interest or incur a lien on, the same property to or for the benefit of the trustee to secure the Debt Securities equally and ratably for as long as such debt is secured by such property.
This restriction will not apply in certain situations. Assets may be encumbered if the encumbrance is a permitted lien, as defined below, without regard to the amount of debt secured by the encumbrance. Assets also may be encumbered if the sum of the following does not exceed 10% of our consolidated net tangible assets:
◦the amount of debt secured by such assets; plus
◦the total amount of other secured debt on restricted property, excluding debt that is secured by a permitted lien and excluding debt secured by a lien existing on the date of the indenture; plus
◦the total amount of attributable debt in respect of certain sale-leaseback transactions.
Permitted liens include:
◦liens that equally and ratably secure the Debt Securities and the debt;
◦liens on a corporation’s property, stock or debt at the time it becomes a restricted subsidiary;
◦liens on property at the time we or a restricted subsidiary acquires the property, provided that no such lien extends to any other restricted property owned by us or a restricted subsidiary at the time the property is acquired;
◦liens securing payment of all or part of a property’s purchase price upon the acquisition of such property or to secure debt incurred or guaranteed prior to, at the time of or within one year after the later of the property’s acquisition, completion of construction (including any improvements on existing property) or commencement of full operations of such property, for the purpose of financing the purchase price or construction or improvements on the property;
◦liens securing debt owed by a restricted subsidiary to us or another restricted subsidiary;
◦liens on property of an entity at the time such entity is merged into or consolidated with us or a restricted subsidiary or at the time we or a restricted subsidiary acquire all or substantially all of the assets of the entity;
◦liens in favor of any customer to secure payments or performance pursuant to any contract or statute, any related indebtedness or debt guaranteed by a government or governmental authority;
◦liens arising pursuant to any order of attachment, distraint or similar legal process so long as the execution or other enforcement is effectively stayed and the claims secured are being contested in good faith by appropriate proceedings;
◦materialmen’s, suppliers’, tax or similar liens arising in the ordinary course of business for sums not overdue or which are being contested in good faith by appropriate proceedings; and
◦any renewal, extension or replacement for any lien permitted by one of the exceptions described above or a lien existing on the date that Debt Securities of a series are first issued, provided that the renewal, extension or replacement is limited to all or any part of the same property subject to the existing lien.
Except in certain circumstances, the indenture also restricts our ability and the abilities of our restricted subsidiaries to enter into sale-leaseback transactions, as defined below. The indenture will not otherwise limit our ability to incur additional debt, unless we disclose such limitations in a prospectus supplement.
The following are summaries of definitions for certain terms used in the covenants. For the full definition of these terms, you should refer to the indenture filed as an exhibit to the registration statement.
◦“Attributable debt” for a lease means the carrying value of the capitalized rental obligation determined under U.S. generally accepted accounting principles.
◦“Consolidated net tangible assets” means our total assets, including the assets of our consolidated subsidiaries, less total current liabilities, goodwill, patents and trademarks, all as reflected in our most recent consolidated balance sheet at the time a determination is being made.
◦“Lien” means any mortgage, pledge, security interest or lien.
◦“Principal property” means, with certain exceptions, any manufacturing facility located in the United States and owned by us or by one or more restricted subsidiaries and which has, as of the date the lien is incurred, a net book value, after deduction of depreciation and similar charges, greater than 3% of consolidated net tangible assets, or any manufacturing facility or other property declared to be a principal property by our chief executive officer or chief financial officer by delivery of a certificate to that effect to the trustee.
◦“Restricted property” means, as to any particular series of Debt Securities, any principal property, any debt of a restricted subsidiary owned by us or one of our restricted subsidiaries on the date Debt Securities of the series are first issued or secured by a principal property, or any shares of our stock or the stock of a restricted subsidiary owned by us or one of our restricted subsidiaries.
◦“Restricted subsidiary” means one of our subsidiaries that has substantially all of its assets located in, or carries on substantially all of its business in, the United States and that owns a principal property, except that a subsidiary shall not be a restricted subsidiary if its shares are registered with the SEC or if it is required to file periodic reports with the SEC.
◦“Sale-leaseback transaction” means, subject to certain exceptions, an arrangement pursuant to which we, or a restricted subsidiary, transfer a principal property to a person and contemporaneously lease it back from that person.
Consolidation, Merger or Sale
The indenture prohibits us from consolidating with or merging into another corporation, or transferring all or substantially all of our assets to another corporation unless:
◦the resulting, surviving or transferee corporation assumes by supplemental indenture all of our obligations under the Debt Securities and the indenture;
◦immediately after giving effect to the transaction, no event of default and no circumstances which, after notice or lapse of time or both, would become an event of default, shall have happened and be continuing; and
◦we have delivered to the trustee an officers’ certificate and a legal opinion confirming that we have complied with the indenture.
If we enter into such a transaction and comply with these provisions, our obligations under the Debt Securities and the indenture will terminate.
Redemption, Sinking Fund, Discharge and Defeasance
If a series of Debt Securities may be redeemed or is subject to a sinking fund, the prospectus supplement will describe those terms.
The indenture permits us to satisfy and discharge our obligations or defease certain of our obligations for any series of Debt Securities at any time. We may discharge our obligations with respect to a series of Debt Securities or defease certain of our obligations with respect to a series of Debt Securities by irrevocably depositing with the trustee cash or government securities sufficient to pay all sums due on that series and by delivering to the trustee an opinion of counsel to the effect that, based on applicable U.S. federal income tax law or a ruling published by the U.S. Internal Revenue Service, the discharge or defeasance, as the case may be, will not be deemed, or result in, a taxable event with respect to the holders of that series. Under certain circumstances, upon deposit of such cash or government securities and delivery of such opinion of counsel, our legal obligation to pay principal, interest and any premium on that series will be discharged. We can discharge or defease one series of Debt Securities without discharging or defeasing any other series.
Amendments, Supplements and Waivers
Without notice to or consent of any holder of the Debt Securities, we may amend or supplement the indenture to cure any ambiguity, omission, defect or inconsistency or to clarify or make certain other changes that would not materially adversely affect the rights of any holder.
Without notice to any holder but with the written consent of holders of not less than a majority in principal amount of the Debt Securities of a particular series affected, we may amend or supplement the indenture or the Debt Securities of such series. Without notice to any holder, the holders of a majority in principal amount of the Debt Securities of an affected series may waive compliance by us with any provision of the indenture as it applies to such series or any provision of the Debt Securities of such series. However, without the consent of each holder affected by a change, no amendment, supplement, or waiver may:
◦reduce the amount of securities of any series required to consent to a particular amendment, supplement, or waiver;
◦reduce the interest rate or extend the interest payment date on any Debt Securities;
◦reduce the principal of or extend the fixed maturity date of any Debt Securities;
◦reduce the portion of the principal amount of a discounted security payable upon acceleration; or
◦make any Debt Securities payable in any currency or currency unit other than the one stated in the security.
We may enter into supplemental indentures for other specified purposes and to make changes that would not materially adversely affect your interests, including the creation of any new series of Debt Securities, without the consent of any holder of Debt Securities.
Trustee
U.S. Bank National Association serves as the trustee under the indenture. If we use a different trustee for any series of debt securities, the prospectus supplement will identify the trustee. We conduct other banking transactions with U.S. Bank National Association and its affiliates in the ordinary course of their business.
Governing Law
The laws of the state of Maryland govern the indenture and the Debt Securities.