sec document
As filed with the Securities and Exchange Commission on September 9, 2005
Registration No. 333-126335
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
--------------------------
AMENDMENT NO. 2 TO
FORM S-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
LYNCH CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
INDIANA 38-1799862
(State or Other Jurisdiction of (I.R.S. Employer Identification Number)
Incorporation or Organization)
140 GREENWICH AVENUE, 4TH FLOOR
GREENWICH, CONNECTICUT 06830
(203) 622-1150
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
-----------------------------
JOHN C. FERRARA
PRESIDENT AND CHIEF EXECUTIVE OFFICER
LYNCH CORPORATION
140 GREENWICH AVENUE, 4TH FLOOR
GREENWICH, CONNECTICUT 06830
(203) 622-1150
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent For Service)
-----------------------------
Copy to:
DAVID J. ADLER, ESQ.
OLSHAN GRUNDMAN FROME ROSENZWEIG & WOLOSKY LLP
PARK AVENUE TOWER
65 EAST 55TH STREET
NEW YORK, NEW YORK 10022
(212) 451-2300
-----------------------------
Approximate date of commencement of proposed sale to the public: From time
to time after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, please check the following box. /X/
If the registrant elects to deliver its latest annual report to security
holders, or a complete and legible facsimile thereof, pursuant to Item 11(a)(1)
of this Form, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. /_/ ___________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. /_/ ___________
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. /_/ ___________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. /_/
CALCULATION OF REGISTRATION FEE
--------------------------------------------------------------------------------------------------------------------------------
Title of Each Class of Proposed Maximum Proposed Maximum
Securities to be Amount to be Offering Price Per Aggregate Offering Amount of
Registered Registered(1) Share(2) Price Registration Fee
--------------------------------------------------------------------------------------------------------------------------------
Common Shares,
$0.01 par value per 549,945
share common shares $8.12 $4,465,534.40 $525.60(3)
--------------------------------------------------------------------------------------------------------------------------------
Subscription Rights to purchase 1,649,834
Common Shares(4) subscription rights - - -
--------------------------------------------------------------------------------------------------------------------------------
(1) In the event of a share split, share dividend or similar transaction
involving the common shares, the common shares registered hereby will
automatically be increased pursuant to Rule 416 of the Securities Act of
1933, as amended, to cover the additional common shares required to prevent
dilution.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933, as amended, and
based upon the average of the high and low prices of the Registrant's
common shares on the American Stock Exchange on June 30, 2005.
(3) The registration fee was previously paid with the filing on July 1, 2005.
(4) Under Rule 457(g) of the Securities Act of 1933, as amended, no separate
registration fee is required for the rights as they are being registered in
the same registration statement as the common shares underlying such
rights.
-----------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
-----------------------------------
The information in this prospectus is not complete and may be changed. The
selling shareholder may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and it is not soliciting an
offer to buy these securities in any state where the offer or sale is not
permitted
Subject to Completion, dated September 9, 2005
PROSPECTUS
LYNCH CORPORATION
538,676 COMMON SHARES
1,616,026 SUBSCRIPTION RIGHTS
We are offering at no cost to you, as a holder of our common shares,
transferable rights to purchase our common shares. If you own common shares on
________, 2005, the record date, you will be entitled to receive one right per
share. Every three such rights will entitle you to subscribe for one common
share. The subscription price will be $_______ per whole share. Each right will
also carry with it an oversubscription privilege to subscribe for additional
common shares that are not purchased by other holders of rights. The rights will
be evidenced by Subscription Certificates and will expire at _______ p.m. New
York City time on _________, 2005, unless extended for up to 15 days.
We have applied to list the rights and expect to be authorized for trading
of the rights on the American Stock Exchange under the symbol "LGL.RT." Our
common shares are traded on the American Stock Exchange under the symbol "LGL."
Our principal executive offices are located at 140 Greenwich Avenue, 4th
Floor, Greenwich, Connecticut 06830. Our telephone number is (203) 622-1150.
AN INVESTMENT IN OUR COMMON SHARES INVOLVES A HIGH DEGREE OF RISK. CONSIDER
CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 4 OF THIS PROSPECTUS.
-----------------
--------------------------------------------------------------------------------
PROCEEDS TO LYNCH
PRICE PER SHARE CORPORATION
--------------------------------------------------------------------------------
Offering Price to
Shareholders $_____________ $_____________ (1)
--------------------------------------------------------------------------------
(1) Before deduction of estimated expenses of $__________, including legal and
accounting fees, printing expenses and other miscellaneous fees and
expenses.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is _________, 2005.
TABLE OF CONTENTS
Prospectus Summary.............................................................1
Risk Factors...................................................................4
Special Note Regarding Forward-Looking Statements.............................15
Description of Securities to Be Registered....................................16
Use of Proceeds...............................................................16
The Rights Offering...........................................................17
Material United States Federal Income Tax Consequences........................27
Plan of Distribution..........................................................28
Legal Matters.................................................................30
Experts.......................................................................30
Information with Respect to the Registrant....................................30
Where You Can Find More Information...........................................30
Incorporation by Reference....................................................31
PROSPECTUS SUMMARY
This summary highlights important features of this offering and the
information included or incorporated by reference in this prospectus. This
summary does not contain all of the information that you should consider before
investing in our common shares. You should read the entire prospectus carefully,
especially the risks of investing in our common shares discussed under "Risk
Factors."
Unless the context otherwise requires, all references to "Lynch," "we,"
"us," or "our" in this prospectus refer collectively to Lynch Corporation, an
Indiana corporation, and its subsidiaries.
THE COMPANY
We are a diversified holding company with subsidiaries engaged in
manufacturing. Our business development strategy is to expand our existing
operations through internal growth and acquisitions. We may also, from time to
time, consider the acquisition of other assets or businesses that are not
related to our present businesses and the strategic disposition of certain
assets.
M-TRON INDUSTRIES, INC./PIEZO TECHNOLOGY, INC.
Mtron designs, manufactures and markets custom designed electronic
components used primarily to control the frequency or timing of electronic
signals in communications equipment. Its devices, which are commonly called
frequency control devices, crystals or oscillators, support fixed and mobile
wireless, copper wire, coaxial cable, wide area networks, local area networks
and fiber optic systems. It sells its products to original equipment
manufacturers, contract manufacturers and to distributors.
On October 15, 2004, Mtron completed its acquisition of all the issued and
outstanding common shares of Piezo. Piezo is a wholly-owned subsidiary of Mtron
that designs, manufactures and markets frequency control devices, crystal
resonators, crystal oscillators, timing devices, filters, crystal filters,
liquid crystal filters and related products and technologies. The combined
operations of Mtron and PTI are referred to herein as "MtronPTI."
LYNCH SYSTEMS, INC.
Lynch Systems designs, develops, manufactures and markets a broad range of
manufacturing equipment for the electronic display and consumer glass
industries. Lynch Systems also produces replacement parts for various types of
packaging and glass container-making machines, which Lynch Systems does not
manufacture.
THE RIGHTS OFFERING
Basic Subscription
Privilege.....................We will distribute to the holders of record of
our common shares at the close of business on
___________, 2005, at no charge, one
transferable subscription right for each common
share owned. Every three such rights will
entitle the holder to subscribe for one common
share.
Oversubscription Privilege......Each subscription right will also include an
oversubscription privilege to purchase
additional common shares that are not purchased
by other rights holders through their basic
subscription privileges.
You will be entitled to exercise your
oversubscription privilege only if you exercise
your basic subscription privilege in full. If
the number of common shares remaining after the
exercise of all basic subscription privileges is
not sufficient to satisfy all requests for
common shares pursuant to oversubscription
privileges, you will be allocated additional
common shares pro rata, based on the number of
common shares you purchased through the basic
subscription privilege in proportion to the
total number of common shares that you and other
oversubscribing shareholders purchased through
the basic subscription privilege.
Subscription Price..............$______ in cash per share
Common Shares
Outstanding after Rights
Offering......................Assuming that all rights are exercised,
including those that may be exercised as a
result of the oversubscription privilege, an
aggregate of approximately 538,676 common shares
will be sold.
Transferability of Rights.......The rights are transferable until the last
business day prior to the expiration date and
are expected to be authorized for trading on the
American Stock Exchange. A business day is a day
on which trading occurs on the American Stock
Exchange. Trading of the rights will be
conducted on a regular-way basis from ________,
2005 through the last business day prior to the
expiration date. Any commissions in connection
with the sale of rights will be paid by the
selling rights holder. We cannot assure you that
a market for the rights will develop, or the
prices at which rights may be sold if a market
does develop.
Record Date.....................______________, 2005
2
Expiration Time................._________, 2005, at 5:00 p m , New York City
time, unless extended for up to 15 days.
Procedure for Exercising
Rights........................If you want to exercise rights you must properly
complete and sign the Subscription Certificate
evidencing the rights and forward the
Subscription Certificate, with full payment, to
the subscription agent at or prior to the
expiration time.
YOU MAY NOT REVOKE AN EXERCISE OF RIGHTS UNLESS
WE MAKE A SIGNIFICANT AMENDMENT TO THE TERMS OF
THE OFFERING AFTER YOU HAVE EXERCISED.
Issuance of Common
Shares........................We will deliver to you certificates representing
common shares purchased upon exercise of the
basic subscription and oversubscription
privileges as soon as practicable after the
expiration date, anticipated to be approximately
seven to 10 business days after the expiration
date.
Use of Proceeds.................The net cash proceeds from the sale of the
common shares offered hereby, after payment of
fees and expenses, is anticipated to be
approximately $__________. We expect that such
net proceeds will be used for general corporate
purposes, working capital and to make
acquisitions, although the Company has not
identified any specific acquisitions at this
time.
Risk Factors....................There are substantial risks in connection with
this offering that should be considered by you.
See "Risk Factors."
Amendment, Extension or
Termination Rights
Offering......................We reserve the right, in our sole discretion,
to: (a) amend or modify the terms of this rights
offering; (b) extend the expiration time to a
later date, but in no event for more than 15
additional days; and (c) terminate the rights
offering at any time for any reason.
Intentions of the
Company's officers,
directors and principal
shareholders..................Our officers, directors and one of their
affiliates have advised us that they expect to
exercise the basic subscription privilege under
their rights and may exercise their
oversubscription privilege.
3
RISK FACTORS
AN INVESTMENT IN OUR COMMON SHARES INVOLVES A HIGH DEGREE OF RISK. THE FOLLOWING
RISK FACTORS SHOULD BE CONSIDERED CAREFULLY IN ADDITION TO THE OTHER INFORMATION
IN THIS PROSPECTUS, INCLUDING THE INFORMATION UNDER "SPECIAL NOTE REGARDING
FORWARD-LOOKING STATEMENTS," BEFORE MAKING AN INVESTMENT IN OUR COMMON SHARES.
RISKS RELATING TO THIS OFFERING
THE SUBSCRIPTION PRICE IS NOT AN INDICATION OF THE VALUE OF OUR COMMON SHARES
AND YOU MAY NOT BE ABLE TO SELL COMMON SHARES PURCHASED UPON THE EXERCISE OF
YOUR SUBSCRIPTION RIGHTS AT A PRICE EQUAL TO OR GREATER THAN THE SUBSCRIPTION
PRICE.
The subscription price per common share does not necessarily bear any
relationship to the book value per share of our assets, operations, cash flows,
earnings, financial condition or any other established criteria for value. As a
result, you should not consider the subscription price as an indication of the
current value of our common shares. We cannot assure you that you will be able
to sell common shares purchased in this offering at a price equal to or greater
than the subscription price.
THIS OFFERING MAY CAUSE THE PRICE OF OUR COMMON SHARES TO DECREASE IMMEDIATELY,
AND THIS DECREASE MAY CONTINUE.
The subscription price per share represents a discount of ____% from [the
closing sale price of our common shares on _____ __, 2005] [the average of the
closing sales prices of our common shares over the ___-trading day period ending
______ __, 2005]. This discount, along with the number of common shares we
propose to issue and ultimately will issue if this offering is completed, may
result in an immediate decrease in the market value of our common shares. This
decrease may continue after the completion of this offering.
YOU MAY SUFFER DILUTION OF YOUR PERCENTAGE OWNERSHIP OF OUR COMMON SHARES.
If you do not exercise your subscription rights and common shares are
purchased by other shareholders in this offering, your proportionate voting and
ownership interest will be reduced and the percentage that your original common
shares represents of our expanded equity after exercise of the subscription
rights will be diluted. For example, if you own 5,000 common shares before this
offering, or approximately 0.3% of our outstanding common shares, and you
exercise none of your subscription rights while all other subscription rights
are exercised by other shareholders, then your percentage ownership would be
reduced to approximately 0.2%. The magnitude of the reduction of your percentage
ownership will depend upon the number of common shares you hold and the extent
to which you exercise your subscription rights.
ONCE YOU EXERCISE YOUR SUBSCRIPTION RIGHTS, YOU MAY NOT REVOKE SUCH EXERCISE
EVEN IF THERE IS A DECLINE IN THE PRICE OF OUR COMMON SHARES OR IF WE DECIDE TO
EXTEND THE EXPIRATION DATE OF THE SUBSCRIPTION PERIOD.
The public trading market price of our common shares may decline after you
elect to exercise your subscription rights. If that occurs, you will have
committed to buy our common shares at a price above the prevailing market price
4
and you will have an immediate unrealized loss. We may also, in our sole
discretion, extend the expiration date of the subscription period, but in no
event beyond an additional 15 days. During any potential extension of time, the
value of our common shares may decline below the subscription price and result
in a loss on your investment upon the exercise of rights to acquire our common
shares. If the expiration date is extended after you send in your subscription
forms and payment, you still may not revoke or change your exercise of rights.
Moreover, we cannot assure you that following the exercise of subscription
rights you will be able to sell your common shares at a price equal to or
greater than the subscription price.
YOU WILL NOT RECEIVE INTEREST ON SUBSCRIPTION FUNDS RETURNED TO YOU.
If we cancel this offering or if we are not able to fulfill your full
oversubscription, we will not have any obligation with respect to the
subscription rights except to return to you, without interest, any subscription
payments and/or oversubscription payments you made that were not used to
purchase common shares.
YOU NEED TO ACT PROMPTLY AND FOLLOW SUBSCRIPTION INSTRUCTIONS, OTHERWISE YOUR
SUBSCRIPTION MAY BE REJECTED.
Shareholders who desire to purchase common shares in this offering must act
promptly to ensure that all required forms and payments are actually received by
the subscription agent prior to 5:00 p.m., New York City time, on the expiration
date. If you fail to complete and sign the required subscription forms, send an
incorrect payment amount, or otherwise fail to follow the subscription
procedures that apply to your desired transaction, the subscription agent may,
depending on the circumstances, reject your subscription or accept it to the
extent of the payment received. Neither we nor our subscription agent undertakes
to contact you concerning, or attempt to correct, an incomplete or incorrect
subscription form or payment. We have the sole discretion to determine whether a
subscription exercise properly follows the subscription procedures.
YOU MAY NOT RECEIVE ALL OF THE COMMON SHARES FOR WHICH YOU OVERSUBSCRIBE.
If an insufficient number of common shares is available to fully satisfy
all oversubscription privilege requests, the available common shares will be
distributed proportionately among rights holders who exercised their
oversubscription privilege based on the number of common shares each rights
holder subscribed for under the basic subscription privilege.
YOU MAY NOT WANT TO EXERCISE YOUR RIGHTS AS THE PROCEEDS OF THIS OFFERING MAY BE
USED TO MAKE ACQUISITIONS THAT YOU MAY NOT HAVE THE OPPORTUNITY TO APPROVE.
We expect that the net cash proceeds from this offering will be used for
general corporate purposes, working capital and to make acquisitions, although
we have not identified any specific acquisitions at this time. If you exercise
your rights, you may not have an opportunity to evaluate the specific merits or
risks of any potential future acquisitions. As a result, you may be entirely
dependent on the broad discretion and judgment of management in the selection of
potential future acquisitions.
5
NEITHER WE, NOR THE SUBSCRIPTION AGENT, WILL HAVE ANY OBLIGATION TO YOU IF THIS
OFFERING IS CANCELED, OTHER THAN TO REFUND YOUR SUBSCRIPTION PAYMENTS.
Neither we, nor the subscription agent, will have any obligation to you if
this offering is canceled, other than to refund your subscription payments,
without interest.
RISKS RELATING TO OUR BUSINESS
WE HAVE INCURRED OPERATING LOSSES FOR THE PAST THREE YEARS AND FACE UNCERTAINTY
IN OUR ABILITY TO ACHIEVE OPERATING PROFITS IN THE FUTURE.
We have incurred substantial operating losses for the past three years.
Without giving effect to gains realized from the deconsolidation in 2002 of one
of our holdings, we suffered operating losses of $2.9 million, $832,000 and $3.3
million in 2004, 2003 and 2002, respectively. We are uncertain whether we will
be able to achieve or sustain operating profits in the future.
IF WE ARE UNABLE TO SECURE NECESSARY FINANCING, WE MAY NOT BE ABLE TO FUND OUR
OPERATIONS OR STRATEGIC GROWTH.
In order to achieve our strategic business objectives, we will be required
to seek additional financing. Lynch Systems' credit facility with SunTrust Bank,
which was to have expired on August 31, 2005, has been extended to September 30,
2005. Lynch Systems has received a commitment letter from another bank for
financing to replace this facility, however, there can be no assurances that the
Company will be able to obtain new financing on these terms, or at all.
MtronPTI's bridge loan from First National Bank of Omaha is scheduled to mature
on October 14, 2005. MtronPTI is in negotiations to refinance this bridge loan,
however, there can be no assurances that the Company will be able to do so.
MtronPTI's revolving credit facility from First National Bank of Omaha is
scheduled to mature on May 31, 2006. Venator Merchant Fund, L.P.'s loan to the
Company is due on November 10, 2005 (or within seven days after demand).
Under our existing credit facilities, we are required to obtain the
lenders' consent for most additional debt financing and to comply with other
covenants, including specific financial ratios. For example, we may require
further capital to continue to develop our technology and infrastructure and for
working capital purposes. In addition, future acquisitions would likely require
additional equity and/or debt financing. Our failure to secure additional
financing could have a material adverse effect on our continued development or
growth.
AS A HOLDING COMPANY, WE DEPEND ON THE OPERATIONS OF OUR SUBSIDIARIES TO MEET
OUR OBLIGATIONS.
We are a holding company that transacts all of our business through
operating subsidiaries. Our primary assets are the common shares of our
operating subsidiaries. Our ability to meet our operating requirements and to
6
make other payments depends on the surplus and earnings of our subsidiaries and
their ability to pay dividends or to advance or repay funds. Payments of
dividends and advances and repayments of inter-company debt by our subsidiaries
are restricted by our credit agreements.
WE MAY MAKE ACQUISITIONS THAT ARE NOT SUCCESSFUL OR FAIL TO PROPERLY INTEGRATE
ACQUIRED BUSINESSES INTO OUR OPERATIONS.
We intend to explore opportunities to buy other businesses or technologies
that could complement, enhance or expand our current business or product lines
or that might otherwise offer us growth opportunities. We may have difficulty
finding such opportunities or, if we do identify such opportunities, we may not
be able to complete such transactions for reasons including a failure to secure
necessary financing.
Any transactions that we are able to identify and complete may involve a
number of risks, including:
o the diversion of our management's attention from our existing business to
integrate the operations and personnel of the acquired or combined business
or joint venture;
o possible adverse effects on our operating results during the integration
process;
o substantial acquisition related expenses, which would reduce our net income
in future years;
o the loss of key employees and customers as a result of changes in
management; and
o our possible inability to achieve the intended objectives of the
transaction.
In addition, we may not be able to successfully or profitably integrate,
operate, maintain and manage our newly acquired operations or employees. We may
not be able to maintain uniform standards, controls, procedures and policies,
and this may lead to operational inefficiencies.
PROVISIONS IN OUR CHARTER DOCUMENTS AND UNDER INDIANA LAW MAY PREVENT OR DELAY A
CHANGE OF CONTROL OF US AND COULD ALSO LIMIT THE MARKET PRICE OF OUR COMMON
SHARES.
Provisions of our certificate of incorporation and bylaws, as well as
provisions of Indiana corporate law, may discourage, delay or prevent a merger,
acquisition or other change in control of our company, even if such a change in
control would be beneficial to our shareholders. These provisions may also
prevent or frustrate attempts by our shareholders to replace or remove our
management. These provisions include those:
o prohibiting our shareholders from fixing the number of our directors;
o requiring advance notice for shareholder proposals and nominations; and
o prohibiting shareholders from acting by written consent, unless unanimous.
We are subject to certain provisions of the Indiana Business Corporation
Law, or IBCL, that limit business combination transactions with 10% shareholders
during the first five years of their ownership, absent approval of our board of
directors. The IBCL also contains control share acquisition provisions that
limit the ability of certain shareholders to vote their common shares unless
their control share acquisition was approved in advance by shareholders. These
7
provisions and other similar provisions make it more difficult for shareholders
or potential acquirers to acquire us without negotiation and could limit the
price that investors are willing to pay in the future for our common shares.
COMPLIANCE WITH CHANGING REGULATION OF CORPORATE GOVERNANCE AND PUBLIC
DISCLOSURE WILL REQUIRE US EITHER TO INCUR ADDITIONAL EXPENSES OR CEASE TO BE A
REPORTING COMPANY.
Keeping abreast of, and in compliance with, changing laws, regulations and
standards relating to corporate governance and public disclosure, including the
Sarbanes-Oxley Act of 2002, new SEC regulations and American Stock Exchange
rules, will require an increased amount of management attention and external
resources. We would be required to invest additional resources to comply with
evolving standards, which would result in increased general and administrative
expenses and a diversion of management time and attention from
revenue-generating activities to compliance activities.
Our Board of Directors may determine that it is in the best interests of
shareholders to eliminate or reduce such expense by ceasing to be a reporting
company for purposes of the Securities Exchange Act of 1934, as amended. One
commonly used method, subject to shareholder approval, is to effect a reverse
share split to reduce the number of shareholders to fewer than 300, permitting
termination of registration. Under this method, shareholders who own less than
one whole common share following the reverse split would cease to be
shareholders and would receive a cash payment for their fractional shares. After
a reverse split, there might be no established trading market for our common
shares, although we expect that our common shares may then be quoted on the
"pink sheets."
WE MAY BE EXPOSED TO LIABILITY AS A RESULT OF BEING NAMED AS A DEFENDANT IN A
LAWSUIT BROUGHT UNDER THE SO-CALLED "QUI TAM" PROVISIONS OF THE FEDERAL FALSE
CLAIMS ACT.
The Company, Lynch Interactive Corporation, which was formed via a tax-free
spin-off from Lynch Corporation on September 1, 1999 ("Lynch Interactive"), and
various other parties are defendants in a lawsuit brought under the so-called
"qui tam" provisions of the federal False Claims Act in the United States
District Court for the District of Columbia. The main allegation in the case is
that the defendants participated in the creation of "sham" bidding entities that
allegedly defrauded the U.S. Treasury Department by improperly participating in
Federal Communications Commission spectrum auctions restricted to small
businesses, and obtained bidding credits in other spectrum auctions allocated to
"small" and "very small" businesses. While the lawsuit seeks to recover an
unspecified amount of damages, which would be subject to mandatory trebling
under the statute, a report prepared for the relator (a private individual who
filed the action on behalf of the United States) in 2005 alleges damages of
approximately $91 million in respect of bidding credits, approximately $70
million in respect of government loans and approximately $206 million in respect
of subsequent resales of licenses, in each case prior to trebling. Although
Lynch Interactive is contractually bound to indemnify us for any losses or
damages we may incur as a result of this lawsuit, Lynch Interactive may lack the
capital resources to do so. As a result, we could be held liable and forced to
pay a significant amount of damages without recourse.
8
WE DO NOT ANTICIPATE PAYING CASH DIVIDENDS ON OUR COMMON SHARES IN THE
FORESEEABLE FUTURE.
We anticipate that all of our earnings will be retained for the development
of our business. The Board of Directors has adopted a policy of not paying cash
dividends on our common shares. We do not anticipate paying cash dividends on
our common shares in the foreseeable future.
THERE IS A LIMITED MARKET FOR OUR COMMON SHARES. OUR COMMON SHARE PRICE IS
LIKELY TO BE HIGHLY VOLATILE AND COULD DROP UNEXPECTEDLY.
There is a limited public market for our common shares, and we cannot
assure you that an active trading market will develop. As a result of low
trading volume in our common shares, the purchase or sale of a relatively small
number of common shares could result in significant share price fluctuations.
Our share price may fluctuate significantly in response to a number of factors,
including the following, several of which are beyond our control:
o changes in financial estimates or investment recommendations by securities
analysts relating to our common shares;
o loss of a major customer;
o announcements by us or our competitors of significant contracts,
acquisitions, strategic partnerships, joint ventures or capital
commitments; and
o changes in key personnel.
In the past, securities class action litigation has often been brought
against a company following periods of volatility in the market price of its
securities. We could be the target of similar litigation in the future.
Securities litigation, regardless of merit or ultimate outcome, would likely
cause us to incur substantial costs, divert management's attention and
resources, harm our reputation in the industry and the securities markets and
reduce our profitability.
SECURITIES ANALYSTS MAY NOT INITIATE COVERAGE OF OUR COMMON SHARES OR MAY ISSUE
NEGATIVE REPORTS, AND THIS MAY HAVE A NEGATIVE IMPACT ON THE MARKET PRICE OF OUR
COMMON SHARES.
We cannot assure you that securities analysts will initiate coverage and
publish research reports on us. It is difficult for companies with smaller
market capitalizations, such as us, to attract independent financial analysts
who will cover our common shares. If securities analysts do not, this lack of
research coverage may adversely affect the market price of our common shares.
IF WE ARE UNABLE TO INTRODUCE INNOVATIVE PRODUCTS, DEMAND FOR OUR PRODUCTS MAY
DECREASE.
Our future operating results are dependent on our ability to continually
develop, introduce and market innovative products, to modify existing products,
to respond to technological change and to customize some of our products to meet
customer requirements. There are numerous risks inherent in this process,
including the risks that we will be unable to anticipate the direction of
technological change or that we will be unable to develop and market new
products and applications in a timely or cost-effective manner to satisfy
customer demand.
9
OUR OPERATING RESULTS AND FINANCIAL CONDITION COULD BE MATERIALLY ADVERSELY
AFFECTED BY ECONOMIC, POLITICAL, HEALTH, REGULATORY AND OTHER FACTORS EXISTING
IN FOREIGN COUNTRIES IN WHICH WE OPERATE.
As we have significant international operations, our operating results and
financial condition could be materially adversely affected by economic,
political, health, regulatory and other factors existing in foreign countries in
which we operate. Our international operations are subject to inherent risks,
which may materially adversely affect us, including:
o political and economic instability in countries in which our products are
manufactured and sold;
o expropriation or the imposition of government controls;
o sanctions or restrictions on trade imposed by the United States government;
o export license requirements;
o trade restrictions;
o currency controls or fluctuations in exchange rates;
o high levels of inflation or deflation;
o greater difficulty in collecting our accounts receivable and longer payment
cycles;
o changes in labor conditions and difficulties in staffing and managing our
international operations; and
o limitations on insurance coverage against geopolitical risks, natural
disasters and business operations.
In addition, these same factors may also place us at a competitive
disadvantage when compared to some of our foreign competitors. In response to
competitive pressures and customer requirements, we may further expand
internationally at lower cost locations. If we expand into these locations, we
will be required to incur additional capital expenditures.
OUR BUSINESSES ARE CYCLICAL. THE RECENT DECLINE IN DEMAND IN THE ELECTRONIC
COMPONENT AND GLASS COMPONENT INDUSTRIES MAY CONTINUE, RESULTING IN ADDITIONAL
ORDER CANCELLATIONS AND DEFERRALS AND LOWER AVERAGE SELLING PRICES FOR OUR
PRODUCTS.
Our subsidiaries sell to industries that are subject to cyclical economic
changes. The electronic component and glass component industries in general, and
specifically the Company, have for the past several years experienced a decline
in product demand on a global basis, resulting in order cancellations and
deferrals and lower average selling prices. This decline is primarily
attributable to a slowing of growth in the demand for components used by
telecommunications infrastructure manufacturers and newer technologies
introduced in the glass display industry. We cannot assure you that any expected
or perceived improvements in the economy and the electronic component and glass
component industry will occur. The slowdown may continue and may become more
pronounced. A slowdown in demand, as well as recessionary trends in the global
economy, make it more difficult for us to predict our future sales, which also
makes it more difficult to manage our operations.
10
OUR MARKETS ARE HIGHLY COMPETITIVE, AND WE MAY LOSE BUSINESS TO LARGER AND
BETTER-FINANCED COMPETITORS.
Our markets are highly competitive worldwide, with low transportation costs
and few import barriers. We compete principally on the basis of product quality
and reliability, availability, customer service, technological innovation,
timely delivery and price. All of the industries in which we compete have become
increasingly concentrated and globalized in recent years. Our major competitors,
some of which are larger than us, and potential competitors have substantially
greater financial resources and more extensive engineering, manufacturing,
marketing and customer support capabilities than we have.
OUR SUCCESS DEPENDS ON OUR ABILITY TO RETAIN OUR KEY MANAGEMENT AND TECHNICAL
PERSONNEL AND ATTRACTING, RETAINING, AND TRAINING NEW TECHNICAL PERSONNEL.
Our future growth and success will depend in large part upon our ability to
retain our existing management and technical team and to recruit and retain
highly skilled technical personnel, including engineers. The labor markets in
which we operate are highly competitive and most of our operations are not
located in highly populated areas. As a result, we may not be able to retain and
recruit key personnel. Our failure to hire, retain or adequately train key
personnel could have a negative impact on our performance.
WE MAY NOT REALIZE THE SYNERGIES OR ACHIEVE THE INTENDED OBJECTIVES SOUGHT FROM
MTRON'S ACQUISITION OF PTI.
Effective September 30, 2004, Mtron completed its acquisition of PTI. The
value of this acquisition is largely based on the synergies that we believe will
be created by the integration of these two companies. This process involves a
number of risks, including the diversion of our management's attention from our
existing business to integrate PTI's operations and personnel, and possible
adverse effects on our operating results during the integration process. In
addition, we may be unable to integrate, operate, maintain and manage PTI's
operations or employees. We also may not be able to maintain uniform standards,
controls, procedures and policies, and this may lead to operational
inefficiencies.
MTRONPTI'S BACKLOG MAY NOT BE INDICATIVE OF FUTURE SALES AND MAY ADVERSELY
AFFECT OUR BUSINESS.
MtronPTI's backlog comprises orders that are subject to specific production
release orders under written contracts, oral and written orders from customers
with which MtronPTI has had long-standing relationships and written purchase
orders from sales representatives. MtronPTI's customers may order components
from multiple sources to ensure timely delivery when backlog is particularly
long and may cancel or defer orders without significant penalty. They often
cancel orders when business is weak and inventories are excessive, a phenomenon
that MtronPTI has experienced in the recent economic slowdown. As a result,
MtronPTI's backlog as of any particular date may not be representative of actual
net sales for any succeeding period.
11
MTRONPTI RELIES UPON ONE CONTRACT MANUFACTURER FOR A SIGNIFICANT PORTION OF ITS
FINISHED PRODUCTS, AND A DISRUPTION IN ITS RELATIONSHIP COULD HAVE A NEGATIVE
IMPACT ON MTRONPTI'S SALES.
In 2004, approximately 12% of MtronPTI's net sales was attributable to
finished products that were manufactured by an independent contract manufacturer
located in both Korea and China. We expect this manufacturer to account for a
smaller but substantial portion of MtronPTI's net sales in 2005 and a material
portion of MtronPTI's sales for the next several years. MtronPTI does not have a
written, long-term supply contract with this manufacturer. If this manufacturer
becomes unable to provide products in the quantities needed, or at acceptable
prices, MtronPTI would have to identify and qualify acceptable replacement
manufacturers or manufacture the products internally. Due to specific product
knowledge and process capability, MtronPTI could encounter difficulties in
locating, qualifying and entering into arrangements with replacement
manufacturers. As a result, a reduction in the production capability or
financial viability of this manufacturer, or a termination of, or significant
interruption in, MtronPTI's relationship with this manufacturer, may adversely
affect MtronPTI's results of operations and our financial condition.
CONTINUED MARKET ACCEPTANCE OF MTRONPTI'S PACKAGED QUARTZ CRYSTALS, OSCILLATOR
MODULES AND ELECTRONIC FILTERS IS CRITICAL TO OUR SUCCESS, BECAUSE FREQUENCY
CONTROL DEVICES ACCOUNT FOR NEARLY ALL OF MTRONPTI'S SALES.
Virtually all of MtronPTI's 2003 and 2004 net sales came from sales of
frequency control devices, which consist of packaged quartz crystals, oscillator
modules and electronic filters. We expect that this product line will continue
to account for substantially all of MtronPTI's net sales for the foreseeable
future. Any decline in demand for this product line or failure to achieve
continued market acceptance of existing and new versions of this product line
may harm MtronPTI's business and our financial condition.
MTRONPTI'S FUTURE RATE OF GROWTH IS HIGHLY DEPENDENT ON THE DEVELOPMENT AND
GROWTH OF THE MARKET FOR COMMUNICATIONS AND NETWORK EQUIPMENT.
MtronPTI's business depends heavily upon capital expenditures by the
providers of communications and network services. In 2004, the majority of
MtronPTI's net sales were to manufacturers of communications and network
infrastructure equipment, including indirect sales through distributors and
contract manufacturers. In 2005, MtronPTI expects a smaller but significant
portion of its net sales to be to manufacturers of communications and network
infrastructure equipment. MtronPTI intends to increase its sales to
communications and network infrastructure equipment manufacturers in the future.
Communications and network service providers have experienced periods of
capacity shortage and periods of excess capacity. In periods of excess capacity,
communications systems and network operators cut purchases of capital equipment,
including equipment that incorporates MtronPTI's products. A slowdown in the
manufacture and purchase of communications and network infrastructure equipment
could substantially reduce MtronPTI's net sales and operating results and
adversely affect our financial condition. Moreover, if the market for
communications or network infrastructure equipment fails to grow as expected,
MtronPTI may be unable to sustain its growth. In addition, MtronPTI's growth
depends upon the acceptance of its products by communications and network
infrastructure equipment manufacturers. If, for any reason, these manufacturers
do not find MtronPTI's products to be appropriate for their use, our future
growth will be adversely affected.
12
COMMUNICATIONS AND NETWORK INFRASTRUCTURE EQUIPMENT MANUFACTURERS INCREASINGLY
RELY UPON CONTRACT MANUFACTURERS, THEREBY DIMINISHING MTRONPTI'S ABILITY TO SELL
ITS PRODUCTS DIRECTLY TO THOSE EQUIPMENT MANUFACTURERS.
There is a growing trend among communications and network infrastructure
equipment manufacturers to outsource the manufacturing of their equipment or
components. As a result, MtronPTI's ability to persuade these original equipment
manufacturers to specify our products has been reduced and, in the absence of a
manufacturer's specification of MtronPTI's products, the prices that MtronPTI
can charge for them may be subject to greater competition.
MTRONPTI'S GOVERNMENT CONTRACTS CONTAIN PROVISIONS THAT ARE UNFAVORABLE TO IT
AND HAVE A NUMBER OF SPECIFIC RISKS THAT MAY RESULT IN LOST ORDERS AND PROFITS.
Many of MtronPTI's contracts with government agencies contain provisions
that give the governments rights and remedies not typically found in private
commercial contracts, including provisions enabling the government to:
o terminate or cancel existing contracts without good reason or penalty;
o suspend MtronPTI from doing business with a foreign government or prevent
MtronPTI from selling its products in certain countries;
o audit and object to MtronPTI's contract-related costs and expenses,
including allocated indirect costs; and
o change specific terms and conditions in MtronPTI's contracts, including
changes that would reduce the value of the contract to MtronPTI.
MtronPTI's business generated from government contracts could be materially
and adversely affected if:
o MtronPTI's reputation or relationship with government agencies were
impaired;
o MtronPTI were suspended or otherwise prohibited from contracting with a
domestic or foreign government;
o any of MtronPTI's products were to fail to meet the requirements of certain
applicable specified military standards;
o levels of government spending were to decrease;
o MtronPTI were barred from entering into new government contracts or
extending existing government contracts based on violations or suspected
violations of laws or regulations; or
o MtronPTI were not granted security clearances required to provide its
services and solutions to governments, or such security clearances were
revoked.
13
FUTURE CHANGES IN MTRONPTI'S ENVIRONMENTAL LIABILITY AND COMPLIANCE OBLIGATIONS
MAY INCREASE COSTS AND DECREASE PROFITABILITY.
MtronPTI's manufacturing operations, products and/or product packaging are
subject to environmental laws and regulations governing air emissions,
wastewater discharges, and the handling, disposal and remediation of hazardous
substances, wastes and other chemicals. In addition, more stringent
environmental regulations may be enacted in the future, and we cannot presently
determine the modifications, if any, in MtronPTI's operations that any future
regulations might require, or the cost of compliance that would be associated
with these regulations.
MTRONPTI MAY BE UNABLE TO MODIFY ITS PRODUCTS OR MAY INCUR INCREASED COSTS TO
MEET THE REQUIREMENTS OF THE EUROPEAN UNION'S RESTRICTION ON HAZARDOUS
SUBSTANCES DIRECTIVE.
MtronPTI may be unable to modify its products or may incur increased costs
to meet the requirements of the European Union's Restriction on Hazardous
Substances Directive. If MtronPTI is unable to comply with these regulations, it
may not be permitted to ship its products to the European Union.
LYNCH SYSTEMS' REVENUE IS LARGELY DEPENDENT ON DEMAND FOR ITS TELEVISIONS AND
COMPUTER MONITORS BASED ON CATHODE-RAY TUBE TECHNOLOGY. THIS TECHNOLOGY WILL
EVENTUALLY BE REPLACED BY PLASMA AND LIQUID CRYSTAL DISPLAYS.
Lynch Systems generates a significant portion of its revenue from sales to
glass producers that supply television and computer monitor displays that are
based on cathode-ray tube technology. This market is being rapidly penetrated by
thinner, lighter weight plasma displays and liquid crystal displays. Although
cathode-ray tube televisions and computer monitors currently retain advantages
in image quality and price, glass producers are investing billions of dollars to
improve the quality and lower the unit price of plasma, liquid crystal and other
display types. We believe that market penetration by plasma and liquid crystal
display producers will continue and eventually render obsolete cathode-ray tube
technology and this Lynch Systems product line.
LYNCH SYSTEMS' DEPENDENCE ON A FEW SIGNIFICANT CUSTOMERS EXPOSES IT TO OPERATING
RISKS.
Lynch Systems' sales to its ten largest customers accounted for
approximately 80% of its net sales in 2004, 2003 and 2002. Lynch Systems' sales
to its largest customer accounted for approximately 36%, 42% and 27% of its net
sales in 2004, 2003 and 2002. If a significant customer reduces, delays or
cancels its orders for any reason, the business and results of operations of
Lynch Systems would be negatively affected.
AN ORDER TO BUILD MULTIPLE MACHINES IN THE FUTURE WITH A SIGNIFICANT CUSTOMER IN
THE TABLEWARE MARKET IS CONTINGENT UPON THE SUCCESSFUL INSTALLATION AND
OPERATION OF THE MACHINES CURRENTLY IN PRODUCTION.
Lynch Systems has a significant order for glass manufacturing machines that
are scheduled to be shipped and installed in the customer's factories in 2005.
We expect that this contract will represent approximately 33% of Lynch Systems'
revenues in 2005. Many of these machines utilize new processes and require
14
customer training. The ability of the customer's personnel and resources to
operate these machines successfully is critical. If the customer does not
realize the full benefit from these machines, new orders from this customer may
be canceled.
THE RESULTS OF LYNCH SYSTEMS' OPERATIONS ARE SUBJECT TO FLUCTUATIONS IN THE
AVAILABILITY AND COST OF STEEL USED TO MANUFACTURE GLASS FORMING EQUIPMENT.
Lynch Systems uses large amounts of steel to manufacture its glass forming
equipment. The price of steel has risen substantially and demand for steel is
very high. Lynch Systems has only been able to pass some of the increased costs
to its customers. As a result, Lynch Systems' profit margins on glass forming
equipment have decreased. If the price of and demand for steel continues to
rise, our profit margins will continue to decrease.
LYNCH SYSTEMS MAY BE UNABLE TO PROTECT ITS INTELLECTUAL PROPERTY.
The success of Lynch Systems' business depends, in part, upon its ability
to protect trade secrets, designs, drawings and patents, obtain or license
patents and operate without infringing on the intellectual property rights of
others. Lynch Systems relies on a combination of trade secrets, designs,
drawings, patents, nondisclosure agreements and technical measures to protect
its proprietary rights in its products and technology. The steps taken by Lynch
Systems in this regard may not be adequate to prevent misappropriation of its
technology. In addition, the laws of some foreign countries in which Lynch
Systems operates do not protect its proprietary rights to the same extent as do
the laws of the United States. Although Lynch Systems continues to evaluate and
implement protective measures, we cannot assure you that these efforts will be
successful. Lynch Systems' inability to protect its intellectual property rights
could diminish or eliminate the competitive advantages that it derives from its
technology, cause Lynch Systems to lose sales or otherwise harm its business.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and documents incorporated by reference into this
prospectus contain forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended, that are not historical facts, but rather are
based on current expectations, estimates and projections about our business and
industry, our beliefs and assumptions. Words such as "anticipates," "expects,"
"intends," "plans," "believes," "seeks," "estimates," and variations of these
words and similar expressions are intended to identify forward-looking
statements. These statements are based on our current plans and expectations and
involve risks and uncertainties over which we have no control, that could cause
actual future activities and results of operations to be materially different
from those set forth in the forward-looking statements. Important factors that
could cause actual future activities and operating results to differ include
fluctuating demand for capital goods such as large glass presses, delay in the
recovery of demand for components used by telecommunications infrastructure
manufacturers and exposure to foreign economies. Important information regarding
risks and uncertainties is also set forth elsewhere in this document, including
in those described in "Risk Factors" beginning on page 4, as well as elsewhere
in this prospectus and in documents incorporated by reference into this
prospectus. You are cautioned not to place undue reliance on these
15
forward-looking statements, which reflect our management's view only as of the
date of this prospectus or as of the date of any document incorporated by
reference into this prospectus. All subsequent written or oral forward-looking
statements attributable to us or persons acting on our behalf are expressly
qualified in their entirety by these cautionary statements. We undertake no
obligation to update these statements or publicly release the results of any
revisions to the forward-looking statements that we may make to reflect events
or circumstances after the date of this prospectus or the date of any document
incorporated into this prospectus or to reflect the occurrence of unanticipated
events.
You are also urged to carefully review and consider the various disclosures
made by us in this document, as well as in our prior periodic reports on Forms
10-K, 10-Q and 8-K, filed with the Securities and Exchange Commission and listed
under the caption "Incorporation by Reference" on page 31 of this prospectus.
We make available, free of charge, our annual report on Form 10-K,
quarterly reports on Form 10-Q, and current reports on Form 8-K, if any.
We also make this information available on our website at
WWW.LYNCHCORP.COM.
DESCRIPTION OF SECURITIES TO BE REGISTERED
Our authorized capital consists of 10,000,000 common shares with a par
value of $.0.01 per share. As of August 31, 2005, there were approximately
1,616,026 common shares issued and outstanding. Additionally, there were 600,000
common shares reserved for issuance upon exercise of options granted or to be
granted pursuant our 2001 Equity Incentive Plan. The holders of our common
shares are entitled to one vote for each common share held of record on all
matters to be voted on by shareholders. The holders of our common shares are
entitled to receive such dividends, if any, as may be declared by the Board of
Directors in its discretion out of funds legally available. Upon liquidation or
dissolution of the Company, the holders of our common shares are entitled to
receive on a pro rata basis all assets remaining for distribution to
shareholders after the payment of debts and liquidation preferences on any
capital stock. Our common shares have no preemptive or other subscription rights
and there are no other conversion rights or redemption or sinking fund
provisions with respect to such common shares.
The Company's Transfer Agent and Registrar is Mellon Investor Services LLC.
USE OF PROCEEDS
If all of the rights are exercised in full at $_______ per share, we would
receive net cash proceeds of approximately $_______ million, after payment of
fees and expenses. No discount or commission is payable in connection with any
such exercise.
The funds, if any, received upon exercise of the rights will be used for
general corporate purposes, working capital and to make acquisitions, although
the Company has not identified any specific acquisitions at this time.
16
THE RIGHTS OFFERING
Our Board of Directors has proposed that we raise equity capital through
this offering to all of our shareholders. Through this prospectus, we are
offering common shares that rights holders may purchase upon exercising their
subscription rights.
SUBSCRIPTION RIGHTS
BASIC SUBSCRIPTION PRIVILEGE. We will distribute to the holders of record
of our common shares, at the close of business on ___________, 2005, at no
charge, one transferable subscription right for each common share owned. The
subscription rights will be evidenced by Subscription Certificates. Every three
such rights will entitle the holder to subscribe for one common share. Assuming
that all rights are exercised, including those that may be exercised as a result
of the oversubscription privilege, an aggregate of approximately 538,676 common
shares will be sold. We will deliver to subscribers certificates representing
common shares purchased through the exercise of the basic subscription privilege
as soon as practicable after the expiration date, anticipated to be
approximately seven to 10 business days. You are not required to exercise any or
all of your subscription rights.
If, pursuant to the exercise of subscription rights, the number of common
shares that a rights holder would be entitled to receive would result in receipt
of fractional shares, the aggregate number of common shares that the holder is
entitled to purchase will be rounded up to the nearest whole number. Rights
holders will not receive cash in lieu of fractional shares.
OVERSUBSCRIPTION PRIVILEGE. Subject to the allocation described below, each
subscription right will include an oversubscription privilege to purchase
additional common shares that are not purchased by other rights holders pursuant
to the other rights holders' basic subscription privileges. A rights holder will
be entitled to exercise its oversubscription privilege only if it exercises its
basic subscription privilege in full. If the number of common shares remaining
after the exercise of all basic subscription privileges is not sufficient to
satisfy requests from all shareholders for common shares pursuant to
oversubscription privileges, you will be allocated additional common shares pro
rata, based on the number of common shares you purchased through the basic
subscription privilege in proportion to the total number of common shares that
you and other oversubscribing shareholders purchased through the basic
subscription privilege. Once you have exercised your oversubscription privilege,
you may not revoke your exercise.
If you wish to exercise your oversubscription privilege, you should
indicate the number of additional common shares that you would like to purchase
in the space provided on your Subscription Certificate. When you send in your
Subscription Certificate, you must also send the full purchase price for the
number of additional common shares that you have requested to purchase (in
addition to the payment due for common shares purchased through your basic
subscription privilege). After all common shares requested pursuant to the basic
subscription privilege are allocated, a determination will be made as to the
number of common shares available for issuance under the oversubscription
privilege. For purposes of allocating the common shares under the
oversubscription privilege, there shall be calculated for each holder seeking to
exercise the oversubscription privilege a proration factor. This proration
factor will be based on the number of common shares purchased by a holder
17
through the basic subscription privilege in proportion to the total number of
common shares purchased by all holders pursuant to the basic subscription
privilege. For each holder, this proration factor will be applied to the common
shares available for purchase upon exercise of the oversubscription privilege
and common shares will be allocated accordingly. This process will be repeated
until one of the following conditions is met: (i) all oversubscribing holders'
requests are filled, or (ii) there are no more common shares available for
allocation.
As soon as practicable after the expiration date, Mellon Investor Services
LLC, acting as our subscription agent, will determine the number of common
shares that you may purchase pursuant to the oversubscription privilege. You
will receive certificates representing these common shares and a refund for any
excess subscription payments as soon as practicable after the expiration date,
anticipated to be approximately seven to 10 business days after the expiration
date. If you request and pay for more common shares than are allocated to you,
we will refund that overpayment, without interest. In connection with the
exercise of the oversubscription privilege, banks, brokers and other nominee
holders of subscription rights who act on behalf of beneficial owners will be
required to certify to us and to the subscription agent as to the aggregate
number of subscription rights that have been exercised, and the number of common
shares that are being requested through the oversubscription privilege, by each
beneficial owner on whose behalf the nominee holder is acting.
SUBSCRIPTION PRICE
Three subscription rights plus $______ entitles the holder to purchase one
common share. The per share price represents a discount of ____ % from [the
closing sale price of our common shares on ____ __, 2005] [the average of the
closing sales prices of our common shares over the __-trading day period ending
_____ __, 2005]. The subscription price does not necessarily bear any
relationship to our past or expected future results of operations, cash flows,
current financial condition, or any other established criteria for value. No
change will be made to the cash subscription price by reason of changes in the
trading price of our common shares prior to the closing of this offering.
DETERMINATION OF SUBSCRIPTION PRICE
Our Board of Directors set all of the terms and conditions of this
offering, including the subscription price. In establishing the subscription
price, our Board of Directors considered the following factors:
o strategic alternatives for capital raising,
o the market price of our common shares,
o the pricing of similar transactions,
o the amount of proceeds desired,
o our business prospects,
o our recent and anticipated operating results, and
o general conditions in the securities markets.
We determined the subscription price after taking into account the
preceding factors. We did not seek or obtain any opinion of financial advisors
or investment bankers in establishing the subscription price for the offering.
18
You should not consider the subscription price as an indication of the value of
our company or our common shares. We cannot assure you that you will be able to
sell common shares purchased during this offering at a price equal to or greater
than the subscription price. On _________, 2005, the closing sale price of our
common shares was $_____ per share.
EXPIRATION DATE, EXTENSIONS AND TERMINATION
You may exercise your subscription right at any time before 5:00 p.m., New
York City time, on __________, 2005, the expiration date for this offering.
However, we may extend the offering period for exercising your subscription
rights in our sole discretion, but in no event by more than 15 additional days.
If you do not exercise your subscription rights before the expiration date, your
unexercised subscription rights will be null and void. We will not be obligated
to honor your exercise of subscription rights if the subscription agent receives
the documents relating to your exercise after the expiration date, regardless of
when you transmitted the documents, unless you have timely transmitted the
documents under the guaranteed delivery procedures described below.
We have the sole discretion to extend the expiration date by giving oral or
written notice to the subscription agent on or before the scheduled expiration
date. If we elect to extend the expiration of this offering, we will issue a
press release announcing the extension no later than 9:00 a.m., New York City
time, on the next business day after the most recently announced expiration
date.
WITHDRAWAL AND AMENDMENT
We reserve the right to withdraw or terminate this offering at any time for
any reason. In the event that this offering is withdrawn or terminated, all
funds received from subscriptions by shareholders will be returned as soon as
practicable, anticipated to be approximately three to five business days after
such date of such withdrawal or termination. Interest will not be payable on any
returned funds.
We reserve the right to amend the terms of this offering. If we make an
amendment that we consider material, we will:
o mail notice of the amendment to all shareholders of record as of the record
date;
o extend the expiration date by at least 10 days; and
o offer all subscribers no less than 10 days to revoke any subscription
already submitted.
The extension of the expiration date will not, in and of itself, be treated
as a material amendment for these purposes.
INTENTIONS OF THE COMPANY'S OFFICERS, DIRECTORS AND PRINCIPAL SHAREHOLDERS
Our officers, directors and one of their affiliates have advised us that
they expect to exercise the basic subscription privilege under their rights and
may exercise their oversubscription privilege.
19
METHOD OF SUBSCRIPTION - EXERCISE OF SUBSCRIPTION RIGHTS
You may exercise your subscription rights by delivering the following to
the subscription agent, at or prior to 5:00 p.m., New York City time, on
______________, 2005, the date on which the rights expire:
o your properly completed and executed Subscription Certificate with any
required signature guarantees or other supplemental documentation; and
o your full subscription price payment for each common share subscribed for
under your basic subscription privilege and your oversubscription
privilege.
You should read and follow the Instructions for Use of Lynch Corporation
Subscription Certificates carefully.
SIGNATURE GUARANTEE MAY BE REQUIRED
Your signature on each Subscription Certificate must be guaranteed by an
eligible institution such as a member firm of a registered national securities
exchange or a member of the National Association of Securities Dealers, Inc., or
from a commercial bank or trust company having an office or correspondent in the
United States, subject to standards and procedures adopted by the subscription
agent, unless:
o your Subscription Certificate provides that common shares are to be
delivered to you as record holder of those subscription rights; or
o you are an eligible institution.
DELIVERY OF SUBSCRIPTION MATERIALS AND PAYMENT
You should deliver your Subscription Certificate and payment of the
subscription price or, if applicable, Notice of Guaranteed Delivery for
Subscription Certificates, to the subscription agent by mail, by overnight
courier or by hand to:
BY UNITED STATES MAIL BY OVERNIGHT COURIER: BY HAND:
DELIVERY:
Mellon Investor Services LLC Mellon Investor Services LLC Mellon Investor Services LLC
Post Office Box 3301 85 Challenger Road - Mail 120 Broadway, 13th Floor
South Hackensack, NJ 07606 Drop - Reorg New York, NY 10271
Attn: Reorganization Department Ridgefield Park, NJ 07660 Attn: Reorganization
Attn: Reorganization Department
Department
You are responsible for the method of delivery of your Subscription
Certificate(s) with your subscription price payment to the subscription agent.
If you send your Subscription Certificate(s) and subscription price payment by
mail, we recommend that you send them by registered mail, properly insured, with
20
return receipt requested. You should allow a sufficient number of days to ensure
delivery to the subscription agent prior to the time this offering expires.
DO NOT SEND YOUR SUBSCRIPTION CERTIFICATE(S) AND SUBSCRIPTION PRICE PAYMENT
TO THE COMPANY. Your delivery to an address other than the address set forth
above will not constitute valid delivery.
METHOD OF PAYMENT
Your payment of the subscription price must be made in U.S. dollars for the
full number of common shares you are subscribing (or oversubscribing) for by
either bank draft (cashier's check) or certified check drawn upon a U.S. bank or
money order payable to the subscription agent.
PLEASE NOTE THAT COMMON SHARES MAY NOT BE PAID FOR BY UNCERTIFIED PERSONAL
CHECK.
RECEIPT OF PAYMENT
Your payment will be considered received by the subscription agent only
upon receipt by the subscription agent of a certified check or bank draft drawn
upon a U.S. bank or a money order.
CALCULATION OF SUBSCRIPTION RIGHTS EXERCISED
If you do not indicate the number of subscription rights being exercised,
or do not forward full payment of the total subscription price for the number of
subscription rights that you indicate are being exercised, then you will be
deemed to have exercised your basic subscription privilege with respect to the
maximum number of rights that may be exercised with the aggregate subscription
price payment you delivered to the subscription agent.
YOUR FUNDS WILL BE HELD BY THE SUBSCRIPTION AGENT UNTIL COMMON SHARES ARE ISSUED
The subscription agent will hold your payment of the subscription price
payment in a segregated account with other payments received from other rights
holders until we issue your common shares to you. If this offering is not
completed, or we do not apply your full subscription price payment to your
purchase of common shares, the subscription agent will return as soon as
practicable, without interest, all excess subscription payments.
NO REVOCATION
Once you have exercised your subscription privileges, you may not revoke
your exercise. Subscription rights not exercised prior to the expiration date of
this offering will expire.
TRANSFERABILITY OF RIGHTS
The rights are transferable until the last business day prior to the
expiration date. A business day is a day on which the American Stock Exchange
trades. We have applied to list the rights and expect to be authorized for
21
trading of the rights on the American Stock Exchange. Any commissions in
connection with the sale of rights will be paid by the selling rights holder. We
cannot assure that a market for the rights will develop, or the prices at which
rights may be sold if a market does develop.
You may transfer all of the rights, including oversubscription rights,
evidenced by a single Subscription Certificate by signing the Subscription
Certificate for transfer in accordance with the appropriate form printed on the
Subscription Certificate. You may transfer a portion of the rights, including
oversubscription rights, evidenced by a single Subscription Certificate by
delivering to Mellon Investor Services LLC the Subscription Certificate properly
signed for transfer, with separate written instructions to register a portion of
the rights in the name of your transferee and to issue a new Subscription
Certificate to the transferee covering the transferred rights. In that event and
by appropriate written instructions, you may elect to receive a new Subscription
Certificate covering the rights you did not transfer.
If you wish to transfer all or a portion of your rights, you should allow a
sufficient amount of time prior to the expiration time for:
o the transfer instructions to be received and processed by Mellon Investor
Services LLC;
o new Subscription Certificates to be issued and transmitted; and
o the rights evidenced by the new Subscription Certificates to be exercised
or sold by the intended recipients.
It may require from two to 10 business days, or more, to complete transfers
of rights, depending upon how you deliver the Subscription Certificate and
payment and the number of transactions you request. Neither the Company nor the
subscription agent will be liable to you or any transferee of rights if
Subscription Certificates or any other required documents are not received in
time for exercise or sale prior to the expiration time.
If you exercise or sell rights in part, a new Subscription Certificate for
the remaining rights will be issued to you only if the subscription agent
receives a properly endorsed Subscription Certificate from you no later than
5:00 p.m., Eastern Time, on the fifth business day prior to the expiration date.
The subscription agent will not issue new Subscription Certificates for
partially exercised or sold Subscription Certificates submitted after that time
and date. If you do submit a Subscription Certificate after that time and date,
you will not be able to exercise the unexercised or unsold rights.
Unless you make other arrangements with the subscription agent, a new
Subscription Certificate issued after 5:00 p.m., Eastern Time, on the fifth
business day before the expiration date will be held for pick-up by you at:
Mellon Bank, N.A.
c/o Mellon Investor Services
120 Broadway, 13th Floor
New York, New York 10271
Attn: Reorganization Department
22
If you request a reissuance of a Subscription Certificate, the delivery of
that document will be at your risk.
ISSUANCE OF SHARE CERTIFICATES
Share certificates for common shares purchased in this offering will be
issued as soon as practicable after the expiration date, anticipated to be
approximately seven to 10 business days after the expiration date. Our
subscription agent will deliver subscription payments to us only after
consummation of this offering and the issuance of share certificates to our
shareholders that exercised rights. Unless you instruct otherwise in your
Subscription Certificate form, common shares purchased by the exercise of
subscription rights will be registered in the name of the person exercising the
rights.
GUARANTEED DELIVERY PROCEDURES
If you wish to exercise your subscription rights, but you do not have
sufficient time to deliver the Subscription Certificate evidencing your rights
to the subscription agent on or before the time your subscription rights expire,
you may exercise your subscription rights by the following guaranteed delivery
procedures:
o deliver your subscription price payment in full for each common share you
subscribed for under your subscription privileges in the manner set forth
in "Method of Payment" to the subscription agent on or prior to the
expiration date;
o deliver the form entitled Notice of Guaranteed Delivery for Subscription
Certificates, substantially in the form provided with the Instructions as
to Use of Lynch Corporation Subscription Certificates distributed with your
Subscription Certificates, on or prior to the expiration date; and
o deliver the properly completed Subscription Certificate evidencing your
rights being exercised and the related nominee holder certification, if
applicable, with any required signatures guaranteed, to the subscription
agent within three business days following the expiration date.
Your Notice of Guaranteed Delivery for Subscription Certificates must be
delivered in substantially the same form provided with the Instructions as to
Use of Lynch Corporation Subscription Certificates, which will be distributed to
you with your Subscription Certificate. Your Notice of Guaranteed Delivery for
Subscription Certificates must come from an eligible institution, or other
eligible guarantee institutions which are members of, or participants in, a
signature guarantee program acceptable to the subscription agent.
In your Notice of Guaranteed Delivery for Subscription Certificates, you
must state:
o your name;
o the number of subscription rights represented by your Subscription
Certificates and the number of common shares you are subscribing (and
oversubscribing) for; and
o your guarantee that you will deliver to the subscription agent any
Subscription Certificates evidencing the subscription rights you are
exercising within three business days following the expiration date.
23
You may deliver your Notice of Guaranteed Delivery for Subscription
Certificates to the subscription agent in the same manner as your Subscription
Certificates at the address set forth above under "Delivery of Subscription
Materials and Payment." Alternately, on the expiration date ONLY, you may
transmit your Notice of Guaranteed Delivery for Subscription Certificates to the
subscription agent via facsimile transmission (Facsimile No.: 201-296-4293). ALL
FACSIMILE DELIVERIES MUST BE CONFIRMED. To confirm facsimile deliveries, you
must call 201-296-4860.
Please call the information agent to request any additional copies of the
form of Notice of Guaranteed Delivery for Subscription Certificates you may
need.
DETERMINATIONS REGARDING THE EXERCISE OF YOUR SUBSCRIPTION RIGHTS
We will decide all questions concerning the timeliness, validity, form and
eligibility of your exercise of your subscription rights and our determinations
will be final and binding. We, in our sole discretion, may waive any defect or
irregularity, or permit a defect or irregularity to be corrected within such
time as we may determine. Non-material defects or irregularities will be waived
provided that we can determine your intentions with respect to exercising your
rights. If there is any defect or irregularity that results in an ambiguity
regarding your intentions with respect to exercising your rights, such defect or
irregularity will not be waived. In such event, we will treat any identical
defects or irregularities the same way for all shareholders. We may reject the
exercise of any of your subscription rights because of any defect or
irregularity. We will not receive or accept any subscription until all
irregularities have been waived by us or cured by you within such time as we
decide, in our sole discretion.
Neither we nor the subscription agent will be under any duty to notify you
of any defect or irregularity in connection with your submission of Subscription
Certificates and we will not be liable for failure to notify you of any defect
or irregularity. We reserve the right to reject your exercise of subscription
rights if your exercise is not in accordance with the terms of this offering or
in proper form. Under Section 18 of the Securities Act of 1933, as amended, our
common stock and the subscription rights offered hereby are exempt from state
regulation or "blue sky" laws because our common shares are listed on the
American Stock Exchange. If you are a foreign shareholder with a legal residence
outside of the United States, we will not accept your exercise of rights if our
issuance of common shares to you could be deemed unlawful under applicable law
or if compliance with applicable law would be materially burdensome to us.
If you are given notice of a defect in your subscription, you will have
five business days after the giving of notice to correct it. You will not,
however, be allowed to cure any defect later than 5:00 p.m., New York City time,
on ________________, 2005. We will not consider an exercise to be made until all
defects have been cured or waived.
NOTICE TO BANKERS, TRUSTEES OR OTHER DEPOSITARIES
If you are a broker, a trustee or a depositary for securities who holds
common shares for the account of others at the close of business on the record
date, you should notify the respective beneficial owners of such common shares
of this offering as soon as possible to find out their intentions with respect
24
to exercising their subscription rights. You should obtain instructions from the
beneficial owners with respect to the subscription rights, as set forth in the
instructions we have provided to you for your distribution to beneficial owners.
If the beneficial owner so instructs, you should complete the appropriate
Subscription Certificates and submit them to the subscription agent with the
proper payment. If you hold common shares for the accounts of more than one
beneficial owner, you may exercise the number of subscription rights to which
all such beneficial owners in the aggregate otherwise would have been entitled
had they been direct record holders of our common shares on the record date,
provided that you, as a nominee record holder, make a proper showing to the
subscription agent by submitting the form entitled Nominee Holder Certification
which we will provide to you with your offering materials.
NOTICE TO BENEFICIAL OWNERS
If you are a beneficial owner of our common shares or will receive your
subscription rights through a broker, custodian bank or other nominee, we will
ask your broker, custodian bank or other nominee to notify you of this offering.
If you wish to exercise your subscription rights, you will need to have your
broker, custodian bank or other nominee act for you. If you hold certificates of
our common shares directly and would prefer to have your broker, custodian bank
or other nominee exercise your subscription rights, you should contact your
nominee and request it to effect the transaction for you. To indicate your
decision with respect to your subscription rights, you should complete and
return to your broker, custodian bank or other nominee the form entitled
Beneficial Owner Election Form. You should receive this form from your broker,
custodian bank or other nominee with the other offering materials. If you wish
to obtain a separate Subscription Certificate, you should contact the nominee as
soon as possible and request that a separate Subscription Certificate be issued
to you.
COMMON SHARES OUTSTANDING AFTER THIS OFFERING
Upon the issuance of the common shares offered in this offering (assuming
that all of the subscription rights are exercised), 2,154,702 common shares will
be issued and outstanding. This would represent an approximate 33% increase in
the number of outstanding common shares. If only 10% or 50% of the subscription
rights are exercised, then 1,669,894 and 1,885,364 common shares will be issued
and outstanding, respectively, which represents an approximate 3% and 17%
increase in the number of outstanding common shares, respectively.
SUBSCRIPTION AGENT
We have appointed Mellon Investor Services LLC as subscription agent for
this offering. We will pay the fees and certain expenses of the subscription
agent, which we estimate will total approximately $__________. Under certain
circumstances, we may indemnify the subscription agent from certain liabilities
that may arise in connection with this offering.
INFORMATION AGENT
We have appointed Mellon Investor Services LLC as information agent for
this offering. We will pay the fees and certain expenses of the information
agent, which we estimate will total approximately $__________. Under certain
circumstances, we may indemnify the information agent from certain liabilities
that may arise in connection with this offering.
25
FEES AND EXPENSES
Other than for fees charged by the information agent and the subscription
agent, you are responsible for paying any other commissions, fees, taxes or
other expenses incurred in connection with the exercise of the subscription
rights. Neither we, the information agent nor the subscription agent will pay
such expenses.
NO BOARD RECOMMENDATION
An investment in our common shares must be made according to each
investor's evaluation of its own best interests. Accordingly, our Board of
Directors makes no recommendation to rights holders regarding whether they
should exercise their subscription rights. Our officers, directors and one of
their affiliates have advised us that they expect to exercise the basic
subscription privilege under their rights and may exercise their
oversubscription privilege. John C. Ferrara (Chief Executive Officer and
Director), Marc Gabelli (Chairman of the Board of Directors and 5% holder), E.
Val Cerutti (Director), Avrum Gray (Director), Anthony R. Pustorino (Director)
and Eugene Hynes (Vice President) collectively beneficially own 349,198 common
shares or 21.6% of the common shares outstanding as of August 31, 2005. Assuming
that each of the persons mentioned above exercises his basic subscription
privilege in full, they will collectively own an additional 116,401 common
shares, or a total of 465,599 common shares after this offering is completed.
IF YOU HAVE QUESTIONS ABOUT EXERCISING RIGHTS
If you have questions or need assistance concerning the procedure for
exercising subscription rights, or if you would like additional copies of this
prospectus or other forms related to this offering, you should contact the
information agent at the following address and telephone number:
BY UNITED STATES MAIL BY OVERNIGHT COURIER: BY HAND:
DELIVERY:
Mellon Investor Services LLC Mellon Investor Services LLC Mellon Investor Services LLC
Post Office Box 3301 85 Challenger Road - Mail 120 Broadway, 13th Floor
South Hackensack, NJ 07606 Drop - Reorg New York, NY 10271
Attn: Reorganization Department Ridgefield Park, NJ 07660 Attn: Reorganization
Attn: Reorganization Department
Department
Toll Free Telephone: (866) 340-1578
Direct Line for Banks and Brokers: (201) 373-5156
26
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following discussion is a summary of the material U.S. federal income
tax consequences of (i) the dividend by us of subscription rights to holders of
common shares that hold such common shares as a capital asset for federal income
tax purposes, and (ii) the exercise of such rights. This discussion is based on
laws, regulations, rulings and decisions in effect on the date of this
prospectus, all of which are subject to change (possibly with retroactive
effect) and to differing interpretations. This discussion applies only to
holders that are U.S. persons, which is defined as a citizen or resident of the
United States, a domestic partnership, a domestic corporation, any estate (other
than a foreign estate), and any trust so long as a court within the United
States is able to exercise primary supervision over the administration of the
trust and one or more U.S. persons have the authority to control all substantial
decisions of the trust. Generally, for federal income tax purposes an estate is
classified as a "foreign estate" based on the location of the estate assets, the
country of the estate's domiciliary administration, and the nationality and
residency of the domiciliary's personal representative.
This discussion does not address all aspects of federal income taxation
that may be relevant to holders in light of their particular circumstances or to
holders who may be subject to special tax treatment under the Internal Revenue
Code of 1986, as amended, including holders of options or warrants, holders who
are dealers in securities or foreign currency, foreign persons (defined as all
persons other than U.S. persons), insurance companies, tax-exempt organizations,
banks, financial institutions, broker-dealers, holders who hold common shares as
part of a hedge, straddle, conversion or other risk reduction transaction, or
who acquired common shares pursuant to the exercise of compensatory share
options or warrants or otherwise as compensation.
We have not sought, and will not seek, an opinion of counsel or a ruling
from the Internal Revenue Service regarding the federal income tax consequences
of the distribution of the rights or the related share issuance. The following
summary does not address the tax consequences of the distribution of the rights
or the related share issuance under foreign, state, or local tax laws.
ACCORDINGLY, EACH HOLDER OF COMMON SHARES SHOULD CONSULT ITS OWN TAX ADVISOR
WITH RESPECT TO THE PARTICULAR TAX CONSEQUENCES OF THE DISTRIBUTION OF THE
RIGHTS OR THE RELATED COMMON SHARE ISSUANCE TO SUCH HOLDER.
The federal income tax consequences for a holder of common shares on the
receipt of subscription rights and the exercise of such rights are as follows:
o A holder will not recognize taxable income for federal income tax purposes
in connection with the receipt of subscription rights.
o Except as provided in the following sentence, the tax basis of the
subscription rights received by a holder will be zero. If either (i) the
fair market value of the subscription rights on the date such subscription
rights are distributed is equal to at least 15% of the fair market value on
such date of the common shares with respect to which the subscription
rights are received or (ii) the holder irrevocably elects, by attaching a
statement to its federal income tax return for the taxable year in which
27
the subscription rights are received, to allocate part of the tax basis of
such common shares to the subscription rights, then upon exercise of the
subscription rights, the holder's tax basis in the common shares will be
allocated between the common shares and the subscription rights in
proportion to their respective fair market values on the date the
subscription rights are distributed. A holder's holding period for the
subscription rights received will include the holder's holding period for
the common shares with respect to which the subscription rights were
received. We intend to notify the holders whether the fair market value of
the subscription rights will equal or exceed 15% of the fair market value
of the common shares to which the subscription rights relate and the fair
market value of those subscription rights. Notification will be made by
written communication that will be included with the share certificates
that are mailed to those holders who exercise their subscription rights.
Holders should be aware that the Internal Revenue Service is not bound by
our valuation of the subscription rights.
o A holder that sells the subscription rights will recognize capital gain or
loss, depending on the amount realized upon the sale and the holder's tax
basis (if any) in the subscription rights. The gain or loss will be
long-term or short-term depending on the holder's holding period for the
subscription rights (discussed above).
o A holder that allows the subscription rights received to expire will not
recognize any gain or loss, and the tax basis of the common shares owned by
such holder with respect to which such subscription rights were distributed
will be equal to the tax basis of such common shares immediately before the
receipt of the subscription rights.
o A holder will not recognize any gain or loss upon the exercise of the
subscription rights.
o The tax basis of the common shares acquired through exercise of the
subscription rights will equal the sum of the subscription price for the
common shares and the holder's tax basis, if any, in the subscription
rights as described above.
o The holding period for the common shares acquired through exercise of the
subscription rights will begin on the date the subscription rights are
exercised.
Holders who exercise their subscription rights will be required to furnish
a Substitute Form W-9 (which appears as part of the Subscription Certificate) to
avoid the imposition of the 28% backup withholding tax.
PLAN OF DISTRIBUTION
We are offering our common shares underlying the rights directly to you. We
have not employed any brokers, dealers or underwriters in connection with the
solicitation or exercise of subscription rights in this offering and no
commissions, fees or discounts will be paid in connection with this offering.
Mellon Investor Services LLC is acting as our subscription agent to effect the
exercise of the rights and the issuance of the underlying common shares.
Therefore, we anticipate that our officers' and employees' role will be limited
to:
28
o Responding to inquiries of potential purchasers, provided the response is
limited to information contained in the registration statement of which
this prospectus is a part; and
o Ministerial and clerical work involved in effecting transactions pertaining
to the sale of common shares underlying the rights.
We intend to distribute and deliver this prospectus by hand or by mail
only, and not by electronic delivery. Also, we intend to use printed
prospectuses only, and not any other forms of prospectus.
We have distributed to the holders of record of our common shares, at the
close of business on __________, 2005, at no charge, one transferable
subscription right for each common share they own. Every three such rights will
entitle the holder thereof to subscribe for a right to purchase one of our
common shares at a subscription price of $_____ per share. You may exercise any
number of your subscription rights, or you may choose not to exercise any
subscription rights. We will not distribute any fractional common shares or pay
cash in lieu of fractional common shares, but will round up the aggregate number
of common shares you are entitled to receive to the nearest whole number.
We do not expect that all of our shareholders will exercise all of their
basic subscription privileges. By extending oversubscription privileges to our
shareholders, we are providing shareholders that exercise all of their basic
subscription privileges with the opportunity to purchase those common shares
that are not purchased by other shareholders.
If you wish to exercise your oversubscription privilege, you should
indicate the number of additional common shares that you would like to purchase
in the space provided on your Subscription Certificate. When you send in your
Subscription Certificate, you must also send the full purchase price for the
number of additional common shares that you have requested to purchase (in
addition to the payment due for common shares purchased through your basic
subscription privilege). If the number of common shares remaining after the
exercise of all basic subscription privileges is not sufficient to satisfy all
requests for common shares pursuant to oversubscription privileges, you will be
allocated additional common shares pro rata (subject to elimination of
fractional common shares), based on the number of common shares you purchased
through the basic subscription privilege in proportion to the total number of
common shares that you and other oversubscribing shareholders purchased through
the basic subscription privilege. However, if your pro rata allocation exceeds
the number of common shares you requested on your Subscription Certificate, then
you will receive only the number of common shares that you requested, and the
remaining common shares from your pro rata allocation will be divided among
other rights holders exercising their oversubscription privileges.
As soon as practicable after the expiration date, Mellon Investor Services
LLC, acting as our subscription agent, and we will determine the number of
common shares that you may purchase pursuant to the oversubscription privilege.
You will receive certificates representing these common shares as soon as
practicable after the expiration date, anticipated to be approximately seven to
10 business days after the expiration date. If you request and pay for more
common shares than are allocated to you, we will refund that overpayment,
without interest. In connection with the exercise of the oversubscription
privilege, banks, brokers and other nominee holders of subscription rights who
act on behalf of beneficial owners will be required to certify to us and to the
29
subscription agent as to the aggregate number of subscription rights that have
been exercised, and the number of common shares that are being requested through
the oversubscription privilege, by each beneficial owner on whose behalf the
nominee holder is acting.
We will pay Mellon Investor Services LLC, as the information agent, a fee
of approximately $______ plus expenses, and as the subscription agent, a fee of
approximately $________ plus expenses, for its services in connection with this
offering. We also have agreed to indemnify, under certain circumstances, Mellon
Investor Services LLC, in its capacity as information agent and subscription
agent, from any liability it may incur in connection with this offering.
Our subscription rights will be listed on the American Stock Exchange under
the symbol "LGL.RT." Our common shares issued upon the exercise of subscription
rights will be listed on the American Stock Exchange under the symbol "LGL," the
same symbol under which our currently outstanding common shares now trade.
LEGAL MATTERS
The validity of the common shares offered hereby has been passed upon by
Olshan Grundman Frome Rosenzweig & Wolosky LLP, Park Avenue Tower, 65 East 55th
Street, New York, New York 10022.
EXPERTS
Ernst & Young LLP, independent registered public accounting firm, has
audited our consolidated financial statements and schedules included in our
Annual Report on Form 10-K for the year ended December 31, 2004, as set forth in
their report, which is incorporated by reference in this registration statement.
Our financial statements and schedules are incorporated by reference in reliance
on Ernst & Young LLP's report, given on their authority as experts in accounting
and auditing.
INFORMATION WITH RESPECT TO THE REGISTRANT
This prospectus is accompanied by a copy of our latest Annual Report on
Form 10-K and Quarterly Report on Form 10-Q.
WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement on Form S-2 with the SEC for our
common shares offered in this offering. This prospectus does not contain all the
information set forth in the registration statement. You should refer to the
registration statement and its exhibits for additional information. Whenever we
make references in this prospectus to any of our contracts, agreements or other
documents, the references are not necessarily complete and you should refer to
the exhibits attached to the registration statement for the copies of the actual
contract, agreement or other document.
30
The SEC maintains an Internet site at http://www.sec.gov that contains
reports, proxy and information statements, and other information regarding us.
You may also read and copy any document we file with the SEC at its Public
Reference Room at 450 Fifth Street, N.W., 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 common shares are listed on the American Stock Exchange and our reports
and other information about us may also be inspected at the offices of the
American Stock Exchange at 86 Trinity Place, New York, New York 10006.
Additional information about us is available over the Internet at our web site
at WWW.LYNCHCORP.COM.
INCORPORATION BY REFERENCE
The following documents filed by us with the SEC are incorporated by
reference in this prospectus:
(1) Our Annual Report on Form 10-K for the fiscal year ended December 31, 2004;
(2) Our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31,
2005;
(3) Our Quarterly Report on Form 10-Q for the fiscal quarter ended June 30,
2005;
(4) Our Current Report on Form 8-K/A filed on January 3, 2005;
(5) Our Current Report on Form 8-K filed on January 4, 2005;
(6) Our Current Report on Form 8-K filed on April 29, 2005;
(7) Our Current Report on Form 8-K filed on May 16, 2005;
(8) Our Current Report on Form 8-K filed on July 6, 2005; and
(9) Our Current Report on Form 8-K filed on August 30, 2005.
You may request a copy of these filings (excluding the exhibits to such
filings that we have not specifically incorporated by reference in such filings)
at no cost, by writing or telephoning us as follows:
Lynch Corporation
140 Greenwich Avenue, 4th Floor
Greenwich, Connecticut 06830
Attention: Secretary
(203) 622-1150
31
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the various expenses that will be paid by us
in connection with the securities being registered. With the exception of the
Securities and Exchange Commission ("SEC") registration fee and the American
Stock Exchange ("AMEX") listing fee, all amounts shown are estimates.
SEC registration fee........................................ $ 525.60
AMEX listing fee............................................ $ 10,783.52
Printing and engraving...................................... $ 30,000.00
Legal fees and expenses (including Blue Sky fees)........... $ 50,000.00
Accounting Fees and Expenses................................ $ 10,000.00
Miscellaneous............................................... $ 5,000.00
Subscription Agent.......................................... $ 30,000.00
Information Agent........................................... $ 10,000.00
------------------
Total........................................... $ 146,309.12
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Except as hereinafter set forth, there is no statute, charter provision,
by-law, contract or other arrangement under which any controlling person,
director or officer of the Company is insured or indemnified in any manner
against liability which he may incur in his capacity as such.
Article VI, Section 6.2 of Registrant's Restated Articles of Incorporation
provides that to the extent not inconsistent with applicable law, every director
and officer shall be indemnified by Registrant against all liability and
reasonable expense that may be incurred by such director or officer in
connection with or resulting from any claim, (i) if such director or officer is
wholly successful with respect to the claim, or (ii) if not wholly successful,
then if such director or officer is determined to have acted in good faith, in
what the director or officer reasonably believed to be the best interests of
Registrant or at least not opposed to its best interest and, in addition, with
respect to any criminal claim is determined to have had reasonable cause to
believe that his conduct was lawful or had no reasonable cause to believe that
his conduct was unlawful. The termination of any claim, by judgment, order,
settlement (whether with or without court approval), or conviction or upon a
plea of guilty or of nolo contendere, or its equivalent, shall not create a
presumption that a director or officer did not meet the standards of conduct set
forth in clause (ii) hereof. For a more detailed description, reference is made
to Article VI, Section 6.2 of the Registrant's Restated Articles of
Incorporation filed as Exhibit 3(a) hereto which contains certain
indemnification provisions pursuant to authority contained in the Indiana
Business Corporation Law.
Registrant's directors and officers are also covered under Registrant's
directors and officers insurance policy up to a maximum of $10 million.
II-1
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers or persons controlling the
Registrant pursuant to the foregoing provisions, the Registrant has been
informed that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act of
1933 and is therefore unenforceable.
The following sections of Chapter 37 of the Indiana Business Corporation
Law provide as follows:
Section 23-1-37-8 Permissive Indemnification
(a) A corporation may indemnify an individual made a party to a proceeding
because the individual is or was a director against liability incurred in the
proceeding if:
(1) the individual's conduct was in good faith; and
(2) the individual reasonably believed:
(A) in the case of conduct in the individual's official capacity with
the corporation, that the individual's conduct was in its best interests; and
(B) in all other cases, that the individual's conduct was at least
not opposed to its best interests; and
(3) in the case of any criminal proceeding, the individual either:
(A) had reasonable cause to believe the individual's conduct was
lawful; or
(B) had no reasonable cause to believe the individual's conduct was
unlawful.
(b) A director's conduct with respect to an employee benefit plan for a
purpose the director reasonably believed to be in the interests of the
participants in and beneficiaries of the plan is conduct that satisfies the
requirement of subsection (a)(2)(B).
(c) The termination of a proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent is not, of
itself, determinative that the director did not meet the standard of conduct
described in this section.
Section 23-1-37-9 Mandatory Indemnification
Unless limited by its articles of incorporation, a corporation shall
indemnify a director who was wholly successful, on the merits or otherwise, in
the defense of any proceeding to which the director was a party because the
director is or was a director of the corporation against reasonable expenses
incurred by the director in connection with the proceeding.
Section 23-1-37-10 Advance Indemnification
(a) A corporation may pay for or reimburse the reasonable expenses
incurred by a director who is a party to a proceeding in advance of final
disposition of the proceeding if:
II-2
(1) the director furnishes the corporation a written affirmation of the
director's good faith belief that the director has met the standard of conduct
described in section 8 of this chapter;
(2) the director furnishes the corporation a written undertaking, executed
personally or on the director's behalf, to repay the advance if it is ultimately
determined that the director did not meet the standard of conduct; and
(3) a determination is made that the facts then known to those making the
determination would not preclude indemnification under this chapter.
(b) The undertaking required by subsection (a)(2) must be an unlimited
general obligation of the director but need not be secured and may be accepted
without reference to financial ability to make repayment.
(c) Determinations and authorizations of payments under this section shall
be made in the manner specified in section 12 of this chapter.
Section 23-1-37-11 Application for Indemnification
Unless a corporation's articles of incorporation provide otherwise, a
director of the corporation who is a party to a proceeding may apply for
indemnification to the court conducting the proceeding or to another court of
competent jurisdiction. On receipt of an application, the court after giving any
notice the court considers necessary may order indemnification if it determines:
(1) the director is entitled to mandatory indemnification under section 9
of this chapter, in which case the court shall also order the corporation to pay
the director's reasonable expenses incurred to obtain court-ordered
indemnification; or
(2) the director is fairly and reasonably entitled to indemnification in
view of all the relevant circumstances, whether or not the director met the
standard of conduct set forth in section 8 of this chapter.
Section 23-1-37-12 Procedure for Determining Indemnification
(a) A corporation may not indemnify a director under section 8 of this
chapter unless authorized in the specific case after a determination has been
made that indemnification of the director is permissible in the circumstances
because the director has met the standard of conduct set forth in section 8 of
this chapter.
(b) The determination shall be made by any one (1) of the following
procedures:
(1) By the board of directors by majority vote of a quorum consisting
of directors not at the time parties to the proceeding.
(2) If a quorum cannot be obtained under subdivision (1), by majority
vote of a committee duly designated by the board of directors (in which
designation directors who are parties may participate), consisting solely of two
(2) or more directors not at the time parties to the proceeding.
II-3
(3) By special legal counsel:
(A) selected by the board of directors or its committee in the
manner prescribed in subdivision (1) or (2); or
(B) if a quorum of the board of directors cannot be obtained
under subdivision (1) and a committee cannot be designated under subdivision
(2), selected by majority vote of the full board of directors (in which
selection directors who are parties may participate).
(4) By the shareholders, but common shares owned by or voted under
the control of directors who are at the time parties to the proceeding may not
be voted on the determination.
(d) Authorization of indemnification and evaluation as to reasonableness
of expenses shall be made in the same manner as the determination that
indemnification is permissible, except that if the determination is made by
special legal counsel, authorization of indemnification and evaluation as to
reasonableness of expenses shall be made by those entitled under subsection
(b)(3) to select counsel.
Section 23-1-37-13 Indemnification of Officers, Agents and Employees
Unless a corporation's articles of incorporation provide otherwise:
(1) an officer of the corporation, whether or not a director, is entitled
to mandatory indemnification under section 9 of this chapter, and is entitled to
apply for court-ordered indemnification under section 11 of this chapter, in
each case to the same extent as a director;
(2) the corporation may indemnify and advance expenses under this chapter
to an officer, employee, or agent of the corporation, whether or not a director,
to the same extent as to a director; and
(3) a corporation may also indemnify and advance expenses to an officer,
employee, or agent, whether or not a director, to the extent, consistent with
public policy, that may be provided by its articles of incorporation, bylaws,
general or specific action of its board of directors, or contract.
Section 23-1-37-14 Insurance
A corporation may purchase and maintain insurance on behalf of an
individual who is or was a director, officer, employee, or agent of the
corporation, or who, while a director, officer, employee, or agent of the
corporation, is or was serving at the request of the corporation as a director,
officer, partner, member, manager, trustee, employee, or agent of another
foreign or domestic corporation, partnership, limited liability company, joint
venture, trust, employee benefit plan, or other enterprise, against liability
asserted against or incurred by the individual in that capacity or arising from
the individual's status as a director, officer, member, manager, employee, or
agent, whether or not the corporation would have power to indemnify the
individual against the same liability under section 8 or 9 of this chapter. The:
II-4
(1) corporation may purchase insurance under this section from; and
(2) insurance purchased under this section may be reinsured in whole or in part
by;
an insurer that is owned by or otherwise affiliated with the corporation whether
the insurer does or does not do business with other persons.
Section 23-1-37-15 Indemnification Under Chapter Not Exclusive
(a) The indemnification and advance for expenses provided for or authorized
by this chapter does not exclude any other rights to indemnification and advance
for expenses that a person may have under:
(1) a corporation's articles of incorporation or bylaws;
(2) a resolution of the board of directors or of the shareholders; or
(3) any other authorization, whenever adopted, after notice, by a majority
vote of all the voting common shares then issued and outstanding.
(b) If the articles of incorporation, bylaws, resolutions of the board of
directors or of the shareholders, or other duly adopted authorization of
indemnification or advance for expenses limit indemnification or advance for
expenses, indemnification and advance for expenses are valid only to the extent
consistent with the articles, bylaws, resolution of the board of directors or of
the shareholders, or other duly adopted authorization of indemnification or
advance for expenses.
(c) This chapter does not limit a corporation's power to pay or reimburse
expenses incurred by a director, officer, employee, or agent in connection with
the person's appearance as a witness in a proceeding at a time when the person
has not been made a named defendant or respondent to the proceeding.
ITEM 16. EXHIBITS.
Exhibit
No. Description
------- -----------
3(a) Restated Articles of Incorporation of the Company (incorporated by
reference to Exhibit 3(a) to the Company's Annual Report on Form 10-K
for the period ended December 31, 2004).
(b) Articles of Amendment of the Articles of Incorporation of the Company
(incorporated by reference to Exhibit 3(b) to the Company's Annual
Report on Form 10-K for the period ended December 31, 2004).
(c) By-laws of the Company (incorporated by reference to Exhibit 3.1 to
the Company's Current Report on Form 8-K dated December 22, 2004).
5* Opinion of Olshan Grundman Frome Rosenzweig & Wolosky LLP.
II-5
10(a) Lynch Corporation 401(k) Savings Plan (incorporated by reference to
Exhibit 10(b) to the Company's Annual Report on Form 10-K for the
period ended December 31, 1995).
(b) Directors Stock Plan (incorporated by reference to Exhibit 10(o) to
the Company's Form 10-K for the year ended December 31, 1997).
(c) Lynch Corporation 2001 Equity Incentive Plan adopted December 10, 2001
(incorporated by reference to Exhibit 10(y) to the Company's Form 10-K
for the year ended December 31, 2001).
(d) Amended and Restated Credit Agreement by and between Lynch Systems,
Inc. and SunTrust Bank dated as of June 10, 2002 (incorporated by
reference to Exhibit 10(z) to the Company's Form 10-K for the year
ended December 31, 2002).
(e) Unlimited Continuing Guaranty Agreement by Guarantor, Lynch
Corporation, dated June 10, 2002 (incorporated by reference to Exhibit
10(aa) to the Company's Form 10-K for the year ended December 31,
2002).
(f) First Amendment and Waiver to Amended and Restated Credit Agreement
between Lynch Systems, Inc. and SunTrust Bank dated May 30, 2003
(incorporated by reference to Exhibit 10(ee) to the Company's Form
10-Q for the period ending June 30, 2003).
(g) Term Loan Promissory Note between Lynch Systems, Inc. and SunTrust
Bank dated August 4, 2003 (incorporated by reference to Exhibit 10(ff)
to the Company's Form 10-Q for the period ending June 30, 2003).
(h) Second Amendment to Security Deed and Agreement dated August 4, 2003
between Lynch Systems, Inc. and SunTrust Bank (incorporated by
reference to Exhibit 10(gg) to the Company's Form 10-Q for the period
ending June 30, 2003).
(i) Mortgage dated October 21, 2002 by Mortgagor, Mtron Industries, Inc.,
to Mortgagee, Yankton Area Progressive Growth, Inc. (incorporated by
reference to Exhibit 10(hh) to the Company's Annual Report on Form
10-K for the year ended December 31, 2003).
(j) Promissory Note between Mtron Industries, Inc. and Yankton Area
Progressive Growth, Inc., dated October 21, 2002 (incorporated by
reference to Exhibit 10(ii) to the Company's Annual Report on Form
10-K for the year ended December 31, 2003).
(k) Standard Loan Agreement by and between Mtron Industries, Inc. and
Areawide Business Council, Inc., dated October 10, 2002 and Exhibits
thereto (incorporated by reference to Exhibit 10(jj) to the Company's
Annual Report on Form 10-K for the year ended December 31, 2003).
(l) Loan Agreement by and between Mtron Industries, Inc. and South Dakota
Board of Economic Development, dated December 19, 2002 (incorporated
by reference to Exhibit 10(kk) to the Company's Annual Report on Form
10-K for the year ended December 31, 2003).
(m) Promissory Note between Mtron Industries, Inc. and South Dakota Board
of Economic Development, dated December 19, 2002 (incorporated by
reference to Exhibit 10(ll) to the Company's Annual Report on Form
10-K for the year ended December 31, 2003).
(n) Employment Agreement by and between Mtron Industries, Inc. and South
Dakota Board of Economic Development, dated December 19, 2002
(incorporated by reference to Exhibit 10(mm) to the Company's Annual
Report on Form 10-K for the year ended December 31, 2003).
II-6
(o) Loan Agreement by and among Mtron Industries, Inc., Piezo Technology,
Inc. and First National Bank of Omaha (incorporated by reference to
Exhibit 10.1 to the Company's Current Report on Form 8-K dated October
20, 2004).
(p) Unconditional Guaranty for Payment and Performance with First National
Bank of Omaha (incorporated by reference to Exhibit 10.2 to the
Company's Current Report on Form 8-K dated October 20, 2004).
(q) Registration Rights Agreement by and between the Company and Venator
Merchant Fund, L.P. dated October 15, 2004 (incorporated by reference
to Exhibit 10.4 to the Company's Current Report on Form 8-K dated
October 20, 2004).
13(a) Annual Report to Shareholders for the year ended December 31, 2004.
(b) Form 10-Q for the quarter ended June 30, 2005.
23(a)* Consent of Independent Registered Public Accounting Firm - Ernst &
Young LLP.
(b)* Consent of Olshan Grundman Frome Rosenzweig & Wolosky LLP (included in
Exhibit 5)
24* Powers of Attorney.
99(a)** Form of Instructions for Use of Lynch Corporation Subscription
Certificates.
(b)** Form of Notice of Guaranteed Delivery for Subscription Certificates.
(c)** Form of Letter to Shareholders.
(d)** Form of Letter to Securities Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(e)** Form of Letter to Clients of Security Holders Who Are Beneficial
Holders.
(f)** Form of Nominee Holder Certification Form.
(g)** Beneficial Owner Election Form.
(h)** Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(i)* Form of Subscription and Information Agent Agreement between Lynch
Corporation and Mellon Bank, N.A.
(j)* Form of Subscription Certificate.
----------------------
* Filed herewith
** Previously filed
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in
II-7
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if,
in the aggregate, the changes in volume and price represent no
more than 20 percent change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table
in the effective registration statement; and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial BONA FIDE offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
(e) The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is
sent or given, the latest annual report, to security holders that is
incorporated by reference in the prospectus and furnished pursuant to and
meeting the requirements of Rule 14a-3 or Rule 14c-3 under the Securities
Exchange Act of 1934; and, where interim financial information required
to be presented by Article 3 of Regulation S-X is not set forth in the
prospectus, to deliver, or cause to be delivered to each person to whom
the prospectus is sent or given, the latest quarterly report that is
specifically incorporated by reference in the prospectus to provide such
interim financial information.
(h) Insofar as indemnification for liabilities arising under the Securities
Act, as amended may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of an action, suit or proceeding) is
asserted by such director, officer or controlling person in connection
with the securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as expressed
in the Securities Act and will be governed by the final adjudication of
such issue.
II-8
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-2 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the Town of Greenwich, State of Connecticut on the 8th day of
September, 2005.
LYNCH CORPORATION
By: /s/ John C. Ferrara
-------------------------------------
John C. Ferrara
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints John C. Ferrara and Eugene Hynes as his true and
lawful attorney-in-fact, each acting alone, with full power of substitution and
resubstitution for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments, including post-effective amendments
to this registration statement, and any related registration statement filed
pursuant to Rule 462(b) of the Act and to file the same, with exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that said attorneys-in-fact or
their substitutes, each acting along, may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ John C. Ferrara
------------------------ Chief Executive Officer and September 8, 2005
John C. Ferrara Director (Principal Executive
Officer)
*
------------------------ Vice President, Treasurer and September 8, 2005
Eugene Hynes Secretary (Principal Financial
and Accounting Officer)
*
------------------------ Chairman of the Board of September 8, 2005
Marc Gabelli Directors
*
------------------------ Director September 8, 2005
E. Val Cerutti
*
------------------------ Director September 8, 2005
Avrum Gray
*
------------------------ Director September 8, 2005
Anthony R. Pustorino
---------------- September 8, 2005
*By John C. Ferrara, Attorney-in-Fact
II-9
EXHIBIT INDEX
Exhibit
No. Description
------- -----------
3(a) Restated Articles of Incorporation of the Company (incorporated by
reference to Exhibit 3(a) to the Company's Annual Report on Form 10-K
for the period ended December 31, 2004).
(b) Articles of Amendment of the Articles of Incorporation of the Company
(incorporated by reference to Exhibit 3(b) to the Company's Annual
Report on Form 10-K for the period ended December 31, 2004).
(c) By-laws of the Company (incorporated by reference to Exhibit 3.1 to
the Company's Current Report on Form 8-K dated December 22, 2004).
5* Opinion of Olshan Grundman Frome Rosenzweig & Wolosky LLP.
10(a) Lynch Corporation 401(k) Savings Plan (incorporated by reference to
Exhibit 10(b) to the Company's Annual Report on Form 10-K for the
period ended December 31, 1995).
(b) Directors Stock Plan (incorporated by reference to Exhibit 10(o) to
the Company's Form 10-K for the year ended December 31, 1997).
(c) Lynch Corporation 2001 Equity Incentive Plan adopted December 10, 2001
(incorporated by reference to Exhibit 10(y) to the Company's Form 10-K
for the year ended December 31, 2001).
(d) Amended and Restated Credit Agreement by and between Lynch Systems,
Inc. and SunTrust Bank dated as of June 10, 2002 (incorporated by
reference to Exhibit 10(z) to the Company's Form 10-K for the year
ended December 31, 2002).
(e) Unlimited Continuing Guaranty Agreement by Guarantor, Lynch
Corporation, dated June 10, 2002 (incorporated by reference to Exhibit
10(aa) to the Company's Form 10-K for the year ended December 31,
2002).
(f) First Amendment and Waiver to Amended and Restated Credit Agreement
between Lynch Systems, Inc. and SunTrust Bank dated May 30, 2003
(incorporated by reference to Exhibit 10(ee) to the Company's Form
10-Q for the period ending June 30, 2003).
(g) Term Loan Promissory Note between Lynch Systems, Inc. and SunTrust
Bank dated August 4, 2003 (incorporated by reference to Exhibit 10(ff)
to the Company's Form 10-Q for the period ending June 30, 2003).
(h) Second Amendment to Security Deed and Agreement dated August 4, 2003
between Lynch Systems, Inc. and SunTrust Bank (incorporated by
reference to Exhibit 10(gg) to the Company's Form 10-Q for the period
ending June 30, 2003).
(i) Mortgage dated October 21, 2002 by Mortgagor, Mtron Industries, Inc.,
to Mortgagee, Yankton Area Progressive Growth, Inc. (incorporated by
reference to Exhibit 10(hh) to the Company's Annual Report on Form
10-K for the year ended December 31, 2003).
(j) Promissory Note between Mtron Industries, Inc. and Yankton Area
Progressive Growth, Inc., dated October 21, 2002 (incorporated by
reference to Exhibit 10(ii) to the Company's Annual Report on Form
10-K for the year ended December 31, 2003).
(k) Standard Loan Agreement by and between Mtron Industries, Inc. and
Areawide Business Council, Inc., dated October 10, 2002 and Exhibits
thereto (incorporated by reference to Exhibit 10(jj) to the Company's
Annual Report on Form 10-K for the year ended December 31, 2003).
(l) Loan Agreement by and between Mtron Industries, Inc. and South Dakota
Board of Economic Development, dated December 19, 2002 (incorporated
by reference to Exhibit 10(kk) to the Company's Annual Report on Form
10-K for the year ended December 31, 2003).
(m) Promissory Note between Mtron Industries, Inc. and South Dakota Board
of Economic Development, dated December 19, 2002 (incorporated by
reference to Exhibit 10(ll) to the Company's Annual Report on Form
10-K for the year ended December 31, 2003).
(n) Employment Agreement by and between Mtron Industries, Inc. and South
Dakota Board of Economic Development, dated December 19, 2002
(incorporated by reference to Exhibit 10(mm) to the Company's Annual
Report on Form 10-K for the year ended December 31, 2003).
(o) Loan Agreement by and among Mtron Industries, Inc., Piezo Technology,
Inc. and First National Bank of Omaha (incorporated by reference to
Exhibit 10.1 to the Company's Current Report on Form 8-K dated October
20, 2004).
(p) Unconditional Guaranty for Payment and Performance with First National
Bank of Omaha (incorporated by reference to Exhibit 10.2 to the
Company's Current Report on Form 8-K dated October 20, 2004).
(q) Registration Rights Agreement by and between the Company and Venator
Merchant Fund, L.P. dated October 15, 2004 (incorporated by reference
to Exhibit 10.4 to the Company's Current Report on Form 8-K dated
October 20, 2004).
13(a) Annual Report to Shareholders for the year ended December 31, 2004.
(b) Form 10-Q for the quarter ended June 30, 2005.
23(a)* Consent of Independent Registered Public Accounting Firm - Ernst &
Young LLP.
(b)* Consent of Olshan Grundman Frome Rosenzweig & Wolosky LLP (included in
Exhibit 5)
24* Powers of Attorney.
99(a)** Form of Instructions for Use of Lynch Corporation Subscription
Certificates.
(b)** Form of Notice of Guaranteed Delivery for Subscription Certificates.
(c)** Form of Letter to Shareholders.
(d)** Form of Letter to Securities Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(e)** Form of Letter to Clients of Security Holders Who Are Beneficial
Holders.
(f)** Form of Nominee Holder Certification Form.
(g)** Beneficial Owner Election Form.
(h)** Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(i)* Form of Subscription and Information Agent Agreement between Lynch
Corporation and Mellon Bank, N.A.
(j)* Form of Subscription Certificate.
----------------------
* Filed herewith
** Previously filed